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.
Thanks!
Like I thought the Doc has no other plan..... LOL!
Dimples you can sit argue specifics ALL DAY LONG what the bulk of embedded taxes come from. We have these BS arguments because because of your beloved hideous MARXIST Progressive tax code that punishes the successful and rewards the poor. Nevertheless, your argument is pointless because it will not make embedded taxes GO AWAY.
So are you for the status quo?
If however excessive duties are placed on ALL goods and services then how are consumers going to reduce their consumption? They've got to eat.
I guess Alexander Hamilton didn't think of that.
The deal could always be changed later once this system is set up. There's nothing to prevent that from being done.
Reducing imports is another advantage, unless you believe having no duties on imports actually grows jobs here.
To address your post directly:
... your beloved hideous MARXIST Progressive tax code ...
First, it's not mine.
Second, it is not "beloved."
Third, if Marxist connections are your demon, then I'm sure you agree the so-called FairTax "prebate" is an implementation of "from each according to his ability, to each according to his needs." After all, those without means will pay less than they should, those with ability will pay more than they should.
And finally, if progressivity is one of your demons, then you should be wary of the progressivity of the FairTax ... the so-called "prebate" is a progressivity mechanism.
As for the "pointlessness" of my argument, the FairTax proponents (yourself included) have spent countless hours defending their claims. If the argument was so "pointless," one would think that such debates would never be given the time of day by you folks ... it would be pointless to do otherwise.
The point of this and other debates on the FairTax has been and continues to be about whether several of its central claims are indeed true. If they are, then I and many others would be inclined to support such a program. However, if they are not, we do ourselves a favor by addressing those issues now, directly, and without fear. So far, this particular claim about price reduction appears to have been oversold; even the originator of the research behind the claim says so. Yet, you and others here, like ostriches bury your heads in the sands of riteous indignation.
Look, if the FairTax is going to succeed, it will not do so my basing its advocacy on proven errors.
You would do yourself a favor to reserve your rock throwing for debates where you can add some value.
Whether you like it or not, the devil here is in the details. Arguing specifics is the only way to shine light into the dark corners of the impossible promises.
To directly answer your question, I am neither FOR the status quo nor AGAINST the FairTax.
I AM against irrational, impossible, and problematic promises. I AM against naive notions that once instituted that ANY new system is immune from tampering. I AM against the notion that any revenue neutral tax system somehow lessens everyone's tax burden. I AM against the notion that those who dare ask questions or point out inconsistencies have nefarious intent.
I AM for tax system reform (including wholesale replacement of today's system of income taxation) provided that such reform can live up to its claims. Time will tell if the FairTax is such a system; but as long as its proponents continue to sell it by making false claims, I'm not buying.
"Reducing imports is another advantage, unless you believe having no duties on imports actually grows jobs here."
Reducing imports is an advantage of the FairTax. However, unlike your approach, the FairTax does not do so in a manner that discriminates against foreign competition and therefore invokes retaliation by our trading partners or sanctions by the WTO. The FairTax eliminates the root cause of the problem, which is a tax foundation that puts US goods at a disadvantage vs their foreign competitors in the global economy. Enacting import tariffs while leaving the underlying tax system intact is like putting lipstick on a pig.
I certainly must have been misinformed since I thought that the statement:
"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 represent 23% of tax inclusive price. "
... actually meant that the 66% rate mentioned when you said 66% of price was a rate ... silly me!! It must have meant your pants size, eh? Then, too, later in your post in your (presumably) formulaic derivation you describe a number you give as 66% (OH PARDON ME ALL TO HELL! I MEANT 66.9%. GEE! GOSH! GOLLY I ERRED. A HUNDRED ZILLION PARDONS AND I HOPE YOU'RE NOT INSULTED DITTO OLD CHAP), but I note that you now call it a ratio. Is that now presumed to be different from a rate??
Before going further, BTW, I've not said that prices will drop 23% (or any other specific number) but just that they will drop a significant amount due to the embedded tax mechanism that you fail to understand despite many clear explanations - nor have you ever proven that to be an incorrect description ... you merely attempt to ignore it and falsely state other claims. Nor, in fact, have I ever said that embedded tax costs were composed of only the cascading embedded taxes you do not with to admit. In view of the fact that there are other costs that will be eliminated in addition to those on business income taxes - such as compliance costs, and a number of intangible costs related to misuse of assets caused by the income tax laws - it is quite clear that prices will be reduced by these other costs in addition the embedded business income tax costs.
In your arrogant and supercilious claim in #179, where you try to stake out the moral high ground that only you have not been insulting, calling names and denigrating others while (fortunately for you) always being the only one who is correct on all information you present whereas all of the other poor slobs are just fortunate to have you around to point out their almost-universal errors. That is NOT ONLY supercilious and arrogant - it is flatly incorrect since there have been several times on these threads your errors have been pointed out (only to have you ignore them, of course since you are, indeed, perfection). So stop your attempts to try to demean others in that fashion.
As for examples of your "wotrk" in that regard we have excerpts from recent threads:
SNIP*** ... Of course it's not a real world example you maroon! It's the MECHANISM that's important DON"T YOU GET THAT !!! tee hee, tee hee hee ... "... your inane example, which was profoundly incorrect ...
(and you don't even mention my name - tsk, tsk!)
... YOUR table: it's hogwash. You appear to be the one insisting on using selecive data (incorrectly at that) and bogus reasoning ... SNIP *** ... Believe what you want. You know, you're a rather comical person; I always get a chuckle of your replies ... SNIP *** ... Read my words carefully (understanding language is quite important to divining proper meaning.) ... SNIP *** ... you intimate that you are competent at the math. What's the problem? Cat got your calculator? ... SNIP *** ... You denigrate the ... SNIP ***
(USED TO START 4 CONSECUTIVE PARAGRAPHS FOLLOWED BY)
You don't actually offer any mathematical analysis, you just gush and claim I'm wrong.
(AND AT THE END OF POST)
SNIP *** ... Perhaps you don't understand that math: ... SNIP *** ... Please feel free to repost this anywhere you may encounter the infamous "cascading taxes" table posted by pigdog ... SNIP*** ... Dorothy was as convinced about the truth of Oz as you are of the fantasy of "cascading" taxes" ..." - It appears you've jumped into the deep end of the pool but clearly can't swim ...
And there are many more ... but I'd think you get the drift - the old saying about the glass houses, etc.
Now, back to your current claims. The examples of cascading, embedded income taxes I've given are neither "overarching" or "ficticious" and the explanations I've given are certainly understandable to most people. Your pretense that wages must be cut for prices to drop (or that prices must rise) does not comport with reality.
In the calculations you present, you continually allude to "accumulated profit" while I've pointed out to you before (more than once I believe) that there is no such thing as "accumulated profit" in the cascading example; there are cascading tax costs as a % of sell price but the profit is retained wihin the level where earned, not accumulated. For this reason neither example is meaningful since it relates to nothing real. In fact, take your calculation with the 34.4% tax rate - the amount that would be necessary to eual 23% of the sell price at Level 6 would be $66.44 x 0.23 = $15.28 which amount is clearly LESS than the 33.88% of embedded taxes which amount to $22.51. That would be assuming these would be real-world values which, BTW, was never claimed and which you continually try to put forth as an erroneous statement of what I have said.
The upshot of all this is that - ONCE AGAIN - it is "tax coses as % of sell price" that represent embedded taxes that are potentially removed (along with other costs) when the income tax is deep sixed. There are no accumulated profits and the pretense that there are is utter foolishnes.
Leaving that aside for the moment, why is it that we have never heard your proposed real tax plan as an alternative to the FairTax? And don't give us that nonsense about how if you could find out "just one more thing that were true" you'd love it. None of us on these threads are that gullible. Let's hear about how YOU believe the present system should be fixed with a real tax plan.
Taxes are computed on income not revenue.
Go ahead and be angry.
If you can't make your case without misrepresenting my position, then I suppose I should just get out of the way and let you argue both sides.
Taxes are computed on income not revenue.So? Revenue is generated by sales (prices). If income taxes are only 2% of revenue, if you remove the income taxes - how much could prices go down for WalMart? No more than 2%.
Since taxes are computed on income, not revenue, and income is what determines if a company is successful or not, you must compare income tax as a percentage of income. WalMart pays 35% of its income to income tax.
Revenue - Expense = Income.
The question is not what percentage they pay of income, that has no bearing what so ever on how much they can reduce their price with the elimination of the tax. You need to compare the amount of tax with their gross sales to how much Wal-Mart could reduce their prices. Your analysis is meaningless.
If you pay over a third of your income in taxes, the elimination of those taxes would have no effect on the price you have to charge to still receive the same after-tax income?
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