Posted on 03/03/2005 7:05:07 AM PST by FairOpinion
WASHINGTON Mar 3, 2005 — Federal Reserve Chairman Alan Greenspan on Thursday embraced the notion of overhauling the nation's tax system and said that some form of a consumption tax such as a national sales tax could spur greater economic growth.
"As you know, many economists believe that a consumption tax would be best from the perspective of promoting economic growth particularly if one were designing a tax system from scratch because a consumption tax is likely to encourage saving and capital formation," Greenspan said.
(Excerpt) Read more at abcnews.go.com ...
"I'm afraid you blew it there. I WAS a supplier!"
If you were a supplier, then your prices to your customers would not drop as much as someone at the end of the production chain - a retailer. The studies indicate that the number of levels in the supply chain are highly correlated with the quantity of imbedded costs. The estimates of consumer prices dropping (pre-tax) do NOT require that prices drop by proprotionate amounts up and down the supply chain. That is because of the cascading that goes on in the production chain.
"Prices including NRST, will remain roughly constant with prices we see today with income/payroll taxes and costs embedded."
With the notable exception of imports.
"And people will receive the full gross wage that people are contracted for now."
"IF any income taxes are due they come from PROFIT."
And where does profit come from ... manna from heaven?
What happens to companies which don't turn a profit on an ongoing basis?
"They are paid ONLY by business which make a profit."
a) Profitable companies are the only ones which survive on a long term basis.
b) For the third time ... where does profit come from?
"By shifting the tax burden to fewer taxpayers."
The FairTax taxes illegal aliens and foreign visitors, as well as drug dealers, pornographers and prostitutes. How does that constitute fewer taxpayers?
The studies indicate that the number of levels in the supply chain are highly correlated with the quantity of imbedded costs.Show me one study that shows this. Just one.
"And this is going to reduce compliance and collections costs?"
We are replacing a system which currently, according to CCH, requires in excess of 60,000 pages to document with one current running a little over 100 pages. That is about a 99.7% simplification.
We are reducing the number of collection/enforcement points by about 90%.
It should be obvious from those statistics why compliance costs will decrease dramatically.
It is my understanding that in this discussion with Boortz, Linder states that he has negotiated immediate price reductions with some corporations.Negotiated price reductions? I've never heard of negotiated price reductions. Sound fishy.
the greater preponderance of those costs.....are included in the costs of your suppliers and thus what you pay for materials and services you pay for in the conduct of your business.
He was replying to the point I had made that in my business the costs he was talking about were small. His response was that a suppliers' costs were greater than mine and were where the extra cost he claimed was. What he didn't know then was that I was a supplier!
"And if their forecast suggest they aren't going to make enough profit (what's enough profit anyway) are you suggesting this company would just raise their prices to get more profit?
Go pick up an ECON 101 textbook..."
I don't need an economics textbook to understand how the budget process works. I have been actively involved in the budget process of quite a few companues over the years.
That reminds me of an old joke I saw in Playboy many years ago. The newlywed bride says to hubbie "I learned to cook from the same place you learned to make love .... from a book."
Back to your question, every CEO I ever worked for would look for discretonary costs to cut to hit profit targets. That would be the first step. That process would typically take quite a bit of thought and analysis. Next he would talk to the sales and marketing people to make sure the sales forecast was aggressive enough, given the introduction of new products, a more experienced sales force, whatever.
Pricing would certainly be included in the mix, but not without due regard for the impact on sales volume.
I think he's got mixed up with the VAT, where the VAT piles up as you go up the chain. In this case, IMO, the percentage of embedded costs should be about constant along the chain. However, ancient_geezer seems to think it would go DOWN because most of them are in the (lower) supplier levels (but that was probably just bluster to save his poition in our argument).
"To claim that the Feds are going to get their money and the workers are going to get their gross pay and yet gross taxed-up prices are not going to rise is an outrageous claim and reminiscent of confidence-trick scams and the inventors of Perpetual Motion machines."
Perhaps some of that is due to the fact that the finding that after-tax prices will not go up substantially is limited to US produced goods only. This is something that we, as FairTax supporters, do not emphasize enough IMHO. This is a BENEFIT. We are getting rid of a tax system which (inadvertendly) has evolved into one which favors foreign producers at the expense of our own.
Eliminating this bias will create shifts in relative prices which will increase the demand for US produced goods in many markets around the world - including our own.
"Show me one study that shows this. Just one."
Be happy to. Right after you show me the studies that support your VAT/flat tax/tax of the week proposal.
There's that little math problem again. Idiot.
100-22=78
78 x 1.29= 100.62
No. They also pay the income taxes to the employees who pay it back to them.
And where is the tax burden now? Are you goning to say anything other than consumers?
"He was replying to the point I had made that in my business the costs he was talking about were small. His response was that a suppliers' costs were greater than mine and were where the extra cost he claimed was. What he didn't know then was that I was a supplier!"
Are you interested in understanding how the proposal would actually work or are you more interested in playing "gotcha"? LewisLynn, Your Nightmare, Always Right, Willie Green, balrog666 and others have been playing "Gotcha" for years now and it has grown very old.
"I think he's got mixed up with the VAT, where the VAT piles up as you go up the chain. In this case, IMO, the percentage of embedded costs should be about constant along the chain. However, ancient_geezer seems to think it would go DOWN because most of them are in the (lower) supplier levels (but that was probably just bluster to save his poition in our argument)."
No, actually, the cumulative tax burden (which is the one that we are concerned about) increases as you go up the supply chain.
18 is more than 5.
However, ancient_geezer seems to think it would go DOWN because most of them are in the (lower) supplier levels (but that was probably just bluster to save his poition in our argument).
Don't misrepresent my position. The level of costs are highly dependant upon the industry sector of the business, and accumulates along the chain of production. As a percentage of taxes paid, accounting and reporting cost for example tend to be higher, by as much as a factor of more than ten times, for small businesses and single proprietorships, self employed etc. compared to larger businesses which can realise economies of scale.
My point to you was that the general or even average case cannot be determined from anectdotal accounts of a single individual. In aggregate and in a macro economic sense however the impact is much clearer.
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