Fair Tax - Good idea?

[JTGalt]

Quote:Let's not also forget that the incremental advantage of the mortgage interest deduction has disappeared. Houses are instantly turned from tax avoidance vehicles into "property", with additional devastating impact upon purchaser's finances.

It's like the Huge elephant at the circus who is tied by a tiny rope to a tiny stake in the ground and you wonder why it just does not pull it up and walk away as it is perfectly capable of doing.

But what actually happened is that when it was a smaller young elephant it was chained to a very heavy stake which it could not move.

So after it was trained to the notion that resistance was futile, the heavy chains and massive stakes were not needed anymore to control the elephant.

The IRS Tax Code is like this over the years it has managed to befuddle the American People to the point that:

If you offer to give ALL their money back they will hesitate because they will have to give up the deductions in which they get a PARTIAL return of their money.

I have to emphasize again there is NO tax on home resales and for new homes a 23% tax is offset by a 23% drop in costs because income taxes are not part of the equation any more.

Quote: Economy crashes.

Well I suppose that with several hundred dollars every week in most people's pockets because income taxes are not taken out there is a chance that they would get confused and not know what to do with it.

By I am betting on the ingenuity of the American People and that if they have several hundred extra dollars in their pockets every week they will find a way to spend it which will have a very stimulating effect across  the whole economy.

[codger]

I have to emphasize again there is NO tax on home resales and for new homes a 23% tax is offset by a 23% drop in costs because income taxes are not part of the equation any more.

Please explain this in more detail. I have a cramp in my brain today. Maybe if you could provide an example.

[Debs]

Here in Quebec, we pay sales tax on new homes as well as paying income tax.  When I bought my current home from the builder, which was brand new when I bought it in Feb 2004, I paid 15-some-odd-percent sales tax on the purchase price, which was substantial (a 3-br, 1-1/2 ba, 1800 sq ft home on 7500 sq ft lot in the Montreal suburbs, w/1-car garage on private street).  And we pay a 'Welcome tax' to the town on ALL home sales (new or used - usually a bit under $900).  AND paid 38% income tax.  Boy, do you guys complain a lot about so little!!

(Hee-hee, stand back..   )

[The Gorn]

ANY major change to an existing economic model that impacts major purchases in a large segment of the economy will be disruptive-to-poisonous to that segment of the economy.

I am not calling for status quo forever. What I am suggesting is that even a POSITIVE change that is applied suddenly and arbitrarily will be negative for most of us.

Anything as major in impact and as significant to purchase decisions as applying a sales tax to housing *ought* to be phased in.

[Rastus P Shagnasty]

Well Gault the radio fellow was supporting your tax.  He was the guest, he was shilling YOUR tax.

This thing will trash the majority of Americans retirement plans.  Most people have a sizeable chunk tied in real estate.  Real estate has benefits other than having your own dirt.  Like it or not woe be to those that screw with it.

And Debs, psst we are capitalists down here   We like to think we dont have such confiscatory tax rates down here.

[The Original Dinosaur]

Quote:What I am suggesting is that even a POSITIVE change that is applied suddenly and arbitrarily will be negative for most of us.

How do you think the 535 thieves could do something like this without our getting wind of it?

After much debate, a bill passes and goes to the prez for signing, and takes effect some time later.  This allows plenty of time for planning, books to be written, "experts" to emerge (sui generis, of course).