Posted on 08/24/2005 9:40:44 PM PDT by RobFromGa
"If you believe that out of a ~$2 trillion discretionary (non-SS) budget only ~$750B is spent on goods, services,
and employees, you are nuts."
Not nuts, just better informed than you are. And if I'm nuts, then apparently so is the Census website.
The Federal government doesn't really "spend" all that much on consumption. It doles out a lot of money,
but it doesn't "consume" all that much. It pays retirement benefits to former employees.
It gives money in block grants to states. It pays out disability, unemployment, and SS benefits.
It would only pay FairTax on what it "consumes" plus wages for current employees.
If you don't beleive the Census numbers, then how about the NIP tables ?
14 Federal government consumption $ 658.6 NIPA Table 3.10.5, line 12
15 Gross purchases of new structures $ 15.5 NIPA Table 3.9.5, line 9
16 Gross purchases of equipment and software $ 78.1 NIPA Table 3.9.5, line 10
I went to the Census numbers because you apparently didn't believe anything that came from the AFFT site.
"So, $827B minus $30B education expense equals $797B - multiplied by 29.87% is $238B! You were a little off."
Well, you haven't broken this down into how much was wages and salaries with the 7.65% savings vs. the 11% price drop savings for everything else. I'll do it for you. Save $16B on salaries. Save 11% times $587B = $65B on everything else. So our new FairTax base is $716B. Times 30% = $214B. Total is now $214B + $716B + $30B = $960B. Which is $133B. Subtract the $70B in interest savings on the national debt. We have a net increase of $63B.
So using your own figures, I was a heck of a lot closer than you were.
More FairTax, pie-in-the-sky math. Like the price of an aircraft carrier is going to go down 11%...
Like the contractor that builds aircraft carriers doesn't have income and payroll taxes and neither does anybody in their supply chain.
Give it up, Nightmare. All you can ever prove is that if you deny the obvious, the FairTax can't work. Denial. It's not just a river in Egypt.
Just for fun, I went and checked the financial statement for Nortthrup Grumman -- major contractor for a new aircraft carrier "CVN 21" starting construction in 2007.
2004 revenue was $30B. Income Tax paid $500M. Payroll tax on 125K employees was probably $600M. 11% savings on subcontractors and materials is another $2.5B so we have a total cost reduction of $3.6B on $30B revenue. Looks like 12% to me.
Well, you haven't broken this down into how much was wages and salaries with the 7.65% savingsWhat makes you think there would be a 7.65% savings on wages and salaries?...
Where is it written that the payroll tax paid on the employee's behalf won't be given to the employee where it belongs?...Especially when the Fairtax rate would be determined by Social Security bureaucrats based on 15.3% of the Social Security wage base.
`(d) OLD-AGE, SURVIVORS AND DISABILITY INSURANCE RATE- The old-age, survivors and disability insurance rate shall be determined by the Social Security Administration. The old-age, survivors and disability insurance rate shall be that sales tax rate which is necessary to raise the same amount of revenue that would have been raised by imposing a 12.4 percent tax on the Social Security wage base (including self-employment income) as determined in accordance with chapter 21 of the Internal Revenue Code most recently in effect prior to the enactment of this Act. The rate shall be determined using actuarially sound methodology and announced at least 6 months prior to the beginning of the Calendar year for which it applies.Add them up, it's 15.3% not 7.65%...`(e) HOSPITAL INSURANCE RATE- The hospital insurance rate shall be determined by the Social Security Administration. The hospital insurance rate shall be that sales tax rate which is necessary to raise the same amount of revenue that would have been raised by imposing a 2.9 percent tax on the Medicare wage base (including self-employment income) as determined in accordance with chapter 21 of the Internal Revenue Code most recently in effect prior to the enactment of this Act. The rate shall be determined using actuarially sound methodology and announced at least 6 months prior to the beginning of the calendar year for which it applies.
You really are confused. You need to stop reading only every third word and read what the bill actually says.
"... same amount of revenue that would have been raised ..."
has nothing to do with where the money comes from. It is strictly a guarantee that SS and Medicare will still be funded -- but from general revenue instead of a separate special employment tax.
The employment taxes are finished, eliminated, don't exist anymore. There is no way for the givernment to force employers to give employees money that was never paid by the employee and never counted as compensation to the employee. Employers will continue to pay their employees their contractually agreed upon gross wages, period. Which means the employer see a COST for the employee 7.65% lower than it was before.
If you can't make an intelligent statement, you should just keep quiet.
Did you ever stop to think that if the 7.65% retained by employers did lower prices it would trigger the SS bureaucrats to raise the rate to raise the -"same amount of revenue that would have been raised"- when the employer was paying it?....
You aren't capable of seeing that if the employer retains 7.65% of the Social Security wage base that the Social Security wage base would be 7.65% short, resulting in higher tax rates (without a vote from Congress) for consumers (that's not a question).
There is no way for the givernment to force employers to give employees money that was never paid by the employee and never counted as compensation to the employee.Really? No way? Not counted as compensation?
Employers will continue to pay their employees their contractually agreed upon gross wages, period.That's a nice AFT talking point but if there is such a thing as a "contractually agreed upon" (unless you're a union member) wage the government enforced part of the contract requires the employer to pay 7.65% of the wage base on the employee's behalf..it's in the contract.
No, I can see it isn't a question. It is just an incorrect conclusion.
You can't seem to get it through your head that the SS administrators are going to simply tell Congress how much money they need -- calculated based on the equivalent of the revenue raised from the old rates.
As long as the FairTax 23% raises enough total revenue to cover the SS obligations as well as all other obligations previously funded by income and payroll taxes, there is no "missing" 7.65%.
"the government enforced part of the contract requires the employer to pay 7.65% of the wage base on the employee's behalf..it's in the contract."
I'm going to have to start calling you "Loonie-Lewie".
What country do you live in ? There is no contractual agreement for the employer to pay 7.65% of the wage base on the employee's behalf. None. There is a separate law requiring employers to pay WHATEVER rate Congress decides. That rate can be 10% or zero or whatever Congress decides -- and the employee has no claim on the money that would have been paid at a different rate.
Economists may argue about who bears the "burden" of the employer-side payroll tax, but there is no legal claim the employee can make and receive it. Even tax protesters that refuse to pay income tax and "opt out" of the SS tax do not receive from the employer the amount the employer would have paid the government. That's just silly.
I'm going to have to start calling you "Loonie-Lewie".Here we go, another idiot with the name calling...
What country do you live in ? There is no contractual agreement for the employer to pay 7.65% of the wage base on the employee's behalf.You're right it's not a contractual agreement it's a federal law whether the employer agrees to it or not.
there is no legal claim the employee can make and receive it.Sure there is. It's called Social Security/medicare benefits
There is a separate law requiring employers to pay WHATEVER rate Congress decides.And right now that rate is 7.65% of the employee's SS wage base...
You can't seem to get it through your head that the SS administrators are going to simply tell Congress how much money they needNope, you're wrong as usual. I'll have to post it again.
`(3) COMBINED FEDERAL TAX RATE PERCENTAGE- The combined Federal tax rate percentage is the sum of-- `(A) the general revenue rate (as defined in paragraph (4), andNot one word about "simply telling Congress how much money they need".`(B) the old-age, survivors and disability insurance rate, and
` (C) the hospital insurance rate.
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`(d) Old-Age, Survivors and Disability Insurance Rate- The old-age, survivors and disability insurance rate shall be determined by the Social Security Administration. The old-age, survivors and disability insurance rate shall be that sales tax rate which is necessary to raise the same amount of revenue that would have been raised by imposing a 12.4 percent tax on the Social Security wage base (including self-employment income) as determined in accordance with chapter 21 of the Internal Revenue Code most recently in effect prior to the enactment of this Act. The rate shall be determined using actuarially sound methodology and announced at least 6 months prior to the beginning of the Calendar year for which it applies.
`(e) Hospital Insurance Rate- The hospital insurance rate shall be determined by the Social Security Administration. The hospital insurance rate shall be that sales tax rate which is necessary to raise the same amount of revenue that would have been raised by imposing a 2.9 percent tax on the Medicare wage base (including self-employment income) as determined in accordance with chapter 21 of the Internal Revenue Code most recently in effect prior to the enactment of this Act. The rate shall be determined using actuarially sound methodology and announced at least 6 months prior to the beginning of the calendar year for which it applies.
`(f) Assistance- The Secretary shall provide such technical assistance as the Social Security Administration shall require to determine the old-age, survivors and disability insurance rate and the hospital insurance rate.
What part of "shall be determined by the Social Security Administration" and "shall be that sales tax rate" confuses you?
"... to raise the same amount of revenue that would have been raised..."
That says it all. Your misinterpretation is not my problem.
"... to raise the same amount of revenue that would have been raised..."No that only says part of it. this says it all:That says it all. Your misinterpretation is not my problem.
"The old-age, survivors and disability insurance rate shall be determined by the Social Security Administration. (not by Congress) The old-age, survivors and disability insurance rate shall be that sales tax rate (determined by unelected Social Security bureaucrats)which is necessary to raise the same amount of revenue that would have been raised by imposing a 12.4 percent tax on the Social Security wage base (including self-employment income).....The Fairtax definition of 100% paycheck only includes 7.65% of the SS wage base but the very same Fairtax people include 15.3% of the SS wage base in their sales tax...That's a loser for the consumer.The hospital insurance rate shall be determined by the Social Security Administration. The hospital insurance rate shall be that sales tax rate (determined by unelected Social Security bureaucrats) which is necessary to raise the same amount of revenue that would have been raised by imposing a 2.9 percent tax on the Medicare wage base (including self-employment income)
Your misinterpretation is not my problem.Actually YOUR misinterpretation is your problem...I only posted the actual words YOU misinterpreted them.
You are still misinterpreting the rates shown in sections 904(d) and (e). This is only to establish that funding will be provided that matches what the old system provided. The more relevant sections are 904(b) and (c) which just says the total 23% is allocated to fund 5 separate obligations as defined in (a):
"
`SEC. 904. TRUST FUND REVENUE.
`(a) Secretary to Make Allocation of Sales Tax Revenue- The Secretary shall allocate the revenue received by virtue of the tax imposed by section 101 in accordance with this section. The revenue shall be allocated among--
`(1) the general revenue,
`(2) the old-age and survivors insurance trust fund,
`(3) the disability insurance trust fund,
`(4) the hospital insurance trust fund, and
`(5) the Federal supplementary medical insurance trust fund.
`(b) General Rule-
`(1) GENERAL REVENUE- The proportion of total revenue allocated to the general revenue shall be the same proportion as the rate in section 101(b)(4) bears to the combined Federal tax rate percentage (as defined in section 101(b)(3)).
`(2) The amount of revenue allocated to the old-age and survivors insurance and disability insurance trust funds shall be the same proportion as the old-age, survivors and disability insurance rate (as defined in subsection (d)) bears to the combined Federal tax rate percentage (as defined in section 101(b)(3)).
`(3) The amount of revenue allocated to the hospital insurance and Federal supplementary medical insurance trust funds shall be the same proportion as the hospital insurance rate (as defined in subsection (e)) bears to the combined Federal tax rate percentage (as defined in section 101(b)(3)).
`(c) Calendar Year 2007- Notwithstanding subsection (b), the revenue allocation pursuant to subsection (a) for calendar year 2007 shall be as follows:
`(1) 64.83 percent of total revenue to general revenue;
`(2) 27.43 percent of total revenue to the old-age and survivors insurance and disability insurance trust funds, and
`(3) 7.74 percent of total revenue to the hospital insurance and Federal supplementary medical insurance trust funds.
`(d) Old-Age, Survivors and Disability Insurance Rate- The old-age, survivors and disability insurance rate shall be determined by the Social Security Administration. The old-age, survivors and disability insurance rate shall be that sales tax rate which is necessary to raise the same amount of revenue that would have been raised by imposing a 12.4 percent tax on the Social Security wage base (including self-employment income) as determined in accordance with chapter 21 of the Internal Revenue Code most recently in effect prior to the enactment of this Act. The rate shall be determined using actuarially sound methodology and announced at least 6 months prior to the beginning of the Calendar year for which it applies.
`(e) Hospital Insurance Rate- The hospital insurance rate shall be determined by the Social Security Administration. The hospital insurance rate shall be that sales tax rate which is necessary to raise the same amount of revenue that would have been raised by imposing a 2.9 percent tax on the Medicare wage base (including self-employment income) as determined in accordance with chapter 21 of the Internal Revenue Code most recently in effect prior to the enactment of this Act. The rate shall be determined using actuarially sound methodology and announced at least 6 months prior to the beginning of the calendar year for which it applies.
`(f) Assistance- The Secretary shall provide such technical assistance as the Social Security Administration shall require to determine the old-age, survivors and disability insurance rate and the hospital insurance rate.
`(g) Further Allocations-
`(1) OLD-AGE, SURVIVORS AND DISABILITY INSURANCE- The Secretary shall allocate revenue received because of the old-age, survivors and disability insurance rate to the old-age and survivors insurance trust fund and the disability insurance trust fund in accordance with law or, in the absence of other statutory provision, in the same proportion that the old-age and survivors insurance trust fund receipts bore to the sum of the old-age and survivors insurance trust fund receipts and the disability insurance trust fund receipts in calendar year 2006 (taking into account only receipts pursuant to chapter 21 of the Internal Revenue Code).
`(2) HOSPITAL INSURANCE- The Secretary shall allocate revenue received because of the hospital insurance rate to the hospital insurance trust fund and the Federal supplementary medical insurance trust fund in accordance with law or, in the absence of other statutory provision, in the same proportion that hospital insurance trust fund receipts bore to the sum of the hospital insurance trust fund receipts and Federal supplementary medical insurance trust fund receipts in calendar year 2006 (taking into account only receipts pursuant to chapter 21 of the Internal Revenue Code)."
Whatever the total Sales Tax rate is, it will initially be split up by the Secretary of the Treasury based on the percentages given in 904(c)(1-3) for the Calendar Year 2007. Section (d) only shows that this split of the 23% revenue is supposed to match the funding provided by the old separate Payroll Tax rates.
This split could change as FairTax revenue increases due to economic growth or as baby-boomers retire, and the wage base falls.
None of this has anything to do with 15.3% vs. 7.65% being returned to the wage earner. It is simply to guarantee that the SSA's calculations for these liabilities will have the same funding as before.
The phrases "shall be that sales tax rate" and "would have been raised by" are the keys. This does not give the SSA any leeway to raise rates just because they want to -- or even need to. The rates can only be what is "necessary to raise the same amount of revenue" as in under the previous wage-based tax.
All the SSA can do is say "The wage base was 'X' and 12.4% of that would be 'Y', so we need that much money. The FairTax base is 'Z', so tell the consumer that 'P' of the Sales Tax is to fund SS." Same for the other funds.
I've said before that I am not happy with the handling of the SS program within the FairTax. But the 15.3% vs. 7.65% and whether the employer-side 7.65% belongs to the employee is not one of my concerns. Only the self-employed even think about that 7.65% as belonging to them. With any agreed-upon wage, it is never included as part of the employee's gross.
If you want to worry about the SS after the FairTax, then worry about something relevant, like the fact that the FairTax breaks the myth that your SS account is like a retirement account with money in it. And although the FairTax ensures funding, there is no longer a direct link (though never proportional) between taxes actually contributed and the benefit received. This makes it clear that the SS program is just welfare. Most of us knew that already, but it will be painfully obvious under the FairTax. It also makes implementing private accounts a very dubious affair. To say that somebody is entitled to place 'X' amount of money in a private account because they 'theoretically' paid 'Y' amount in Sales Taxes is just ridiculous. So saving for retirement will not be through private accounts paid for from FairTax revenues. Just not gonna happen. Worry about that if you want to focus on SS.
I missed this comment earlier:
"Did you ever stop to think that if the 7.65% retained by employers did lower prices it would trigger the SS bureaucrats to raise the rate to raise the -"same amount of revenue that would have been raised"- when the employer was paying it?...."
I think I finally see where your misconception comes from.
There are two entirely different tax bases involved here.
If you look at the total revenue from the 15.3% payroll taxes, it is around $700B. That means the taxable wage base was $700B/.15 = ~$4.7T
The taxable base for the FairTax is roughly $9.7T, so obviously 15.3% is not necessary to raise the same $700B revenue. Only $700B/$9700B = 7.2% is actually necessary.
This means that if we were only replacing the payroll taxes with a FairTax, the FairTax rate would only need to be 7.2% instead of 23%. The remainder of the 23% is going to the general fund and to provide the "prebate/rebate/refund/welfare/subsidy/whatever-you-want-call-it."
The FairTax section 904 you keep quoting only guarantees the funding at the same level as wage-base tax rates. 7.2% does that, no matter whether the employer-side 7.65% went to the employee, reduced prices, or was kept as additional profit by the employer.
The more relevant sections are 904(b) and (c)`(c) Calendar Year 2007- Notwithstanding subsection (b), the revenue allocation pursuant to subsection (a) for calendar year 2007 shall be as follows:
-----
`(2) The amount of revenue allocated to the old-age and survivors insurance and disability insurance trust funds shall be the same proportion as the old-age, survivors and disability insurance rate (as defined in subsection (d)) bears to the combined Federal tax rate percentage (as defined in section 101(b)(3)).
`(3) The amount of revenue allocated to the hospital insurance and Federal supplementary medical insurance trust funds shall be the same proportion as the hospital insurance rate (as defined in subsection (e)) bears to the combined Federal tax rate percentage (as defined in section 101(b)(3)).
`SEC. 101. IMPOSITION OF SALES TAX.`(a) In General- There is hereby imposed a tax on the use or consumption in the United States of taxable property or services.So where is the combined rate rate for 2008?`(b) Rate-
`(1) FOR 2007- In the calendar year 2007, the rate of tax is 23 percent of the gross payments for the taxable property or service.
`(2) FOR YEARS AFTER 2007- For years after the calendar year 2007, the rate of tax is the combined Federal tax rate percentage (as defined in paragraph (3)) of the gross payments for the taxable property or service.
`(3) COMBINED FEDERAL TAX RATE PERCENTAGE- The combined Federal tax rate percentage is the sum of--
`(A) the general revenue rate (as defined in paragraph (4), and
`(B) the old-age, survivors and disability insurance rate, and
`(C) the hospital insurance rate.
`(4) GENERAL REVENUE RATE- The general revenue rate shall be 14.91 percent.
This "stuff" didn't work the first 27 times you tried it - it surely won't now. The poster Kellis91789 is definitely no newbie poster as you'd like. But I guess you'll find that out the hard way ... lotsa' luck Looey.
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