The Fair Tax...

[Jeff_in_Atl]

It's up to the organization that processes a sales transaction to collect taxes. Foreign countries would have to get on the same page to prevent money from flowing elsewhere. Think of it this way......

You live in Florida, you log on to the internet and purchase an item in California. California does not collect sales tax for Florida. There is no sales tax collected unless the item is delivered to the same state as the purchase. if the government puts large sales taxes in place, more people will shop out of the country and have items shipped in via UPS or the like. It will take quite a bit of doing to prevent this from happening.

If it is sold in the US then that retailer collects and turnes in the taxes on it no matter where it is shipped to.

[Joe 1320]

If it is sold in the US then that retailer collects and turnes in the taxes on it no matter where it is shipped to.

Sorry Jeff, but that is not true, I've worked in retail for 20 years. Like I said before, get online and buy something out of your state and have it shipped in, you don't pay state sales tax. I do it all the time, it is frequently cheaper to buy online and have it shipped to me than to buy it locally and pay sales tax.

[Jeff_in_Atl]

Sorry but that is not true, I've worked in retail for 20 years. Like I said before, get online and buy something out of your state and have it shipped in, you don't pay state sales tax. I do it all the time, it is frequently cheaper to buy online and have it shipped to me than to buy it locally and pay sales tax.

It is also not to my knowledge that that is against the law. It would be in the fair tax and should be prosecuted if caught. It would certainly be cheaper to audit a company under the fair tax. How do you keep anyone from trying to cheat whatever system is in place?

[Joe 1320]

Jeff,

I'm not here to debate the issue, just remind you that sales taxes are state controlled, not federal. If you live in California and you call up Jegs or Summit Racing and order $500 worth of parts, you aren't charged sales tax unless you live in the same state. Whether or not it's ethical is indeed a question. And the other question you made is valid too.......how do you monitor it?

been living with this for 20 years. As a consumer it pays to shop out of state. As a retailer, it's a double edged sword. When a customer buys something from me and has it shipped up north, the savings in sales taxes not paid often more than pays the shipping. It is what it is, ethics aside.

[Jeff_in_Atl]

Jeff,

i'm not going to debate the issue, just remind you that sales taxes are state controlled, not federal. If you live in California and you call up Jegs or Summit Racing and order $500 worth of parts, you aren't charged sales tax unless you live in the same state. Whether or not it's ethical is indeed a question. And the other question you made is valid too.......how do you monitor it?

been living with this for 20 years. As a consumer it pays to shop out of state. As a retailer, it's a double edged sword. When a customer buys something from me and has it shipped up north, the savings in sales taxes not paid often more than pays the shipping. It is what it is, ethics aside.

But the thing with state sales tax is like you say a state enforced tax. California can't enforce their laws in Florida. But with the FairTax we are talking about a federal law which is enforceable in all states. So the feds can enforce Florida to take out taxes on an item shipped to California. So that's not a fair comparison.

If a US company sells something over seas then they can enforce the sales tax.

[Joe 1320]

But the thing with state sales tax is like you say a state enforced tax. California can't enforce their laws in Florida. But with the FairTax we are talking about a federal law which is enforceable in all states. So the feds can enforce Florida to take out taxes on an item shipped to California. So that's not a fair comparison.

If a US company sells something over seas then they can enforce the sales tax.

No, it is a fair comparison. You actually hit the nail on the head! The tax would have to be federally monitored to enforce it within the US. It would also have to contain some sort of overseas transaction monitoring. Other countries will not collect and enforce US taxes, it's not their job unless it becomes part of the fair trade act. Monitoring of all sales would be required or people would buy overseas.... sending US dollars to foreign countries. That's what would have to be stopped in order for the federal sales tax to keep dollars within our country. Canada does it by sending items though customs. Once there, the person who is accepting shippment must pay the taxes before it's released to them.

[Jeff_in_Atl]

No, it is a fair comparison. You actually hit the nail on the head! The tax would have to be federally monitored to enforce it within the US. It would also have to contain some sort of overseas transaction monitoring. Other countries will not collect and enforce US taxes, it's not their job unless it becomes part of the fair trade act. Monitoring of all sales would be required or people would buy overseas.... sending US dollars to foreign countries. That's what would have to be stopped in order for the federal sales tax to keep dollars within our country. Canada does it by sending items though customs. Once there, the person who is accepting shippment must pay the taxes before it's released to them.

Why can't the federal government enforce the tax like the state does? My wife's company has been audited for sales tax before.

I don't understand the overseas aspects of what you are saying.

If a US company sells something overseas then the overseas person has to get money to the US. If the item costs $78 and there is $23 in taxes then it is advertised as $100. The overseas person sends $100 to the US company and the US company sends $23 to the feds. I don't see a problem there.

If it is an overseas company selling something from the US then the overseas company has to buy it from someone in the US so the above applies.

[Joe 1320]

Why can't the federal government enforce the tax like the state does? My wife's company has been audited for sales tax before.

I don't understand the overseas aspects of what you are saying.

If a US company sells something overseas then the overseas person has to get money to the US. If the item costs $78 and there is $23 in taxes then it is advertised as $100. The overseas person sends $100 to the US company and the US company sends $23 to the feds. I don't see a problem there.

If it is an overseas company selling something from the US then the overseas company has to buy it from someone in the US so the above applies.

The overseas aspect goes like this.........

You drive down to the the local circuit city and see brand X flat screen TV. The price is $2500 plus 7% state sales tax. You head home with information in hand and log on the internet. On the net you see a website like "TraderSam's Electronics Outlet" based in China. The same flat screen TV is $2000 US dollars plus $200 shipping. Now that $300 less price is tempting, but often times that small difference will still make a consumer shop local because of the ability to return, exchange, customer service etc.

Fast foreward to a national sales tax. You head out to Circuit city, the flat screen is $2500 plus a national sales tax of 20%. Now you are at $3000 for the same flat screen that you could have shipped in from Trader Sam's in china for $2300 delivered to your door. It's happening right now every day, it would get worse with a higher national tax unless some form of enforcement prevented goods from entering the US tax free.

[Jeff_in_Atl]

I get it. You are missing something about the FairTax. It is an embedded tax. The consumer will never see it. It isn't collected the same as state sales tax. The tax is included in the prices of the product. It's not listed as $77 plus $23 in tax. It is listed as $100 plus your state and local sales tax.

Let me add this. You are paying it now. There is an embedded federal tax of about 22% in everything you buy now. The 22% is what all the companies involved in the making and distribution of a product have to charge now to keep up with the 10,000 pages of federal taxes. The company you work for now has to have someone every year do their taxes right. It takes them hours and hours to do. With the FairTax to figure the taxes you multiply sales times 23% and send them a check. Anyone can do that. You won't have to hire an accountant to do it. The trucking company won't either. Neither will the distribution warehouse or the manufacturer.

As for the oversees company selling it to someone in the US why should we try and get taxes from that sales. I see your point with that but if you take out the embedded taxes and include the tax the net is the same. Compare that with someone overseas trying to send it to America with a large shipping bill and it sounds to me like it might even out.

[Joe 1320]

if you take out the embedded taxes and include the tax the net is the same. Compare that with someone overseas trying to send it to America with a large shipping bill and it sounds to me like it might even out.

It doesn't even out unless the currency exchange rate is favorable to to just that. I used China as an example of what is currently happening. Cheap labor and materials combined with lack of government enforcement of labor laws and practices has billions of dollars flowing into China. A Federal sales tax put in place would likely make the situation even worse as there would be nothing to stop the even greater widening of delivered prices.

In my opinion, it's a nasty circle were in. The whole capitalism structure favors those with the dough, it's unlikely that anything is going to change that in the near future.

[Jeff_in_Atl]

It doesn't even out unless the currency exchange rate is favorable to to just that. I used China as an example of what is currently happening. Cheap labor and materials combined with lack of government enforcement of labor laws and practices has billions of dollars flowing into China. A Federal sales tax put in place would likely make the situation even worse as there would be nothing to stop the even greater widening of delivered prices.

In my opinion, it's a nasty circle were in. The whole capitalism structure favors those with the dough, it's unlikely that anything is going to change that in the near future.

No federal income taxes would draw companies to the US which would bring billions of overseas dollars to the US.

I don't see any evidence that suggests what you are suggesting.

[Joe 1320]

No federal income taxes would draw companies to the US which would bring billions of overseas dollars to the US.

I don't see any evidence that suggests what you are suggesting.

Jeff..... The evidence is everywhere. Most people buy at the lowest price that is possible at any given moment... the law of supply and demand. I doubt that most people look at the gas prices while they are driving and pick the most expensive one in town. people don't do it buying cars and homes, most people at some point compare prices. The internet and the ability to purchase worldwide has been the talk of ALL the retailers in the national trade magazines for the last 5 years. The smaller business have either toughened their ways of doing business or they are going away. Specialty retailers can still hold their own with specialized products and or services, but the hardest hit are your local neighborhood merchants who can't compete with the cheap imports. If it's not Walmart killing them with low cost high volume basic items, it's the internet killing both volume and driving down profit margin.

As much as I hate to admit it, I'm guilty of the same thing. In the Radio control airplane hobby, I can get some good quality parts direct from the factory in China. Things like brushless motors, servos, speed controllers shipped to my door for less than half of what it costs for the same thing domestically, just repackaged with a different name..... sometimes not even repackaged. A servo here in the US on the cheap end is about $12 average. The same servo from overseas is $4. Even if I paid a crazy $5 shipping for a $4 servo, It's still way less than $12 plus tax..... I just ordered them in some quantity so shipping per item was greatly reduced. You would be amazed at how many products that are sold here in the US that are merely a repackaged item direct from overseas. It was one set of circumstances 20 years ago. The internet has forced the world very quickly into a global market that is accessable by virtually everyone.

Due to this trend, many areas in the US are moving to a service based industry. That is where the federal tax could be real money maker. You aren't going to send your dry cleaning to China, nor are you going to fly somewhere to have your teeth cleaned. Think of all the service based industries like Restarants, Beauty Salons, Tax consultants, The healthcare industry.....etc... and you get the idea.

The basic tax hypothsis is both good and bad. I can see it's merits, it's the potential downside that bothers me. The thought that the elimination of income tax as a motivator to attract business I feel is not going to pan out. The bad part is without some sort of government intervention, elevating the delivered cost to a consumer when you don't have a monopoly will lead to eventual erosion of top line sales. The competion, which in this case is foreign countries, will cut price to capture the american dollar. The only way it won't happen is with some sort of international goods tariff to equalize pricing to protect the American internal tax revenue system. While I'm not a CPA, nor a financial advisor, I do have a very connected flow of information what is happening with retail and sales. These trends are reported thoughout the industry and have been observed by myself as well as countless others. Maybe we are talking on different ends of the spectrum, I don't know..... I do know that I am in the middle of it every day and I wanna retire.

[Jeff_in_Atl]

I understand what you are saying about people price shopping. Put that aside for a minute. The FairTax Would not change the price of goods and services. If you paid $100 now it would be $100 with the Fair Tax. So if the price doesn't change why would the current situation that we have now change to something else. It would not make people go looking to the internet or overseas more than they would now. If we don't change the tax system people are still going to go to the internet as they do now.

So the amount you pay for something wouldn't change. That's good.
So your check would not have any taxes taken out of it. That's better.
You would not have to keep records all year. That's better.
You would not have to file a tax return every year. That's better.
Politicians would not be able to "buy" votes by manipulation the tax code. That' better.
Almost all countries have some sort of income tax that they levy against all companies that operate inside their borders. If the US removed their income tax that they levy what do you think that company would do. For example a company says if we stay here in XXXX country they will levees a 15% (Russia's flat rate) tax on everything we make But if we go to the US we won't be levied anything. So it would be 15% cheaper for us to operate in the US. Don't you think some companies will move to the US to escape taxes? They moved away to escape taxes. That better.

Millions of dollars has been spent investigating the FairTax and they have not found any major problems like this.

We know that the current system has a bunch of major problems. No tax system is perfect. Are the potential problems of The FairTax worse than what we currently have? Not even close from what I see. Just taking the ability to take the politics out of the tax system is worth it to me. Politicians use wealth envy to buy votes from people by promising to raise taxes on the evil rich an give it to them. People are voting to get money rather than what is best for the country. Somebody a long time ago said once people realize they can vote to get money the country is doomed.