[Your Nightmare]

Exposed hear on Free Republic first by RobFromGa.

[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.

[MNJohnnie]

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.

[Red Badger]

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

[ovrtaxt]

It's from CNN.

You've got to be kidding.

[bk1000]

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.

[raybbr]

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?

[xcamel]

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.

[mikegi]

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.

[Tribune7]

If the feds will get the same amount of money but there will be less time and money spent getting it too them, I can't see how there won't' be savings for the overall economy.

However, I also don't understand the claim that prices won't rise. I thought the idea was people could afford the price increase because the feds wouldn't be withoholding their salary and would be giving them "prebates".

[Mikmur]

Perhaps an employee's gross paycheck would be smaller, but take home pay should remain about the same. A company has to pay matching funds and a staff to deduct and pay the taxes.

As far as the government still taking in as much in taxes, this may be the case, but it would then be our choice directly, and not only through elected representation. We could then have more than one way to show our disapproval of the use of tax dollars. When money is spent wrongly, we stop buying....

[xzins]

My car price has a lot of things in it when it comes from the manufacturer: materials, advertising, labor at x+1, company infrastructure, company fed/state/local taxes, and probably a few things in other categories that I've forgotten.

The labor cost has to be at level X+1 instead of at level X because I need a certain level of "take home pay" after my individual taxes are deducted and mailed to the fed/state/local gov'ts.

As you can see, the company has it's own taxes to pay and one could suppose that it pays me at X+1 level because of the taxes I pay.

Actually, it pays me at X+1 level because that's what they're willing to pay in the market for my labor. Also, that's what I'm willing to do that work at for that company.

There is no rule that says I have to back off my pay level demands just because I no longer pay income taxes. After all, my sales taxes just went up. I'd be foolish to back off my pay level demands.

[js1138]

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.

[ctdonath2]

The real problem is that ANY tax system will be corrupted.
The current income tax started real simple too.
Once some pol discovers he can win votes by changing the tax system to favor a special interest, the slippery slope begins.

[nopardons]

bttt

[Sprite518]

You are posting from CNN.. LOL!

[ItsForTheChildren]

Ping to one of your favorite subjects.

[goldstategop]

What Money Magazine did NOT mention is that under the current income tax system, the government gets to keep half your pay and you still get the effect of a wage cut! It comes from the hidden hand of government. To liberals, that's not a decrease in purchasing power whereas if a private company does it, it a reduction in people's earnings. I don't know where to laugh or cry in the face of this conception the government knows better what to do with your money than you do.

(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)

[Little Ray]

Umm... That is absolutely wrong. It would be the entire pre-tax amount.