Re: conservation of Euros

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And somehow I doubt many people there pay that income tax. Most certainly not on already saved and taxed income, because they don't have to. Else, just pick some other destination. Maybe a nice Caribbean island where there are no winters and the beer is good.

That would be similar to the European VAT system and there is no way you'd ever be able to quench the "needs" of the current tax system with

How about beer consumed during working hours?

DVD

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I don't see those zillions of jobs being justifiable, considering that all you did is move the tax grab from the frontend to the backend. They won't materialize. And then what? 23% will not nearly be enough then.

So is property tax. Has that ever fazed a politician? Remember pre-Prop13 times?

Many do but an aircraft is a business purchase and thus exempt. Way that works is they pay the VAT and at the end of the month factor that against all the VAT they collected from fares and such. Then they only pay the difference or, if negative after such a huge investment, get a refund.

The only people who'd be stuck with the VAT are retired private pilots who buy a small 2-4 seater and are unable to come up with a plausible excuse that it's used for business. They won't by a Boeing though :-)

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People often retire to low-cost countries where it is difficult to make a good living from scratch. Shipping cranky geriatrics off relieves a big load on the health care system, and is to be encouraged, IMHO. Sort of a modern form of senilicide. ;-)

Well, let's see, total US federal state and local gov't revenue is said to be about 4.8 trillion*, ignoring deficits for the moment. Say

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...if government spending is higher than the sum of all personal income, what exactly does that mean?

Not sure how it is these days. Back when I ran a biz over there I never claimed it but there were IIRC 6-7 different VAT rates. Don't remember the one for beer but I believe it was deductible if purchased for a work-related function. Just like catered food. But probably similar to here, only half of it deductible in order to curb abuse.

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Problem is, there are no 100 million households that have $60k or spending power.

Hint: Mortgages :-)

We pay sales tax on it, but we expense it too, so it reduces our corporate income tax, which is (in a good year) a lot higher than sales tax.

John

Sure there will. Any states stupid enough to not get with the program will starve as their jobs move to states that have. Fast.

Of course Kalifornica is a "bit different". Though not so different with taxes. Many states are similar, others rely more on the IRS (VT use "send us

Sure, that wouldn't necessarily change. Most states use property taxes to pay for local government, schools, fire protection, and such.

Again, you want the federal government to *Unconstitutionally* tell the states how to raise their taxes.

I think you may be overestimating the ability of some politicians to even notice when a exodus is happening right under their noses.

Ah, so property tax remains. State sales tax remains. State income tax remains. No thanks, then I don't want the "fair tax".

Once more: No. We have several constitutional vehicle to get that done in the US. Elected representative from the states and voters. Now if a state doesn't want to do it, fine, but then the voters in that state will not like a "fair tax" and won't vote in favor it it.

Yes, but: If you can expense 100% of the VAT, sales tax, whatever, then that is a much better deal than expensing it. Because your corporate tax rate isn't 100% even if you had the sales volume of Exxon.

With a change that drastic to the federal tax structure they'd *have* to get with the program. No choice, since there won't be any "1040 Line xxxx" to copy from.

Of *course*. The "Fair Tax" is only federal. It would be UNCONSTITUTIONAL for the feds to dictate to the states how to raise revenue, or to do it for them.

You seem to think the "Fair Tax" somehow should tell states how to run their business. That *is* unconstitutional. If enough states (representatives, actually) go for it, Kalifornica won't have any choice.

The formula is GDP * 23%, or about $14-15T * 23% =3D $3.2-3.5T.

Of course they'll have to adjust that rate weekly to keep up with this President.

Debt.

-- Cheers, James Arthur

TIONAL

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To sum up the many points in play:

I don't think Joerg's understanding this at all: that the Fair Tax is a federal tax that eliminates a huge federal mess.

And, the Constitution simply doesn't allow the federal government to set, control, collect, or in any way determine how states collect their revenues. That would be unconstitutional. So, the Fair Tax can't eliminate state-stuff, that's up to each state.

But, the Fair Tax still simplifies things greatly--it eliminates the many federal taxes I've listed repeatedly: personal income tax, Social Security tax (6.5%-ish), Medicare tax, unemployment, matching taxes paid by the employer[*], the new Obamacare taxes on income and insurance, capital gains tax, alternative minimum tax, corporate income tax, and more. All replaced with a single tax collected at point-of-sale. Citizens would no longer have to file income tax returns.

That's a significant step forward. (A giant leap forward?)

Joerg's concerned about potential double-taxation. I brought that concern personally to the actual people, and they're very receptive to doing that. Those things happen as amendments to bills as said bills get debated and perfected in Congress. (In normal times, anyhow.)

My greatest qualm is the prebate. The idea of everyone getting government checks just bugs me--it reeks of nanny-state. John suggested exempting necessities; I like that better.

-- Cheers, James Arthur

The VAT (which is credited, not expensed) is only a percentage of the cost.

There are four possibilities (ignoring the partial deductiblity and assigning taxable benefit to the employee options, which governments won't necessarily do)

In case 0x01, if the corporate income tax rate is less than the sales tax rate you're better off than you would be with case 0x10. But the best case (for beer consumers) would be 0x11.

Couldn't they voluntarily agree to do so?

IMO, no. That said, it's done every day. Think: highway trust fund. Note the strings that go with that mess (e.g. seat belt laws).

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SP >Couldn't they voluntarily agree to do so?

krw > IMO, no. =A0That said, it's done every day. krw >=A0Think: highway trust fund. =A0Note the krw > strings that go with that mess (e.g. seat belt laws).

You're touching on a very interesting twist having to do with state's rights.

It's not the only area in which the Federal Government basically BUYS a law from each state in exchange for massive funding.

A few years back the Feds pushed every state to lower the Blood Alcohol level for the legal standard for intoxication to be so low that a person having a single glass of wine with a meal at a supper club could be nailed for Drunk Driving.

When I drove taxi I watched drunks STAGGER to their cars and saw how unwilling they were to give up the keys.

I saw a large number of SEVERELY drunk people drive off. It occurs to me that Police are now wasting a LOT of time on the less severe cases and makes the reality more about selective enforcement than about addressing the more severe problems.

We have enough areas where laws are set up to be enforced only when the authorities have an axe to grind or isn't related somehow to the "perp".

It's called "selective enforcement".

But the tactic of "buying laws" or "buying states rights" has become much more common.

At some level it steam rollers over the individuality of states and weakens the distinction between states, trending toward one huge nation state.

I do understand that :-)

That is simply not true. It was discussed here ad nauseam that they will still have to file their state tax returns as usual. _That_ is what causes all the effort and compliance costs. It makes no difference whether you file state or federal or both. One alone will generate nearly all the compliance works and costs all by itself, the other simply follows a similar pattern. You have to get all your 1099s in order, all you interest income, all your deductions. If the states do not change their system as well then the claim that a "fair tax" eliminates compliance costs is a big old joke. Because it doesn't.

And then, pretty soon, we are on our merry way again to a goliath

That can be risky because it fosters misapproriation. What really blew my mind was what some French folks did back in the late 70's: They broke a piece off of a baguette and wiped the table with it. Cheaper ...

Sorry, the first incidence of expense should have read claim (as in file for refund).