Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (41) | Ignore Thread Prev | Next
Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121146  
Subject: Re: FairTax Date: 9/27/2012 8:06 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 56
but don't expect honest answers on this board since several of the biggies here are tax accountants (ptheland) and the Fair Tax would be an attack on their existence,

I am forced to take exception to that remark. I freely admit that I am a professional tax preparer. However, I have no fear of losing my job with the FairTax. Frankly, I could probably get a different job with minimal problems, or simply start a different business. I am not a one-trick pony. I choose to prepare taxes because, frankly, I enjoy it.

My objections to the FairTax are based on social equity. I believe that taxes should be paid by those that have the money to pay the taxes. The more money you have, the more taxes you should pay and the higher percentage of your income you should pay in tax.

Our current system is an attempt to tax in that way, but with some admitted flaws. However, those flaws are far fewer than the flaws in the FairTax. The FairTax is flawed at its core.

The FairTax would tax lower incomes at significantly higher rates than the much higher incomes because it taxes consumption rather than income. It does not tax savings. And the more income you have, the more you are able to save and the less tax you would pay as a percentage of your total income.

If you make $30k or $40k a year as a family today, you pretty much spend it all by necessity. The FairTax proposal would collect about 23% of that as taxes less a baseline spending allowance. From their web site, those two would net out to roughly zero. So the poorest in the country would end up close to where they are now. So far so good.

But let's say you make $100k and manage to save $10k. That leaves $90k for spending. Lop off 23% of that (about $20k) for the tax and you'd have $70k for spending. That's around at 20% tax rate on your total income. If you make $300k today and spend only $200k, you'd pay the 23% only on the $200k, or about 15% on your total income. And if you make $10 million and spend $5 million, that tax rate falls to 11.5%. That's a regressive tax.

And I don't like regressive taxes. I believe they are unfair.

Is that an honest enough answer for you?

--Peter
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (41) | Ignore Thread Prev | Next

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement