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Can Computers Be Used To Optimize the US Tax Code?
FatLittleMonkey writes "Science fiction author David Brin wonders whether the US tax code, described by President Obama as a '10,000-page monstrosity,' could be dramatically simplified. His idea is about using computers to shuffle the existing system: 'I know a simple way the sheer bulk of the tax code could be trimmed by perhaps 70% or more, without much political pain or obstructionism! ... it should be easy to create a program that will take the tax code and experiment with zeroing-out dozens, hundreds of provisions while sliding others upward and then showing how these simplifications would affect, say, one-hundred representative types of taxpayers... Let the program find the simplest version of a refined tax code that leaves all 100 taxpayer clades unhurt. If one group loses a favorite tax dodge, the system would seek a rebalancing of others to compensate. No mere human being could accomplish this, but I have been assured that a computer could do this in a snap.' With all the talk about Open Government, perhaps the computer code currently used in tax modelling could be released to the wider community, leading eventually to a Folding@Home type project."
That procedure would lead to the same results. Maybe some redundancy would be removed, but obviously he doe not understand why the Tax system is complicated. Its the politics, stupid. Many of these 10000 pages are just small little promises somebody has given to *his* voters at some point. And nobody wants to cut such things, because one time this starts, it could be soon the promises to *your* voters. So no matter how absurd something is, it will stay there forever.
Would work at face value. Genetic algorithms can easily be used to solve something like that.
However I think taxes have more of an effect than just bringing in money, if the system decides to highly tax something, it might cause an economic downturn on that item, which could have ramnifications. In fact, the more popular the item is, the more cash you'd get if you raise the taxes on it.
The system will still not be understandable, but this time computers will be blamed.
Slightly longer answer:
Maybe
Would politicians accept the solution without re-bloating it first? No
Scrap the whole thing and start over. All the cruft is from decades of putting in and taking out different provisions for thousands of groups of people. Start with whatever rates you want. Then stop. What's the point of taxing someone 30%, then giving them a mortgage deduction, education deduction, horse rodeo operator deduction, etc.? Same with corporations; if you're going to give them all tax breaks on their water coolers, just drop the rates. The IRS will be pissed, thousands (millions?) of accountants will be pissed, and everyone else get 4 hours of their lives back from stupid paperwork each year.
Vote monkeys into Congress. They are cheaper and more trustworthy.
a tax system is like an ecosystem. If you change it brutally, people will find holes and adapt their behaviour in order to pay less taxes while remaining in total legality.
If you change it too often (like in France), you will penalise business (business likes fixed rules).
Computer models can help in modifying the system, but you can not improve it without a very deep understanding of the current system. You can not just say it is crap, even if it is true.
Yes, you're the only person who has done research on this topic. Out of the hundreds of millions of people affected by the tax code, nobody has ever thought to sue the federal government over income taxes or to use this as an affirmative defense against charges of tax evasion. You could be the hero who leads us all into a tax-free future by finding that honest judge of which you speak.
Get to work on that. Good luck, and let us know how it turns out.
In what way? The power to tax is in the constitution itself and "general Welfare of the United States" is pretty much "whatever you think is good".
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
Also they added this amendment which is very, very broad:
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
So do tell... what is unconstitutional?
Live today, because you never know what tomorrow brings
Sales Tax:
5% to the local community
3% to the local State
2% to the FedGov.
= 10% tax on everything sold. Easy to calculate and pretty fair (spend more, pay more).
Get rid of everything else...
It certainly has to be someone who has the resources to do so. No offense, but your statement leaves only the poor and I doubt they create jobs. Usually those who create jobs do so because they have exhausted their personal abilities and need an extension of themselves, hence employees. Corporations are merely that process grown over a longer period of time.
Your flat tax rate is a bit low to sustain the government we have now.
The real problem with the tax system is not in its complexity, its just how high our taxes truly are. Adding the embedded taxes; this is the taxes rolled into every product and service you buy; to your income taxes, medicare, medicaid, social security, sales taxes, fuel taxes, and associated fees and such, and you would probably have open rebellion if people knew just how much it really takes from them.
Simply put, the Federal Government has grown too large from over promising everyone something. There is not enough taxable income in the United States to sustain the promises made on the local, state, and federal levels of government.
The reason Obama and Washington love to talk about reforming the tax system is not to reduce our tax burden but to increase government revenues. If they were truly serious about fixing the system they would be talking primarily about how to fix entitlement programs. Then top that off with a system where either we have a flat tax rate for all combined taxes at the Federal level with no corporate tax to hide even more or go to a consumption tax.
A flat tax will work but it must be honest. To be honest it means we cannot tax corporations. Every dollar a corporation pays in taxes comes from its customers, that means we pay those dollars. Whether or not you buy a particular company's product or service someone you do buy from may. This is the problem Washington faces, showing Americans their true tax load scares them. They don't want to admit the size of the beast. Also, everyone must have some skin in the game as the old saying goes. This means there must be a rate, I would not go below 10%, applied to all incomes. This must not be offset with give backs and entitlement programs. Everyone needs to know they are paying for it all.
An alternative to a flat tax would be a consumption tax. Even the rich would have no method other than not spending money to avoid this one. Using ideas brought forward with the Fair Tax we would rebate the cost of living to every family using the IRS. It is a simple process that far too many claim is impossible. After all, if they can track the current system they surely can trace a prebate system. The shock here again is that people will see their real tax costs. This is why Washington routinely has their sycophants in the media and academia falsely portray this plan. When they shoot this down it is fun to watch them march over to the flat tax and start over there too.
Ask yourself, why does he want to fix the tax system. If he uses the word "fair" in the conversation you can be assured of one thing, he does not intend to reduce the burden on the American people he merely wishes to increase the revenues to the Federal Government hiding behind common class warfare tactics
* Winners compare their achievements to their goals, losers compare theirs to that of others.
The IRS and it's system certainly has ulterior motives. As do the congress critters who actually pass laws regarding taxes.
I can simplify the tax code without a computer. Just strike all the existing income tax laws, and in their place, pass a law that your gross income times .1 belongs to the government. No deduction, no shelters, no credits, nothing. The same tax rate applies for married, single, youth, elderly, businesses large and small, no matter who you are.
However, the tax system isn't about revenue for the government, so much as it's about politics, so my system would never be adopted. Politicians use the tax system to make a zillion little groups of people feel "special", and to redistribute wealth according to whichever special group has the most political clout.
"Windows is like the faint smell of piss in a subway: it's there, and there's nothing you can do about it." - Charlie Br
"general Welfare of the United States" is pretty much "whatever you think is good".
No. "General Welfare" is a term from contract law, and in the constitution it's a limit on the taxing power: it requires all appropriations to be made for the benefit of the people as a whole, not favoring any region or group at the expense of another.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
rm tax code | /dev/null
Computers CAN fix the tax code.
*Repent!Quit Your Job!Slack Off!The World Ends Tomorrow and You May Die!
It won't work for the very simple reason that the rich are much more able to optimize their tax paying to take advantage of what is in the tax code.
For example, in the UK the rich pay 50% tax on income (42.5% tax on dividends) but only 28% tax on capital gains (might even be 18% if they can get their taxable income low enough - I'm not absolutely sure what happens at this extreme)
So it currently makes sense for the rich to buy shares that tend to generate capital gains in favour of shares that tend to generate income - especially if there intention would have been to reinvest the dividends anyway.
Change that around and the rich will shift their investment strategies around to get the best deal they can. The poor (and in this case I mean almost everybody) will typically only have a single source of income (their job) and no opportunity to optimize their tax rates because they'll be "trapped" in a single taxation regime.
So if you try and optimize it so that nobody ends up better or worse off, what will actually happen is that the rich will then optimize their tax rates and end up paying less. The only way to recover the missing tax will be to put up rates so that, for at least some people, they will end up worse off.
Tim.
God said, "div D = rho, div B = 0, curl E = -@B/@t, curl H = J + @D/@t," and there was light.
it requires all appropriations to be made for the benefit of the people as a whole, not favoring any region or group at the expense of another.
Naive questions: if you look to benefit the people as a whole, isn't it to be expected that sometimes some regions or groups will be benefited more than others? Does this inequality in benefits mean that sometimes a group will benefit at the expense of another?
The income tax was introduced in 1913 at levels of like about 2% , for only the super rich.
90% of people didnt have to pay so didnt complain.
Govts got greedy, kept increasing the taxes, and lowering the thresholds.
Welcome to 2011, 110% of you taxes and more goes directly to banks, and none of it gets spent on 'society'
I'm not a fan of our current tax system, but that's the stupidest thing I've ever read.
Slightly longer answer:
Maybe
Would politicians accept the solution without re-bloating it first? No
Actually, the original idea will never get off the ground, because most of those 10,000 pages deal with things like "companies employing less than 100 people and which are located in a depressed neighborhood and which have names ending in a vowel get to deduct the cost of the president's jet." Things like that are added to give one particular company a break, but they never mention the company's name, just a set of circumstances that describe only that company. The company knows who they are, but we are unlikely to figure it out since each of the intersecting sets is rather large. Unless that company is part of one of the clades, that particular clause will have zip effect and it will be proposed for deletion, leading to that company and all the others in the same situation to object to the entire process.
Nothing for 6-digit uids?
So it currently makes sense for the rich to buy shares that tend to generate capital gains in favour of shares that tend to generate income - especially if there intention would have been to reinvest the dividends anyway.
This is not a bug, this is intended. And if it isn't, it really should be. It makes sense that that taxation regimes should be designed to encourage the re-investment of surplus wealth into economic activities. After all, you might lose the 22-32% on income tax, but this is expected to be beaten by the increase in tax take from the recipients of the investment in the form of corporation tax, VAT where applicable and the income tax on employees of the organisation that was invested in. Having anyone simply sitting on huge piles of cash benefits no-one.
Rational thought is the only true freedom
I take it you know more about economics than you do about the command line, right?
Welcome to 2011, 110% of you taxes and more goes directly to banks, and none of it gets spent on 'society'
You must have clicked submit too soon because you were about to explain how you have no publicly funded roads, bridges, air traffic control, police, army / navy / airforce, prisons, firefighters, justice system, schools, health care, welfare, parks & recreation facilities, sanitation or water supply where you live.
No. "General Welfare" is a term from contract law, and in the constitution it's a limit on the taxing power: it requires all appropriations to be made for the benefit of the people as a whole, not favoring any region or group at the expense of another.
And how would anything ever be exactly equal? We all use public roads, but we'll never get perfectly equal benefit from them. Some use them more, some use them less, some only use them indirectly as passengers or public transport and even more indirectly buy goods that got there over public roads. And there's always arguments about what route to take because it'll benefit different people or where to build roads at all. And if we should spend more or less money on roads in general. That is just one tiny fraction of the things that you think all should be balanced. The argument you make just doesn't work much in practice.
Around here one of the big rah-rahs is the Apollo program. Was that of equal benefit for everyone? Or was it certain tech centers that benefited way, way more than others? Even with the best of intentions and results, things will differ. Also there's the question of what horizon you take, like for example work to get electrify and phones to everyone. In the long run it pulls the whole country along, in the short term it's a pretty clear subsidy. Does something like the CPS benefit everyone equally? No, childless families don't need it except maybe it get other people's maltreated kids taken care of. Other reasons are that other people react to us, like for example trade relations, attracting investors, flight of jobs and capital.
I very much doubt you could make a credible case that proves that a tax does not in any possible way contribute to the general welfare of the United States. That some will benefit more and less yes, but to prove that it can't possibly overall be for the greater good is a near impossible task.
Live today, because you never know what tomorrow brings
I'm not a fan of our current tax system, but that's the stupidest thing I've ever read.
Not true. I'm sure you've read things that are much more stupid than that. Although I will concede that it's likely in the high end of the stupid spectrum.
Paying off those who own homes isn't really a simplification, it's what the housing deduction does.
Actually no, it does nothing useful for them. The group it pays off is the homebuilders, developers, etc.
Look what happens when the govt provides $5000 untaxed child care benefit... I do not end up $5000 richer, or even my roughly 20% average tax rate richer. What happens by supply and demand is the prices rise to match the new supply of money. Inflation, basically. The daycare knows darn well I can afford to pay more, and I will have to. So as an industry the price rises to compensate.
Same thing with the mortgage interest tax deduction... I have $1500/month gross income to spend on housing, without a tax deduction I pay about $300 to the govt in taxes, and $1200 to the bank. With the deduction, I won't pay tax, so I can now send $1500 to the bank. An idiot would think that means I'll get a higher quality house, after all, I'm paying $1500 instead of $1200. However the way it really works, is as a member of the 90th percentile of income (guess?) that would imply I WILL be living in the exact same 90th percentile house... The only thing that varies is how much money the bank and previous owners get.
The other big fail, is the idea that the govt will not spend $300 if I don't give it to them now. All it means is I, or my kids, will have to give the govt $400 later to pay off bond holders instead of $300 now. So even more money goes to make the banks and top 1% even richer.
All the mortgage interest deduction does is make the rich richer and the poor poorer. Which is, of course, as designed.
"Science flies us to the moon. Religion flies us into buildings." - Victor Stenger
You're right, but only half right. Rich individuals, not just companies, can get these same kinds of special treatment. It's all about how much you've donated to the right Congresscritters.
God invented whiskey so the Irish would not rule the world.
You understand it is true, though?
Income Tax in the United States originally applied only to profits from dividends and the like. Wages and salaries were explicitly excluded. It affected only the wealthy who could afford to invest, and were successful at it.
That is really the only way it passed, by exempting 90% of the population. For an example, see Tennessee State's income tax today.
Learning HOW to think is more important than learning WHAT to think.
Where your tax dollars go (last chart at the bottom):
http://www.offthechartsblog.org/top-ten-tax-charts/
I'm not a fan of our current tax system, but that's the stupidest thing I've ever read.
Not true. I'm sure you've read things that are much more stupid than that. Although I will concede that it's likely in the high end of the stupid spectrum.
In his defense, when you get much dumber, literary ability starts to decline. I'm sure he's not counting dumb pictographs, gestures, or of course "dictated but not read" (also known as the "Trump Du Jure").
Bill Gates and Warren Buffet
Nobody owes them money without a government establishing and enforcing contract law upon which their businesses are built.
A government provides education to develop their employees. Police to protect them and their employees from a lawless societies. Their position of power at the apex of the economy means they receive small indirect benefits from benefits conferred upon all related parties.
Imagine trying to run Microsoft and Berkshire from a government-free place like Somalia. Can you imagine trying to get money from a Somalian warlord because he was stuck with the wrong end of a futures contract? Or asking him to pay for his Windows licenses? There isn't enough infrastructure and order to support such entities without a highly ordered society. There are theoretically other ways to develop such order, but practically speaking, such order develops from stable government.
Except that the tax code doesn't encourage that, in fact I'd go so far as to say that it discourages it by offering tax breaks for all sorts of antisocial behavior. For instance corporations like GE can book their losses in the US from foreign operations and offset their gains in the US without having to book profit from international operation, which makes it trivial for them to pay no taxes in the US.
Most of those bits of the tax code ought to be eliminated in favor of something less unwieldy so that people can actually understand what it is that they're doing without need for a professional.
And while we're at it, why doesn't the IRS just fill out our tax forms for us? Given that they already have most of our information in large databases, I see no reason why they can't fill them out like they do in other countries.
You might complain about that, but do you - or any other industrialized nation around the world - have to fill out the sort of bullshit paperwork that we Americans have to? AFAIK, you don't have to worry about getting audited or whether you qualify for certain deductions. There's a small but growing movement here to get a flat tax similar to the VAT added just to simplify the whole thing as well as cut 90% of the IRS down. Saves money, cuts down on bureaucracy, it's impossible to evade, and no more goddamned Form 1040s.
Random Thoughts From A Diseased Mind (Not For Dummies)
because most of those 10,000 pages deal with things like "companies employing less than 100 people and which are located in a depressed neighborhood and which have names ending in a vowel get to deduct the cost of the president's jet."
Please cite examples.
Display some adaptability.
No, that's a stupid-people problem, not something that distinguishes left from right. For every left-wing weirdness that fits what you're talking about, I can list a right-wing one. You cite "tax the rich" and I'll cite "teach creationism." Pretty much everyone is demanding their government make choices that are destructive pragmatism and efficiency, all for the sake of feeling good.
As copyright owner of this comment, I authorize everyone to defeat any technological measure which limits access to it.
No. "General Welfare" is a term from contract law
In 1789?
This isn't how Hamilton understood its meaning:
The terms "general Welfare" were doubtless intended to signify more than was expressed or imported in those which Preceded; otherwise numerous exigencies incident to the affairs of a Nation would have been left without a provision. The phrase is as comprehensive as any that could have been used; because it was not fit that the constitutional authority of the Union, to appropriate its revenues shou'd have been restricted within narrower limits than the "General Welfare" and because this necessarily embraces a vast variety of particulars, which are susceptible neither of specification nor of definition.
It is therefore of necessity left to the discretion of the National Legislature, to pronounce, upon the objects, which concern the general Welfare, and for which under that description, an appropriation of money is requisite and proper. And there seems to be no room for a doubt that whatever concerns the general Interests of learning of Agriculture of Manufactures and of Commerce are within the sphere of the national Councils as far as regards an application of Money.
The only qualification of the generallity of the Phrase in question, which seems to be admissible, is this--That the object to which an appropriation of money is to be made be General and not local; its operation extending in fact, or by possibility,* throughout the Union, and not being confined to a particular spot.
Alexander Hamilton, Report on Manufactures
*- emphasis added.
Think of infrastructure and economic development projects like the state-funded Erie Canal in the 1820s or the federally funded TVA in the 1930s. Once you demonstrate what can be done, you can do more.
Uh, no. Try looking into the actual history of income tax, please. What you claimed is trivially disprovable. See here
The 16th amendment was needed to for the Federal government to tax dividends, interest, and rents. Aka, 'money earned without doing any work'. Not income from employment, which was always taxable.
And, strangely, the supreme court decision that seemed to disallow that was probably in error. Taxes on property, aka, a 'direct tax', were not allowed, and that court decision had a very convoluted way of trying out make out that that any income from property was also somehow a direct tax, which they certainly are not.
Congressional scholars, and in fact the US supreme court, currently mostly regard the 16th amendment as utterly pointless. I quote the court, 'Sixteenth Amendment conferred no new power of taxation but simply prohibited the previous complete and plenary power of income taxation possessed by Congress from the beginning from being taken out of the category of indirect taxation to which it inherently belonged.'
And the US had plenty of permanent progressive income taxes before then. In fact, it has never had any other sort of tax on income. (How would that even work?)
And there was not even vaguely the promise you claimed it had. People were already taxed more than that without the income tax. More than 5% of household paid taxes the last time there was an income tax, see the previous link.
If corporations are people, aren't stockholders guilty of slavery?
I think corporate tax is silly anyway. Just tax all income as income... capital gains, dividends, salary, benefits... and you won't need a corporate tax.
This would have the additional advantage of encouraging corporations to move to the US.
Corporate taxes only generate revenue in the $400 billion range. You could easily get this back with higher capital gains rates and deduction/loophole killing.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Fairtax effecitvely cuts taxes massively for the wealthy. it has a lot of good press (aka the best propaganda money can buy) combined with a healthy dose of magical thinking.
A real fair tax needs to address the fact that state taxes typically tax in reverse with the lower income paying 10%+ of their income in taxes while the wealthy pay under 1% of their income in taxes.
The best form of a fair tax would be
A fixed 20% tax on everyone with no deductions except ignoring all income at and below the poverty line.
The poor and middle class listen to this nonsense and slit their own throats while the wealthy are turning into an oligarchy and new nobility class.
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
I tried to interest people in redistricting on the same idea. Have the politicians state what their trade-space is? state the value of having districts simply shaped versus ones that include more diverse/less divers people or follow natural contours like housing development or rivers. Then have a computer bark out lors of possible district maps.
No interest.
The problem is that politicians are interested in their own power not fairness. THey want certain companies in their districts. They want mayors that owe them favors in their districts. they want gerry mandered advantages.
If you want this you have to impose it by referendum or other force. they will not agree on their own accords.
In the case of the tax code. How is a politician supposed to promise intel a tax break if they give him a boatload of money? he can't unless the tax code is adjustable.
Some drink at the fountain of knowledge. Others just gargle.
Fair is everyone paying the same rate.
I agree. Everyone should pay the same tax rate.
Like, for example, the superrich, who have managed to wrangle a 15% tax rate for their income, which is in the form of stock gains, which results in them paying a lower tax rate than anyone but people making under $16,000.
Although I suspect, somehow, it's the people making under $16,000 that people like you are talking about.
If corporations are people, aren't stockholders guilty of slavery?
Ok - so historically America has never provided a universal (or social or whatever you want to call it) health care system due to a sense of "Wild wild west"ism? Perhaps that explains the NRA as well.
So why are you not all riding around on horses still? I joke obviously.
Why is your tax code so complicated that "most people don't pay taxes at all"? Certainly not the case in the UK (where I'm originally from), where the employer is responsible for ensuring your income tax is paid direct to the government (known as Pay As You Earn - PAYE). Or are you referring to the massively wealthy, who are not the numeric majority?
England certainly is not a cosy place to live where your every whim is provided by the government. The welfare is not enough to live on. There used to be "council houses" you could rent from the local government, but Maggie Thatcher put paid to that, and has caused a lot of other problems with rising house prices. But we also don't generally have a 50% tax burden. All in all I would say I was paying about 25%, as a rough guestimate taking into account my tax bracket and national insurance. I was on an average income, and I don't think any of my friends were much different. The 50% tax bracket is reserved for people earning in excess of £150,000 (USD 240,000). But the people who pay that kind of tax is relatively few, certainly not the numeric majority.
Do I think the National Health Service (the NHS) and other welfare benefits is worth my 25%? Yes, actually I do.
Do I think my freedom has been curtailed as a result of having the NHS? No, I don't think it has. We still have a private healthcare system in the UK, and if I wanted to avoid going to the NHS for whatever reason, I could - if I had the money/health insurance for it.
Do I think I would have been financially better off if I didn't have the NHS? No, I don't think I would. There are several points in my life where I've needed the NHS, and one of those times I was unemployed. It would have been financially detrimental to me if I hadn't had the NHS.
America rose to its economic supremacy, not because of any kind of American specialism rooted in rugged individualism, but because of the following factors:
Vast natural resources
Vast amounts of land to absorb population growth without causing political instability
An ongoing supply of cheap immigrant labor
Not having fought any world wars on its own soil
There are other reasons for sure, but keep in mind that the US experienced economic supremacy only after introducing socialist programs like Social Security.
Instead you'd rather live in the US, where when you add in the cost of your healthcare to your taxes, you're paying more (for less return!) than people in those so-called European welfare states?
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
Spending also improves the economy. Yet I doubt you'd support reducing taxes on the bottom three quintiles in order to increase spending.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
No you didn't. You just shifted the entire burden of taxation onto the poor and middle class with your shitty, extremely regressive tax system that nobody but a few fringe libertarian types wants.
Why not do your own research into the facts instead of just repeating what your socialist comrades claim. They don't like the fair tax because it shifts power and control away from the centralized government, not because it's regressive (it's not).
"Somebody has to do something. It's just incredibly pathetic it has to be us."
--- Jerry Garcia
Fairtax effecitvely cuts taxes massively for the wealthy.
Nope, not true. It eliminates loopholes for the wealthy
it has a lot of good press (aka the best propaganda money can buy) combined with a healthy dose of magical thinking.
Not sure where that's coming from - all I ever see in the press is people like you vilifying the FairTax with falsehoods and misrepresentation (like your post)
A real fair tax needs to address the fact that state taxes typically tax in reverse with the lower income paying 10%+ of their income in taxes while the wealthy pay under 1% of their income in taxes.
That's for the states to do, not the Federal government - state taxation is up to the states.
The best form of a fair tax would be A fixed 20% tax on everyone with no deductions except ignoring all income at and below the poverty line.
That sounds a whole lot like the FairTax (except that it's 26% instead of 20%)
The poor and middle class listen to this nonsense and slit their own throats while the wealthy are turning into an oligarchy and new nobility class.
Better that they just listen to you describing the FairTax as something different than it is, and never give it a chance?
"Somebody has to do something. It's just incredibly pathetic it has to be us."
--- Jerry Garcia
The presumption that wealthy people spend 100% of their income is invalid.
That may be your presumption (not sure why you would make it). This provides incentive for saving, which is a good thing. The only other objection that this would cover is if you are just concerned about punishing people for their income.
The presumption that wealthy people would not buy clothing, booze, and other valuables in other lower tax jurisdictions is invalid.
Out of the COUNTRY!?!? They don't do that now, why would they do it under this scheme? Not invalid at all.
I've validated since this was posted that raw food would not be excluded. That is a HUGE tax increase for the poor.
You're missing a lot. NOTHING is excluded - that's part of the fairness. The FairTax actually eliminates and reimburses all federal taxes for those below the poverty line. This is accomplished through the universal prebate and by eliminating the highly regressive FICA payroll tax. Today, low and moderate income Americans pay far more in FICA taxes than income taxes. Those spending at twice the poverty level pay a FairTax of only 11.5 percent -- a rate much lower than the income and payroll tax burden they bear today. Meanwhile, the wealthy pay the 23 percent retail sales tax on their retail purchases.
The fair tax is on spending- not on INCOME. The wealthy do not spend large portions of their income. Hell- I'm not wealthy and I don't spend large portions of my income.
And that's a good thing. Reverses the American habit of spending MORE than they make, encouraging saving. I'm glad you're able to save most of what you make. I'm living paycheck to paycheck myself, and I like this plan MUCH more than the current system.
The "fair tax" is grossly unfair to the middle income and the poor. Once people saw what it really means in practice, it wouldn't survive 30 seconds. It's a massive transfer of taxing from the wealthy to those making less.
That's not justified by any provisions of the tax. It's unfounded hyperbole.
"Somebody has to do something. It's just incredibly pathetic it has to be us."
--- Jerry Garcia