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The Fair Tax would increase inequality in the USA by shifting the burden of tax payment onto the poorest. The rich spend between 1 and 10% of their income on g

The Fair Tax would increase inequality in the USA by shifting the burden of tax payment onto the poorest. The rich spend between 1 and 10% of their income on goods and services, whereas the poor spend upwards of 100% of their income, and even more by going into debt to cover life expenses. All this tax would do is ensure that the wealth of the rich remains locked up and out of circulation forever, multiplying tax free in hedge funds (basically sucking even more money out of the economy), while the poor pay for everything.

anigbrowl 4y ago
Just according to keikaku. (Translator's note: keikaku means plan.)
- kstenerud 4y ago
  It's not really a plan per se; it's just a natural consequence (or emergent phenomena, if you will) of a political system where one must already be rich and connected in order to become a senator and thus affect the laws of the land. Not all countries have this problem.
  - anigbrowl 4y ago
    My post was more bleak sarcasm than analysis, but I think it's about 50-50. Perverse incentives are part of the issue, but there are networks that diligently and patiently work to maximize their number and perversity, eg applying the lessons of selectorate theory in a maximally adversarial rather than diagnostic way. https://en.wikipedia.org/wiki/Selectorate_theory https://en.wikipedia.org/wiki/Selectorate_theory
no-s 4y ago
> The Fair Tax would increase inequality in the USA by shifting the burden of tax payment onto the poorest. So there are some provisions to address this: - basic rebate: every person gets a rebate corresponding to a base amount of tax paid; this is intended to ensure poverty-stricken folks are not taxed out of subsistence (HHOS). This is like earned income credit but it’s streamlined so the bureaucracy is minimized and there is no magical cutoff. It’s optional so progressive types can refuse it. - tax only first sale: only new goods and services are taxed. resale is not taxed. However this does mean direct services are taxed and that may be unpleasant for those who earn by invoicing for service (lawyers, truck drivers, etc). OTOH consumable things like food, disposable diapers, etc will always be taxed - Only the federal individual income tax is repealed and outlawed. There’s plenty of taxation schemes left and some even applies to wealthy individuals and corporations. I question your explanation of “rich get richer, poor pay for everything”, it doesn’t seem obvious. Hedge funds serve a purpose or they wouldn’t exist, but you seem to imply they only serve to pull money out of the economy. That at least would be deflationary, but AFAICT it seems like the appreciation of hedge funds at least creates wealth that gets put to some use in further capitalization. Which grows the economy, so I scratch my head at your characterization. Furthermore “the poor pay for everything” seems like it could be substantiated only if the actual amount corresponding to the 100%+ you claim the poor will pay exceeds the amount corresponding to the 1%-10% the rich will pay such that the latter is lost in the noise. The reality even in the current tax scheme is the rich pay for everything eventually (even more so in California, the pinnacle of benevolent taxation, up yours Franchise Tax Board).
- anigbrowl 4y ago
  - basic rebate: every person gets a rebate corresponding to a base amount of tax paid; this is intended to ensure poverty-stricken folks are not taxed out of subsistence (HHOS). This is like earned income credit but it’s streamlined so the bureaucracy is minimized and there is no magical cutoff. It’s optional so progressive types can refuse it. How are you going to minimize the bureaucracy? Poor people are still going to have document all their income/assets to qualify for a rebate, richer people who hate taxes will channel their income through some sort of trust while claiming that their designer suits are owned by the trust and administrators are required to wear them like any other employee. Hedge funds serve a purpose or they wouldn’t exist As does Fentanyl, but I bet you don't think it's a good idea to sprinkle it on your cornflakes. As does fentanyl, but that doesn't mean it's a good idea to sprinkle it on your cornflakes.
  - no-s 4y ago
    > Poor people are still going to have document all their income/assets to qualify for a rebate, nope, no qualifications, no means test. Only one rebate per person, same amount for each person, computed from poverty line statistics. Children too, legal guardian collects. > As does Fentanyl, but I bet you don't think it's a good idea to sprinkle it on your cornflakes. I’m not sure how to construe your analogy. I would agree its inappropriate to eat hedge fund participants for breakfast, but OTOH Fentanyl does have a legitimate use even if some might abuse it as a cereal topping. Perhaps you should clarify your original point instead. Fair Tax isn’t really intended to address wealth disparity and the outsize influence of the wealthy. The Fair Tax asserts the defects of the Income Tax outweigh the virtues, particularly WRT to transgressions against individual rights, costs vs benefits, and exceeding limited government. It's an alternative tax system. The macroeconomic impact is debatable, static analysis is probably an error due to the outsize influence of perverse tax incentives.
    - anigbrowl 4y ago
      no qualifications, no means test. Only one rebate per person, same amount for each person Ah, so by 'base amount of tax paid' you mean averaged across the population? A rebate generally implies a refund of prior payment, so I found your summary confusing. I’m not sure how to construe your analogy. That just because something has a purpose does not imply it is a net good. In general I think high concentrations of wealth are bad on a systemic level, like too much sugar leading to diabetes. So I'm not sure that the capital allocation performed by hedge funds is a necessity for an economy to operate sustainably.

anigbrowl 4y ago

Just according to keikaku. (Translator's note: keikaku means plan.)

kstenerud 4y ago
It's not really a plan per se; it's just a natural consequence (or emergent phenomena, if you will) of a political system where one must already be rich and connected in order to become a senator and thus affect the laws of the land. Not all countries have this problem.
- anigbrowl 4y ago
  My post was more bleak sarcasm than analysis, but I think it's about 50-50. Perverse incentives are part of the issue, but there are networks that diligently and patiently work to maximize their number and perversity, eg applying the lessons of selectorate theory in a maximally adversarial rather than diagnostic way. https://en.wikipedia.org/wiki/Selectorate_theory https://en.wikipedia.org/wiki/Selectorate_theory

no-s 4y ago

> The Fair Tax would increase inequality in the USA by shifting the burden of tax payment onto the poorest. So there are some provisions to address this: - basic rebate: every person gets a rebate corresponding to a base amount of tax paid; this is intended to ensure poverty-stricken folks are not taxed out of subsistence (HHOS). This is like earned income credit but it’s streamlined so the bureaucracy is minimized and there is no magical cutoff. It’s optional so progressive types can refuse it. - tax only first sale: only new goods and services are taxed. resale is not taxed. However this does mean direct services are taxed and that may be unpleasant for those who earn by invoicing for service (lawyers, truck drivers, etc). OTOH consumable things like food, disposable diapers, etc will always be taxed - Only the federal individual income tax is repealed and outlawed. There’s plenty of taxation schemes left and some even applies to wealthy individuals and corporations. I question your explanation of “rich get richer, poor pay for everything”, it doesn’t seem obvious. Hedge funds serve a purpose or they wouldn’t exist, but you seem to imply they only serve to pull money out of the economy. That at least would be deflationary, but AFAICT it seems like the appreciation of hedge funds at least creates wealth that gets put to some use in further capitalization. Which grows the economy, so I scratch my head at your characterization. Furthermore “the poor pay for everything” seems like it could be substantiated only if the actual amount corresponding to the 100%+ you claim the poor will pay exceeds the amount corresponding to the 1%-10% the rich will pay such that the latter is lost in the noise. The reality even in the current tax scheme is the rich pay for everything eventually (even more so in California, the pinnacle of benevolent taxation, up yours Franchise Tax Board).

anigbrowl 4y ago
- basic rebate: every person gets a rebate corresponding to a base amount of tax paid; this is intended to ensure poverty-stricken folks are not taxed out of subsistence (HHOS). This is like earned income credit but it’s streamlined so the bureaucracy is minimized and there is no magical cutoff. It’s optional so progressive types can refuse it. How are you going to minimize the bureaucracy? Poor people are still going to have document all their income/assets to qualify for a rebate, richer people who hate taxes will channel their income through some sort of trust while claiming that their designer suits are owned by the trust and administrators are required to wear them like any other employee. Hedge funds serve a purpose or they wouldn’t exist As does Fentanyl, but I bet you don't think it's a good idea to sprinkle it on your cornflakes. As does fentanyl, but that doesn't mean it's a good idea to sprinkle it on your cornflakes.
- no-s 4y ago
  > Poor people are still going to have document all their income/assets to qualify for a rebate, nope, no qualifications, no means test. Only one rebate per person, same amount for each person, computed from poverty line statistics. Children too, legal guardian collects. > As does Fentanyl, but I bet you don't think it's a good idea to sprinkle it on your cornflakes. I’m not sure how to construe your analogy. I would agree its inappropriate to eat hedge fund participants for breakfast, but OTOH Fentanyl does have a legitimate use even if some might abuse it as a cereal topping. Perhaps you should clarify your original point instead. Fair Tax isn’t really intended to address wealth disparity and the outsize influence of the wealthy. The Fair Tax asserts the defects of the Income Tax outweigh the virtues, particularly WRT to transgressions against individual rights, costs vs benefits, and exceeding limited government. It's an alternative tax system. The macroeconomic impact is debatable, static analysis is probably an error due to the outsize influence of perverse tax incentives.
  - anigbrowl 4y ago
    no qualifications, no means test. Only one rebate per person, same amount for each person Ah, so by 'base amount of tax paid' you mean averaged across the population? A rebate generally implies a refund of prior payment, so I found your summary confusing. I’m not sure how to construe your analogy. That just because something has a purpose does not imply it is a net good. In general I think high concentrations of wealth are bad on a systemic level, like too much sugar leading to diabetes. So I'm not sure that the capital allocation performed by hedge funds is a necessity for an economy to operate sustainably.