As a small biz owner, I'd pay my employees whatever is fair market rate, taking into consideration: no more withholding tax, higher sales tax, etc. Eliminate the IRS and you have my vote. Period.
I'm a big FT supporter but I think Boortz is dancing with a hyena here.
Unfortunately much the bottom line of the message of economic improvement is being lost in this statement in Boortz' dance from one extreme to another, for it focuses solely on tax collections per-se without acknowledging the gains in productivity and efficiency to be realised in going to a consumption tax system that arises from its lower marginal tax rate incident on the individual, and lower overhead costs on business upstream from retail sale.
More efficient utilization of business resources means higher production/sales volume at lower costs above and beyond the savings of taxes extracted by government.
The release of manufacturing from federal tax requirements of the income/payroll tax system provides a tax haven from the perspective of international trade. A clear incentive to reverse the flow of manufactures leaving the U.S.
The net result to the individual is sustained and rising income in a stronger economy not a loss as is constantly portrayed by consumption tax opponents.
The room for improvement to the economy and benefit to the individual household is very large and well beyond the taxes exctracted by government in the current tax system. The federal income/payroll tax system is a destructive burden that must be removed from this nation to remain a competitive player in international trade, as well as provide for a high standard of living for our future generations.
http://www.heritage.org/Research/Taxes/hl565.cfm
An American Economic Review study found that every dollar of taxes could impose as much as $4 of lost output on the economy, with the probable harm ranging between $1.32 and $1.47
Edgar K. Browning, "On the Marginal Welfare Cost of Taxation," American Economic Review, Vol. 77, No. 1 (March 1987), pp. 11-23."Another study in the Journal of Political Economy estimated that the corporate income tax costs more in lost output than it raises for the government."
Jane G. Gravelle and Laurence J. Kotlikoff, "The Incidence and Efficiency Costs of Corporate Taxation When Corporate and Noncorporate Firms Produce the Same Good," Journal of Political Economy, Vol. 97, No. 4 (1989), pp. 749-780.
Economic Burden of Taxation
William A. Niskanen
Presented October 2003
Friedman Conference
Federal Reserve Bank Dallas page 6.
www.dallasfed.org/news/research/2003/03ftc_niskanen.pdf"Given that the elasticity c implicit in recent U.S. fiscal conditions is about 0.8 and the average tax rate is about 0.3, the marginal cost of government spending and taxes in the United States may be about $2.75 per additional dollar of tax revenue. One wonders whether there are any government programs for which the marginal value is that high. Given the estimate of the long-term elasticity c from the U.S. time-series data, the marginal cost of government spending and taxes may be as high as $4.50 at the current average tax rate. "
This burden on the nations productivity is greatly reduced under a single stage consumption tax allowing for increased growth with an overall gain in purchasing power and standard of living for the individual household.
To pretend going to a revenue neutral single stage consumption tax is a net detriment to the economy or to individual households is just plain wrong.
If the Fair Tax is passed there will be some pain but it will almost certainly be worth it in the long run.
I understand his point about the revenue nuetral affect on each element of the tax base that is part of our economy. I do see a disconnect in this article that does not take into account the expansion of that base into foriegn produced goods and on the underground economy.
The base grows, therefore the burden is lowered on the elements carrying the load today. Are we willing to reject this idea because it might hurt foriegn companies and criminals?
I havent thought completely thought the fair tax stuff yet, but one thing seems obvious to me.
If retailers are forced to add 22% to the cost of all their goods, then wouldn't I just buy everything from the black market and save 22%? Wouldn't most people? And wouldn't it be about as enforcable as prohibition and the current drugs laws.
Where is my logic wrong?
Always a good thing to do
Boortz is such a doofus. This is just his attempt to rake in some cash by tagging along with another guy's idea. Debating the "fair tax" is a waste of oxygen. It will never happen. I will also never forgive that gasbag for his heartless ridicule of Terry Schiavo and her family, and lionizing of Michael Schiavo.
What I don't understand is how to factor in the tax exempt status for post-tax money I already have in savings.
That money was taxed under the old/current system. If we switch systems, and place a FT in place of the old system, why would prior post-tax money be subject to the tax? It would be taxed twice.
Is this why Boortz wrote the article?
I disagree with a substantial portion of what Neal Boortz explains in this piece. THERE IS A FREE LUNCH IN THE FAIR TAX ACT! The free lunch comes from ridding our tax system of the tremendous inefficiency of the income tax. That inefficiency costs about 90% of the $300+ Billion per year expended by Americans for compliance with the tax system as it now exists. THE FREE LUNCH WILL AMOUNT TO THE ECONOMIC EQUIVALENT OF $250 BILLION/YEAR IN TAX CUTS - THE LARGEST AND MOST BENEFICIAL TAX CUT IN HISTORY - SIMPLY BY THROWING OUT THE STUPIDITY OF EXTREME WASTE OF MANPOWER REQUIRED TO COMPLY WITH THE PRESENT TAX SYSTEM. That will enable a net gain in the economic growth rate not less than 1-2% per year, which will be sufficient to pay the costs of Social Security reform and more.
All the quibbling over exactly what happens to the repealed income and payroll taxes (whether they go back on the paycheck - which I think they will do in 90% of cases) or are recaptured by the employer through negotiated salary reductions does not amount to a hill of beans. Let's keep our attention on the big picture, which is MORE than enough to justify entirely adoption of the Fair Tax Act of 2005 as real tax reform.
http://www.freerepublic.com/focus/f-news/891695/posts