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kickaha

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.

Flat | Top-Level Comments Only

From:

tealynx.livejournal.com

Okay, so I wasn't going to reply... but then I took my shower and started thinking and....

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.

From:

actsofcreation.livejournal.com

HR 25 allows the states to allows the states to do the tax collection if they have a conforming sales tax and allows them to retain 1/2 percent of tax collected for the service? Net result is that if your state has a sales tax you would probably be using the same method to pay the FairTax on your sales as you do to pay your existing sales tax. Ie your overhead is unlikely to change from what it is now unless you are in a no sales tax state (like NH).