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???
No one really CARES who Looey really is (or lewislynn or lousbolts or lurkeylou, either).
SQL stands for Status Quo Lover and OOC stands for Out Of Context - all of which you SQL guys are quite familiar with since it is your common set of practices so don't pretend otherwise.
And your tax plan is ... ??????
Did you have something about the Fairtax you wanted to know?
If so, Looey, I can certainly go to the website as can anyone else.
Oh but I do realize it, that's why I rejct this white elephant. All it does is maintain the status quo and keep feeding the beast the same amount to waste and squander. That's not relief and in the long run, may well cost us a lot more, since none of you will even make a guess what the rate will be after the year 2007.
Oh, next time you want to spank me about a spelling error, at least spell check your own. You won't look so ridiculous then.
I can certainly go to the website as can anyone else.So anything you've ever said about the Fairtax can be confirmed by simply visiting their/your website?
Although still not what I would call a perfect solution, this one, I feel, is closer to the mark. I feel it is closer because here they also call for and mandate less government spending (elsewhere on the site).
http://www.veteransparty.us/newweb/taxes.htm
Naw, I LIKE my spelling errors ... makes me seem human.
And so you realize you pay a good bit in embedded taxes and yet you can't believe it needs to dbe drastically altered???
In addition not you nor anyone else can predict tax rates in 2007 or any other year. Who do you think you're kidding?
"Feeding the beast" is eliminating income (and other)taxes and putting in place a system that will greatly boost our economy?? Hmmm!
You can fuss and splatter all you wish about spending - that's a separate issue.
It may depend upon whether one can read and comprehend Looey ... why don't you try, anyway?
If you'd actually look at the model mentioned in the paper where Nightie cawlims it shows such and such and read it with some understanding, you'll notice that the portion he refers to is where the model establishes a baseline (using the present tax system) for later projections by the model.LOL! Yes, it establishes a baseline where the marginal tax rate on labor increases labor costs and then after the transition to a NRST, when there are no taxes on labor, labor costs go down.
price of labor = household value of time / (1 - marginal tax rate on labor)It is not discussing the FairTax at all at that point, but the effect of present taxation ("personal tax rates") on the model in its initial state.Maybe you would like to tell me at what point the paper discusses the FairTax at all.
“And do you have a bill in congress now that "guarantees" all of its "stated attractions"? Mind giving a cite to it? I am sure many of us would like to check it out.”
"No, And I certainly am not promoting a fraud upon the people as H.R. 25 is.
And tell me, what provision. is it in H.R. 25 which would prohibit a future Congress from calculating a tax from all corporate and individual income, payrolls, self-employment earnings, capital gains, estates and gifst ”? We are told H.R. 25 does this, now what provision guarantees it, how may it be enforced and a future Congress forbidden to calculate such a tax?."
HR/S 25 repeals the IRC in its entirety. FairTax supporters also support a repeal of the 16th whose primary co-sponsor is one of our strongest supporters in the house. If you believe that eliminating the income tax is important (as you appear to), can you tell me who is doing more to make that happen than FairTax supporters? I certainly don't see any evidence of supporters for your approach addressing that issue. As a matter of fact, I don't see any evidence of support for your approach at all.
HR/S 25 repeals the IRC in its entirety.I understand what you meant, but, in point of fact, HR/S 25 does not repeal the IRC in it's entirety.
HR/S 25 repeals the IRC in its entirety.Shame on you. You know that's a lie.
Why do you put my name in the "to" box but address someone else that doesn't exist in the reply box?...dementia?
"Surely there is a clear enough distinction between such foods as caviar and chicken eggs, between wine and milk, between silk and cotton underwear, between a Chevy Nova and BMW to truthfully say one is a luxury and the other a necessity and allow every one to contribute by carefully selecting what they purchase and the taxes imposed by a judicious selection of objects proper for such impositions..."
Mmmm interesting list. It appears carefully selected to ignore grey areas. So a Chevy Nova is a "necessity" and a BMW is a "luxury"? Is that your position? What about a Chevy Impala or SUV? What if your Chevy Nova is a convertible with larger than the standard engine? What if your Chevy Nova has an AM/FM radio with a CD player and expensive speakers? Can you have a "luxury" music system in a "necessity" car? Is the whole thing taxable/not depending on its overall classification, or do you have to look at each option separately?
If you are going to classify autos as "luxury" or "necessity" by their make, can you classify the following
Yugo
Volvo
Saab
Chevrolet (other than Nova, which we have established)
Ford
Chrysler
Honda
Toyota
If a Honda is a "necessity", does that go for Preludes, Civics and Accords? Is a minivan a "luxury" or "necessity"? Does it depend on the make and size of the family? What about a Jeep Wagonneer? Is a motorcycle a luxury or necessity? Does the make/model/HP matter here? Does its use matter? An antique car if used for basic transportation? If it didn't cost any more than more conventional transportation - does that matter?
Does it matter whether the milk is powdered or fresh? Same with eggs. What if the milk and eggs are consumed in a restaurant? Silk and cotton underwear? What if the cotton underwear is a thong? What if it is a cotton blend? Does the percentage of cotton come into play here? Does the material that the cotton is blended with matter? What about bras? Are they categorized as "necessity" or "luxury" based on material? What if the wearer is flat chested? Is a bra a "necessity" then? What if the bra is bought by a cross-dressing man: still a necessity? Is a bra a necessity for a woman who works in an office, but not a stay-at-home Mom?
Cosmetics - luxury or necessity? Separate answers for women and men, please.
Smoking cessation expenses - same question. Psychological and marriage counselling?
Car seats for the kids - does it matter whether it is in a state that legally requires them?
With regard to furniture and clothing - what if a consumer is willing to pay more for goods that are made in America, does that factor in in any way?
What about potato chips, maple syrup and popcorn - necessity or luxury? Canned vegetables which are more expensive than fresh? Coffee? Does it matter if it is Starbucks' at $3-4 a cup? What about creamer - does it matter if it's French Vanilla or plain? And bagels - does it matter of they have raisons and cinnamon - does that make them "luxury"? Are frozen TV dinners a luxury or necessity? Ice cream? What about fresh fish vs frozen - how are they classified? What about flank steaks and ground sirloin? Frozen vs. fresh OJ?
What about a business suit - does the wearer's occupation come into play here? If someone wants to buy it just to wear to church, is it taxed at a different rate than someone who is required by his employer to wear one? What if he is self employed and his income is insignificant, but he feels he has to present a professional image to build his business? Is a necktie a luxury or necessity - does the material or the purpose for which it is bought matter?
Education expenses - luxury or necessity? What if the student already has an undergrad degree and a good job and he is pursuing a course of study that won't enhance his career? Are all educational expenses considered one or the other or would they have to be considered independently? What if it isn't for a formal course of study, just personal enrichment? I enjoy reading about Native American history, for example, but I have never taken a formal course and it isn't something that I expect to ever use in my career or profession. Would you consider that a luxury or necessity?
Is a home a luxury or necessity? Does the lot size matter? Square footage? Neighborhood? Is it all or nothing? What if you have upgraded floor parquet or an upgraded carpet in an otherwise modestly priced home? Does the presence of or size of the garage matter? What if the home has a pool but you bought it for about the same amount as your neighbors who don't have a pool? Is central heating and A/C a necessity or a luxury? Security system?
"Surely there is a clear enough distinction......"
The above distinctions may be clear enough to you, but they certainly aren't to me.
Aren't you even a little bit curious? Although the exact amount isn't mentioned, there is the formula for future rates contained within the bill
‘‘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.— ‘‘(2) FOR YEARS AFTER 2007.—For years after the calendar year 2007, the rate of tax is the combined Federal tax rate percentage (as defined in paragraph (3)) of the gross payments for the taxable property or service. ‘‘(3) COMBINED FEDERAL TAX RATE PERCENTAGE.—The combined Federal tax rate percentage is the sum of ‘‘(A) the general revenue rate (as defined in paragraph (4), and ‘‘(B) the old-age, survivors and disability insurance rate, and ‘‘(C) the hospital insurance rate. ‘‘(4) GENERAL REVENUE RATE.—The general revenue rate shall be 14.91 percent.
So, we start at nearly 15% and add (a synonym for "the sum of") two other variable factors to it. With only 8% left to equal the claimed 23% for the year 2007, there's a real good chance this after 2007 rate (or, the second year of the white elephant and beyond) could skyrocket into a lot more than we are paying in income and hidden taxes today, especially seeing how the government loves to throw our money around.
"Feeding the beast" is eliminating income (and other)taxes and putting in place a system that will greatly boost our economy?? Hmmm!
Uh, no. Feeding the beast is continuing to throw large amounts of money at an out of control heavily spending government, or in simpler terms, "revenue neutral." There is not one mandate, demand or suggestion contained in this to slow down spending, just assumptions and wishful thinking that they will. Hasn't happened in my 57 years, my friend. As long as they keep getting however much they wish, they will keep packing pork barrel projects to bills (can't wait to see how many they tag onto this nightmare) pending in Congress and throwing money everywhere they can imagine. That's not an assumption, it's a fact bore out by history.
Actually, there would be no 60,000 page code…when Congress selects the specific articles of consumption and places the amount on each specific article.
I suggest you study the first revenue Act of our country
As I see it, putting such a burden upon Congress would keep them busy, giving them less time to screw with us.
JWK
Spending rants are a separate category from a tax bill. And the portion of he tax bill you post has to do with the determination for specifying the percentages determined by S/S and M/C entitlements both of which are controlled by other laws - the FairTax merely funds them.
The General Revenue Rate, as you'll notice (which is the FairTax rate without the entitlements) remains as 14.91%. If you can tell us what the amount of money for these entitlements might be in the year in question it would be pretty clear what the tax rate would be. The government itself seems to have great difficulty with projecting that number accurately. Any rate increase (or decrease) is caused by the entitlements not the basic FairTax itself.
If you'd like to argue about excessive spending, this is the wrong thread for that as the FairTax is a tax bill not a spending bill. They are quite different types of legislation and trying to mix them would accomplish nothing. The President has specified that a revenue neutral tax bill is required which is another sign that spending complaints need to be posted elsewhere.
You'd find that 90% plus of FairTax supporters believe spending is too high and that the FairTax is not only a superior tax system but one approach to doing something about spending levels. With the present tax system, tax increases and special provisions can be so easily hidden and used for political purposes to the detriment of taxpayers that there will never be a decrease in spending in our lifetimes - why should there be when so many people think that others pay the tax burden so that they get a "free ride" That's nonsense, but you'll see quite a number of posters on these threads that oppose the FairTax for that reason - but don't phrase it that way.
Thank you for finally seeing my point. You are placing trust in a group that has shown it cannot be trusted with money at all. In the end, some say this boondoggle could end up costing us 50% or more. What with the way government loves to spend, why give them that power?
I'm ready to limit their power and force them to be accountable for their spending, and to ensure the spending is absolutely necessary, unlike today and unlike under this fairtax nonsense.
Then, let's impose a realistic consumption tax that really will be fair.
"It is not discussing the FairTax at all at that point, but the effect of present taxation ("personal tax rates") on the model in its initial state."
Frankly it's difficult to understand where I said it WAS discussing the FairTax at all (as you can see, I didn't say that). In fact, the simulation never discussed the FairTax but, at a later point, a NRST (National Retail Sales Tax) similar in concept to the FairTax. You posted this same stuff months ago and it is no more germane now than then.
At the point in the model you were using, however, the chosen equation was from the intraperiod submodel which is basically a static general equilibrium statment (IOW, a starting point for the model), the equation itself which you post can be easily seen to be calculating INCOME tax effects, not sales tax effects. And the numerator is (which you call household time) is composed of work time plus leisure time.
It does this to establish changes that occur as a result of interactions later in the model among its hundreds upon hundreds of equations (it uses a large number of vector transforms and matrix manipulations) in these later stages, not simple arithmetic as Nightie would have you believe. This equation shows that (in the base case, remember) if taxes are increased, the employer must pay the worker more (to accomodate the income tax). That seems intuitively valid.
As noted by Jorgenson,
"The implied subsidy to leisure time would drop to zero under the NRST; under the existing tax system this is equal to the marginal tax rate on labor income."
He goes on to say:
"Since producers would no longer pay taxes on profits or other forms of capital income under the NRST and workers would no longer pay taxes on wages, prices received by producers, shown in the sixth chart,would fall by an average of twenty percent.The seventh chart shows that industry outputs would rise by an average of twenty percent with substantial relative gains for investment goods producers."
It seems to me to be clear from those statements that he is saying prices would drop (due to the effects of removing income/payroll taxes - not reducing wages) but be offset by increasing economic activity (drop by 20%; increase business by 20%). That says nothing at all about wages being reduced (and the simulation shows just the opposite due to increasing economic activity as you might imagine). It does say, though, that prices would be reduced and then with the advent of the sales tax go back to about where they were (but now having tax included in them rather paid as a separate added amount).
As I have said, be circumspect in reading some of these posts. I'd certainly urge you to read the bill itself since it's an easy read and then to spend some time thinking about what is offered in the detailed economic analysis on the FairTax website. You should be able to sort the wheat from the chaff.
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