Posted on 08/15/2005 5:55:06 AM PDT by OESY
I covered the 7.65% employer paid portion of the FICA tax in my posts. These are not really paid for by the employer although wage earners like to think that they are sticking it their employers though.
On other FairTax posts, is has been claimed that the 7.65% employer portion would be paid to the employee not retained by the employer as a cost savings. I'll look for evidence of this.
Even granting your point and adding 7.65% of my labor costs which for the sake of discussion are 60% of my sales cost, this would only be another 4% cost savings bringing the total cost savings to 8%. Where is the 23% price reduction I am going to need to keep my prices the same with the Fair Tax added? You also have to take into account the reduction in prices your suppliers are able to give.
Yes I did that was where the 4% cost savings came from in my analysis.
I used the fact that 15% of the cost of the car wash was purchased materials, with a 25% savings for 3.75% (I don't believe that 25% savings but for this argument will stipulate it)
We have an additional 60% labor cost that under your assumption we will save 7.65% on (I think this will be passed on to the employee for no savings to the business but for this argument will stipulate 7.65% savings on labor). This is about 4.5% savings on the cost of the car wash.
The remaining 25% is the business profit which is the shareholders and business owners income and we are not going to reduce that either.
So, we have a total of 8% savings not 23%.
And, most importantly you have to consider the income taxes and FICA taxes on your own income, whether self-employment tax or the FICA tax on the salary you give yourself.
I have considered that and the business owners are going to get to keep all the profits without sharing them with the government by paying taxes. So this is good for the business owner from a profit standpoint if it weren't for the ugly problem that his cost for a car wash is now too high when you tack on the 30% and he loses business.
Reread my examples, I have already discussed these issues you bring up again.
And therefore my feeling that there will not be a significant reduction in "compliance costs"
Assuming, for the sake of your argument, that prices don't come down (not conceding, just making a point). Would you concede that consumers are going to have more money in their pockets from no withholding, or no tax deposits to make? Also, even YN, I believe, has said that prices might come down 10% or so (might have been someone else. Sorry in advance if that wasn't you, YN) How, then, are we going to be screwed? Prices coming down is just icing on the cake.
No, you're wrong. The CPA's will be there to help with business decisions, not tax decisions.
OK, Daddy. Now back to the subject at hand (#300), your OOC attempts were called out for inspection and found lacking as I posted several times. In fact, it was shown that the attempts you made at selective highlighting and particular quotes were more often than not from papers or reports the main body of which were showing just the opposite of what you were attempting to fool readers into believing.
Oh, hey, and it's fine with me if you wish to keep track and/or correct my typos since it would at least give you some honest activity to occupy yourself with ... idle fingers are the devil's tools, you know.
My comment about "jibe" and "jive" though was really related to word meaning since you didn't seem to know the difference between the two.
Back to Linder, etc., though...
Let's see, you're trying to convince everyone by posting Linder's offhand remarks responding to a question in the Committee meeting that he said the only method that would be used for a business not being taxed on a sale at a (normal) retailer like Home Depot would be to pay the tax and later file paperwork and request a rebate. You'd certainly like that, wouldn't you since it would be such a relatively complex, unnecessary, and expensive procedure.
That way you could probably just scare the hell out of unsuspecting readers who are not familiar with the FairTax and how it operates. (I noticed that at least one reacted in just that fashion after seeing your Chicken Little post). Just tell 'em they have to keep all receipts and file to the government to get the sales tax back after having paid it. Raise the spectre of big, bad government and reams and reams of bureaucracy and paperwork, eh???
There is a small problem with that, though, Nightie - and that is IT AIN'T SO!!
The present and overwhelmingly employed practice in most states is - as I have said - to sell to business sales tax free by use of resale certificates or numbers. My local Home Depot operates this way as I can attest on the few purchases I have made there for business use; reseller cert to them and then no sales tax. Certainly an offhand comment by Linder is not going to change the common sales tax practice and there is nothing in the bill to suggest this (rebate of tax) as any sort of common practice while there IS in the bill the currently-used mechanism of reseller certifications. Linder's comment does not change the wording in the bill (if that's really what he said since your "not available" post cannot be verified) nor does your posting of what he (presumably) said. He probably didn't even realize he'd made such an error and certainly the guy asking the question did not either.
His answer to the question changes nothing and the wording in the bill does not "jibe" with your hoped-for explanation. Sorry, Nightie. The normal, commonly used sales tax practices will continue pretty much as they are since this is a time tested, simple, and inexpensive method of not taxing businesses.
The rebate provisions Linder was explaining (incorrectly) are there for use conversions and mixed use probperty. Requiring anything like that in the bill (which is not done) would certainly be nonsense.
At least we now know which end of the warthog you are. Forbes destroys your precious national sales tax in one paragraph. Whatever you're smoking, stop!
Exactly who the hell do you think you are that you can tell Americans which products should be taxed to death? Who the hell made you the protector of the realm! Get lost!
Who the hell do you think is going to "handle", "receive", "account" the unFAIR Tax????? Little fairies in your mind? Only the Fair Tax gets rid of the IRS,.................please, get a life! The IRS isn't going anywhere under any tax plan!
The rebate provisions Linder was explaining (incorrectly) are there for use conversions and mixed use probperty. Requiring anything like that in the bill (which is not done) would certainly be nonsense.So you are saying Linder was incorrect in his understanding of how the FairTax would work?
And which paragraph might THAT be. I refuse to sign up for the WSJ (and don't bother to suggest "BugMeNot"---their passwords almost never work).
You know, I would love to discuss whether it is better to pay 20% more for every new purchase at retail, while paying no income taxes or FICA. That would be an interesting discussion. But, this discussion right now is about the hard-to-believe assumption of the FairTax proponents who claim prices will be the same and we'll all have more money because of no income tax.
If they are lying about the massive price drop the week after the Fair Tax is enacted, how good are their other guesses.
Re: if prices went up by say 15% inclusive of the Fair Tax, then the biggest losers are senior citizens living above the poverty level who have paid the taxes on the income and saved and now would have to pay with alreadytaxed dollars that buy 20% less stuff. That's why they can't agree that prices might go up,
Assuming, for the sake of your argument, that prices don't come down (not conceding, just making a point). Would you concede that consumers are going to have more money in their pockets from no withholding, or no tax deposits to make? Also, even YN, I believe, has said that prices might come down 10% or so (might have been someone else. Sorry in advance if that wasn't you, YN) How, then, are we going to be screwed? Prices coming down is just icing on the cake.I said the only amount they could go down was the total of business income tax, the employer share of the payroll tax, and the difference in compliance costs between the current system and the FairTax. That would be much less than 10% of all the products and services purchased in the US.
But, this discussion right now is about the hard-to-believe assumption of the FairTax proponents who claim prices will be the same and we'll all have more money because of no income tax.RFG, did you ever read the quotes I posted here. They spell it out pretty clearly. (There's even a couple from the authors of the FairTax, Mastromarco and Burton.)
Let me be a bit more specific, Nightie.
I'm saying that the quotation you posted claiming to be from Linder was apparently an unprepared, offhand response presumably to a posed question. If Linder said that, his response was incorrect if he were trying to indicate what the normal tax free mechanism to use would be.
At this point I have no idea just what might have been said. Perhaps you could tell me which specific document in the TaxAnalysts repertoire it might be in (e.g., #145-50, etc.) so that I can see the specifics and the context more exactly.
Yeah I read them and they do seem clear that for prices to drop, the employee pay would have to drop by a significant amount. And for most people they would end up about where they started. And by being relatively more frugal you would come out ahead, and by being more of a spendaholic you would come out behind.
That makes sense to me, and it jives (:-) with my previous experience and common sense. And if we could find a way to transition older people paying a lower sales tax to make up for their lost pruchasing power, it could probably be an interesting plan.
Hey Karl, how big of a salary drop are you going to accept as a controller for having to only deal with business decisions and no tax decisions? How about 25%?
You might also study post #98 on that same thread which shows some of the fallacies in the referenced post (#23).
There are even other, more detailed posts if those don't furnish any helpful inforamtion for you.
That makes sense to me, and it jives (:-) with my previous experience and common sense. And if we could find a way to transition older people paying a lower sales tax to make up for their lost pruchasing power, it could probably be an interesting plan.The bill does specify that Social Security payments will include the FairTax costs (of course, it doesn't specify where the money will come from), but any after-tax savings people have will be taxed again. This is one of the reasons economists consider the transition to a sales tax a tax on current wealth.
At this point I have no idea just what might have been said. Perhaps you could tell me which specific document in the TaxAnalysts repertoire it might be in (e.g., #145-50, etc.) so that I can see the specifics and the context more exactly.As I said, I no longer have access to the site. I believe it was the Tax Notes Today from August 5th, but I may be wrong.
Employee wages will go up, not down. Perhaps you should do more research.
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