Posted on 08/03/2005 4:51:43 PM PDT by RobFromGa
A simple question...
So, under the FairTaxI get to keep my whole paycheck, prices for everything I will buy will stay the same even with the taxes included, and I get a prebate check from the govt every month. And businesses pay no taxes.
Where is the extra money coming from...
What is wrong with this reasoning below?
1. Right now the government collects $X in the form of all taxes.
2. All taxes are really paid for by consumers in the end result, either directly, or in the cost of their purchases which allow businesses to collect money in order to pay taxes. Companies do not really pay taxes they jsut collect them and pass them on.
3. The FairTax will collect the same $X per year in the form of taxes but using a different method.
4. Under the FairTax, the price paid for goods will not rise because getting rid of all the taxes built into goods will cause the prices to drop, then the FairTax will add onto the new lower price, resulting in the same price paid by consumers.
5. So, for a given taxpayer, shopping (consumption) will be revenue neutral. Ie. Prices are the same as before.
6. And each given taxpayer will get a "prebate" check every month that they are not getting now.
7. And each taxpayer will pay no taxes on capital gains, or on savings.
8. And, each taxpayer will no longer pay any taxes on income, or payroll taxes.
9. And, there will be no Fair Taxes on any purchases made for a business.
Are these all true so far?
Again, I get to keep my whole paycheck, prices for everything I will buy will stay the same even with the taxes included, and I get a prebate check from the govt every month.
Where is the extra money coming from???
"Which is why a 'fairtax' type of system will never happen. Not unless there are all kinds of loopholes and exceptions to keep all those people employed."
Correct. Unless the American people take control of their government back from the special interests and demand it.
link please on that trillion per year(?)
what about state and local and FICA?
my property taxes on my business are way more than my combined income?
and all these from a proponent of infanticide...sorry.
"Boortz and the congressman said that the built in taxes in the price of any item are about 22%."
However, that is not true for imports, which will increase in price.
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
I listened to Cavuto rerun this morning and I assume that was Boortz in another publishing house promotion that Fox is getting famous for.
In any case, the one thing that really appeals to me about the sales tax is getting the IRS out of the lives of private citizens.
The thing that worries me about it is Greenspan weighing in a few months back suggesting that we have both a sales tax and an income tax.
I guarantee you that congress will vote for that tomorrow.
They will promote it, of course, as a "transition" period. They'll be able to have a new movie, "The Never-Ending Transition."
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
"Can this really be true? Can it be proven to a sufficient level of certainty to make it worth risking the health of the entire US economy (the best in world history) that you and the other Fair Taxers are right?"
You raise a valid point, but there are a couple of other points that need some consideration.
1. Although our economy is relatively good, there are major problems looming ahead. For one, we have a massive trade deficit which is growing at an alarming rate. We are in uncharted waters here - no country on earth has ever run up these kinds of trade deficits. ALso, some foreign money managers are becoming concerned enough about our twin deficits (federal budget and trade) that they are already shifting reserves out of dollars into euros. If euros displace the US dollar as the most trusted currency on the planet, the economic consequences will be enormous. I could go on, but that should give you an idea of what I am talking about.
2. The FairTax has been thoroughly researched and that research is ongoing. It isn't perfect, but it is AT LEAST as good for the economy as the current system (which isn't saying much). The upside potential is much greater than the downside risk.
3. Our tax system has long been recognized as a drag on our economy. This isn't new. What is somewhat new is an alternative that has been well thought out.
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
Sounds like a "pig in a poke". The black market will be rampant.
As an example, I am able to explain supply side economics by explaining that tax payments are a brake on the economy and that reducing effective tax rates causes the economy to grow increasing overall revenue.
But the FairTax people are not counting on a larger economy to generate the revenue from what I have read, and from what I am reading. They are using a static model.
Let me try to restate what I don't understand.
As an upper middle class taxpayer right now I pay a substantial amount to the IRS in the form of income tax, plus I pay $X for all goods and services I buy. These prices are estimated to have a hidden premium of 20-25% in order to compensate for the tax related costs.
Under that Fair Tax as an upper middle class taxpayer, I will no longer pay any income tax to the IRS, and neither will any one else. This lack of taxes in the cost of goods and services, will result in a reduction in the price of those goods and services of about 20-25%. Under the Fair Tax, I will pay the same amount for all my goods and services in the end when the government collects the 23% Fair Tax.
The 23% the government collects will replace the money that they had been collecting in taxes embedded in the product. So where does the government collect the money to replace what I am presently paying in income tax?
The steel is but one component of an automobile and it has at least three levels of cascading tax and compliance cost embedded in it's price to the automobile manufacturer. That would also be true of every other component of that automobile and how anyone can not see that the final price to the consumer contains all of that is beyond me. The Fairtax would eliminate ALL of that and our products would once again be VERY competitive in world markets.
Yeah I read that, so right now some Americans are paying a "lazy and/or unorganized person" surtax. Normally Neal would ridicule such people not champion them as people to be helped.
But I digress. The Fair Tax system will eliminate the "lazy and/or unorganized person" surtax (the LUP surtax).
What will replace that lost revenue? Remember we are trying to be revenue neutral here. I assume that the organized, productive persons will have to pay more than he does now to make up for the repeal of the LUP surtax?
How can everyone come out better under this plan and pay less money for everything? Is this Lake Wobegon, where all the children are above average?
Because the taxes themselves are but a small part of ALL the costs imposed by those taxes!
So we've come back to the idea that the entire goverment tax revenue collected currently is about equal to the compliance costs with the present system. Get rid of that system and the compliance costs are eliminated.
All we need to prove is that those compliance costs are about 20% of goods and services and we've made the case for the Fair Tax.
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