Posted on 10/19/2006 5:11:50 PM PDT by pigdog
As specified in Congressional bill H.R. 25/S. 25, the FairTax is a proposal to replace the federal personal income tax, corporate income tax, payroll (FICA) tax, capital gains, alternative minimum, self-employment, and estate and gifts taxes with a single-rate federal retail sales tax. The FairTax also provides a prebate to each household based on its demographic composition. The prebate is set to ensure that households pay no taxes net on spending up to the poverty level.
Bill Gale (2005) and the President’s Advisory Panel on Federal Tax Reform (2005) suggest that the effective (tax inclusive) tax rate needed to implement H.R. 25 is far higher than the proposed 23% rate. This study, which builds on Gale’s (2005) analysis, shows that a 23% rate is eminently feasible and suggests why Gale and the Tax Panel reached the opposite conclusion.
This paper begins by projecting the FairTax’s 2007 tax base net of its rebate. Next it calculates the tax rate needed to maintain the real levels of federal and state spending under the FairTax. It then determines if an effective rate of 23% would be sufficient to fund 2007 estimated spending or if not, the amount by which non-Social Security federal expenditures would need to be reduced. Finally, it shows that the FairTax imposes no additional real fiscal burdens on state and local government, notwithstanding the requirement that such governments pay the FairTax when they purchase goods and services.
(Excerpt) Read more at people.bu.edu ...
You see, I quickly admit something if I made a mistake. If I was you, I would lie that I ever said it, attack your english skills, and claim you took it out of context.
"Under the FairTax the decision to not pay government is tied to the decision to not make a purchase. If the government doesn't get paid, neither does the business owner, nor the producers of the products and services not purchased.It is impossible to impact one, without impacting the other. Ultimately, that's all of us."
To me, having the government get the money when and in what amount and for what thing (since not everything is taxed as the Calculator information shows) I decide to spend it is far, far preferable to having the government decree that x% will be taken before I even have it in hand - and THEN (if I'm fortunate) I may struggle to get some of it back (unless the IRS decrees that I owe more ... and OF COURSE that never happens in your status quo world, does it?).
As the many economic studies show, economic activity will greatly rise from the effects of the FairTax which will help your earlier mythical out-of-work taxpayer find a new job sooner, and it also makes it much more likely that consumption will increase, not decrease. Especially so since consumption is a more regular revenue source than wages. The overall economic impact of consumption taxation will be up, not down as you assume.
Meant to say on a new house.
On the other hand, they say that one pays taxes embedded in the price of the products now, so those wage tax dodgers are paying taxes.
Everyone benefits, of course! Lets look at homeowners. The first time after FairTax is implemented it seems that there will be a tax due on the sale of one's home. Who pays it? Why the current homeowner who cannot sell his home for more than the market, and so must absorb the tax. The next owner can turn around and sell at the same price because the house can now trade without the FairTax being applied. Every homeowner may go underwater with their mortgages the day FairTax is implemented.
"What the FairTaxers miss, is that if one's income is reduced, one's taxes are also reduced under the income tax; while the FairTaxers rely on (or at least use as an argument) consumption remaining constant and thus stable tax collection, even if one must borrow or go through savings to continue supplying the government with revenue. One system has the taxpayer handing over a portion of what he actually has and the other paying taxes on what he needs even if he has to borrow to do so. "
You've actually defeated you own point (which you alluded to in a recent post) by showing us that consumption is a more stable tax base than income.
It's hard to understand just why you gather some of the quotes you present to me since some came from or were to others, but I do note that you are one of the status quo supporters who believes that government spending is an investment as you were asked:
Government spending that creates infrastructure, promotes financial stability and protects people and property is an investment.""Or are you one of those people who think that gov't spending is an "investment"?
That surely indicates you think it is morally wrong for taxpayers to have charge of their own money and have any decision in when or how it should be taxed but that rather government should take in the funds and then allow the taxpayer whatever it decides is proper. You'll find that most FairTax supporters disagree with your view completely.
As for the functioning of the income tax on your income, if your income is reduced and therefore the government's tax take, what do you think the governments tax action would be?? Perhaps just say "... that's ok - I'll just spend less this year and get it back in a couple (or ten years)??? Or would the government be more likely to bump up tax rates and/or enforcement or any of the other "tricks" they have available (such as ramping up inflation) with the status quo.
The answer should be obvious and the taxpayer is far better off (as is the government due to the more stable tax base) by having other resources to draw on if required.
"One system has the taxpayer handing over a portion of what he actually has and the other paying taxes on what he needs even if he has to borrow to do so."
Indeed that's the case but the big difference is - which you seem to overlook - that if under the income tax your income declines (along with the government's tax revenue) you are also forced to depend upon your own resources but that at least under the FairTax the prebate covers any taxation (or even more than that) on your "needs" so that neither you nor the government suffer drastically and with the tax free provisions of income under the FairTax you'll be much more likely to earn any funds back more quickly.
The interest on either a new or used home is not taxed under the FairTax.
And this coming from a poster who claims "... there is nothing inherently wrong with an income tx ..."!!!
"income tx = income tax".
Naw, he's got to save it until he dies! He can get nice clean $20 bills from the bank and strew them across his bed, and just glory in writhing around in the dough. He can count the digits in his savings, and relish the big numbers. And when he dies, he can pass it on tax free to his heirs, who will pay the tax when they spend the money. What satisfaction! Pigdog - one wonders?
And you're wrong - if the person wants something badly enough to buy it and pay the tax ... that's his decision.
He has no such decision under the income tax since all his income (rather than just what he decides to spend) will have been filtered through the income tax system and most taxpayers will pay tax based upon all their income. The few who don't are the exception but the tax on consumption will catch the gross big spenders such as you and Mrs Kerry.
As for passing wealth on to future generations - that a big plus of he FairTax and if the present generation piddles it all away, well, that's their decision too but at least they will have had the opportunity to improve financially. How do you think the large family fortunes in history have come about - such as the Kennedys in the US and the Rothschilds in Europe. It wasn't all earned in one big blast but passed along from ancestors to progeny.
The official SQL economic textbook:Interesting comment coming from someone complaining that they can't accumulate wealth because of the income tax to someone who not only accumulates wealth but is also capable of creating wealth in spite of the income tax.
If it takes a Sears catalog to be successful maybe groanup should look past the lingerie pages.
And the picture you question was not "attacking anyone's faith". You're much too eageer to cast aspersions since you believe that to be a debate technique. It isn't.
You seem to be missing the point - money is only useful, for the vast majority of us - to trade for the things we need or desire in life. Most of us hope to or will die penniless, baring a premature death, and/or planned provision for dependents. Listen to one who would be a looser if the FairTax were implemented - it doesn't have to be that way, because the FairTax bill could and should compensate people in my position for this dramatic change in the way taxes are collected for the government. It should also compensate those who are holding tax free bonds or annuities for the immediate reduction in value of those assets - and any other asset class that is impaired due to the change. Of course, it will not even be considered - it would be much too expensive to contemplate. The theft that makes the plan seem so good will be buried under a pile of lies.
"They have economists who they pay to spin this so it is a good thing. Why don't you believe what their paid for shills tell you? "So does this little blast then mean that the anti-FairTax economists such as William Gale and Bruce Bartlett DO NOT get paid???
Or perhaps you're trying to say it's OK for work done to be paid for so long as someone who opposes the FairTax is the one getting paid??? It's not hard to figure out that sort of reasoning.
Thanks for another all time low.
There are actually mostly winners under the FairTax since keep in mind that under the income tax system everything purchased will have been taxed by the price increase represented by costs of income taxation - which even opponents of the FairTax have stipulated is 9%. That alone will be higher than many taxpayers' effective FairTax rate and it applies to every cent spent while with the FairTax there are many things not taxed.
One example being, let's say, the $1,500 you give to your church each year. Under the income tax to have earned that you'd have to (at a 25% rate) have earned $1,875 to make that donation and the church, when spending it, would be buying things that are inflated in price due to the income tax system by the 9% - making the actual purchasing power be $1,365.
that's one of the unseen effects of the income tax - hidden taxes and financial picket fences caused by them.
Seniors as a whole will do quite well under the FairTax as the few of them who have sizable "net worth" will certainly be bright enough to realize they will pay no capital gains or AMT on selling those assets and will realize that investing the proceeds will help them greatly - particularly if they do not routinely practice conspicuous consumption. Those that do so will pay the appropriate tax but I believe there are far more relative frugal oldsters than you apparently do - and that's how many of them got that way.
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