Such BS:
Posted on 10/19/2006 5:11:50 PM PDT by pigdog
As specified in Congressional bill H.R. 25/S. 25, the FairTax is a proposal to replace the federal personal income tax, corporate income tax, payroll (FICA) tax, capital gains, alternative minimum, self-employment, and estate and gifts taxes with a single-rate federal retail sales tax. The FairTax also provides a prebate to each household based on its demographic composition. The prebate is set to ensure that households pay no taxes net on spending up to the poverty level.
Bill Gale (2005) and the President’s Advisory Panel on Federal Tax Reform (2005) suggest that the effective (tax inclusive) tax rate needed to implement H.R. 25 is far higher than the proposed 23% rate. This study, which builds on Gale’s (2005) analysis, shows that a 23% rate is eminently feasible and suggests why Gale and the Tax Panel reached the opposite conclusion.
This paper begins by projecting the FairTax’s 2007 tax base net of its rebate. Next it calculates the tax rate needed to maintain the real levels of federal and state spending under the FairTax. It then determines if an effective rate of 23% would be sufficient to fund 2007 estimated spending or if not, the amount by which non-Social Security federal expenditures would need to be reduced. Finally, it shows that the FairTax imposes no additional real fiscal burdens on state and local government, notwithstanding the requirement that such governments pay the FairTax when they purchase goods and services.
(Excerpt) Read more at people.bu.edu ...
You guys have been trying to make that argument for years. AFAIK the only lump in that mattress was Boortz who claimed that everybody would have more money and the gov't would still have the same amount of tax. Can't create money out of thin air unless you're Chase Manhattan. (Under virtually every scenario purchasing power will go up, however, as has been demonstrated endlessly.) The fact is that FairTaxers have always been upfront about inclusive vs. exclusive. If they had ignored it they would have been attacked for comparing apples and grapes.
The FT is pointless.
Such BS:
So, where did that money come from?
Guess we all know where you stand on illegals now.
LOL!! I think illegals should be banned in IRELAND.
"My issue is the immediate reduction in value of after tax savings to the holders of that class of savings."Obviously your issue is nothing of the sort but to try your claim by crafting an example to fit the point. There IS no "reduction of after tax savings". There is a tax when things are purchased under a consumption tax just as there are taxes under the income tax when certain accumulations of money or assets are converted into cash but the FairTax savings are untaxed as well as the income from them. Which is more beneficial to the taxpayer depends upon the exact situation - which you choose to not describe.
"For instance, long term capital gains will be taxed at a much higher rate (when spent of course)."
A truly odd claim since there's no way for anyone to judge that without more information so I'll not play that silly game further. I showed you one scenario where the opposite was true - particularly so when considering embedded income tax costs that you're not considering. That's fine with me, but you'll pay them on all that you buy whether you believe it or not.
"Personally, I see this scheme as a way for the "going broke fast" government to exploit the retirement savings of the baby boomers, who will be spending their lifetime of savings, and get marginal benefit from the elimination of income tax. "
Quite obviously THAT is your "issue" and you plan to push it regardless of any facts. But no matter where your money comes from if you choose to blow it big time you'll pay the sales tax on it. As I pointed out you'd be well ahead of the game by taking advantage of the tax free environment and even increasing your savings but that is your choice; spend your money and cry about it rather than gaining further. You're free to make the choice as are others and many would probably make a different choice. As I illustrated with the example, the effective tax rate varies with each taxpayers situation and his proclivities. Guys like you who "have to" spend large sums are just fine and when you do you'll pay the FairTax.
"Should something like the NRST be at risk of becoming law, I'll cashier my savings and invest in housing, or other protected classes of "savings". So will many other investors - what havoc would that create? Eh? (That is a new issue)"
That's our choice too - and be sure you're not "investing" in what you think is a "protected class of savings" (investment, really) only to find out it, too, responds to the laws of supply and demand and that instead of wreaking havoc on the economy you've shot yourself in the foot and outsmarted yourself by buying into a housing collapse. That's your choice, too, but I know of few "protected classes of investments". Perhaps you do.
And don't forget to pay your capital gains taxes which will undoubtedly be greater than under the FairTax - where there are none.
"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. "
What "massive restructuring" are you speaking of?? None that I'm aware of has even been shown by anyone and I certainly doubt you'll pull that off - especially since you "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".
We've had others on these who are far better at scare tactics than you. They also haven't been able to find, describe and define with economic particulars these "so-called "huge displacements".
"I have read the plan(as have many others), I know how the rates are figured"
Actually you seem to illustrate otherwise and merely show your bias.
The FairTax is described both as tax inclusive and tax exclusive and the resulting sales tax can be described - or calculated - either way. And that's an indicator of the extent of your knowledge or lack thereof.
"You assume that everyone that points out flaws in the plan is stupid and don't understand it. "
No comment required.
"... the plan may be flawed and needs to go back to the drawing board ..."
Perhaps yes, perhaps no - but no one has been able to conclusively show that ... nor have you.
"Why don't you start a thread asking for opinion on flaws in the plan and advice on making it better? "
Uhhh - actually that seems to be what your were trying to do but it hasn't been too "constructive".
"More like $1.30 depending how you round up/down."
Not at all ... in fact nothing like that. No item would ever cost that much but instead would be the $1 plus the effective FairTax rate which is substantially less then the marginal rate (which is what you pay the cashier, having already received the prebate to in effect reduce the tax rate).
Your illustration indicates you do not understand what's involved.
"Forest Gump said life is like a box of chocolates...you never know what you'll get. "Forest Gump said a lot of things and some of the other sayings might apply here too.
Middle class people spend most of their paychecks-- of necessity. The Bill Gateses of the world save and invest most of what they earn. Therefore, the rich will fare much better under this kind of tax than under the present income tax. To overcome the loss of revenue from the income taxes on the wealthy, the result will be either that the Government will have to drastically cut spending, or that the sales tax rate will wind up being very, very high. As a libertarian, I'd like to see spending drop, but, as a realist, I doubt it would.
"Your list of untaxed expenditures is very strange"
It is also very accurate.
"The supposed higher price built into things due to income taxes is a debatable point."
Great - love to see you do some debating. What's your take? Are you claiming that there are no tax cost components embedded in prices and that prices will remain as they are??? Or what ... and why.
LOL!!
The consumer already pays all taxes and fees, don't let him rope you into this bass-ackwards argument
So....speaking as a Libertarian, you think it's better for the Government to take our money up front, hold it all year, pay us no interest and then let us have some back at the end if we do our paper work right? That just doesn't make sense to me.
Since you're a realist, you should read the paper and grasp what it is saying which is quite different than your presumptions.
It's good to know that you treat others so gently!!
Sorry if I wasn't clear. The question I was responding to was "why hasn't this been enacted already?" My answer is that many middle class people will-- or think they will-- be hurt by it. If it were up to me, we'd have way lower taxes and far less government spending.
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