Another Fair Tax Question

PTC Guy's picture

May have been asked, but I didn't see it.

What is to stop the Big Companies from transferring sales tax, that would otherwise be paid by CEOs, to the consumers by making such as cars, planes and such compensation?

Meaning the company provides it, the CEO and such do not pay for it.

So far, I am backing the Fair Tax. But that does not mean I don't have some concerns.

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Everyone Missed the Real Answer
Submitted by dneighbors on Sun, 07/23/2006 - 11:18pm.

The real answer is that no one can say for sure. Since the topic is not addressed directly in the legislation it will fall the the implementing regulations to answer those question. As the implementing regulations are written, after passage of the legislation, the general intent in the legislation will be followed and defined to the point where questions like this are answered.

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Answer to FairTax Question II
Submitted by LindaLiberty on Sun, 07/23/2006 - 12:01pm.

My FairTax guru basically said the same thing I did - mainly the part about what is a true B2B expense and what isn't. Here is his response:
In order for a business item to be FairTax free, it has to be used ONLY for business purposes. This is the same for deductions under the current system. With 120 million tax filers and only 110,000 IRS employees (more than Exxon/Mobil's remember) there are tons of people getting away with a business deduction currently and using items for personal use. I mean the rules now are that if you have a home office, you can buy your furniture for that office and deduct it from the income tax, BUT it can never be sat on for personal. Under the FairTax, if a movie star is buying $10,000 shoes for business purposes, than these purposes are for being used in her movies. As a registered business, these high profile individuals will certainly have a much easier chance at getting caught using these items while walking down the street. They will get caught. The some goes for a business buying their employees company cars. It's taking two to cheat, the company and the individual. Now if your job is sales, and you're provided a company vehicle because you have to travel 5 days out of the week (sometimes more if you're staying in hotels on-site) you would not need to buy your own car for personal use. I have a friend who fits this same description, and don't believe he has his own car. I believe this is already established in H.R.25 as well. If you're somebody like myself, who lives within 30 minutes of the job, and has to work on-site or flies far out of state when traveling, I would not need a vehicle and GE would certainly not break the law and provide me this vehicle. Their tax return would no longer be 24,000 pages anymore (more than 14x larger than the Catholic Bible) to hide these types of things in. They'd get caught, or I'd get caught.

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Fair Tax deductions
Submitted by Sailon on Sun, 07/23/2006 - 2:30pm.

Yeah, 10,000.00 dollar shoes are deductible---assuming you can afford 10,000.00 shoes. That is the point.
Actually as to the current sales tax, if an item a retailer buys is going to be for sale and not consumed by him, there is no sales tax at that sale. Billions of retailers buy personal items as items to be resold and pay no tax. Fact is, most tax money has to come from poor working stiffs where it is deductd before they can get it and manipulate the paperwork like the non-working stiffs who obtain more money than they can spend but still don't want to pay much, if any, tax. Called: Greed.

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I hate to
Submitted by tonto707 on Sun, 07/23/2006 - 12:07pm.

burst anybody's bubble, but the so called FAIRTAX as drafted by Tom Linder and promoted by Neal Boortz ain't gonna happen.

At best we may see a hybrid of a graduated tax rate and a national sales tax, with some credit against the 1040 tax for a portion of the national sales tax.

The flat % national sales tax for everyone just won't hunt.

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grassroots effort needed
Submitted by LindaLiberty on Sun, 07/23/2006 - 12:22pm.

You may be right but they probably never thought that blacks or women would get the right to vote nor prohibition would be repealed nor the Berlin wall come down, but all those things did happen. There is a fairly large grassroots effort to get this thing passed. If people just sit back and say it ain't gonna happen it won't. The politicians certainly aren't going to want to give up the power they get from manipulating the current system. Why husband kept telling me over and over that it ain't going to happen and all of a sudden he got on the bandwagon - go figure. Now he is telling people about it and passing out DVDs. If he can be won over, then others can.

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Berlin Wall
Submitted by Sailon on Sun, 07/23/2006 - 7:47pm.

I never did care much about the Berlin Wall coming down, and those West Germans that I have talked to wish it had not! The standard of living has decreased by 35% since the have nothing East Germans starting sharing the German pie. The wall came down because Russia (Soviet Union) couldn't support East Germany any more. By the way if you are interested in Boorttzzs's (must be an East German) "fair Tax" maybe you would be interested in this time-share I have in Montana?

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Answer to Fair Tax Question
Submitted by LindaLiberty on Sun, 07/23/2006 - 11:31am.

I'm not sure of the answer to that. My husband and I have discussed it and the conclusion we came to is that there probably isn't anything to prevent them from doing that except that it will make their products more expensive and less competitive. Right now in the current system there are all kinds of tax free benefits that employers CAN give out but they have to balance what they give away with their bottom line. I've asked my FairTax guru who knows more about these things than I do and will let you know what he has to say. I think that a business gets some sort of sales tax exemption card (I see them in Home Depot doing that) and maybe you wouldn't qualify to buy new cars without paying sales taxes unless they were required in your business - like a limo service or a sales person that travels etc. If any business owners know how this works I would like to hear from you. As an aside, skirting government regulations is how the tax advantaged medical insurance benefits came about. During WWII the goverment froze wages, so businesses, to entice the better workers, started offering free medical insurance. Now it's a mess and even though it would be much better for you to have your own insurance policy so you could CHOOSE what is best for you and you could CHOOSE to leave your job when you felt it was better for you many people a forced to stay because they feat loss of the benefits. Governmnet interference strikes again.

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Tax Exemption
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Submitted by PTC Guy on Sun, 07/23/2006 - 11:57am.

I have a number for my business.

That issue is complicated. You can only use it for materials included in a new product, you produce, or sell to the end user.

If you are the end user you pay sales tax.

I would assume that premise would continue with Fair Tax.

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Keeping it real and to the core of the issue, not the peripherals.


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PTC guy
Submitted by Sailon on Sun, 07/23/2006 - 2:22pm.

You ASSUME a lot. Just another of millions of exceptions and complications to the fair tax proposal that would soon become even a greater horror than IRS. To assume does this: ass of u and me, assume.

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Reply to HighOne
Submitted by LindaLiberty on Sun, 07/23/2006 - 2:50pm.

The reason I like the FairTax is because changes/rules/regulations are much more visible. If you have ever done taxes on a large scale like I have you would know all the little jabs and pokes the system uses to screw people. An example - the business my husband works for set up an employee stock option plan several years ago. It was all OK'ed by the powers that be and the stocks vested in 2 years. In the meantime the government decided they didn't really like this type of system and that anyone that exercised their options would now have to pay a 10% penalty on top of the federal tax, social security taxes and medicare taxes that would already be due. Because of these new regulations we chose (were forced) to not exercise the options. The company is now in bankruptcy, the options are worth nothing and we lost out. That type of stuff all goes away under the FairTax system. There is so much less to regulate and so many fewer entities to regulate - 154 million tax filers vs 14 million service and goods providers. You seem to constantly want a perfect system and if it isn't perfect you won't be happy. You also have a tendency to make mountains out of molehills. Millions of exceptions? Give me break. Even the current system doesn't have that many. I am very curious as to why you are such a strong defender of the current system. Care to let me know?

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Actually
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Submitted by PTC Guy on Sun, 07/23/2006 - 2:41pm.

What do you call this statement? Fact?

...fair tax proposal that would soon become even a greater horror than IRS.

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Keeping it real and to the core of the issue, not the peripherals.


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The unfair "fair tax" PTC guy
Submitted by Sailon on Sun, 07/23/2006 - 10:50am.

PTC guy: There must be a million unanswered questions----read the book, read the book, read the book, they say when they don't know!!!!
Whose book? Burpse? Look at it this way: If all the taxes collected NOW equal one dollar each, won't all the taxes collected under the so called "fair tax" also have to be one dollar? Of course they will. The difference is who pays them. You know who that will be, and so do the "fair taxers."

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highgreen
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Submitted by PTC Guy on Sun, 07/23/2006 - 11:59am.

A big distinction is you have control over how much you pay in sales tax. You do not have that under income tax.

And the tax paid is visible to the buyer. Making the politicians more accountable.

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Keeping it real and to the core of the issue, not the peripherals.


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