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.
Could the Squirrels be too busy sorting their nuts to be able to understand the real world?
Could be:
Economic Burden of Taxation
William A. Niskanen
Presented October 2003
Friedman Conference
Federal Reserve Bank Dallas page 6.
www.dallasfed.org/news/research/2003/03ftc_niskanen.pdf"Given that the elasticity c implicit in recent U.S. fiscal conditions is about 0.8 and the average tax rate is about 0.3, the marginal cost of government spending and taxes in the United States may be about $2.75 per additional dollar of tax revenue. One wonders whether there are any government programs for which the marginal value is that high. Given the estimate of the long-term elasticity c from the U.S. time-series data, the marginal cost of government spending and taxes may be as high as $4.50 at the current average tax rate. "
The room for price reduction comes not only from direct costs on the immediate business but from the release from burdens on productivity and sales of all manufactures/suppliers/retailers throughout the chain of production. It ain't the tax amount that's killing us, it's how it is being applied and its effects on the economy and the American people.
Patrick Henry nailed that one back in the beginnings of our nation, too bad folks seem to have forgotten the basic principles on which our country was formed and it tax systems originally envisioned.
Patrick Henry, Virginia Ratifying Convention June 12, 1788:
- "the oppression arising from taxation, is not from the amount but, from the mode -- a thorough acquaintance with the condition of the people, is necessary to a just distribution of taxes. The whole wisdom of the science of Government, with respect to taxation, consists in selecting the mode of collection which will best accommodate to the convenience of the people."
"A hand from Washington will be stretched out and placed upon every man's business; the eye of the federal inspector will be in every man's counting house....The law will of necessity have inquisical features, it will provide penalties, it will create complicated machinery. Under it men will be hauled into courts distant from their homes. Heavy fines imposed by distant and unfamiliar tribunals will constantly menace the tax payer. An army of federal inspectors, spies, and detectives will descend upon the state."
-- Virginian House Speaker Richard E. Byrd, 1910, predicting the consequences of an income tax.
Is hardly the tax system will best accommodate to the convenience of the people.
Hamilton put it all in context:
Alexander Hamilton, Federalist #12:
- "A nation cannot long exist without revenues. Destitute of this essential support, it must resign its independence, and sink into the degraded condition of a province. This is an extremity to which no government will of choice accede. Revenue, therefore, must be had at all events. In this country, if the principal part be not drawn from commerce, it must fall with oppressive weight upon land."
- "The ability of a country to pay taxes must always be proportioned, in a great degree, to the quantity of money in circulation, and to the celerity with which it circulates. Commerce, contributing to both these objects, must of necessity render the payment of taxes easier, and facilitate the requisite supplies to the treasury."
Alexander Hamilton, Federalist #21:
- It is a signal advantage of taxes on articles of consumption, that they contain in their own nature a security against excess. They prescribe their own limit; which cannot be exceeded without defeating the end proposed, that is, an extension of the revenue. ... Impositions of this kind usually fall under the denomination of indirect taxes, and must for a long time constitute the chief part of the revenue raised in this country.
I guess that this economist (along with most others) hasn't read the Squirrels interpretations that taxes are not embedded in prices - he clearly says they are.The consumer price is the producer price plus any sales/excise taxes, not income/payroll taxes.
Wow! You've found a way for a government to tax it's citizens without any negative economic effects. The FairTax sure sounds like the way to go!! /sarcasm"Given that the elasticity c implicit in recent U.S. fiscal conditions is about 0.8 and the average tax rate is about 0.3, the marginal cost of government spending and taxes in the United States may be about $2.75 per additional dollar of tax revenue. One wonders whether there are any government programs for which the marginal value is that high. Given the estimate of the long-term elasticity c from the U.S. time-series data, the marginal cost of government spending and taxes may be as high as $4.50 at the current average tax rate. "The room for price reduction comes not only from direct costs on the immediate business but from the release from burdens on productivity and sales of all manufactures/suppliers/retailers throughout the chain of production. It ain't the tax amount that's killing us, it's how it is being applied and its effects on the economy and the American people.
Wow! You've found a way for a government to tax it's citizens without any negative economic effects.
Just found a way that is better than the status quo, reducing the negative effects of taxation on the economy through changing the mode of taxation to consumption in the form of retail sales taxes instead of income and payroll taxes in use today..
The FairTax sure sounds like the way to go!! /sarcasm
Certainly is,
- "the oppression arising from taxation, is not from the amount but, from the mode -- a thorough acquaintance with the condition of the people, is necessary to a just distribution of taxes. The whole wisdom of the science of Government, with respect to taxation, consists in selecting the mode of collection which will best accommodate to the convenience of the people."
For the increase in liberty and financial privacy of the individual citizen more than justification for the repeal of the income/payroll tax system we currently live under:
| "As a matter of fact, what the income tax does — and this is the debate that I think we always try to get into in order to let you and him fight, see — and the people of this country are led down a path where the actual control of their resources, which in the end is the control over their will, is handed off to the government." . . . "The government then manipulates that will in order to destroy the freedom of our electoral system through the income tax structure, and we call the resulting slavery a free system." "In point of fact, it is not as the founders understood, and the only way to restore real freedom is to give people back control over the income that they earn so that they won‘t, at the voting booth and in other phony issues, be subject to that manipulation." |
| I discussed the importance of abolishing the income tax because of its tendency to form a habit of servility in the souls of a people that accepts it. Servility of soul is bad not only in itself, it is also an open door through which will soon walk the abuses of ambitious government power. Leaders who find themselves with governmental power over a servile people will be quick to conclude that such a people exist to serve them. |
The potential for economic growth and increased standard of living of the Americans people are just icing on the cake.
The point, Nightie, is that business taxes ARE embedded into prices paid by the consumer. The author is not talking merely about sales/excise taxes and here we have an example of YOU putting your own words into someone else's mouth - something you always accuse FairTax supporters of.
He's talking about taxes (period) and that surely includes payroll and income taxes as well. That money must come from some place, and it comes from the buyer. But I thought you knew that.
"Wow! You've found a way for a government to tax it's citizens without any negative economic effects. The FairTax sure sounds like the way to go!! /sarcasm"
Actually, Nightie, it's good that you're finally beginning to come to your senses ... (oh, "/sarcasm"??? I see - a real-live joke from you). You should make that "/ignorance" to be accurate since the economic benefits ARE immense with very little downside (despite the Squirrel's chatter).
The point, Nightie, is that business taxes ARE embedded into prices paid by the consumer. The author is not talking merely about sales/excise taxes and here we have an example of YOU putting your own words into someone else's mouth - something you always accuse FairTax supporters of. He's talking about taxes (period) and that surely includes payroll and income taxes as well. That money must come from some place, and it comes from the buyer. But I thought you knew that.I'm not putting words into anyone's mouth. In economics, the consumer price is the producer price plus any sales or excise taxes.
Post all the economic pinhead gobbldegoop you want but it doesn't change the fact that producers are not retailers nor do they dictate retail prices....If you don't believe that go look at a new car sticker price with the "manufactured suggested retail price: VS "dealer mark up" price....
Post all the economic pinhead gobbldegoop you want but it doesn't change the fact that producers are not retailers
By definition retailers are producers as much as any business delivering a product to a purchaser, whether that purchaser is for final consumption, or merely purchasing to sell, or to incorporate material or service into its end product for sale they are all producers.
nor do they dictate retail prices....If you don't believe that go look at a new car sticker price with the "manufactured suggested retail price: VS "dealer mark up" price....
You are finally getting it. Retailers cannot dictate their own price in competitive markets; Which is precisely why all will lower prices in keeping up with competitors in any competitive market or cease to remain in business for lack of customers how buy what they need elsewhere for a lower price.
Lower overhead costs assure competitors will lower price to capture market optimizing their profitability. Any who holdout figuring to keep an imagined windfall, will pay a significant price in lost customers.
32% on wage income. A retired person lives on dividend, interest, capital gains, and withdrawals from savings and investments (already taxed in many cases).
To be revenue neutral, the "Fair Tax" would have to replace the revenue obtained from individual income taxes, a large portion of the total revenue obtained by the federal government, so the tax price of products would be plus up'ed significantly more than the "hidden" taxes that corporations pay in income taxes, and they also have lots of income tax dodges. So of course the retired individual would be double paying taxes on savings as it was withdrawn. The income earner would gain, as their income would not be taxed at the federal level. This is good only for those who are earning wage income, or inheriting money. Those who have saved are screwed by this "fair tax".
To be revenue neutral, the "Fair Tax" would have to replace the revenue obtained from individual income taxes, a large portion of the total revenue obtained by the federal government,
Indeed, as the Fair Tax replaces both income and payroll taxes, as well as finances the FCA sale tax rebate.
The computation is fairly straight forward, an example of such being discussed in the CATO article here:
Cato Policy Analysis #272
Emancipating America from the Income Tax:
How a National Sales Tax Would Work
by David R. Burton and Dan R. Mastromarco
http://www.cato.org/pubs/pas/pa-272.html
so the tax price of products would be plus up'ed significantly more than the "hidden" taxes that corporations pay in income taxes,
Not at all, as businesses no longer pay income or payroll taxes nor expend capital and resources to sterile activities to account for and minimize the income tax due, they are able to concentrate their capital and business resources to productive and more efficienct operations instead.
With the repeal of federal income and payroll taxes on business, not only do the federal taxes they represent go away, the overhead costs related to tax planning, income sheltering, accounting & reporting, and litigation are removed with them as well.
The cost savings and productivity gains to business resulting from the repeal of the income/payroll tax system extends far more than just the amount that government collects as revenue from them.
and they also have lots of income tax dodges.
Since the only thing being replaced by the FairTax is actual revenue receipts to governement as they stand now, in a "revenue neutral" tax reform policy, income tax dodges that business currently use merely reduce the target amount and consequently the rate of tax to be collected under the new system. I fail to see any issue there.
What you are overlooking in your view of the FairTax is that the total retail sales tax base that is covered by the NRST it implements is a much broader tax base than is realizable under the taxable income and SS/Medicare taxbases. As a consequence the marginal rate for implementing the FairTax legislation is lower than the marginal rates of the Forbes Flat Tax with SS/Medicare taxes.
Unless a retired person is withdrawing principal from savings and investments he is still being taxed on the interest and gains, taxes he wouldn't pay under the NRST. If there are reductions in prices due to the elimination of the embedded taxes, and I think there will be, the retired should be no worse than even and probably they would be better off. They are the most likely to employ tax experts to file for them. That costs money too.
You haven't read the plan...that gov't check is sent to cover the tax on the "basics" that everyone whines about when a sales tax is involved (i.e. food and medicine).
It's not the government "giving" anything. It's a reimbursement for taxes paid on those "basics" and probably the easiest way to make a formula than going through every single item (prepared food is taxed, boxed is not, etc).
Your just plain wrong. On what basis do you think prices will go up? It's a tax, not a price increase.
And you clearly do not understand the concept between gross and after-tax income. Again, if a $30K earner lives in a city that is determined, through the formula, that the Fair Tax paid on "basics" is $300 a month then he gets a reimbursment monthly. This now give that person $33,600 a year available to spend. If he was spending his entire after-tax income before (and why would he spend more - he may but it's not a guarantee)the Fair Tax would be LOWER than his income/FICA taxes.
So let's say he spends the entire $33,600...the Fair Tax would be $8,280 at 23% of everything (including your bugaboo about rent) leaving him with $27,720 with is, follow me closely, M-O-R-E than he would have under the current income/FICA tax system.
It's just simple math. And I, again, argue that without businesses paying a tax on profits and matching FICA they'd have lower operating costs in which to lower prices to increase market share and revenue volume.
We do it everyday in my business when we can cut costs.
The figure they consistely use (an an average to make the point) is $4,800 a year.
What evidence do you have to show that is "inflated"? I suggest none.
My comparison was based on his disposable income to show the simple difference in the taxes versus what he has to spend now. Why do you assume he'll spend at a larger base level? Are you also arguing prices (not the tax on them) will go up? If so, why? I say they will go down as business has less taxes to pay.
How will they not???? Do you think everyone just magically get 25% more take home pay and prices stay the same. Do little fairies just come down and give everyone extra spending money????? Don't you stop and think if something sounds to good to be true, it probably is???? Get a grip, there is no free ride. Prices must go up.
You are too biased to even get it...YES, they WILL get more "take home pay" because there will be NO INCOME TAX OR FICA TAX WITHHOLDING!
Do you think your income is your take home pay? You have obviously not bothered to read my posts at all since I clearly, and mathematically, show you the figures. You can argue with the assumptions but not the math.
But frankly this is useless. A majority vote is all that's needed to pass something like this. I doubt it will happen since, as this discussion has proven, too many people are bereft of an economic and financial education since it's not even taught in basic curriculum.
Enjoy paying 7.65% to FICA and 15-25% in income taxes.
Sorry, that's patently wrong. Reread the proposal. And I've listen to Boortz explain this dozens of times and he points out it's different because cost of living is different around the country. I don't expect the reimbursement for someone living in San Diego go be the same as me near Nashville.Sorry, if Boortz said that then he is patently wrong.
The figure they consistely use (an an average to make the point) is $4,800 a year. What evidence do you have to show that is "inflated"? I suggest none.It's right on the FairTax website. The 2005 FCA for a single individual would have been $2,201. Your original example has a single person receiving $3,600. I would say that's inflated.
Oh I am not the one who doesn't get it. Certainly your take home pay goes up, but without the advent of some miracle, prices must go up. You see unless business can cut $2 trillion out of their costs, prices go up. Compliances costs and business taxes don't even add up to $1 trillion. The only way prices could come down even so the 30% sales tax won't increase prices, is if business pocket the money. You little example is meaningless because you ignore what is going on from the business side of things.
It would be a simple matter for the "Fair Tax" bill to include a provision to compensate those who had after tax savings, with a 25% (or whatever the sales tax rate would be) payment of net after-tax savings as compensation for future taxes. Compensation is proposed to make the "poor" wage earners whole with respect to the new taxation method. Do you hear of compensation for savers in the plan? No!
The purpose of this "Fair Tax" is to get at the massive savings that the boomers have accumulated, because the federal government's voracious appetite for money will likely cause the working stiffs to revolt (like OMB projections of 75-85% tax burdens on wage earners). The septuagenarians will not have the strength to overthrow the avaricious political class thieves.
How about an annual tax on "net worth"? Why not? Because it would affect the rich and powerful. But there is a weak group with bucks to hit - that is the boomer retirees. Sock it to 'em, with a "Fair Tax".
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