The Rampson FTP vs the other FTP
Neal Boortz wrote an article about a "Fair Tax Plan" that is advocated by the "Fair Tax" org. This tax is a sales tax and has more issues than The Rampson FTP. Here's a comparison of sales vs transaction tax:
Q: What is the criminality element?
ST: Anyone that crosses border's to avoid the ST (Canada for us Michiganders) can be put in jail. Anyone that buys products over the internet from a foreign country can be put in jail. Any merchant that fails to file the paperwork can be put in jail. Cash transactions are problematic here.
TT: Any large bank or brokerage firm that fails to file paperwork can be punished.
Q: What about the poorest citizens?
ST: You pay 22% sales tax and then get some sort of rebate (paperwork?).
TT: The poorest (paycheck to paycheck) pay 0 - no need for rebates. Any poor person using a bank would be paying the tax on each transaction - a pittance of a percentage possibly 5% or less.
Q: What does the US Government KNOW about your income?
ST: Some sort of reporting or income is neccessary for rebates. All of your spending is noticed by the Government.
TT: The government knows what you spend - NEVER, NEVER, NEVER what you make.
Q: What transactions get missed?
ST: No accomedation is made for Cash - The same black-market, under-the-table rules apply. Services are not taxed - and since the US is becomming a "Service Economy", not taxing services is short-sighted. Canada makes an attempt at this with its goods and services tax.
TT: Makes cash transactions the same as credit transactions - they all get taxed. No more under-the-table. Goods and Services are all taxed.
Q: What about accurate statistics collection?
ST: Sales taxes only measure one aspect of the economy - sales. This is already being measured and has its drawbacks.
TT: Transactions taxes yield information about ALL parts of the economy.
Q: When does the tax get applied?
ST: Whenever you buy something you need to calculate the tax needed.
TT: If you use Cash or Credit, no need to calculate is needed - its builtin. With debit cards you will need to (since the tax is taken out when your bank account is accessed).
Q: Are Big corporations getting a loophole?
ST: Not clear - If a corporation "buys out" another, do you charge 22%? What about "all stock" buyouts?
TT: All transactions are the same and you are taxed - the more you spend, the more you pay in taxes. Of course, the rate should be MUCH LOWER than 22%.
Q: What is the tax rate needed to fund the US Government?
ST: 22% (guessed at and maybe too low).
TT: Since money gets continually taxed as it moves around, it is difficult to determine what rate to charge. However, this tax can be implemented at a ridiculously low level (0.001%) to start with, and within a month, you will know EXACTLY what to charge. I estimate 5% or less.
Q: What about STATE taxes?
ST: Another 8% on top of the 22% federal rate (Michigan).
TT: You could take the "Permanent Residency" of everyone with a bank account, and send a state transaction tax to those states. Not much more work than setting it up in the first place.
Q: How do you set this tax up?
ST: New forms and training for merchants that use them, plus a Washington bureaucracy to handle the paperwork (smaller than the IRS? Maybe . . .). Not to mention all of those merchants sending money to the state bureaucracy to then send it to the washington bureaucracy.
TT: The banks (and brokerage houses) would need to add a computer program to their process. Since they are so adept at charging fees for every such thing, it should be NO PROBLEM to set up the transaction tax. Sending the money is a simple transaction for each bank (not taxed of course).
Q: Is there taxation on used goods?
ST: Nope.
TT: Of COURSE there is! Making exceptions means making loopholes in the law and requiring documentation to feed the bureaucracy! The small pittance of a tax on the used goods isn't worth arguing about.
All other benefits (such as Eliminating offshoring, American's getting their whole paycheck, Revenue neutrality) are shared between the two plans.
Q: Why would anyone prefer the Sales tax to the Transaction tax?
Q: What is the criminality element?
ST: Anyone that crosses border's to avoid the ST (Canada for us Michiganders) can be put in jail. Anyone that buys products over the internet from a foreign country can be put in jail. Any merchant that fails to file the paperwork can be put in jail. Cash transactions are problematic here.
TT: Any large bank or brokerage firm that fails to file paperwork can be punished.
Q: What about the poorest citizens?
ST: You pay 22% sales tax and then get some sort of rebate (paperwork?).
TT: The poorest (paycheck to paycheck) pay 0 - no need for rebates. Any poor person using a bank would be paying the tax on each transaction - a pittance of a percentage possibly 5% or less.
Q: What does the US Government KNOW about your income?
ST: Some sort of reporting or income is neccessary for rebates. All of your spending is noticed by the Government.
TT: The government knows what you spend - NEVER, NEVER, NEVER what you make.
Q: What transactions get missed?
ST: No accomedation is made for Cash - The same black-market, under-the-table rules apply. Services are not taxed - and since the US is becomming a "Service Economy", not taxing services is short-sighted. Canada makes an attempt at this with its goods and services tax.
TT: Makes cash transactions the same as credit transactions - they all get taxed. No more under-the-table. Goods and Services are all taxed.
Q: What about accurate statistics collection?
ST: Sales taxes only measure one aspect of the economy - sales. This is already being measured and has its drawbacks.
TT: Transactions taxes yield information about ALL parts of the economy.
Q: When does the tax get applied?
ST: Whenever you buy something you need to calculate the tax needed.
TT: If you use Cash or Credit, no need to calculate is needed - its builtin. With debit cards you will need to (since the tax is taken out when your bank account is accessed).
Q: Are Big corporations getting a loophole?
ST: Not clear - If a corporation "buys out" another, do you charge 22%? What about "all stock" buyouts?
TT: All transactions are the same and you are taxed - the more you spend, the more you pay in taxes. Of course, the rate should be MUCH LOWER than 22%.
Q: What is the tax rate needed to fund the US Government?
ST: 22% (guessed at and maybe too low).
TT: Since money gets continually taxed as it moves around, it is difficult to determine what rate to charge. However, this tax can be implemented at a ridiculously low level (0.001%) to start with, and within a month, you will know EXACTLY what to charge. I estimate 5% or less.
Q: What about STATE taxes?
ST: Another 8% on top of the 22% federal rate (Michigan).
TT: You could take the "Permanent Residency" of everyone with a bank account, and send a state transaction tax to those states. Not much more work than setting it up in the first place.
Q: How do you set this tax up?
ST: New forms and training for merchants that use them, plus a Washington bureaucracy to handle the paperwork (smaller than the IRS? Maybe . . .). Not to mention all of those merchants sending money to the state bureaucracy to then send it to the washington bureaucracy.
TT: The banks (and brokerage houses) would need to add a computer program to their process. Since they are so adept at charging fees for every such thing, it should be NO PROBLEM to set up the transaction tax. Sending the money is a simple transaction for each bank (not taxed of course).
Q: Is there taxation on used goods?
ST: Nope.
TT: Of COURSE there is! Making exceptions means making loopholes in the law and requiring documentation to feed the bureaucracy! The small pittance of a tax on the used goods isn't worth arguing about.
All other benefits (such as Eliminating offshoring, American's getting their whole paycheck, Revenue neutrality) are shared between the two plans.
Q: Why would anyone prefer the Sales tax to the Transaction tax?
So, my employer pays me. Taxed.
ReplyDeleteI deposit the pay in the bank. Taxed.
I withdraw cash. Taxed.
OR: My employer pays me direct deposit. Taxed.
I withdraw cash. Taxed.
Hmmm, 1/3 less taxation.
OR: My employer pays me cash. Taxed.
Hmmm, 2/3 less taxation.
OR: Everyone avoid banks, deal in cash only.
Hmmm, No Taxes!
More like Toyota makes big bucks and when it sends the money back to Japan - it gets taxed.
ReplyDelete"Offshore" companies that do business in the US will be taxed when they take money out of the US.
People can try to avoid banks, but large companies cannot - and they will pay the lion's share of taxes.
I recommend that those interested in a fair tax plan read about the FairTax plan online or in one or more of the books that have been written about it. It is grossly misrepresented in this blog.
ReplyDelete