Posted on 02/03/2005 9:54:12 AM PST by EternalVigilance
CONGRESSMAN STEVE KING INTRODUCES RESOLUTION TO ELIMINATE IRS
WASHINGTON - As W-2s arrive in mailboxes this week, U.S. Congressman Steve King has introduced a resolution to repeal the 16th Amendment to the Constitution, which gives Congress the authority to collect income taxes.
H.J. Res. 16 would eliminate the IRS and the means for the government to collect income taxes.
"The IRS is an out-of-date, trillion-dollar-a-year drag on our economy," said King. "Instead of continuing to band-aid our complicated, leaking tax system year after year, we can choose a permanent solution and finally rid Americans of the fat leech they feed their paychecks to."
King has been a long-time supporter of the FairTax, a national sales tax placed on goods and services, which would replace the income tax.
H.J. Res. 16 must be approved by two-thirds of both the House and Senate, and then sent to the states, where three-fourths must ratify the amendment.
For information on the FairTax, visit:
http://www.fairtax.org
U.S. Congressman Steve King
Iowa's Fifth Congressional District
1432 Longworth House Office Building · Washington, DC 20515
http://www.house.gov/steveking/
Don't kid yourself - it won't happen if Republicrats control 100% of everything. Since 1994, essentially nothing has been done to follow through on the "limited government" bushwah blathering they used to get themselves elected.
Compare 1994 to 2004 - is Big Government any smaller? Less expensive? Less intrusive? Tax code smaller or larger? Subsidies gone? PBS defunded? Education Dept. gone? NEA defunded?
Anything?
Even farm subsidies have made a huge comeback, just in time for Bush to make more windy promises about "cutting" them.
It's all crap. I'm concluding the whole mess has to collapse to get killed off.
. Although the later revisions of their paper don't have the caveat, they still have the unrealistic labor supply response.
Hmmm, sure you can believe anything you want.
However, it is quite clear that Jorgensen has made substantial changes, subduing his treatment of initial labor supply in his later Inter-temporal general equilibrium models. It would indeed be unusual for an economist to stop short of correcting a known issue leaving an "unrealistic labor supply response." after expending obvious and significant effort to remove such.
"The primary effect of the reform is to change the supplies of the economy’s two primary factors, labor and capital. Figure 3 shows the time paths of labor and capital under the consumption tax expressed as percentage deviations from the base case. Labor supply increases sharply because the consumption tax raises real after-tax wages substantially at the margin. "
Jorgenson '97
Taking note of Chart 3 of the Jorgenson '97 JCT paper (labor and capital factor supplies) it is to be noted the Flat Tax case for labor supply is 6.5% (1996) where the labor supply response is less than 1/3 that in the '98 Baker model for the same intitial year.
"The implied subsidy to leisure time is equal to the marginal tax rate on labor income and would drop to zero when the individual income tax is abolished. Individuals sharply curtail consumption of both goods and leisure under the Sales Tax. Figure 12 shows that labor supply (and demand) jumps initially by thirty percent in 1996. This labor supply response recedes to a level of around fifteen percent by 2020. By contrast the Flat Tax generates an increase in both consumption and labor supply. The labor supply response is only two percent in 1996, but gradually rises to more than five percent by 2020."
Jorgenson '99
However, it is quite clear that Jorgensen has made substantial changes, subduing his treatment of initial labor supply in his later Inter-temporal general equilibrium models.The version I have from 2002 states the labor supply response was 30%. Doesn't sound like it was subdued much to me.
It would indeed be unusual for an economist to stop short of correcting a known issue leaving an "unrealistic labor supply response." after expending obvious and significant effort to remove such.He can't correct it, it's fundamental to the model.
Labor supply increases sharply because the consumption tax raises real after-tax wages substantially at the margin.Right, that's the substitution effect. The model has no income effect to temper the substitution effect. Their time endowment is also way too high.
after expending obvious and significant effort to remove such.How the hell do you know if he put in significant effort to "remove such"?
An extensive body of literature (summarized in Heckman, 1993) suggests that the labor supply is not very responsive to changes in the wage rate. Such a result is not surprising theoretically because there are income and substitution effects. Higher wages encourage individuals to substitute consumption for leisure, which has now become more costly. This positive response of labor to the wage rate is offset by the income effect: as individuals earn higher wages, they can afford to consume more of both consumption goods and leisure. Thus, labor can either rise or fall as the wage rate rises or falls.
This is certainly true in the case of strongly graduated income tax rates of the federal tax system. Changes in gross wage thus produce diminishing returns in supply response at the upper brackets, a factor noted by many economists including Heckman above in his comments on the federal graduated income tax.
However, the large reduction in high marginal rates and lowering of the marginal rate of the NRST do produce significant changes in after tax incomes providing substantial incentive to earn more. This coupled with zero taxation of savings and investment and a clear and visible taxation of consumption, makes additional income for investment and savings a primary motivator and leisure of lesser value. With that fundamental change in mode of taxation, a consequential additional supply of labor is injected into the workforce.
the Jorgenson/Wilcoxen model doesn't have an income effect, thus the out of whack results.
. Labor supply increases sharply because the consumption tax raises real after-tax wages substantially at the margin. "
Jorgenson '97
LOL, the NRST removes disincentives that hold back expansion of the labor supply with gross wage increases. With the large real after-tax increases in wage that occurs in transition to a single rate tax across a much larger taxbase than the graduated income tax, the expansion of labor supply is indeed a very strong effect.
Chart 3 of the Jorgenson '97 JCT paper (labor and capital factor supplies) it is to be noted the Flat Tax case for initial labor supply is 6.5% (1996) where the labor supply response is less than 1/3 that in the '98 Baker model for the same initial year.
Adjusting for excess response of the '97 model, the '98 model exhibits the following:
the Flat Tax generates an increase in both consumption and labor supply. The labor supply response is only two percent in 1996, but gradually rises to more than five percent by 2020."
Jorgenson '99
Base on the empirical evidence, much less than 15% (and it could even be negative). 30% is a total joke.
LOL, the '97 Jorgensen model has its roots deep in empirical evaluation in its parameterization, much more so than previous models.
|
The econometric method for choosing the parameters of our model stands in sharp contrast to the calibration method used in previous general equilibrium models of tax policies. *** SNIP *** The econometric approach to parameterization has several advantages over the calibration approach.First, by using an extensive time series of data rather than a single data point, we can derive the response of production patterns to changes in prices from historical experience. This is particularly important for the analysis of tax policies, since these policies have changed substantially during our sample period and tax rates have varied widely. The extensive time series evidence on behavioral responses to changes in tax policy is ignored in the calibration approach. A second advantage of the econometric approach is that parameters estimated from time series are much less likely to be affected by the peculiarities of a particular time period. By construction, parameters obtained by calibration are forced to absorb all the random errors present in the data for a single benchmark year. This poses a severe problem when the benchmark year is unusual in some respect. For example, parameters calibrated to the year 1973 would incorporate into the model all the distortions in energy markets that resulted from price controls and the rationing of energy during the first oil crisis. Econometric parameterization greatly mitigates this problem by reducing the influence of disturbances for a particular time period. Empirical evidence on substitutability among inputs is essential in analyzing the impact of tax policies. If it is easy for industries to substitute among inputs, the effects of these policies will be very different than if substitution were limited. Although calibration avoids the burden of data collection required by econometric estimation, it rules out substitutability among inputs by assumption. This can easily lead to substantial distortions in estimating the impacts of alternative tax policies. By contrast the econometric approach determines the extent of substitutability on the basis of empirical evidence. |
Give it up, YN you are just digging a deeper hole for yourself.
For anyone who is interested (AG obviously isn't) "Dynamic Tax Models: Why They Do the Things They Do" is a good overview of some of these issues.
Dynamic Tax Models: Why They Do the Things They Do
http://ntj.tax.org/wwtax/ntjrec.nsf/0/a4ae09c03add63d385256863004a5949?OpenDocument
Eric Engen, Jane Gravelle, Kent Smetters
50 National Tax Journal 657-82 (September 1997)"Examines a broad range of reduced-form and intertemporal models in which each model is calibrated to generate the same initial economy, which allows the authors to focus on model features without concern that initial differences in calibration are determined. "
Note the dates, and the difference in methodogy discussed. This does not address the paramaterization features of the '97 & '99 Jorgenson IGEMs.
Sorry, Jorgenson's parameterization is specifically designed to overcome many of the calibration problems discussed in the above paper.
|
Empirical evidence on substitutability among inputs is essential in analyzing the impact of tax policies. If it is easy for industries to substitute among inputs, the effects of these policies will be very different than if substitution were limited. Although calibration avoids the burden of data collection required by econometric estimation, it rules out substitutability among inputs by assumption. This can easily lead to substantial distortions in estimating the impacts of alternative tax policies. By contrast the econometric approach determines the extent of substitutability on the basis of empirical evidence. Jorgenson '99 |
Give it up, YN you are just digging a deeper hole for yourself.And you are just showing your ignorance. Get off of FairTax.org and experience the real world.
Note the dates, and the difference in methodogy discussed. This does not address the paramaterization features of the '97 & '99 Jorgenson IGEMs.You knucklehead, she's discussing inherent problems with infinite-horizon models.
Sorry, Jorgenson's parameterization is specifically designed to overcome many of the calibration problems discussed in the above paper.
Empirical evidence on substitutability among inputs is essential in analyzing the impact of tax policies.We weren't discussing the substitutability of inputs, we were discussing the substitution effect as it applies to the labor supply. Regardless, the problem is that they don't have an income effect, not a substitution effect.
Sorry, Jorgenson's parameterization is specifically designed to overcome many of the calibration problems discussed in the above paper.And like every economic model ever, it fails to achieve accurate results.
Get off of FairTax.org and experience the real world
None of the above comes from "FairTax.org", I would suggest however you spend abit more time there yourself, for you are sorely behind the curve.
And like every economic model ever, it fails to achieve accurate results.
Just as well stick your fingers in the wind then and go with the NRST.
Agreed, absolute accuracy to the nth decimal place is never in any model. Rational evaluation of proposals is there major purpose. One needs to look at the relative performace of one proposal relative to another and baselines. In relative terms NRST outshines the results of flat tax, VATs and the current tax system in spades in every model based in core economic principles.
Your denial of even the above realization is your downfall YN.
bttp
I don't say this to be insulting, but your statement assures me you have missed the vital point I and others are trying to communicate to you. It's the equivelent of saying, "I'm all for free groceries as long as I can still use my coupons."
Under our existing system, business expenses are TAX DEDUCTIBLE... under the FairTax they are TAX FREE. Put another way, under our current system, businesses are TAXED on their incomes, and deductions REDUCE that Tax. Under the FairTax the business PAYS NO TAX, for income OR for items purchased for business use.
However, the large reduction in high marginal rates and lowering of the marginal rate of the NRST do produce significant changes in after tax incomes providing substantial incentive to earn more.That's the substitution effect. Now, what's the income effect..??....come on.....income effect....you..remember?....
LOL, the NRST removes disincentives that hold back expansion of the labor supply with gross wage increases. With the large real after-tax increases in wage that occurs in transition to a single rate tax across a much larger taxbase than the graduated income tax, the expansion of labor supply is indeed a very strong effect.Doh, back to the income effect. I guess you just won't understand until you figure it out.
In relative terms NRST outshines the results of flat tax, VATs and the current tax system in spades in every model based in core economic principles.Can you show me a paper that models a NRST vs. a VAT?
My problem is I run a business and understand what this fair tax is all about. Limiting competition.
Agreed, absolute accuracy to the nth decimal place is never in any model.So why do you say prices will drop x% in your posts?
Repealing the irs and income tax -- I'd be in favor of that.
From your previous post I must conclude you do not understand the FairTax, as you were suggesting it would be okay as long as it still allowed business expenses to be tax deductible. This exposes a GREAT misunderstanding, as I, and others, have tried to explain.
That misunderstanding aside, please explain what you mean by "Limiting Competition". I'm certain I don't understand, and if I'm missing something, I would be gratefull to you if you would be patient enough to explain it to me.
I've already explained it a few times, read back on my posts.
, back to the income effect.
indeed, back to income effect in an inter-temporal model that provides a progression across time such as the Jorgenson IGEM provides the income effect is very discernible.
Individuals gaining in higher real after tax wage as well as returns from investment/saving creates the conditions across time that translates the initial impulse for labor and investment into lower levels as time advances.
Income effect is the primary reason why the initial impulse of labor supply decays with time instead of sticking at its initial impulsive levels with attendant economic expansion arising out of consequent return to consumption away from high initial rates of investment as is clearly seen in the '99 Jorgenson results.
There is a large substitution of labor over leisure out of that initial impulse to seek more income from rising real after-tax returns from incentives to place more into tax free investment and savings over consumption.
That initial burst is followed by a relaxation of the labor supply with renewed growth of consumption both in leisure and goods in an advancing economy as both returns on capital and labor increasegiving rise to renewed consumption of both leisure and goods. That is the result of the income effect as into real income gains are resolved advancing standards of living as drive for higher income is manifested.
This is especially apparent in the substututional effects between consumption and investment, as the income effect resolves the balance between labor supply and new income, with increased investment at early stages, followed by a decline in labor supply as goals are realized with consequent returns to higher consumption of goods and leisure from the income effect as investment declines to lower levels.
| 4. Figure 6 compares the impacts of the two tax reform proposals on consumption. The impact of the Flat Tax in 1996 is to increase consumption by 3.5 percent, relative to the Base Case. This impact gradually diminishes over time, falling to 1.3 percent by 2020. While it may seem paradoxical that consumption increases with a rise in the consumption tax, the marginal tax rate for low-income taxpayers is reduced to zero, stimulating consumption. By contrast the Sales Tax curtails consumption sharply in 1996, resulting in a decline of 5.6 percent, relative to the Base Case. However, the level of consumption overtakes the Base Case level in 1998 and rises to 5.5 percent above the Base Case in 2020. 5. Figure 7 compares the impact of the two tax reform proposals on investment. The impact of the Flat Tax in 1996 is to depress investment by 8.6 percent, relative to the Base Case. Investment\par recovers over time, eventually reaching a level that is only 1.7 percent below the Base Case in the year 2020. Substitution of the Sales Tax for existing income taxes generates a dramatic investment boom. The impact in 1996 is a whopping 78.5 percent increase in the level of investment that gradually gives way by the year 2000 to a substantial increase of 16.5 percent, relative to the Base Case. Jorgenson '98 |
Unfortunately you have not figured that out yet.
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