Yeah, but they’ll expand Medicaid to all, repair our roads, provide housing subsidies for those in need, kick out corporate home ownership, promote remote work, invest in true green energy, give all children 2 meals a day at school for free and install a national railway system, right?
R…*right?!*
As someone still in the US, the issue is that, while these are all fairly popular and would do a lot of good, the right-wing US government will never let it happen unless they think they're losing power. That was the other commentor's point. They'll just use the tax to extract wealth from the populace and funnel it into the dragons' hoards.
The ultra-wealthy here have worked very hard to get as many Americans as possible on the precipice of financial ruin so that they have to work longer and due less. Without a substantial change of course, barring fascist takeover, gen-Z may be the last in the US to have any realistic chance of upward mobility.
As someone making a few
Hundred grand a year and a left of center type, it’s hilarious. I’ll make out like a bandit. My major expenses are my home and car. Now I’ll just lease a car and make out like a bandit not having to pay income tax.
Guess who will get soaked? Elderly people on fixed incomes, basically the entire gop base. They are mostly retired not paying any income tax now on their Medicare. Now they’ll get soaked on sales tax. Ya know what? They’ll deserve it for voting the people proposing this in office. The gop has always been nothing but a grift organization. $2 trillion tax cuts for the rich and now they want to refuse to raise the debt ceiling. It’s hilarious if it wasn’t tragic at this point.
Because it's regressive.
The more you have, the proportionally less you buy.
I'm wealthy but I live like I'm making six figures. Imagine how little tax responsibility I would bear if only my consumption were taxed.
As it currently stands, I'm paying seven figures in taxes.
Of course Republicans want this system. (I'd benefit from it too...)
I'm not rich. I gross $130k or so, so I'm far from poor, but definitely not rich. I live off of 45% of my post tax income. I spend another 10% on vacations or the rare few thousand dollar purchase. I don't have kids, so that helps. I still would probably pay less in taxes if it was just sales tax. You pay the taxes one way or the other. I just bought a house in a different state. 3.5% less income tax. The property tax increase almost wipes that out though. Rich people may buy more expensive groceries, but they aren't buying more groceries. Replacing income tax with sales tax helps the wealthy and hurts the poor like you said.
Honestly, helping to defend Ukraine is perhaps the only U.S. military action of the last 25 years I unquestionably support. NO response to Russia's aggressions will only embolden Russia to continue its land grab of other sovereign nations.
I opposed it until I watched Colin Powell present evidence of WMDs to the U.N. "If Colin Powell says we need war, I believe him." They lied to Colin to use his credibility for their fake war.
I’d be all for it if the tax hike would mean better allocation of education funds, better police w more training / transparency, and universal healthcare…you know, all the good things you would kindof expect to benefit from as a tax payer….man, that would be the life.
And how will the additional state sales taxes work? Are we gonna have to pay two sales taxes on everything? The federal government doesn't have the constitutional authority to abolish those.
40% of Americans already don't owe federal tax. This would be 23% increase for 40% of the country. Specialty the poorest 40%.
For all income under $90,000 per individual this would be a tax increase. The only people seeing less tax would be earners over $90,000 ($180,000 for married/jointly).
So unless you're making $43/hr this is an increased tax burden.
I don't know about this iteration, but previous iterations of the Fair Tax included a "prebate", an automatic rebate for all. This would mean anyone spending less than X dollars would effectively be paying 0 taxes and potentially be getting a credit. It's like a psudo-univeral basic income.
I can't even tell you if it's part of the current plan, so I certainly can't tell you what the amount would be. I haven't bothered to find out because I know it's not going anywhere.
It's still a regressive tax. If you tie taxation to spending rather than accumulation then you encourage wealth accumulation for those who have the means, while disproportionally impacting the lower earners why by definition have a lower portion of their income available to reserve.
Even with a UBI without a specifically targeted wealth tax overhaul it still benefits an individual more the wealthier they are, and has the knock on effect of being one more huddle to financial mobility.
How about my state and local income taxes? And Social Security/FICA? Just taking away the federal income tax and instituting a federal sales tax isn't going to lower the cost of living. If anything, it'll increase it. The only way it work's out for middle and low income folks is if we don't pay any income tax at all.
The GOP always says they're gonna abolish the IRS when they take control of the house. In reality, the only thing they ever actually abolish are the ethics rules intended to prevent them from shitting all over the rest of us. https://www.newsweek.com/republicans-blasted-after-voting-gut-house-ethics-office-1772486
Only those who use TurboTax ™ would get the ability to show the plethora of contrived tax deferrals. Everybody else would pay full tax and get nothing back.
It's actually a 30% increase. They call it a 23% tax because after all is said and done, the new tax would be 23% of the overall price. They're leaning on math illiteracy to make their proposal sound (slightly) less insane.
Correct. I'm surprised I just scroll so far down to see this. It is also likely to be higher than 30% when all is said and done because the bill assumes there is no sales tax fraud. I saw somewhere a while back that it would need to be at least 10% higher to collect the amount they would expect. My family used to own a hardware store, and everyone around we knew cheated on sales tax at least a little.
Explanation on why it is actually 30% instead of 23% like they say: The 23% in the proposed bill is the person paying 23 cents OUT OF every dollar they spend. So, if your total is a $1, 23¢ goes to the government and 77¢ goes to the vendor. 23¢ is 30% of 77¢. The Way state and local sales tax works now is that you pay about 7% ON TOP of the dollar. So if your total is 1$, that $1 goes to the vendor and an additional 7¢ goes to the government.
Simply put: if the sale price of an item is $100, the new federal sales tax would be 30% of that for a total of $130. They are lying to us by saying it’s ‘only’ a 23% tax because $30/$130 = 0.23 = 23%.
Don’t believe the lying bastards.
It's not a lie. Mathematically, a 30% sales tax is equivalent to a 23% income tax.
Say you earn $100, with 23% going to income taxes, leaving you with $77. So you can purchase an item that is $77 with no sales tax.
Now, let's instead say there's no income tax, so you keep the $100 you earned. You find a $77 item, and with 30% sales tax it comes to $100.
Both scenarios leave you with a $77 item, and $23 going to the government.
The sales tax is like the only regressive tax we have - it hurts the poor more than the rich. It's absolutely bonkers that they think this is anything but a dumpster fire.
This is so ridiculously intentionally dishonest, and they know it. Every single sales tax we pay right now the percentage is the percent of the tax. So telling.
Stop telling people who they voted for please. Some of us are getting gerrymandered so hard we have district lines between the living room and the bathroom!
> Who change it? The top 1% who run everything? Of course they give themselves loopholes. You keep voting for them and their cronies.
You think voting is gonna fix it? You fools keep “voting” in a system that isn’t representative and designed explicitly to prevent labor from having power and yet everyone pretends like voting is how real change happens. No, it’s historically war or some other social upheaval....
It's just another scheme to eliminate taxes for the rich and pass the costs onto everyone else. They will bait you by advertising rebates and breaks for middle & low income households in order to get it passed.
Then a few years later they will start calling those rebates entitlement programs and try to cut those too.
Same thing they did with the Trump tax cuts where they put in temporary cuts for the middle class to get it passed, only to let them expire in a few years.
Don't be fooled. They won't stop until they have it all and we have nothing.
I agree with your comment, but what really annoys me was how trump’s TCJA benefitted businesses so much and not hardworking citizens.
I’m actually looking forward to TCJA components expiring in 2026, as are most employees living in HCOL states. The 10k SALT cap sucks.
Strange how well they do at portraying things that increase the wealth of business owners as "benefiting businesses" when they hurt everyone who works for a business.
I’m actually looking forward to TCJA components expiring in 2026, as are most employees living in HCOL states. The 10k SALT cap sucks.
Do you mind elaborating on this?
Sure! TCJA (tax cuts & jobs act) had 2 big changes impacting people:
1. Federal tax brackets changed **in our favor**: the tax rates were lowered (bracket comparison [here](https://smartasset.com/taxes/trump-tax-brackets)). Most of us got a smaller tax obligation bc of this
2. The standard deduction almost doubled and a **$10k limit on SALT deductions was introduced.** This made a standard deduction better than itemized for many people. Pre-TCJA, and how things will go back to in '26, there was no SALT (state and local taxes) cap. People could itemize their deductions and include their total state income tax (or sales tax) and property tax. People living in expensive states, and especially homeowners, will get a larger return once the cap is eliminated. Our tax bracket will be higher but it's still a way better outcome.
example since I'm looking to buy my first home:
2022: I'm in the 35% fed bracket with a tax bill of $124k, but the total deduction (10k limit on SALT + 50k mortgage interest = 60k) would get me a 21k federal refund
once SALT cap goes away: I'll be in the 39.6% bracket (worse) with a tax bill of $128k, but the total deduction (13k property taxes + 42k state income tax + 50k mortgage interest) actually brings me down to the 33% bracket and a fed refund of \~$36k
I hope this makes sense!! sorry for the novel lol I love this stuff
edit: clarity
Can you comment on the math I posted here:
https://www.reddit.com/r/economy/comments/10jejsm/comment/j5kn3m2/?utm\_source=share&utm\_medium=web2x&context=3
1. How would you enforce that?
2. The rich don't pay income tax because they don't have income. They live off of loans backed by existing assets, which isn't taxable.
There are schemes. Alternative minimum or wealth surcharge taxes would work. I think a wealth surcharge tax of 2% annually over all financial wealth over 10m would be fine. There’s nobody who can’t get liquid enough to pay that.
All the numbers in your comment added up to 420. Congrats!
10
+ 400
+ 10
= 420
^([Click here](https://www.reddit.com/message/compose?to=LuckyNumber-Bot&subject=Stalk%20Me%20Pls&message=%2Fstalkme) to have me scan all your future comments.) \
^(Summon me on specific comments with u/LuckyNumber-Bot.)
Absolute garbage. What they're proposing is the most regressive taxes possible. So, if you're making 10M a year, and spend only 10% of your income to live each year on consumption, you'll have an effective tax rate of 2%. If you make $70,000 and spend every penny you make on rent, food, etc, you'll be paying the full 23% tax.
Note that this wouldn't be enough to sustain the federal budget, even though it would tax a large pool currently being untaxed, aka the poor.
I like the opposite approach. You pay taxes only on what you didn't spend this year of your total income. So, if you spent it all, you pay no taxes, but you dumped all your money back into the economy so thank you. And if you hoarded it all, you lose 25% of it.
This disincentivizes saving money. How are people supposed to save for retirement? or a kids college fund? having an emergency fund? saving to buy a house? This would also just have rich people move their money into other things (houses, cars, gold, bonds even maybe)
Look into buying a yacht, you will see the loophole that already exists thats used. They register them in other countries and dont pay any taxes in the US. The loopholes already exist and would just go to other products. Or else they wouldn't buy them or buy it thru businesses and claim its a business expense and not in their name. The math doesn't work at all, taxes would go up on those that spend a greater % of their income and those that dont qualify for tax relief, the middle class. And they cannot afford it as it is.
>politicians refuse to raise taxes on.
It's the irony of asking the police to police themselves. We acknowledge that The Government is 100% captured by special interests, yet paradoxically we also seem to think that this entity would act in our best interest rather than its own with ultimate power and so.....we just keep giving it more power and then get upset when it doesn't do what we want.
Stupid or Crazy, I believe, is the term.
The truth is that if our representative government was willing to legislate against the 1% we the people would have succeeded by a mere passing of such legislation. Call me a sucker but we get to vote every two years. If we really want things to change we’d have go be willing to vote for people who are willing to tackle the corporate oligarchy in our nation, as well as their undue influence on our governance.
> I am merely suggesting that there is a subgroup of Americans who can afford to pay more taxes and that is the same group of Americans who politicians refuse to raise taxes on.
“Don’t tax you, don’t tax me, tax the fellow behind the tree.”
The problem with that, is rich people tend to be smart, in, or in control of the government, so the law is written to exclude rich people. Poor dumb bastards just pay more taxes and vote. Lol.
How about if you are in the top tax bracket all money from any source that you receive is counted as income and you get no special rates for oh say capital gains? Also you receive no tax breaks.
I think all residential properties over $1M is a bit different than luxury vehicles and yachts, especially with the inflated housing prices. Maybe, *second* homes over $1 million.
A residential property valued at over a million dollars is now just a nice house in a nice metropolitan city. We’re trying to get CEOs and billionaires, not doctors or lawyers
How many billionaires do you think there are? Only \~725 in the US.
As far as multi-millionaire CEOs, you probably got several thousands.
Still not enough to make a difference because we simply spend too much. Last year our deficit was $1.5 Trillion. You could take every penny, stock, house and car every billionaire owns and you still would have enough to close that gap for just one year of US spending.
But entire middle class neighborhoods in HCOL areas have million dollar homes. It’s a problem that they’ve gotten so high, but people are only able to buy them because they’ve built equity in the market along the way with cheaper houses before the market exploded. They get paid more living those areas but the HCOL eats it up pretty quick. Things don’t cost the same across the country, especially housing.
Tax secondary homes and vacation homes. Tax the home people bought to rent out or put on AirBnB. The people in HCOL areas paying a million dollars just to have a modest home are not your enemy, they want change too.
More than a 50% decrease in the deficit. Maybe let the massive fiscal event that was the pandemic work out before trying to balance to the budget. It's about like trying to balance the household budget after buying a house and saying "We need to make up for the 800K deficit we had last year!"
> As far as multi-millionaire CEOs, you probably got several thousands.
This is a severe underestimate. There are about 8m households with more than $2m net worth. If you up the threshold to $10m, there are about 1.5m households.
By "several thousands" did you mean 1500 thousands?
https://leighbaldwinadvisory.com/how-many-millionaires-are-there-in-america/
>residential properties valued at over a million dollars?
one million is absolutely not "luxury" in some markets. that's way too low of a number to apply a blanket tax given how widely real estate varies. luxury / sports cars and yachts i can see being much more justifiable as "luxury" items and those costs are also more consistent nationally.
It's so much worse than 23%. The actual tax is 30% for the first year, if you look at the bill ("23% of the gross spend", which is 30 / (100 + 30)), and then it adjusts as needed in the coming years. Meaning it goes up, automatically. And if they try to carve out something like rent or mortgages, they'd have to increase the tax to maybe 60% of everything else.
The [proposal](https://www.cbsnews.com/news/scientologys-fair-tax-plot/) here actually comes from Scientology, which is pretty comical, as well. It was originally created as a way for Scientologists to get back at the IRS when they were feuding over being considered a church. When the IRS declared Scientology a church, the Scientologists dropped the idea. But others in the far right have picked it up.
The goal is basically to shift as much taxation as possible to the bottom of society. Even after the "prebate" this bill would still be worse than a flat income tax, aka more regressive. It's pretty much as extreme of a proposal as possible, intended to rile people.
But it will obviously never pass. It's just part of the comedy of life.
You misunderstand. The ultra rich don’t make money, they have money. You don’t want to tax their income, you want to take away their wealth. Look at Elon Musk, his salary is $1 per year. His net worth is in stock, that you can’t take until he sells it, because the gains and losses aren’t realized until it’s sold. What you suggest is that we should tax their net worth and not their income.
We should be defunding things, particularly war, without raising working class taxes until the public gets the healthcare and other public benefits that are supposed to come out of a system of taxation.
Republicans: let's change taxes in a way that will help the 1% and hurt everyone else.
Biden: that's dumb, that would be terrible for American families.
People in this thread: fuck Joe Biden!
The GOP tax plan is a complete scam. Middle class households typically pay 10-20% of their income on the federal income tax (not counting payroll taxes which will remain in under the proposal). Replacing that with a sales tax over 20% means that most Americans will end up paying more in taxes, but the wealthiest households will get another tax break.
The only way to combat inflation is by either destroying wealth at the top 1% or redistributing it. Otherwise it just grows and grows at the top and makes the rest worthless.
This will be magical for higher income earners if they replaced federal income tax with a high sales tax.
It would simplify taxes for all wage and salary earners, but businesses have increased tax reporting obligations by taking on the responsibility to collect, report, and pay what was collected for the federal sales tax. This could hurt small businesses that struggle to keep up with the reporting requirements, but all depends how it's implemented.
Generally high sales tax is anti consumption. If the leaks in your finances are now spilling more money, you're going to plug them up. Any frivolous spending will end. This will hit low income earners the most and almost have no effect or a positive effect for high income earners as the tax ceiling is 23% and only if you spend every single dollar you earned.
Low income earners will have far less headroom to as they can only spend a smaller part of their income before they start paying more in taxes than they would have with the traditional income tax.
No more upgrading phones, tvs, laptops, or luxury items. More casual gamers skipping the upgrade to ps5/xboxsx and the accompanying yearly online subscriptions.
Expect to see a proliferation of the micro transaction model as more businesses try to claw back revenue by offering smaller slices of services.
Businesses will revise spend strategy and cut back hard as well. Any big or generally expensive or abused taxable spending is going to be curbed dramatically. Expect to get hit hard if you're a business that caters to those needs, i.e. business travel or capex.
Cash based and under the table revenue businesses will be able to increase their prices and pocket higher margins on the unreported earnings.
Investing is now tax free/deferred. RIP to all the Roth ira and Roth 401ks. Not sure how markets will do with retail investors. Push/pull of high and low income earners will be interesting to see.
But mostly this would be fucking magical for high income earners. If I just spend less I will keep a substantially larger amount of money (10s of thousands), which I can invest now with a tax free/deferred status. I am torn whether I would want this or not.
Biden is, of course, leaving out important facts for political purposes.
The proposal is to dump the income tax and the IRS and substitute a sales tax. It also includes a substantial rebate of taxes to the poor (an estimated $6383/yr for a family of four).
There are valid arguments for this, the main ones being that it is essentially a tax on consumption rather than income, and eliminates the incredibly high trouble and cost (over the US population) of tax preparation on the individual end and the cost of the IRS to process those forms. The current US income tax really is inordinately complicated. This also leads to inefficient use of capital due to the hunt for income tax savings.
There are also valid arguments against, such as the fact that many states base their income tax on the feds, and would have to redesign their system of taxation. Also, it's unfair to those seniors who paid income tax all their lives and now will be penalized more for spending the money they saved. It could be unfair to the poor, as they consume more of their income than the rich, but this is partly handled by the proposed rebate to the poor (see above).
Overall it would be an extreme change and cause quite a bit of turmoil, and shouldn't be taken lightly... nor should you take unbalanced, politically motivated propaganda as the full story.
"...The incredibly high trouble and cost (over the US population) of tax preparation on the individual end and the cost of the IRS to process those forms. The current US income tax really is inordinately complicated. This also leads to inefficient use of capital due to the hunt for income tax savings."
The thing is, this could be fixed without fundamentally changing the current tax system. The IRS knows what the vast majority of tax payers paid and what they owe. The ONLY reason we don't get a letter from the IRS saying "You owe/ get a refund of X amount, do you agree?", every year is Turbo Tax.
They spend millions in lobbying because they make billions on the current system.
https://www.propublica.org/article/inside-turbotax-20-year-fight-to-stop-americans-from-filing-their-taxes-for-free
It should be as simple as "You and your spouse make X dollars a pay period with Y dependents, therefore you own Z federal tax" and done. Do away with deductions such as mortgage interest, etc etc etc and call it a day.
But fuck no, we can't have THAT. Gather all your forms, your proof of insurance by your employer, get the booklet or look it up online and take all that shit and add and subtract and BAM!!! YOU OWE US $3,000 SHITHEAD. Of you underpaid 3 years ago? Pay $1500 right now plus interest and fees if we don't get it in a week from post date of this notice (that took 2 weeks to get you).
The IRS and the tax system is the second largest government employment/social welfare program known to man. The US military industrial complex is the first.
> (an estimated $6383/yr for a family of four).
And what is it for single people? $2,000?
After the standard deduction NOW, I pay around $4,000 a year in taxes and I earn $30,000, bringing it down to $26,000.
If I had to pay 23% tax on everything tomorrow, that would be $6,900 for the income I earned, and since I'm poor, I end up spending it all. That means my take home income at the end of the year would decrease to $23,000 a year.
As a single person, I wouldn't be eligible for the FAMILY rebate, and who knows what limits they would impose on those rebates to begin with, right? So I can reasonably expect (can't find any information about the rebates anywhere) that MY rebate would be far, far less than $6,383, right? So like I said, maybe $2,000? If I'm lucky?
Which brings my total take home to $25,000 a year. A full $1,000 less than before. And I can't even afford rent now, FFS.
>There are valid arguments for this, the main ones being that it is essentially a tax on consumption rather than income
Do you know who doesn't consume?
Rich people.
They save.
They keep all their money in offshore banks and rarely spend much of any of it.
They hoard.
And ensuring they only have to pay taxes for what they spend means that if they spend $300,000 a year, but earn 200 million a year, they only ever get taxed for that $300k.
The rich never spend everything they have, so it will never be all of their money that is taxed under such a system.
But it will ALWAYS be 100% of MY income taxed under such a system.
How can you call something a "fair" tax if it decreases the amount the upper class will be taxed for and increases the amount the lower class will be taxed for? That's inherently UNFAIR!
I'm assuming this is better thought out than a flat sales tax across all purchases, but I haven't read the proposal. Take Florida's sales tax system for example, where grocery food items are generally tax exempt to alleviate some of the burden from lower Income individuals. Point being, a sales tax doesn't _have_ to be such a burden if it's crafted correctly.
> Which brings my total take home to $25,000 a year. A full $1,000 less than before. And I can't even afford rent now, FFS.
If you factor in the sales tax you currently pay, this gap will close.
>There are valid arguments for this, the main ones being that it is essentially a tax on consumption rather than income,
Firstly most people rich or poor consume roughly the same amount of necessities So this tax over burdens those with less money for necessities.
Secondly people with high levels of wealth are generally able to purchase property, pay for trips, lease cars, etc through corporations. In such cases they personally wouldn't pay the consumption tax. It would all get expensed.
The govt has bailed out the Airline industry twice in the last 20 years. That has down stream impacts on the entry tourism industry (hotels, parks, restaurants, etc). The govt bailed out the auto industry, the banks, stock market, and invested in new companies like Tesla.
The govt maintains the national highways without which billion dollars corporations like FedEx, Viking Freight, Uber, etc couldn't operate. The govt manages all air traffic control through the FAA and airport security through the TSA.
The derangement some have where they believe the govt is a drag on the economy is ridiculous. Every dollar corporations and wealthy individuals pay in taxes produces meaningful returns.
>Biden is, of course, leaving out important facts for political purposes.
I can't let this one stand. You're leaving out important information too.
Like the prebate being offered is only allowed for a certain income threshold that isn't set yet, AND is not set up for different cost of living adjustments.
Not only that but people are not truly understanding the wording of the tax either
>William Gale of the Brookings Institute has noted that it isn’t accurate to refer to the Fair Tax as 23%. He indicates that the rate is actually 30%. Fair Tax defines the sales tax as "$0.23 out of every dollar spent," which means that a $0.23 tax is added to every $0.77, not to every dollar.
[People are grossly underestimating the personal cost this will have to middle class to lower class cost of living](https://www.brookings.edu/wp-content/uploads/2016/06/20040924.pdf) and I plead with others to fully read and understand the effects this will have.
The only people agaisnt the IRS are those who skip on taxes. The IRS never went after working class people who pay their taxes. And if you want changes in the tax code, the single largest tax cut for the rich and owners of businesses and putting the burden on the working class isn't the way to do it.
If you are working class and are thinking this is a great idea, it's not.
Most of your points are fair or at least worthy of debate.
This one may not be:
>The IRS never went after working class people who pay their taxes.
You may want to glance at this site run by Syracuse University, particularly the "IRS Audits Poorest Families at Five Times the Rate for Everyone Else" article: [https://trac.syr.edu/tracirs/latest/679/](https://trac.syr.edu/tracirs/latest/679/).
It may be because I know working class people with their own small businesses, but the complexity of income tax-related paperwork is certainly a burden on them.
I love nuance like this.
Thank you for sharing that. It is important to understand how the IRS can be used for collecting from working class people. However, I did say people not paying taxes.
NOW BEFORE YOU COMMENT BACK REDDIT - The tax burden on working class people who own businesses *are* subject to more harassment from the IRS, but that's just because they don't have the excess funds to dodge taxes like larger businesses can. The IRS can't go after the larger fish and can only go for the lower defended small businesses.
Not to mention the total hellscape lobbying has done to make the US tax system a hell in a handbasket to navigate. Big businesses have entire fields of lawyers to help them navigate. Many working class people don't have the knowledge nor man power to do so. Eliminating the IRS will help those small businesses, but they won't do what they should be doing to stop tax fraud from monopsony businesses and larger businesses in general.
The typical audit for poor or middle class people is a simple form that says something like "You forgot to file your income for your side job and you owe X dollars". Been there, done that and the entire process was painless. I fucked up and filed my taxes incorrectly and then fixed it. There were no penalties or problems with the process at all.
If you file your taxes and aren't doing anything shady an audit is not a big deal. If you're claiming extra deductions for things that you don't actually have, then yes, you're breaking the law and the IRS will come after you. Don't do that and you won't have a problem.
Whaaaatttt? Leaving out important info because there's a political bias?? Posted on reddit??? Nooo wayyyy, I can't believe it! I figured ol Biden would spit the facts straight and not leave out parts that wouldn't help him pander to the left. This is wiiiild I tell ya
So this means me, someone that owns two homes and filing jointly with $600K+ income would only pay 23% on groceries, birthday presents for my kids, etc.
Great deal for me. Shitty deal for 98% of the rest of the USA.
I'll tell you what happens as a result of this. Local taxes skyrocket. Some states become more of a backwater because they can't afford anything for their residents.
Working people just above income guidelines for assistance are the ones that pay the taxes and get no benefits. Democrats demonize rich republicans demonize poor, ppl argue with each other over which politicians are for them all while voting against their own interests while the engine is churned by paycheck to paycheck workers
It actually hits savings and investments more, considering you've already paid taxes on the income you used to purchase those assets.
It would save us billions in tax preparation. I think it's a great idea.
Imagine eliminating all tax subsidies, tax credits, and rebates as well.
Pretty sure the proposition was for a 30% national consumption tax and no income taxes.
It's a terrible system that will decrease taxes collected and will shift tax burdens to those who can least afford them
I was surprised the bill actually had more than one sponsor considering it seemed like those of those bills written and pushed by a single insane person
The idea is to replace income tax with sales tax.
This stops rich people dodging tax as they love buying shit.
The tax system essentially means those with more disposable income generate more tax as they buy more.
There is one huge issue though.
The UK did this years ago with VAT - A tax on sales of goods to replace income tax.
They never removed income tax.
The government is a parasite, it needs your money, and has police, prisons and guards to ensure they get it. Tax is theft.
As someone who spends less than he makes, sounds great. I'd save a lot more money.
However, the tax would be incredibly regressive. Wealthy people would pay even less tax, poor people even more.
Let’s look at a simple tool like a hammer. The hammer is sold in a store with 25% sales tax…ok. The end price increases. What about the wood for the handle the manufacturer purchases from a supplier, is that also taxed at 25%? The metal for the head? What about delivering the materials to the manufacturer, is diesel increased by 25% as well?
This may very well “trickle down” to MUCH more than a 25% increase in end cost to consumer if it compounds down the line for every item…
No, this a solved problem. If you’re a business buying materials you will resell into another product, you can either provide your sales tax exempt ID to your vendors or get rebates from the tax authority later.
So the only people paying taxes are consumers? So upper class who’s businesses own their assets and make their purchases won’t be paying tax?
Seems like a more effective way for the rich to reduce their tax exposure and put it on the producing class
As replacement for income tax. GOPer will say that's amazing less taxes. Anyone with a single understanding of tax code know sales tax is regressive and effect the bottom. The richest can start LLC and buy stuff that way and business expenses are not covered by this proposed sales tax.
23% sales tax = great way to eliminate 23% of people's accumulated wealth overnight. Oh well, better spend it before the tax law gets passed - no way that will have any effect on inflation!
That sales tax is a replacement for federal income taxes right? Like a direct swap out? If so I don’t see a problem with it. A sales tax or a consumption tax is way better and harder to get around not paying.
If it’s not a replacement but an additional tax then fuck that.
What do I think? I think it's an elaborate system of moving money from one pocket to the other without addressing the fundamental issues driving inequality but instead creating a plethora of unintended (or perhaps just perverse) consequences. Just tax land lol
Honestly, I would much prefer this over the abomination we have now. It is literally impossible to know if you are following tax law now because it is so complex that even calling the IRS help line and following their instructions exactly, then providing the recording of said instructions as proof can end in fines for breaking the rules.
Tax law is at the whim of each IRS agent in the moment.
Sales tax with necessary items taxed at a reduced rate or zero and luxuries taxed more aggressively and bam, a simple yet progressive system that does not require a PhD to comply with.
He forgot to mention dems are trying to eliminate the debt ceiling meaning we will have unlimited inflation and your $15/hr job will be worth $14, $13, $11, …..etc as they keep printing more money.l
Oh yea don't forget the 87k+ new IRS agents Biden just hired. Theyre all in this together there no separate parties just an illusion of choice, they all got an agenda to fulfill
I know this is oversimplified, but if my federal income tax rate was 23% and we went to a 23% sales tax instead, then wouldn't the increased income offset the increased costs?
And what if I use most of my income to pay debt and not simply make purchases, then wouldn't I be better off with the sales tax?
Could the proposal of the bill incentivize people to make more major purchases now and hold the debt to avoid the possible sales tax in the future?
Sales tax would also mean everyone who buys contributes regardless of citizenship and/or unreported income. Less time and money spent on tax prep would be nice too.
I don't know. Honestly, we're already getting screwed, might as well try a new position lol.
Everyone knows that sales tax is a regressive form of taxation. Regressive taxation stifles economies. It's a stupid fucking tax and Americans should be rioting right now at the mere suggestion of such a stupid tax.
Meanwhile, Biden is sticking your hand in your pocket and stealing 50% of your income 🙄
Flat tax is fair and gets rid of the waste of money that is the IRS.
No more tax code!!! I’m 1000000000% on board!
I once had the IRS spend Over $1,000 to collect $12 from me, no a joke, dead serious.
I ballparked the $1k but between hourly pay and paper/postage, it might be more than that…
This is so disgustingly obvious, the ultra wealthy have more money than they could ever spend so of course they find it advantageous to have a sales tax and no income tax. I’m sure sure that applies to long term and short term capital gains as well as income since the game-plan is no IRS.
Republicans pass deeply partisan legislation that they know will not go beyond the house, news at 11.
This is a tactic to rile their fucking base up and nobody sees it. They're taking culture war stuff and presenting it in a way that make democrats look like they refuse to cooperate with their legislation. The midterms literally did nothing lmao.
Conservative politicians everywhere love consumption taxes more than income taxes because everyone, including the ultra-wealthy pay the same tax on a Big Mac while income tax brackets are supposed to result in equitable, and not equal, taxation.
To be clear, this proposal would at the same time eliminate income taxes and abolish the IRS. The taxable items would exclude food, pharmaceutical, educational and healthcare items.
This is disturbingly disingenuous.
This sales tax would be replacing the income tax.
Im not sure how I think about it either but I like the idea of no more irs.
Oh, like the FairTax. Yeah, okay. Consumption-based tax. Biden is clearly framing it disingenuously here, since it'd abolish the income tax, which would make the vast majority of workers take home more of their paycheck. Some good incentive for investment there, too. And usually a program like that would include vouchers for things like basic food and clothing costs for low-income families, so that the status quo improves for them as well.
My criticism would probably be that it could potentially vastly accelerate the rate of wealth gain for the already wealthy, but I don't know how problematic that would be overall. I don't think it's a guarantee, either.
He forgot to mention they also wanted to abolish the IRS
Our luck is that democrats and republicans will compromise. Keep the IRS and current taxes but add the sales tax too.
Most likely outcome haha
At first I laughed at this but then I realized ya this is probably how it goes and I'm sad now... Thanks.
Yeah, but they’ll expand Medicaid to all, repair our roads, provide housing subsidies for those in need, kick out corporate home ownership, promote remote work, invest in true green energy, give all children 2 meals a day at school for free and install a national railway system, right? R…*right?!*
What does this look like Norway?
#M-M-M-Military spending
As someone living in an actual developed country, i see no issues with this?
As someone still in the US, the issue is that, while these are all fairly popular and would do a lot of good, the right-wing US government will never let it happen unless they think they're losing power. That was the other commentor's point. They'll just use the tax to extract wealth from the populace and funnel it into the dragons' hoards. The ultra-wealthy here have worked very hard to get as many Americans as possible on the precipice of financial ruin so that they have to work longer and due less. Without a substantial change of course, barring fascist takeover, gen-Z may be the last in the US to have any realistic chance of upward mobility.
As someone making a few Hundred grand a year and a left of center type, it’s hilarious. I’ll make out like a bandit. My major expenses are my home and car. Now I’ll just lease a car and make out like a bandit not having to pay income tax. Guess who will get soaked? Elderly people on fixed incomes, basically the entire gop base. They are mostly retired not paying any income tax now on their Medicare. Now they’ll get soaked on sales tax. Ya know what? They’ll deserve it for voting the people proposing this in office. The gop has always been nothing but a grift organization. $2 trillion tax cuts for the rich and now they want to refuse to raise the debt ceiling. It’s hilarious if it wasn’t tragic at this point.
Imagine the GOP getting what they want, new national sales tax and no IRS. Who’s going to oversee the sales tax?
Drug cartels will stop smuggling in drugs, and start smuggling in tax-free toaster ovens and Instant Pots.
States I'd assume
They already have their own sales tax, so each state will regulate federal taxes? That sounds like a great idea /s
Democrats are very anti-sales tax so I highly doubt it
Because it's regressive. The more you have, the proportionally less you buy. I'm wealthy but I live like I'm making six figures. Imagine how little tax responsibility I would bear if only my consumption were taxed. As it currently stands, I'm paying seven figures in taxes. Of course Republicans want this system. (I'd benefit from it too...)
I'm not rich. I gross $130k or so, so I'm far from poor, but definitely not rich. I live off of 45% of my post tax income. I spend another 10% on vacations or the rare few thousand dollar purchase. I don't have kids, so that helps. I still would probably pay less in taxes if it was just sales tax. You pay the taxes one way or the other. I just bought a house in a different state. 3.5% less income tax. The property tax increase almost wipes that out though. Rich people may buy more expensive groceries, but they aren't buying more groceries. Replacing income tax with sales tax helps the wealthy and hurts the poor like you said.
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Honestly, helping to defend Ukraine is perhaps the only U.S. military action of the last 25 years I unquestionably support. NO response to Russia's aggressions will only embolden Russia to continue its land grab of other sovereign nations.
It took some time after the war in Iraq before everyone began pretending they had always opposed it. Wonder when that will happen here.
I opposed it until I watched Colin Powell present evidence of WMDs to the U.N. "If Colin Powell says we need war, I believe him." They lied to Colin to use his credibility for their fake war.
It's the Uni-Party. I don' t trust any of them anymore.
I’d be all for it if the tax hike would mean better allocation of education funds, better police w more training / transparency, and universal healthcare…you know, all the good things you would kindof expect to benefit from as a tax payer….man, that would be the life.
Then who would collect the national sales tax?
Me. I volunteer.
.
This is legally binding advice. Ianal
You seem trustworthy, I second this
And how will the additional state sales taxes work? Are we gonna have to pay two sales taxes on everything? The federal government doesn't have the constitutional authority to abolish those.
Yes. You would pay both but your paycheck would come to you in full. No taxes.
40% of Americans already don't owe federal tax. This would be 23% increase for 40% of the country. Specialty the poorest 40%. For all income under $90,000 per individual this would be a tax increase. The only people seeing less tax would be earners over $90,000 ($180,000 for married/jointly). So unless you're making $43/hr this is an increased tax burden.
All sales tax over income tax laws are blatantly only to help the richest Americans.
This is absolutely redistribution of wealth in the wrong direction.
As if those fucks didn't get enough in the last few years alone.
I don't know about this iteration, but previous iterations of the Fair Tax included a "prebate", an automatic rebate for all. This would mean anyone spending less than X dollars would effectively be paying 0 taxes and potentially be getting a credit. It's like a psudo-univeral basic income. I can't even tell you if it's part of the current plan, so I certainly can't tell you what the amount would be. I haven't bothered to find out because I know it's not going anywhere.
It's still a regressive tax. If you tie taxation to spending rather than accumulation then you encourage wealth accumulation for those who have the means, while disproportionally impacting the lower earners why by definition have a lower portion of their income available to reserve. Even with a UBI without a specifically targeted wealth tax overhaul it still benefits an individual more the wealthier they are, and has the knock on effect of being one more huddle to financial mobility.
How about my state and local income taxes? And Social Security/FICA? Just taking away the federal income tax and instituting a federal sales tax isn't going to lower the cost of living. If anything, it'll increase it. The only way it work's out for middle and low income folks is if we don't pay any income tax at all.
Oh, there wouldn't be SS anymore and yes you'd still pay your local income tax which would probably be higher than it is now.
That will never happen with the not paying tax at all.
I believe states would collect for the federal government. I’m sure Florida and Texas will pay up no problem…
The GOP always says they're gonna abolish the IRS when they take control of the house. In reality, the only thing they ever actually abolish are the ethics rules intended to prevent them from shitting all over the rest of us. https://www.newsweek.com/republicans-blasted-after-voting-gut-house-ethics-office-1772486
They'd probably want to replace the IRS with TurboTax
Only those who use TurboTax ™ would get the ability to show the plethora of contrived tax deferrals. Everybody else would pay full tax and get nothing back.
Only if you get a blue checkmark edition of TurboTax
It's actually a 30% increase. They call it a 23% tax because after all is said and done, the new tax would be 23% of the overall price. They're leaning on math illiteracy to make their proposal sound (slightly) less insane.
Correct. I'm surprised I just scroll so far down to see this. It is also likely to be higher than 30% when all is said and done because the bill assumes there is no sales tax fraud. I saw somewhere a while back that it would need to be at least 10% higher to collect the amount they would expect. My family used to own a hardware store, and everyone around we knew cheated on sales tax at least a little. Explanation on why it is actually 30% instead of 23% like they say: The 23% in the proposed bill is the person paying 23 cents OUT OF every dollar they spend. So, if your total is a $1, 23¢ goes to the government and 77¢ goes to the vendor. 23¢ is 30% of 77¢. The Way state and local sales tax works now is that you pay about 7% ON TOP of the dollar. So if your total is 1$, that $1 goes to the vendor and an additional 7¢ goes to the government.
Simply put: if the sale price of an item is $100, the new federal sales tax would be 30% of that for a total of $130. They are lying to us by saying it’s ‘only’ a 23% tax because $30/$130 = 0.23 = 23%. Don’t believe the lying bastards.
It's not a lie. Mathematically, a 30% sales tax is equivalent to a 23% income tax. Say you earn $100, with 23% going to income taxes, leaving you with $77. So you can purchase an item that is $77 with no sales tax. Now, let's instead say there's no income tax, so you keep the $100 you earned. You find a $77 item, and with 30% sales tax it comes to $100. Both scenarios leave you with a $77 item, and $23 going to the government.
>It's not a lie. Mathematically, a 30% sales tax is equivalent to a 23% income tax. Only if you spend all of your income.
It's worse. Most people are In debt and spend MORE than their income. It's over a 30% tax for many.
The sales tax is like the only regressive tax we have - it hurts the poor more than the rich. It's absolutely bonkers that they think this is anything but a dumpster fire.
This is so ridiculously intentionally dishonest, and they know it. Every single sales tax we pay right now the percentage is the percent of the tax. So telling.
How about you change some of these tax loopholes that allow the top 1% to pay next to nothing in taxing
Who change it? The top 1% who run everything? Of course they give themselves loopholes. You keep voting for them and their cronies.
Stop telling people who they voted for please. Some of us are getting gerrymandered so hard we have district lines between the living room and the bathroom!
> Who change it? The top 1% who run everything? Of course they give themselves loopholes. You keep voting for them and their cronies. You think voting is gonna fix it? You fools keep “voting” in a system that isn’t representative and designed explicitly to prevent labor from having power and yet everyone pretends like voting is how real change happens. No, it’s historically war or some other social upheaval....
Keep this rhetoric up & they’ll be looking to hire you 😂
😂😂😂
It's just another scheme to eliminate taxes for the rich and pass the costs onto everyone else. They will bait you by advertising rebates and breaks for middle & low income households in order to get it passed. Then a few years later they will start calling those rebates entitlement programs and try to cut those too. Same thing they did with the Trump tax cuts where they put in temporary cuts for the middle class to get it passed, only to let them expire in a few years. Don't be fooled. They won't stop until they have it all and we have nothing.
I agree with your comment, but what really annoys me was how trump’s TCJA benefitted businesses so much and not hardworking citizens. I’m actually looking forward to TCJA components expiring in 2026, as are most employees living in HCOL states. The 10k SALT cap sucks.
Strange how well they do at portraying things that increase the wealth of business owners as "benefiting businesses" when they hurt everyone who works for a business.
Well... hurting people who work for the business makes you need that job more and more and reduces your bargaining position. So almost by definition..
I’m actually looking forward to TCJA components expiring in 2026, as are most employees living in HCOL states. The 10k SALT cap sucks. Do you mind elaborating on this?
Sure! TCJA (tax cuts & jobs act) had 2 big changes impacting people: 1. Federal tax brackets changed **in our favor**: the tax rates were lowered (bracket comparison [here](https://smartasset.com/taxes/trump-tax-brackets)). Most of us got a smaller tax obligation bc of this 2. The standard deduction almost doubled and a **$10k limit on SALT deductions was introduced.** This made a standard deduction better than itemized for many people. Pre-TCJA, and how things will go back to in '26, there was no SALT (state and local taxes) cap. People could itemize their deductions and include their total state income tax (or sales tax) and property tax. People living in expensive states, and especially homeowners, will get a larger return once the cap is eliminated. Our tax bracket will be higher but it's still a way better outcome. example since I'm looking to buy my first home: 2022: I'm in the 35% fed bracket with a tax bill of $124k, but the total deduction (10k limit on SALT + 50k mortgage interest = 60k) would get me a 21k federal refund once SALT cap goes away: I'll be in the 39.6% bracket (worse) with a tax bill of $128k, but the total deduction (13k property taxes + 42k state income tax + 50k mortgage interest) actually brings me down to the 33% bracket and a fed refund of \~$36k I hope this makes sense!! sorry for the novel lol I love this stuff edit: clarity
Can you comment on the math I posted here: https://www.reddit.com/r/economy/comments/10jejsm/comment/j5kn3m2/?utm\_source=share&utm\_medium=web2x&context=3
Meanwhile implementing permanent corporate tax cuts.
Why don’t Democrats propose a 10% sales tax contingent upon people making more than $400,000 a year pay a 10% income tax.
1. How would you enforce that? 2. The rich don't pay income tax because they don't have income. They live off of loans backed by existing assets, which isn't taxable.
There are schemes. Alternative minimum or wealth surcharge taxes would work. I think a wealth surcharge tax of 2% annually over all financial wealth over 10m would be fine. There’s nobody who can’t get liquid enough to pay that.
All the numbers in your comment added up to 420. Congrats! 10 + 400 + 10 = 420 ^([Click here](https://www.reddit.com/message/compose?to=LuckyNumber-Bot&subject=Stalk%20Me%20Pls&message=%2Fstalkme) to have me scan all your future comments.) \ ^(Summon me on specific comments with u/LuckyNumber-Bot.)
Now it's a libertarian tax policy
Good bot
Absolute garbage. What they're proposing is the most regressive taxes possible. So, if you're making 10M a year, and spend only 10% of your income to live each year on consumption, you'll have an effective tax rate of 2%. If you make $70,000 and spend every penny you make on rent, food, etc, you'll be paying the full 23% tax. Note that this wouldn't be enough to sustain the federal budget, even though it would tax a large pool currently being untaxed, aka the poor.
and that doesnt even factor in individual state taxes.
I like the opposite approach. You pay taxes only on what you didn't spend this year of your total income. So, if you spent it all, you pay no taxes, but you dumped all your money back into the economy so thank you. And if you hoarded it all, you lose 25% of it.
This disincentivizes saving money. How are people supposed to save for retirement? or a kids college fund? having an emergency fund? saving to buy a house? This would also just have rich people move their money into other things (houses, cars, gold, bonds even maybe)
You aren't familiar with VAT, are you?
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Look into buying a yacht, you will see the loophole that already exists thats used. They register them in other countries and dont pay any taxes in the US. The loopholes already exist and would just go to other products. Or else they wouldn't buy them or buy it thru businesses and claim its a business expense and not in their name. The math doesn't work at all, taxes would go up on those that spend a greater % of their income and those that dont qualify for tax relief, the middle class. And they cannot afford it as it is.
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>politicians refuse to raise taxes on. It's the irony of asking the police to police themselves. We acknowledge that The Government is 100% captured by special interests, yet paradoxically we also seem to think that this entity would act in our best interest rather than its own with ultimate power and so.....we just keep giving it more power and then get upset when it doesn't do what we want. Stupid or Crazy, I believe, is the term.
The truth is that if our representative government was willing to legislate against the 1% we the people would have succeeded by a mere passing of such legislation. Call me a sucker but we get to vote every two years. If we really want things to change we’d have go be willing to vote for people who are willing to tackle the corporate oligarchy in our nation, as well as their undue influence on our governance.
> I am merely suggesting that there is a subgroup of Americans who can afford to pay more taxes and that is the same group of Americans who politicians refuse to raise taxes on. “Don’t tax you, don’t tax me, tax the fellow behind the tree.”
The problem with that, is rich people tend to be smart, in, or in control of the government, so the law is written to exclude rich people. Poor dumb bastards just pay more taxes and vote. Lol.
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How about if you are in the top tax bracket all money from any source that you receive is counted as income and you get no special rates for oh say capital gains? Also you receive no tax breaks.
I think all residential properties over $1M is a bit different than luxury vehicles and yachts, especially with the inflated housing prices. Maybe, *second* homes over $1 million.
A residential property valued at over a million dollars is now just a nice house in a nice metropolitan city. We’re trying to get CEOs and billionaires, not doctors or lawyers
How many billionaires do you think there are? Only \~725 in the US. As far as multi-millionaire CEOs, you probably got several thousands. Still not enough to make a difference because we simply spend too much. Last year our deficit was $1.5 Trillion. You could take every penny, stock, house and car every billionaire owns and you still would have enough to close that gap for just one year of US spending.
But entire middle class neighborhoods in HCOL areas have million dollar homes. It’s a problem that they’ve gotten so high, but people are only able to buy them because they’ve built equity in the market along the way with cheaper houses before the market exploded. They get paid more living those areas but the HCOL eats it up pretty quick. Things don’t cost the same across the country, especially housing. Tax secondary homes and vacation homes. Tax the home people bought to rent out or put on AirBnB. The people in HCOL areas paying a million dollars just to have a modest home are not your enemy, they want change too.
More than a 50% decrease in the deficit. Maybe let the massive fiscal event that was the pandemic work out before trying to balance to the budget. It's about like trying to balance the household budget after buying a house and saying "We need to make up for the 800K deficit we had last year!"
> As far as multi-millionaire CEOs, you probably got several thousands. This is a severe underestimate. There are about 8m households with more than $2m net worth. If you up the threshold to $10m, there are about 1.5m households. By "several thousands" did you mean 1500 thousands? https://leighbaldwinadvisory.com/how-many-millionaires-are-there-in-america/
A good example of the damage that has already been done.
And apply to the "sales tax" to corporations that buy companies or corporate stock. Why exempt those purchases?
>residential properties valued at over a million dollars? one million is absolutely not "luxury" in some markets. that's way too low of a number to apply a blanket tax given how widely real estate varies. luxury / sports cars and yachts i can see being much more justifiable as "luxury" items and those costs are also more consistent nationally.
It's so much worse than 23%. The actual tax is 30% for the first year, if you look at the bill ("23% of the gross spend", which is 30 / (100 + 30)), and then it adjusts as needed in the coming years. Meaning it goes up, automatically. And if they try to carve out something like rent or mortgages, they'd have to increase the tax to maybe 60% of everything else. The [proposal](https://www.cbsnews.com/news/scientologys-fair-tax-plot/) here actually comes from Scientology, which is pretty comical, as well. It was originally created as a way for Scientologists to get back at the IRS when they were feuding over being considered a church. When the IRS declared Scientology a church, the Scientologists dropped the idea. But others in the far right have picked it up. The goal is basically to shift as much taxation as possible to the bottom of society. Even after the "prebate" this bill would still be worse than a flat income tax, aka more regressive. It's pretty much as extreme of a proposal as possible, intended to rile people. But it will obviously never pass. It's just part of the comedy of life.
When will they tax the ultra rich?
You misunderstand. The ultra rich don’t make money, they have money. You don’t want to tax their income, you want to take away their wealth. Look at Elon Musk, his salary is $1 per year. His net worth is in stock, that you can’t take until he sells it, because the gains and losses aren’t realized until it’s sold. What you suggest is that we should tax their net worth and not their income.
When will people realize the answer to this question? Never. Never ever in a million years.
lol now that IRS is being targeted like it is - likely never.
We should be defunding things, particularly war, without raising working class taxes until the public gets the healthcare and other public benefits that are supposed to come out of a system of taxation.
Republicans: let's change taxes in a way that will help the 1% and hurt everyone else. Biden: that's dumb, that would be terrible for American families. People in this thread: fuck Joe Biden!
This is like getting your ass beat at school then coming home and having your dad punch you square in the mouth
I wonder if purchasing stocks would count. I'd be game if they taxed stock transactions. Maybe not 23% but at least something.
The GOP tax plan is a complete scam. Middle class households typically pay 10-20% of their income on the federal income tax (not counting payroll taxes which will remain in under the proposal). Replacing that with a sales tax over 20% means that most Americans will end up paying more in taxes, but the wealthiest households will get another tax break.
Both dems and reps are corrupt beyond all decency. They both are against the American people. We need a revolution.
There be a giant spike in cash usage and cash only services.
In other words, a giant shift of tax burdens from the rich onto the poor. No thanks.
The only way to combat inflation is by either destroying wealth at the top 1% or redistributing it. Otherwise it just grows and grows at the top and makes the rest worthless.
This will be magical for higher income earners if they replaced federal income tax with a high sales tax. It would simplify taxes for all wage and salary earners, but businesses have increased tax reporting obligations by taking on the responsibility to collect, report, and pay what was collected for the federal sales tax. This could hurt small businesses that struggle to keep up with the reporting requirements, but all depends how it's implemented. Generally high sales tax is anti consumption. If the leaks in your finances are now spilling more money, you're going to plug them up. Any frivolous spending will end. This will hit low income earners the most and almost have no effect or a positive effect for high income earners as the tax ceiling is 23% and only if you spend every single dollar you earned. Low income earners will have far less headroom to as they can only spend a smaller part of their income before they start paying more in taxes than they would have with the traditional income tax. No more upgrading phones, tvs, laptops, or luxury items. More casual gamers skipping the upgrade to ps5/xboxsx and the accompanying yearly online subscriptions. Expect to see a proliferation of the micro transaction model as more businesses try to claw back revenue by offering smaller slices of services. Businesses will revise spend strategy and cut back hard as well. Any big or generally expensive or abused taxable spending is going to be curbed dramatically. Expect to get hit hard if you're a business that caters to those needs, i.e. business travel or capex. Cash based and under the table revenue businesses will be able to increase their prices and pocket higher margins on the unreported earnings. Investing is now tax free/deferred. RIP to all the Roth ira and Roth 401ks. Not sure how markets will do with retail investors. Push/pull of high and low income earners will be interesting to see. But mostly this would be fucking magical for high income earners. If I just spend less I will keep a substantially larger amount of money (10s of thousands), which I can invest now with a tax free/deferred status. I am torn whether I would want this or not.
Biden is, of course, leaving out important facts for political purposes. The proposal is to dump the income tax and the IRS and substitute a sales tax. It also includes a substantial rebate of taxes to the poor (an estimated $6383/yr for a family of four). There are valid arguments for this, the main ones being that it is essentially a tax on consumption rather than income, and eliminates the incredibly high trouble and cost (over the US population) of tax preparation on the individual end and the cost of the IRS to process those forms. The current US income tax really is inordinately complicated. This also leads to inefficient use of capital due to the hunt for income tax savings. There are also valid arguments against, such as the fact that many states base their income tax on the feds, and would have to redesign their system of taxation. Also, it's unfair to those seniors who paid income tax all their lives and now will be penalized more for spending the money they saved. It could be unfair to the poor, as they consume more of their income than the rich, but this is partly handled by the proposed rebate to the poor (see above). Overall it would be an extreme change and cause quite a bit of turmoil, and shouldn't be taken lightly... nor should you take unbalanced, politically motivated propaganda as the full story.
"...The incredibly high trouble and cost (over the US population) of tax preparation on the individual end and the cost of the IRS to process those forms. The current US income tax really is inordinately complicated. This also leads to inefficient use of capital due to the hunt for income tax savings." The thing is, this could be fixed without fundamentally changing the current tax system. The IRS knows what the vast majority of tax payers paid and what they owe. The ONLY reason we don't get a letter from the IRS saying "You owe/ get a refund of X amount, do you agree?", every year is Turbo Tax. They spend millions in lobbying because they make billions on the current system. https://www.propublica.org/article/inside-turbotax-20-year-fight-to-stop-americans-from-filing-their-taxes-for-free
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It should be as simple as "You and your spouse make X dollars a pay period with Y dependents, therefore you own Z federal tax" and done. Do away with deductions such as mortgage interest, etc etc etc and call it a day. But fuck no, we can't have THAT. Gather all your forms, your proof of insurance by your employer, get the booklet or look it up online and take all that shit and add and subtract and BAM!!! YOU OWE US $3,000 SHITHEAD. Of you underpaid 3 years ago? Pay $1500 right now plus interest and fees if we don't get it in a week from post date of this notice (that took 2 weeks to get you). The IRS and the tax system is the second largest government employment/social welfare program known to man. The US military industrial complex is the first.
> (an estimated $6383/yr for a family of four). And what is it for single people? $2,000? After the standard deduction NOW, I pay around $4,000 a year in taxes and I earn $30,000, bringing it down to $26,000. If I had to pay 23% tax on everything tomorrow, that would be $6,900 for the income I earned, and since I'm poor, I end up spending it all. That means my take home income at the end of the year would decrease to $23,000 a year. As a single person, I wouldn't be eligible for the FAMILY rebate, and who knows what limits they would impose on those rebates to begin with, right? So I can reasonably expect (can't find any information about the rebates anywhere) that MY rebate would be far, far less than $6,383, right? So like I said, maybe $2,000? If I'm lucky? Which brings my total take home to $25,000 a year. A full $1,000 less than before. And I can't even afford rent now, FFS. >There are valid arguments for this, the main ones being that it is essentially a tax on consumption rather than income Do you know who doesn't consume? Rich people. They save. They keep all their money in offshore banks and rarely spend much of any of it. They hoard. And ensuring they only have to pay taxes for what they spend means that if they spend $300,000 a year, but earn 200 million a year, they only ever get taxed for that $300k. The rich never spend everything they have, so it will never be all of their money that is taxed under such a system. But it will ALWAYS be 100% of MY income taxed under such a system. How can you call something a "fair" tax if it decreases the amount the upper class will be taxed for and increases the amount the lower class will be taxed for? That's inherently UNFAIR!
If I am rich all my vacations and many of my purchases will be overseas.
I'm assuming this is better thought out than a flat sales tax across all purchases, but I haven't read the proposal. Take Florida's sales tax system for example, where grocery food items are generally tax exempt to alleviate some of the burden from lower Income individuals. Point being, a sales tax doesn't _have_ to be such a burden if it's crafted correctly.
Most sales taxes i know are like that. A usual 10% general sales tax but for supermarkets and necessities its usually 0 or tops like 1%
> Which brings my total take home to $25,000 a year. A full $1,000 less than before. And I can't even afford rent now, FFS. If you factor in the sales tax you currently pay, this gap will close.
State and local sales taxes wouldn't go away. So you would be paying those *on top of* a federal tax.
A national sales tax wouldn't end local or state sales taxes any more than the federal income tax ends state and local income taxes.
You are forgetting to calculate the current sales tax you pay.
>There are valid arguments for this, the main ones being that it is essentially a tax on consumption rather than income, Firstly most people rich or poor consume roughly the same amount of necessities So this tax over burdens those with less money for necessities. Secondly people with high levels of wealth are generally able to purchase property, pay for trips, lease cars, etc through corporations. In such cases they personally wouldn't pay the consumption tax. It would all get expensed. The govt has bailed out the Airline industry twice in the last 20 years. That has down stream impacts on the entry tourism industry (hotels, parks, restaurants, etc). The govt bailed out the auto industry, the banks, stock market, and invested in new companies like Tesla. The govt maintains the national highways without which billion dollars corporations like FedEx, Viking Freight, Uber, etc couldn't operate. The govt manages all air traffic control through the FAA and airport security through the TSA. The derangement some have where they believe the govt is a drag on the economy is ridiculous. Every dollar corporations and wealthy individuals pay in taxes produces meaningful returns.
You had me until every dollar produces a meaningful return. Examples of good tax use does not become all tax use is being used well
>Biden is, of course, leaving out important facts for political purposes. I can't let this one stand. You're leaving out important information too. Like the prebate being offered is only allowed for a certain income threshold that isn't set yet, AND is not set up for different cost of living adjustments. Not only that but people are not truly understanding the wording of the tax either >William Gale of the Brookings Institute has noted that it isn’t accurate to refer to the Fair Tax as 23%. He indicates that the rate is actually 30%. Fair Tax defines the sales tax as "$0.23 out of every dollar spent," which means that a $0.23 tax is added to every $0.77, not to every dollar. [People are grossly underestimating the personal cost this will have to middle class to lower class cost of living](https://www.brookings.edu/wp-content/uploads/2016/06/20040924.pdf) and I plead with others to fully read and understand the effects this will have. The only people agaisnt the IRS are those who skip on taxes. The IRS never went after working class people who pay their taxes. And if you want changes in the tax code, the single largest tax cut for the rich and owners of businesses and putting the burden on the working class isn't the way to do it. If you are working class and are thinking this is a great idea, it's not.
Most of your points are fair or at least worthy of debate. This one may not be: >The IRS never went after working class people who pay their taxes. You may want to glance at this site run by Syracuse University, particularly the "IRS Audits Poorest Families at Five Times the Rate for Everyone Else" article: [https://trac.syr.edu/tracirs/latest/679/](https://trac.syr.edu/tracirs/latest/679/). It may be because I know working class people with their own small businesses, but the complexity of income tax-related paperwork is certainly a burden on them.
I love nuance like this. Thank you for sharing that. It is important to understand how the IRS can be used for collecting from working class people. However, I did say people not paying taxes. NOW BEFORE YOU COMMENT BACK REDDIT - The tax burden on working class people who own businesses *are* subject to more harassment from the IRS, but that's just because they don't have the excess funds to dodge taxes like larger businesses can. The IRS can't go after the larger fish and can only go for the lower defended small businesses. Not to mention the total hellscape lobbying has done to make the US tax system a hell in a handbasket to navigate. Big businesses have entire fields of lawyers to help them navigate. Many working class people don't have the knowledge nor man power to do so. Eliminating the IRS will help those small businesses, but they won't do what they should be doing to stop tax fraud from monopsony businesses and larger businesses in general.
The typical audit for poor or middle class people is a simple form that says something like "You forgot to file your income for your side job and you owe X dollars". Been there, done that and the entire process was painless. I fucked up and filed my taxes incorrectly and then fixed it. There were no penalties or problems with the process at all. If you file your taxes and aren't doing anything shady an audit is not a big deal. If you're claiming extra deductions for things that you don't actually have, then yes, you're breaking the law and the IRS will come after you. Don't do that and you won't have a problem.
This is an incredibly balanced and well written description. Thank you, (checks username) u/LordPhartsalot
Whaaaatttt? Leaving out important info because there's a political bias?? Posted on reddit??? Nooo wayyyy, I can't believe it! I figured ol Biden would spit the facts straight and not leave out parts that wouldn't help him pander to the left. This is wiiiild I tell ya
But no federal income tax, right? Why leave that out?
And what about corporate taxes? I'm guessing the GOP proposal means that gets eliminated too?
Everyone who voted Republican, give yourself a pat on the back. You reap what you sow.
Didn’t the Reps just complained about how Biden raised the costs of everything?!
So this means me, someone that owns two homes and filing jointly with $600K+ income would only pay 23% on groceries, birthday presents for my kids, etc. Great deal for me. Shitty deal for 98% of the rest of the USA. I'll tell you what happens as a result of this. Local taxes skyrocket. Some states become more of a backwater because they can't afford anything for their residents.
Working people just above income guidelines for assistance are the ones that pay the taxes and get no benefits. Democrats demonize rich republicans demonize poor, ppl argue with each other over which politicians are for them all while voting against their own interests while the engine is churned by paycheck to paycheck workers
Balderdash
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It actually hits savings and investments more, considering you've already paid taxes on the income you used to purchase those assets. It would save us billions in tax preparation. I think it's a great idea. Imagine eliminating all tax subsidies, tax credits, and rebates as well.
Including those that apply to major corporation's and the extemely wealthy?
Pretty sure the proposition was for a 30% national consumption tax and no income taxes. It's a terrible system that will decrease taxes collected and will shift tax burdens to those who can least afford them I was surprised the bill actually had more than one sponsor considering it seemed like those of those bills written and pushed by a single insane person
It's way past time to tear all this down and start over
The idea is to replace income tax with sales tax. This stops rich people dodging tax as they love buying shit. The tax system essentially means those with more disposable income generate more tax as they buy more. There is one huge issue though. The UK did this years ago with VAT - A tax on sales of goods to replace income tax. They never removed income tax. The government is a parasite, it needs your money, and has police, prisons and guards to ensure they get it. Tax is theft.
As someone who spends less than he makes, sounds great. I'd save a lot more money. However, the tax would be incredibly regressive. Wealthy people would pay even less tax, poor people even more.
The tree of liberty needs some watering
Sales tax is egregiously regressive so this just makes sense coming from Republicans.
Absolutely insanely regressive. There isn't a better indicator that republicans want to fuck the lower and middle classes.
I think this would be a death sentence to the poors
Ah, so working as intended then?
forgot to mention no income tax only tax on what you choose to buy love it
Sales tax disproportionately impacts the poor because the rich get to save a greater share of their income.
Let’s look at a simple tool like a hammer. The hammer is sold in a store with 25% sales tax…ok. The end price increases. What about the wood for the handle the manufacturer purchases from a supplier, is that also taxed at 25%? The metal for the head? What about delivering the materials to the manufacturer, is diesel increased by 25% as well? This may very well “trickle down” to MUCH more than a 25% increase in end cost to consumer if it compounds down the line for every item…
No, this a solved problem. If you’re a business buying materials you will resell into another product, you can either provide your sales tax exempt ID to your vendors or get rebates from the tax authority later.
So the only people paying taxes are consumers? So upper class who’s businesses own their assets and make their purchases won’t be paying tax? Seems like a more effective way for the rich to reduce their tax exposure and put it on the producing class
As replacement for income tax. GOPer will say that's amazing less taxes. Anyone with a single understanding of tax code know sales tax is regressive and effect the bottom. The richest can start LLC and buy stuff that way and business expenses are not covered by this proposed sales tax.
America needs to revolt
Republicans would love paying twice as much for milk knowing no one is cheating paying for some inexpensive item.
Sounds good to me so long as sales taxes are placed on all investment vehicles including capital investments.
I think it's surprising to hear that Republicans want a new tax.
23% sales tax = great way to eliminate 23% of people's accumulated wealth overnight. Oh well, better spend it before the tax law gets passed - no way that will have any effect on inflation!
That sales tax is a replacement for federal income taxes right? Like a direct swap out? If so I don’t see a problem with it. A sales tax or a consumption tax is way better and harder to get around not paying. If it’s not a replacement but an additional tax then fuck that.
Exactly they should also make exclusions for like food and medicine then it would be perfect
Try taxing capital gains for once lol.
Basically tax evasion for rich people without the paperwork or irs
LOL yes keep asking the working class to foot the bill that the rich can easily afford and take off a huge amount of stress from everyone else.
23% sales tax but no income tax would be fine
What do I think? I think it's an elaborate system of moving money from one pocket to the other without addressing the fundamental issues driving inequality but instead creating a plethora of unintended (or perhaps just perverse) consequences. Just tax land lol
When rich people support a different tax plan, that’s all you need to know.
Show the Twitter fact check
Biden is a joke. He left the part out, that they are getting rid of income tax and the IRS.
I’m 100% for this. If they get rid of the IRS everyone will have to pay there fair share from all cash business to the 1%.
So will uncle same tax my income out of the ass still?
While at the same time abolishing federal income tax. so no money taken out of your check for taxes
Honestly, I would much prefer this over the abomination we have now. It is literally impossible to know if you are following tax law now because it is so complex that even calling the IRS help line and following their instructions exactly, then providing the recording of said instructions as proof can end in fines for breaking the rules. Tax law is at the whim of each IRS agent in the moment. Sales tax with necessary items taxed at a reduced rate or zero and luxuries taxed more aggressively and bam, a simple yet progressive system that does not require a PhD to comply with.
Remember those checks we sent you for COVID. We want our money back.
More Lies.
Common why dont you put the whole thing on the screenshot
He forgot to mention dems are trying to eliminate the debt ceiling meaning we will have unlimited inflation and your $15/hr job will be worth $14, $13, $11, …..etc as they keep printing more money.l
Oh yea don't forget the 87k+ new IRS agents Biden just hired. Theyre all in this together there no separate parties just an illusion of choice, they all got an agenda to fulfill
What is the national sales tax % currently?
I'd rather have a flat tax with no loopholes and no Biden. It would solve so many problems.
I know this is oversimplified, but if my federal income tax rate was 23% and we went to a 23% sales tax instead, then wouldn't the increased income offset the increased costs? And what if I use most of my income to pay debt and not simply make purchases, then wouldn't I be better off with the sales tax? Could the proposal of the bill incentivize people to make more major purchases now and hold the debt to avoid the possible sales tax in the future? Sales tax would also mean everyone who buys contributes regardless of citizenship and/or unreported income. Less time and money spent on tax prep would be nice too. I don't know. Honestly, we're already getting screwed, might as well try a new position lol.
Everyone knows that sales tax is a regressive form of taxation. Regressive taxation stifles economies. It's a stupid fucking tax and Americans should be rioting right now at the mere suggestion of such a stupid tax.
Meanwhile, Biden is sticking your hand in your pocket and stealing 50% of your income 🙄 Flat tax is fair and gets rid of the waste of money that is the IRS. No more tax code!!! I’m 1000000000% on board! I once had the IRS spend Over $1,000 to collect $12 from me, no a joke, dead serious. I ballparked the $1k but between hourly pay and paper/postage, it might be more than that…
From the party that let the Expanded Child Tax Credit die.
This is so disgustingly obvious, the ultra wealthy have more money than they could ever spend so of course they find it advantageous to have a sales tax and no income tax. I’m sure sure that applies to long term and short term capital gains as well as income since the game-plan is no IRS.
Republicans pass deeply partisan legislation that they know will not go beyond the house, news at 11. This is a tactic to rile their fucking base up and nobody sees it. They're taking culture war stuff and presenting it in a way that make democrats look like they refuse to cooperate with their legislation. The midterms literally did nothing lmao.
As long as there are Republicans, the US doesn't need any external enemy.
Conservative politicians everywhere love consumption taxes more than income taxes because everyone, including the ultra-wealthy pay the same tax on a Big Mac while income tax brackets are supposed to result in equitable, and not equal, taxation.
To be clear, this proposal would at the same time eliminate income taxes and abolish the IRS. The taxable items would exclude food, pharmaceutical, educational and healthcare items.
I think that politicians think we are all idiots
This is disturbingly disingenuous. This sales tax would be replacing the income tax. Im not sure how I think about it either but I like the idea of no more irs.
Yet democrats give billions to Ukraine
Joe Biden can die already so I can shit in his grave.
Yeah, that’s not inflationary. /s
Oh, like the FairTax. Yeah, okay. Consumption-based tax. Biden is clearly framing it disingenuously here, since it'd abolish the income tax, which would make the vast majority of workers take home more of their paycheck. Some good incentive for investment there, too. And usually a program like that would include vouchers for things like basic food and clothing costs for low-income families, so that the status quo improves for them as well. My criticism would probably be that it could potentially vastly accelerate the rate of wealth gain for the already wealthy, but I don't know how problematic that would be overall. I don't think it's a guarantee, either.