The Instigator
The_Silent_Consensus
Con (against)
Losing
16 Points
The Contender
beem0r
Pro (for)
Winning
24 Points

The FairTax

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Voting Style: Open Point System: 7 Point
Started: 2/17/2008 Category: Politics
Updated: 9 years ago Status: Voting Period
Viewed: 2,695 times Debate No: 2715
Debate Rounds (3)
Comments (34)
Votes (12)

 

The_Silent_Consensus

Con

Note: if you accept this debate, you are arguing for the FairTax itself, not the general principle of a consumption tax

I'm going to sum up my points of why I don't support the FairTax:

1. It is regressive. That's Econ 101

2. Their math is fuzzy. Not only do they make the mistake in counting the prebate as negative taxation instead of additional income, but their notion that we'll see no increase in prices, everyone will get a pay raise and a prebate, everyone is better off is saying there's such thing as a free lunch. There isn't. I will respond to that notion as simply as I can:

Simply, the embedded taxes are removed, prices should go down. FairTax brings it back up, and then somehow, the workers also get a pay raise (from no withholdings). If the price is the same and % of the price that's tax is still the same, then that cannot possibly work. There's no such thing as a free lunch. Their way of calculating it is saying that the payroll taxes are passed entirely onto employees with lower wages, and entirely onto consumers with higher prices. Sorry, they can't have it both ways. In reality, if these taxes are currently passed entirely onto workers through lower wages, then the prices will either remain the same and workers' wages will go down to what they were after-taxes under the old system (to pay this new sales tax), or prices will increase 30% to pay for the higher wages. If these taxes are currently passed entirely onto consumers through higher prices, then the same thing will happen. Either prices will be the same, and workers' wages will go down to what they were after-taxes in the old system, or prices will go up 30% to pay for the higher wages.

3. If it just replaces the embedded taxes, then it can't make up for the revenue from embedded taxes AND from the income tax. Simple mathematical logic

4. They say it will get rid of the IRS, but they will need 2 new bureaucracies: One to administer the sales tax and another to keep track of sending out hundreds of billions of dollars in checks every year to compensate taxpayers for the regressive nature of sales taxes. The prebate would require an IRS-like system to validate each person and the amount of "prebate" they are due.

5. The claim that pimps and drug dealers will pay sales tax when they spend their earnings, and that will increase revenue in comparison to the system of today. Maybe, but they're forgetting something, and this causes an overestimation of revenue gained from this. The FairTax will untax the johns and junkies when they earn their money. So instead of taxing the john when he earns it, it will be taxing the pimp when he spends it.

6. That also provides one other problem. The reason people like Al Capone got jailed was for income tax evasion. The reason they were able to arrest him was because he was claiming he had little or no income, but it was obvious he had lots of income because of the luxury items he owned. Income tax evasion is the only thing they were able to prove, so they were able to get him locked up for something. The FairTax would eliminate the ability to prosecute people like him for tax evasion.

7. It counts revenue from government purchases in making the FairTax revenue neutral. What it doesn't realize is that the revenue from government purchases is directly offset by the increase in spending to pay this new tax. In other words, the Department of Defense may pay the tax for a new weapons system, but that money goes right back to the government. It's a wash.

8. That provides another problem. State and local governments will need to pay this additional tax, but they won't get any revenue back from it. They will need to increase their tax rates to pay for it. Simply depending on backdoor tax increases to finance the lower federal rate.

I'm sure more arguments are out there against the FairTax, but I'll leave it at that
beem0r

Pro

I'll give all my rebuttals numerically, as my opponent provided the points initially.

1. What's wrong with a regressive tax? If you don't show that regressive is bad, saying FairTax is regressive is not a point. I am prepared to defend regressive tax, but you have made no attack on it, so I will wait. Throw this point out or explain why regressive is bad.

2. First, how can a fixed prebate be considered additional income? The government deals with taxes, your workplace deals with your income, and the government deals with the prebate. You don't get it FOR the work you've done, so it isn't income in that sense. Regardless, who cares how they word it?

Also, no one's saying you'll magically have oodles more buying power with FairTax. Please clarify this point to say exactly what is shows bad about FairTax or throw it away.

3. Give an official source that says it will not replace income tax. I thought that was the purpose of the FairTax? No one's saying you'll magically have to give the government oodles less money. Clarify or throw this point away.

4. First, those tasks would likely be done by one institution. And this one institution would be a lot less complex as the IRS is now. The IRS has to track your income, keep records of each person's deductions, audit some people, etc. Everyone gets the prebates, so that would be mind-numbingly simple to keep track of (just send one to each household once a year, wow), and deciding the tax rate would be equally simple. With info on government spending and the average dollar value of goods and services people buy, _I_ could determine the suitable tax rate _alone_ in less than one day, and you probably could too. So, in summation, the current tax system is a lot harder to administer than the FairTax.

5. There really won't be that much of an increase in total revenue from this. Pimps and drug dealers will simply have to increase their prices X% to compensate for the fact that they now get taxed. Ergo, John pays the same amount he would have if it was taxed, and the pimp still gets the same amount as if it was still untaxed. In a way, I concede this point, but it certainly isn't something _bad_ about the FairTax. Whichever FairTax supporters claim this are mostly wrong. That doesn't make the FairTax bad, since it's not the reason the FairTax is considered good.

6. The Al Capone would now be paying taxes whether he wanted to or not, so your point is irrelevant. Clarify or throw it away.

7. I don't understand how this is relevant. If the government 'buys' something, it doesn't buy from itself (unless we're talking about two different levels of government). Not in the current system, not in the FairTax system. And guess what? Weapons and stuff are made by defense contractors, not the US gov. Again, clarify the point you think this makes against FairTax or throw the point away.

8. Yes, they will have to increase their taxes. But it won't increase it in a way that the government is now taking more of our money on average. The government would still need roughly the same amount of money overall. Just as the state and local government would have to increase tax on their end, the federal tax would be a little lower than if the state and local governments weren't paying tax. I don't see how this speaks against FairTax. They won't magically start needing more money from us because of FairTax. In fact, they'll need slightly less, since they won't have to operate the IRS, which is a very bulky system. Very slightly less. Once again, explain why this is actually a BAD thing about the FairTax, or throw the point away.

My offense is that the current tax system is bulky to both the government and taxpayers. Neither of us should have to keep track of all kinds of purchases. Neither of us should have to waste very much time dealing with taxes. An there is a way to accomplish this: the FairTax. People would no longer have to file taxes, the government would no longer have to waste so much time administering it. I already showed in my rebuttal to point 4 that the FairTax is much simpler for the government to administer. I'll wait for my opponent to respond before adding anything else, since my only other main point is the additional fairness of a more regressive tax system, and I'll wait to see what problems he has, if any, with regressive taxes before making that point.
Debate Round No. 1
The_Silent_Consensus

Con

1. It's a matter of opinion whether it's good or not. Regressive taxation does put a bigger burden on those who can least afford it than on those who can most afford it. Further, it's trying to get blood from a stone. When Willie Sutton was asked, "Why do you rob banks?" He said "Because that's where the money is." Well no duh. I'm not a "tax the rich to hell" kind of guy, but I certainly won't argue for taxing the poor to hell either. Depending more on the poor for revenue is akin to trying to squeeze blood from a stone

2. Is a dollar I find on the ground "income?" Is a Social Security check "income?" Is a welfare check or an unemployment benefit "income?"

Unless you say no, then the prebate is income

Actually they do say I'll have oodles of more spending power. They're saying my check will go up because the payroll taxes are gone, and the sales tax will just replace the embedded taxes (which are the same taxes the employers take off the employees through lower wages). Want proof? http://video.google.com...

3. Please read my arguments for what they are. The supporters claim prices will not go up under the FairTax because it will just replace all the embedded taxes. But if that's the case, then the revenue will only make up for the loss of embedded tax revenue, not the loss of that AND income tax revenue.

4. It would be more simple than the current IRS, I will concede that. However, it's not as simple as just sending one check to each household per year. They need to configure whether it's a married household, and whether they have any dependents.

5. Not much comment necessary. Some do claim that though, particularly Mike Huckabee. http://www.factcheck.org...

6. Again, please read my arguments for what they are. People like him are dangers to society. The problem is, the prosecutors aren't able to prove they committed any violence, but they are able to prove tax evasion, so they are able to get people like him locked up for something. The FairTax would take that ability away

7. I have trouble figuring out how I can make this simpler. They are assuming revenue from the government on its own purchases. When the government purchases a weapon system under the FairTax, they will pay the sales tax on it. The proponents are counting that as revenue in order to justify their claim that 23% is revenue neutral. But they don't realize that the revenue they get from that will be offset by the increase in cost.

8. State governments don't operate the IRS. The FairTax makes no changes to the state tax systems. What the FairTax does do is cause the states to pay a sales tax to the federal government on everything they buy. You admitted states will have to raise their taxes. Given that the proponents depend on revenue from state and local government purchases in order to make the 23% revenue neutral, they are depending on backdoor methods of tax increases in order to better sell their proposal.

I can see your last argument as one for a consumption tax in general, but the FairTax is too flawed.
beem0r

Pro

beem0r forfeited this round.
Debate Round No. 2
The_Silent_Consensus

Con

I do not have much to say given that I have nothing new to respond to. A consumption tax may have its benefits in comparison to an income tax, but the FairTax proposal itself is flawed
beem0r

Pro

My apologies for missing the last round, I lost track of time. I'll make this short since I don't want it to look like I'm ninja-ing the last round. I'll simply make a few main points.

First, the fair tax requires less money to operate, and this is an undeniable advantage. However, this is an insignificant part of the advantages it has.

It also saves people the trouble of dealing with taxes themselves, something we unfortunately have to do in the current system.

Also, the fact that it is more regressive makes it far more fair. Consider the following:

When you buy a TV, you pay a certain dollar value.
When you buy food, you pay a certain dollar value.
When you buy a haircut, you pay a certain dollar value.
Then why do people pay different amounts for the goods and services taxes provide us for? As it is, the rich pay FAR more than the poor for the same goods and services. This would also be the case with the FairTax, but to a much lesser extent. The reason we cannot make a tax have a flat value is just as my opponent says: we would have to tax the poor for more money than they have to do this. This is why the FairTax must still be based on a percentage. While it may not be the fairest way, it is far fairer than the current way, where a $100,000/year man pays 3 times as much as the $50,000/year man. Exponential growth is highly unfair, and that's just what a progressive tax is. Regressive taxes are fairer, and while the poor may end up with less spending power on average, it is better than unfairly overtaxing the rich.

My opponent's qualms with the FairTax are mostly about certain claims that some supporters make. However, I believe I have just shown that there are real advantages to the FairTax. It is fairer, costs less money to operate, and saves everyone time and hassle. The FairTax might not be all it's cracked up to be, but it is surely good.

I believe my opponent has overwhelmingly failed to show why the FairTax is actually bad. It is better than the status quo, that's for sure, and that seems to be what my opponent advocates.

Once again, I apologize for missing round 2. I believe that despite this, I have still shown why the FairTax is good.
Debate Round No. 3
34 comments have been posted on this debate. Showing 1 through 10 records.
Posted by The_Silent_Consensus 8 years ago
The_Silent_Consensus
Okay last words, because this is becoming an exercise from my wrists on down and a waste of keystrokes.

The IRS doesn't have the information, but people are legally required to declare it to the IRS. My point remains that we will need an enforcement agency to be sure each retail store is paying the tax on a "new" product.

For the record, I believe taxes should be user-fee based when possible, but I don't believe that money for public goods (by definition, one cannot be excluded from benefiting from) should be extorted in such a way that is a bigger burden on those who can least afford it. Extorting money in such a way that means less food on the table for some while others only have one less TV is not fair in any sense of the word.

Again, the prebate is not an offsetting of taxation. Call it what you want, but it's ordinary income to be spent or saved as one chooses. Therefore, one makes $15,000, gets $1,000, now has $16,000 in spendable income. Spends it all, pays a 30% tax on it all

The one making $150,000 gets $1,000, and now has $151,000 in spendable income. This person is not likely to spend it all, but save some. If he spent it all, he would also be subject to a 30% tax on his income, but if he saves some, then he's subject to less than a 30% tax on his income.

It's proportional at best, progressive at worst.
Posted by beem0r 8 years ago
beem0r
Actually, that example was not as extreme as I had planned to make it, so disregard me calling it an extreme example.
Posted by beem0r 8 years ago
beem0r
The IRS doesn't have information about stuff you sell in private. Have a garage sale? IRS doesn't know. Sell some furniture? IRS doesn't know. Sell a car? IRS doesn't know. I may be wrong, but if I am, I ask that you provide a source for it.

So, to be clear here, you're advocating that money is extorted from citizens in a way that some people don't have to pay anything and others have one less TV. Some people just get all government services as a handout, while others have to pay sometimes outrageous prices for them. that's not fair in any sense of the word.

Also, the prebate makes it progressive. Consider this extreme example to get my point across. You make $15,000 this year. This is 10,500 of after-tax value. This is also the spending power you would have with an income tax.
Then consider that you get a $1,000 prebate. You now have $700 more in after-tax value. You have 11200 in after-tax money, while you only made 15,000 this year. Thus, you are effectively only paying 25.3% tax.

Now consider you make 150,000 this year. You have 105,000 in after-tax spending power. Same as you would have with a 30% income tax. Then consider that you get a $1,000 prebate. You now have $700 more in after-tax spending power. Now, you have 105,700 in after-tax spending power. Thus, you are effectively paying 29.5% tax. This is decidedly more than 25.3%. This means the FairTax is progressive.
Posted by The_Silent_Consensus 8 years ago
The_Silent_Consensus
So what are you advocating, that everyone have to have less food on the table due to taxes?

RIGHT, THAT'S EXACTLY WHAT I SAID (sarcsm). THAT'S NOT WHAT I SAID AT ALL!

That's ridiculous, you'd be taxing the rich to the point of communism. The poor, no matter what they pay, are going to have less food on the table because of taxes. Unless they don't pay anything at all. And if they don't pay anything at all, then we're left with a situation where one group gets less TV's and another pays nothing, which is certainly unfair.

I DON'T BELIEVE ANYONE WHO MAKES UNDER A CERTAIN CUTOFF POINT SHOULD PAY ANY TAXES. THERE, I SAID IT. THAT'S NOT "COMMUNISM" AT ALL

Used items can only be considered used if taxes were already paid a first time, so businesses will not simply be able to call their items used. Every item, no matter what, will have to have federal tax paid on it. That's how it is now: income from selling your car does not count as part of your income as far as the IRS is concerned. This is parallel with the fact that used goods will not be taxed.

GRANTED, BUT PROFIT FROM SELLING YOUR CAR ISN'T COUNTED AS INCOME? THAT'S NEWS TO ME

Fortunately, the FairTax is not regressive: the very poor will barely pay any tax at all, since the prebate will cover most of the tax they paid throughout the year.

TO BE HONEST WITH YOU, THIS IS BECOMING AN EXERCISE. AGAIN, THE POOR GETS THE PREBATE, SPENDS IT, AND IT GETS TAXED LIKE ALL OTHER EXPENDITURES. AND THEN, THE REST OF THEIR MONEY SPENT GETS TAXED. IF YOU COUNT THE PREBATE AS ORDINARY INCOME (instead of negative taxation, because prebate is fundamentally different from a tax refund), LIKE IT WILL BE TREATED, THEN IT REMAINS REGRESSIVE

I don't support a national sales tax at all, but I'd rather have one that exempts necessities such as food, clothing, heating oil, gasoline, etc... and no prebate than one that taxes everything with a prebate
Posted by beem0r 8 years ago
beem0r
So what are you advocating, that everyone have to have less food on the table due to taxes? That's ridiculous, you'd be taxing the rich to the point of communism. The poor, no matter what they pay, are going to have less food on the table because of taxes. Unless they don't pay anything at all. And if they don't pay anything at all, then we're left with a situation where one group gets less TV's and another pays nothing, which is certainly unfair.

Used items can only be considered used if taxes were already paid a first time, so businesses will not simply be able to call their items used. Every item, no matter what, will have to have federal tax paid on it. That's how it is now: income from selling your car does not count as part of your income as far as the IRS is concerned. This is parallel with the fact that used goods will not be taxed.

Also, I understand that highly regressive taxes work less in practice. They also work less in theory. They are simply fairer given the ideals of a capitalist society. Fortunately, the FairTax is not regressive: the very poor will barely pay any tax at all, since the prebate will cover most of the tax they paid throughout the year. The very rich will effectively pay tax at that flat rate, since the prebate is chump change to them. So the actual tax rate, we'll say 30%, will be the limit of what the highest tax bracket will be paying. The lower and lower we get, the more the prebate comes into effect, and the less % is effectively paid.
Posted by The_Silent_Consensus 8 years ago
The_Silent_Consensus
It's hard to "show" morality. Ultimately the question comes down to this:

If government is to provide services to we the people, how should it pay for them? Do I believe that in order for some people to pay for services they are forced to pay for, should they be forced to give up food, while others only need to give up an extra TV? No, not at all. While your argument of "they pay different amounts and get the same amount of services" may have merit, I'd rather it be "unfair" in that sense than "unfair" in the sense of forcing some to starve and others just to go without an extra TV. Therefore, I reject the idea that proportional taxation overcharges some and undercharges others

As far as your car example, Yogi Berra said it best, "In theory, there is no difference between practice in theory. In practice, there is"

What is likely to happen is many businesses will reclassify their products as "used" in order to avoid paying the sales tax in the first place, and then will slightly increase their prices. What will be needed in order to prevent that? Something that sounds like the last 3 letters of "theirs." Finally, the one product that cannot be purchased used is food, which takes up a higher % of a poor person's budget than a richer person's.
Posted by beem0r 8 years ago
beem0r
Let's say I buy a new car. It's $10,000. This means that I pay 13,000 under the FairTax (with 30%). Am I about to sell the car for the same amount I would have sold it for without fairtax? No. The amount I sell it for will also be 30% higher, since I am getting paid in before-tax dollars. I might have normally sold the car for 5000, but 5000 isn't worth the same to me under FairTax. Therefore, I would be foolish to accept 5,000 for the car under FairTax if it was worth that many after-tax dollars. I would sell the car for 6,500, since I value the car at 5,000 after-tax dollars.
This also works with a 'used' house. The value of this house will be 30% higher, since you'll be paying in before-tax dollars. It will end up costing the same amount of after-tax dollars as it would be with income tax.

Also, you haven't shown why involuntary makes it fair that we take more money from some people than others. You've just said "it's involuntary, therefore it's unfair to charge them the same amount for the same service!" That makes no sense. It being involuntary doesn't make it any more justifiable to overcharge some and undercharge others.
Posted by The_Silent_Consensus 8 years ago
The_Silent_Consensus
One other thing, under the FairTax I can save money, and then spend it on a good-as-new used product, and avoid the tax. If I purchase a new house, I get slammed with a tax, but if I purchase a house that has been around just a few years, I don't get taxed.

That's even more reason it's regressive
Posted by The_Silent_Consensus 8 years ago
The_Silent_Consensus
And the money isn't "extorted." Unless you promote anarchy, we need a government, and it needs money.

THE MONEY CAN BE EXTORTED BY GOVERNMENT. ALL TAXES ARE TAKEN BY FORCE, AND IF YOU THINK NOT, TRY NOT PAYING THEM. YOU'LL FIND YOURSELF IN JAIL, OR IF YOU RESIST ARREST, YOU'LL FIND YOURSELF RECEIVING BODILY HARM. THAT'S EXTORTION, PLAIN AND SIMPLE

Buying a $2,000 laptop means for some people one less TV and for some people less food on the table. Yet that's completely fair. I reject your idea that the same thing becomes unfair when it's tax-paid-services that we're paying for. Why is it fair to make one guy pay 10 times as much for the same thing? It's not.

AGAIN, APPLES AND ORANGES. THE $2,000 LAPTOP IS VOLUNTARY. IF I WERE TO CHOOSE LESS FOOD ON THE TABLE FOR A LAPTOP, THAT'S MY RIGHT. I ACTUALLY HAVE THE CHOICE IN THAT CASE. FUNDAMENTALLY DIFFERENT FROM THE GOVERNMENT EXTORTING THE MONEY IN SUCH A WAY THAT RESULTS IN ONE LESS TV FOR SOME AND LESS FOOD FOR OTHERS

The rich do not deserve to pay ridiculous amounts of money disproportionate with the actual government spending per person, and there's no reason the poor should have to pay less than it, except that it's necessity. The government taxes the rich more heavily than the poor because that's where the money is. Still, it's not necessary to make the rich pay EXPONENTIALLY more. We can at least settle at them paying about the same percentage, rather than higher and higher percentages based on their income.

YOU'VE ARGUED AGAINST PROPORTIONAL TAXES WITH THE SAME LOGIC, SO DON'T EVEN TRY THE ANTI-EXPONENTIAL ARGUMENT ON ME
Posted by The_Silent_Consensus 8 years ago
The_Silent_Consensus
You're not any beytter off savign money with a fairtax - since with a consumption tax, your money has yet to be taxed. Having 100,000 in the bank with fairtax (of 30%) and having 70,000 in your hand with an income tax (of 30%) are the exact same thing.

YES, BUT HAVING $100,000 IN THE BANK WITH THE FAIRTAX AND HAVING $100,000 IN THE BANK WITH THE INCOME TAX IS NOT THE SAME THING.

Each affords you $70,000 of spending power, after taxes. 100% of your income is taxed, it's just taxed WHEN YOU SPEND IT. If you never spend it, it's not really spending power. If you ever spend it, it is taxed. 100% of it. If you NEVER spend it, you don't really have that money, now do you.

YOU ABSOLUTELY DO. IT'S CALLED PASSING IT DOWN, WHICH BRINGS IN THE DEBATE ABOUT THE ESTATE TAX. RICHER PEOPLE WILL PASS DOWN A HIGHER % OF THEIR INCOME (generally) AND THEREFORE, THROUGHOUT THEIR LIFETIME, THEIR AVERAGE TAX WILL BE A LOWER % THAN THOSE WHO ONLY HAVE ENOUGH TO SPEND ON NECESSITIES.

You're thinking, due to being in an income-tax system, that tax per year is Dependant on people's income per year. If you don't fully tax the income, you're not getting the full tax, right? No. Money you save, unless you save it in a piggy bank, is still spent. It is spent by borrowers. The role of banks is to give your money to other people so they can spend it. This is why each year, total spending is roughly equal to total income.

AGAIN, NOT FOR THE INDIVIDUAL. $100,000 =/= $70,000. A 30% INCOME TAX WOULD MEAN $30,000, WHILE A 30% SALES TAX WOULD BE $21,000.

I AT LEAST HAD RESPECT FOR YOU WHEN YOU WERE SAYING "YES, IT'S REGRESSIVE AND THAT'S HOW I LIKE IT." AT LEAST THAT'S HONEST. I'VE REALLY BEEN NOTICING CONTRADICTIONS OVER THIS TIME

So I've shown that the spending power remains the same, and that the government still gets the same amount of money regardless.

NO YOU HAVEN'T AT ALL. CLAIMING YOU HAVE DOESN'T MAKE IT S. SALES TAXES ARE INHERENTLY REGRESSIVE
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Vote Placed by ComradeJon1 9 years ago
ComradeJon1
The_Silent_Consensusbeem0rTied
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