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???
Please correct me if I am wrong.
Under the FairTax, If I went into Wal-Mart and picked up a new radio that had a $100 price tag, I would hand the cashier a $100 bill and walk out of the store. (Assuming no state sales tax). Wal-Mart would then send the Fed $23 and pocket the rest.
This is why it is being called an Inclusive tax since it is included in the retail price, not added above the retail price.
"1. It increases the revenue to the Federal Government."
Silly argument. It is revenue neutral when measured in static terms. When measured in dynamic terms, it would increase the revenue (assuming no subsequent rate reductions) because of the much faster growing economy. Please explain to me how a faster growing economy is bad for America.
"2. It increases the scope of the Tax and broadens its taxing power"
I'm not sure what this means. The FairTax taxes consumption, not the various forms of income that our current system does. The consumption base is, in fact, significantly broader than the taxable income base. Sooooo, taxing a broader consumption base is bad because ....?
" 3. It increases the ability for invasion of private property of individuals who purchase anything."
Incorrect. When was the last time you had your private property invaded because of a state sales tax issue? The poster should check out some websites on the abusive tactics of the IRS.
" 4. It eliminates the pitfalls of income tax Fraud by the Federal Government against the defense of private citizens under due process in courts of law."
Again, not a very lucid or articulate expression. Due process does not exist in tax courts today. You are guilty until proven innocent. That would be eliminated by the FairTax.
"5. It eliminates all tax exemptions of businesses in America while shifting the burden of taxation onto individuals."
Nonsense. Only individuals pay taxes now. That has always been the case and always will. It doesn't just eliminate tax deductions for businesses - it eliminates the taxes that those deductions are taken against. The poster seems to be opposed to eliminating deductions for businesses (which would have the effect of raising their taxes) while at the same time being opposed to eliminating taxes on businesses. Sounds like an SQL to me.
"6. It puts every citizen onto the socialist payroll"
Incorrect. It provides the fairest and simplest way to ensure that the tax system is not regressive. The research that went into developing the FairTax revealed that the American people were strongly opposed to a regressive system. Do you consider the tax refunds that some Americans get at the end of the tax year to be "socialist"?
"7. (Since it doesn't mandate the repeal of 16th Amdendemnt) it legalizes a direct tax on people's property without provisions of apportionment."
It can't mandate the repeal. The repeal bill is separate and is supported by FairTaxers. In fact, its primary sponsor, Rep. Steve King (R/IA), is one of the FairTax's strongest proponents. In fact, the 16th amendment legalized a direct tax without apportionment. The FairTax is the only politically realistic way to get the 16th repealed. Every other legitimate tax reform proposal that I am familiar with would require the perpetuation of the 16th, thus a continuation of what the poster is objecting to.
All in all, one of the sillier attempts to bat down the FairTax that I have seen. I would prefer that the poster give us their REAL objections, such as, "my son is an IRS agent and he would have to find productive work to do". "I have spent years figuring out how to game the current system and now that I have, you want to change it to one that will be much harder to game?" "I make my living selling imports and now you want to put US producers on a level playing field with foreign producers?"
"But the Boortz assertion that 'It doesn't matter that paying taxes will be voluntary under the Fair Tax plan' is only unassailable if, and only if, the necessities of life and supplies necessary to conduct business are not taxed under the Fair Tax plan. But they are taxed, and to conclude as Neal Boortz and you do, one must pretend that starving one’s self to death and the shutting down of America’s businesses and industries is a rational approach for Americans who wish to choose to avoid paying the “voluntary” tax on the necessities of life and supplies necessary to conduct America’s businesses. And so, we list this assertion of Neal’s, and yours in the MYTH column where it rightfully belongs."
You don't agree with the way the FairTax approaches the definition of "necessities" by way of the prebate. Fair enough .... give us your definition of "necessities", please.
"I thought this was supposed to be a "simple" method of taxation?"
In its curent form, the FairTax bill is less than 200 pages and it replaces a system which, according to CCH, has now grown to more than 60,000 pps. In relative terms, there is no doubt that the FairTax qualifies as "simple".
"Why not just simply mention to potential supporters it is actually 30 cents on the dollar?"
I always explain the tax inclusive/exclusive issue to people when I explain the proposal now. As far as your suggestion, the 30 cents on the dollar depends on which dollar you are comparing it to - the pretax price of the item, or the total aftertax price. The reason that we don't just call it a 30% sales tax (as the SQLs would love) is that it leads to the misunderstanding that the same taxes paid under the FairTax would be at a higher rate due to the historical differences in rate calculation. It would introduce a subtle bias in favor of income taxes into any analysis, which is, of course, exactly what the SQLs want.
"A.G. wrote: You do have at least one sponsor and a bill introduced into the House or Senate don't you?"
"Can’t seem to find anyone. Sorry, they all seem to be signing on to your plan......."
Sounds like a little bitterness there, misplaced though it is. The last time I checked, the FairTax only had one sponsor in the senate and fewer than 40 in the house. That leaves 99 potential sponsors in the senate and almost 400 in the house .... and that assumes that none of the existing FairTax sponsors could be persuaded to back a competing proposal. In fact, several of our sponsors are signed onto a flat tax bill.
If your proposal is going nowhere in congress, it certainly isn't because of the FairTax.
Correct!
And the price of the product, the amount of the tax, and the tax inclusive rate involved are specified on the receipt.
The merchant makes a two line report each month and sends your tax and the others collected to the state sales tax agency - and is well-paid from the tax funds for doing so. There is no unfunded mandate on the retailer as at preesent.
That's garbage and you know it, Looey. You SQL types are a case apart, that's for sure ... apart from reality, that is.
If a particular practice is universal in an industry there would be little competitive pressure to change. If, however, the practice is not widely done, your discriminating retailer wouldn't remain in busiess too long with the same set of employees.
That's what happens with marketplace competition. It is your evaluation that needs some alignment since you've done nothing to convince anyone that the practice you cited is an any way universal.
Breathing and oxygen use are involuntary. Consumption is not (except for a few people, it seems - and perhaps you're one of those).
Consumption and the timing and type thereof are VOLUNTARY.
As for used goods, the market itself will level out that particular playing field.
This is why it is being called an Inclusive tax since it is included in the retail price, not added above the retail price.
It is indeed tax inclusive as the tax rate is with regard to gross payment (including the federal retail sales tax) for the product as is clearly stated in the bill:
H.R.25Fair Tax Act of 2005 (Introduced in House) `SEC. 2.(a)(5) GROSS PAYMENTS- The term `gross payments' means payments for taxable property or services, including Federal taxes imposed by this title.
`SEC. 101. IMPOSITION OF SALES TAX.`(a) In General- There is hereby imposed a tax on the use or consumption in the United States of taxable property or services. `(b) Rate-
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Get a life.
That's a pretty fair assessment. For those reasons, I usually assume that the "employer's share" of payroll taxes will be used to reduce production costs, rather than be paid to the employee. Of course, there's nothing stopping an employer from increasing wages, but that has to take competitive market factors into consideration.
"Am I understanding this correctly?"
Yes, you are.
Sorry, but the comparison is deceptive, to say the least. We currently don't pay income taxes on every single purchase. So, comparing the rate to income taxes and trying to make it sound like it's a regular sales tax to the masses will lead them into a lot of anger once they approve of this and see what it really will cost them.
Like I said, you are selling this white elephant to the American Public who thinks in a certain manner, from years and years of being guided that way. All of sudden, you come before them with a new proposal, new thinking and obscure actual costs by legalese. You want a really pissed off public, just keep obscuring the real costs to this, especially taxing bartering and employee discounts above 20% (also in the bill).
You tell them it will eleminate the income tax and the IRS, but don't mention what will have to be set up to monitor, collect and enforce the new taxes, as well as ensure rebates are properly sent out. You tell them no papers to fill out, but right in the bill, one must register (by paper) to qualify and if there is a dispute, of course they must have paper proof they are correct. Businesses each have to register as a seller, no telling where that can lead, and ensure receipts are proper, taxes collected, appropriate amounts sent off to the state and ultimately off to the feds.
No, this stuff that is in the bill itself does not get mentioned by supporters or at fairtax.org, it's just another "trust me, I know better than you" scenario. Even fairtax.org admits that a one dollar item will actually cost one dollar and thirty cents with the new sales tax and calls that "23% INCLUSIVE." The average American doesn't bother with the little words added here and there, they trust people like you and in the end, the Public gets screwed over again.
Very well. Some examples:
After the Federal Trade Commission began looking, during the first Reagan Administration, at anticompetitive practices in white-collar wages (looking also at professional associations' codes of conduct for non-compete provisions), the Salary Board was discontinued, and the intercompany information exchange was delegated to a private company, Hay Associates, which "consulted" to the former Board member companies on industrial wages.
Combine those two concepts, and you have the universal tendency that I've argued persists among managements, to control labor costs by fair means or foul.
"75 economists. Big deal. That's probably fewer economists than graduate in one year from a large university."
But that exceeds by 75 the number of economists who have endorsed the Nightmare tax, doesn't it? :-)
"There are perhaps 20 million illegal aliens in the US. Many millions of them are working."
Indeed they are. Many, perhaps most of them, work for cash and don't pay payroll or individual income taxes on them. They would go from a tax preferenced position (since the only taxes many of them pay are the imbedded taxes on their consumption) to a tax disadvantaged one (since they would be paying at the register, but not receiving the rebate).
"The basic reporting requirement for a retailer is for a 2 or 3 line item report once a month along with payment of the tax receipts."
"I don't even have this level of intrusion, now. We have to have ADP send off a check for withholding every pay period, and we have to file our quarterly employer's report every three months, but we'll have to send off the quarterly report anyway, as reporting of wages isn't going to go away.
So, now you're forcing me to fill out a monthly report that I don't currently have to fill out! Where is my compliance going down?"
So your primary yardstick for measuring compliance costs is frequency of reporting? Does it not matter at all that sales tax reporting is trivial compared to payroll taxes or income taxes?
"And why do you think that, in order to avoid a THIRTY PERCENT TAX, there won't be informal retailers who bring merchandise to the market without the tax?"
What are "informal retailers"? Studies have shown that a very large proportion of retail sales take place at the level of the Wal-Marts, Targets, etc. I have heard some SQLs forecast that shopping centers will go dark while black-marketeers will set up shop off the back of trucks in their parking lots. As if that type of activity would be difficult to detect and stop!
Geez, if I am a cop and I am driving around a mall and I see people lined up at the back of a truck, don't you think I might be able to figure out what is going on? Especially if they are hauling away refrigerators and sofas?
"Well, get ready, his mortgage payment on his house is about to increase 30%!! So, too, will his homeowners insurance!! As well as the costs of all the food, clothing, and private education for his five kids."
Why will his mortgage payment and his kid's education go up? That isn't the FairTax you are referring to. Heck, it isn't even true for ALL his food and clothing costs. In fact, to the extent that those purchases are made up to the poverty level buying US produced goods, those costs will actually go down.
"Their twenty-year recession probably would have been a complete economic collapse if they'd have moved entirely to consumption taxes, and completely gotten rid of the income tax."
"I see no reason to take the risks associated with this program when it appears inevitable that the supposed simplicity of the system will be legislated away in a relatively short period."
"The so-called "fair tax" will do little, by way of compliance, than shifting it from compliance with the income tax to compliance with the national sales tax."
You certainly have an abundance of opinions, none of which appear to have any support that we can identify.
"More likely, more folks will flee to an underground economy, to save the dough, and with them, they'll take their state sales taxes, as well."
Certainly a legitimate concern. There will undoubtedly be a different set of compliance issues that we have to deal with with a sales tax than we have had with an income tax. However, with approximately a 99% reduction in the complexity of the system being administered and a 90% reduction in the number of points of collection/enforcement, it is inevitable that we will have a much higher level of compliance with much lower resources committed to enforcement.
The FairTax isn't perfect - it is simply much, much better than the existing system and any of the alternatives proposed so far. If someone comes along and develops the perfect system, many of us FairTaxers would support it. However, since there is no telling how long that process might take, it seems prudent to convert now to the best alternative available at this point in time.
Well, Nightie, I have a very good idea of what Out Of Context means since we so frequently encounter it from you and Looey. It's obvious you don't, however, so here is an example of that very sort of thing:
http://home.austarnet.com.au/stear/creationist_out_of_context_quotes.htm
Claiming you "don't do it" is hardly credible to many readers who have seem much of your posting manipulations on these threads. That's sort of like the little boy telling his Mother that he "didn't break that window" while trying to hide the baseball bat behind his back.
Perhaps instead of Out Of Context they should be called "Selective Partial Quoting"??? I sort of think OOC has a nice ring to it so I'll keep calling them that. You're welcome to call them SQL Honesty or any other name you prefer.
The only thing "deceptive" is our understanding of the bill ... or your refusal to do same.
You assume costs and complexities in the bill that are not there merely because you oppose it. That's certainly not uncommon as we have seen.
And you're incorrect - a "one dollar item" will cost one dollar ... and 23 ents of that will be the FairTax and so indicated on the receipt they receive.
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