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 ...
Exposed hear on Free Republic first by RobFromGa.
I didn't here a thing...
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.
So if my Fed taxes go up,that means my hourly wage MUST go up?
So if my Fed taxes go up,that means my hourly wage MUST go up?
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.
Hogwash!!!!!!!!!!!!
OUCH. Better put some ice on that Nightmare, this one is going to leave a mark.
"Money" is published by Time magazine. They have an agenda that doesn't include the Fair Tax.
It's from CNN.
You've got to be kidding.
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.
So does the original poster. His posting history shows nothing but FairTax-bashing.
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.
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.
Actually, it is a very evenhanded article which exposes the good points and the flaws of the fair tax.
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?
Real and actual wages would rise, and by a cute trick of verbiage, Money hung itself right out in the wind.
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.
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.
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