6/25/2014 11:33 AM
Posted by toddcommish on 6/25/2014 11:26:00 AM (view original):
And lowering (or eliminating) corporate taxes will keep some of those businesses in the US rather than fleeing to other countries with more corporation-friendly tax laws, which means MORE jobs which means MORE tax revenue.

Liberals always seem to miss that point when crying for higher corporate taxes.
From the FAQ.


How does this affect U.S. competitiveness in foreign trade?

Because the FairTax is automatically border adjustable, the 17 percent competitive advantage, on average, of foreign producers is eliminated, immediately boosting U.S. competitiveness overseas. American companies doing business internationally are able to sell their goods at lower prices but at similar margins, and this brings jobs to America.

In addition, U.S. companies with investments or plants abroad bring home overseas profits without the penalty of paying income taxes, thus resulting in more U.S. capital investment.

And at last, imports and domestic production are on a level playing field. Exported goods are not subject to the FairTax, since they are not consumed in the U.S.; but imported goods sold in the U.S. are subject to the FairTax because these products are consumed domestically.
6/25/2014 11:36 AM
As a side note.... Govt gosta get spending. US GDP revised down again today to -2.9% for Q1.
6/25/2014 11:45 AM
Posted by moy23 on 6/25/2014 11:31:00 AM (view original):
Posted by bad_luck on 6/25/2014 10:39:00 AM (view original):
Posted by moy23 on 6/25/2014 10:34:00 AM (view original):
Posted by bad_luck on 6/25/2014 9:24:00 AM (view original):
What about b2b sales? If I sell a component piece to a company that makes a product, do they pay a tax on that component?
No. Only the end user pays taxes when the good or service is bought.

The thought is it will reduce the cost of producing goods because they don't get taxed 15 times along the way.... And through competition drive the end price down which offsets the 23% sales tax for the consumer.


The FAQ has all of this in it. Its a really good tax system.... Its fair and best of all its simple.
So if I run a small construction company and buy a truck, no sales tax?
From the FAQ.... The answer is no sales tax for the business. See below.



Does the FairTax tax used items?

The FairTax does not tax "used" goods but it is important to note that HR25 has a legal definition of the term "used". This is necessary to ensure that items are taxed only once and to prevent tax cheating.

Under the FairTax, for an item to be considered "used" it must be:

(1) purchased before the FairTax is enacted, or

(2) the FairTax on the item must have been previously paid.

Let's look at (1) above. Assume that Joe bought a new car in January of 2012. Let's further assume that the FairTax went into effect on Jan. 1, 2013. Since Joe owned the car before the enactment of the FairTax, it is considered a "used" car. It has the taxes from the existing tax system embedded in its price. Therefore, when Joe sells that car to Bill, Bill will not owe tax on the transaction.

Now, let's consider (2) above. The most common example is that Joe buys a new car for personal use and pays the FairTax on it. If Joe then sells his car to Bill, there would be no tax on it because the tax had already been paid. Let's look at another example. Assume that Joe owns a flower shop business and buys a van to use when making deliveries to his customers. No tax is charged on purchases for business purposes so that the FairTax on goods sold to consumers does not double tax, or put a tax on a tax.

If Joe decides to sell the van to his friend Bill (who is not in business) for use as his personal vehicle, then it would be a taxable sale to Bill. Why? Because Joe did not pay tax when he bought the van for his flower shop. Since no FairTax has been previously paid on that van, it is not considered used and the sale to Bill would be taxable.

If later, Bill decided he did not like driving a van and sold it to someone else, it would not be a taxable sale. Why? Because the tax had been previously paid (when Bill bought it from Joe) making the item "used"; and not subject to tax.
Sounds like a cluster ****.

Since you're such a fan of "read the website," check this out:

www.politifact.com/truth-o-meter/article/2008/jan/23/adding-fairtax/
6/25/2014 11:47 AM
Posted by tecwrg on 6/25/2014 11:04:00 AM (view original):
A truck is not a component piece, and your company is the end user with respect to the truck.  I would think that you would pay sales tax.
So some businesses would pay taxes on equipment but not others? And then I'd have to pass the cost of that tax along...and then add on the actual tax on the product/service I'm selling?

Sounds like a disaster for businesses. Especially when the gray market pops up so that everyone can avoid the tax.


6/25/2014 11:53 AM
A truck is a business expense.  Just as the salaries that it pays to workers would be a business expense.  Business expenses are baked into the price of goods or services that the business sells.
6/25/2014 11:55 AM
Posted by tecwrg on 6/25/2014 11:53:00 AM (view original):
A truck is a business expense.  Just as the salaries that it pays to workers would be a business expense.  Business expenses are baked into the price of goods or services that the business sells.
But now expenses are 23% higher if I have to pay the tax on them. And then I have to charge an additional 23% to collect the tax.

Does this seem like a good idea to you?
6/25/2014 12:00 PM
Posted by bad_luck on 6/25/2014 11:55:00 AM (view original):
Posted by tecwrg on 6/25/2014 11:53:00 AM (view original):
A truck is a business expense.  Just as the salaries that it pays to workers would be a business expense.  Business expenses are baked into the price of goods or services that the business sells.
But now expenses are 23% higher if I have to pay the tax on them. And then I have to charge an additional 23% to collect the tax.

Does this seem like a good idea to you?
That extra sales tax paid on a truck is more than offset by the now-eliminated corporate taxes that the business had been paying.  One would expect that the overall price of the product/services being sold by the business will go down rather than up.  Which, in turn, is good for the buyer of said product/services.
6/25/2014 12:03 PM
Posted by tecwrg on 6/25/2014 12:00:00 PM (view original):
Posted by bad_luck on 6/25/2014 11:55:00 AM (view original):
Posted by tecwrg on 6/25/2014 11:53:00 AM (view original):
A truck is a business expense.  Just as the salaries that it pays to workers would be a business expense.  Business expenses are baked into the price of goods or services that the business sells.
But now expenses are 23% higher if I have to pay the tax on them. And then I have to charge an additional 23% to collect the tax.

Does this seem like a good idea to you?
That extra sales tax paid on a truck is more than offset by the now-eliminated corporate taxes that the business had been paying.  One would expect that the overall price of the product/services being sold by the business will go down rather than up.  Which, in turn, is good for the buyer of said product/services.
Almost no small businesses pay corporate income tax. Only C corps pay it and almost all small businesses are set up as S corps.

So no, that wouldn't be true for a small contractor.
6/25/2014 12:14 PM
Posted by tecwrg on 6/25/2014 11:04:00 AM (view original):
A truck is not a component piece, and your company is the end user with respect to the truck.  I would think that you would pay sales tax.
My bad.  According to the FAQ, any business purchases specifically for business use (such as a truck) would not be subject to sales tax.
6/25/2014 12:16 PM
Posted by bad_luck on 6/25/2014 11:45:00 AM (view original):
Posted by moy23 on 6/25/2014 11:31:00 AM (view original):
Posted by bad_luck on 6/25/2014 10:39:00 AM (view original):
Posted by moy23 on 6/25/2014 10:34:00 AM (view original):
Posted by bad_luck on 6/25/2014 9:24:00 AM (view original):
What about b2b sales? If I sell a component piece to a company that makes a product, do they pay a tax on that component?
No. Only the end user pays taxes when the good or service is bought.

The thought is it will reduce the cost of producing goods because they don't get taxed 15 times along the way.... And through competition drive the end price down which offsets the 23% sales tax for the consumer.


The FAQ has all of this in it. Its a really good tax system.... Its fair and best of all its simple.
So if I run a small construction company and buy a truck, no sales tax?
From the FAQ.... The answer is no sales tax for the business. See below.



Does the FairTax tax used items?

The FairTax does not tax "used" goods but it is important to note that HR25 has a legal definition of the term "used". This is necessary to ensure that items are taxed only once and to prevent tax cheating.

Under the FairTax, for an item to be considered "used" it must be:

(1) purchased before the FairTax is enacted, or

(2) the FairTax on the item must have been previously paid.

Let's look at (1) above. Assume that Joe bought a new car in January of 2012. Let's further assume that the FairTax went into effect on Jan. 1, 2013. Since Joe owned the car before the enactment of the FairTax, it is considered a "used" car. It has the taxes from the existing tax system embedded in its price. Therefore, when Joe sells that car to Bill, Bill will not owe tax on the transaction.

Now, let's consider (2) above. The most common example is that Joe buys a new car for personal use and pays the FairTax on it. If Joe then sells his car to Bill, there would be no tax on it because the tax had already been paid. Let's look at another example. Assume that Joe owns a flower shop business and buys a van to use when making deliveries to his customers. No tax is charged on purchases for business purposes so that the FairTax on goods sold to consumers does not double tax, or put a tax on a tax.

If Joe decides to sell the van to his friend Bill (who is not in business) for use as his personal vehicle, then it would be a taxable sale to Bill. Why? Because Joe did not pay tax when he bought the van for his flower shop. Since no FairTax has been previously paid on that van, it is not considered used and the sale to Bill would be taxable.

If later, Bill decided he did not like driving a van and sold it to someone else, it would not be a taxable sale. Why? Because the tax had been previously paid (when Bill bought it from Joe) making the item "used"; and not subject to tax.
Sounds like a cluster ****.

Since you're such a fan of "read the website," check this out:

www.politifact.com/truth-o-meter/article/2008/jan/23/adding-fairtax/
Point 1.... I'm not fixated on screwing the rich like some people are. The fair tax taxes everyone equally if they choose to buy something. The wealthy still spend more $$$ than the poor thus they will still pay a higher % of the tax burden. In some cases like cigarettes the current 50% sales taxes will drop to 23% which will help the 28% of those in poverty that smoke to have more spendable money. The prebate is a nice addition and its simple.

Point 2.... Their will always be black markets. Right now I can gamble online even though its illegal. I can buy drugs and guns pretty easily. I also can buy things online and skip sales tax. The good news is those IRS agents out of jobs under a fair tax can find a job trying to close these markets. This is probably the biggest drawback to the Fair Tax. The good outweighs the bad IMO.... And if people are doing things illegally I hope they are prosecuted for it.

Point 3... Of course it's a political nightmare... At first. Its a big change and most people fear change. Retirees will get over it. For one it repairs the social security system which is bankrupt.... For 2 they will no longer be taxed on SSI, Pension, IRA incomes. They will have more money... And possibly a prebate too. I'm sure lobbyists will be ****** too... They can't lobby for tax loopholes anymore.

The FAQ addresses a lot of these issues.... Like social security and mortgage interest deductions.
6/25/2014 12:19 PM
Posted by tecwrg on 6/25/2014 12:14:00 PM (view original):
Posted by tecwrg on 6/25/2014 11:04:00 AM (view original):
A truck is not a component piece, and your company is the end user with respect to the truck.  I would think that you would pay sales tax.
My bad.  According to the FAQ, any business purchases specifically for business use (such as a truck) would not be subject to sales tax.
But then if I sell the truck, I have to determine how the buyer will use it in order to know if I need to collect the tax on the sale.

Fun.

6/25/2014 12:20 PM
On social security ... From the FAQ....

How is the Social Security system affected?

Like all federal spending programs, Social Security operates exactly as it does today, except that its funds come from a broad, progressive sales tax, rather than a narrow, regressive payroll tax. Employers continue to report wages for each employee, though, to the Social Security Administration for the determination of benefits. The transition to a reformed Social Security system is eased while ensuring there is sufficient funding to continue promised benefits.

Meanwhile, Social Security/Medicare funds are no longer triple-taxed as under the current system: 1) when payroll taxes are initially withheld; 2) when those withheld payroll taxes are counted as part of the taxable base for income tax purposes; and 3) when the promised benefits are finally received.
6/25/2014 12:21 PM
On the mortgage deduction.... Again from the FAQ

What about the home mortgage deduction?

The FairTax has positive effects on residential real estate far beyond this narrow question. Today’s homeowners, if they itemize (and 70 percent do not), pay their interest with post-Social Security/pre-income tax dollars. They then pay their principal with post-SS/post-income tax dollars. Those who do not itemize get no advantages at all. Under the FairTax, all homeowners make their entire house payment with pre-tax dollars.

With the FairTax, mortgage interest rates fall by about 25 percent (about 1.75 points) as bank overhead falls; this is a huge savings for consumers. For example, on a $150,000, thirty-year home mortgage at an interest rate of 7.00 percent, the monthly mortgage payment is $999.12 for principal and interest. On that same mortgage at a 5.25 percent interest rate, the monthly payment is $830.01. Over 30 years, the 1.75-percent decrease in interest rates in this instance results in a $60,879 cost savings to the consumer. Finally, first-time buyers save for that down payment much faster, as savings are not taxed.

Under the FairTax, home ownership is a possibility for many who have never had that option under the income tax system. Lower interest rates, the repeal of the income tax, the repeal of all payroll taxes, and the prebate mean that people have more money to spend and have an increased opportunity to become homeowners.
6/25/2014 12:23 PM
Posted by bad_luck on 6/25/2014 12:19:00 PM (view original):
Posted by tecwrg on 6/25/2014 12:14:00 PM (view original):
Posted by tecwrg on 6/25/2014 11:04:00 AM (view original):
A truck is not a component piece, and your company is the end user with respect to the truck.  I would think that you would pay sales tax.
My bad.  According to the FAQ, any business purchases specifically for business use (such as a truck) would not be subject to sales tax.
But then if I sell the truck, I have to determine how the buyer will use it in order to know if I need to collect the tax on the sale.

Fun.

Well its 1 of 2 choices... Either its used for business or its used for personal. One is taxed the other isn't.

Sounds like a mole hill... Not a mountain.
6/25/2014 12:32 PM
Honestly, that seems like some convoluted IRS loophole BS that I'd want to avoid.    If a finished good is sold, tax it.   When it's sold used, tax it again.   The market will set itself.   If my $1 candy bar becomes $2.75 because of the tax paid on the delivery truck, I won't eat candy bars.   Simple enough.
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