Posted on 07/20/2005 12:51:23 PM PDT by Your Nightmare
Members of President Bush's advisory panel on tax reform largely agree that the individual alternative minimum tax, or AMT, should be fully repealed the committee's chairman said Wednesday.
"I think the obvious consensus was on the AMT on the individual side. We didn't end up with a consensus on the corporate side, even though I think it's fair to say that I think all panel members felt the corporate AMT was really not an effective way to tax," Chairman Connie Mack, a former Republican senator from Florida, told reporters after a public meeting of the committee.
The AMT is a parallel tax system created in 1969; it was enacted after it was revealed that a handful of extremely wealthy Americans paid no income tax. But thresholds for the AMT were never indexed for inflation. As a result, it has encompassed or threatened a growing number of middle-income taxpayers over the years. Lawmakers and administrations have responded by temporarily pushing up the threshold, but have yet to come up with a complete fix.
It's also become a substantial revenue source. Full repeal would reduce revenues by more than a trillion dollars over 10 years.
During the panel discussion, committee member Bill Frenzel said he agreed that it was time to "bite the bullet" and press for full repeal, but warned that doing so will put a "huge burden" on the panel to find a way to make up the lost revenues.
The panel's vice chairman, former Democratic Sen. John Breaux, said that while he's not a fan of the AMT, the panel must examine whether the full repeal of the system would allow some of the nation's highest earners to get away with paying no tax at all.
Mack replied that if that were the case, the committee would have to make adjustments in order to maintain roughly the same tax burden on the upper quintile of earners that is now in place.
The panel members agreed that changes to the corporate AMT would best be tackled as part of a broad corporate tax reform, Mack noted.
The committee, formally known as the President's Advisory Panel on Federal Tax Reform, must present the Treasury Department with a set of tax-reform proposals in September.
Bush has set a number of ground rules for the panel, however. The proposals must be revenue-neutral. Also, future tax measures can't touch the code's most sacred cows -- mortgage interest deduction and charitable giving.
The employer's portion is what I'm talking about.If your dream of a fairtax ever happens I think you'll find the "employer's portion" will be the employee's to keep.
That's the beauty of the Fair Tax. It gives you choices.There won't be a choice. The "employer portion" is already and always has been recognized as a part of the employee's wage ...the fairtax rhetoric won't change that.
Our prices are definitely set by the market and we have absolutely no control over the price.So you won't be lowering your prices 20%?...imagine that.
I'm not sure what you mean by "profiting on wages". I'm not familiar with that termYou said it first
It's 7.65% of everybody's wages in the supply chain for the product, MARKED UP to make a profit.How is that not profiting on wages?
I don't think the business' costs are irrelevant. Otherwise, why doesn't GM just sell their Cadillacs for $1,000. I'm sure they would sell a few.They sell Cadillacs for the most they think they can get, regardless of costs. Why do you think they are selling them so much cheaper right now? If people were buying them at the higher prices do you think they would have gone down on the price?
Nope, Nightie, with payroll taxes gone the employees will have more takehome and more to spend so overall their real wages will actually go up since they can now control when they are taxed and by how much (or actually save some of it) where with any income tax based system they have no such option as the money is taken from the up front regardless of what they might decide to consume.
They're much better off under the FairTax. And, oh yes, prices will decline under the FairTax also, but not under any income-based form of taxation.
It's funny. She has groups she belongs to listed on her website and links to a bunch of other groups. Nowhere on her Scientology site does she list that she is research director for Americans For Fair Taxation.
Thomas Sowell has words for this type of occasion:
“It is amazing how many people think that they can answer an argument by attributing bad motives to those who disagree with them. Using this kind of reasoning, you can believe or not believe anything about anything, without having to bother to deal with facts or logic.”
--Dr. Thomas Sowell
Demonize a group or you can ascribe anything to individuals by mere association. Just ask a mormon sometime about how that sort of characterization works.
If a buyer cannot cover his costs as a rule, he will not be willing to sell at such a price. Costs include payroll, utililities, office supplies, and tax costs, among other things.So why has GM lost ~$2.5 billion the first six months of the year? They obviously are selling at prices that aren't covering their costs, as is any business that doesn't make a profit. Why don't they just raise prices until they are profitable?
Saying tax costs don't affect pricing is like saying payroll doesn't affect prices. Absurd.
If you're trying to make the argument that no part of income taxes is embedded into prices, you're not making a very realistic case for it.
You're merely looking at a limited segment for a limited time in trying this sort of presentation. Overall, this sort of pertubation will get right back to a more normal situation not where prices are higher than they would otherwise be due to embedded taxes.
That's why so many of the Euro (and other) countries have gone to the VAT form of taxes - to try to take the cascaded tax component out of prices to make their country's products more competitive overseas.
Actually, Looey, the payroll tax is 15.3% since there are 2 7.65% segments. Both come out of the hide of the employee as y0u stated - agreeing with Walter Williams - in a post on an earlier thread ... how soon you forget!!
I'll use myself as an example. Right now, my take home pay (after adding back 401(k) contribution) is 75.39% of my gross wage. Let's take $1,000 of my pay. My gross wage is $1,000. My take home is $754. After enactment of Fair Tax, my take home pay is $1,000, a 32.63% increase. Let's say I going to buy something that cost $754 before the Fair Tax. I had to earn $1,000 to buy it. After the Fair Tax, assuming no decrease in prices at all (just for the sake of illustration. I'm not conceding that, Lewislynn) it would cost me $754 plus $225 tax, or $979. I had to earn $979 instead of $1,000 to buy the item. I don't think that is a decrease in "real" wages for me. This does not take the prebate into account, either.
But I may not be typical. Let's use one of the women who works with me. Her gross pay is $3862/month. Her take home pay is $3148 or 81.51%. She's married but let's say she's single for illustration of the rebate. Her monthly rebate would be $178, so under the Fair Tax her spending money for a month would be $4040. Right now she has to make $3862 to have $3148 to spend. To spend the same $3148 after the fair tax her total spending money must be $4,088. That is without any price decline at all factored in (again, not conceding that point, Lewislynn). You are correct in that case, she would have a drop in "real" wages in the amount of $48, IF there are no price declines. However, 7.65% of $3862 is $295, much more than $48. Therefore, the employer might be able to give her the raise AND lower prices AND have a little left over for additional profit. They can give me a raise. I'll take it.
What needs to be realized is that, in real terms, not much changes regardless of the incidence of the taxes.
I think my illustrations above show that in a static environment that is the case.
YN, the things I really like about the Fair Tax is no withholding, no filing of tax returns, and the simplicity of the collection process. Also, the lack of social engineering done through the current tax code. I am a CPA, though not in public practice. I go to these tax update courses to get my continuing education requirements and it just appalls me how Congress changes the laws each year and the numbers and exemptions, etc are all just arbitrary. The numbers are all pulled out of thin air, it seems. You may not like the Fair Tax, but I think even you can see that it tries to have only one function, to fund the federal government. Not to give incentives for having children, or buy hybrid cars, or get married, etc.
BTW, thanks for trying to have a serious conversation about this stuff.
Oh, sure. Now you're REALLY insulting me! LOL Sorry for the long post. Feel free to check my math and comment on my illustrations. I used the 29.87% tax rate. I know you don't agree with that.
Uh. That's exactly what they did! Haven't you been paying attention? Employee discounts and all?
Yes, but GM and Ford seem to be more than willing to lose money with the marketing gimmick they've got going on right now. I think your "absurd" comment should be directed to them, not our adversaries on the thread (your comment wasn't absurd. You said they made absurd comments) I think this is just a temporary anamoly, though, and can't really be used as an illustration of how products are priced.
After the Fair Tax, assuming no decrease in prices at all (just for the sake of illustration. I'm not conceding that, Lewislynn) it would cost me $754 plus $225 tax, or $979. I had to earn $979 instead of $1,000 to buy the item. I don't think that is a decrease in "real" wages for me. This does not take the prebate into account, either.This only works if you use the 29.87% rate, which we now know from Treasury isn't revenue neutral. Not by a longshot. It also doesn't include the increase in your state and local taxes that will be required for the states to pay the estimated $346.2 billion in FairTax they will be sending the federal government.
Anyway, it's obvious that no matter how they have determined their prices it's all out of control right now so lowering costs is their only resort.
If a buyer cannot cover his costs as a rule, he will not be willing to sell at such a price. Costs include payroll, utililities, office supplies, and tax costs, among other things.
Saying tax costs don't affect pricing is like saying payroll doesn't affect prices. Absurd.
So why has GM lost ~$2.5 billion the first six months of the year?
Because buyers aren't willing to pay what they were asking. If they're not covering their costs, they will go out of business. It is trivially obvious that GM must price in such a way that covers their costs or face going out of business. To assert that GM does not consider costs in determining price is foolish.
It may be that GM isn't smart enough to figure out how to cover their costs and price to stay in business - that's the way it works.
But the fact remains that to survive, they must cover their costs by pricing to recover adequate revenue AND do so at a price that will find buyers.
Just because they do so doesn't mean they'll make a sale - but it is obviously requred that price cover costs.
The idea is to cover your costs AND have willing buyers. They both go into a sale.
Patience, Nightie, Patience ... they will make the money back at some point (and probably then some).
You're so IMPATIENT!!! Everything is not governed by the annual April 15 tax day you see - some things take longer than that and eventually balance out. Looking at only an instant in time and thinking it is forever is so ... AMERICAN!!
Uh. That's exactly what they did! Haven't you been paying attention? Employee discounts and all?They gained market share?...Where did it get them?
I'll use myself as an example. Right now, my take home pay (after adding back 401(k) contribution) is 75.39% of my gross wage.It likely doesn't take any income tax deductions into account either.----
This does not take the prebate into account, either.
The employer's portion is what I'm talking about.If your dream of a fairtax ever happens I think you'll find the "employer's portion" will be the employee's to keep. NOT NECESSARILY.
That's the beauty of the Fair Tax. It gives you choices.There won't be a choice. The "employer portion" is already and always has been recognized as a part of the employee's wage ...the fairtax rhetoric won't change that. THERE IS NO LAW SAYING THE EMPLOYER HAS TO GIVE THE EMPLOYEE THE EMPLOYER PORTION. SHOOT, A LOT OF EMPLOYEES DON'T EVEN KNOW THERE IS AN EMPLOYER PORTION.
Our prices are definitely set by the market and we have absolutely no control over the price.So you won't be lowering your prices 20%?...imagine that. ONLY IF YOU CAN FIGURE OUT A WAY FOR ME TO MANIPULATE THE WORLD OIL AND GAS MARKETS. IF YOU DO, LET ME KNOW NOW. I'D LIKE TO BUY SOME FUTURES.
I'm not sure what you mean by "profiting on wages". I'm not familiar with that termYou said it first NO, I SAID
It's 7.65% of everybody's wages in the supply chain for the product, MARKED UP to make a profit.How is that not profiting on wages? WELL, IF SOMEONE WORKS FOR A COMPANY AND THE COMPANY MAKES A PROFIT I GUESS THE COMPANY IS PROFITING ON WAGES. NEVER QUITE HEARD IT PUT THAT WAY BEFORE. SOUNDS KIND OF CLASS WARFARE LIKE.
SORRY ABOUT THE ALL CAPS. NOT SHOUTING, JUST DISTINGUISHING BETWEEN MY OLD COMMENTS, YOUR COMMENTS, AND MY NEW COMMENTS. WHEW!
I believe that is 22.5% and 23.5245%, respectivelly. Nah, just messing wit ya.
You realize I was trying to say this may not be the same woman, don't you?
I used the 29.87% tax rate. I know you don't agree with that.
Do you agree with my illustration, if my rate was correct (in your mind)?
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