Posted on 10/10/2006 8:59:26 AM PDT by cryptical
Just where did I say that?
... that's a "fer peice" from your prediction of "+/- 5%".
PRICES will indeed rise (much more than your 5% prediction. DISPOSABLE INCOME might or might NOT rise depending on who you are. AGGREGATE PURCHASING POWER will remain initially unchanged (for a revenue neutral program) BUT ...
... INDIVIDUAL purchasing power WILL VARY SUBSTANTIALLY.
BTW, the example in #32 assumes the bill's current 23% inclusive / 29.87% exclsuive NRST rate. if, however, the Bush tax cuts were made permanent, the revenue-neutral rate drops to (I beleive) 19.2% inclusive / 23.76% exclusive.No it wouldn't. Research just released (and supported by the AFT) by Kotlikoff using projected 2007 data and every possible positive assumption about the FairTax found that the 23% rate was not revenue neutral.
Just where did I say that?Just where did I say that you said anything? I asked you a question.
No kidding.
But in order to make your point, you had to choose a case where someone is living off a practically untaxed, relatively high fixed income. The only way I can see that happening is from tax-deferred investments, so the whole mantra of "double-taxing poor seniors' savings" doesn't work here.
For someone living on a low or moderate fixed income, the effective NRST tax rate is much lower than the marginal rate (note that my example put the NRST at a disadvantage by comparing it as a marginal rate to the icnome/payroll tax effective rate), and that correspondingly skews the numbers so that while prices go up, there was considerably more money in the spender's pocket to start with.
I agree. Get rid of tax whithholding, move tax day to 1 week before federal elections, mark incumbents on the ballots.
I have never given Boortz any credence on his understanding of the FairTax. Hell, I've never even read the book.
"move tax day to 1 week before federal elections"
Exactly, there is a reason that taxes are due in April and elections are held in November...
....Viva la Revolution!
Because this is a wholly NEW tax and not now figured into State and Local tax rates, S&L governments will have to increase the taxes they collect from their taxpayers to pay the bill.
As calculated by your sources, even at the 19.2% inclusive rate, State and Local governments would have to come up with an additional $190 Billion they do not now have. That will come from S&L tax increases, on average, increases of 17% in the amount of S&L tax collected; rate impacts will vary widely by jurisdiction.
Quoting the Federal Rate alone when talking of the FairTax is telling only part of the story. In total, after the impact of S&L taxation is included, the "effective rate" on people is significantly greater. Normalizing to a simple "taxpayer" rate that recognizes that taxing S&L governments is just an indirect tax on people, the 19.2% rate you cite would actually bite into the taxpayer to the tune of a 24% ti rate. At the currently advertized 23% ti rate, the taxpayer would experinence an effect of more like a tax inclusive rate of 28%.
Remember, governments don't pay taxes, people do.
Be aware, that one of the aspects of the FairTax that advocates tout is it's progressivity (the effective rate rises with spending due to the effect of the "prebate".)
Ultimately, any method of taxation who's collection is implemented as a part of normal commerce (income or consumption) is doomed to become normal and accepted ... it disappears into the noise of every day life.
If you want to truly impact an individual's sense of the impact of the size of government, then make the collection of taxes a periodic "lump sum" event OUTSIDE the monotony of normal commerce. Have the Taxpayer "write the check."
Sadly, you seem to miss the obvious extention that if the Senior is indeed "poorer" than Sally (whom I chose to "match" the income situation of your "Joe"), that she would be even WORSE off than I showed! Oh, and I didn't even bring up the fact that there is a "double taxation" problem ... thanks for reminding us.
Not only is the FairTax "effective" rate for low or moderate income people less than the marginal rate, so is the effective rate of the income tax lower. No matter how you spin it, those with a currently low income tax effective rate have proportionally less "money to start with" in their pockets under the FairTax. Now, you might argue that the point of the FairTax is to make low income taxpayers pay more Federal Tax. Fine. Make that argument. I might even agree that is a good thing ... but, please, don't try to handwave away the real eventualities that many would face under that FairTax.
To accept your anecdotal tactics is to accept willful misrepresentation.
Never said it was bigger or smaller. It's a different problem.
If the employer is going to hand Joe the whole $117.95, then that implies that Joe's gross annual income remains the same as before. All the taxes passed to the government on Joe's behalf are in his paycheck. The employer has no net savings in his labor costs (wages and salaries) except the cost of tax compliance. The employer can't reduce his prices as he must maintain the same revenue to pay Joe at the agreed rate. The asking price for the product doesn't change, but the taxation becomes the NRST + state sales tax + local sales tax.
It's a pipedream to think employers will cut employee pay and apply that cut to the price of their products. Their employees would leave for an employer who doesn't abuse them in that fashion. It would destroy the buying power of an employee to purchase products from employers who chose not to cut prices and employee pay. The government can not mandate how the employer decides to handle that payroll issue.
To achieve the revenue neutral aim, Joe must consume enough to transfer all of the previously witheld income and payroll taxes to the government. If Joe becomes frugal, the government has to raise the rate to restore the tax revenues to the desired level. Joe becomes even more frugal as the increased NRST rate drains more buying power.
Don't you think it matters whether you spend your limited political capital on an imporant problem or an insignificant one?
Clearly to me, the #1 most important fiscal issue to get resolved is the entitlement timebomb. We need to privatize Social Security and reform Medicare.
And we need to enlarge and extend the tax cuts to maintain a high growth economy which is slowly shrinking the Public Debt-to-GDP ratio every minute of every day, even as we speak.
You've got my vote!
"Quick - Pull my finger.." - Nikoli Tesla
Yeah - that idea I mentioned was embraced by several crazies in the nation's past... men like Jefferson, Madison, Washington, Adams, Hancock, Franklin... crazy guys like that. Radicals, ya know. Our current crop of free-spending congresscritters know better, of course.
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