More political reform stuph
Oct. 18th, 2004 11:03 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
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actsofcreation is insane.actsofcreation is wise.Listen to the
actsofcreation.Well, at least about the FairTax. ;)
His site dedicated to it is becoming a rather impressive comparison of FairTax and our current income tax. He's got me convinced. Just read it. It's the best suggestion I've seen for revamping our current system: tax consumption, not production; make taxes equal for everyone from top to bottom; eliminate loopholes for those who can afford tax lawyers to find them; have an actual progressive tax for the poor. Excellent stuff.
And his HTML foo is to be feared. I shudder to think about the coding that took.
![[identity profile]](https://www.dreamwidth.org/img/silk/identity/openid.png){kind=small}
The coding was crazy.
Date: 2004-10-19 06:12 am (UTC)Bippy
Re: The coding was crazy.
Date: 2004-10-19 06:26 am (UTC)Wow, I totally Agree
Date: 2004-10-19 07:32 am (UTC)You see, the mathematician in me and the one that wants a fair and just tax code are so with you guys. So completely and totally with you guys. The concept of paying for loopholes in the tax code, the fact that those with enough money put it in places that means the pretty much never pay tax. This is all so unfair and unjust that it makes me sick to my stomache.....
But the retailer, the one that would responsible for collecting this tax, and most importantly the one that would be selling goods under this tax knows it would kill those of us in the luxury goods market. When the sales tax goes up, sales go down, at least for a time. Yes, they'd come up eventually, but often not to the level they started at. Oh, and let's not for get the amount of money and time (which is also money) that I spend now tracking, collecting, and paying the sales tax I do collect. For every dollar of sales tax I collect now, I spend at least 10 cents paying for that in some way. Just that cost alone would put me out of business, not to mention the cost of a pound of english breakfast would go from 16 to 20 though no fault of my own. And they can order it from England for 18......
-tealynx
(who is trying to be a liberal and a business owner at the same time)
Re: Wow, I totally Agree
Date: 2004-10-19 02:24 pm (UTC)One, HR 25, the bill for the FairTax, provides a 1/2 percent retention of the tax buy the retailer collecting it to reimburse for the cost of collection.
Two, if you employ other people you no longer have to do federal withholding for them. You now longer have federal corporate income taxes to file or pay.
Three, if they can order if from England now for 18, then they will have to pay the FairTax at border. HR 25 has provisions for all imports not destined for retail sale being taxed at point of importation, so you can't avoid the FairTax simply by buying things overseas.
Four, as to sales, do keep in mind that people will have a lot more cash in pocket under the FairTax due to the repeal of the income and payroll taxes, as well as the Family Consumption Allowance. I don't know to what degree this will offset the sales issues you refer to, but I suspect it would do so at least somewhat.
I'm very interested in hearing a retailers concerns. I will definitely need to put together a "How the FairTax Effects Retailers" post eventually.
Re: Wow, I totally Agree
Date: 2004-10-19 04:21 pm (UTC)First. I said in my earlier post, it cost me about 10% to collect the tax I collect now. I'm sure that for huge retailers like Walmart with centralized bookkeeping and enormous revenue that .5% would be sufficient, but for a small retailer, it would have to be at least 10 times that, or 5%. Because, you see, this would involve for of the time of the 3 most expensive people in any small business. The bookkeeper, the accountant, and the lawyer. I mean, the first thing I'd do if this bill came up on the floor of congress is call my lawyer, and let's just say a phone conversation with him isn't cheap, let alone making sure our process to collect and pay this tax is legal and defensible.
Two, paying federal taxes for people, also known as withholding, is a very minor cost. All of the systems to collect it are automated and electronic. No collecting this tax almost wouldn't register on my radar, though I do admit it would generate a savings. Probably in the .5% range you are talking about. This is because collecting this tax means two calculations a month for each employee. The sales tax adds a calculation for every sale, and then calculations again when the tax is paid. The tax collection process goes from 5-10 times a month to 500-1000 times a month, maybe more. No matter how automated, that's enormous.
Three. I import tea though the border now, and have to go though government regulations do to that, including an FDA clearing process. This system is overloaded, slow, and incredibly expensive now. Besides, I suspect some lawyers would have something to say about every small package that comes in the country being open and inspected for its taxes.
Four. Well, I thought about this one when I wrote my original post... but see here's the thing. That theory always is touted when tax changes are made. Hell, our current president made it for both of the tax cuts he just put into place. Clinton made it for his tax changes.... It just doesn't really work. You see, when you put more money in people's pockets it doesn't directly correlate to them spending more for the things they were buying for less. I mean, I have daily conversations with people in their 60's and 70's where I have to explain to them the the reason the tea they are buying is 2 or 3 times the cost it was when then were 25 is because of inflation. I can't imagine having that conversation with every customer about the tax every time. And while it would eventually die down, it would never stop. I'd have it every day it was in place forever.
What it doesn't take into account, this tax plan, is sticker shock. It totally disregards the fact that people want to pay less for things, and even if they know why the price has gone up, they won't pay more as often. They will look for cheaper ways.
Which brings me to a major point. This turns the burden of tax collection from bookkeepers and accountants to those of us with a cash register. I turns me into a tax collector. I mean, I know I already am, I know I collect almost 10% in tax on some things in the store, but the whole idea of me collecting all of the taxes that are created in this economy makes me a little nervous. I know other retailers aren't as honest as myself, and there are always ways to make a sale you don't ring up. I mean, this would take tax collection out of the hands of those people that have spent their lives studding codes and such and turn it into those that have decided their life is about making a buck. It just seems like a system that would be at least as rife with cheating, maybe more. Smuggling and under the counter sales would be a quick and and easy way to dodge this tax, and it would create a great boon for the organized crime families among us....
That all said, I don't think this is a bad idea on a theoretical basis. We need a simpler tax code. Paying (or dodging) the codes we have takes a great deal of time and money that could be better spent doing what taxes are supposed to do. I think the idea of some sort of flat tax with very few deductions is a great idea. I just don't know how to do it.
Re: Wow, I totally Agree
Date: 2004-10-19 06:45 pm (UTC)Re: Wow, I totally Agree
Date: 2004-10-19 04:17 pm (UTC)My family has always been in retail until recently, so I too have that mindset, and it still has me convinced. Now that my family is doing import/export, I had to look at it from that viewpoint... and I'm still convinced.
The hardest time period, IMO, will be the transition. People will either hoard their money for a while, or go on a spending spree when they see their bank accounts swell. But after at most a year, I'd expect things to be pretty much just as they are now in retail.
And another thing to think about - you'd have an *advantage* over many retailers - your goods are luxury consumables. Since FairTax has no sales tax for used goods, it encourages people to buy used items... but yours can't be. ;)