Posted on 05/12/2005 7:46:54 PM PDT by Your Nightmare
Members of the President's Advisory Panel on Federal Tax Reform on May 11 expressed concerns over the FairTax national retail sales tax, a plan that has emerged as an alternative with a major grass-roots push.
Panel chair Connie Mack, vice chair John B. Breaux, and other members worried the plan would be difficult to enforce, would be regressive, and would require a high rate in order to take in enough money to fund the government.
Breaux raised concerns that the proposed 23 percent (tax-inclusive) rate would not be sufficient to raise the revenue necessary to fund the government. The Joint Committee on Taxation estimated that it would take as much as a 57 percent (tax-exclusive) rate to be revenue-neutral. Further, Breaux said he thought exemptions that would be carved out to make the sales tax progressive would also complicate it.
Mack, who raised concerns similar to his fellow panelists', said he was "intrigued" by the plan. "But if it's such a great idea, why haven't other political entities around the world pursued it?" he asked.
Americans for Fair Taxation Executive Director Tom Wright emphasized that the plan emerged after "thorough academic research" and "thorough polling" The strong grass-roots push has resulted in some of the group's 600,000 members appearing at each of the panel's hearings and has inspired a large comment-writing campaign to the panel in support of the plan.
Sales tax advocates were among the 20 witnesses who gathered before the panel for a full day of testimony on tax reform proposals. Although the group has held several other hearings in Washington and around the country, the May 11 meeting was its first hearing on specific reform plans since Bush appointed the panel in January. The panel has been charged with identifying tax reform proposals that are progressive, encourage charitable giving and home purchases, and are revenue-neutral. The proposals are due by July 31.
Among the tax replacement and reform plans presented to the panel were the value added tax, consumption-based tax, and the flat tax, as well as proposals that would use the current income tax as the foundation.
Witnesses generally claimed that theirs was the fairest, simplest, most flexible, most transparent revenue-neutral proposal that would improve economic growth and savings while meeting the president's criteria of encouraging charitable giving and home buying. Witnesses presenting consumption-based plans praised their overhaul as taking millions of low-income taxpayers off the rolls, being easy to transition to on a worldwide basis, and including safeguards to prevent new loopholes that would result in increased complexity down the road.
Tax reform panel members, who agree the current tax system needs to be fixed, grilled witnesses without revealing whether they will ultimately endorse a consumption- or income-based tax or a different mixture of the two.
"The major flaw in it is the claim that income taxes are worked into the prices of products when they clearly are not, coming as they do at the end of economic calculations rather than at the beginning as with other costs."
Totally ridiculous assertion. Businesses price their product to recoup their costs .... ALL THEIR COSTS. It doesn't matter when the costs have to be paid.
If your vendors were to give you longer terms than you give your customers, would that mean that you could sell your product without factoring in the costs that will ultimately have to be paid?
Of course not.
They aren't counted twice by anyone as far as I know except you.
Because FairTaxers preach that a major benefit of your plan is that the employee gets to keep his whole paycheck. If this is true, then much of the so-called embedded taxes will still be in the cost of goods and prices can not come down 20-30%. If you were honest in your presentation, you would inform people that for this plan to work as modelled, they must take a pay cut.
"What bank would loan a person an extra $60,000 for tax on a $200,000 home? What is the collateral for the $60k?"
Duhhhhh Could it be the value of the home?
All employee taxes are counted as part of the embedded costs, including the ones the employee pays.
Good theories and ideas. You won me over.
"So book purchases, rent, food for college students is exempt? That sounds nice but one more layer of corruption and complication is added to this "simple" scheme. Before long it will be just as complicated as the current scheme and require as many experts and advisers and enforcement officials."
So it's bad if the FairTax taxes educational expenses, huh?
And it's bad if the FairTax exempts educational expenses, huh?
Whatever provisions are in the FairTax, they are just BAD. Why? Because they replace our beloved Marxist progressive income tax, that's why.
You said, "The majority of the "embedded taxes" you claim are in prices are also "embedded" in wages." HereYes, and I was addressing Squeally. Then you asked "Which 'embedded taxes' that I claim are in prices are also 'embedded' in wages?" Out of confusion I simply asked "Why are you asking me?" And after several back and forths (until you obviously discovered you were in error and don't even remember what you've said versus what Squeally said) now it turns out you are concluding that somehow I am stating "the information is not valid."
Ted Turner and Jane Fonda were getting their divorce a few years ago, his tax returns were entered into evidence. The Atlanta Journal Constitution reported that for the previous tax year, his income was about $125 million and he paid about $5 MM in taxes.
And your plan would mean for him to pay $5 MM a year in taxes he would have to spend about $22 MM a year (fat chance)....Then, your plan would send him a check so he doesn't have to pay tax on his "necessities"...As if anyone there in your offices at AFT know what everyones, let alone Ted Turner's, "necessities" cost them.
How many of you would like to have an effective tax rate of less than 5%?
Oh, BTW, he would only have to have his corporation make his purchases...under your plan he could pay NO tax.
How many of you would like to have your corporation make your purchases so your effective tax rate is 0%
The employee keeps his whole paycheck with no federal deductions. But his paycheck doesn't include employer "contribution" payroll taxes. Nor does it include the business' income taxes! Why the hell would it?
The employee is contracted to be paid a certain amount. That amount will be paid. Why would it change?
Takehome pay will include dollars previously withheld by the feds. Those dollars for employee payroll tax and personal income tax won't be withheld anymore. The employee will instead pay his taxes when he spends on retail consumption of goods and services.
"Oh, yeah, it's the clear frontrunner."
Absolutely. Sorry to have to break it to ya, but it's WAY ahead of the Nightmare tax. BTW, is this a flat day or a VAT day?
Ahh, we have to resort to patronizing now I suppose. I certainly know what a society is, except I know it only as a definition. There is no such organism as a society, it is merely a description of a group of individuals. This is where you fail in your rhetoric.
Certainly living in America costs money. No one ever said it didn't. However, it's be up to ME to decide what to do with my life. This means that you, or some government agency (also a group of individuals), has zero right to pilfer parts of my life at the point of a gun. By what right does another individual take a portion of my life to distribute to others?
America needs to go back to a pay-as-you-go system of government. You go to court to settle a dispute - you pay. You get convicted of a crime - you pay. You want the privilege to drive - you pay. There is an endless array of government services that can be on a pay-as-you-go basis. But, lets not forget that the proper role of the Federal government which is to defend the nation against foreign and domestic entities that wish to undermine our Constitutional rights.
Least ye not forget that the purpose of the Constitution is to protect the rights of individuals. It does not grant rights, it recognizes them. You may call it whining, I call it Patriotism. Or perhaps you would like to change the definition of stealing and theft. Your screen name fits your argument well - justshutupandtakeit. Well I, for one, will not just shut up and take it when my rights are trampled and portions of my life are pilfered to benefit others. Again I say it's evil and wrong, and I am not my brother's keeper.
No they're not. Some are incident on the employee (not counted in embedded tax costs), some are incident on employer (counted in embedded tax costs).
My question remains; You've said that someone (whoever that is) over counts/double counts taxes. Who says it and which taxes?
I think you just don't understand it all and you're mixed up.
According to your own posts, PIT is incident on employee, not in pricesDo you agree?
As for payroll taxes, there are two parts. ONe part is incident on employee, the other in prices.Who says the second is in prices?
Well, which one(s)?Payroll and personal income taxes. That's the only way you can get the price drops that are being claimed. Even the authors of the FairTax understand this.
Response to William Gale
by Dan Mastromarco and David Burton
[authors of the FairTax]
Memorandum, March 16, 1998Federal income and payroll taxes either are or are not incorporated into the prices of goods and services. If they are embedded in prices, their removal will reduce prices. If they are not, then their removal will not reduce prices but instead returns to labor and capital will go up. If returns to labor go up, people will see their after-tax wages increase and asset values will increase since the present discounted value of the new, higher returns will be higher.
The replacement sales tax could be incident on the factors of production or it could be incident on consumers through higher prices. It cannot be both. If it is incident on the factors of production, then wages and the return to capital will fall but sales tax inclusive prices will not be any higher, on average, than they are today. If the sales tax is fully incident on consumers, then prices will increase by the amount of the sales tax but returns to labor and capital will be higher.
Irrespective of to whom your post was adressed, you said ""The majority of the "embedded taxes" you claim are in prices are also "embedded" in wages."
Did you mean it? If not, why did you post it? If you did mean it, then please explain which of the "embedded taxes" are also "embedded" in wages. Simply making an assertion does not make it so.
Why would you hesitate and avoid such a question?
How many of you would like to go to jail for tax fraud?
"And in light of the very progressive nature of our current tax system, it becomes ever more regressive, relatively speaking."
"You do not think paying $5 million is enough."
You were the one who said that the current system is progressive. I pointed out a legitimate example of an instance in which it clearly is NOT progressive.
Then you criticize me by insinuating that I want the wealthy to pay more taxes. You are the one who has the problem with consistency. You assert (falsely) that the current system is highly progressive, when in fact many Americans are angry that it is in fact REGRESSIVE.
You apparently missed the part of Senator Mack's comments in which he said that, in all the comments he had recieved from the public, not a single person had said that the tax system is fine like it is and that the panel should recommend doing nothing. Apparently you haven't exercised your rights to make the panel aware of your sentiments. You and Louie should enlighten them about what a wonderful tax system we already have and how this whole exercise is a waste of time.
LOL
Duhhhh, the value of the home is $200,000, not $260,000."What bank would loan a person an extra $60,000 for tax on a $200,000 home? What is the collateral for the $60k?"Duhhhhh Could it be the value of the home?
So you don't want to answer. This is where it always happens.
"All employee taxes are counted as part of the embedded costs, including the ones the employee pays."
Incorrect. Imbedded costs are corporate income taxes, employER paid payroll taxes and associated compliance costs.
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