Posted on 08/18/2005 6:34:27 AM PDT by GPBurdell
NUMBER ONE ---- AGAIN!
The word came in yesterday afternoon. The FairTax Book will remain No. 1 on the New York Times Bestseller's List for the second week in a row. Our editor at Regan Books told us yesterday afternoon that it is much harder to make this list the second week than it is the first. Needless to say, we're excited and gratified. Interview requests for Congressman Linder and myself are pouring in, and the crowds at the book signings remain strong.
Our greatest hope is that the book generates a buzz and momentum of its own. Across the country people who have never heard of The FairTax before are learning that it is possible to get rid of all income and payroll taxes and replace those taxes with a one-time tax on consumption at the retail level. These people are learning that:
* They can say goodbye to the death tax, the gift tax, Social Security taxes, Medicare taxes, the Alternative Minimum Tax, capital gains taxes and the trouble of filling out tax forms; * That they can just go enjoy themselves on April 15th, just as they do on every other spring day; * That American corporations who have fled overseas to escape our crushing tax system can be brought home again; * That they can invest and save with no federal tax consequences whatsoever; * That the trillions of dollars that are working in offshore financial centers, again to escape our crushing taxes, can be brought back to work in the American economy again; * That we don't need to spend $500 billion a year to comply with an obscene tax code; * And that all of this can be accomplished while eliminating the federal tax burden on the poor, and without increasing the cost of living for everyone else.
I was discussing the book with some friends last night. I told them that over the past ten or so days I think that I have signed about 8,000 copies of the book at various book signings. Since many people buy multiple copies of the book, I would guess that I've seen about 6,500 people during that time. So .. how many people had something negative to say? Two. That's it. Just two. One man at Ft. Bragg came through the line twice to have two books signed (he went and bought an extra copy) all the while grumbling that we didn't include enough of the research in the book. Well, there's a reason for that. You can find the research at the FairTax website. Knock yourself out, pal. One other man stood in front of the table and demanded an opportunity to point out all of the typos he had found. We politely declined his incredible offer. But that's it. Two complaints. On the other hand, we've received hundreds of comments from people who doubted whether or not this idea could work ... until they read the book. Well, that's what we were after.
Again ... thanks so much for another week at No. 1! The FairTax is becoming an idea that can't be ignored.
When I buy a loaf of bread, the price including tax ends up being about what it is todayExcept in your illogical dream world the farmer, the miller and probably the grocer all live tax free...
In the real world the farmer and the miller would, like everyone else, have to pay tax when they spend your dreamed up price reducing cut in pay.
Which accounts for why corporate federal income taxes account for about 1.3% of GDP.Yea but you're forgetting the 21.7% of GDP for compliance costs...LOL!
So you think the interest on your Roth won't be taxed. Think twice. Under the current income tax it will.
The flat tax is 17% + 7.65% FICA for individuals = 24.66
For self-employed its 17% + 7.65% + 7.65% = 32.3%.
The same for corporations - but remember Companies don't pay taxes - they pass them on in the price of their goods and services and we pay them. 24.66x2 = 49.32%
Under the Fair Tax the rate would be 23% at the cash register on new goods and services. That's it. No taxes on corporations. No taxation on savings interest, investments, estates. All other taxes are gone.
You may want to pay 50% in tax but I sure don't.
You are almost correct - Flat Tax
17% + 7.65% = 24.65 for individuals 32.30 for self-employed
You need to add -
Corporations will pay the same 24.65 but since they pass those costs onto the consumer (that's us) we will be paying 49.30. We all tend to forget we are paying their taxes already. In fact I would say most of the country doesn't realize we pay the corporate taxes.
There are times that we reach a point with certain individuals that just can't be reasoned with. Even reading the book won't make a difference with these people because they don't want to hear it.
So we admit that this person must be 'Always Right' even if they are sometimes wrong and let it go.
When I receive requests for donations to the RNC, local candidates, etc. I put a Fair Tax palm card and a slip of paper with the following:
If we had the FairTax I could afford to donate to your campaign and it would be tax free.
Plus
"We need true tax reform that will at least make a start toward restoring for our children the American dream that wealth is denied to no one, that each individual has the right to fly as high as his strength and ability will take him." Ronald Reagan
or
"If Thomas Jefferson thought taxation without representation was bed, he should see how it is with representation." Rush Limbaugh
or
"A wise and frugal government...shall not take from the mouth of labor the bread it has earned." Thomas Jefferson
If all these campaigns began receiving these instead of donations I think they would get the point.
I also do the same for other types of solicitation i.e. credit cards, magazines, etc.
Company A extracts raw materials and sells them. They pay tax on their income, and for withholding, and compliance. These expenses are calculated and included in the price of the raw materials sold.Company "A" gross sales to Company "B": $100,000----
Company B purchases raw materials from Company A
Company "B" converts them (for lack of a better term) to initial stage product bought in bulk by company CCompany "B" gross sales to Company "C" = $200,000
Company "C" gross sale = $300,000
Minus cost of goods sold = $200,000
Taxable income=$100,000
10% profit = $10,000
25% income tax rate = $2500.
Tax as percentage of taxable income = 2.5%
Total sales = $300,000
Total profits $30,000
Total tax paid = $7500
Total Tax as percentage of total profits....25%
Total tax as percentage of taxable income = 2.5%
Guess what...No cascading taxes.
You know, only 32% of the country was in favor of our fighting for our independence. I am sure glad we didn't give up when someone in 1776 said "It will never happen."
Because the tax is 'fair' to everyone. We all pay the same and we are only taxed once. No double taxation.
It even taxes the illegals and the underground economy who don't currently pay taxes. Now I think that's fair to all of us.
Theresa would pay more than 12%.
Give up pigdog. You can't reason with people who must be "Always Right."
"but the fair tax numbers are off by well over $1 Trillion."
Where did you get this information?
Theresa would pay more than 12%.
Maybe, depends on what she buys, right? As I understand it, 12% of her annual income would be quite a bit. Doesn't matter, though, she has to put it to work in the economy rather than hide it somewhere.
Your #2 buyer purchased the exact same item as your #1 buyer for resale to #3, for resale to #4, for resale to #5, for resale to #6.....BWAHAHAHAHAHA...
Anyway...Take your #3 example. #3 idiot bought for 2.00 (what he could have bought for $1.00) then sold for $2.82 to idiot #4...That's $0.82 profit not .66 "profit margin" (when he could have made $1.82)
Take that "example" of your grossly flawed idiocy and multiply it times 6 and that's what you've concocted as your "example of cascading"???
Groanup:
"Refer to post #154 and imagine ALL of the embedded taxes at each level."LOL! It would certainly take a lot of imagination to to find "embedded taxes" in that grossly flawed mess....
Could we try some realistic examples for a change?
Agreed. For that fact alone, prices would come down. How much would depend on the particular item. But I would prefer that scenario, with the honesty of the tax burden on each individual right up front, than the deceptive way it's being done now.
So, any defense of taxing income?
Company "B" gross sales to Company "C" = $200,000
Minus cost of goods sold = $100,000
Taxable income =$100,000
10% Profit = $10,000
25% income tax rate = $2500
Tax as percentage of taxable income = 2.5%
lewis, in the above exmple, I have a question. Usually, the gross minus the COGS is the net profit- or taxable income. You take a scenario where the profit figure of $100,000 is shifted to $10,000 with no explanation. Or do you only pay tax on 10% of your profits?
Really, the income tax rate of 25% should be $25,000, not $2,500. You do the same thing with example C.
???
The COGS figure should include all expenses incurred in making the product- labor, vehicles, office space, etc. The only thing left afterward should be profit, which is the taxable income figure.
Using those numbers, the total tax bill after all three stages of production comes to
$52,500
which is a bit over 17%. Looks like the cascading concept to me. Please explain where I'm wrong.
It all centers on what Dale Jorgenson meant in his study which showed all products currently have a 22% 'embedded tax' in them. If there is a 22% embedded tax on all goods and services, that would mean there are some $2 Trillion worth of taxes. Using IRS data for all taxes on businesses and fair tax's own inflated numbers on tax compliance costs, there are roughtly $1 trillion worth of these 'embedded taxes'. I content that Jorgenson also included personal income tax of employees to obtain the the missing $1 Trillion of embedded taxes. If that is the case, the fair tax line that you can keep you full paycheck and prices will stay the same after the tax is a $1 Trillion lie. All we need is Jorgenson's study to show what he meant by 'embedded taxes' to show how he got his $2 Trillion.
Dear lewislynn,
Your model isn't far off from a typical retailer.
From memory, I think the cost of goods sold at Wal-Mart is about 75% or so. G&A, transportation, insurance, etc., leave net pre-tax profit of about 5.6% of revenues.
5.6%. That's it.
And Wal-Mart is a very successful discount retailer.
Their total corporate federal income tax is about 1.6% of revenues.
Sears, on the other hand, paid very little corporate federal income taxes last year, because even though the company was profitable, it had losses to be brought forward, thus wiping out most of their federal income tax liability. They'll be in this situation for a while, as they bring forward their previous losses.
$22 billion in revenues. Less than 0.5% corporate federal income tax.
Of course, when devising these models, it's important to recognize that each one of the levels under discussion is likely a differenty type of company. Thus, the final level will be the retailer. Large retailers often get by with net pre-tax profit margins of 5% or even less on revenues (when they're not actually losing monty).
Small retailers often pay no corporate income tax at all, because these businesses are often family-owned, or owned by a small set of partners. Set up as S corporations, or LLCs, or even sole proprietorships, income passes through to the owners as compensation, the equivalent of salary and wages, and is only taxed as personal income. This tax must be treated the same way the employees' taxes are treated, in that the taxpayer, under the NSRT receives them back to make the taxpayer "whole" after the 30% sales tax is put into effect.
These businesses just don't pay any corporate income tax.
With folks like Sears and Wal-Mart, these guys usually buy directly from the manufacturer. However, smaller folks will buy from wholesalers and distributors.
Wholesalers live on even less profit. TechData, a distributor of electronic goods, has net pre-tax profits of about 1.1% of revenues. Their federal corporate income tax burden is about 0.2% of revenues. That's two-tenths of 1% of revenues.
Their competitor, Ingram Micro, has a net pre-tax profit of about 1% or revenues. Federal corporate income taxes total about 0.1% of revenues. That's one-tenth of 1% of revenues.
These folks go back to manufacturers. That's typically the level before the wholesalers and distributors.
A large manufacturing company in the US that manufacturers goods one might find in a retail store is General Electric. GE is a great, well-run company. Their net pre-tax profits total approximately 13% of revenues. Wow!
However, their federal corporate income taxes come in at something under 2%.
If you look back through the value chain of any product you find in any retail store, you'll find a mix of companies with very low profits and thus very low taxes, higher profits, and sometimes higher taxes, and sometimes no profits, or recovering profits, and no taxes.
Overall, American businesses, since 1990, have averaged about 6% profit on revenues. In 2003, corporations in the United States paid in federal corporate income taxes an amount equal to about 1.3% of GDP.
You can look at all the Fortun 500, or Fortune 1000, or Fortune 5000 companies, and you'll see that very, very few pay much in federal corporate income taxes.
As for closely-held businesses (businesses with a very small number of shareholders, and where shares in the company are not made available to the company, usually S corporations, LLCs, proprietorships, and certain forms of partnerships) pay no federal corporate income tax, at all.
sitetest
Only in that make believe world YOU seem to live in Lewis! ONLY there! And it is NOT the taxes alone Lewis but everything that arises as a result of those taxes as well!
You go right on living in your make believe world Lewis. I have a bill to get passed!
Many ways! Chief amongst them is failure to adequately plan for TAXES!
One thing you can rest assured of however is that there never has been a business venture launched for the purpose of LOOSING money!
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