Posted on 02/13/2005 10:41:05 AM PST by nsmart
[26] If the $47,129 of our family's income was all wage income, then that couple would have paid $3,605 in employee payroll taxes on those wages. Note also that their wages were also about $3,605 lower because of the employer payroll tax. As noted earlier, economists generally believe that the employer share of the payroll tax is borne by the employee in the form of lower wages. After the standard deduction, the couple would pay income taxes of $6,433, most of which would be in the 15 percent rate bracket, but some of which would be in the 28 percent rate bracket. /5/ Hence, using a standard deduction, the couple would have paid $10,038 of taxes on
Funny though, I thought the tax was high, so I looked it up on the table. The great Economic-god Mastromarco did not take the standard deduction off, but instead taxed them on the full amount. Not only that, the great Mastromarco also failed to give them any personal exemptions. Assuming no kids, their taxable income would be (47,129-9700-6200=) $31,429, and their taxes owed would be $3999. If they had a couple of kids, you would knock off another $1000. Mastromarco is not even qualified to work at HR Block.
In way you are right and in a way you are wrong. Their economists do assume all the costs of taxes are born by the consumer. But they also assume that the costs of payroll taxes are born by the employee also. And then they also assume those same taxes are also born by the employer. It is that type of double and triple counting their benefit that their bought and paid for economists come up with the outrageous numbers they do.
So, whose assumptions do we trust? The economist's or your's?
How bout, not using stock assumptions, neither an economist's stock assumptions nor your strawman assumptions.
Instead go to an econometric model. Dynamic, empirically based models make alot more sense to me when evaluating the relative merits of systems than generic assumptions and static regressions that tend to be garbage based more in descriptive convenience or ideology than real world behaviour.
Parametrically match a know system to historical data series, then introduce the system changes to evaluate merit of the change.
Actually those are your assumptions, not his. When you quote people saying that all consumer goods are embedded with 30% of taxes in them, you are assuming all the taxes are in the price of the goods. So if you don't like those assumptions, blame your fair tax economists who spew those numbers.
Instead go to an econometric model. Dynamic, empirically based models make alot more sense to me when evaluating the relative merits of systems than generic assumptions and static regressions that tend to be garbage based more in descriptive convenience or ideology than real world behaviour.
Ummm, a tax system imposing a 30% sales tax has never been tried, so there is no empirical data for these so-called models, just assumptions by modelers who were paid for to make the fair tax look good.
Why is it that sometimes you say these experts are stupid morons but other times you say they're right?
Yes this is true. I'm glad you finally agree with the authors and developers of the Fair Tax.
That they assert that payroll tax is borne by the employee in the form of lower wages means that employers budget a certain amount for compensation to an employee - and 7.65% of what's budgeted for the employees compensation goes to payroll tax...instead of to the employee.
So the 7.65% of wages no longer has to be paid to the feds - it can be used productively.
Hence the savings on payroll tax.
I am surprised to see you agree with anything the Fair Tax authors say and I'm glad you see some truth.
Actually those are your assumptions, not his. When you quote people saying that all consumer goods are embedded with 30% of taxes in them, you are assuming all the taxes are in the price of the goods.
Actually, point out that shelf price (i.e. price before tax) is expected to fall 20-30% by Jorgenson.
Nowhere do I assume that fall in prices is due to just taxes embedded in price as you well know. That claim by you is just another of your frequent strawmen.
The producer price fall on replacement of federal income & payroll tax system (actually replacement of income tax system alone is sufficient to drive that drop in prices according to the Jorgenson Baker study) is a consequence of change in many tax system related factors, and producer/consumer/investment behaviours that are implicit in Jorgenson's macroeconomic IGEM that go with removal of federal income tax system burden from businesses.
Ummm, a tax system imposing a 30% sales tax has never been tried,
It is apparent you have no understanding of statistical methods and extrapolative results based on empirical studies of system parameters.
so there is no empirical data for these so-called models, just assumptions by modelers who were paid for to make the fair tax look good.
ROTFL, your hyperbole is down to it usual standard.
Sorry, the initial version of the particular study, Jorgenson & Wilcoxen for Baker (1997 revised 1999), I generally refer to was in the works prior to the drafting of the Fair Tax and was not commissioned by NRST people at all. In fact the recommendations and conclusions of that study and ones prior to it for Ways & Means committee presentations and to JCT by Jorgenson demonstrating the characteristics of his IGEM were incorporated into and inspired particular provisions of the Fair Tax Act, rather than the converse.
But then when did you ever let facts get in the way of your claims of dishonesty and unethical behaviour on the part of professionals doing studies.
As a result, you are not really sure that the black market would increase to the point that avoidance would be 4x under the sales tax compared to the avoidance we have today. Are you going to stand by that earlier claim you made?
Great! Keep at um!
You throw numbers out you don't understand where they come from. Yes those are the numbers that Jorgenson assumes are from taxes embedded in goods. Here's a quote from a FAQ from a web site promoting the fair tax:
Did you know that hidden income taxes currently make up 20% to 30% of all retail prices? It's true. According to Dr. Dale Jorgenson of Harvard, hidden income taxes are passed on to the consumer in the form of higher prices, from 20% to 30% higher than they would otherwise be for everything you buy.
You guys mix and match numbers so much, you have no clue what assumptions are in each set of numbers. That's why so many of your conclusions are ridiculous.
In way you are right and in a way you are wrong. Their economists do assume all the costs of taxes are born by the consumer. But they also assume that the costs of payroll taxes are born by the employee also. And then they also assume those same taxes are also born by the employer. It is that type of double and triple counting their benefit that their bought and paid for economists come up with the outrageous numbers they do.I stand corrected.
You are a piece of work. I understand it quite well. You are the one who does not see the lunacy is extrapolating the effects of a 5-10% sales tax to a 30% sales tax. There are just assumptions going from a reason tax rate to a 30% tax rate that just don't hold. A 30% tax will have a psychologically detrimental impact to the consumer. Many at seeing that tax will either not buy or will cheat the system. For me, I am much more likely to buy a $40,000 Lexus with hidden taxes, then I am buying a $30,000 Lexus with $10,000 taxes. It is like when George Bush added the luxery tax to boats and cars over $30K, it killed their sales. You apply all the statistically mathmatics and extrapolations you wish, but the assumptions of any study is what makes or breaks it. And if you assume people react to a 5% tax the same way they do to a 30% tax, you don't know what you are talking about. No one can extrapolate those numbers in a meaningful way. This has nothing to do with understanding mathematics and statistics (which I do quite well by the way) but human behavior. The few studies which have been done (mostly in Europe) show a dramatic impact on consumer behavior once a sales tax of over 10% is added.
They even say as much if you read all their propaganda. A tax system that takes out the same amount of money can't by itself do everything they claim. You can't get lower prices, higher take home pay, lower costs just by changing where things are taxed. You can get a minor benefit from compliance costs, but the enormous benefits they claim are obtain by double and triple counting the benefits.
"No one can predict the precise magnitude of the harm, as nothing this risky has ever been done on such a scale, to my knowledge."
I'm pretty sure the same words were uttered in the last half of the 1700's.
"Last night the onondaga county conservative party of NY, passed a resolution to urge our elected federal offcials to
sponsor and support the fairtax bills."
That's good news. Are they part of a national party? I never heard of the conservative party.
"A 30% tax will have a psychologically detrimental impact to the consumer. Many at seeing that tax will either not buy or will cheat the system. For me, I am much more likely to buy a $40,000 Lexus with hidden taxes, then I am buying a $30,000 Lexus with $10,000 taxes."
Actually, that is consistent with Dr. Jorgenson's analysis. Total consumption would decline in the first year after the FairTax is implemented, which is another way of saying that savings would increase. To quote one of the economists at the President's economic summit held in December, those economists virtually unanimously agree that our savings rate is too low and that there are a number of other economic problems which emenate from that.
However, because of a faster growing economy consumption would catch up to where it would have been under the current system by about the fourth year and be higher from that point forward. Even in the first year, the drop in total consumption would be comprised entirely of a decrease in imports, partially offset by an increase in consumption of US produced goods. IOW getting rid of the bias that our current system provides to foreign producers would cause consumers to shift behavior and buy more US produced goods at the expense of foreign producers. That same process would be going on around the world, also, as US producers would be able to sell goods in to international market with no imbedded taxes and become far more competitive.
You are a piece of work. I understand it quite well.What's hilarious is that he thinks that because Jorgenson is using an econometric approach that he doesn't make assumptions! There are just as many assumption made in creating the IGEM model as any other (if not more). One of the biggest assumptions of the IGEM model is that a single infinite-lived representative agent with perfect foresight (they know what's going to happen 30 years in advance) is representative of the hundreds of millions of workers/consumers in America.
I got the information exactly where you always say I should, at AFT.
So when it suits you, now that the very group you've been using as your bible on the subject has made you look like a fool, you're saying they're liars and YOU are the expert?
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