Posted on 02/11/2006 8:54:52 AM PST by Eaglewatcher
Recent letters have expressed concern that the poor or middle class might be harmed by adoption of the FairTax (www.FairTax.org) based on a deep misunderstanding of both the FairTax and the current system. We cannot assess the effects of the FairTax without comparing it to the reality of our current income and payroll tax system.
One cannot buy a loaf of bread without paying the income taxes of the baker. The price of that loaf of bread contains the cost of the flour, and the income of the baker, but it also contains the taxes the baker pays. After all, the baker does not have a money tree from which to pluck dollars to pay his taxes, he must get those funds from his customers, like any other business.
Further, the price of that loaf of bread contains the taxes of the miller, the farmer, the trucker and the grocer and those of all their employees. Those income and payroll taxes cascade through the production process and eventually make up more of the cost of that loaf of bread than the profits of any of those who worked to produce that bread.
Those many layers of taxes on productive work make up the embedded tax component of the price of bread or any other goods or services we buy. On average, that embedded tax component is 22.4 percent of the price of everything we buy, from a loaf of bread to brain surgery. So, the true tax burden on the working poor is 28.4 percent, (their FICA tax of 7.65 plus plus 22.4 percent of their remaining take-home pay, which goes to pay the embedded taxes hidden in the price of everything they buy).
Even if the poor paid the entire 23 percent FairTax, they would be better off than now, but they don't. The FairTax provides a rebate of all tax paid on spending up to the federal poverty line to everybody. This cancels out all taxes for those living at or below the poverty line, $25,660 a year for a married couple and two children.
For the same family earning twice the poverty line ($51,320), half their taxes are rebated, yielding an effective rate of 11.5 percent. And even at triple the poverty level, $76,980, their effective rate is only 15.3 percent, still far better than the 28.4 percent the poorest of the poor pay now.
So, who loses? The idle rich, illegal aliens, criminals, "off-book" workers and others who escape the current system through evasion or legal loopholes. Tax lawyers and lobbyists who make their livings from the complexity of the current system will also come up short. Foreign goods sold in the U.S. will no longer get a free ride while production of American-made goods and services bear the whole tax burden.
But those of us who work for a living, or who get by on a fixed income, will be far better off.
Tabor, of Chesapeake, is co-state director for FairTax.org in Virginia.
But I admit I have one - supporting the FairTax as a wonderful tax system that is badly needed while you Squirrels invariably to pretent to be supremely knowledgeable and innately know the FairTax is "bad" and its supporters also - even you have to make up some "misdirected" info to claim this.
In short, openly supporting something like the FairTax instead of pretending you know of something better(without ever really espousing what it is in any detail so it may be examined) is, I believe most people would think, the more honest of the two approaches.
You are the only one who seems to have no understanding of what embedded taxes are. Jorgenson used all federal income and payroll taxes as making up 'embedded taxes'. Some other people may also include the cost of tax compliance. Then there is pigdog, who also wants to add 'cascading effects' (otherwise known as profits) as part of 'embedded taxes'. But since the discussion centers around the fairtaxers often-quoted Jorgenson number of 22%, we should use Jorgenson's definition. What other people call embedded taxes are not relevant to the discussion.
You seem to be tryin to shift your position from openly prefering the income tax, but words like "honest and truthful debate" coming out of your mouth do not ring true at all in view of your initial efforts to conceal your real agenda to attack anything FairTax.
... particularly when I do post on other threads.
But my primary focus is the TRTs (Tax Reform Threads). It is a vital subject for our country in my opinion and one that MUST be addressed soon to prevent what I believe is a serious economic disruption if we continue as we are.
You lack basic comprehension skills. What Ron Paul, Rob, and I are saying is the biggest problem with the current tax system is the amount of tax. The fairtax plan does nothing to address that.
I disagree. Simply ending withholding and making folks pay their tax monthly in cash or check would do a lot to reduce taxes. Yet this would be revenue neutral.
It is indeed the method of collection that allows the unbounded growth of government.
"... an honest and truthful debate ..."
In other words, agree with what I say and I'll stop telling lies about the FairTax (and you). otherwise, all bets are off ...
I think you must surely know Robbie that I will never agree with you since you actually prefer the present tax systm - and have publically admitted that. I cannot think of a single reason why I should agree with you OR your preferred tax system ... and I don't.
What's your point??? Are you just running out of insults and are trying such a stretch to dredge up somethg you think is an insult.
Last time I looked it was a free country and one could post wherever. Perhaps you'd like to apply an income tax to THAT, too???
Wages going down was not a prediction of the study despite what you try to pretend.
Nor, in fact, was there any indication that actual labor costs would go down at all - let alone by the full amount of the payroll tax. What you're hanging your hat on is what he used for the premise of his model, not a prediction or actual indication of what would occur with labor.
And misrepresenting ... you Squirrels have been misrepresenting the FairTax in many respects since you came on these threads so I doubt you'll suddenly stop.
Part of the problem is the way Boortz and Linder are using the idea of embedded taxes. In an eight-year-old study paid for by AFFT, Harvard economist Dale Jorgenson noted that because the taxes paid by everyone in the chain of production are embedded in the cost of goods, prices could decline an average of 20 percent if all those taxes were scrapped. The FairTax Book devotes an entire chapter to this idea.
What The FairTax Book fails to mention is that prices can only fall this sharply if companies cut wages. I asked Jorgenson about this, and he agreed. Say your salary is $100,000 a year today, but you take home $80,000 after taxes.
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And he is the fairtax expert according to fairtax.org. Here is a paper at the fairtax.org website.
The FairTax – Are there winners and losers?
From footnote #1: More than $2 million dollars has been invested in economic research by FairTax advocates to determine the impact of the FairTax on the economy, business, and individual taxpayers. The FairTax research team includes some of the leading economists in the country: Dr. Dale Jorgenson, Chairman of the Economics Department
"... it just shows the mentality of the poster ..."
... since what it ACTUALLY shows is the interest of the poster.
The MENTALITY of the poster is shown by the content of his posts - so I'm embarrassed for you (and several of your SQL Squad pals).
And all you ever do is attack the motives of the posters, call them liars without supporting it, call them wrong without making an arguement, and make up silly names to call people. You don't know the truth when it slaps you in the face.
Perhaps you should look in the mirror on your last post.
Your post was:
"You still must report your income to the federal government. The government is still collecting income information for SS and other benefits. "
If you'd like to admit your error and correct it - fine. Otherwise stop trying to weasel out of the fact you were wrong. Whose "stupidity" is involved here??? Aren't you the one making the error?
When I call someone wrong or liar, i use details and facts to support it. I can point to a dozen posts on this thread where all pigdog did was call people liars or tell them they were wrong. All pigdog does is stick he head in the sand and deny facts that are black and white.
For self-employed people they must report income to get credit for SS.
To see one of YOUR error examples (which I've called you on), check post #355.
And your response ...??? Post #327 certainly doesn't cover it!
That doesn't cover your error either. You are simply someone that cannot admit he's wrong and instead try to inveigle you way out of the error.
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