Tax return money: How will you spend it?

[aurik]

Yes it's an additional rebate of like $500 or something. A shot in the arm for the large segment of Americans who will shortly or are now feeling the pinch due to the oncoming economic chill.

Trickle-down reaganomics, go!

[Tyche]

And I have a kid, so tack more onto that rebate!

[SwampdonkeyPLD]

Edit for Aurik: Yes it does.

And I disagree with you, taxing consumption instead of taxing income has the effect of shifting the burden away from people with large incomes (ie, the people benefiting from the current system), to people with large consumption (who drive the economy). In essence, it favors people with lots of income but little or no local consumption, which is hardly fair at all.

The people with large incomes are the ones with large consumption. It also doesn't just favor people with lots of income and little or no consumption, it favors everyone with little or no consumption, the category that the poor fits into.

[evilbau]

Edit for Aurik: Yes it does.

And I disagree with you, taxing consumption instead of taxing income has the effect of shifting the burden away from people with large incomes (ie, the people benefiting from the current system), to people with large consumption (who drive the economy). In essence, it favors people with lots of income but little or no local consumption, which is hardly fair at all.

The people with large incomes are the ones with large consumption. It also doesn't just favor people with lots of income and little or no consumption, it favors everyone with little or no consumption, the category that the poor fits into.

thats a fundamental flaw in your analysis of the fairtax. you are assuming those with high incomes will spend it all, which won't be the case. Most will save and/or re-invest and in fact it will most likely have the side effect of promoting overseas investment which will shift the tax burden on the lower-income individuals. Its unrealistic to assume that all income will go to consumption, especially among high income households.

[aurik]

Edit for Aurik: Yes it does.

And I disagree with you, taxing consumption instead of taxing income has the effect of shifting the burden away from people with large incomes (ie, the people benefiting from the current system), to people with large consumption (who drive the economy). In essence, it favors people with lots of income but little or no local consumption, which is hardly fair at all.

The people with large incomes are the ones with large consumption. It also doesn't just favor people with lots of income and little or no consumption, it favors everyone with little or no consumption, the category that the poor fits into.

Er, no, there are plenty of people with large incomes that funnel the money into foreign markets or otherwise move it offshore. Those are actually the people that should be supporting the government and government programs, because a healthy, stable society with sensible laws is about the biggest thing stopping a Marxist revolution, and they have the most to lose. The poor already pay little-to-no taxes; this tax system wouldn't impact them much because they'll still be taxed the same: nothing, just what they can afford.

Think of income tax this way: it's taxing what people *could* spend when they earn. The so-called FairTax instead taxes people only when they spend their income. Since most people, and particularly affluent people, don't spend all their income, the taxable base is guaranteed to be smaller. This means that in order to generate the same revenue, the tax rate has to be higher. Mathematically, this shifts a greater tax burden onto people who spend a larger percentage of their income--which, due to the poverty-based-rebate, is the lower-middle working class...not because they're consuming more, but because they're earning less.

And that is why it is only "fair" in title.

[SwampdonkeyPLD]

Edit for Aurik: Yes it does.

And I disagree with you, taxing consumption instead of taxing income has the effect of shifting the burden away from people with large incomes (ie, the people benefiting from the current system), to people with large consumption (who drive the economy). In essence, it favors people with lots of income but little or no local consumption, which is hardly fair at all.

The people with large incomes are the ones with large consumption. It also doesn't just favor people with lots of income and little or no consumption, it favors everyone with little or no consumption, the category that the poor fits into.

thats a fundamental flaw in your analysis of the fairtax. you are assuming those with high incomes will spend it all, which won't be the case. Most will save and/or re-invest and in fact it will most likely have the side effect of promoting overseas investment which will shift the tax burden on the lower-income individuals. Its unrealistic to assume that all income will go to consumption, especially among high income households.

I don't assume rich people will spend it all, I assume at best they will spend just as much as before. The Fairtax will open up the stock market so I assume that a lot more money will be invested in the stock market than is now, but under the Fairtax people will have more money than they do now, so it might just even out, I don't know.

Why would people suddenly invest overseas though? I don't understand that. I understand if people shift investment/consumption overseas how that would put the burden on the poor, but why would the Fairtax suddenly motivate people to invest elsewhere?

Edit: The tax base would be larger because tourists and illegals would also be taxed. Economists also estimate that one to three trillion dollars goes untaxed every year in an underground economy. These people would finally be taxed as well because drug dealers have to eat, buy clothes, etc as well. There also won't be any motivation to move money offshore anymore under the Fairtax.

[evilbau]

Edit for Aurik: Yes it does.

And I disagree with you, taxing consumption instead of taxing income has the effect of shifting the burden away from people with large incomes (ie, the people benefiting from the current system), to people with large consumption (who drive the economy). In essence, it favors people with lots of income but little or no local consumption, which is hardly fair at all.

The people with large incomes are the ones with large consumption. It also doesn't just favor people with lots of income and little or no consumption, it favors everyone with little or no consumption, the category that the poor fits into.

thats a fundamental flaw in your analysis of the fairtax. you are assuming those with high incomes will spend it all, which won't be the case. Most will save and/or re-invest and in fact it will most likely have the side effect of promoting overseas investment which will shift the tax burden on the lower-income individuals. Its unrealistic to assume that all income will go to consumption, especially among high income households.

I don't assume rich people will spend it all, I assume at best they will spend just as much as before. The Fairtax will open up the stock market so I assume that a lot more money will be invested in the stock market than is now, but under the Fairtax people will have more money than they do now, so it might just even out, I don't know.

Why would people suddenly invest overseas though? I don't understand that. I understand if people shift investment/consumption overseas how that would put the burden on the poor, but why would the Fairtax suddenly motivate people to invest elsewhere?

and you don't see the disparity that aurik mentioned that would result from taxing a portion of their income (what they consume) versus their entire income? The only way our tax system works is if the the people with the most income pay the most money to offset the decreased amount of taxes coming from the lower income brackets and the increased govt services they consume. Thats fine with me. we already have a budget deficit but sure, its a good idea to implement things which will make it worse. I don't believe people will have more money than they do now but all the pages and pages of explanation isn't getting the message through and i really don't feel like repeating myself.

I can only see a retail sales tax working if we drastically reduce govt spending but personally i think things like social security and medicare/aid are worth keeping around.

It will promote overseas investing because its the quickest way to avoid paying any taxes. 10 second scenario: I buy 10,000 'used' knockoff ipods from china and sell them on ebay. I have just avoided paying any tax.

[SwampdonkeyPLD]

[quote=evilbau]

Edit for Aurik: Yes it does.

And I disagree with you, taxing consumption instead of taxing income has the effect of shifting the burden away from people with large incomes (ie, the people benefiting from the current system), to people with large consumption (who drive the economy). In essence, it favors people with lots of income but little or no local consumption, which is hardly fair at all.

The people with large incomes are the ones with large consumption. It also doesn't just favor people with lots of income and little or no consumption, it favors everyone with little or no consumption, the category that the poor fits into.

thats a fundamental flaw in your analysis of the fairtax. you are assuming those with high incomes will spend it all, which won't be the case. Most will save and/or re-invest and in fact it will most likely have the side effect of promoting overseas investment which will shift the tax burden on the lower-income individuals. Its unrealistic to assume that all income will go to consumption, especially among high income households.

I don't assume rich people will spend it all, I assume at best they will spend just as much as before. The Fairtax will open up the stock market so I assume that a lot more money will be invested in the stock market than is now, but under the Fairtax people will have more money than they do now, so it might just even out, I don't know.

Why would people suddenly invest overseas though? I don't understand that. I understand if people shift investment/consumption overseas how that would put the burden on the poor, but why would the Fairtax suddenly motivate people to invest elsewhere?

and you don't see the disparity that aurik mentioned that would result from taxing a portion of their income (what they consume) versus their entire income? The only way our tax system works is if the the people with the most income pay the most money to offset the decreased amount of taxes coming from the lower income brackets and the increased govt services they consume. Thats fine with me. we already have a budget deficit but sure, its a good idea to implement things which will make it worse. I don't believe people will have more money than they do now but all the pages and pages of explanation isn't getting the message through and i really don't feel like repeating myself.

I can only see a retail sales tax working if we drastically reduce govt spending but personally i think things like social security and medicare/aid are worth keeping around.

It will promote overseas investing because its the quickest way to avoid paying any taxes. 10 second scenario: I buy 10,000 'used' knockoff ipods from china and sell them on ebay. I have just avoided paying any tax.[/quote:2qlhypu0]

There have been many economists that have stated that under the Fairtax, at 23%, the government will bring in essentially the same amount of money as it does now. So unless they are wrong then there is no disparity. (Is that the disparity you're talking about?)

People will have more money because they will be keeping 100% of their paycheck.

You didn't avoid paying taxes on those ipods. Internet sales on new goods and services are taxed as well. As I understand it, what determines a used good is whether or not the Fairtax has been paid on it, and in that scenario no tax has been on the ipods before Ebay.

[evilbau]

There have been many economists that have stated that under the Fairtax, at 23%, the government will bring in essentially the same amount of money as it does now. So unless they are wrong then there is no disparity. (Is that the disparity you're talking about?)

People will have more money because they will be keeping 100% of their paycheck.

You didn't avoid paying taxes on those ipods. Internet sales on new goods and services are taxed as well. As I understand it, what determines a used good is whether or not the Fairtax has been paid on it, and in that scenario no tax has been on the ipods before Ebay.

'many economists' represents a number, yet that number is in the minority. I have noticed some very shaky assumptions after reading some of the literature on the Fairtax. 10% GDP growth annually? Does that really seem likely right now? It is extremely unrealistic. You still haven't addressed the issues i brought up in the first fairtax thread: our tax system has been used as a way to promote/dissuade certain types of behaviors, how will those be remedied (hybrid vehicle tax credit, medical expense deductibility, etc. etc.).

I still don't believe goods will cost the same. This is a point you can convince with me with evidence, but I have only seen some unrealistic numbers that assume businesses will pass on certain tax savings onto their products to offset the POS (point of sale) retail tax. I have no reason to believe they will do so. This will result in a inflationary effect, negating 'people having more money'.

How will you judge internet auctions are new or used? Will you get a federal organization to monitor ebay? craigslist? It is comically easy to avoid paying a retail tax with these sites. Even if you monitor or regulate them, other blackmarket marketplaces would emerge, as there are plenty that exist already. 10 second scenario means i made it up in 10 sec. You should be able to shoot it down just as fast.

[evilbau]

Edit for Aurik: Yes it does.

And I disagree with you, taxing consumption instead of taxing income has the effect of shifting the burden away from people with large incomes (ie, the people benefiting from the current system), to people with large consumption (who drive the economy). In essence, it favors people with lots of income but little or no local consumption, which is hardly fair at all.

The people with large incomes are the ones with large consumption. It also doesn't just favor people with lots of income and little or no consumption, it favors everyone with little or no consumption, the category that the poor fits into.

Er, no, there are plenty of people with large incomes that funnel the money into foreign markets or otherwise move it offshore. Those are actually the people that should be supporting the government and government programs, because a healthy, stable society with sensible laws is about the biggest thing stopping a Marxist revolution, and they have the most to lose. The poor already pay little-to-no taxes; this tax system wouldn't impact them much because they'll still be taxed the same: nothing, just what they can afford.

Think of income tax this way: it's taxing what people *could* spend when they earn. The so-called FairTax instead taxes people only when they spend their income. Since most people, and particularly affluent people, don't spend all their income, the taxable base is guaranteed to be smaller. This means that in order to generate the same revenue, the tax rate has to be higher. Mathematically, this shifts a greater tax burden onto people who spend a larger percentage of their income--which, due to the poverty-based-rebate, is the lower-middle working class...not because they're consuming more, but because they're earning less.

And that is why it is only "fair" in title.

this is correct also

[aurik]

Levy a 23% sales tax, that will sure bring in those tourists to pay our bills for us. I'm sure they'll be happy to know that the extra fees they pay by visiting our "fine" country will go towards supporting a society that the people most enriched by it can't be arsed to.

I think it's a bit naive to think that the "extra money" from taxing previously-unreported-income won't be offset either completely or in large part by people using unreported transactions to do an end-run against a sales tax.

As for people moving income out-of-country, right now there is no real incentive to do so for properly reported income, because the tax has essentially already been paid on it. So whether people move that money in or out of the country is based on the merits of the available investment opportunities.

However, in the case of a flat sales tax, wealth that never enters local circulation is never taxed, and money earned in a foreign location gets doubly-taxed when it is spent locally. So, there's an extra incentive to never put locally-earned income into local circulation and instead invest it in markets where the laws are friendly to foreign investment.

[evilbau]

ON topic, my sister asked my family about this the tax rebate (we keep in touch with email daily) and even my mom has weighed in lol:

gov't really need to cut their spending and get out of the war. no rebate
tax cut will make much dent in today's crisis.
and because now people really worried about their own situation, only stupid
people will spent it.

english isn't her first language and I still agree with her analysis haha

[Shalyn]

Everyone has all these fun/exciting things to do with their refunds... whereas me, not depending on how much, is going towards tuition and credit cards I've been using to buy books. Boo

[Awoir]

Sex, drugs, and rock and roll.

[Howard Roark]

ON topic, my sister asked my family about this the tax rebate (we keep in touch with email daily) and even my mom has weighed in lol:

gov't really need to cut their spending and get out of the war. no rebate
tax cut will make much dent in today's crisis.
and because now people really worried about their own situation, only stupid
people will spent it.

english isn't her first language and I still agree with her analysis haha

lol ITT ask your parents what they think, not making fun, i think some parents are great and have smart/funny things to say

stop playing ffxi

[SwampdonkeyPLD]

'many economists' represents a number, yet that number is in the minority. I have noticed some very shaky assumptions after reading some of the literature on the Fairtax. 10% GDP growth annually? Does that really seem likely right now? It is extremely unrealistic. You still haven't addressed the issues i brought up in the first fairtax thread: our tax system has been used as a way to promote/dissuade certain types of behaviors, how will those be remedied (hybrid vehicle tax credit, medical expense deductibility, etc. etc.).

I still don't believe goods will cost the same. This is a point you can convince with me with evidence, but I have only seen some unrealistic numbers that assume businesses will pass on certain tax savings onto their products to offset the POS (point of sale) retail tax. I have no reason to believe they will do so. This will result in a inflationary effect, negating 'people having more money'.

How will you judge internet auctions are new or used? Will you get a federal organization to monitor ebay? craigslist? It is comically easy to avoid paying a retail tax with these sites. Even if you monitor or regulate them, other blackmarket marketplaces would emerge, as there are plenty that exist already. 10 second scenario means i made it up in 10 sec. You should be able to shoot it down just as fast.

I have no clue whether 10% is realistic or not, some economists evidently do. The Fairtax erases all federal taxes, so if the "behavior" taxes are federal, they will be erased and thats how it will deal with them. If they're state, then nothing.

Dr. Jale Jorgenson, did a study that found that 22% of the price of goods came from embedded taxes. Erase all the taxes we have now, then add in the Fairtax and the prices are essentially the same. It assumes companies will pass on the savings to consumers. The basis for this assumption was provided in the Fairtax book, which I don't have in front of me. It had to do with a tax on airline tickets on airline companies or something. When the tax was repealed prices dropped, when the taxes were levied again, prices jumped. (That's an extreme paraphrase right there.)

And as far as internet auctions, I don't see how someone can auction off a good that hasn't already had the Fairtax payed on it, and thus be a new good.

Levy a 23% sales tax, that will sure bring in those tourists to pay our bills for us. I'm sure they'll be happy to know that the extra fees they pay by visiting our "fine" country will go towards supporting a society that the people most enriched by it can't be arsed to.

If tourists aren't happy, they have the choice to not come. I seriously doubt it will stop them though.

I think it's a bit naive to think that the "extra money" from taxing previously-unreported-income won't be offset either completely or in large part by people using unreported transactions to do an end-run against a sales tax.

Business are currently required to have a registered seller's certificate on file, and must keep complete records of all transactions for six years. Businesses must also record all taxable goods bought for seven years. They are required to report these sales every month.

As for people moving income out-of-country, right now there is no real incentive to do so for properly reported income, because the tax has essentially already been paid on it. So whether people move that money in or out of the country is based on the merits of the available investment opportunities.

I would consider no capital gains tax a good investment opportunity. I would consider not having to pay tax on your income a good investment opportunity for a business as well, thus bringing business back home.

However, in the case of a flat sales tax, wealth that never enters local circulation is never taxed, and money earned in a foreign location gets doubly-taxed when it is spent locally. So, there's an extra incentive to never put locally-earned income into local circulation and instead invest it in markets where the laws are friendly to foreign investment.

First sentence: Economists think the Fairtax will bring business's back home because the Fairtax is much friendlier to business's than anything found abroad. Once they start earning money here they won't be doubly-taxed. Surely in the long haul it will be cheaper to start earning money under the Fairtax than to keep earning it abroad.

Second sentence: If someone is looking to invest they wouldn't be spending it in local circulation anyway. Also, unless they are paying 0 taxes in the markets abroad, how could the markets be better than the Fairtax?

I'm not saying the Fairtax is perfect, there are two legitimate criticisms that I've seen, I just think it's better than what we have now. It's also 12:00 am and I'm tired, so forgive me if I typed something that doesn't make sense.

[BIGSTIC]

Getting about $2500 back. All of it is going into our Heath Insurance Deductible Fund. We want another kid and wife has a $2500 deductible on her so it works out great.

But figure this out. Co-Worker who claimed Exempt for 8 months is still getting $9000 back. He PAID $4000 in taxes and not only does he get all that back but the government wants to give him $5k more. He made around $55k and has 5 children and his wife stays at home. Moral of the story...Keep your women pregnet to make money off the government lol

[sekaran]

Not sure how much I'm getting back.. but plan to pay off some of my never decreasing student loan debt.

[Tricen]

How does one get this rebate >_>:

[AzazaelFenrir]

How does one get this rebate >_>:

I still need to look into it more to see if I qualify and all that. My main concern is that this isn't like what they tried a few years ago, where they said "Here take this money", then later everyone found out it was an advance from next years tax return and everyone was hosed.