The Fair Tax, for better or worse?

[scottyt]

Originally Posted by krozet

Profit is Not always the motivation for great things unless you can show me where the profit was for NASA to send people to the moon, or for the team that invented insulin or the eradication of the Polio Virus or the vast majority of Nobel Prize winners...

Computers were invented not for profit but for the betterment of education. Oil, and Electricity were not invented, they were discovered and the people that discovered how electricity works were academics, not profit seeking companies...

well nasa is the .gov they dont make a profit all they do is spend money, and i agree with it. computers where not invented for education, one reason gates and allen are not together still is they had different views. gates saw everyone making computers and little profit in it over the long run, so he did software which he just about gave away for 15 years. now he has the biggest chunk of the market.

it also said that nobel prize winner can right there own pay checks. once known they can make lots of money from the notoriety

[scottyt]

one thing alot of people forget about during the 90 % tax rate days where there where a lot of right offs that dont exist any more. car payment interest, credit card interest, property taxes, any money invested that increased the value of a house, etc.... that lowered the actual interest paid much lower than it looked like on paper. now most of these tax right offs did not even come in to effect until you made 100's of 1000's.

i know a mortgage broker who had to pay an effective tax rate of 70 % in 2005. he had rental houses, he had to pay income tax on the houses, but if he had to put a roof on a house he could not right it off. all because he made too much money. he and his wife made almost a mil in 2005 and paid about 700,000 in taxes. that seems real fair to me... not

[sck5]

that mortgage broker needs a new accountant

[danjarch]

To move the discussion to the idea of the "Fair Tax" itself. It has two major flaws and would gain thousands more if it ever became law. The first flaw is that it still hides the true amount of taxes you pay. That's the biggest reason the government has been able to grow out of hand. Most people think they get money from the government rather then get a portion of what they paid in, back. Unless your self employed or own a business, it's easy to forget that what you see on your W2 under medicare, social security, and fica is only half of what's been paid on your behalf. Then there is the unemployment tax that you never see but is paid on your behalf.

Of course there are plenty more taxes that you never sit down and write a check for, so don't often think about or figure out how much your paying, such as sales tax, exercise taxes, utilities taxes, airport taxes, telecomunications taxes, corporate income taxes, etc.. . All told we pay something like 48 cents out of every dollar we make in taxes. But most of it goes out with out our being aware or having to write a seperate check. The fair tax plan, repeats this existing flaw. Hiding the total amount of taxes paid in your name.

The second problem is that it creates a major disadvantage on small businesses. Think of a maid service that is state wide and buys it's cleaning products by the truck load, in condensed form. Being able to get a big discount for buying in bulk. It's then increased by being hit with a lower tax bill. Meanwhile a independent person working as a maid, is going to be paying as much as 3 times as much for cleaning supplies, this will be compounded since the tax difference would be again multiplied by three.

In simple terms, if bottle of off the shelf floor cleaner is $6 and the tax is 30% bringing the total to $7.80. Now that big company is only paying $2 for that same amount of condensed cleaner, adding in the taxes it comes to $2.60. So an already $4 disadvantage becomes a $5.20 disadvantage.

I know it doesn't seem like much, but imagine all the small plumbers, contractors, maids, and other trades that already have to manage to overcome there lack of bargaining power.

The third fault is that it is in no way safe from being manipulated by congress. As already mentioned they just love trying to use the tax laws to incourage or discourage behavor. You can just imagine what would be going on right now if we were under the fair tax plan. They would be trying to exempt green products from the tax, or trying to give out 6 month exemptions for this industry or that industry.

[krozet]

Originally Posted by scottyt

well nasa is the .gov they dont make a profit all they do is spend money, and i agree with it. computers where not invented for education, one reason gates and allen are not together still is they had different views. gates saw everyone making computers and little profit in it over the long run, so he did software which he just about gave away for 15 years. now he has the biggest chunk of the market.

it also said that nobel prize winner can right there own pay checks. once known they can make lots of money from the notoriety

Not to get off topic but when I see crap dressed up as fact I have to point it out.

During WWII Konrad Zuse invented the Z1. According to Mary Bellis, the Z1 was the first real functioning, binary computer (actually, it was a very large calculator--but a computer nonetheless!). Zuse used it to explore several ground-breaking technologies in calculator development: floating-point arithmetic, high-capacity memory and modules or relays operating on the yes/no principle. Zuse's ideas, not fully implemented in the Z1, succeeded more with each Z prototype.

In 1939, Zuse completed the Z2, the first fully functioning electro-mechanical computer. It was followed by the Z3. These machines were used to produce secret codes for the German military. For a while this gave the Germans a decided advantage. But then, the British, guided by mathematician Alan Turing, created the Colossus Mark I.

Colossus was the world's first programmable, digital electronic computer, developed in 1942-43 at "Station X", Bletchley Park, England. British code breakers used Colossus to read the encrypted German messages. The Germans didn't know their "Enigma" code had been broken. This is one reason the D-Day Invasion succeeded.

In 1939, John V. Atanasoff and Clifford Berry developed the Atanasoff-Berry Computer (ABC) at Iowa State University, which was regarded as the first electronic digital computer. The ABC was built by hand and the design used over 300 vacuum tubes and had capacitors fixed in a mechanically rotating drum for memory.

In 1945, ENIAC, created by J. Presper Eckert and John Mauchly, was unveiled. ENIAC (Electronic Numerator Integrator Analyzer and Computer) weighed in at 27 tons and filled a large room. Not surprisingly, ENIAC also made big noises, cracking and buzzing while performing an equation of 5,000 additions. Before the invention of ENIAC, it took a room full of people to calculate a similar equation.

The first electronic computer that could store its own programs was developed in 1948 at Manchester University. It was called "The baby" and celebrated its 60th birthday in 2008. See BBC and Manchester University links in related links below. This is widely considered to be the forerunner of the modern computer.

The UNIVAC I (Universal Automatic Computer) was the first commercially available, "mass produced" electronic computer. It was manufactured by Remington Rand in the USA and was delivered to the US Census Bureau in June 1951. UNIVAC I used 5,200 vacuum tubes and consumed 125 kW of power. 46 machines were sold at more than $1 million each. By this time, computer design was limited primarily by the size and heat of vacuum tubes.

The vacuum tube was eventually replaced by the transistor. Shortly afterward, in 1959, the monolithic integrated circuit (now called the microchip) was invented by Jack Kilby at Texas Instruments in Dallas, Texas, and a few months later by Robert Noyce, of Fairchild Semiconductor in California. The two companies were embroiled in legal actions for years, but finally decided to cross-license their products. Kilby was awarded the Nobel Prize in Physics in 2000.

You might notice in there that nowhere is bill gates mentioned. bill gates found a way to mass market a tool that was getting cheaper and cheaper due to economics of scale and Moore's Law.

As for the crack about winning a Nobel Prize:

WARETOWN, N.J. - Anyone who has ever taken a digital photograph, uploaded a video to YouTube, or seen photos of distant objects in space knows George Smith's work.

Yet the unassuming retiree from a bayfront community in southern Ocean County was largely anonymous , until a caller with a Swedish accent left a message on his phone early Tuesday.

The 79-year-old former Bell Labs researcher won the Nobel Prize in physics along with a former co-worker for their 1969 invention. The device would become the eye of the digital camera, a sensor that transforms light into the tiny points of color that are the building blocks of every digital image.

"It does do wonders for one's ego," Smith said. "People obviously like taking pictures. Look at all the cell-phone cameras and cameras in your computer. That's using this technology."

Smith invented the device along with fellow Bell Labs researcher Willard Boyle, who now lives in Nova Scotia.

The Royal Swedish Academy of Sciences said their breakthrough, called a charge-coupled device or CCD, "revolutionized photography, as light could now be captured electronically instead of on film." It described the technology as having built on Albert Einstein's discovery of the photoelectric effect, for which he was awarded the Nobel physics prize in 1921.

Boyle, in a phone call to the academy, said he is reminded of his work with Smith "when I go around these days and see everybody using our little digital cameras, everywhere."

Their work also made possible the transmission of images of features of Mars like its red desert taken by digital cameras in space.

Before Tuesday's announcement, 11 Bell Labs researchers had already been awarded six Nobel prizes in physics for work done at the labs, which were founded in 1925 in New York.

Researchers there had a role in formulating the Big Bang theory, they developed the transistor, developed some of the earliest data networks and proposed the first cellular network.

Bell Labs President Jeong Kim said it was unusual but not unheard of that researchers would win this year's prize for work they did three decades ago.

"Proper recognition takes time," he said.

Smith was asleep in his home on a lagoon in Waretown, a boating and fishing community on Barnegat Bay, when the phone rang early Tuesday , at 5:43 a.m., to be precise. But he didn't get out of bed in time to answer the call, which went into voice mail.

"It was a message in a Swedish accent, so we knew something was up," said his wife, Janet Murphy said.

Smith rushed to the Web site of the Nobel committee and saw that the announcement was to be made momentarily. The phone rang again shortly with the good news.

Within a few hours, reporters were calling from all over the world: Germany, South America, Austria.

"I was elated," said the soft-spoken Smith, who said he and his wife have no exotic plans for the $250,000 he won as his share of the prize.

They sailed the world on their 35-foot sailboat Apogee, a voyage that took 17 years. It needs some repairs, but that's about it in terms of future expenditures.

"I'm very happy with what I have right here," Smith said. "We'll probably just do some very local sailing, up and down on Barnegat Bay. Right now, what I really want is a second cup of coffee."

The winners of the Nobel Peace Prize for the last 9 years:
# 2008 - Martti Ahtisaari
# 2007 - Intergovernmental Panel on Climate Change, Al Gore
# 2006 - Muhammad Yunus, Grameen Bank
# 2005 - International Atomic Energy Agency, Mohamed ElBaradei
# 2004 - Wangari Maathai
# 2003 - Shirin Ebadi
# 2002 - Jimmy Carter
# 2001 - United Nations, Kofi Annan
# 2000 - Kim Dae-jung

The winner of Medicine and Physiology last year were a team of doctors that discovered the HIV virus decades ago...

I'm not going to bother pointing out how few Nobel winners did it to "Write there own ticket" as it take years to decades too get recognition.

Just stop throwing around fiction, not everyone is in it for the money and not everything was invented for profit.

[danjarch]

And another kicker on the government funded computers idea. The end of WW2 also ended a lot of government funding for that type of research. Leaving the colleges building those first computers without money to continue the research. The money then came from the insurance industry and the horse racing industry, since both dealt with large volumes of big calculations. So much for profit not being a motivator. Those industries were also some of the first to then buy computers once they were being produced by for profit companies.

[US27inKS]

Originally Posted by danjarch

To move the discussion to the idea of the "Fair Tax" itself. It has two major flaws and would gain thousands more if it ever became law. The first flaw is that it still hides the true amount of taxes you pay. That's the biggest reason the government has been able to grow out of hand. Most people think they get money from the government rather then get a portion of what they paid in, back. Unless your self employed or own a business, it's easy to forget that what you see on your W2 under medicare, social security, and fica is only half of what's been paid on your behalf. Then there is the unemployment tax that you never see but is paid on your behalf.

I don't see it that way. The fair tax plan would eliminate SS and fica taxes. The employer would no longer contribute to these taxes. Hopefully most people would see a small raise because of this.

Of course there are plenty more taxes that you never sit down and write a check for, so don't often think about or figure out how much your paying, such as sales tax, exercise taxes, utilities taxes, airport taxes, telecomunications taxes, corporate income taxes, etc.. . All told we pay something like 48 cents out of every dollar we make in taxes. But most of it goes out with out our being aware or having to write a seperate check. The fair tax plan, repeats this existing flaw. Hiding the total amount of taxes paid in your name.

State sales tax would stay. Federal excise taxes would be gone, state and local utility and airport taxes would stay, corporate income tax would be gone.

The second problem is that it creates a major disadvantage on small businesses. Think of a maid service that is state wide and buys it's cleaning products by the truck load, in condensed form. Being able to get a big discount for buying in bulk. It's then increased by being hit with a lower tax bill. Meanwhile a independent person working as a maid, is going to be paying as much as 3 times as much for cleaning supplies, this will be compounded since the tax difference would be again multiplied by three.

In simple terms, if bottle of off the shelf floor cleaner is $6 and the tax is 30% bringing the total to $7.80. Now that big company is only paying $2 for that same amount of condensed cleaner, adding in the taxes it comes to $2.60. So an already $4 disadvantage becomes a $5.20 disadvantage.

The small maid co. would just have to change the way it does it's billing. Buy the cleaning supplies as a reseller (no tax) and include the items on the bill to the customer (customer pays tax), and the maid co. sees no difference in it's profitability vs the big company.

I know it doesn't seem like much, but imagine all the small plumbers, contractors, maids, and other trades that already have to manage to overcome there lack of bargaining power.

When I purchase auto parts, I have no where near the bargaining power of some of the chain stores. That would not change, nor effect my business. I would still buy parts on a wholesale basis (no tax paid) and sell at retail (sales tax gets paid). I only pay sales tax on items that are consumed by my business.

The third fault is that it is in no way safe from being manipulated by congress. As already mentioned they just love trying to use the tax laws to incourage or discourage behavor. You can just imagine what would be going on right now if we were under the fair tax plan. They would be trying to exempt green products from the tax, or trying to give out 6 month exemptions for this industry or that industry.

While no tax law, or any law, is safe from congress trying to modify behavior or give kickbacks to their friends, the fair tax is much more transparent than what we have now. If taxes are raised for any reason, it would be apparent the next time you went to the store. Under our current system, congress can raise our taxes without the general public ever knowing. If they raise corporate tax rates, or add an excise tax on a particular item, all we see is a more expensive product without knowing that the price increase is actually taxes. And the politicians will raise our taxes while telling us they're giving us a tax cut.

The fair tax is not perfect, but do you have a better suggestion for a tax system that's both fair and transparent?

[ssneade]

Originally Posted by danjarch

To move the discussion to the idea of the "Fair Tax" itself. It has two major flaws and would gain thousands more if it ever became law. The first flaw is that it still hides the true amount of taxes you pay. That's the biggest reason the government has been able to grow out of hand. Most people think they get money from the government rather then get a portion of what they paid in, back. Unless your self employed or own a business, it's easy to forget that what you see on your W2 under medicare, social security, and fica is only half of what's been paid on your behalf. Then there is the unemployment tax that you never see but is paid on your behalf.

Of course there are plenty more taxes that you never sit down and write a check for, so don't often think about or figure out how much your paying, such as sales tax, exercise taxes, utilities taxes, airport taxes, telecomunications taxes, corporate income taxes, etc.. . All told we pay something like 48 cents out of every dollar we make in taxes. But most of it goes out with out our being aware or having to write a seperate check. The fair tax plan, repeats this existing flaw. Hiding the total amount of taxes paid in your name.

The second problem is that it creates a major disadvantage on small businesses. Think of a maid service that is state wide and buys it's cleaning products by the truck load, in condensed form. Being able to get a big discount for buying in bulk. It's then increased by being hit with a lower tax bill. Meanwhile a independent person working as a maid, is going to be paying as much as 3 times as much for cleaning supplies, this will be compounded since the tax difference would be again multiplied by three.

In simple terms, if bottle of off the shelf floor cleaner is $6 and the tax is 30% bringing the total to $7.80. Now that big company is only paying $2 for that same amount of condensed cleaner, adding in the taxes it comes to $2.60. So an already $4 disadvantage becomes a $5.20 disadvantage.

I know it doesn't seem like much, but imagine all the small plumbers, contractors, maids, and other trades that already have to manage to overcome there lack of bargaining power.

The third fault is that it is in no way safe from being manipulated by congress. As already mentioned they just love trying to use the tax laws to incourage or discourage behavor. You can just imagine what would be going on right now if we were under the fair tax plan. They would be trying to exempt green products from the tax, or trying to give out 6 month exemptions for this industry or that industry.

i see what you're saying, but first, after the fair tax is enacted, your employer doesn't pay half of your social security tax, because there won't be any. nothing hidden there.....

second the fair tax is an inclusive tax, rather than an exclusive tax. so your seven dollar container of ajax would still be seven dollars.....

third, who runs congress, them or us? our government is elected, not appointed, for now. our current system allows just what you are talking about. i encourage you to read the bill thoroughly before you make an opinion.....

thanks,
scott

[danjarch]

Originally Posted by US27inKS

I don't see it that way. The fair tax plan would eliminate SS and fica taxes. The employer would no longer contribute to these taxes. Hopefully most people would see a small raise because of this.

But it would still hide the tax from the average public. Since it would come as $5 here and $150 there. The big items like cars and boats would see the tax included in the price and financed over time so you'd be paying $50 a month for sixty months rather then having to write a check for $3000. The net effect is that even fewer people would know how much their tax bill is.



State sales tax would stay. Federal excise taxes would be gone, state and local utility and airport taxes would stay, corporate income tax would be gone.

Your already showing that a lot of existing taxes would stay. The Airport and excise taxes wouldn't be likely to go away and plenty more would be added here and there to hide increases.



The small maid co. would just have to change the way it does it's billing. Buy the cleaning supplies as a reseller (no tax) and include the items on the bill to the customer (customer pays tax), and the maid co. sees no difference in it's profitability vs the big company.

Same difference in the end. The small business will have to do something to offset the lower price of their bigger competitor. And what about all the items that are bought that can't really be passed through so easy. Again taking the maid as an example, they don't bill for each trash bag or every drop of cleaner and to do so would only piss people off.



When I purchase auto parts, I have no where near the bargaining power of some of the chain stores. That would not change, nor effect my business. I would still buy parts on a wholesale basis (no tax paid) and sell at retail (sales tax gets paid). I only pay sales tax on items that are consumed by my business.

Same as above, you may be able to get the customer to pay the tax on brake pads, but what about the penatrating lube, the shop towels, the tools and the light bulbs you use to light the shop. Most small businessmen are good at keeping cost low and getting by with less, but there is a point where there is just nothing you can do to cut costs anymore and the fair tax will be a big one of those.



While no tax law, or any law, is safe from congress trying to modify behavior or give kickbacks to their friends, the fair tax is much more transparent than what we have now. If taxes are raised for any reason, it would be apparent the next time you went to the store. Under our current system, congress can raise our taxes without the general public ever knowing. If they raise corporate tax rates, or add an excise tax on a particular item, all we see is a more expensive product without knowing that the price increase is actually taxes. And the politicians will raise our taxes while telling us they're giving us a tax cut.

The fair tax is not perfect, but do you have a better suggestion for a tax system that's both fair and transparent?

The whole fair tax debate reminds me of my brother who traded in a good car because it needed brakes and tires. Of course he was already a little upside down. He wound up more upside down and after about a year the new car needed brakes and tires anyway. That's the problem with trading one set of taxes with another. I could agree with shifting some of our taxes to a national sales tax but that still won't change the spending habits of congress.

A better fix would be to outlaw withholding as well as taxing artificial persons (corporations). Since the withholding hides the actual taxes paid, and having employers pay a big chunk again hides the actual taxes paid. Same for taxing artificial persons. They don't really exist so can't really pay taxes. Your basically taxing real people at the register instead of them writing a seperate check.

In short, if we can't fix what we've got now then switching to a new system isn't going to solve are problems. There is a big difference between trading in a good working car for a new one, or even sending a car that's just plumb wore out to the junk yard, but this is more like trying to trade in a good working car so we don't have to put new tires and brakes on it. Until we clean up what we got, we're going to get anything better.

[danjarch]

Originally Posted by ssneade

i see what you're saying, but first, after the fair tax is enacted, your employer doesn't pay half of your social security tax, because there won't be any. nothing hidden there.....

Still hidden. Like I stated above, hiding in every purchase rather then in smaller pay checks.

second the fair tax is an inclusive tax, rather than an exclusive tax. so your seven dollar container of ajax would still be seven dollars.....

Depends on your ability to negotiate. If you can get the base price down then the tax follows down.

third, who runs congress, them or us? our government is elected, not appointed, for now. our current system allows just what you are talking about. i encourage you to read the bill thoroughly before you make an opinion.....

thanks,
scott

I've read the bill and the book. That isn't the bill that would get out of congress and into law and still doesn't prevent the continued corruption of the law the day after it becomes law.

Also to counter on more point made before. The exemptions would come a little at a time so you wouldn't be likely to notice your taxes went up a quarter percent, a sixteenth of a percent. They would also be as likely as they are now to print them extra money or borrow it, both of which cost you and should be considered hidden taxes.

Like I said above, we need to fix up the existing system before trying to trade it for a new one.