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.
Read that again Rob. The poster specified nothing about the type of savings involved nor the amounts involved. It actually sounded like one of your "gotcha" questions with few specifics but wanting a specific answer.
In any event as I pointed out the oldsters would be better off rather that worse since with prices remaining the same their purchasing power would be increased due to untax S/S payments and the prebate.
Are you going to tell us where you got your example from?
That's what an average of $75 per corporation?
Of course, everyone will be better off. Prices will be about the same, and all wage earners in America get a takehome pay increase of 15-25% which translates to 15-25% more stuff they can buy. And all this money appears from savings in compliance costs. And everyone gets free prebates, young and old, plucked fresh off the FairTax money tree.
It sounds great, too bad it is impossible to have people get their whole paychecks and still have prices go down enough to come even close to covering the 30% FairTax adder.
It could work, maybe, if businesses cut the payroll expenses by the amount that is now going to FICA, but otherwise it is a pipedream.
You only call them "gotcha" questions because you know you are stuck in a corner with no escape.
My last simple question was:
So, are you saying that the old-timers if they take their $1000 to the mall, they will have the same purchasing power as before the FairTax, on average? They'll be able to buy about the same amount of stuff with their saved dollars?
Of course, the standard FairTax canard is that prices on goods will go down, on average, by about 20-25% allowing prices to remain about the same when the 30% FairTax is added. So, you would answer YES to my question.
But you consider this a gotcha question because this points out the flaw in another FairTax canard- that wage earners will get to keep 100% of their income with no FICA or income taxes removed. This means that the average wage earner will receive a 15-25% windfall in purchasing power income with the FairTax PLUS THE PREBATE.
It is obviously impossible, ridiculous and dishonest to promote the FairTax plan on these grounds, yet you refuse to see what is staring you in the face. You will not answer this glaring problem and you just keep trying to change the subject to some other area.
The only other Fairtax possibility is all prices go up 20-30% which doesn't put the US at any advantage vs. imports, and would be grossly unfair to anyone with accumulated savings.
Why should the service provider (hint small businessman) get what he gets now, and the wage earner gets his pay now plus his FICA taxes plus his income taxes?
Do you agree that this would put the business owner (who you say should get the same takehome as before the FairTax) at a relative disadvantage vs the hundred million wage earners who are expecting to get their whole check (15-25% more income than before the FairTax)?
Dear RobFromGa,
Thanks.
Yeah, either folks don't get back their taxes, in which case, take-home wages stay the same, but then prices can fall to accommodate the NSRT, or folks get back the taxes they pay or are paid on their behalf, and retail prices increase by 30%. If 30% is the right number (I think it may wind up being a little low), well, it's supposed to be revenue-neutral, so overall, on average, folks break even.
Because, there really isn't much by way of "embedded tax costs" or "embedded compliance costs" in the economy.
Ironically, Rob, it would have been different if this had been proposed 30 years ago, or so.
Back then, corporate profits were much higher, and corporate income taxes were a much larger part of GDP. Corporate income taxes averaged well over 5% of GDP. Cascade that a couple of levels, and you really do wind up with significant savings to be had by eliminating the corporate income tax. Maybe not 22%, but maybe 10% - 15%.
But the last 20 years have seen increasing competitive pressures in the US economy, and companies have squeezed down costs, and accepted much lower levels of profitability. I read an article not too long ago that gave significant credit for this result to Wal-Mart, all by itself.
That's because Wal-Mart has a pretty strict ethic of taking low net profits on revenues (and thus owing little by way of corporate income taxes), and has pushed hard on its own suppliers to keep their costs as low as possible, thus depressing their profits, as well. Their pricing discipline has permitted them to compete ruthlessly, and gain huge market share in their market segments. It's been an excellent plan for them, in that their total revenues now amount to more than 2% of the GDP of the United States. Think about that one!
Price competition, and the use of technology to intensify price competition, have squeezed a lot of profits (and thus corporate income taxes) out of the corporate economy.
This has been good, overall, for consumers.
But it means that there is little by way of "cascading taxes" or "compliance costs" with which to lower overall price levels.
That's just the reality of things, no matter how much others assert (without evidence) to the contrary.
sitetest
The example is certainly simple enough and clearly indicates cascading of income tax. Wish I'd have done it myself (sorry, but no I didn't). Since you can't seem to find things like that (that don't fit the SQL Playbook) I see no reason to help you out since you'll merely deny it or attempt to belittle ANY source.
You apparently felt it was straightforward enough that you attempted a cardiac bypass with your spreadsheet - but failed. Perhaps if you made a real attempt to show the effect of cascading taxes (instead of trying to proove it doesn't exist) the muse would strike you.
Can't you figger that, Rob ... my calculator's broke. And are you trying to amaze us with statistics?
No, Rob, it is quite possible ... but you don't choose to believe it (and spare me the stuff about "being the first to lead the parade ..." business if someone would just show you). You've tried that before.
Some savings come from reduced compliance costs, some from elimination of embedded tax costs, some from an increased tax base, some from greatly increased economic activity, some from the prebate ... and, oh yes, some caused b capital flows being repatriated back into the US from the offshore locations to which they have fled. Some are even from other sources such incread tax paid by the illegal income sector, cash betting, the sex industry, etc. But of course none of that counts, right??? It's all lies, right???
And, let's see ... your plan is ...???
The small businessman gets his whole paycheck now. He just writes a check quarterly and another at the end of the year for both taxes and FICA. The wage earner is at no advantage. What are you talking about?
You know, I gotta find a business where I can buy something for a dollar, mark it up 33 cents, and resell it, with the 33 cents markup being all profit - no other costs of doing business. Twenty-five percent profit without adding any value whatsoever!!! LOL.Why bother with the 33 cent markup when you can skip the fools at levels 2, 3, 4, and 5, then go directly to level 6 with the exact same product and sell it to some fool for over 7 times your initial "input....LOL!
LOL! I love the way you think that an oil rig in Texas can magically turn its yield into a Quik Trip in Virginia. Hmm, how do they do that?
Dear lewislynn,
"Why bother with the 33 cent markup when you can skip the fools at levels 2, 3, 4, and 5, then go directly to level 6 with the exact same product and sell it to some fool for over 7 times your initial "input....LOL!"
Because, then the example provided wouldn't fool some posters who seem not to realize that in the example, there is no other economic activity than to collect profit and pay tax. Nothing to turn the yield, say, from an oil rig in Texas into a product available in Virginia.
No drilling, no refining, no transporting, no marketing, no advertising, no putting in the ground underneath the gas pump, no credit card transaction costs, no salaries, no insurance costs, no rent, no nothing.
Just profit and tax.
Without levels 2 through 5, no one would be fooled.
;-)
I just have to think that they had an appreciation for creating wealth without a ball and chain that inhibits that activity. Well, I guess we'll just have to pass the legislation without them.
And it certainly does not plan to generate revenue from cash betting or illegal activities except for when those people buy their stuff honestly on the open market like they do now. Those transactions are in the revenue neutral tax base.
And the embedded tax costs go to the people paying them now, remember the 100% paycheck promise? So, no savings there.
And the prebates are a cost item on the revenue calculation, not a savings. Without prebates, the NRST rate would be lower, but you wouldn't be able to take all the poor off the tax rolls (at least now they contribute to FICA) without the prebates.
My plan is to continue to cut taxes on the present system and to eliminate death, AMT, and corporate taxes. Job #1 is to reform SocSec so that it doesn't become a drain on our future. THAT is the #1 danger signal ahead in my opinion. Radical overhaul of the entire tax code while we're in the middle of a World War that threatens our existence seems a crazy time to make a prayer on a fantasy plan which is what the FairTax plan is.
I think you understand that every wage earner in America cannot be given outright a 15-25% increase in purchasing power without it coming from somewhere. I just think you have way too much of your ego wrapped up in this plan that if you knew for a certainty that prices would go up or salaries would go down by 20% or so, you would still support the plan. You can't seem to come up with any way to answer the repeated question of where is this huge pay raise for every wage earner going to come from? You just wave that away as though it is too stupid for you to answer. Because you are enthralled with a movement.
I love the way you think that an oil rig in Texas can magically turn its yield into a Quik Trip in Virginia. Hmm, how do they do that?Using the pigdog example you all think they suck gasoline out of the ground in Texas then 6 different people buy and sell the same gasoline before it even get's to Virginia....
Hmm, how do they do that?Tell us how it's done big shot....
If you honestly don't understand what I am talking about then you are not reading. The wage earner is promised his whole 100% paycheck by the FairTax. This will be a 15-25% increase in takehome pay for the W2 wage earner. The other end is the business owner who makes profit on the business and pays income taxes on the profit. You seem to think that the business owner will be fine and dandy if he doesn't get any increase in takehome spendable pay and that the money he saves on taxes will go to the business bottom line,
That is giving wage earners a raise and putting the business owners at a relative disadvantage, it is redistributing income.
If you are now saying that the business owner will get an increase in his spendable pay just like the wage earner, then there are no other significant taxes that the business will save in order to reduce prices.
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