Comment

The Tax Code and why 'Fair Tax' is Horribly Unfair

48
ausador11/04/2011 12:50:59 pm PDT

re: #44 Buck

I don’t think I have dodged any questions.

I explained that it has been the experience here in Canada that EVERYONE spends the bulk of the money they earn. Sooner or later, even the wealthy.

I buy and sell stock to earn money, which I spend. I was trying to say that buying a stock is just converting one financial instrument into another. You are taxed on the profit, not the actual conversion. Like buying a bond, or putting money into a savings account. You only pay tax when you withdraw it and spend it.

Ahh, but there in lies the rub…

Here in America the schemes to get a Flat tax/Fair Tax enacted would all do away completely with the capital gains tax. So you would not be taxed on the profit of your investment when you sold your stock, not one penny, you would pay sales tax (providing a federal sales tax was enacted which is pretty much only a pipe dream at this point) only on the dollars that you actually spent. Those dollars that you saved (in a mattress, in a bank, in new investments) would be completely tax free.