Shopsmith Forums

My case is different in that I had my business in Canada but the concept is the same. Before retiring I had a business that was by nature of the "cash only" variety. I started it in 1990 and my wife and I ran it for fourteen years before selling out and retiring in 2004. We reported and paid our taxes on every dime of that income and because our books recorded all this we were able to sell our business for it's real value and retire. I have known others over the years who thought they were getting away with something by dealing in cash under the table but when the time came to sell or retire or whatever they couldn't show that their business was worth what they wanted for it. There are very good reasons for paying your taxes and not all of them are altruistic.

I will, however, stay out of the debate of the U.S. case as it's not my business.

Paul M

I have been reading about Ixtoc gulf oil spill in 1979 it put out some 3 million barrels of oil. It took about 6 years. But Mother Nature cleaned up most of the notable damage. We can hope she will do it again.

I have a number that made there living from the sport fishing industry. They are all out of business. One of those is faced with not having kepted much in the way of records and it has caught up with him. He can not make the case for the reality of his what he is loosing. I hate he is in this mess he did not cause the oil leak. But his dilemma is of his own making. There is a reason to keep records. This is just one of many.

I suppose baby sitters who get paid in cash are really the same but at the same time different.

They make a few dollars each time they work....but.... You would think that a business that brings in cash in 6 digit annual figures would at least keep records just in case someday something like this would happen.

JPG40504 wrote:1) A cash only 'system' creates no paper trail for later 'reference'.

2) With the 'fair tax' 'system' does it not rely upon either voluntary 'reporting' or a 'paper trail'?

3) Current cash only 'system' is lacking an accountability feature(requires 'self reporting').

4) So how is a 'fair tax' system different from a cash only system that prevents the lack of accountability inherent in current cash only systems.

The Fair Tax is not analogous to a cash only system.

With the current system, federal taxes are collected from your income. It comes out of your check before you see it. Unless you own your own business, then you have to report your earnings to the IRS. The higher your income, the higher your tax rate. "Productivity" is punished. A "cash only" system to avoid paying taxes is appealing.

If you happen to get paid "under the table," then you avoid the tax. If you happen to be a drug dealer, you avoid the tax. If you know the loopholes, you can avoid a lot of the taxes.

With the Fair Tax, you get to keep all the money you make. "Productivity" is not taxed. Make all the cash you want. Federal taxes would then be collected through a national sales tax. When a consumer buys something, they pay taxes. That business would be responsible for collecting and reporting sales taxes just as they do now on the state/local level. That is not voluntary reporting, that is required reporting. There's your paper trail. If you get paid in cash, you still pay Federal taxes when you buy things. If you're a drug dealer, you pay Federal taxes when you buy things. The more money you have, the more things you buy and the more taxes you pay. Or don't spend your money and keep it. It's yours. You earned it. You should have the right to keep it. "Self-reporting" is not required. Lengthy, complicated forms to fill out at the end of the year are not required. You get to keep what you earn - from your job, your investments, etc. It basically just shifts tax collection from income/productivity to consumption.

Sure, there's still room for abuse. Businesses could collect, but not report sales taxes. That happens now anyway. I don't think that problem would be any worse or any better than it is now.

There are also prebates so that those in poverty won't have to pay the sales tax on necessary items like groceries.

I won't go into the full details of the plan, but you can read about it here:

http://www.fairtax.org/site/PageServer? ... about_main

Fair Tax is not going to happen unless we replace about 60% of those in Washington in Nov and the other 40% in 12.

Ed in Tampa wrote:Heathicus
I'm not trying to be some kind of a wise guy but on what do you base this statement?

Do we really know the impact the Valdez had or do we know what environmentalist tell us? From what I was told the environment recovered immediately after the Valdez incident. Sure there was fish kills and wildlife that died but I'm told today the environment is total restored.

The continuing impact of the Valdez spill is huge. Whole fisheries have been wiped out -- including herring, which is not only a commercial catch but also a basic part of the food chain for a number of other animals. Roughly half of the spilled oil stranded and was buried along Prince William Sound. Toxins from that oil are leaching into the waters of the Sound and the damage continues as a result. Many local economies have yet to recover, and may never. It makes no difference how one feels about drilling or where one stands politically. The facts don't care. The aftermath of the Valdez spill will live on well into the future.

I like this idea (below). Further, why not link the national sales tax rate directly to both the deficit and the budget? In other words, establish a percentage of the tax for paying down the deficit over time. Then, each year when Congress passes a budget, the IRS estimates the sales tax rate necessary to pay for it and adjusts it annually. If they over-estimate, we get it back the following year in a reduced rate. If they underestimate, they have to make up for it the following year.

Think of the ramifications of that. Most folks would pay a whole lot more attention to the national budgeting process because we would all see it directly in the sales tax rate -- and Congress couldn't bury the real costs of doing things in obscure taxes and fees. We'd all see the real cost of government with every dollar we spent on taxable items.

So, instead of hearing about numbers in the billions that are impossible to wrap your brain around, we'd hear instead that doing something -- whatever it was -- would boost the national sales tax by .5% (or whatever).

I tend to be left of center, but I can see real value in this -- at least after the revolution it would probably initiate...

heathicus wrote:The Fair Tax is not analogous to a cash only system.

With the current system, federal taxes are collected from your income. It comes out of your check before you see it. Unless you own your own business, then you have to report your earnings to the IRS. The higher your income, the higher your tax rate. "Productivity" is punished. A "cash only" system to avoid paying taxes is appealing.

If you happen to get paid "under the table," then you avoid the tax. If you happen to be a drug dealer, you avoid the tax. If you know the loopholes, you can avoid a lot of the taxes.

With the Fair Tax, you get to keep all the money you make. "Productivity" is not taxed. Make all the cash you want. Federal taxes would then be collected through a national sales tax. When a consumer buys something, they pay taxes. That business would be responsible for collecting and reporting sales taxes just as they do now on the state/local level. That is not voluntary reporting, that is required reporting. There's your paper trail. If you get paid in cash, you still pay Federal taxes when you buy things. If you're a drug dealer, you pay Federal taxes when you buy things. The more money you have, the more things you buy and the more taxes you pay. Or don't spend your money and keep it. It's yours. You earned it. You should have the right to keep it. "Self-reporting" is not required. Lengthy, complicated forms to fill out at the end of the year are not required. You get to keep what you earn - from your job, your investments, etc. It basically just shifts tax collection from income/productivity to consumption.

Sure, there's still room for abuse. Businesses could collect, but not report sales taxes. That happens now anyway. I don't think that problem would be any worse or any better than it is now.

There are also prebates so that those in poverty won't have to pay the sales tax on necessary items like groceries.

I won't go into the full details of the plan, but you can read about it here:

http://www.fairtax.org/site/PageServer? ... about_main

When oh when will rational folks stop talking about the 'deficit' and realize that merely reducing the deficit, will still allow the 'debt' to continue growing!

We need to eliminate the 'deficit' and start reducing the 'debt'!

Unless the Fair Tax includes the purchases of businesses, charities and educational organizations, who normally don't pay taxes up front on purchases, we will still miss many dollars on income tax. When government buys anything, they pay no taxes, neither do churches, church schools, other schools or any state institutions. Or at least, they didn't just a few years ago. Maybe, that has changed. It seems that those who have power can find loopholes for not paying. This year, the first time in over 20 years, I paid less income taxes. For those who are working with good paying jobs, I can't speak for them. But, federal retirees have been told that there is no COLA for them next year. But, you can bet the premiums of our insurance will go up more as it has for the past 7 or 8 years. I don't fell confident that there is a simply solution to any of this. Just my situation. Thanks for listening.

cv3 wrote:I have been reading about Ixtoc gulf oil spill in 1979 it put out some 3 million barrels of oil. It took about 6 years. But Mother Nature cleaned up most of the notable damage. We can hope she will do it again.

I have a number that made there living from the sport fishing industry. They are all out of business. One of those is faced with not having kepted much in the way of records and it has caught up with him. He can not make the case for the reality of his what he is loosing. I hate he is in this mess he did not cause the oil leak. But his dilemma is of his own making. There is a reason to keep records. This is just one of many.

Newsweek did an article on oil spills and even if the present Gulf spill goes on until mid August it is going to be smaller than the one mentioned above. It is also less than a third as large as the oil spilt in the desert when Iraq blew up the oil wells during their retreat. This information is per Newsweek Magazine I think the June 14 issue.