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Taxing Sales under the FairTax – What Rate Works?
Boston University ^
| September 2006
| Laurence J. Kotlikoff et al
Posted on 10/19/2006 5:11:50 PM PDT by pigdog
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To: pigdog
Where you slip your tongue is not any concern of mine.
321
posted on
10/21/2006 10:45:49 AM PDT
by
xcamel
(Press to Test, Release to Detonate)
To: Principled
As soon as you admit the FT is just one giant red herring.
322
posted on
10/21/2006 10:46:47 AM PDT
by
xcamel
(Press to Test, Release to Detonate)
To: phoenix0468
A good post and has many fine points. In fact I'm sure that a decent dynamic analysis will show considerably more tax revenue if a rate of 23% remains.
And you're correct about the revenue shifting, too, I think. The fly in the ointment is geting the Feds to do it, but with a new, decent tax system - who knows. Perhaps they'll begin to look at reason (finally).
I sure hope so.
323
posted on
10/21/2006 10:48:13 AM PDT
by
pigdog
To: pigdog
I have better things to do than to spend my entire weekend writing an economic paper detailing how the Fair Tax is a house of cards built on a shaky foundation of assumptions. I actually find whole premise interresting and possibly cause of further research. I just find fault in it being implemented.
Keep in mind however that it would cause a massive restructering of the economy to pull off, and any restructering of an economy (one that is working should I add) can cause huge displacements.
324
posted on
10/21/2006 10:54:08 AM PDT
by
Brellium
("Thou shalt not shilly shally!" Aron Nimzowitsch)
To: Brellium; pigdog
Many of these well-respected economists fail to take into account even basic economics into the application of the Fair Tax. But you do. Let's see.
First thing, the assumption that prices would decline if the Fair Tax is to be implemented is just that, an assumption.
Okay, fine. Prices don't fall. So what? You are taking home 100% of your income. It still takes 25% of your income to pay taxes. What's the difference? At least you can save a portion of it before it is stolen from you.
Now you make 100 dollars, you keep 75 after taxes.
Under a NRST you make 100 dollars you spend 100 dollars but only get the equivalent of 75 dollars worth of pre NRST goods. So what?
Basic economic theory states that business will charge a price for a service (or product) at a rate which the market will support.
You have never studied that of which you speak. The FT org has never claimed what you state. It has always been put forth that competition would cause prices to fall.
All of this is in addition to any of the other difficulties such a system would face as has already been previously mentioned; such as avoidance of taxation through a black market
It has yet to be demonstrated on these threads how a black market in Big Macs, toothpaste, milk and dental fillings will occur.
why buy a house when you can rent and pay the same taxes?
The appreciation of the value of rental units doesn't accrue to the lessee.
325
posted on
10/21/2006 10:54:49 AM PDT
by
groanup
(Limited government is the answer. What's the question?)
To: pigdog
"Obviously you don't; here's what the paper clerifies for you:
"3.3 Tax-Inclusive versus Tax-Exclusive Rates"
Dear Pigheaded,
I have read the plan(as have many others), I know how the rates are figured.
I also know that it is basically a Federal sales tax to replace income tax (and other taxes).
Yet the information presented to the public is distorted in a way to mislead the average person that is used to figuring the normal sales tax in most states.
You assume that everyone that points out flaws in the plan is stupid and don't understand it.
Until you can admit that the plan may be flawed and needs to go back to the drawing board, it wont pass and will continue to be little more than "Spam" here that wastes bandwidth.
Why don't you start a thread asking for opinion on flaws in the plan and advice on making it better?
That would at least be constructive.
326
posted on
10/21/2006 11:05:07 AM PDT
by
Beagle8U
(Demonrats want the Gays out of Congress.....stand back and let them purge their base.)
To: Beagle8U
Yet the information presented to the public is distorted in a way to mislead the average person that is used to figuring the normal sales tax in most states. Please demonstrate.
327
posted on
10/21/2006 11:07:33 AM PDT
by
groanup
(Limited government is the answer. What's the question?)
To: groanup
"Please demonstrate"
A $1 item plus 5% sales tax= $1.05. Correct?
A $1 item under the (as advertised) 23% Fairy tax = ???
It sure as hell isn't the $1.23 most would think it was the way the plan is being advertised.
More like $1.30 depending how you round up/down.
328
posted on
10/21/2006 11:21:02 AM PDT
by
Beagle8U
(Demonrats want the Gays out of Congress.....stand back and let them purge their base.)
To: Beagle8U
But if you believe their horse-hockey, your $1.30 would auto-magically be $0.97 - to argue/debate/discuss/ponder this with them is pointless.
329
posted on
10/21/2006 11:25:19 AM PDT
by
xcamel
(Press to Test, Release to Detonate)
To: Beagle8U
330
posted on
10/21/2006 11:27:35 AM PDT
by
groanup
(Limited government is the answer. What's the question?)
To: groanup
All of these plans would lose their future tax liability. Not true - these assets would be taxed at the Fair Tax rate when consumed by the retirees, a rate that would probably be more than the retirement income tax rate.
331
posted on
10/21/2006 11:33:43 AM PDT
by
GregoryFul
(There's no truth in the New York Times)
To: GregoryFul
Your premise was the plan is a scheme to tax retirement assets. Waving all future liability on tax deferred assets is not a very good way to tap into retirment assets, is it?
332
posted on
10/21/2006 11:42:07 AM PDT
by
groanup
(Limited government is the answer. What's the question?)
To: xcamel
The name of the plan should be changed to "Fairy Tax" the "Tax Reclusive" plan.
333
posted on
10/21/2006 11:42:37 AM PDT
by
Beagle8U
(Demonrats want the Gays out of Congress.....stand back and let them purge their base.)
To: Beagle8U
or "Scare Tax" as economic destruction would be sure to follow.
334
posted on
10/21/2006 11:50:45 AM PDT
by
xcamel
(Press to Test, Release to Detonate)
To: groanup
"Yet the information presented to the public is distorted in a way to mislead the average person that is used to figuring the normal sales tax in most states."
If you only bothered to read that, until you understand it, you would know why people keep telling you the same thing.
335
posted on
10/21/2006 11:54:54 AM PDT
by
Beagle8U
(Demonrats want the Gays out of Congress.....stand back and let them purge their base.)
To: Beagle8U
I read it, responded to it and linked the explanation. What else would you have me do? Put it on a church sign?
336
posted on
10/21/2006 12:05:13 PM PDT
by
groanup
(Limited government is the answer. What's the question?)
To: groanup; xcamel
Forest Gump said life is like a box of chocolates...you never know what you'll get.
That is how Fairy tax is being sold. Its presented in a way that most wont know what they will get if they buy into it.
I prefer that Fairy tax is the dreaded "Green Jelly" in the box of chocolate....It can be masked and hidden, but when someone bites into it they will puke.
337
posted on
10/21/2006 12:22:28 PM PDT
by
Beagle8U
(Demonrats want the Gays out of Congress.....stand back and let them purge their base.)
To: pigdog
Let's assume your and your wife have an $800,000 savings account and that when you go on S/S and retire you'll receive about $21,600 per year. If you invest your savings and earn 6.25% annually this would give you an annual income of $50,000 plus the S/S or $71,600 - none of which income is taxed. Let's assume the current income tax scheme. I take the $800,000 in savings and buy tax free municipal bond fund (APX currently paying 5.7%), I get $45,600 tax free, plus the $21,600 S/S I'd have to pay tax on at 28% rate or $6048, for an effective tax rate of 9%, considerably better than the effective FairTax of 14.6% you calculate.
But I want to buy a boat, now that I'm retired, and have a nice nest egg, and time to enjoy myself. I take $200,000 of savings and buy a nice new cruiser - and will not have to pay the $60,000 or so FairTax on this purchase.
Your list of untaxed expenditures is very strange. It would be quite revolting were the government to start taxing loan repayments, or money put into savings.
Also keep in mind that under the income tax you will be paying an additional tax amount in the form of higher prices - an amount that FairTax opponents have stipulated as 9% - on everything that you buy (even the S/S funds) - whicvh would make your income tax effective rate 24.88%.
The supposed higher price built into things due to income taxes is a debatable point. If industry still pays its workers their current pre-tax pay, rather than their current take home pay, there may not be any significant reduction in pre-FairTax price of products. To be fair, industry ought to raise workers pay by the payroll taxes the businesses would be relieved of having to pay, since the workers will now be paying that tax. Doubt that will happen though.
338
posted on
10/21/2006 12:29:53 PM PDT
by
GregoryFul
(There's no truth in the New York Times)
To: groanup
Nobody sane would post such BS in front of a church
339
posted on
10/21/2006 12:36:24 PM PDT
by
xcamel
(Press to Test, Release to Detonate)
To: pigdog
My take? Absolutely no more than 10%. And make it a Constitutional law that Congress cannot borrow money unless there is a declaration of war.
340
posted on
10/21/2006 1:15:46 PM PDT
by
DennisR
(Look around - God is giving you countless observable clues of His existence!)
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