Posted on 12/22/2005 5:15:35 AM PST by Eaglewatcher
Did you look at the table?
How many of those 2 million homeless people receive the EITC?
EITC = any welfare woops
I'm outta here. Merry Christmas- talk next year-
By your reasoning, it is not. Most of the EITC is a refund of SS/payroll taxes that they paid out of their gross income. However, the EITC has been raised to the point where some recieve a portion of their employers paid portion of the payroll taxes.
Merry Christmas to you.
Yes, this is an interesting viewpoint. Is the Prebate really any more of a welfare program than the EITC and Child Credit ? Or even the income tax refund most people receive because they had too much withheld during the year ?
A conservative approach to seeing how much of the $500B would be to look at how much of the total consumption is done by people ABOVE and BELOW the poverty line. Since 13% is the latest figure for the number of people living below the poverty line, we should be able to make a rough calculation.
The last figure I can find shows 39M (13% of all Americans) including 13.5M children living below the poverty line. Each of those children is worth $1,000 Federal Income Tax Credit to some poor family. So that is $13.5B just in Child Tax Credits to poor families. In 2003, $39B in Credits was issued under the EITC program. That is according to this study (page 12) http://www.irs.gov/pub/irs-utl/irs_earned_income_tax_credit_initiative_final_report_to_congress_october_2005.pdf#search='total%20eitc%20issued%202005'
That is a total of "Tax Credit Welfare" of $52.5B.
The Prebate would give these 25.5M adults each $2,201 and each of 13.5M children $750. A total Prebate of $66.3B.
So absolute worst-case, that means $66.3B of welfare, while the other $433.7B is a refund to people that actually spent enough for it to be a legitimate refund of taxes paid.
So what is the "net new welfare" of the Prebate compared to the EITC and Child Tax Credit currently going to these same families ? It would be the $66.3B absolute maximum minus whatever the current cost of the EITC and Child Tax Credits which total $52.5B. A "net new welfare" of $13.8B.
That is based on assuming FairTax Prebates were issued and those poor people somehow paid zero FairTax, ie. they didn't deserve any of that $66.3B in Prebates.
In actuality, it seems like the "new welfare" aspect would be significantly less than $13.8B and not anything to be concerned over.
The $500B goes in and mostly goes back out to the people who paid it. Thanks for that viewpoint, Principled.
Knowing what sticky fingers Congress has, shuffling all that money still makes me uneasy. But it still seems much better than the EITC, Child Credits, and Tax Refunds of the current system.
In fairness to the EITC and Child Credits, most go to people who actually paid that amount in taxes. Quite a few people have a negative income tax rate until you figure in social security tax. The EITC was only meant to refund social security taxes paid by the working poor although it has been increased above that. So the EITC is mostly a refund also in that sense.
GET RID OF IT! If you can't do it with the fair tax do it some other way. AR WHAT DO YOU SUGGEST? The fair tax people have given a hell of a lot for the cause. WHAT CAUSE? The cause that will free us from the albatross.
You guys can debate the technicals all you want, but the bill is not even on the floor for debate. We have to all get together NOW. We have been debating this sh*t for years. I want to know who is for change and who is not.
Is that a fair question?
...that you stepped on on your way to the top?
"God bless us every one."
Always steal from the best.
And never let a good idea get in the way of progress.
We only started debating the EITC as a rebuttal to Rob's comment that the Prebate looks like a "Universal Welfare" program. And my own gut response that I agreed with him. It would only constitute "welfare" if it constituted a large distribution of wealth. If it just gives back what was taken, then it is merely inefficient.
My own conclusion after putting some numbers in play was that the net effect is minor and doesn't constitute any more of a wealth redistribution than the existing system.
I am encouraged that the Prebate is not the giveaway program it sometimes looks like, and that it is a more honest and straghtforward method of achieving the same thing as the EITC and Child Tax Credits.
That doesn't mean EITC and Child Tax Credits are a good thing. Anything that removes people from the rolls of taxpayers is a bad thing in my opinion.
The eitc represents amounts paid in tax, but is NOT a refund of that tax! The future benefits purchased by those taxes still exist! They are't trading the tax refund for future benefits, they're getting both. That's welfare.
(Jorgenson expressly said nothing of the sort. Jorgenson said any gains shown in the model would be due to economic efficiencies not because of the elimination of the income tax, and Jorgenson certainly did not say that he ignored economic efficiencies. In fact that was one of the main purposes of the model)
Wgat you are overlooking is the context of the remark as specifically regards gains to workers and investors, i.e. wages and returns on investment/savings.
Gains to workers are wages, and he expressly leaves out efficiency gains to wages in his characterization that the worker would not receive his contracted gross, but would recieve only what is takehome under the income tax.
Jorgenson's statement: "A more reasonable interpretation of my 1996 testimony is that workers would keep that after-tax pay; producers' prices would fall, but retail prices would be increased by the national retail sales tax. Any gains by workers and investors would be the result of increase economic efficiency."
The economic efficiency gains that workers receive come by way of a higher real wage and are of necessity a result of replacing income taxes with retail sales taxes in his model allowing economy via business to operate more efficiently, which is what his testimony about his study in the '93 model is about.
RobFromGa's claim and apparently yours as well is that there are no gains to be had for the worker as all he can receive is the income tax takehome pay level.
A result counter, to gains to the worker as a result of increase economic efficiency.
You can't have it both ways either the worker gets more than that income tax level takehome pay as a consequence of replacement of income taxes with retail sales taxes or he doesn't have gains from economic efficiencies.
Jorgenson's studies indicate a gain to be had, the characterization that all the worker gets is that takehome pay level is a misinterpretation of what Jorgenson was trying to get across, model treats wages in a particular way, but the worker can receive something more than the implementation constraints in the real world, due to increased economic efficiencies resulting from replacement of income taxes with retail sales taxes.
This is especially true in the case of the FairTax, which not only repeals the income tax system, but replaces the SS/Medicare payroll tax system as well. The combination of removing both from the manufacturer results in very large efficiency gains arising from lower costs of doing business, higher investment rates and lower pricing levels necessary to achieve same profits out of the higher production volumes which his later studies clearly indicate in production growth as a consequence of improved economic efficiencies.
(The only thing that is interesting is Geezer still does not seem to understand what Jorgenson said and the significance of it)
The factor of interest is your total denial of gains to the worker that Jorgenson clearly states must occur regardless of the simplified implementation in how he handles wages in his model, by artificially constraining them to income tax takehome pay. Under such an artificial constraint, the gains to the worker come out as increased purchasing power of his fixed dollar wage (i.e the real value of wages rise) providing a gain to the wage earner and consumer from increased economic efficiencies.
The real world would tend to see increase in gross wages and the purchasing power of the dollar continuing its systemic slow decline through inflation due to continuing Fed interventions and expanding money supply arising from government deficit spending. The gross wages being more governed by contract and inflation pressures than Jorgenson's model simplifications allow demonstration of.
Perhaps so, but even when folks are listed as "below the poverty level", they spend above it!
See a 2001 Bureau of Labor Statistics table here.
Then think again how many people will not be spending up to the poverty line.
The table tends to show that folks spend up to poverty line irrespective of reported income. Beggars spend their collections, homeless people spend donations from shelters, etc... but people are gonna spend. Check out the table.
I am debating this detail for a couple reasons.
First, I want to show that the prebate is indeed a refund and not welfare. It may be that a tiny fraction gets paid out when it isn't deserved, but the amount is very small - as I'm showing on this thread albeit slowly.
Second, I want to illustrate that the nrst is an improvement over our existing system.
I do believe that most of the anti-reform arguments are not the real reasons for rejecting reform. They are ideas put forward that have been created in liberal think-tanks, shared with certain posters, and then put forth as "I used to think this so-called fair tax was a good idea, then I found out about "X"". Now, there are some posters that have their own unstated reasons for rejecting reform and they'll latch on to these false objections too.
THe curious thing is why they don't simply state their true objections to the reform plan. I suppose some of them are socialist, some of them are currently evading taxes to an extent that will no longer be possible under the nrst, some are doing well with their income tax niches/perks and don't want to change, and some fear change.
I do not see anyone who says that our current system is better though! That's an important point WRT what the previous paragraph says - not a single poster will admit that the current system is better.
So after this "tax refunds are welfare" is over, they'll go onto something else. THis is just one more attempt to get them to share their real reasons.... Merry Christmas -
And the table continues. All averages, from 2001.
Link.
Our current system is better than this boondoggle of a plan that no one is allowed to question. I personally am a conservative, small l libertarian Bush supporter and I do not take my marching orders from liberal think tanks and then sharing them with Free Republic.
Nor do I evade taxes, in fact as the owner of a thriving (non-retail) business, I pay a ton of income and payroll taxes.
Our present system with all its warts has seen income tax rates CUT a number of times since the FairTax bill was first looked at. In spite of all the problems with the present system, our economy is the envy of the world and continues to grow at high rates.
So, I think the present system is better than the one ya'll continue to misrepresent.
Merry Christmas.
It is you who misreprents this, not I. HR 25 eliminates both employer and employee payroll taxes. The study you so proudly quote does not.
The study in question is not at all what is proposed in HR 25. Yet you misrepresent that it is. Why?
I usually ignore such crap, but when challenged directly I will not.
My position is that wages, prices, and purchasing power will remain constant under HR 25. If you would like to quote studies of HR 25, which eliminates income, payroll, self-employment, estate and gift taxes, please do so. But to continue pretending a model of a non-existant plan is the model of HR 25 is misrepresenting.
Notwithstanding your misrepresentations, we are all very, very proud of your posts and the high number of views and replies your misrepresentative posts have garnered.
Do you feel better now?
I will reiterate here that you say you like our current system. Thanks for that admission.
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