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 ...
It's obvious that you have either failed to read, or comprehend, the plan. Because of the "prebate" (FCA), the NRST would actually be progressive based on spending (not income) -- retail spending at the poverty line would yield and effective tax rate of 0%, twice the poverty line would yield an effective rate of the NRST rate times one-half, etc., according to the formula:
Reff = RNRST * ( M - 1 ) / MReff is the effective rateRNRST is the NRST (marginal) rateM is the multiple of poverty-line spendingMy agenda includes the Flat Tax. It's a workable consumption tax that isn't being promoted with lies.They have an agenda that doesn't include the Fair Tax.So does the original poster. His posting history shows nothing but FairTax-bashing.
You mean, other than trying to sell an income tax (including retaining the VAT-like effects of corporate income taxation) as a "workable consumption tax"?
Part of the price of doing business might be some federal taxes. These particular costs would go away under the NRST since the sales tax would be on the end consumer and not on the producers.....as I understand it.
This would lower prices a bit, but if one is going to say prices will fall because the labor cost will fall due to having not to pay the higher wage the income tax requires, then it is only fair to say that the worker's wage will fall. You can't take it away and let it stay at the same time.
Nonetheless, I still like the idea of getting the IRS out of individual's lives, I like the idea of getting rid of the mountains of tax code that can be used to criminalize anyone, and I agree that the huge service industry built around the income tax is an unnecessary drain on resources.
The "so called" poverty level is what screws up the math on how it effects everyone.
My Mother is 80 yrs. old, gets about 18k in SS and a small retirement. She pays zero in taxes now, but it takes every dime of her 18k just to scrape by now. After the pre-bate is figured in, she would be taxed 23% on aprox 6k. thats money she dont have.
Also; anyone that has saved some of their "aftertax" money now, would get to pay taxs AGAIN when they spend it.
The fairtax has its winners and losers, and retirees fall in the loser category on this one. That maybe the toughest sale of all for the fairtax.
Better yet would be to have them put their annual tax check in a drop box... located right in front of the voting booth.
Ever hear of a concept known as "competition"?
Yes, and therein lies the rub. All of the tax accountant and lawyer sympathizers conveniently ignore this little tid bit of freedom. Although I don't buy into the lower wages mantra, I would gladly take a pay cut to exercise the freedom of voluntary taxes.
However, this means that before-tax prices will generally not fall enough to offset the FairTax. They will fall a bit (as producers are relieved of administrative overhead costs, and forced by competition to pass the savings along), but not by anywhere near 20%.
so according to that logic, I just assumed everytime there is a FED tax increase my hourly rate would rise....that's all.
And of course, all of this is just talking about the immediate effects. By the same Jorgensen model, the economic growth in the country would be astounding (9% growth), and as the saying goes "a rising tide lifts all boats".
....and if there is a FED tax CUT,my hourly rate should go down.
The only thing that matters in the long run is what percentage of the GDP the government gets to spend, and whether they get to use tax policy to micro-manage your life.
Perhaps an employee's gross paycheck would be smaller, but take home pay should remain about the same."Take home pay should remain about the same" but that's BEFORE taxes not after.
What is the total fairtax charged on a 100.00 US item?
Not a 77.00 dollar item, a 100.00 item.
That would be $123.00 PLUS whatever your state sales tax is.
Great deal huh?
A $100 item, exclusive of all taxes? Using the rate in the current NRST bill (23% inclusive, 29.87% exclusive), the total tax would be $29.87 (29.87% of $100, 23% of $129.87).
If the Bush tax cuts are made permanent, current calculations indicate that the NRST rate would still be revenue-neutral a 19.2% inclusive (23.76% exclusive), so the tax in that case would be $23.76.
Two questions for you... 1) How much does that $100 item (exclusive of all taxes) cost when current corporate and payroll taxes are added in? and 2) How much do you have to earn (pre-tax) before you can buy that item?
Duh!!! Maybe after awhile but there would be huge proit taking at first. No corporate weenie would pass up the chance to take his bonus based on the initial profit gain made at the outset.
Of course the super-capitalist will say, "He's the CEO. He is in charge or the company. It's because of him that the company makes money."
While normally true, in this case, due to the huge jump in profit when the tax changes, the CEO will have had nothing to do with it. Yet, he/she will still take his cut off the top.
As far as actual competition, unless one makes the first move, no one will follow.
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