Posted on 02/13/2005 10:41:05 AM PST by nsmart
The FairTax is the non-partisan national sales tax proposal that would replace all federal income taxes. These include personal, estate, gift, self-employment, alternative minimum, capital gains, FICA, and corporate and death taxes.
(Excerpt) Read more at WWW.FAIRTAX.ORG ...
That's right.
If I have to meet a monthly payroll of $12744, I also have to pay 975 to feds. That 975 will no longer have to be sent to the feds. I can become that much more competitive now thru any combination of lower prices, higher wages, or improved ROI.
You're telling me you don't see that? lol
More so than the authors of the fairtax bill.
Here's a reflection of their confidence in Jorgenson's accuracy from the same paper I posted above:
[51] Research by Harvard economist Dale Jorgenson shows that producer prices will fall 20 to 35 percent under the Fair Tax plan since the income tax and payroll tax is embedded in the price of everything we buy. In this case, new housing prices will be approximately the same, even including the sales taxes, as they are today, and the relative prices of new and used housing will remain roughly comparable to what they are today. If Jorgenson is wrong and the sales tax causes prices to rise, then existing home prices will rise immediately to reflect the fact that they are not subject to tax. Although this would result in a one-time, quick windfall gain to owners of existing houses, the relative price of new and old homes will be comparable.
Of course no one here has seen that elusive research...at least no one will admit they've seen it.
On the one hand the authors include the employer portion in the gross wages but Jorgenson forgot to read the plan telling him the emploees would be getting their income taxes and both halves of the payroll taxes in their checks.
I think everyone agree's those taxes are paid out of the gross sales of products as opposed to "embedded in the price" but they can't even agree amongst themselves to what the affects would be or even if the entire tax burden is removed.
If push comes to shove and if there's ever a legitimate, legal, debate about who owns the employer portion of the payroll tax I put my money where every economist and government study says it is...the employee.
To the best of my knowledge NYS is the only state with an organized Conservative state party. Born in 1963 to conter the Rockefeller Republicans. Many times our endorsement is the margin of win or loss.
The party has alligned itself with the American Conservative Union on the national level.
And therein lies a huge problem with the whole NRST plan. If employees keep all the taxes, the after tax prices of goods and services will have to go up substaintially. The only way for the price of goods to fall 20-30% is if all employees agree to take a pay cut, and I just don't see how that happens. Having the price of all goods and services increase 10-20% overnight can not be a good thing.
Ahem... where do gross sales come from?... that would be prices. There is no other continous source of revenue.
Sales revenue is the only indefinite income stream for business survivability.
The employer and employee have agreed on $62,000.
Of course the employer may choose to give him a raise with the $4750 savings, or choose to lower prices with the $4750 savings, or choose to improve ROI with the $4750 savings... or he may spread the $4750 out among some or all of those areas.
It really doesn't matter. What matters is the result. The immediate result will be a windfall to the employee who now gets a bigger paycheck, but since the employer is still paying full wages and not saving a dime on employee cost, he can not lower the price of his goods very much. The price of goods may lower by 10% or so, but not nearly enough to make up for the 30% tax that will be charged. Unless all employees agree to take a pay cut, this plan is highly inflationary.
Why do you think that an employee who accepted a position for $62,000 annually would expect to have the employer's share of FICA ($4750) added to $62,000 for a new annual salary?
The employer and employee have agreed on $62,000.
Of course the employer may choose to give him a raise with the $4750 savings, or choose to lower prices with the $4750 savings, or choose to improve ROI with the $4750 savings... or he may spread the $4750 out among some or all of those areas.
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.
LOL, as I said you don't have the vaguest notion of how system parameters are derived. You would find from reading Jorgenson's base work in the that has model parameters are rooted in data on all kinds of tax systems from US and around the world and how changes in rates, removal of tax systems as well as their imposition have on economies, not just low rate state sales taxes. There have been many instance in history of retail tax rates on the order of those proposed by the NRST, as well as experience with equivalent VATs, from which much can be learned, of even higher rates.
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.
LOL, yep there are lots of studies on business turnover taxes essentially VATs without the credit side of the credit voucher system., and how they sap an economy through cascading. Those business turnover tax are the kind of "sales tax" that were specifically replaced by the EU VATby the way. Europe's holdover from WWII, and France's basis for instituting the first national VAT structure. The VAT credit was added into the turnover tax system to help prevent their business to buisness turnover taxes from cascading tax ontop of tax.
Unfortunately for the EU, they have found that VATs just encourage politicians to create more regualatory complexity and government redtape with the consequence their tax systems are totally bogged down with underground black markets because small businesses can't handle the redtape and stay afloat and single proprietors just turn to cash under the table and door to door business based on home manufacture and service instead with underground cash/barter economies hit levels greater than 35% in several areas of the EU.
So plenty to learn from the EU and how not to do things, as well as the consequence of changes in tax systems of all kinds and rates, their effects on economies and what incites evasion and what doesn't. Interestingly redtape and complexity appear to be the greater culprit in evasion, not rate. But then you would have known that had you actually take time to learn about the situation. And that high marginal rates such as the 40% plus marginal rates of the income/payroll tax system on businesses that incite the self-employed and small business into a cash underground on the order of 10-20% of GDP in this country.
Exactly. So how do I lower the costs of my goods if I am still paying my employees the same. In order for your program to work out so goods stay the same, the employer is the one who needs to see all the savings from the elimination of income taxes. Otherwise there is no way to pass the savings to the customer. Take home pay for employees go up, but so do prices.
Yes but the price isn't determined by the "embedded tax" rather the embedded tax is paid FROM the price. If you don't believe that, you've never seen anything on sale at a reduced price.
You might want to get that incessant clearing of your throat checked too.
ROTFL....You have told me 1000 times over that a VAT is completely different from your sales tax. Now you tell me they are equivalent. I can't take you BS no more.
The employer, the employee AND the US government also agreed that the employer pay a percentage of the employee's wage on the employee's behalf attributed to the employee's SS account number....Play with the wage all you want but try taking that percentage away from the employee.
Yeah, that's the ticket. People do illegal things to avoid the paper work, not for the tons of money they save.....
Tax is only one of the costs used in the determination of price. If you don't believe that, you've never been thru high school.
Exactly. So how do I lower the costs of my goods if I am still paying my employees the same.
You can lower your prices by the amount of the payroll tax you no longer send to the feds - $4750.
It really doesn't matter. What matters is the result. The immediate result will be a windfall to the employee who now gets a bigger paycheck, but since the employer is still paying full wages and not saving a dime on employee cost, he can not lower the price of his goods very much. The price of goods may lower by 10% or so, but not nearly enough to make up for the 30% tax that will be charged. Unless all employees agree to take a pay cut, this plan is highly inflationary.The reason employees will want/need the employer's share of the payroll tax is that, if the FairTax is truely revenue neutral, the employee will be paying that tax someplace else. Either through higher tax inclusive prices, higher state and local taxes, or some other avenue. The tax has to be collected somewhere and the employee is going to need more nominal wages to pay it or his real wages (purchasing power) would be going down.
Wage earners pay 7.65% of wages in FICA. The employer has to pay an equivalent amount out of the employer's funds.
The portion paid by the employee will no longer be withheld - so he'll see a bigger check.
THe portion paid by the employeer will no longer be collected either.
The employee sees a 7.65% raise.
The employeer sees a 7.65% of wages reduction in costs.
Do you really own a business?
u have told me 1000 times over that a VAT is completely different from your sales tax.
Just as I have told you a 1000 times that a VAT is imposed on all levels of production not just final retail sale. Thus the NRST is indeed different in that it does not impose burdens on businesses upstream from the retailer.
Now you tell me they are equivalent. I can't take you BS no more.
As Your Nightmare has repeatedly shown, the equvalence of a VAT to retail sales taxes is easily established and effects of rate on consumer behavior is readily separated from the effects of redtape imposed by the VAT system's propensity for complexity as many variant examples and their history abound not only in the EU, but around the developing world as well as a consequence of IMF meddling.
Plenty of material for an econometrician of Jorgenson's caliber to work with to derive base parameters for a retail sales tax as well as from numerous high rate single stage tax systems that have existed and been removed as EU and IMF imposed VATs were put in place.
You can lower your prices by the amount of the payroll tax you no longer send to the feds - $4750.Then the employee will be paying it on his purchases through the NRST. So he will need a raise to pay it -- there goes your savings. Again, if the FairTax is revenue neutral, somebody has to pay the employer share of the payroll tax if the employer isn't. That's going to be the employee through higher prices.
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