The Fraudulent Tax

The Mises Institute ^ | October 9th, 2006 | Laurence M. Vance

[RockinRight]

Well before we kill millions of our own citizens and destroy our entire economy and financial system in the process, I would suggest we try to reform from within.

[Bigun]

It is true that I don't grasp the importance of putting government and personal consumption on an equal footing.

Have you not seen this graphic?

Government Growth:
http://mwhodges.home.att.net/piechart.htm

 

Relative Shares of Economy
pre-1930	post WWII (1947)	TODAY (2004)

 

---

Do you doubt,even for a moment, it's validity?

Perhaps you would be kind enough to explain the trend shown here, which by the way has entirely taken place after the current income tax system became firmly entrenched, if it is not in your opinion attributable to the government voting itself advantages over the private sector.

[Your Nightmare]

And it happens to be against FR Posting Guidelines to try to continue your personal attacks and taunting from thread to thread as you FairTax opponents routinely do. Look it up.

This coming from a guy who's had his account suspended (what is it now?) three times (or is it four?).

[Your Nightmare]

How many times have you been suspended, pigdog?

[Always Right]

Knock off the continued personal attacks you've been making in this thread. Just because the Mods don't remove your posts or ban you for them does not mean they are anything BUT personal attacks.

Calling out your lies is not a personal attack, but pointing to the obvious. Let's go to your statement you just made:

PIGDOG: "Actually it was both you and Robbie who were pretending that Jorgenson's assumptions were predictions of what would happen"

Here is an example of the true history of this. In post 25 on that thread:

Always Right: "Leaving out the fact that all these analysis assume you have to take a wage cut is misleading at best."

I clearly identify it as an ASSUMPTION. Two posts later in post 27:

PIGDOG: "The fact that some assumed that he meant that would happen in real life doesn't alter the fact that he made no such prediction."

I clearly say Jorgenson assumed it, and then you turn aroudn and claim I said it was a prediction. You have done that over and over again and then you lie about what went down. You are the one who twists the truth. And it does not matter how many times it is pointed out to you in black and white, you still maintain your lies. You are impossible.

[pigdog]

With your #403 and #404, let it be noted that you're taunting and doing the very thing described as "not done" in posting guidelines of continuing such across threads.

We'll see if the Mods takes note, won't we???

These sorts of personal attacks by you FairTax opponents do nothing to further your cause - in fact most lurkers would tell you they work against you. If you don't wish to debate, that's fine. Perhaps a whole separate website just for you to attack FairTax supporters would be appropriate. Why don't we all suggest that to JR???

[Always Right]

How many times have you been suspended, pigdog?

Not nearly enough.

[pigdog]

What you attempt in this post is clearly against Posting Guidelines by trying to continue an old argument across different threads and is merely a form of taunting.

I'll not play your silly game. And stop the personal attacks.

[pigdog]

Once again, I ask you to stop the personal attacks and taunting!

If you wish to debate then do so. If you wish to merely attack and castigate then find a different forum since what you are collectively doing is working against FreeRepublic and helping to turn it into something like DU.

[Your Nightmare]

LOL!

[pigdog]

Apparently you haven't been willing to look at the paper further since you say:

"... Kotlikoff assumed that he would keep after tax prices constant by monetary policy ... "

In the paper itself (contrary to your claims) it says:

"Therefore a rise in the price level would be possible only if accommodated by an increase in the money supply. Put another way, without monetary accommodation, prices faced by consumers under the FairTax would not rise. Any changes to the level of monetary accommodation, i.e. increase in the money supply, would cause prices to increase in the same proportion."

To translate that for you, that says if there is inflation (by an increase in the money supply - or "monetary accommodation") then consumer prices would also rise. DUH!!!

So yes, indeed, you "missed it".

[Always Right]

I did not need your 'translation', I understood what he was saying and what I said was correct.

[lucysmom]

Perhaps you would be kind enough to explain the trend shown here, which by the way has entirely taken place after the current income tax system became firmly entrenched, if it is not in your opinion attributable to the government voting itself advantages over the private sector.

Prior to the income tax (and for sometime after), the British pound was the international reserve currency, and the sun never set on the British Empire. The point is that there have been some big changes since the early days of the last century and the role the US plays in international economics and politics has changed.

Our military budget, alone, is more than the combined military budgets for the rest of the world. Is that government voting itself advantage over the private sector? Would you like to see us cut defense spending? Will that fly while we occupy Iraq and Afghanistan and fight the war on Terror?

Government bailed out the S&Ls and is now bailing out failed pension plans, is that the result of government voting itself advantages over the private sector? Certainly the private sector benefits greatly from sales to government and from consumption by government employees.

Isn't it true that when military bases are closed, the local community bemoans the lost revenue rather than celebrates local resources freed up for private development?

[pigdog]

"That wasn't the question. (You always change the question when you are shown to be wrong.) The question was is the 23% rate applied to government wages inclusive or exclusive of the tax!?!"

Indeed, that was very much the question and I note that you now attempt to deflect the question (as you claim I do) by pretending the entire discussion was about the terms "inclusive" or "exclusive".

The question wasn't about that at all (though you're now trying to make it that) nor did I use either the term in describing the tax imposed on government as a taxable employer. I have consistently referred to that tax as a 23% excise on gross wages of noneducational government employees. And that's why the term "government consumption expenditures" is used as a term to make up the FairTax base.

Perhaps if you read my #316 it will help you to understand why the government employees in this category who have, say a set of gross wages that total $100,000 will cause the government to pay $23,000 in FairTax (less the adjustments noted in #316, 319, and 339 of this thread.

"You've been saying it's 23% excluding the tax! "

Not at all - I;m saying that 23% of the gross wages (less the adjustmenttioned in a couple of the posts above) IS the tax ... in effect, an excise on gross wages. There is no tax amount of a retail sale to be incorporated since government services are not (overtly) charged for as would be the case in a retail sale situation - they are "provided" to us lucky citizens ... aren't you glad???

Your claim, then, that:

"... They show government wages being treated like all other consumption in the FairTax base - with the 23% being applied to wages including the tax! ... "

... is meaningless since there IS no retail sale on which to apply a "tax" - and that is why government taxable employers are handled differently than retail sales or even taxable employers in the private economy. They are certainly not "treated like all other consumption" as I've clearly pointed out.

As a side note (not that it really matters) your directions for deriving the numbers you claim do not result in those numbers, but it's meaningless since the real issue is as I've described it here again - that the government taxes the pertinent wages at a 23% rate much like an excise tax. If you'd do more research, you'd find that most economists understand that the 23% number is as I've described it.

[pigdog]

"I understood what he was saying and what I said was correct."

Clearly you did not understand. Your claim was that K. assumed that he would "keep after tax prices constant by monetary policy" when what he ACTUALLY said was prices would remain constant unless there were inflation - in which case they would of course rise.

Those are diametrically opposed views so you certainly needed the clarification.

[Bigun]

That is a very nice post but it has very little, if any, relevance to the subject at hand. The fact is that governments at all levels have usurped ever larger portions of the economy and have done so largely by granting themselves all manner of advantages over the private sector. They MUST do so as they are so utterly inefficient that they CANNOT otherwise compete with the private sector.The fairtax seeks to correct that, at the federal level at least, and return the tax system in this country to something much more in keeping with what the founders intended in the process.

[Your Nightmare]

Indeed, that was very much the question and I note that you now attempt to deflect the question (as you claim I do) by pretending the entire discussion was about the terms "inclusive" or "exclusive".

Inclusive or exclusive is the question whether you understand it or not. You are claiming the 23% rate is applied to government wages excluding the tax (the rate is 23% exclusive), the bill states that the 23% is applied to the amount including the tax (the rate is 23% inclusive).

The question wasn't about that at all (though you're now trying to make it that) nor did I use either the term in describing the tax imposed on government as a taxable employer.

So you didn't use the exact words. Big deal. That's what you are talking about.

I have consistently referred to that tax as a 23% excise on gross wages of noneducational government employees.

So? What do I care if you refer to it as an excise? The bill doesn't.

And that's why the term "government consumption expenditures" is used as a term to make up the FairTax base.

Huh? That makes absolutely no sense. "Government consumption expenditures" includes all expenditures, not just wages. Are they all taxes at 23% exclusive?

Not at all - I;m saying that 23% of the gross wages (less the adjustmenttioned in a couple of the posts above) IS the tax

23% of gross wages excluding the tax.

is meaningless since there IS no retail sale on which to apply a "tax" - and that is why government taxable employers are handled differently than retail sales or even taxable employers in the private economy.

But you have not produced any language from the actual bill that states this and the calculations by both Kotlikoff and the AFT contradict your claim.

If you'd do more research, you'd find that most economists understand that the 23% number is as I've described it.

Most economists? Like who? The voices in your head?

[Your Nightmare]

As a side note (not that it really matters) your directions for deriving the numbers you claim do not result in those numbers,

Kotlikoff, page 8:

• Subtotal, State and Local Tax Base = $1,093 billion
  
       $1,093 billion x 29.87% = $326 billion
  
  
• Subtotal, Federal Government Tax Base = $916 billion
  
       $916 billion x 29.87% = $274 billion

[pigdog]

"So you didn't use the exact words. Big deal. That's what you are talking about."

No ... that's what YOU'RE talking about, not me.

""Government consumption expenditures" includes all expenditures, not just wages. Are they all taxes at 23% exclusive?"

No it does not include "all expenditures" at all but one of its primary components is government wages. The main part of those wages, as I've described, are taxed at the 23% rate of gross wages (which I've referred to as being much like an excise). Non wage expenditures are taxed (if purchased at retail) at a 23% tax inclusive rate (which means the retail price AND the tax amount are added - or thinking of it in the manner you prefer that the tax exclusive amount is added onto the untaxed retail price).

With the government as taxable employer, though, this same situation does not apply since there is no retail sale or retail price involved since it's not a sale of services at retail or perhaps you could think of it as the untaxed "retail" tax price amount (which doewsn't exist) being zero and only the tax (the 23%) is paid on the government output (the wages involved). I think it helps to think of it as an excise of 23% on gross wages.

You're welcome to call it "Santa's beard" or anything else that pleases you so long as a set of the described wages for the employees that totals $100,000 in gross wages results in a payment of $23,000 (less the adjustments mentioned in the other posts I've made on the subject) in FairTax.

"But you have not produced any language from the actual bill that states this and the calculations by both Kotlikoff and the AFT contradict your claim."

In fact I have - several times and from different sources of economists. One that I especially recall was the economist Michael Graetz who pushes a competing (and quite different) tax bill. He several times in the course of a debate stated the 23% figure on government wages. And he's opposed to the FairTax, preferring his own bill.

[lucysmom]

That is a very nice post but it has very little, if any, relevance to the subject at hand. The fact is that governments at all levels have usurped ever larger portions of the economy and have done so largely by granting themselves all manner of advantages over the private sector.

It would me address the subject at hand if you would give some specific examples so that I would know exactly what you are talking about.