Posted on 08/22/2005 6:53:28 PM PDT by RobFromGa
And yes, before prices of domestic made products can be reduced 20% there has to be wage or income concessions. If they aren't domestic (most aren't) our tax laws have 0 affect...it's a fact.
you obviously don't know what a troll is, you must think it is anyone who doesn't agree with you.
lewislynn is not a troll
check your FReepmail
Just click on his name, and click on in Forum. You can go page after page, and that is all he writes about. He is a Troll and everyone needs to know it. Yeah he is probably you with another name on this Forum. LOL!
are you saying I am a troll too?
You know you have been busted, and that is why your defending him... You part of DU???? I smell a RAT..
This guy thinks I'm a DU troll, can you vouch for me and tell him to stop making ad hominum attacks.
Just look at all of lewislynn post. Its all about the Fair Tax. At least 10 pages. This is probably RobFromGa using two different user names to back up his arguments. If its not Rob, then its a Troll. Who comes on Free Republic and for months and months discuss ONLY the Fair Tax?
That was obvious, but it's non-responsive. My questions remain.
You are throwing out accusations against a FReeper with nothing to back you up. Many FR people are single-issue posters.
I myself tend to jump around a bit and discuss whatever interests me the most at the moment. I have had a very eclectic group of interests over the years. I hope you get sent for a timeout for making such a statement.
I have also gone back and read some of the FairTax threads from years back since I have gotten interested, and Lewislynn has been tireless for years in trying to expose the mis-representations regarding the FairTax.
You have crossed over a line by making these personal accuations and you should apologize.
LOL! OH YEAH THAT IS WHAT IT IS....LOL! LEWISLYNN IS JUST A SINGLE ISSUE YOU GUY...LOL! LEWISLYNN PING LIST SAYS IT ALL...LEWISLYNN HAS BEEN BUSTED AND YOU KNOW IT...
YOU CROSS THE LINE WHEN YOU COME ON THIS BOARD AND BS FELLOW FREEPERS ABOUT THE FAIR TAX.. IT IS NOT AN OPINION WHEN FELLOW FREEPERS ARE PRESENTING YOU WITH FACTS....I FEEL LIKE I AM LISTENING TO DAN RATHER....HOWEVER, YOU JUST IGNORE IT BECAUSE YOU LOVE ARE KARL MARX PROGRESSIVE TAX WE HAVE...ITS UNBELIEVEABLE YOU THINK YOU KNOW MORE THAN SOME OF THE GREATEST ECONOMIST IN OUR COUNTRY...LOL!
Several things wildly incorrect in this latest post of yours.
First, it's not MY spreadsheet, but one I like because it clearly shows the embedded tax effects and it is clear and should not be misunderstood by most (yourself excluded, apparently).
"Companies don't sell their profit"??? Actually I don't recall saying they did. That's also irrelevant to this discussion which is about embedded taxes. These taxes are derived by using the tax rate in the example (called "tax rate") and multiplying it by the amount shown as "profit margin" (if that term causes you to not understand the clear meaning of the example, call it "smudgepot" or any other term you'd like). Same with the term "tax rate" for that matter.
Obviously something is warping your mind since you seem to misunderstand how taxes are calculated - by dividing the amount due in taxes by the amount subject to taxes - both of which show up in the example as written. It nowhere says that taxes are derived a percentage of revenues for the very simple reason that they are not.
Give it up pal. The example I posted clearly shows the mechanism and it has nothing to do with revenues per se. It has to do with the amount of taxes and those are not calculated and reported to the IRS as a percent of revenues.
You're not allowed to redefine the example I posted just to try to warp it into something meaninglses as would be your percent of revenues example, so you may as well stop trying. Go check with the IRS if a business pays taxes as a percent of their revenues - lots of luck!!
It's obvious you don't understand the example as you try to present it as some sort of addition of numbers to arrive at a selling price. That's not the way it works at all. Think of it this way the input on L1 ($1.00) has a target profit margin of $0.33. To reach that level at the marginal rate of the business (34.4%) will involve a tax payment of an additional $0.11 and would cause a sell price of $1.44. The tax amount, though, would be the projected $0.33 times 0.344 = $0.11. That is the amount embedded into the $1.44 price. We're unconcerned about the tax as a percent of revenue ... that doesn't enter in at all. You seem to take this as some sort of accounting compilation of calculating a sell price. That's not what it shows - and that is obvious to most people from the example.
Sorry, but you don't get to redefine the example to be something it's not. It shows the cascading effect quite nicely - and the tax paid is not calculated from the selling price listed (nor is the profit) as you believe. The "amount subject to tax" is exactly as I explained it rather than your misunderstanding and the "tax rate" also is as I explained it rather than as your misunderstanding and attempts to redefine it. The tax rate times the amount subject to tax is the $0.11 as shown.
Perhaps you don't understand the example but I'm satisfied with it as showing what I said it did and understandably so. You don't get to redefine it to suit your purposes just as you don't pay income taxes based on a percent of revenue. That's a meaningless concept in trying to show embedded taxes (or even in paying taxes).
Hey, Looey, show us with your Looey-rithmetic how you got that 20% number to reduce wages/income by, eh???
And probably you think that Looey has never, ever lied??? Or misstated??? Or made horrendous numerical errors??? Posted stuff out of context?? Repeated things that had clearly time and time again been refuted??? need I go on?
there is a big difference between doing that and accusing someone of being two different screen names, or being a DU troll.
We let you constantly act very uncivil, but the line is drawn somewhere and personal lies is where I draw it. Sprite crossed a line and he should apologize.
You terribly sensitive thing!
Dear pigdog,
I'm gonna give it one more try, pigdog.
Corporate income taxes are calculated on an inclusive basis. One does not calculate a percentage of the after-tax profit, and then add that to the selling price. I wish it were so. ;-)
No, one multiplies the ENTIRE PROFIT before taxes to come up with the tax liability.
Let's look at the problems with the table you posted. Just one level:
$1.00 - Input
$0.33 - Profit margin of 33%
$0.11 - Tax rate of 34.4%
$1.44 - Selling price
Accumulated tax costs $0.11
Tax costs as % of selling price 7.86%
Okay. The selling price is $1.44.
How much is the net pre-tax margin on the sale? 44 cents.
The input was a dollar, and no other costs are identified. As well, 33 cents is identified as "profit margin," and 11 cents is identified as "tax."
But unless you're positing that there are 11 cents in other costs (unidentified), the only way to read your table is that 33 cents is the profit the business keeps, and 11 cents is the profit the business sent off to the IRS as corporate income tax.
Thus, the profit, before calculating the tax bill, is 44 cents.
Now, when you calculate your corporate income tax, here's how you do it:
Income tax = Net Pre-tax Profit X Tax Rate
So, we come up with the formula of:
11 cents = 44 cents X TR (where TR is the tax rate)
Solve this equation, and the answer is that the actual tax rate on which you've computed was 25%, not 34.4%.
If you wanted a 34.4% rate (and assuming the after-tax profit will still be 33 cents), it would look like this:
$1.00 - Input
$0.33 - Profit margin of 33%
$0.17 - Tax rate of 34.4%
$1.50 - Selling price
Here, there is 50 cents of pre-tax profit (selling price minus input [which is identified as the total costs of the product]).
34.4% of 50 cents is actually 17.2 cents, but, hey, I rounded.
So, with this equation:
Income tax = Net Pre-tax Profit X Tax Rate
We come up with the formula of:
17 cents = 50 cents X TR (where TR is the tax rate)
and TR = 34%.
To repeat, taxes are calculated by multiplying the tax rate on the ENTIRE PRE-TAX NET PROFIT.
"We're unconcerned about the tax as a percent of revenue ... that doesn't enter in at all."
Actually, pigdog, you appear to miss the relevance.
I haven't said that one figures out the amount of taxes owed by applying a percentage to revenues. Of course not. As I've explained to you repeatedly, one calculates taxes as a percentage of pre-tax profits.
However, if we're asking the question, "How much can the price of the product go down if the company no longer pays any corporate income tax?" then the tax AS A PERCENTAGE OF THE SALE PRICE, as you, yourself have shown, is relevant.
And to see what that effect is on a corporate level, one calculates how much the tax is as a percentage of the revenues of the corporation.
Let's try a simple example:
John owns a company that makes one sale this year.
The selling price is $1,000,000.
The profit is $100,000.
The tax rate is 35%.
The tax owed is 35% X $100,000 = $35,000.
John's company, after subtracting the tax out from the $100,000 profit, made $65,000 after taxes.
Now, if John's company paid no income tax (tax on profits), how much could John have sold the item for, and still made $65,000?
Well, that would be $1,000,000 - $35,000 (the amount of tax paid) = $965,000.
The customer saved $35,000.
So, how much did the price of the item come down?
3.5%. Which is the amount of tax paid divided by the original sale price. Which is the amount of tax paid by the entire company divided by the revenues of the entire company.
That's why we go to the trouble of figuring out what the level of taxation is as a percentage of revenue. To calculate possible savings if the tax isn't going to be paid.
I'm not getting the amount of the tax by applying a tax rate to the revenue, but rather, I'm getting the tax-as-percentage of revenue to identify potential savings.
With a company in your example, get rid of the tax, lose 11% of the price. Applied to all the sales of the company, 11% of total revenue wound up being the amount of profit paid in taxes. Get rid of the taxes, lose 11% of the prices across the board for the whole company. Cool!
Now show me 20 Fortune 500 companies where if you get rid of the federal corporate income taxes paid, you can lower the price by 11%.
I won't wait up.
sitetest
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