Posted on 08/26/2004 11:05:33 PM PDT by n-tres-ted
I apologize I did not read all 400 + posts but how would this affect mortgages? If you were to buy a housw with this in effect would you add 23% to the price of the home or will homes be exempt?
The 33.6% number is wrong. You can't tell me how it was determine. You can't defend it.
OOPs, messed that link up,
As I indicated earlier to you: http://www.freerepublic.com/focus/f-news/1196095/posts?page=208#208
I am sure Gary and Aldonna Robbins will more than readily let you need all you ever wanted to know about deriving the factor they use, You can contact them at
Through Heritage foundation staff
http://www.heritage.org/About/Staff/GaryRobbins.cfm
E-mail Gary Robbins
or at Fiscal Policy Associates Inc
1515 Jefferson Davis Highway
Arlington, VA 22202
Phone: 703-413-4371
I apologize I did not read all 400 + posts but how would this affect mortgages? If you were to buy a housw with this in effect would you add 23% to the price of the home or will homes be exempt?
Only new houses would be taxed, older residential property held before the implementation of the NRST, and any house up for resale after the NRST has been paid would be tax free.
The basic cost of building a new house would drop substantial as materials and service going into the construction would be tax free as business is no longer hit with federal taxes. Only final sale for use or consumption of property or services is taxable.
As far as mortgages go, the legislation provides for mechanisms to allow banks and financial institutions to create loans where any NRST would be folded into the a persons house payments.
More particular information can be found here ==>Homebuilder & buyers
If you were to buy a housw with this in effect would you add 23% to the price of the home or will homes be exempt?
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nothing will be exempt - but prices of homes will stay where they are today.
the basic deal is that the nrst does 2 things that everyone agrees on:
1 - it removes and eliminates all fed income tax, payroll taxes, and 90% of other costs relating to taxes ("comlpiance costs")
2 - it imposes a sales tax in place of the eliminated taxex.
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re #1, different papers show that prices we pay at the register are inflated by anywhere from 22-33% due to the tax costs (income, payroll, compliance) paid by businesses. this margin is invisible and many people don't even know it's there and that they're paying inflated prices because of fed taxes.
that brings us to #2, which both replaces the invisible tax and makes the fed tax we pay at the register visible.
that is it replaces invisible income tax, payroll tax, and compliance costs that are now in prices with a sales tax in prices of very nearly the same amount. there is agreement that the amount of invisible tax now varies somewhat depending on the number of steps of production to retail. generally that means big ticket items have more hidden income/payroll/compliance costs than smaller ticket items.
the net is that prices will stay about the same. the same amount of tax that is being eliminated from today's prices will appear as a sales tax in new nrst prices.
check this page- it is put together by the people who wrote the nrst but has good, short answers to lots of quesitons...i've learned a lot there - including what questions to ask...
http://www.fairtaxvolunteer.org/smart/faq.html see #28
and
http://www.fairtaxvolunteer.org/smart/industry_impact.html see Homebuilder
i'm sure there's more there, that's just what i've see so far. let me know if you what you find out! i'm interested...
As far as mortgages go, the legislation provides for mechanisms to allow banks and financial institutions to create loans where any NRST would be folded into the a persons house payments.
just because ancient geezer doesn't explain it doesn't mean we can discount its validity. i am still reading on some links so i'm unprepared to jump in yet, but i'd like to see an explanaiton of why you take the position that the 33.6% is wrong. again, not explaining it or not defending it is not a valid reason to discount it. he did provide a link to the dry cleaning example - what is wrong with it - other than ancient hasn't explained or defended it?What's wrong with it is that the dry cleaning example is somebody just guessing what the taxes would be on a bunch of line items. There is no research behind it. The simple math I used showed it to be in error.
Interest is payment for a taxable service. You would also pay sales tax on a portion of the interest on the loan. (as you would on all your loans - eg. credit cards)
yes this is my point - what is/ where is the research behing your statement that the other statement is wrong?
i'm not simply accepting anything - i would like to see research to analyze myself - as i'm currently in the process of doing with the papers above on the 22%. i haven't finished - i'm not even 10% thru - but i will get there...
and i still am waiting for someone to tell me how cheap overseas labor will be ended.
Interest is payment for a taxable service. You would also pay sales tax on a portion of the interest on the loan.
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good point! how much would that add to consumer's costs...
on a $150000 morgage how much interest is there? i guess that depends on rate - say 8%....that total times 1.2987 is what'll have to come out of pocket -
i need to visit an amortization site... i'll be back
yes this is my point - what is/ where is the research behing your statement that the other statement is wrong?It's hard to do research on a statement if there was no research done to make that statement. I've shown that the number can't possibly be true, the least AG could do is explain how that number was determined.
the product of--
`(I) the excess (if any) of the rate paid on such debt over the basic interest rate (as defined in section 805); and
`(II) the amount of the debt.
source
http://ray.met.fsu.edu/cgi-bin/amortize
on 150k at 8% 30 yrs there's 83532 in interest. does that mean that the consumer would have to come up with 83532*1.2987= 104843 then minus 83532 = 24951 extra? that's an extra 69 per month.
i will go back an reread your stuff again - i must have missed something...
oh so it's a margin type deal....
i get it better now. so if the rate pad were 8 but the long term rate were 6, then you'd just pay the tax on 2% - thanks i was gonna freak out!
on 150k at 8% 30 yrs there's 83532 in interest. does that mean that the consumer would have to come up with 83532*1.2987= 104843 then minus 83532 = 24951 extra? that's an extra 69 per month.
You would need to subtract amount attributed to the basic(i.e. federal rate) as defined in the legislation to calculate the portion actually taxed.
Three things to consider, basic interest is not taxed, interest rates would be somewhat lower(roughly 75% of rates at time of implimentation), principal paid on the house is taxed and what is defined to be implicit fees for financial intermediation services (fees added on as a proportion of interest) Essentially FIS is the difference between the amount paid over the basic rate as defined by the legislation.
H.R.25Fair Tax Act of 2003 (Introduced in House)
`CHAPTER 8--FINANCIAL INTERMEDIATION SERVICES
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The fraud in the sales tax begins with the rate itself. You don't "add 23%" you would add 29.87% (30%)
The 23% rate is "of the gross payment" (including itself)
$100.00 taxable plus fed. sales tax = $129.87 (gross payment)
.23 (of the gross payment) X $129.87 = $100.00
Your sales price on your house would be all the costs, fees etc. included in "the gross payment" X 30%...
$200,000 house would cost $260,000+
Did you notice how they avoid answering a simple question by writing an irrelevant essay? You think there's a reason for that?
LOL! No, but common sense and careful thought can.
As much as I despise the IRS and taxes, I too don't trust the govt. to make things better. Rest assured they have done the important research; i.e., which method allows us to get the most money from the people.
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