FairTax.Org HR25

WWW.FAIRTAX.ORG ^ | Last Week | Thomas Leser

[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.

[Principled]

THe wage base is waaaaaaaaaaaaaaaaaaaay smaller than the consumption base.

[Principled]

Everyone will be paying the nrst rate - not just wage earners.

[Your Nightmare]

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.

Are you suggesting Jorgenson used statistics from the EU or some other place to model the change to a NRST?

If so, prove it.

[Principled]

And payroll tax is not the only area of savings.

[Your Nightmare]

Everyone will be paying the nrst rate - not just wage earners.

You mean, like investors? So now investors need more return to cover their cost of the NRST. Otherwise their real return on investment has been reduced.

You people keep trying to put the incidence of these taxes wherever it suits you.

[Your Nightmare]

THe wage base is waaaaaaaaaaaaaaaaaaaay smaller than the consumption base.

And one of the reasons for this is that the FairTax includes government consumption in the consumption base. And who pays the tax these government pay? The taxpayers through higher taxes, which means my nominal wages need to increase or my real wages decrease. Once again, you are just rearranging where the tax is collect. If the FairTax is truly revenue neutral, there can be no gain solely from where the tax is collected.

[Principled]

If the FairTax is truly revenue neutral, there can be no gain solely from where the tax is collected.

Is it your position that it is not revenue neutral?

The tax is coming from a much larger base - so as a participant in a system now with a relatively small base, I could pay less if the system were relatively larger- and still have the same collected.

5 of 10 individuals pay a total of $90 - that's $18 each.
but increase the number of people to 9...
9 of 10 individuals pay a total of $90 - that's $10 each.

Same amount of tax collected.

[Your Nightmare]

Is it your position that it is not revenue neutral?

Of course it isn't.

5 of 10 individuals pay a total of $90 - that's $18 each.
but increase the number of people to 9...
9 of 10 individuals pay a total of $90 - that's $10 each.

You aren't changing the number of people paying, you are changing what they are paying it on. The reason the consumption base is larger than the income base is that government consumption is included. Otherwise, what are these consumers using to buy their stuff with if not income?

[Bigun]

You aren't changing the number of people paying, you are changing what they are paying it on. The reason the consumption base is larger than the income base is that government consumption is included. Otherwise, what are these consumers using to buy their stuff with if not income?

The comic relief on these threads is absolutely amazing at times! Like now!

Have you any idea how many people there are in this country who have INCOMES but pay no tax on them under the present system but WOULD pay with a NRST?

[Aarchaeus]

What will all the accountants and tax lawyers do for livings? ;^)

They'll have to find productive work of some kind. And whatever value they produce will contribute to the improvement in the economy.

[CSM]

AR,

I thought you already established that net spending power remains constant relative to today's spending power. The combination of higher take home pay (no fed witholding), lower pre-tax prices and higher after tax prices lead to that net spending power remaining constant.

Isn't that the point you made earlier in this thread? If I understood you correctly, you established that the method of tax collection was the only change that could come about, but the amount of tax collected remained the same.

If that is the only result, then I am still on board. Eventually, the knowledge given to the citizens will drive the cost of government down.

If I misunderstood your points earlier, then I apologize and look forward to your clarification.

[CSM]

"So now investors need more return to cover their cost of the NRST."

What cost of the NRST do the investors have that they need to cover?

[CSM]

"You aren't changing the number of people paying, you are changing what they are paying it on."

To some extent I can agree with this. Everyone pays some portion of the Federal burden in the price of goods. However, many (approximately half) of the country does not pay any income tax at all, and some even come out ahead. So, really what is happening is just an equalization of the rate for everyone.

[groanup]

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.

I conceded this point to Your Nightmare a long time ago. I think you can make the case for 10-15% direct savings to the employer. I can see how any further reduction could only come from wages.

However, all employees are taking home 100% of their paychecks.

[ancient_geezer]

If so, prove it.

Experience with you has shown that nothing satifies any demand of proof by you, however

If ever you deign to look in the References section of his Barker NRST work [here ] you would know that he definitely does not restrict himself to purely US information, nor are his econometric research papers limited to the US.

Or better look in Jorgenson's Collected Works laying out the basis of his studies

And his list of sources:

http://post.economics.harvard.edu/faculty/jorgenson/colwork/econs1.pdf

for Econometrics Vol. 1
Econometric Modeling of Producer Behavior

And list of sources

http://post.economics.harvard.edu/faculty/jorgenson/colwork/welfares1.html

for Welfare Vol. 1
Aggregate Consumer Behavior

which amply demonstrate his familiarity and use of world wide information in developing submodules for his econometric models.

[Your Nightmare]

Have you any idea how many people there are in this country who have INCOMES but pay no tax on them under the present system but WOULD pay with a NRST?

Are you considering the payroll tax? If you include that, not too many people don't pay taxes on their income - a lot less than wouldn't pay taxes under the FairTax with it's FCA.

If you are trying to tell me people spend more than they make, that just doesn't make sense. The only consumption is larger than income is if you include government consumption like the FairTax does. But, again, those governments don't pay the tax, their citizens do. You are just hiding the federal tax in their state and local taxes.


From NIPA tables:

		2004
Personal income		$ 9,659
Less: Personal current taxes		$ (1,036)
Equals: Disposable personal income		$ 8,623
Less: Personal outlays		$ (8,533)
	Personal consumption expenditures	$ (8,231)
	Personal interest payments	$ (188)
	Personal current transfer payments	$ (114)
Equals: Personal saving		$ 90

[Your Nightmare]

What cost of the NRST do the investors have that they need to cover?

The cost of the NRST when they use their returns to buy stuff.

[Your Nightmare]

However, many (approximately half) of the country does not pay any income tax at all, and some even come out ahead.

But we aren't talking about replace just the income tax, we are also replacing the payroll tax. The majority of people pay more in payroll tax than in income tax.

[CSM]

"The cost of the NRST when they use their returns to buy stuff."

For their business or for personal use with their personal income?

[CSM]

I did not dispute that, I just pointed out the disparity that would be addressed.