Posted on 09/16/2005 5:15:32 PM PDT by Man50D
Dear Editor, I've just read a new best-seller, which I highly recommend to you and your readers: "The Fair Tax Book, Saying Goodbye to the Income Tax and the IRS."
The co-authors are "reformed lawyer" and syndicated talk show host Neal Boortz, and Congressman John Linder, R-Ga.
Linder is also the principal author/sponsor of The Fair Tax Bill (H.R. 25), currently before Congress.
In the interest of brevity (the book is only 180 pages, by the way), I'll quote from the back of the dust jacket.
"What the Fair Tax will do for America: eliminate the income tax and the dreaded IRS; jump start the U.S. economy; bring businesses and jobs back to the United States; and recapture billions of untaxed dollars currently lost to criminal and offshore businesses.
"What the Fair Tax will do for you: allow you to keep 100 percent of your hard-earned paycheck; let you choose to save all the money you want .... and pay taxes only when you spend it; eliminate countless taxes you don't even know you're paying; lower interest rates; and make April 15th just another beautiful spring day."
The authors provide ample citations from the works of various economic think-tanks to back each of those assertions.
The Fair Tax would replace all current federal, income-based taxes with one universal, federal "consumption tax," on both goods and services, at the retail level only. There would be no exemptions whatsoever. The proposed, "revenue neutral," initial tax rate would be 23 percent. Predictions are that the resulting economic boom would make it possible to lower that rate in short order.
As described so far, the Fair Tax would be so regressive as not to stand a snowball's chance in hell of passage. Here's the solution.
At the first of every month, every head-of-household, irrespective of income/net worth, would receive a federal "pre-bate" check equal to the taxes due on his or her appropriate "poverty level spending" for the coming month. To quote the authors, "'Poverty level spending' is, by definition, that spending necessary for a household of a given size to pay for its necessities. It is adjusted every year by the Department of Health and Human Services."
For example, if the Fair Tax were currently in effect, every family of four would receive a monthly pre-bate of $491.82 to cover the 23 percent tax on its first $2,138.22 spent -- its "poverty level spending." All spending above that level (that month) would have a net federal tax cost of 23 cents on the dollar -- be it for sneakers or a yacht.
The federal sales tax would be collected by the states' sales tax offices. Moreover, don't forget that everyone's "take-home-pay" would be their full, gross earnings under the Fair Tax.
It is a most interesting, concise and thought-provoking read that can be knocked out in two or three sittings. Suggested full retail is $24.95. There is at least one copy available at the Camden County Public Library.
I hope that you and your readers will both enjoy the book and come to support the bill.
Wal-Mart has pledged to reduce their prices by the exact amount they pay in corporate income taxes if the FAIRTAX passes. From their own books, based on their revenues (that's sales for you) and taxes paid, that's a 2% reduction across the board.
Whoop-de-doo, dude!
Wow, you truly are ineducable! Ask an accountant how much tax is paid via an 1120S or a 1065. Here's a hint: you can check the definition of zero at dictionary.com.
Read the book. Something like 22 percent of the price of any retail item is embedded taxes -- and they go away. Drawing upon the actual events that surrounded the failure to renew a tax on airline ticket prices, the authors figure the customer will actually see prices fall rapidly to their pre-tax level.
In other words, the price of goods won't go up.
Sorry, you must have missed it: the book is wrong. The argument is wrong. Always has been, always will be.
The single (!!) study the book was based on assumed that net wages would not increase (that is, that the employee's portion of FICA and all personal withholding) would stay with the employer just so he could afford to reduce prices. The study author (Dr. Dale Jorgenson of Harvard) was out of the country for the last year, but has returned and has essentially disavowed the book in it's entirety.
It's pretty simple: workers either get their full gross pay or prices come down substantially enough to compensate for the retail price increase due to the FAIRTAX. Take your pick, but the former won't work and the latter is not legally possible.
The employer no longer has to pay anything to Social Security, or Medicare or anything else. This is revenue neutral and takes care of ALL the embedded costs. Like I said, read the book.
No Nightie - sorry. YOU'RE the joke. Jorgenson has nothing to do with the embedded taxes I'm talking about ... nor has he "cleared things up" as you naysayers like to erroneously shout.
Prices will be decreased, not increased, when the income tax is eliminated (and it has little or nothing to do with payroll taxes). Workers will still get 100% of their wages also. None of you guys have ever been able to show otherwise.
Ah, balrogg666, but they report them on those forms as part of the tax process. For example, the 1120S is required so that the K-1 can be made which the individual uses for his 1040. It's all part of the wonderful income tax scheme that you guys seem to so love. The point remains that all of these taxes are business income taxes and pretending that only corporations pay business income tax is only a sham.
Please provide a link to the Wal-Mart statement you give.
Wrong again, balrog666. The FairTax price reduction is not merely based upon Jorgenson's analysis. Nor does it depend upon wages being redced.
In addition, Jorgenson has not "disavowed the book in its entirety" (or even at all) ... that's merely you SQLers that have done that in your attempts to do anything possible to inhibit the FairTax.
It seems pretty clear that what will occur is the workers will be getting their full gross wages and there will be a sizeable price reduction also. Whether it might be 10, 15, 20, 25% - or perhaps more - is not yet known.
BTW, you got your claim bassackwards I think when you said "..workers either get their full gross pay or prices come down substantially enough to compensate for the retail price increase due to the FAIRTAX. Take your pick, but the former won't work and the latter is not legally possible."
In any event both parts of that are going to prove to be incorrect and we'll see wages holding up just fine and prices declining. Don't forget there will be some rapid economic expansion also and that will help things economically as well (and that's from Jorgenson within the last month so your "disavowed the book" business is even sillier).
You guys get some truly quaint theories from out of nowhere. I'd sooner believe the 75 economists who say workers will get 100% of their wages and benefits that the folderol promoted by you and your pals.
I've noticed that you're another who has no tax plan to offer as an alternative. Good work!
That's not what's going to happen as you'd know if you did any serious inquiry into the FairTax instead of just haranguing everyone with the Chicken Little bit.
See post #134.
The FairTax price reduction is not merely based upon Jorgenson's analysis.Show us another (beside your own laughable one).
Post #96 shows the basis for price reductions based upon business income tax removal from prices.
BTW, Nightie, where's your Nightmare Tax plan now and how many co-sponsors does it have???
Post #96 shows the basis for price reductions based upon business income tax removal from prices.LOL! From someone besides Professor Pigdog.
That came from one of the Squirrels Nightie - he claimed it was the One True Way to calculate embedded costs.
I'd be glad to look at any explanation you might have - but in the meantime, tell us about your Nightmare Tax plans; haven't seen a single book written to describe the benefits of that - and I searched for (but did not find) "The Nightmare Tax Book".
Guess it hasn't made it (quite) to the top of the charts yet, eh?
Great, if you believe used items and business to business transactions would never be taxed after a National Sales Tax is set up.
Also you would have to believe the tax rate would stay low, the rebate would stay high, and that prices would drop, even though prices didn't drop after the last tax cuts we had.
Don't get me wrong, I like tax cuts.
I just don't see putting in a National Sales Tax as having anything to do with cutting taxes.
My worst fear is that we'd end up with a National Sales Tax AND a National Income Tax.
This is just another way for the Government to take away people's money.
Wouldn't it be great to pay no Federal Taxes as long as you buy no Foreign goods if the Federal Government got all it's money for operating expenses from import Tariffs as allowed by the Constitution?
An Excise Tax imposed on ALL goods and services rather than just on certain goods seems to me to be more over reaching and oppressive a system of taxation than what the Founders intended.
Thank you.
You have to understand. We have been putting up with LL's little stingers for a long time here. He is rather pitiful, but, as we all do, he has a right to post here. His posts are not what one would call "on the topic". They are designed to disrupt and feed his tiny little ego.
He has never been anymore than an irritating bother. He adds nothing worthwhile to the conversation and he actually hasn't had many rational thoughts. We tolerate him as we have to.
He is very careful, though. He hasn't had any of his comments pullled as have many of the anti's.
BTW, he claims to make more in one deal than my house is worth. It's hard to figure, since he stays on these threads almost 24 hours a day. I guess he has minions working for him who do all of his bidding and he rakes in all of the money.
As you've never been able to fully grasp, the algorithm presented in the cited example is the proper way to calculate such costs. One needs to remember that example was created in response to your inane example, which was profoundly incorrect.
AND, as usual, you have taken the example COMPLETELY out of context by leaving out several explanations AND other examples; most notably:
The bottoms up method you have been shopping around is highly misleading (perhaps intentionally so)The NUMBERS do matter: number of levels, amount of profit, tax rate, etc ... 33% profit at every level is YOUR number, and quite ridiculously high!
The potential price reduction of MOST products is FAR LESS than 23% FairTax added back at the end because cumulative profit is FAR less than the 66% of final sale price it would need to be for accumulated, embedded, cascaded, or whatever you wanna callit tax to represent 23% of tax inclusive price.
Ultimately, I notice one characteristic of ALL your responses to ANY analytic post that questions the veracity of the claims of the FairTax: Make up a phoney example (or take someone else's out of context), avoid any real numeric analysis of your own, call your opponent names, close your eyes, click your heals and repeat three times:
"Prices will go down!, Prices will go down! Prices will go down ..."
Then for good measure add:
"AND you can keep ALL your gross pay TOO!"
Dorothy was as convinced about the truth of Oz as you are of the fantasy of "cascading" taxes. The embedded profit taxes in prices represent far less than you keep claiming ... and even you admit that "Whether it might be 10, 15, 20, 25% - or perhaps more - is not yet known." In reality, the number is more like 2% to 5%. AND for companies like airlines and auto manufacturers, the number is more like ZERO.
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.