Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

MONEY finds flaw in 'FairTax' bestseller [FairTax myth busted by major magazine]
CNN ^ | 9/7/2005

Posted on 09/08/2005 4:48:28 AM PDT by Your Nightmare

A bestseller advocating radical tax reform contains a critical flaw that misleads readers, according to a report in the October issue of MONEY Magazine.

...

While consumers would pay a federal sales tax on purchased items, the authors argue that prices at the store would stay the same. The reason: everyone involved in the process of production would no longer be paying taxes, so they could charge less for their goods and labor.

If true, that would mean a dramatic increase in Americans' purchasing power.

But, according to the MONEY report, the book fails to make clear that, in order for pre-tax prices to fall so sharply, companies would also have to cut wages they pay.

"Sure, you'd get to 'keep 100 percent of your paycheck,' as Boortz and Linder repeatedly write, but it would be a smaller paycheck," MONEY senior editor Pat Regnier writes. "That's kind of a big thing to leave out."

(Excerpt) Read more at money.cnn.com ...


TOPICS: Business/Economy; Government
KEYWORDS: boortz; fairtax; taxreform
Navigation: use the links below to view more comments.
first 1-2021-4041-6061-80 ... 241-248 next last

1 posted on 09/08/2005 4:48:30 AM PDT by Your Nightmare
[ Post Reply | Private Reply | View Replies]

To: lewislynn; Always Right; RobFromGa; sitetest; Dimples

Exposed hear on Free Republic first by RobFromGa.


2 posted on 09/08/2005 4:49:47 AM PDT by Your Nightmare
[ Post Reply | Private Reply | To 1 | View Replies]

To: Your Nightmare
Exposed hear on Free Republic first by RobFromGa.

I didn't here a thing...

3 posted on 09/08/2005 4:52:40 AM PDT by Prov1322 (Enjoy my wife's incredible artwork at www.watercolorARTwork.com! (This space no longer for rent))
[ Post Reply | Private Reply | To 2 | View Replies]

To: Your Nightmare

Money seems to have amnesia about the amount of taxes businesses pay for having employees. If you figure the book has bad math, Money just did them one better with lazy math.


4 posted on 09/08/2005 4:53:18 AM PDT by x5452
[ Post Reply | Private Reply | To 1 | View Replies]

To: Your Nightmare

So if my Fed taxes go up,that means my hourly wage MUST go up?


5 posted on 09/08/2005 4:56:25 AM PDT by Minnesoootan
[ Post Reply | Private Reply | To 2 | View Replies]

To: Your Nightmare

So if my Fed taxes go up,that means my hourly wage MUST go up?


6 posted on 09/08/2005 4:56:41 AM PDT by Minnesoootan
[ Post Reply | Private Reply | To 2 | View Replies]

To: Your Nightmare
But, according to the MONEY report, the book fails to make clear that, in order for pre-tax prices to fall so sharply, companies would also have to cut wages they pay.

Um NO. They would NOT have to cut wages at all. Since the money collected to pay taxes is money ON TOP of the money they all ready pay in production costs, their would be NO net increase in price of PRODUCTION. The Author at Money is deliberately MISLEADING or LYING about how this mechanism would work. The cost of goods would go UP because of the tax ADDED, HOWEVER the decision to PAY the tax would rest with the CONSUMER instead of forcibly removed from the WAGE EARNERS paychecks. There would be an off setting reduction in cost because all the hidden taxes that significantly the production costs would NOT have to be paid (Business taxes, fees etc) Once again we see the Dinosaurs grasping at any straw to avoid considering ANY changes to their corrupt failed Tax system. Guess it is MORE important to protect all the special tax privileges and shelters for the giant Corps and trust fund babies then to ACTUALLY have a Tax system that is FAIR.

7 posted on 09/08/2005 4:58:27 AM PDT by MNJohnnie ( Blaco say Wed Aug 31st, FEMA says Thur Sept 1st.. Who is lying?)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Your Nightmare

Hogwash!!!!!!!!!!!!


8 posted on 09/08/2005 4:59:00 AM PDT by Red Badger (United States Marine Corps.....An army of WON!...........)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Minnesoootan
So if my Fed taxes go up,that means my hourly wage MUST go up?

OUCH. Better put some ice on that Nightmare, this one is going to leave a mark.

9 posted on 09/08/2005 4:59:41 AM PDT by MNJohnnie ( Blaco say Wed Aug 31st, FEMA says Thur Sept 1st.. Who is lying?)
[ Post Reply | Private Reply | To 5 | View Replies]

To: MNJohnnie

"Money" is published by Time magazine. They have an agenda that doesn't include the Fair Tax.


10 posted on 09/08/2005 5:00:24 AM PDT by Wiser now (A bitter, sour old woman is the crowning work of the devil.)
[ Post Reply | Private Reply | To 7 | View Replies]

To: Your Nightmare

It's from CNN.

You've got to be kidding.


11 posted on 09/08/2005 5:02:38 AM PDT by ovrtaxt (Stop the looting! The IRS hates competition.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Your Nightmare

I'm sorry, but this dog won't hunt. If I keep 100% of my paycheck and pay tax only when I spend the money, then I will consider my purchases more carefully. If my employer gives me my entire check, instead of part to me and part to Uncle Sam, what's the difference? Where does all this 'smaller paycheck' stuff come from? If nothing else, the employer gets a break by not having to match my social security.I think there is some funny math here.


12 posted on 09/08/2005 5:03:18 AM PDT by bk1000 (A clear conscience is a sure sign of a poor memory)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Wiser now
They have an agenda that doesn't include the Fair Tax.

So does the original poster. His posting history shows nothing but FairTax-bashing.

13 posted on 09/08/2005 5:06:02 AM PDT by kevkrom ("Political looters" should be shot on sight)
[ Post Reply | Private Reply | To 10 | View Replies]

To: x5452
Money seems to have amnesia about the amount of taxes businesses pay for having employees. If you figure the book has bad math, Money just did them one better with lazy math.

Oddly, the math flaw was confirmed by the fair taxer researcher who came up with the 22% embedded taxes, Dr. Jorgenson. Boorts and Linder also agreed there was a flaw, and Boortz said he would correct it in later editions. I have done the math many times, it is flawed.

14 posted on 09/08/2005 5:06:18 AM PDT by Always Right
[ Post Reply | Private Reply | To 4 | View Replies]

To: MNJohnnie
The Author at Money is deliberately MISLEADING or LYING about how this mechanism would work.

The authored lied about nothing. The author was merely pointing out the gross misrepresentation that the fairtax orgnization and Boortz were saying. The author did not concluded wages would go down, merely pointed out that was the assumption used in the fairtax model by the expert who did all their research.

15 posted on 09/08/2005 5:09:06 AM PDT by Always Right
[ Post Reply | Private Reply | To 7 | View Replies]

To: Wiser now
"Money" is published by Time magazine. They have an agenda that doesn't include the Fair Tax.

Actually, it is a very evenhanded article which exposes the good points and the flaws of the fair tax.

16 posted on 09/08/2005 5:10:11 AM PDT by Always Right
[ Post Reply | Private Reply | To 10 | View Replies]

To: Your Nightmare
What The FairTax Book fails to mention is that prices can only fall this sharply if companies cut wages. I asked Jorgenson about this, and he agreed. Say your salary is $100,000 a year today, but you take home $80,000 after taxes. Your company is still paying that extra $20,000. In a FairTax world, it will save that money, and be able to lower its prices accordingly, only if it can reduce your salary to $80,000. In other words, your take-home pay is the same as before. Sure, you'd get to "keep 100 percent of your paycheck," as Boortz and Linder repeatedly write, but it would be a smaller paycheck. That's kind of a big thing to leave out.

Isn't this only true if the company still pays payroll tax? If they don't pay the payroll tax anymore why would they have to cut your salary?

17 posted on 09/08/2005 5:19:34 AM PDT by raybbr
[ Post Reply | Private Reply | To 1 | View Replies]

To: Your Nightmare
Money conveniently forgets that about 5.9% of an employees paycheck (real value) goes to cover just the administration of taxes, not even the taxes that have to be paid themselves.

Real and actual wages would rise, and by a cute trick of verbiage, Money hung itself right out in the wind.

18 posted on 09/08/2005 5:20:44 AM PDT by xcamel (Deep Red, stuck in a "bleu" state.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: bk1000

My 2 cents, as an employer I would be more inclined to give my employees a raise not having to send matching SS & Medicare payments to the Treasury each month, not to mention a little more profit. Still have to rethink my purchases though.


19 posted on 09/08/2005 5:24:53 AM PDT by poobear (Imagine a world of liberal silence.)
[ Post Reply | Private Reply | To 12 | View Replies]

To: Your Nightmare

I don't understand how anyone can think that the "Fair Tax" is a magic cure for federal taxes. The government is still going to take as much taxes as it does now, just through a different mechanism. Over time, there would be thousands of rules and regulations, special "luxury" taxes, special statuses for certain shoppers (low income), etc, etc. You will still need to report to the government your income statements and sales taxes paid, etc.

The *only* way to stop the rise of tax rates is for the government to stop increasing spending. A good start to doing that is to have people receive their full salary and have to write quarterly estimated payments checks directly to the government. That will bring home the true amount of taxes being paid.


20 posted on 09/08/2005 5:28:21 AM PDT by mikegi
[ Post Reply | Private Reply | To 1 | View Replies]


Navigation: use the links below to view more comments.
first 1-2021-4041-6061-80 ... 241-248 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson