Posted on 08/24/2005 9:40:44 PM PDT by RobFromGa
In fact, I am surprised the old boy has finally admitted the truth as I know for a fact that he has been asked to clarify this point (in writing) many times.
Well done.
Desperation? ME? LOL! YOU are delusional on top of everything else!
I post a book title in response to the request of another poster, without ANY editorial comment and without once posting to anyone named "Your Nightmare" I might add, since I happen to believe that most folks are capable of reading something and deciding for themselves what it says. YOU however, at the very appearance of the title, launch your trashing effort and I'M the one who is desperate???
LOL! You REALLY are phunny!
I can't speak for anyone else but I am PERFECTLY willing to let other readers of this thread decide for themselves just who is doing the squirming.
Keep it up and it IS really quite entertaining!
Good question. I suppose it would really depend on the plan -- I haven't looked into that much, but it comes down to whether or not they'll be given a status equal to legal residents. If so, they'd probably be eligible for the FCA, though that would probably require amending the tax code accordingly as well. A "compromise" position might be to give "undocumented workers" (i.e. illegal immigrants with a job) the right to stay for a certain length of time, but not to be eligible for the FCA.
Too many variables for a guess with any kind of conviction, I guess.
just returning the favor. have a great day.
You are here.
Prior to the tax removal, my 90 dollar income would not pay for the 100 dollar car. After the tax removal, my 90 dollar income might pay for the car if the company responds to tax cessation by reducing it's price to 90 dollars.pigdog's response:
That's quite a good observation that some of the Status Quo folks on the thread certainly miss.Quite wrong.Quite right.
Someone missed something alright. Both of you... You both missed the 30% tax on the $90.00 price making the total cost what was $100.00 after tax would now be $116.88 after tax.
The term is immaterial. These costs do cascade through the economy (as they are passed to the next level in the form of a higher price,) and they do accumulate (as they add up, ultimately to paid by the consumer at the final retail stage.) Call them whatever you want.
The real issue is their cumulative magnitude ... While we agree that they exist, IMHO, the FairTax proponents overstate the actual magnitude of these costs.
I am not understanding this statement the business is not giving you a 25% take home pay raise they just are not taking out taxes you still make the same amount of pay hourly.
Both schemes have underground potential. Some money in either scheme will never pass through an "in the game" tollbooth. Only money transferring into the underground is taxed by the income tax and only mony transferring out of the underground it taxed under the FairTax. Money that stays IN the underground is not taxed under either scheme.
Unfortunately, it is impossible to predict how the underground will evolve to thwart any new scheme of taxation, just rest assured that it will. I believe the best working assumption to make now is that the magnitude of lost tax potential in each scheme is about the same. I can't prove that, but no one else can prove that any new scheme will be significantly better (or worse.) You just can't run the experiment (a problem with most predicive economics.)
What!?!? An under the table nanny is going to start charging 30% more? Are you kidding?
What makes you think your friends who hire her are going to be stupid enough to pay her? Unless she produces a receipt, which she won't do unless she has a real business, which puts her on the radar of the state collection agency, she won't be raising her prices. That's a silly example. This is the open market, remember?
What!?!? An under the table nanny is going to start charging 30% more? Are you kidding? What makes you think your friends who hire her are going to be stupid enough to pay her? Unless she produces a receipt, which she won't do unless she has a real business, which puts her on the radar of the state collection agency, she won't be raising her prices. That's a silly example. This is the open market, remember?Actually, the nanny isn't liable for the tax. The bill defines "any household employing domestic servants" as a taxable employer and further states that "in the case of wages or salary paid by a taxable employer which are taxable services, the employer shall remit the tax imposed." Sitetest's friends would be liable and would have to remit the tax.
The term is immaterial.I believe the term is material. "Accumulating" is an additive process, "cascading" is a multiplicative process. A tax that accumulates adds up as the product goes from level to level but the effective tax rate on the base does not change because the tax isn't taxing the tax from previous levels. A cascading tax does tax the tax from previous levels (e.g., a sales tax is imposed on the manufacturer and again on the distributor) so the effective tax rate increases from level to level.
Good catch- thanks!
In the current scheme, the same flow only taxes the money once: at the employer through withholding.
While the FairTax does collect tax from different entities at different points, and some tax from money that escaped taxation in the prior current scheme, other monies, now taxed, escape. It is certainly not clear that the the tax base is significantly larger, but it is different.
You really must wear industrial-strength XXXL blinders. You want to get the FairTax passed so bad, you want to skip right past the honest debate steps and get right to the congratulary backslaps and attaboys.
It doesn't work that way. The fact that you continue to name-call and heap verbal sewage on anyone who dares to question any aspect of your plan, even when such flaws are obvious and bleeding from the neck, shows that you don't want to discuss this civilly. You just want to ram it down our throats. And you think we are squirming?
And thanks to both you and pigdog for providing such a good consistent example of what a FairTax kool-aid drinker behaves like thread after thread after thread. There are others but none with quite the staying power, but others are close. You are the definition of a "True Believer".
The key word is "take-home". Let me try to explain. If they don't take out the taxes your gross pay is the same, but the take-home pay is higher by the amount of the taxes. The business has two choices (actually a range of choices between these two extremes):
A. they can keep paying you $8 per hour and now give you the whole $8 (instead of giving you $6.50 and the govt approx $1.50 as before). In this case the business hasn't saved anything on your income and payroll taxes, so they will be able to only reduce prices by at most 10% (the money they save on your half of FICA, plus a few percent for other things beyond the scope of this post). So, the prices you pay at retail will not go down, and when they tack on the 30% FairTax you will pay about 17% more for everything you buy on average.
OR
B. they can reduce your gross pay to the $6.50 you were "taking-home" before. In this case the business HAS saved on your income and payroll taxes, so they will be able to reduce prices by perhaps 23%. So, the prices you pay at retail will go down about 23% on average, and when they tack on the 30% FairTax you will pay about the same as now for everything you buy on average.
See the example in the letter here for more clarification:
Folks here tend to throw terminology into a discussion rather loosely. Taxes in the current scheme both cascade and accumulate. Taxes in the FairTax do neither. In the end the same amount of tax dollars wind up in the Treasury. They just get there through different routes.
...the effective tax rate on the base does not change...
your point??? what do you mean by "base"?? ... the original dollar cost in the example? the taxpayer? great example of throwing in an undefined term.
Ultimately, extracting $2,000 Billion dollars from a $10,000 Billion economy requires levying an average transaction tax of 20%. If you tax less than the full base (base being defined as the total magnitude of all economic transactions -- GDP), you have to raise the rate. It doesn't matter, from the perspective of the total tax burden whether you pay it up front or in arears.
Having said that, there are secondary effects that may make one scheme preferable over others: growth impacts, ease of collections, transparency, distribution of burden, etc., but none of these are germine to this thread. The topic here is whether the FairTax can really raise your effective wages AND lower effective prices AND generate the same amount of tax revenue.
It can't.
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