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.
I don't agree on that point of view. Unlike you, I believe the funding of the SS/MC by the FairTax is a net plus that will help get us to reforming the mess sooner than leaving it as it is sucking up all possible payroll income with nothing but continual increases in the tax on workers (and probably K-Street-driven fiddling with the tax code involved).
I believe the money is no more hidden under the FairTax since it is clearly identified by a percentage of tax revenue for each in the bill.
I also see no real reason to think that reporting of wages (which is called for in HR25) will be any more (or less) truthful than at present since there's no real reason for it to be.
All that aside, though, for my money, I'd like to see ALL entitlements eliminated ... and as rapidly as possible: S/S, M/C, and all the rest. The FairTax funding while that is being fought out will keep from distracting the political energy and will from reforming those things instead of tinkering with them to fund them as presently done.
I'm sure that under the FairTax there will be groups who go to great lengths to publish the costs of entitlements because they're easily available in the bill but not so readily available under present law (and yes, I know there's a percentage of payroll from EE & ER) where it can easily be furnished in ways people can relate to.
I don't mind disagreeing about that, however, as IMO it's a relatively peripheral issue and only comes into play because it must be funded in some way, I believe that keeping any sort of income tax rate to do this is only asking for a disaster to be re-instituted.
Whatever. You can wrap this gnarly tax dream in the Freedom flag and it still doesn't add up. And how you equate Freedom with paying the same amount of taxes as we already do PLUS collecting enough to cover the new big PREBATE entitlement is beyond me.
It would be enacted in an Emergency manner, and it would only hit about 20% of Americans, the other 80% would happily vote to take the income from the evil rich rather than have the FairTax go to 50%.
I've had about enough of your bullshit, Rob.
I've followed your arguments for some time now, and the best I can figure is that you profit FRom the income tax system in some K Street lobbyist kind of way -- IOW, you are making the big bucks and they will go away when the income tax goes away. AFRaid of real work, are you?
IOW, when you post, I hear a pig squealing.
The FReedom Bigun and I speak of is the FReedom each of us will have under the FairTax to determine the amount and timing of our federal tax payments.
The FReedom Bigun and I speak of is the FReedom each of us will have under the FairTax to work, earn, save and invest FRee of the heavy hand of government.
The FReedom Bigun and I speak of is the FReedom each of us will have under the FairTax to watch our children and grandchildren grow up in a country that respects and protects their economic FReedom, and as a corollary, the other FReedoms as expressed in our founding documents.
You see, Rob, we will never be a FRee country so long as we have an income tax and an IRS!
If you have not got that by now, your understanding of the founding principles of this country is sadly deficient.
BTW, there are other FReedoms I could mention, but those listed are the basic FReedoms that I believe are important.
Ditto.
IOW, when you post, I hear a pig squealing.
You've got me confused with another poster.
The FReedom Bigun and I speak of...
The FReedom Bigun and I speak of...
The FReedom Bigun and I speak of...
does not have anything to do with the Fairtax.
You see, Rob, we will never be a FRee country so long as we have an income tax and an IRS!
I have higher standards for a tax plan, just getting rid of the income tax and the IRS is not enough. It also has to make sense and the Fairtax fails on that account.
the best I can figure is that you profit FRom the income tax system in some K Street lobbyist kind of way
And that would be another thing you would be very wrong about. But attributing nefarious self-serving motives to those that oppose the all-wonderful Fairtax is a typical response from those of you who believe that the Fairtax is Freedom incarnate. Our priority should be cutting spending, not finding a way to increase the tax burden by the amount of a huge new Entitlement *the Prebate*
Absolutely. When I first started my business I know I scraped for every deduction possible mostly to avoid that 15.6 percent hit from SS taxes on top of the 28 percent income tax. Without that 43 percent penalty, I would not take any deductions. I would report my net income as near to my gross income as possible. That is a serious problem that will significantly inflate our future SS liablity.
It is probably unacceptable, but I happen to agree that a combination of income and sales tax is the best solution. Probabably something like a flat 10 percent income tax which exempts $30K of income, and a 10 percent sales tax that exempts food and housing. I would completely trash the prebate nonsense. If that does not provide the government with enough money, it is time to get out the hachet and cut the budget by 25 percent.
What's another $500 billion amoung friends? Just a 25 percent tax increase. No big deal....
We can agree that cutting spending should be a priority.
HST, if you can't see the FReedom possibilities inherent in the FairTax, then you just have got to take those blinders off.
They are really there, Rob.
We currently have a tax system which requires for it's administration an annual annal inspection that would make the inquisitors of the Spanish court blush. Unworthy of a free country, especially when we can so easily have one which does not require that the government know even so much as one's name for it's administration and make the cost of government fully visible to everyone in the process!
THAT is the issue despite all the chaff you and your SQL cronies throw up on these threads!
If it does, then the FairTax is not revenue neutral and the tax rate must go up.
Another "dirty little secret" of the FairTax is that if consumers do indeed exercise their option to pay less tax by investing, buying used, deferring purchased until prices come down, or what ever else they may choose to do with their formerly withheld tax money, the tax base will erode, and to maintain revenue neutrality, the tax rate will be raised!
Jorgenson's modeling of the FairTax predicts as much by showing consumption dropping below the base case for the first three years AND a continuously rising tax rate over the time horizon of the model (25 years.)
Of course, you'll never hear the AFT admit that.
My statement was perfectly accurate. What you are arguing is that the AVERAGES, even ranges, without a distribution, can indeed be misleading. That is a point I have been attempting to make for quite some time now.
So much of the FairTax propaganda focuses on averages, provides no ranges, and provides no clues to distribution.
Without further analysis, neither you nor I can make a case for which part of the range is most capable of aggregate price reductions close to the average: the highly competitive, low margin, low profit tax part of the spectrum, or the relatively competition free, high margin, high profit tax part of the spectrum.
When you consider that on the individual side, 95% of income taxes are paid by top 5% of income spectrum, one might be tempted to conclude a similar distribution exists on the business side! That suggests that the Ferrari dealers of the world might have a whole lot more influence on the average than you give them credit for.
GREAT! Perhaps you and I will find ourselves on the same side in the great and coming war to reform entitlements.
Indeed one of is totally clueless; unfortnately it's you since the FairTax only funds the entiitlements. The paying out of the funds is controlled by other laws. That's true even for the indexing you specify which is controlled by the Omnibus Reconciliation Act of 1981. The FairTax merely provides the funds just as other tax laws do now. In fact with the sales tax base expanding with the inclusions of millions and millions of additional taxpayers (the illegal economy) who presently make no real contribution to tax revenues, the percentage needed for SS/MC is more likely to go DOWN rather than up. But I realize that's beyond you.OK, bright guy. If you had actually read the section I mentioned you would have realized the the FairTax bill amends the Social Security Act to adjust the CPI increase percentage to include the FairTax. It is changing the Social Security laws to have the FairTax included in the COLA. You may want to believe the FairTax bill is jsut a funding bill, but that is just your usual FairieLand hallucination. The FairTax increases Social Security spending by 30%!
Well, that's where you're wrong. As we have been discussing in this thread, Consumer Prices will, in fact, RISE solely as an artifact of implementing the FairTax. Consequently the CPI will rise. Consequently, entitlements will loose real value. Consequently, automatic benefit indexing will boost entitlement benefits...
... All because of the FairTax.
Yep that is a reasonable expectation of electorate response when every street bum, wealfare mother, housewife, father, child, business tycoon and political hack living off his tax favored trust gets to pay the same rate of tax for their goodies and favorite life style.
But, according to you (in previous threads) and the AFT, and most of the rest of the FairTax crowd, all these folks will be nominally unaffected, and marginally better off.
If so, why would they react? that is unless you're now suggesting that they are NOT better off ... but that would violate the FairTax Prime Directive.
It would be enacted in an Emergency manner, and it would only hit about 20% of Americans, the other 80% would happily vote to take the income from the evil rich rather than have the FairTax go to 50%.
Then we should have had a national retail sales tax already on top of income taxes by that reasoning. There have been plenty of opportunities each and every ad-naseum "Emergency" from WWI to The War on Terrorism to institute national sales taxes ontop of the income and payroll taxes to justifiable in keeping from increasing income and SS/Medicare tax rates.
There has been nothing, but the very real political ire of the American voter to hold them back from doing so. The same political ire that would rise up and smite any politician who had any such inclination to re-instate an income tax after a popular overthrow of it by the American electorate demanding the FairTax NRST legislation or anything like it repealing the income and payroll tax systems from the books.
You speculation has no basis beyond vapors of an overactive sense of paranoia.
If the American public has sufficient will to see the income tax removed, it isn't coming back anytime soon. And certainly not in the time it would take to abolish taxation of income by constitutional amendment under such pressure from the citizens of the United States to see it done and done right.
But, according to you (in previous threads) and the AFT, and most of the rest of the FairTax crowd, all these folks will be nominally unaffected, and marginally better off.
People react properly to that which that perceive not that which misdirects there attention to root cause.
In the case before us the root of taxation passed to the individual in lower pay, lower ROI, and higher prices through business activity that is taxed, ends up with the ire of the consumer directed at business, not the source of the problem a bloated government playing a hide the tax shell game.
End the shell game, that an electorate can exercise that "Eternal Vigilence" that is the citizen's obligation in controlling government.
When the burden of large and expansive government is improperly assessed by large swaths of the electorate, there can never be anything like accountablility of government to the people, there can only be the shell game of manipulation and class warfare to keep the march to social welfare state going and growning.
The inherent and primary use of an income tax system is its exceptional utility for monitoring, manipulating and controlling a people, not its capacity for revenue generation.
That is why the current income/payroll tax system must go, it is an affront to an nation that pretends to be rooted in liberty and freedom. Visible consumption taxes, OTOH are self limiting, expanding the empowerment of the citizenry to effect control over their lives by reacting in knowlege rather than blindly striking about at the wrong targets to be held accountable.
| "As a matter of fact, what the income tax does — and this is the debate that I think we always try to get into in order to let you and him fight, see — and the people of this country are led down a path where the actual control of their resources, which in the end is the control over their will, is handed off to the government." . . . "The government then manipulates that will in order to destroy the freedom of our electoral system through the income tax structure, and we call the resulting slavery a free system." "In point of fact, it is not as the founders understood, and the only way to restore real freedom is to give people back control over the income that they earn so that they won‘t, at the voting booth and in other phony issues, be subject to that manipulation." |
You're pontificating about why we need to rid ourselves of the current Income Tax System.
WE AGREE ON THAT.
WE AGREE ON THAT.
WE AGREE ON THAT.
WE AGREE ON THAT.
Got it???
WE AGREE ON THAT.
Where we disagree is on whether the FairTax is the right way to accomplish that (and other) meaningful goals.
Now it's my turn to pontificate:
What I sniff in the air of your frustration is a willingness to throw the baby out with the bathwater, just to rid yourself of the stench of the bathwater.
You've gotten yourself SOOOOOOOO wrapped around the axle of the FairTax wagon, that you refuse to even consider the likelihood that FairTax wagon will take you and all of the rest of us over the proverbial economic cliff!
Ya know, the FairTax MIGHT be a good idea, but you can't tell because of all the misrepresentation, half-truths, and outright lies.
The FairTax might be workable with a few changes, but you are so wrapped up in the infallibility of the FairTax that you can't bring yourself to even consider that it may have flaws.
And, best of all, you won't agree to be forthright about certain facts your own experts have predicted because they might cast the precious FairTax in an unfavorable public light.
The alternative isn't preserving the status quo, as so many of you obstinately insist. Persisting in that ill-conceived belief makes YOU the ostrich with its head in the sand ... all you can see, everywhere you look is FairTax sand.
I can tell when I'm being sold snake oil, because the salesman stops talking about how the product works and focuses on how good I'll feel after I buy the product. That seems to be where you regularly go when you no longer desire to debate the merits of the proposal or have to admit to a flaw that calls question on the FairTax; you go off into "founder-land" or "freedom-land" or "power-to-the-people-land" ... snake oil ... and I'm not buying.
So, have you anything more to say about any of the actual points of debate?
Ya know, the FairTax MIGHT be a good idea, but you can't tell because of all the misrepresentation, half-truths, and outright lies.
I can tell it is the right answer by merely reading the bill. It meets my criterias as to what is necessary to replace the current income/payroll tax system and assure the citizen holds the pat hand in control of the future, not Congress Critters currently in Washington.
All the rhetoric in the world make no difference to the political bottomline that an NRST and the FairTax implementation represents to me. By my sights I would not care if I see one penny in economic gain out of the legislation and even accept a potential for economic loss to see a free, and better United States for my children and grandchildren.
You are the one hung up on the economics as the critical factor of choice in a tax system. I am only interested in the essentials of ridding our system of the income tax sytem in all it permutations and a return to the basics of a government constrained to the limits of a visible consumption tax system.
My descisions have been made on factors beyond the economic having to do nothing at all with marketing of AFT or anyone else for the matter, so I don't give one hang as to what one economist says over another or your concern over whether or not economic studies and marketing rhetoric mean anything at all.
What matters to me, does the bill meet the technical standard of revenue neutrality set in place by Congress. Since that standard has uneqivically been met (it no longer exists as the Budget Enforcement Act and PAYGO rulses sunsetted a by 2004 for both House and Senate and has not been renewed since.)
Guess what the standard is of academic concern only and has no bearing for a floor challenge as it did back when the legislation was first drafted and it meant something to be able to pass muster with a CBO static analysis.
You and your cohorts are the ones interested in "revenue neutrality" and whether prices drop and only current Personal Disposable Income remains constant, or the Constant is Gross pay and the tax is on top of current prices or even something in between.
But then the whole revenue neutrality basis has never been anything more than a hoax on the electorate to justify the continued growth in spending of the Federal government and assure a basis to maintain constantly growing tax burdens throughout the 90's. The difference that allowed a pull back in the tax burdens after 2000 was first the economic slowdown in 2000 that allowed the Repubs to override the PAYGO challenges thrown up buy Dems, and then then subsequent phaseout of all the PAYGOs rules themselve as the provisions sunsetted out of existence all together.
Bottomline a revenue neutral tax change makes no difference whatsoever to the purchasing power and standard of living of the household. If the tax dollars garnered from the economy remain constant in the change over to a NRST, whatever flavor, there is no impact, and any gains in household wellbeing out of impoved production efficiencies that Jorgenson and others suggest are there is good over that.
As I say, I would accept a less efficient result and still support the FairTax legislation as the best there is and has been in a century place out on the table for the public to go with.
The FairTax might be workable with a few changes, but you are so wrapped up in the infallibility of the FairTax that you can't bring yourself to even consider that it may have flaws.
You want to work out what you see as workable changes, that fine by me, I'm all ears. I have heard none of that from you, I've only heard from you only how awful the legislation must be because rhetoric about the tax does not meet your standards. That's tough. What Boortz or anyone else has put in there books, pamphlets or anything else concerning the proposal, I have always taken with a grain of salt. It is you who wants to base acceptence on economic reports as opposed to what the bills provisions say it will do.
The Bill HR25, stands on its on in my eyes, and is sufficient to get the first stage of the process done, repeal of income & payroll tax systems in place and replacement with a visible consumption tax system. The rest is battles yet to be fought and to be fought in their due time.
I can tell when I'm being sold snake oil, because the salesman stops talking about how the product works and focuses on how good I'll feel after I buy the product.
Who ever listens to salesmen, you look at the product and determine its worth on the basis of the content of it. In this case the bill itself. It is sufficient to get us to the intial stage where we want to be, that is more than enough in my sight, tweaks can come later out of the electorate taking ahand in holding Congress' feet to the fire, first steps first, get the repeal of current legislation off the books and a replacement in.
So, have you anything more to say about any of the actual points of debate?
Since there are no points of debate going on here, you say you hold the same objective you just don't like marketing of the product. Thats tough, you can do without the product based on any criteria your heart desires. If you don't like the rhertoric, and that is your criteria of what makes good legislation vs, bad legislation. Well not much to debate their is there. That is a personal problem in my eyes, not one of substance but only of perception and most likely just a rationalization more than any real factor.
If you want changes in the bill, now is the time to push for them, nothing is cast in stone except that it must be politically viable and a retail sales tax system. beyond that you can push for any change you want so go for it. All you have to do is lobby Linder and cohorts and convince them of the necessity of your position.
My position is I can accept the what I perceive as the bull in the bill to make it palatable to those at the center and slightly left of center. That is all that is needed to get to the fundamental goal, repeal of the income/payroll tax system and its replacement with a solid consumption tax not centered on income, and let the electorate take over from there.
In the final analys your opinion on superficial factors of marketing and packaging mean nothing to me. Marketing and packaging is inevitable in today's political environment. Get over it. Only the legislation and what it contains is what matters.
For me, what I have seen in close study of the bill over years, it is sufficient to do the job I expect. And that is all I need.
Hear! Hear!
You tellem, Geezer!
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.