Posted on 10/10/2006 8:59:26 AM PDT by cryptical
"... it owes 29.87% in FairTax: on its taxable wages alone will cost S&L governments over 20% more than today ..."
Once again off the mark and for the same reason. there is no 29.87% on S&L government wages, but - as with federal - only a 23% rate less the 7.65% of ER FICA less also an adjustment for the ER FICA not due for educational employees. An observation I'd have is that I'd think the proportion of educational S&L employees would be even higher than for Federal meaning that there would be a proportionally greater reduction of the 15.35% rate.
It actually sounds like the Kotlikoff/Suffolk Hill paper is more and more right on the money.
"Couple that with the fact that any S&L sales taxes are levied on price value of taxable transactions. Any erosion in the pre-tax price of consumption will commensurately erode the S&L tax revenues as well..In short, the only way to keep S&L government whole is for them to increase S&L tax rates. And Kotlikoff agrees"
By a statement like that in your first sentence above you make the implicit assumption that static analysis is correct. In fact the government's use of static analysis for budgetary work ALWAYS shows it to be wildly off the mark precisely because it WAS static analysis. If prices drop (which they will prior to the imposition of the FairTax) there is certain to be an increase in tax revenues brought about by the thinks mentioned in the paper which any decent dynamic analysis would take into consideration.
For example a broader tax base adding millions as taxpayers who pay little or nothing presently. In addition, increased revenue due to increased economic activity. And as mentioned in the paper there are other things that would actually help benefit the tax revenue picture ... all the time while not increasing the FairTax rate.
As for your second observation, the Kotlikoff/Suffolk U paper does not at all "agree" as you state. That's merely your mistaken interpretation of what was said. The paper specifically states otherwise, but perhaps you missed that. It says that ONE way is to increase rates but it also gives other possibilities which you apparently choose to overlook.
"It is [sic] ridiculous position to take that the 23% rate is sufficient to fund the federal government because it steals tax revenues from the states and then making the states raise additional taxes to make up for it."
Not at all - especially since he said nothing of the sort. The remark you take exception with is merely illustrating one possibility our of several and others are also included in the paper.
In any event, the paper also points out that when dynamic analysis (rather that the static analysis used in the paper) is used, the situation will no doubt dramatically better for the FairTax as well as for most taxpayers (which do just fine under even static analysis) and for the economy as a whole. Static analysis always favors the status quo (the income tax) and it is always misleading because of that.
The paper clearly shows that the 23% rate is sufficient.
There's no reason that they should since that is far from the only option available to the S&L governments as the paper clearly points out.
"... governments don't pay taxes, the governed do ..."
Certainly that is correct and has been so for - what - 6,000 years or so since the ancient Sumerians (or others ... maybe it was the Democrats) launched them since they figured out that without money, the government couldn't do very much. As I recall, they shortly also figured out that without the assent of the governed their taxation was one of many things that would cause them to lose their jobs (or their heads).
Aside from that interesting fact, your analysis is merely doing what Gale, Bartlett, RobFromGa and a few others have attempted to do - artificially shrink the FairTax base so that the FairTax rate would appear preposterously high. Gale even once built things up to a 94% rate (while Robbie slacked off at 50%).
If you're going to analyze the FairTax then needs be you must analyze the bill as written ... hmmm, in fact that little stunt of changing the bill to suit your own purposes and then analyzing the result is just what the Presidential Tax Panel did (among other mal functions).
"What this means is that if capital (cash) is in the wrong place, the model just moves it to where it is needed."
In fact, that's pretty much what government does with a variety of funds presently and one of the reasons it taps the Federal Reserve now and again.
But the problem is hardly one of cash flow since the FairTax revenue will not be out of the government's pocket for very long and the amount generated by taxpayers will come in fairly regularly each month.
Using the NIPA Tables is quite sufficient for a determination of tax rate measurements and requirements. Cash flow would offer no noticeable help in rate determination, but I'd be open to reviewing your formulas that you believe do so.
"He had to do that to get the results AFFT was paying him to get."
In fact, NO, he didn't since Jorgenson has his own competing tax play that he pushes inside the Beltway at every opportunity. He has said that he stands behind his economic analysis which has been greatly distorted on these threads by those who oppose the FairTax.
In fact, Jorgenson and Kotlikoff take rather opposite views and both cannot be correct at the same time. Jorgenson assumes that in effect prices (and wages) will fall by more or less the amount of the income tax while Kotlikoff assumes that wages remain steady and prices rise by the amount of the tax. Both cannot be correct. Both, however, make these simplifying assumptions to move their overall analyses along to some conclusion. Neither are necessarily predictions of what will happen in the real world.
"Not to mention the HUGE negative effect on the prices of imported products..."
Actually, it's not HUGE at all - merely the cost of the item plus the effective FairTax to end up with the cost of the imported thing (taxed for the first time).
That should certainly help boost sales of US made products, don't you think, since those prices will drop before having the FairTax imposed ? At least there will be a level playing field for taxing both types of products whereas now there is not.
Kotlikoff, etc. make no such prediction. Read more than just the single out of context sentence to see what is being said.
"So again, Kotlikoff proves us right: "
Not by the hair on your chinny-chin-chin ... Nor is he "eschewing" anything. You'll notice he says "IF" in the small bit you choose to quote and in addition he also says:
"We assume that the monetary authorities do not accommodate the adoption of the FairTax, which is to say that they restrain the growth of the money supply sufficiently to prevent market prices from rising. As mentioned, this is merely a simplifying assumption. We could just as well have allowed for monetary accommodation, so that there would be no fall in producer prices under the FairTax. Doing so, however, would merely have made the algebra more complicated without changing the results."
In no way is that an "eschewing" anything.
"But HR25 clearly states that "unelected bureaucrats" in the SSA would determine the rate every year. You were wrong. Maybe, for once, you will admit it. "
Sorry but once again you win the "clunker" prize for oddball defense of your error. As I told you you had the incorrect view of the direction of the change - and that is according to all of the genuine economic analyses made of the FairTax. And to change the FairTax rate it would, indeed, take congressional action.
The "rate" mentioned in that portion of the bill refers (as I showed in post #334) to the proportional breakdown of the 23% overall rate into its 3 components which presently have a FairTax revenue allocation of 64.83%, 27.43%, and 7.73% respective for the General Revenue Rate, the S/S entitlement, and the M/C entitlement. The GRR overall is 14.91% on a standalone basis.
So whether the rate rises or falls IS very much the question ... and the answer is as I already gave it to you in post #334; the rates will FALL due to the factors shown in that post. Even so, it would take Congressional action to lower the FairTax rate.
Please provide a link to each of the 2 sources you mention that you believe demonstrate your claim since 23% of gross wages of noneducational employees with government as a taxable employer is the correct figure.Kotlikoff adds NIPA 3.9.5, line 7 (Federal Government Consumption) to the FairTax base. The AFT adds NIPA Table 3.10.5, line 12 (Federal consumption expenditures) to the FairTax base. These are the same number. NIPA Table 3.10.5 specifically shows "Compensation of general government employees" as part of this amount. Neither Kotlikoff or the AFT make any adjustments to account for the 23% rate being exclusive instead of inclusive, as you claim, when applied to these wages. (They do remove "Current Education Spending (Wages and Salaries).")
So whether the rate rises or falls IS very much the question ... and the answer is as I already gave it to you in post #334; the rates will FALL due to the factors shown in that post. Even so, it would take Congressional action to lower the FairTax rate.pigdog, you are so wrong it isn't even funny.
The ER FICA 7.65% would no longer be paid by the government since it is no longer a wage-based charge.You have written proof of that?
The infamous "unelected bureaucrats raising taxes" ploy you've continually tried (unsuccessfully) to use isn't correct and never has been.`(d) Old-Age, Survivors and Disability Insurance Rate- The old-age, survivors and disability insurance rate shall be determined by the Social Security Administration. The old-age, survivors and disability insurance rate shall be that sales tax rate which is necessary to raise the same amount of revenue that would have been raised by imposing a 12.4 percent tax on the Social Security wage base (including self-employment income) as determined in accordance with chapter 21 of the Internal Revenue Code most recently in effect prior to the enactment of this Act. The rate shall be determined using actuarially sound methodology and announced at least 6 months prior to the beginning of the Calendar year for which it applies.
They merely determine the split of tax revenue required to fund the S/S entitlement as required by S/S lawMerely determine the split of tax revenue? Where does SS law require a split of revenue? So pigdog says SS won't determine sales tax rates, they'll just take money from somewhere else if they need more, like money from defense or whatever.
It really doesn't matter what you say anymore. You're either completely wrong or your lying. Either way, or in your case, both ways, you're certainly demonstrating that you aren't much of a spokesperson for any legitimate cause...Well, maybe Communism if that were a legitimate cause.
merely the cost of the item plus the effective FairTaxThank you for posting that because that is just a stupid statement...period.
"The problem with such anecdotal, single situation analysis, is that it does not apply to the breadth of individual circumstances. "
If you really believe that then why do you turn right around and offer up one yourself in the same post???
"PRICES will indeed rise (much more than your 5% prediction. DISPOSABLE INCOME might or might NOT rise depending on who you are. AGGREGATE PURCHASING POWER will remain initially unchanged (for a revenue neutral program) "
Perhaps in your view prices will rise "much more" than 5%, but we've yet to see any definitive numeric proof of any such claim. In the case of the two primary papers discussed about the FairTax by opponents - the Jorgenson analysis and the Kotlikoff/Suffolk U analysis - neither attempts any such definitive calculation. One economist (Jorgenson) assumes that wages will drop by the income tax amount (and prices thereby a corresponding amount) in the approximate range of 22-24%. The other economist (Kotlikoff) makes an opposite assumption that wages remain the same and prices increase by about the amount of the FairTax.
Both choices are assumptions, however, and both cannot be right at the same time so that most likely means that the actual path would be someplace in between.
If you have some definitively derived calculations, though, jump right up and throw out your formulas.
It really is not prices that are the significant thing, though, but purchasing power (disposable personal income if you prefer) that is the important item since that's where "the rubber meets the road". There have been many examples on these threads of comparative purchasing power examples of the same taxpayer's income under the income tax and the FairTax to see which is more beneficial. In almost every case it is the FairTax that benefits taxpayers most - and it also will benefit the overall economy more as well. Emphasing "price" to the exclusion of the real world purchasing power certainly misses the point.
In fact, NO, he didn't since Jorgenson has his own competing tax play that he pushes inside the Beltway at every opportunity.Right, that's why you Fairtaxers used to mention his name as your resident expert economist every other post. His tax plan wasn't untill after he cashed the Fairtax checks...you probably cut it for him.
Don't be so kind. On this thread alone pigdog is 0 for 44.
Wow, how many times have you called RobfromGa and others including myself a liar for making that exact same point? I would guess several hundred. Everytime RobFromGa brings up that point you go back to your old standby that that has been disproven hundreds of times. Now you come out and state it. Incredible.
Where did he state that in his paper? You say we can't read, but the only part I have seen in the Kotlikoff et el paper says clearly says otherwise.
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