Posted on 09/03/2006 5:18:40 AM PDT by Man50D
I guess I will stop using large words like 'that'. You intentionally keep leaving 'that' out. Obviously 'that' confuses you. Of course it doesn't change a thing. Your quote saying prices under the fairtax will stay about the same shows it has been your position that prices will fall 23%. No matter how you spin it, you are still a liar.
I don't think so. He parses his words way too much to be confused. He is congenial liar like the Clintons. But instead of it depends on the definition of 'is', it is it depends on the definition of 'table', 'obscene', 'that', 'prediction', 'assumption'.....
The important point is that you need to use 50% as the FairTax rate, along with the max 8% price drop. That will more accurately model your mythical FariTax universe purchasing power numbers at least in theory.
(Except it is hard to say how much reported taxable consumption will be wrecked by a 50% exclusive tax)
How much of these taxes are removed from costs is not certain, but most FairTax supporters seem to believe that the ER (employer) half of FICA will be removed and perhaps some part of the employees wage/payroll withholding. this latter seems pretty unlikely due to all the union (and other) agreements which specify the gross wages. So it's very likely that most if not all of the wage/payroll withholding will remain in costs as at present leaving business income taxes, ER FICA, compliance costs, opportunity costs, etc. to go in whole or in part toward reducing prices. The ER portion is 7.65% alone.
Most of the EE (employee) wage/witholding costs, then will probably remain in the product costs but that still leaves a substantial amount of room for price reduction. Since there isn't a well-studied figure at this point we use the 9% figure stipulated by the naysayers rather than arguing endlessly about it. If you don't like 9%, try 5% or some other figure. The point is - there will be some price declines when the income tax is ended lowering prices for everyone. The effective tax rate will depend upon the consumption practices of each individual taxpayer.
What is he hoping to gain though? He obviously talks out both sides of his snout. And he obviously says things that make no sense. Is he just trolling for really math-challenged and business-hating Freepers to join his cult?
7.65% of the part of the cost that is due to labor, if only 50% of the cost of an item is payroll expense, then there is pnly 3.8% to be removed from the items cost.
I KNOW 23% of that is the Fair Tax. I KNOW that by the end of the year I will have paid the federal government something less than 23% of what I earned that year, though I couldn't tell you, under penalty of torture, what that number is or will be.
You have no idea whether my effective cost of that bat will be $98.12, $97.12, or $99.12. You don't know what my monthly prebate is, you don't know how much I make, you don't know how much I save, and you don't know how much used merchandise I buy.
But the one thing you seem to know for a fact is that I will pay $98.12 for that bat.
And you wonder why you don't have any credibility on this forum. When you cannot be honest and straightforward about a little thing like how much a stupid bat will cost someone at the checkout counter under the Fair Tax, why should be believe anything you say?
You leave out the little detail of having to add the 30% sales tax on.
The effective tax rate will depend upon the consumption practices of each individual taxpayer.
The price of a product does not depend on your 'effective tax rate'. There is 30% sales tax added on the price of the product. That is the price shown on the receipt and that is the price you pay.
For someone who is anal about using 29.87% instead of 30%, that is a huge misrepresentation. Of course, I am sure it was unintentional. Or maybe he never said it at all. You never know, he can deny anything.
Geez Louise. Like pulling teeth. It will remain in costs, but it will not be sent to the federal government as it is today. It will be given to the employee. Maybe.
The point is, there's an average of 20-25% there today that the criminal is currently paying.
What happens to that 22% after the Fair Tax -- how it's split up -- no one knows. Some will be used to reduce the price, some will be kept as profit, some will be given to the employee, who knows? It's up to the employer.
But they could tell us what they expect the government to do in its role as employer. If all government wokers are going to keep 100% of their paychecks then the private sector will follow that lead. If the government worker is going to take a pay cut to current takehome level, that will send a different signal.
What do the legislators pushing HR25 recommend that the federal government do in its role as an employer? Surely they have an answer to such a basic question.
August 20, 2006
U.S. Representative John Linder & Mr. Neal Boortz
1026 Longworth House Office Building
Washington, DC 20515 Fax: (404) 897-7363
Phone: 770-232-3005
Fax: 770-232-2909
Dear Mr. Linder and Mr. Boortz:
Thank you for changing your FairTax book to remove the incorrect and misleading statements about the "Keep 100% of your paycheck, and all prices stay about the same" misrepresentation. I wrote to you about this subject about a year ago and was glad to see that you revised your book, and made a number of clarifications on this point.
In your FairTax Book, second edition, you make the statement:
“Remember that the poor, along with everyone else—will no longer have Social Security taxes or Medicare taxes removed from their paychecks. Whatever they earn, they get on payday. If employers leave this money in paychecks instead of taking it out of price, most of those we categorize as poor, this would mean an immediate 25 to 30 percent increase in their take-home pay.”
Mr. Boortz, you put up on your website last year in a statement titled "Straightening out some confusion" the following statement:
"When the FairTax is implemented, and when business and personal income and payroll taxes disappear, your employer is going to have to make a decision. He will either take some or the entire amount he had been withholding for federal income and payroll taxes and add it to your weekly check, or he will readjust your pay figures so that your entire paycheck will be equal to what you used to call "take home pay" before the FairTax. The employer may also decide to do a little of both. Either way, you can see that the amount of money you actually receive as pay – the amount you can put into your bank account – will not decrease, and may actually increase.
On a larger scale real wages will rise to the extent to which the nation's employers decide to return the embedded costs of their employee's income and payroll taxes to the employee. Likewise, the cost of the products or services produced by the employer will be reduced to the extent to which that employer retains all or a portion of those income and payroll taxes together with the other taxes on capital and labor eliminated by the FairTax. Once again, a zero-sum, revenue neutral game.
Now, let's elaborate on the "keep 100% of your paycheck" line that appears in The FairTax Book. It is certainly true that after the FairTax becomes law there will be no more withholding from your paycheck for any federal taxes. What you earn is what you get. This is not to say that your gross pay will equal what it was before the FairTax. This will depend on what your employer does when the embedded costs represented by the tax burden you have passed on to your employer disappear. One thing is certain: You will suffer no decrease in real or net earnings --- the amount of each paycheck you deposit into your bank account every other week. The "keep 100% of your paycheck" concept can more easily be applied to those who either change jobs or come into the labor force after the implementation of the FairTax.
My question for the two of you is:
Of course you cannot dictate what the private employment sector will do regarding employee pay under the FairTax, but Congress does dictate what happens to federal government employee pay. What is your understanding of what the effect of the FairTax Bill on the paychecks of federal government workers? Would they keep their equal gross pay, or would it be reduced because of the elimination of the income and payroll taxes?
And a couple of secondary questions:
Since you have now clarified that employers are not all going to reduce their employees pay to the level of current take-home pay, this means that some prices will not drop as much as previously expected. Therefore, when the FairTax is added to the price of the goods, there will be a nominal increase in the prices paid. For the purpose of calculating the cost of government purchases, what percent increase in the costs of everything from paper clips to missiles did you assume?
Since the government is going to be paying the FairTax on everything, and since nominal prices are going to go up by some amount once the FairTax is added, shouldn't you have to take this into account when determining your neutral rate of government spending, and won't this require an increase in the revenue neutral FairTax rate?
Thanks for taking the time to answer my questions.
Sincerely,
Rob
The point is - there will be some price declines when the income tax is ended lowering prices for everyoneThat's only a maybe for only those items produced 100% domestic with 100% domestic components...most aren't.
The point is, here's what we know because it's written in law, there's going to be more tax added than removed and that's the best case.
Paying a 30% tax on my mortgage interest doesn't mean I get a better mortgage.
Paying 30% more for government services doesn't mean I get better government service.
Paying 30% tax on tax doesn't increase my purchasing power at the register.
Paying 30% more for my health insurance doesn't give me a better policy.
Paying 30% more for a haircut doesn't give me a better haircut.
Paying 30% more for a lawyer doesn't give me a better lawyer.
A lawyer, a barber, an independent ins. agent nor anyone else self-employed is going to lower their gross income the amount of income tax savings only to have to pay an exorbitant sales tax from every dollar they spend with what's left.
Your entire "effective tax rate" scenario is bogus and it does NOT use actual numbers for the Fairtax for the reasons I showed above and those are only a few.
And the IRS haters.
Yeah, the "hiding under the bed" crowd, I forgot about them. Every horror movie needs its bogeyman. Too bad the US is not a horror story.
I'll stick with the bill as written and the 9% that the naysayers have stipulated. And I'll keep doing comparative purchase prices when warranted.
If you'd like to get a more exact figure that WOULD apply to you, I'd be glad to do that but I'll need some more data from you. Then it will be straightforward enough to find out how much your $91 baseball bat actually costs you under the FairTax (even though you shell out $118,18 at checkout; that's not what it cost you due to the prebate).
For a valid comparison, what was your effective income tax rate last year? Also what sized family do yu have (M1K, etc). With just a few other things we should be able to use the 9% price reduction and come closer to what the "$91.00 baseball bat" costs under the FairTax (we already know what you pay at checkout: $118.18, but we're after it's cost). Keep in mind that the 9% is an agreed upon figure - or if you like we could use a 5% price drop ... or even both. I won't ask you for your income, spending etc. since you can do that and keep it private by going to the pafairtax website and let us know what your own effective FairTax rate is so we can use that to see what your FairTax costs are.
The actual cost to you of the thing purchased is not shown on the receipt (that's just the price at the marginal FairTax rate of 23%). The actual cost is the money you actually pay out of your own pocket for the item plus the FairTax at the effective rate ... the amount you paid at he cash register less some proportionate prebate amount.
In #904, I mentioned the ER portion as 7.65% and said it was likely o be one of the candidates for some part of reduced prices.
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