700 billions dollar debt increase is the republican's first goal.

Add a couple of million people, who weren't paying anything before- how do you think that would effect the economy?

 

It would take the money they are now spending out of the economy and give it to the government as taxes. Same as if you pay it or I pay it.

 

That is an interesting concept, spend your way out of debt. What is wrong with that picture? Where is Ross Perot when we need him? If someone is blessed as I am is not willing to clean out the barn, who will?

 

Actually, with more money in our pockets on payday it will put more money into the economy which would equal more money in the tax cofers. More tax money to the government but more control, for the individual, over what you work hard to earn. it's really common sense.

 

It really is simple. A + B = C. Reduce A, B goes up. Make A go up, B goes down.

More money in our pockets and less money in the people's pockets who are brought into the system. The effect on the economy is that the economy doesn't care whose pockets it comes out of. You are still taking C out of the economy as taxes.

 

"C" isn't fixed.

 

C is the overall tax revenue that you said would go up. If C goes up, that money is not put into the economy. It is in the government. It doesn't matter whether A>B or B>A or A=B, C is still not in the economy.

 

It is a tax on consumption therefore tax revenue increases as money is put into the economy.

 

But, all the money collected as tax, whether it is income or consumption based, is still not put into the economy. It goes to the government.

If Stu pays the government $0 in income tax and David pays the government $10000 in income tax, how much money is not available to the economy?

If Stu pays the government $5000 in consumption tax and David pays the government $5000 in consumption tax, how much money is not available to the economy?

 

The "illegal aliens" will do it, of course. Rich as rich are, and rich will always mean greed. They go hand in hand. Greed means illegal aliens will do they work because they do it cheaper. That's the same exact reason you'll never see anything done about the illegal issue any time soon. (I mean REALLY do something about it like jailing the employers that hire them to begin with). It's also a way to drive DOWN wages. It's "just business".

 

If I paid $5000 & you paid $5000 in consumption tax that money is paid in taxes only because it was spent in th economy in the first place...how does that hurt the economy?...that's where it all begins. If it were straight income tax, $0 from you & $10000 from me in your example, your $0 doesn't help the tax cofers but forces me to have to pay more to pick up your slack. By me being forced to pay $10000 it limits what I can contribute to the economy because after I pay taxes my I have far less money to spend.

 

Because it is still a tax. And taxes are not spent in the economy. Whether the tax is taken out of your paycheck or at the cash register, it doesn't matter, It still doesn't go to the manufacturer of the goods of the seller of the goods. It goes to the government.

If your tax goes from 10000 to 5000, you have 5000 more to spend than you did before. If my tax goes from 0 to 5000, I have 5000 less to spend than I did before.

It is not changing how the tax collected effects the economy, it is just changing who pays it.

 

What you fail to acknowledge is the fact that millions of people who were at that $0 level will be brought into the system. Because of this fact my $10k may go down to $3k. Your $0 and all the other $0 payers would certainly increase but what's wrong with people paying their fair share? And obviously, since the fair tax is on all consumption, the $0 payers will have no choice but to put $$ into the economy. Also, keep in mind, all the money that is hidden, laundered and spent outside the country will stay here.
To fully understand the FairTax one really needs to take a more "big picture" approach.

 

Look at it the other way round if they stoped all tax on purchases and instead added it to personal income tax I do believe you would notice a very large jump in your tax burden Now if you remove personal income tax and simply have a tax on goods then it will have a effect on the economy as not all the $$ actualy spent goes on tax only a % of it the rest will go to the retailer and the producer that is simple economics When people spend more then the producers and the retailers in turn make a larger % of the take as does the goverment
When demand increases then producers and retailers genraly increase there workforce do they not? (to meet demand) those new employees have to be paid now what happens when you introduce this new injection of capital into the market? well as long as the producers the retailers and the tax man do not get greedy and attempt to over price/raise tax then you have a steady growth, The main problem of course is in which sectors of the economy you desire the growth to occure LOL

 

I have never argued whether it is 'fair' or 'not fair'. My contention is...the idea
that increasing tax revenue by an income tax is somehow devastating while the same tax revenue generated by a sales tax is not, doesn't add up.

If someone makes $33000 and pays no income tax, they have $33000 dollars to spend in the economy.

If you implement a 10% fair tax, they no longer have $33000 to spend in the economy. They only have $30000.

So any increase in the amount of money you have to spend in the economy is offset by a corresponding decrease in the amount of money that someone else has to spend in the economy.

No matter how you take tax money out of the economy, it is still taken out of the economy. If one way is devastating, the other way is too. If one way is not devastating, then the other isn't either.

 

I guess I just can't get how taking $2.2 trillion dollars out of people's paychecks has a different effect on the economy than taking $2.2 trillion dollars out of cash registers? That 2.2 trillion dollars is not going to the retailers either way. It is going to the government.

I guess it will just never add up for me.

 

It's not about replacing $1 in income tax with $1 in consumption tax, what would be the wisdom in that? Your premise is inaccurate & simplistic and exhibits a lack of conceptual understanding of the subject. Once again, I'll urge you to do the research...the benefits are endless. In addition to having more money in your pocket- money you control- prices, across the board will come down as the various taxes that are inherent in the retail price of everything you purchase will be eliminated. So to address the concern you seem to be holding onto so firmly, those brought into the system won't necessarily experience higher prices at the register, in fact they just might be lower even with a higher tax rate being applied.

 

Isn't that pretty much the definition of Revenue Neutral...which is what the Fair Tax claims to be?

And I have read up on it. I have even purposefully stayed away from discussing that some people still won't pay taxes under the fair tax because everyone will get a prebate at poverty level spending. Even though from your posts, one might get the idea that everyone will now pay taxes.

And I have even stayed away from discussing specific rates which will have to be 30% or more to be revenue neutral. Or how, if you didn't tax neccesities (like food) the tax would need to be 50% or higher. Because the rates are very much in dispute.

I have stayed away from a bunch of that stuff because, overall, I think the fair tax is not a bad idea. But I think so because it is simpler and less prone to lobbyists and special interests.

But that has not been the discussion. The discussion has been about raising total tax revenue one way versus raising it another way and that effect on the economy. And how increasing taxes one way is bad whie increasing them another way is good. That is where I have called hooey.

And the Fair Tax sites do not address that. Because, unlike your idea of a Fair Tax increasing government revenue, they seem to go with the idea of it being Revenue Neutral.

About the closest I could find to answering my question - and it was even on the Fair Tax site is this quote...

Which, of course, begs the question of who pays more in taxes to maintain revenue neutrality if I choose to spend less.

 

Everyone would get a pre-bate equal to 25-30% of the current years poverty level income (as determined by statute), Right now that number is $29000 for a family of four. So yes, those at the very bottom of the earnings spectrum would have no tax liability until they make the decision to spend more....what they won't receive are tax return checks that are way more than what they paid in.

One other thing, don't confuse the FairTax national sales tax with an income tax, they aren't the same thing.