Posted on 02/03/2005 9:54:12 AM PST by EternalVigilance
Claiming a tax system to be a "consumption tax" and it being a consumption tax are two very different things.The Flat Tax is a consumption tax. It doesn't matter if you get it from the front end or the back, it still taxes consumption.
Flat Tax NRST Nominal Wage $100,000 $100,000 Wage Tax 17% $17,000 0% $0 "Take Home" $83,000 $100,000 Consumption $70,000 $70,000 Sales Tax 0% $0 17%
20.48% Excl$14,337 Remainder to Invest $13,000 $15,663 25% Return 25% $3,250 25% $3,916 Total Return + Investment $16,250 $19,579 Sales Tax 0% $0 17% $3,329 "Purchasing Power" $16,250 $16,250
Every tax ultimately taxes everything, at some point. What matters is what it taxes immediately. It most certainly does matter, for the purposes of the discussion (regardless of what label you want to put onto the tax), whether it's loaded onto the front end or the back. If you're taxed before you spend, then the government gets your money regardless of your behavior. If you're taxed after you spend, you can withhold giving the government money, by withholding spending, until the tax rate is where you want it to be. The one gives citizens more control over government than the other.
The Flat Tax is a consumption tax. It doesn't matter if you get it from the front end or the back, it still taxes consumption.
LOL, not when you tax investment as well as consumption as happens in an income tax.
Taxing that income that is used to invest is not taxing consumption it is taxing investment.
Consumption = Income - Investment.
| Flat Tax | NRST | |||||
| Nominal Wage | $100,000 | $100,000 | ||||
| Wage Tax | 17% | $17,000 | 0% | $0 | ||
| "Take Home" | $83,000 | $100,000 | ||||
| Consumption | $70,000 | $70,000 | ||||
| Sales Tax | 0% | $0 | 17% 20.48% Excl |
$14,337 | ||
| Remainder to Invest | $13,000 | $15,663 | ||||
PS, it is my choice as to when I may spend or invest returns or capital(if a all)under a Consumption tax.
While at time of investment and while re-invested capital and returns is not taxed under the NRST case.
Your addendum to balance your hoax accounting fails to take individual choice of when capital is spent or for that matter passed on as legacy to heirs that the NRST provides out of the equation.
As the consumption dollars are the same in both cases, the the accounts balance as to the consumer's present standard of living at that point in both instances.
The advantages to empowerment of the individual in terms of witholding taxes from government to oppose excessive taxation while building retirment and legacy to the next generation is much greater under the NRST.
"The proposal to have a flat tax replace the income tax."
The only flat tax proposals that I am aware of are income taxes. Can you point me to the bill that proposes a flat tax that isn't income based?
LOL, not when you tax investment as well as consumption as happens in an income tax.The Flat Tax doesn't tax investment/savings, the NRST does when it is consumed.
Taxing that income that is used to invest is not taxing consumption it is taxing investment.You're ignorant. The Flat Tax is a consumption tax. If it was an income tax people would be taxed on their returns to saving. They're not.
Remainder to Invest - $15,663You don't pay sales tax on investment returns with the FairTax? I think you do. With the Flat Tax it's your's free and clear.
$15,673 - 17% = $13,000
The only flat tax proposals that I am aware of are income taxes. Can you point me to the bill that proposes a flat tax that isn't income based?Can you point me to the bill that proposes a NRST that isn't income based?
The Flat Tax doesn't tax investment/savings, the NRST does when it is consumed.
You care to show us where investment purchases are deductible from taxable income?
"The Freedom Flat Tax Act of 2003:"
H.R.1783
Title: To amend the Internal Revenue Code of 1986 to provide taxpayers a flat tax alternative to the current income tax system.
You're ignorant. The Flat Tax is a consumption tax. If it was an income tax people would be taxed on their returns to saving. They're not.
Consumption = Income - Investment.
Under the H.R.1783 Flat Tax, Individual wages and retirement distributions are part of taxable income under the both are taxed without deduction funds placed into investment or savings.
Furthermore, "Capital gains, dividends, and interest are only taxed once, and they are taxed at the business level", all of which are returns from investment, not consumption.
http://burgess.house.gov/News/DocumentSingle.aspx?DocumentID=6027
You don't pay sales tax on investment returns with the FairTax? I think you do.
So now a sales tax is not a consumption tax ROTFLM(_|_)!!!!
Sorry, as long as business or individual funds remain in investment, and returns are reinvested per:
Consumption = Income - Investment
There is no tax under an NRST.
H.R.25: Sec 101(a) IN GENERAL- There is hereby imposed a tax on the use or consumption in the United States of taxable property or services.
NO tax on Investement at all, Only NRST on first time purchases for use or consumption is levied.
Hence NRST Remainder to Invest = $15,663
With the Flat Tax it's your's free and clear.
LOL, after paying taxes on it
"The flat tax concept is easy - there are two components, the individual wage tax and the business tax. Individuals pay a flat rate on their wage and pension income, and business are taxed on their profits minus their wage and pension expenses - this ensures that income is only taxed one time. Capital gains, dividends, and interest are only taxed once, and they are taxed at the business level. Additionally, the flat tax repeals the Alternative Minimum Tax and the marriage penalty."
Hence Flat Tax Remainder to Invest = $13,000
Sorry, your Flat Income Tax taxes Income, including amounts going to capital investment as well as returns on investment.
You care to show us where investment purchases are deductible from taxable income?It doesn't need to because there is no tax when the returns are consumed like there is with NRST. I showed you an example.
Furthermore, "Capital gains, dividends, and interest are only taxed once, and they are taxed at the business level", all of which are returns from investment, not consumption.Right, they are taxed at the business level with the Flat Tax. With a NRST they are taxed at the consumer level when they are consumed. A 20% flat tax on $5,000 of dividends leaves $4,000 in purchasing power. A 20% inclusive NRST on $5,000 leaves $4,000 purchasing power.
NO tax on Investement at all, Only NRST on first time purchases for use or consumption is levied.OK, so the investment is taxed when it converted to consumption under a NRST. It's still taxed. In the end it's the same as the Flat Tax.
So now a sales tax is not a consumption tax ROTFLM(_|_)!!!!I didn't say that. A sales tax is a consumption tax just like the Flat Tax. I'm sorry you can't see it.
Sorry, as long as business or individual funds remain in investment, and returns are reinvested per:So? Once they are converted to consumption they are taxed.
Sorry, your Flat Income Tax taxes Income, including amounts going to capital investment as well as returns on investment.Sorry, the Flat Tax and the NRST are both consumption taxes. To quote the esteemed Dr. Jorgenson on the Flat Tax, VAT, and NRST:
The crucial point is that all three methods for implementing a consumption tax could be based on the same definition of the tax base. This greatly simplifies the tax economist’s task, since the economic impact would be the same for all three approaches.
source
Sorry, the Flat Tax
Is a consumption and production tax paying taxes on all income including investment income as well as the investment dollars themselves same as the current income tax, just with legal incidence for various subject of the tax reshuffled between business and the individual to hide its nature abit more completely from the perception of the voter:
"The Freedom Flat Tax Act of 2003:"
H.R.1783
Title: To amend the Internal Revenue Code of 1986 to provide taxpayers a flat tax alternative to the current income tax system.
http://burgess.house.gov/News/DocumentSingle.aspx?DocumentID=6027
"The flat tax concept is easy - there are two components, the individual wage tax and the business tax. Individuals pay a flat rate on their wage and pension income, and business are taxed on their profits minus their wage and pension expenses - this ensures that income is only taxed one time. Capital gains, dividends, and interest are only taxed once, and they are taxed at the business level. Additionally, the flat tax repeals the Alternative Minimum Tax and the marriage penalty."
The crucial point is that all three methods for implementing a consumption tax could be based on the same definition of the tax base. This greatly simplifies the tax economist’s task, since the economic impact would be the same for all three approaches.
source
Could be, unfortunately when we see what is actually proposed in Congress as a Flat Tax exceeds the consumption tax base as defined by definitions used by Jorgenson or any other economist.
How can you support the Flat Tax so fanatically when you aren't even familar with the elements that prevent it from being a consumption tax?
Is the VAT just the first one you came across. or did you just fall for the Steve Forbes Flat Tax sales job and then fall into the NCPA/Bartlett line when the Flat Tax lost its support and political luster?
By the way, just for reference I have been advocating an NRST inplace of income taxes many years before AFT existed or even the older Tauzin bill was drafted.
You are aware are you not, that the subject came up during FDR's administration as a supplemental means to finance the war. Got shot down then by FDR nixing it and Repubs not having political will to push it. Seems as liberals always have had this facination with progressive tax structures and soaking the rich.
"How can you support the FairTax so fanatically when you aren't familar with other plans? Is the FairTax just the first one you came across or did you fall for the AFT sales job?"
What plan are you referring to? I have REPEATEDLY asked you for links to the specific proposal that you are supporting and you have dodged the question every single time. I admit that I am ignorant of your preferred solution because it apparently only exists in your head.
I admit that I am ignorant of your preferred solution because it apparently only exists in your head.Yes, as you have shown many times, you are completely ignorant of a flat tax or a VAT.
How can you support the Flat Tax so fanatically when you aren't even familar with the elements that prevent it from being a consumption tax?I don't support the flat tax fanatically. I could go with a VAT.
Actually, that is consumption as defined by a economist. Sorry if you can't see it.Could be, unfortunately when we see what is actually proposed in Congress as a Flat Tax exceeds the consumption tax base as defined by definitions used by Jorgenson or any other economist.Individuals pay a flat rate on their wage and pension income, and business are taxed on their profits minus their wage and pension expenses - this ensures that income is only taxed one time. Capital gains, dividends, and interest are only taxed once, and they are taxed at the business level.The crucial point is that all three methods for implementing a consumption tax could be based on the same definition of the tax base. This greatly simplifies the tax economist’s task, since the economic impact would be the same for all three approaches.
Those aren't part of the consumption base.
As they are charged against the purchaser of tax services as done within the the legislation they certainly are. LOL.
Sec 103(b)(2) CERTAIN WAGES OR SALARY- In the case of wages or salary paid by a taxable employer which are taxable services, the employer shall remit the tax imposed by section 101.
Remember
Consumption = Income - Investment.
That which constitutes payment for taxable services in no case is classed as Investment. Even by Jorgenson.
Remember, wage are taxed under the Flat Tax and paid by the receiver of them.
Under the NRST, and the VATs wages paid for activity that constitute a taxable service are taxed to the purchaser of those services.
Are you now telling us that VATs do not constitute consumption taxes? Wages paid by businesses, are not deductible from a VAT.
I don't support the flat tax fanatically. I could go with a VAT.
Both of which assure government does not pay the same freight in consumption while providing services at a discount to the private individual. That, in a nutshell, constitute a clear and open encouragement to the ownership and control of the factors of production that is the hallmark of socialism.
Part of the problem of the VAT, as it is applied in the EU and other enclaves of socialism for example, is that govenment is left free of paying VAT because all it's purchases are zero rated. Essentially government is handed a large economic advantage in bidding for goods and services and providing to the citizen, government takes over where private enterprise and the market should be operating.
A substantive percentage of the cost of govt consumption in the US today is tax related, in going to a consumption tax and not assuring government must pay the same freight as the individual, you effectively increase govt's capacity to consume by that percentage. Furthermore, without an commensurate burden on government consumption, an incentive is created to produce via government rather than in the private sector when the public sector is tax free. Under such conditions the individual is forced to compete with government for services and goods with a high government imposed millstone around their neck.
Both of which assure government does not pay the same freight in consumption while providing services at a discount to the private individual. That, in a nutshell, constitute a clear and open encouragement to the ownership and control of the factors of production that is the hallmark of socialism.Uh, what does the federal government care if it pays a sales tax to itself? It pays a dollar, it gets a dollar. How is that a disincentive not to take over "the ownership and control of the factors of production"?
But it doesn't automatically go to the same agency's budget out of which it came. It has to be re-appropriated by Congress. So that at least operates as a partial disincentive.
Uh, what does the federal government care if it pays a sales tax to itself?
It has to aquire that dollar from the electorate to pay that tax in the beginning regardless which removes that dollar from circulation.
Think about what that means in a fractional banking system. That dollar removed from circulation reduces the broad money supply by a factor of ~10, which in turn increases the purchasing power of dollars, by that factor, in the hands of the citizen. Thus the economic effect remains.
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