Posted on 10/10/2006 8:59:26 AM PDT by cryptical
"BTW, Kotlikoff's numbers show the federal government paying itself $273 billion in FairTax and the states paying the federal government $326 billion in FairTax."
Since your numbers are on in one case and close in another I'll let you off the hook on the small error ... but as I said; so what? That's not the discussion (except with you talking to yourself). That's merely adding up the revenue base to be used and your applying the tax exclusive rate to it which means nothing except that your calculator works.
The actual formulas used for the derivation of the funds generated (and thereby the revenue neutral rate) are shown in Formula (24) on page 17 where in the term C07+G07+GS07 these values are multiplied by the tax inclusive rate (23%) which means, of course that Koltikoff et al are saying that government wages are burdened at the 23% rate and that the proscribed employees we've been talking about when paid $100,000 in gross wages also cause $23,000 (less the adjustments I've mentioned in earlier posts which I don't think the paper considers but haven't time to check) in FairTax to be generated.
Let me try this once again ... the rate of tax on the considered wages of government as a taxable employer is 23% fof the gross wages. You guys are beating a dead horse. Got it???
No ... that's what YOU'RE talking about, not me.At this point, I don't think you know what you are talking about.
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).So show me where the AFT or Kotlikoff treated the wage expenditures different from non-wage expenditures.
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
Show me where in the bill where it says a good or service must be purchased at retail for the tax to be included in the "gross payment."
What the bill states is "The term 'gross payments' means payments for taxable property or services, including Federal taxes imposed by this title" and that "There is hereby imposed a tax on the use or consumption in the United States of taxable property or services. In the calendar year 2007, the rate of tax is 23 percent of the gross payments for the taxable property or service" and "the term 'service' shall include any service performed by an employee for which the employee is paid wages or a salary by a taxable employer."
The government is paying the employee for a taxable service. No where in the bill does it state that if the payment for a taxable service doesn't occur at retail, the gross payment doesn't include the sales tax. No where.
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.But it is 23%. Twenty-three percent including the sales tax. Don't tell me you were confused by someone quoting the 23% rate without specifying it was inclusive.
"... I shouldn't be so shocked that the FairTax's biggest supporters are completely ignorant of it's details... "
Perhaps you shouldn't - especially in view of the fact that we AREN'T wrong as was clearly explained to you in posts #334, 351, and 368.
You can ask that question until you are blue in the face, I don't see an answer coming anytime soon. However, we could get into a serious debate whether Kotlikoff numbers are in a 'table' or whether they are in a 'spreadsheet listing' as pigdog insists you call them. That is almost as intriguing of the debate on whether these are an inclusive or exclusive sales tax or whether it is some 23% excise tax on gross wages, which seems to be one of pigdog's latest inventions to sidetrack the debate.
`(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.
"... So show me where the AFT or Kotlikoff treated the wage expenditures different from non-wage expenditures ..."
They are treated exactly in the manner shown by the equation I pointed out in post #421 where all three terms are taxed at the 23% rate.
It's unfortunate that so many of you are unable to read the bill and understand what it actually says but it's fortunate that the economists can do so. When you say:
"What the bill states is "The term 'gross payments' means payments for taxable property or services, including Federal taxes imposed by this title" "
... the passage is certainly correct but you don't seem to wish to understand that the only thing "imposed and thereby included in the gross payments for taxable services" in this case is the 23% FairTax itself. There is no payment for taxable property or services. There is only the FairTax component.
Let me state it another way. There is no taxable purchase to add these taxes onto. These services are provided by government, not sold so there is nothing in the way of a payment amount to add the tax payment to ... IOW the only thing included as the "gross payment" are the taxes themselves. This merely means that the government as a taxable employer is not selling its employees services (but still provides them "free") but still must pay the tax
I've very thankful that you guys are not economists or everyone would be in serious economic straits - as would the country. Certainly Kotlikoff et al grasp the meaning of the bill.
"... we could get into a serious debate whether Kotlikoff numbers are in a 'table' or whether they are in a 'spreadsheet listing' as pigdog insists you call them ..."
Sorry, but I "insist" on no such thing with respect to the Tables in the paper. They are clearly Tables which, you might note, are what the paper calls them just as I called my spreadsheet listing a spreadsheet listing. You're "serious debate" falters before it even starts.
To see how all three terms are treated - as I said earlier - read post #421. The government wage expenditures in question are treated as I explain there.
Trees may always grow to the sky, but "unelected bureaucrats" haven't unlimited taxing power (in fact none at all) as that takes congregational action. But your assumption that the rate they get to specify will always increase as an additive amount that would increase the total FairTax rate beyond the 23% isn't justified as explained in the three posts above.
But perhaps you don't even know what they cost now so tell me what you believe they cost now - i.e., what you pay for them now as well as your effective FairTax rate.
"We have established that hidden taxes will still exist."
Actually "we" have established no such thing. You have claimed that but when I speak of hidden taxes I specifically mean those caused by the income tax system an the associated other costs as well. These are done away with by the FairTax.
With the FairTax in place it will become far more easily noticed to see that taxes are being raised as most of the populace will be much more attuned to realizing that a tax increase is a tax increase since everyone will be paying the FairTax and will not be to pleased to see any taxes raised whereas now many think that others pay all the taxes.
Since your numbers are on in one case and close in another I'll let you off the hook on the small errorThey aren't off. I rounded the numbers - one up and one down.
That's not the discussionThat's why I said "BTW."
The actual formulas used for the derivation of the funds generated (and thereby the revenue neutral rate) are shown in Formula (24) on page 17 where in the term C07+G07+GS07 these values are multiplied by the tax inclusive rate (23%) which means, of course that Koltikoff et al are saying that government wages are burdened at the 23% rate and that the proscribed employees we've been talking about when paid $100,000 in gross wages also cause $23,000 (less the adjustments I've mentioned in earlier posts which I don't think the paper considers but haven't time to check) in FairTax to be generated.They are saying no such thing. You left off a part of the equation–the part that shows that C07, G07, and GS07 include the FairTax. Here is the equation in full:
RFT = (C07 + G07 + GS07)ti (1+α)Where:
RFT is the tax revenue to be raised by the FairTax in 2007; C07 is personal consumption at market value in 2007; G07 is taxable federal government spending on goods and services; GS07 is taxable state and local government consumption at market value in 2007; ti is the is the tax-inclusive rate; and α is the percentage by which market prices under the FairTax would exceed expected prices in 2007 under current law.
This change in market prices is due the Fed accommodating the FairTax with consumer price increases. Kotlikoff explains α:
Assuming that the monetary authorities adjust only to the FairTax in setting policy for 2007, The (1-ti) term adjusts for the fall in gross income and in consumer prices (net of the FairTax), given the assumption of no monetary accommodation; with full monetary accommodation this term would drop out. can take values between 0 and te, so that 0 ≤ α ≤ te, where te is the tax-exclusive FairTax rate. With no change in real income or the velocity of money, the maximum amount that prices could increase when the FairTax is imposed is the amount of the tax, so the price would go up by a factor of te when there is full monetary accommodation.
C07, G07, and GS07 include the FairTax, whether the monetary authorities adjust to the FairTax or not. If they don't, gross income declines (real income doesn't change).
I am happy to do that for you.
Trash collection. There is NO reason on earth that this could not be an entirely private enterprise except for the fact that governments are allowed to use trucks purchased at prices which private parties cannot obtain them, which carry tax exempt license plates, which are fueled with tax exempt fuel, which are self insured with taxpayer money and protected from lawsuit by laws passed for that specific purpose.
Public Transportation systems of every sort under the exact same conditions.
Public housing of all sorts.
Education systems and many other things that YOU could youself identify if you would just stop and think about it a little.
You love pointing to your old posts where you showed nothing of the sort. I pointed out the language in the bill which clearly states otherwise. You can't refute what the bill says, so you point to posts what pigdog says. Well, what pigdog claims the bill says don't mean squat. What the bill says does.
It is hopeless. I can't imagine someone posting what pigdog does and not getting paid. Pigdog would not be the first person AFFT has paid to post here.
How about an insurance scheme that if you and I tried to operate such a system privately, even if our company was modeled EXACTLY on the model of the current government run system, would have us thrown into prison VERY quickly because it is nothing more than a Ponzi scheme!
"... You love pointing to your old posts where you showed nothing of the sort ..."
Those aren't "old posts" at all but ones on this current thread and they explain the very topic you're attempting to discuss. Moreover, they show why (while the bill indeed says what it says) the actions delineated by the bill would result in changes in the direction opposite the one you apparently assume them to be.
The 3 posts explain that for you since you've apparently not considered that as a possibility and don't understand what the effects would be.
"Pigdog would not be the first person AFFT has paid to post here."Indeed a scurrilous charge - and without foundation To boot. Please post the names and wages/salaries of those you "know" as well as the wages/salaries you believe each to be receiving.
Perhaps I should ask for a raise?:-)
(1) General Revenue Rate which is fixed in law
(2) the old-age, survivors and disability insurance rate, (not fixed but variable)
(3) the hospital insurance rate. (not fixed but variable)
So the points you keep making that the 'three combined must be 23%' and it will be 23% 'unless change by Congress' are outright lies. You know better than that. I know you can read. Why do you pretend to be so obtuse just to shill for your pet bill?
Chief_Negotiator's wife admited on this forum after his tragic death that he was paid several hundred dollars a month to post on this forum by AFFT.
Hey, wait a minute ... aren't you the one who just said:
"... You always change the question when you are shown to be wrong ... "
You said that when I WASN'T trying to change the question at all (you were) and now you're trying that very stunt yourself. Whoa, Nellie!!!
But your attempted "switch" shows that you know you've lost the argument ... and the term alpha you allude to as though it's a big deal is pretty meaningless since the paper says it can have the value zero (IOW, drop out of the equation). You still have nothing in the way of an argument and the sooner you admit it to yourself, the sooner we can stop wasting time on this nonsense,
"C07, G07, and GS07 include the FairTax, whether the monetary authorities adjust to the FairTax or not. If they don't, gross income declines (real income doesn't change). "
Stop the smoke-blowing since the paper also says:
"... We assume that the monetary authorities do not accommodate the adoption of the FairTax, which is to say that they restrain the growth of the money supply sufficiently to prevent market prices from rising. As mentioned, this is merely a simplifying assumption. We could just as well have allowed for monetary accommodation, so that there would be no fall in producer prices under the FairTax. Doing so, however, would merely have made the algebra more complicated without changing the results..."
All of that including your comments have nothing at all to do with the fact that the government taxable employer wages we have been discussing are taxed at the 23% rate - exactly as I have said for hundreds of posts. You may not know it, but economists do.
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