re: Would you support FairTax plan?

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You take home your entire paycheck.

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Assuming you still have a paycheck when your employer isn't selling as much product.

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That's as fundamental misunderstanding of the plan as I can recall seeing of late.

Congrats?

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Can you explain? If the price of a product increases due to higher taxes, people will buy less of it.

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Can you explain?

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I did. Earlier in this same thread. On the first page.

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2 - Under the current income tax system, approx. 21-27% of what makes up the retail price paid at the register are embedded corporate income taxes that are passed along the distribution chain from the manufacturer all the way down to the retailer. These corporate income taxes are ultimately paid by the consumer.

Those embedded corporate income taxes go away under the FairTax, so there's no reason for those cost components to be included in the margins of the goods sold. That eliminated income tax component is approximately the same rate as the National Retail Sales Tax.

In short - federal income taxes that corporations collect (paid by consumers) are practically replaced to the penny by the National Retail Sales Tax. That means price movement under this system would be negligible.

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If the price of a product increases due to higher taxes, people will buy less of it.

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From July 2023:

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So our take home pay increases by almost 30%, but the cost of everything also jumps up by 30%. Does that really help?

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No offense, but this is the most common misconception about the plan. In 20+ years of researching and understanding it, that perspective is usually rooted in a fundamental misunderstanding of how corporate income taxes are paid. At the risk of repeating myself from earlier in the thread:

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Corporations do not pay corporate income taxes, they collect them. The NRST simply replaces the embedded federal income taxes which are passed down along each step of the supply chain, from manufacturer to wholesaler to distributor to retailer, and ultimately paid by the consumer.

In a NRST scenario, there is no need for the 22% embedded corporate income tax that is already baked into the price you pay at the register. Market forces will drive retail prices down to their rightful place, and the price paid at the register will effectively be the same as it was under the old IRS/income tax model. The major difference being that it's purchased with your whole paycheck, because withholding will have gone away due to obsolescence.

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This is going to wander into TL;DR territory, but those who are truly interested are going to stick around. The howler monkeys are going to sit in the cheap seats and fling feces no matter how long the post is.

For ease of discussion, let's talk about something that costs $10 at retail right now. We're going to call it Item ABC. Only around $7.80 of what you're paying covers the cost of that item - from production to wholesale to distribution to retail profit. The other $2.20 is tacked on at the various stops along the way to recoup the corporate income taxes that are incurred. Ultimately, that bill comes due for the retail consumer. Again, corporations do not PAY income taxes, they COLLECT them.

In the National Retail Sales Tax scenario, the income tax is abolished and what's left of the IRS is simply a clearinghouse entity within the US Treasury to receive the taxes collected by retailers. If there is no more income taxes to be collected, then the cynical folks in the room would believe that the NRST would be tacked on to that $10 price tag for Item ABC, and you'd now pay $12.20.

There's a couple of things that would prevent that from happening, thanks to economics and folks who sell Item ABC wanting to make the sale. Let's say that Grocery World sees a chance to make a quick buck and on day one of the NRST being implemented, they keep the price of Item ABC $10. With the sales tax applied at the register, they don't care that you're paying $12.20, they just want the sale. If that scenario persists, then the consumers are the net loser (though there's a case to be made that +22% at retail is better than -45% on your gross income, but that's a discussion for another time).

While Grocery World is continuing to charge $10 for Item ABC, their competitor Circus Mart is savvy enough to realize that they can make the same margins as before plus a little extra if they drop the price of Item ABC down to $9.00. Obviously, Grocery World would be putting themselves at a competitive disadvantage if they continued to keep their prices at the old levels. This back and forth continues among competitors, and one of them realizes that at $7.80, they would be making the same margins as under the old income tax model, and they were totally fine with that markup.

Simultaneously, Item ABC has a competitor product at the same price point of $10 - Thing 123. The makers of Thing 123 are smart enough to realize that they have that identical $7.80 break-even point that Item ABC has at retail. Even if the retailers weren't bright enough to realize that continuing to offer the old price point is a losing proposition, so they can make their pricing cuts to remove their corporate income tax liability that was previously passed on to the wholesalers. (Remember, the wholesalers were taking that income tax paid and including it in their cost charged to the distributors, and the distributors were passing theirs on to the retailers who ultimately baked all of it in a the register where the consumers foot the bill for the whole thing).

If the makers of Thing 123 are selling their inventory for less, then it's going to have an impact at the retail level. Thing 123 would be a much more attractive option than Item ABC for savvy consumers.

Two different opportunities for market forces to dictate that the previously-buried corporate income taxes paid by the consumer at retail are weeded out under the NRST system.

If you stick around the FairTax/NRST discussion long enough, you'll find that most opposition to the plan comes from folks who a) misrepresent the terms of the plan, either from ignorance or intellectual dishonesty, and/or b) inject hypothetical situations which are not part of the plan (e.g. assuming a higher tax rate than calculated in the base bill, deliberately flip-flopping between inclusive vs. exclusive tax calculations where it's advantageous to make their case; presuming double-taxation between the NRST and mistakenly presenting the income tax as returning, etc.)

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Sales taxes cause more damage to an economy than income tax. They also have an impact on food and prescription
drugs, neither of which are discretionary spending…

If it means no more property taxes in Texas I'm in, paying taxes on something I already paid for is the biggest freaking FU to tax payers know to man.

I don't understand how this doesn't hurt the poor, that essentially pay no income tax as is? Would this not be devastating to them? I'm fine fricking them, but I dont' get it.

Most wealthy really don't consume much for their net worth, but they do pay some taxes on their income.

Labor is often times not taxed either, so I"m curious how that works? For example, there's no sales tax on paying a plumber, landscaper, etc in most states.

So its not really a "consumption" tax, its a tangible goods tax.

I personally just don't see how it doesn't curb spending.

ETA: Most wealthy also have significant "business expenses" that help their lifestyle. So we aren't taxing corporations at all? I don't see how that's not abused massively by anyone that can including small business owners.

Id support it is we eliminated all income, property, estate taxes. Basically all other taxes

its my understanding that the only purchases that are taxed are retail

private transactions between individuals (selling a used car, or Facebook Marketplace type sales, for example) would not be subjected to NRST

is that correct Vox?