Fair Tax: The Myths of Inequality

A recent editorial in the Wall Street Journal by Kevin A. Hassett and Aparna Mathur debunks the idea that the Fair Tax is unfair to the poor because it is not progressive.

A recent editorial in the Wall Street Journal by Kevin A. Hassett and Aparna Mathur (requires subscription) provides a key answer to one of the most frequent charges against the Fair Tax: that it is unfair to the poor because it is not progressive.

For those who don’t know what the Fair Tax is, it is a long-standing proposal to eliminate the entire income tax structure and replace it with a consumption tax on all goods and services. The percentage is a matter of debate, but the idea is that it would put control of taxation back in the hands of citizens who, by their purchases, could control the amount of tax they pay.

The Fair Tax has been derided because of the fixed percentage, which many perceive to be unfair to the poorer because “the rich” would pay the same percentage as the poor.

The authors point out that despite all the thrashing and manipulation of income taxes that:

“…, in 2010 the bottom fifth accounted for 8.7% of overall consumption, the middle fifth for 17.1%, and the top fifth for about 38.6%. Go back 10 years to 2000—before two recessions, the Bush tax cuts, and continuing expansions of globalization and computerization—and the numbers are similar. The bottom fifth accounted for 8.9% of consumption, the middle fifth for 17.3%, and the top fifth for 37.3%.”

It seems that regardless of how much manipulating Washington does with the rates, preferences and structure of the income tax, everyone at each level figures out how to maintain their level of lifestyle without giving up more money to Washington.

If we assume that the Fair Tax would apply a fixed percentage of tax to each purchase in the above categories, the percentage of taxes paid by each segment of the population would be the same: 

  • 8.7% by the bottom fifth,
  • 17.1% by the middle fifth and 
  • 38.6% by the top fifth.

Regardless of who wins the election, next year will bring a major Congressional push for tax “reform.” Our economy and our country would do very well if we steer this push into the Fair Tax.

Here’s what it would mean to you and me:

  1. It means you take home your whole paycheck. All payroll withholding is eliminated, including Social Security and Medicare. It eliminates all capital gains and investment income taxes, encouraging people to save and invest.
  2. It eliminates all gift and inheritance taxes, allowing people with a lifetime of savings to pass them on to their heirs.
  3. It eliminates the hidden taxes that everyone now pays. Corporations don’t pay taxes, they collect them. All of a corporation’s income, payroll and other taxes are embedded in the price of products and collected for the IRS. The Fair Tax will make our entire tax burden visible to everyone, creating a powerful check on Congress.
  4. Citizens will regain their freedom when Congress cannot “incent” them to do what they want. Congress will no longer be able to punish citizens for not doing what they want.
  5. The Fair Tax also means that you can stop paying for someone else’s tax deductions. Everyone can buy what they want, when they want.
  6. Another advantage of the Fair Tax is that it eliminates tax filings. It is estimated that our country spends over $300 billion annually just trying to comply with the 80,000 pages of regulations in our tax code.
  7. H.R. 25 will implement a system where all companies can compete on an even basis, and not suffer a disadvantage because their competitor is “better connected” to a member of Congress. 
  8. Employees will be able to work anywhere in the world and not be double-taxed.

Look into it. It’s worth your time.

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Stephen C. Eldridge February 12, 2013 at 03:31 AM
Frank, 1st, I did not say you were a "tax and spender". I did react to your apparent attacks on the rich not paying even more than they do, as unduly seeking to punish the rich which I (and Dr. Carson) believe is an irrationally flawed passion. The fact that the poor currently pay STATE sales taxes (to pay for STATE services) they make no contribution for FEDERAL services. Next, the poor would pay NO FT (and get a bigger tax welfare check) because of the operation of the Prebate. I am sure Trump or Buffet pay more in sales taxes than any neighborhood of poor people. While the rich defer IT on uch of their income and do much to avoid Inheritance Tax, THEY STILL PAY THE LION'S SHARE OF ALL TAXES COLLECTED BY THE FEDERAL GOVT. As Dr. Csrson said "Buffet put a Billion $ into the pot and your trying to punish him not not payin more". Frank, I find your passion to be class warfare's hatred and envy of class warfare. Have I at least correctly captured your complaint against the rich? If not please clarify. Your insult that I have no integrity 1st undermines your arguments, is baseless, opinionated and DEAD WRONG! I condone all LEGAL TAX AVOIDANCE (as opposed to illegal tax evasion) - there is no moral high ground in paying more tax than the law requires - there is moral high ground in making VOLUNTARY charitable contributions. I do not feel the hatred and envy of class warfare - I find such class hatred to be less than healthy.
Stephen C. Eldridge February 12, 2013 at 03:44 AM
Frank, Additinional response: In addition to my belief the Trump is perfectly OK to AVOID taxes LEGALLY, I do not believe we should change th tax law just to make him pay more - I believe the rich pay more than their "fair share". From your comments, I guess you take a more "Progressive" view which requires/demands more wealth redistribution - I believe there should be no FORCED wealth redistribution (Karl Marx was not one of America's Founding Fathers). Wealth redistribution (CHARITY) is to be VOLUNTARILY conducted by the PRIVATE SECTOR. Judeo-Christian charity is valued ONLY if it is VOLUNTARILY GIVEN FROM THE HEART OUT OF LOVE FOR THE LESS FORTUNATE - and would NEVER enslave people in handout dependancy.
Stephen C. Eldridge February 12, 2013 at 03:53 AM
Frank, Aditinal response: Your logic is that I lack integrity because I don't want to punish Trump/Buffet into paying even more than he already pays (BTW, in the year of Bufffet's famous "I pay a lower RATE than my Secy" , Buffet paid $7MM in TAX). I submit yours is bit a Progressive's attempt to demonize people like me who refuse to punish the wealthy. You cannot justify such punishment of the rich on moral grounds - its simly an invalid supporting argument. (notwithstanding that it works on "Progressives").
Frank Jones February 12, 2013 at 08:06 PM
Stephen...Again, you're referring to me as someone who wants to "punish the rich" however that is not my position. My position is, and has always been, that everyone should pay their fair share. It's just that you and I have different interpretations as to what the fair share is. You appear to define "fair share" in terms of total dollars paid in federal taxes. I prefer to define "fair share" in terms of percent of income paid. These are two vastly different concepts. The rich do pay more dollars in taxes but the poor and middle often pay a greater percentage of their income, a greater percentage of their discretionary income in taxes, and a greater percentage of their net worth in taxes. You argue that the rich pay "the lion's share of all taxes" as evidence that the rich pay too much. However, you fail to point out that the rich also control virtually all of the discretionary income as well as most of the financial wealth in this country. If you compare the financial wealth and discretionary income percentages of the top 1% to the percentage of tax dollars paid by them, you'll see that the wealth and income percentages exceed the tax percentage. Do the comparison and you'll see that the rich are not overtaxed. You argue that I'm in favor of wealth distribution, but that is incorrect. Wealth distribution is taking from one group to give to another. I haven't called for that. Instead, I've called for those who benefit most to pay the most.
Frank Jones February 12, 2013 at 08:26 PM
In respect to wealth distribution, the greatest wealth distribution is Social Security and Medicare. These two programs take from the young and gives to the old. These programs are taxes which the working class pays on every dollar earned and yet, you give them zero credit for their contribution to these programs. The working class pays 7.65% of their earned income for these taxes, plus the additional employer portion that would otherwise be their wages. Combined, it could be argued that they're paying 15.3% of their gross income. This percentage would equate to 30%, 50%, or even 100%+ of their taxable income or discretionary income. With this tax alone, most of the poor and middle class are paying more than the rich. Stephen...my comment regarding your "integrity" was based upon the fact that you are a financial professional. As a former CPA, you have a better than average understanding of the tax code and understand the concepts of dollars vs. percentages and income vs. discretionary income. And yet, you ignore the fundamental fact that percentage of discretionary income is the key tax metric. By doing so, you show your bias, but then again, so do I. I just expect CPA's, past and present, to represent the facts and not use buzz words such as: socialism, marxism, enslave, handout dependency, class warfare and wealth distribution in an attempt to argue that the rich are overtaxed.
Stephen C. Eldridge February 12, 2013 at 09:06 PM
Frank, Thank you for explaining - you are helping me to understand your perpective more clearly and be point out our still different approaches. You seem to define "fair shar" in terms of "benefit" - that the rich don't pay in proportion to thier relative benefit the derive (please correct me if I mis-understaand you). I do not believe that is the correct basis for determining "fair share". Using the "benefit" one achieves is to take the end results (outcomes) approach. I believe the american approach to be to insure no American is deprived of a fair shot (not that we must pay him to give him a fair shot), understanding the realities of life that some ared smarter, more diligent, less risk-averse, lucky etc, AND that our Constitution did not intend to make everyone's OUTCOME the same merely to permit EQUAL OPPORTUNITY to PERSUE (NOT GUARANTEE) happiness. Thus, the rich man does not owe his "fair share" based upon the degreee of his relative success, but based upon more mundane cost-accounting principles. The only fair way (think of your condo or timeshare) to allocate the cost of the military is EQUALLY. Further, to force one person to pay another's "fair share" of America's common charges (essentially,the military) IS WEALTH REDISTRIBUTION.
Stephen C. Eldridge February 12, 2013 at 09:22 PM
Frank, Although the poor pay SS/Medicare taxes, they are nt paying a dime into the general "pot" to pay for e.g., the military (our principal common charge). In fact, while they do pay into SS/Medicare ( a specif benefit program), they derive a great deal MORE in benefits from these programs than they pay for. Yo did not mention that even in these 2 programs MORE wealth redistribution takes place in that the rich subsidize the SS/Medicare benefits of the poor (I can explain in greater detail). I see the proble a passion has overwhelmed your reason. I still grasp financial info. It your tie-ing of discretionary wealth to "fair share" that I strongly disagree with (I don't care how much more discretionary income the rich get to keep, because I don't think that is the relevant determinant (that is the focus of our disagreement - to say that my view is the result of a lck of integrity is a false argument, it comes across as a Saul alinsky attempt to demonize those who disagree with your point of view. Because I disagree with your prpective does not mean that I have no integrity). I use facts. When I find as a fact that the "bottom line" as we financil peope say, is that one man is paying for another's fair share, I call that marxist wealth redistribution, I believe that welfare dependancy is enslavement, etc. In my opinion the rich are overtaxed IN RELATION BECAUSE THEY PAY A DISPROPORTIONATE SHARE OF THE TOTAL and that THEIR DISPOSABLE WEALTH IS NOT AT ALL RELEVANT..
Stephen C. Eldridge February 13, 2013 at 02:31 AM
Frank, Just checking. Do you think it "fair" that the rich pay 100% of the nion's common costs? Do you think they should pay MORE than 100% of our nation's common costs (I.e., should they be forced to fund welfare - "wealth redistribution"?
Frank Jones February 13, 2013 at 12:51 PM
Stephen...with your condo analysis you appear to be saying that there should be an equal fee that all Americans should pay to be a citizen. This fe is to cover the"common costs". However, your condo CAM analysis is flaws in that you assume everyone has the same size condo and the same number of condos. They don't. As such your condo argument would actually call for the rich to pay more. To expand on you condo scenario...taxes pay for the common good. One aspect of the common good is a strong and stable economy. In that respect taxes fund programs that insure the economy won't crash and if it does crash, that we recover. Taxes are a form of insurance and like all insurance, the greater the insured assets, the more you pay. SS/Medicare...there is no current benefit to those that pay these taxes. All they receive is a promise that there may be benefits in the future...unless the Republicans successfully kill the programs or gut them. These taxes pay for the current common good of the current retirees/elderly. You lose this argument. In not tying discretionary wealth to taxes but discretionary income. Businesses pay tax on their net income after their reasonable or not so reasonable costs to exist. People on the otherhand pay taxes on what they make less allowed deductions which often are less than their reasonable costs to exist.
Sharon Swanepoel February 13, 2013 at 04:16 PM
I've just uploaded a PDF at the request of Stephen Eldridge as his computer was having difficulty getting it to load.
Stephen C. Eldridge February 13, 2013 at 07:52 PM
Frank, Thank you Part 1 Your 1st para:. Consider my difference perspective and analysis. Ye, a condo charges more $ for larger units, but that is not because they are trying to apply Progressive principles and "tax the rich" more. What the condo is doing, is applying the common cost-accounting principles and "allocating' the commoon charges to all members on a "scientifically sound "equitable" basis. A 2 B/R unit requires more maintenence, brings in more foot traffic, uses the elevators more, etc. Thus, they try to apportion common charges based upon each unit's RELATIVE IMPACT ON THE TOTAL COMMON CHARGES. What out Republic is supposed to pay for (only the military and a couple of other items) represents our national common charges. What that protects IMHO is 99.9% each person's LIFE & LIBERTY (yes it also protects our property - a RELATIVELY insignificant elemnt -, but critically, protecting property does NOT have any meaningful impact on the total cost of the military. Your 2nd para: Taxes are NOT supposed to be paid for the common good - they should be paid ONLY for the limited services the Constitution directs. They are not to bolster the economy. They are not insurance.Forgive my choice of words, but this sounds like Progressive mush tht tries to mask and ury the intent of the Founding Fathers. We did not establish a marxist welfare state.
Stephen C. Eldridge February 13, 2013 at 08:04 PM
Frank, Part 2 I lose the argument ONLY IYHO. The fact that our politicians have inflicted the Ponzi scheme of SS/Medicare does not chaange a couple of underlying facts. Take SS - if it were run by the private sector, contributions of the young would go into a true trust fund AND no-one else subsudizes your retirement pension. FDR rammed through this Marxist concept (after scaring the Sup Ct into caving in to him) - that does not that America is now a Socialist nation and it does not mean that we should not return to the Constitution. Your Last para: IMHO, You are trying to.force the individual model into a business model. Yes, a business should pay tax on only its NET profits (after deducting all EXPENSES REQUIRED TO EARN THAT INCOME - not what businesses need to survive). That is not the same model as indiividuals who are not in business. An individual does not need to deduct $x because he has children, in order to earn his salary. Your rationale would lead to individuals paying tax on their salaries, with little or no deductions..
Frank Jones February 16, 2013 at 06:21 PM
Stephen...You seem to be changing your position in your condo/tax analogy. First you stated that everyone should be billed equally. Now, you're saying that people should be billed based upon size and usage. Our tax system is based upon size and usage as in, the more you make, the more you pay and the more you make the more you've benefited and used the U.S. infrastructure. Your perspective as to our country (which is a Constitutional Republic with a Democrat form of Government) is out of line with the thinking of Constitutional scholars and the American people. You state that the government is ONLY supposed to provide for our defense/ military and little else. However, you are wrong as there are very few limits as to the federal govt's power under the Constitution. But even so, the mere responsibility of defending the USA includes providing for a strong/sound economy since a strong economy pays for the military and will allow us defend ourselves. For a supposedly educated individual who has had coursework in macro & micro economics, history, social sciences, along with accounting, business and law, your knowledge is extremely limited. The USA is not a socialist country. We're not Marxists. And we haven't diverged from the Constitution.
Frank Jones February 16, 2013 at 06:22 PM
The Constitution is not an all-encompassing document. Instead, it is a framework and a guiding set of principles that our founders wrote. Just because something isn't included in the Constitution doesn't mean a right or a duty doesn't exist. The right or duty is implied and interpreted by the Congress, President and ultimately, the Supreme Court. Getting back to taxes...As a former CPA, you know your comments regarding business vs. individual taxes is full of holes. You state that businesses should pay tax only on its net profits after deducting all expenses required to earn that income. However, businesses often expense items that aren't REQUIRED to generate income such as: corp jets, luxury offices, business vacation/retreats, and more. Businesses also use accelerated methods of expensing fixed assets and as such, expense them before generating income. This flies in the face of accounting 101. You argue that individuals aren't entitled to deductions since their expenses don't generate income. However, that is wrong (again!). Individuals do incur expenses that allow them to earn income...A car is needed to get to work, can't go to work naked, many need child care, have to have a place to live to go to work, etc. These are the things that the standard deduction and personal exemption are supposed to be for. However, the standard deduction and personal exemption aren't sufficient to cover reasonable living expenses.
Frank Jones February 16, 2013 at 06:22 PM
You concluded that my “rationale would lead to individuals paying tax on their salaries, with little or no deductions.” Once again, you’re wrong. My argument is that most individual are overtaxed in that the government doesn’t allow sufficient deductions to cover the reasonable costs of living and working in the US.
Stephen C. Eldridge February 16, 2013 at 09:18 PM
Frank, You are mixing up what I am saying. Everyone should pay EQUAL DOLLARS OF TAX because, everyone has an EQUAL IMPACT ON THE COST OF THE MILITARY, i.e., the relevant cost accunting principle. In a condo, different size units have different impacts on the total cost - a 2 B/R unit costs more building mainenance, etc than a 1 B/R unit. You ake a mistake when you loook at "size and usage" (which I am saying is relevant to relative impact on total cost) and try to relate it how much you make or benefitted. That is your disconnnect. IMHO, you sir, GREATLY expand the govt's obligation to defend us militarily, by giving the fed gov the power to do anything it wants that it believes wil help the economy. EVEN TE LIBERAL JUSTICES IF THE SUP CT DID NOT ALL GO ALONG WITH YOU ON THAT - they voted 7-2 to say Obamacare could not frce you to buy Health Insurance under the commerce clause. I hope you are not relying on that being a tax because that part of the opinion is ridiculous. Frank, it is sad that you think/declare my knowledge to be so limited, IYHO. I submit that ony the most extreme Marxists in this country would believe htat we are not yet Marxists and, (please, I mean no personal offense) IMHO, anyone who thinks that we have not diverged from the Constitution of our Founders is someone with whom I feel it is futile to discusss such issues. Let's keep to explaining facts and analyses of tese tax reform proposals.
Stephen C. Eldridge February 16, 2013 at 09:39 PM
Frank, You are confusing what i am saying. Everyone should pay EQUAL DOLLARS OF TAX because that represents each person's RELATIVE IMPACT ON THE COST OF THE MILITARY. In the condo larger units have a larger impact on total costs (more maintenance, etc) so their owners must contrinute on that basis NOT because they have succeeded more or make more money but that repreents their rrealtive impact on the cost (i.e. the only relevant cost accounting consieration). You GROSSLY expand the govt's powers. The power to protect us militarily should not be stretched that far to include a healthy economy to pay for the military. I do not believe the 4 liberal Sup Ct justices would vote for that. It is sad that you find my knowledge so limited. IMHO, Only a 100+% Marxist would say we are not behaving like a Marxist state. Further, anyone who thinks we have not strayed very far from the Constitution of our Founders is someone with whom I find it futile to discuss such matters - let's stick to facts and analyses of tax proposals.
Stephen C. Eldridge February 16, 2013 at 10:02 PM
I (retired lawyer) submit the Constituion enuerates ONLY ceratin powers GRANTED to the fed gov and expressly states that any power NOT so granted is reserved to the States and to the people. Thus, Congress CANNOT do anything it wants uness the Constitution expressly prohibits it. I was speaking generically. When I say pbusiness can deduct all expenses REQUIRED to earn income , that is English for ALL DEDUCTIONS LEGALLY ALLOWABE BY THE TAX LAW. You think corporate jets used for business travel are not necessary then - when you run a business that makes tons of money, don't rent one. Businesses that can prove that corporate jets are used for business purposes can LEGALLY deduct the cost. Entrepenures are free to operate as they wish as long as it is in furtherance of their business. (please dont get into a nitty gritty discussion of specific tax deductions). I do not know what point you are making about accelerated depn - I think yoou are comlaining about it - let's not go there: it appears that you hate any tax "easing". Your last para also appears confused. Yes, individuals can deduct (some) expenses that are incurred to produce taxble income. However, certain things like clothes and commuting are simply not allowable deductions. The SD is intended to provide a MINIMUM allowable amount of ALLOWABLE DEDUCTIONS. the PE is not intended to cover your other necessary expenses - its just a minimal amount to take poor people off the tax roles (wrong, IMHO).
Stephen C. Eldridge February 16, 2013 at 10:09 PM
Frank, OK, that's clearer - I think I see the point you are trying to make. I sometims feel that way as well. However, if you take that far enough, almost everythih you do contributes to going to work (food, etc. etc etc).. The tax code makes a practical cut off on deductions. Progressives have (over) compensted for this - 1/2 the people ay no IT and recieve TAX WELFARE CHECKS. I believe the tax code must e used ONLY to apportion the cost of the milktray NOT to redistribute the wealth NOR make ony rich people pay for the military (i.e., not based uponn what you can afford to pay or upon how much money you need to survive or to earn income).
Stephen C. Eldridge February 16, 2013 at 11:03 PM
Frank, I have replied to your 3 sets of comments some twice, but they seem to disppear. I will have to talk to Support.
Frank Jones February 18, 2013 at 07:11 PM
Stephen...You and I will never agree on much and I'll again point out some of the fallacies in your arguments: 1. Military spending/taxes - you assert that everyone should pay equally for national defense and benefits equally. And yet, much of our national defense dollars are spent overseas where 95-ish percent of Americans never travel. Much of our national defense dollars are spent safe-guarding assets and people engaged in international commerce. But your argument is that each individual should pay equally? 2. Obamacare - Really? The justices did rule that the Gov't can't force you to purchase insurance, but they did rule that the Gov't can implement a fee (a tax as declare by a conservative justice). We can have a lengthy debate on health insurance if you like. 3. I'm a Marxist? Get real! Just because someone has views to the left of your ultra-conservative dogma doesn't make them a Marxist. 4. Tax Deductions - you're mixing issues as they relate to tax deductions. You're correct that businesses and individual are entitled to all legally allowed tax deductions. That's not my point. My point is that not all legally allowed tax deductions should be legal. Likewise, not all expenses currently prohibited should be prohibited. For instance,you know that most corp jets are very loosely affiliated with a true business purpose, yet fully deductible. You know that individuals incur legitimate expenses to earn income which are denied.
Frank Jones February 18, 2013 at 07:18 PM
Stephen...You're ultra-conservative talking-point idiocy was grossly apparent in your closing reply. Specifically, you refer to 50% of people who pay no income taxes but receive welfare checks. On these points, you're WRONG. Roughly 47% of people pay no income tax but do in fact pay taxes...sales, state income, gasoline, and payroll taxes. Many of these people are retirees who have already paid taxes and are living on their retirement savings. The majority of the rest are the working poor who simply don't make enough money to survive let alone to pay federal income taxes.
Stephen C. Eldridge February 18, 2013 at 10:12 PM
Frank, to me answered in 2 parts - Part 1 Yet again, you DECLARE my arguments to be fallacies (they are so, ONLY, IYMHO). Most intelligent people not only dismiss such DECLARATIONS, they also wisely discount somewhat, the arguments of the DECLARER. 1. I do not know where you get your facts about military spending or your reasoning. I don't think our military protects int'l shipping in general (we would keep open the Straits of Hormuz for protection of the US economy, which benefits us all EQUALLY - remember, that means our most precious assets of our lives and liberty, not your life-outcome-oriented approach which - forgive me - is reminiscent of Marxism). The miitary predominantly protects Americans' lives and liberty,EQUALLY. 2. Obamacare: As a retired tax lawyer, I (and many other critics) believe that J. Roberts finding it was a "tax" was CLEARLY ERRONEOUS and that he did so for misguided political purposes. Perhaps we can discuss health insurance. 3. Frank, IMHO, your views are very far left. BTW, I prefer the designation of a Constitutionalist (Ultra - Conservative sounds negative and I am not sure what that rreally means anyway - Conervative means different things in different contexts).I believe we signeda contract, the Constitution, and that we should all be held to the spirit of that very wisely drawn contract.
Stephen C. Eldridge February 18, 2013 at 10:17 PM
Response (Part 2) 4. Taxes. Frank, If you want to change the tax law, then go lobby for changes. I live in the world Congress gave us - that is reality. Anyone who volunteers to pay extra taxes may be a patriot, but that is something each of us is free to decide on his own. I do not know where you got your FACTS that most corp jets are "very loosely affiliated with trues business purpose" - I think that is a typical Liberal trick of merely DECLARING facts to be true. How could you possibly know that.I assume you are not a high-flying entrepreneur who make such buying-renting decisons. , Do you have the right to tell Roger Federer that he must haul all of his tennis gear onto a commercial airliner (and arrive more tired) or tell a big deal maker to close a big deal in an airport coffee shop? Frank, your resentment against success comes through time and time again.
Stephen C. Eldridge February 18, 2013 at 10:34 PM
Frank, There you go again. Will you ever learn. I know you "Ultra" Liberals believe in your bible, Alinsky's Rules for Radicals, including the tactic of demonizing nd ridiculing the opposition (because the Marxism you are selling does not appeal to most educated people and you have to sway the uneducated masses. Insults diminish YOU, not me. May I suggest that you would do better (with educated people) with well reasoned analytically supported arguments. DECLARE,DECLARE, DECLARE - I guess that works with your fellow Liberals. I believe I explained this but it did not get through to you. Sales taxes, State Income taxes are paid to be "serviced" by one's STATE - these payments contribute NOTHING to the covering our mutual costs of the FEDERAL govt. the P/R taxes paid by the poor are but a small amount of the TOTAL BENEFIT they breceive FROM US - we give them welfar AND hey do not contribute to the general fed burden. Similarly, the small amount of fed gas tax paid by the poor, goes to pay for maintaining the federal highway system and is thus somewhat closer to SS/Medicare type of program than to general expenses like the military (I would guess that the $125 of RC's alone, without even cosidering the waiver of IT) greatly exceeds fed gas tax revenues from the poor.
Frank Jones February 20, 2013 at 03:21 AM
Stephen…You consider my views very far left and I consider your views extremely far right. You consider yourself a Constitutionalist just as I consider myself a Constitutionalist. We have different interpretations of the Constitution. Having ultra-conservative views doesn’t mean you’re any more correct than myself or others. You and other attorneys are entitled to your view of Obamacare and Chief Justice Robert’s opinion. However, Roberts is a Justice of the Supreme Court and his opinion trumps yours. Many attorneys that believe that the decision was accurate and that the dissenting justices – Scalia, Thomas, and Alito – did so for political or ideological reasons. Taxes...Stephen, I have extensive tax knowledge as well as business knowledge. I handle mergers & acquisitions and business planning for high net worth individuals. Many of my clients have corporate jets and most use the planes for business purposes but mostly for pleasure. There is no “liberal agenda” but merely informed personal observation. The poor and taxes…Again, you’re bashing of the working poor and seniors living on retirement income is unbelievable. The working poor pay taxes, just not Fed Inc Tax. Seniors living on their savings have of already paid their fair share. You declare that they contribute nothing and yet, the working poor are paying your SS and Medicare benefits. Nice! If you're drawing SS & Medicare, you're a hypocrite and a Socialist.
Frank Jones February 20, 2013 at 04:09 AM
Let's leave the rhetoric behind and look at financial and tax facts of the working poor. Consider a married two-wage earner couple with 2 young children and combined gross wages of $50K. This family pays $3,825 of FICA tax, but receives zero current benefit. This family has living expenses and pays $12K for shelter, $8K for food, $10K for childcare, $5K for health insurance, $5K for gas, $1K for car insurance, and $5K for car pymt. In total, they have to spend $46,000 to live/work plus the $3,825 of FICA tax for a total of $49,825. As such they're left with $175 for all other expenses and income taxes. Federal income tax will be $569 so they're now in the hole by $394. My argument is that people should pay taxes based upon reasonable discretionary income. In this scenario, their discretionary income was $175 and yet they are paying income tax of $569. That's an effective tax rate of 325% not to mention FICA taxes; include FICA and the effective tax rate becomes 2511%.
Stephen C. Eldridge February 20, 2013 at 01:40 PM
Again, merely DECLARING me to be "Ultra-C" (Whatever that means & how it helps your Saul alinsky 101 emonize the enemy). Scaliaand I belive in the rule of law and apply the canons of legal interpretation to interpret the Constitution. These canons are utterly devoid of politics. Although no longer in tax practice, I am confient that the portion of your clients' use of their jets for pleasure is NOT DEDUCTIBLE. I recall a rule which DISALLOWS ANY portion of the use of a car UNLESS the car was used over 50% for business and then ONLY for the business pupropses. I don't see suport for your accusation that I bash the working poor and retitrees. I do take my SS checks - I am recoveringg just a smaall portion of the SS & IT that I ahve aid to supporta lot of pooor peoople. I am still vey deep in the hole.
Stephen C. Eldridge February 20, 2013 at 01:50 PM
There you go again Comrade Marx, you want people to pay taxes based upon their NEEEDS with the balance being paid by those with additional MEANS. Your view is that the Constitution guarantees OUTCOMES while we believe that it guarantees FREEDOM TO FLY not OUTCOMES., Everyone must pay his fair share of the maintenence and we are all free to fly as far and high as ur investments, energies, talents etc take us. It is incomplrehensible to me that you consider yourself a Constitutinalist while you believe in a outcome based approach. Forfive me Frank, but I believe that you delude yourself in order to clothe your Marxist views in Constitutinal-sounding words. The fact your guy pays SS and gets no current benefits (he does - disabiliity insurance coversage) he merely "pre-pays" for his eventual benefit its somewhat like life or LTC insurance.
Stephen C. Eldridge February 20, 2013 at 05:11 PM
Frank, to expand on my lasr answer: For some reason you ignore totallly what i say and go back to reapeating your view. As I have said before a poor person aying SS/Mdicare ax pays only a small portion of the benfit he gets - WE PAY for him.Any State tax he pays is for STATE SERVICES not FEDERAL (separate conversation). Let's agree to disagree with each other's analytical views. BTW, I do not mean to inflame you (onlly to elicit humor) by calling you Comrade Marx. Even if you view is only modified-Marxism (perhaps you mean only that the rich must provide a good life for everyone and the rich can then enjoy any excess money they may be able earn), but even that is Socialism in my book ( and un-Constitutional) AND it always gets worse because people in office can never steal enough money fro the rich to buy votes from the non-rich.


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