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.
It has no bearing on the calculation. You need to compare the tax savings with gross sales to say how much you can reduce prices. But you don't like to do that because it shows how little those savings actually are.
Like you provide the source of the claim and the rationale that it costs Americans $232 billion to prepare their income tax forms? I gave you my rationale, and it makes sense to me as a long time 1040 filer. It does not take me 30 hours to fill out a 1040, maybe 4 hours with the assistance of tax software.
It would only move the evils around. I'm not interested an any revenue neutral systam. Without a massive cut, things won't get any better.
Wal-Mart's income tax rate is not an interesting factor in this discussion. The relevant fact is the ratio of their income tax to total sales, since the sales tax would be applied to their sales price. If Wal-Mart paid no income tax, they could reduce their sales price by about 2%, not your implied 34.8%. You're defending this scheme by dissembling. If you look at it through a rational analysis, you will see that the "Fair Tax" claims do not add up.
Gross sales have nothing to do with tax savings. Gross sales are only half of the equation. You can have all the sales in the world and have equal expenses and have NO income. You wouldn't have any tax savings and you also wouldn't be in business for very long.
Do you figure your tax liability on your sales or your income?
It would only move the evils around. I'm not interested an any revenue neutral systam. Without a massive cut, things won't get any better.
You're dreaming that a massive cut will ever be possible under our present system. The only possibility for that to occur is to massively change the system. Free markets under a fair tax could bolster the economy enough to in effect lower taxes. But I suspect you realize that, and will still find some way to reject it.
Um how about businesses, corporations, sole proprietorships, partnerships,LLC, etc..they have to try and understand the complex tax laws to take advantage of breaks and avoid pitfalls. To do this properly requires professional pre-tax planning...compliance is not just about filing a simple return, it is figuring out how to most effectively avoid (not evade) paying taxes using legitimate (but sometimes complex) tax regulations. Take a look at how many Tax lawyers and Tax Accountants there are, they are not just filing 1040's..oh don't forget the recordleeping for IRS and then filling out complex business returns and audits...fabrication of what? http://ntj.tax.org/wwtax/ntjrec.nsf/EEA087F6813237A585256863004A5933/$FILE/v50n3487.pdf
Um how about the manufacturer's and suppliers to Wal-Mart...utilities costs go down, raw materials cost less, shipping costs less, labor cost less, compliance costs are less...how do these figure in Wal-Mart's costs and profits?
If there's still Welfare, Social Security, FEMA funds for snow removal, Medicaid, 200 million dollar bridges to islands populated with 50 people, ATM cards for disaster victims, Prescription drug benefits, Agricultural subsidies...Ad Infinitum, then there's still wealth redistribution.
The percentage of employee costs to total costs would affect the percentage of your savings.But 20% isn't possible unless I ripped the employee(s) off for their withholding.
Good thing the Fair Tax doesn't tax used items or business to business transactions
So, we wipe out the auto industry forthright, as, knowing human nature, initially people will be buying used cars (which are currently in an enourmous glut) to save that 23%.
Also, is it just my "fair nature" that will keep me from purchasing groceries under my company visa card? If business to business isn't taxed, you can bet your ass I'm setting up a business while this is winding through the halls of confusion.
While we're at it, what about realestate? What sort of protection does anybody outside of California have from rate increases which might arise in a declining realestate market? If I buy a used house, is it not taxed?
My wife works for a crane company. Cranes are hideously expensive. 23% of a million dollar crane can go a long ways to rebuilding several half million dollar ones. Some of these cranes are imported, how do we get the Germans to collect the tax? If B to B isn't taxed in this scenario, why do I have to pick up the slack? You really think that (a) the manufacturer will pass all the saving on? You really think an individual will reap benefits from this hypothesized cost savings when it's worked its way through the tilt-up walls of the neighborhood grocer???
NRST is for suckers who think that they could trust the average politician as far as they could throw them. The NRST is only out there because the alternative is either flat tax, or the federal government goes back to the constitutional means of tax collection for themselves and gets the hell out of all the touchy feely crap that states should be doing and letting each other learn from the benefit of what would turn out by some to be their gross stupidity.
If states were responsible for all of the crap the Feds have taken upon themselves, you'd quickly see everyone move from the ones run by do gooder fools. As it is, we're trapped.
Even the concept of a 23% rate for an NRST is stupid, the Feds should maybe get 10%, if it were to cover their actual duties. All the other crap that creates legions of New Orleanites among the productive class should be left to states to either sink or swim upon...
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?THINK!
You cannot eliminate those taxes from the price you'd have to charge...
Since you haven't paid any tax, your income would not be after tax. Your income would be BEFORE tax.
You're high if you thing the NRST would eliminte an onerous enforcement arm...
Of course it's not revenue neutral if you leave all of the unconstitutional BS in the mix...
How are you ripping off the employees? They still see the same take home pay. When do they get those "withholdings" now?
How are you ripping off the employees? They still see the same take home payTHINK!
Their take home pay now is AFTER taxes.
Since they wouldn't have paid taxes after being ripped off by their employer, their/your take home pay would be BEFORE any taxes are paid (from a lesser amount).
Now: $1000 gross
$300 withholding
$700 tax free.
Your way after: $700 gross
No withholding
$539 tax free. ($700 minus 23% tax = $539)
You seem to be pretty good at getting out of the way. Doing nothing isn't a position. It's merely capitulation.
Not hardly...basic economics shows that supply and demand along with fair competition dictate prices...More likely the price of used autos will go up, just as they have gone down now with "employee discounts for all"(lower new prices=lower used prices) Autos raw materials, labor and manufacturing costs will come down from the loss of hidden compliance and tax costs..the amount of that decline is subject to debate, but any difference between new and used will narrow.
Also, is it just my "fair nature" that will keep me from purchasing groceries under my company visa card? If business to business isn't taxed, you can bet your ass I'm setting up a business while this is winding through the halls of confusion.
Read the bill, you will need to get an exemption for your purchases, and will be subject to audit. if you buy groceries now with your business card you probably still will. The difference is millions of people in the underground economy will have to pay something under a NRST.
While we're at it, what about real estate? What sort of protection does anybody outside of California have from rate increases which might arise in a declining real estate market? If I buy a used house, is it not taxed?
What rate increases are you talking about?.Is a used house different from a used car?
My wife works for a crane company. Cranes are hideously expensive. 23% of a million dollar crane can go a long ways to rebuilding several half million dollar ones. Some of these cranes are imported, how do we get the Germans to collect the tax? If B to B isn't taxed in this scenario, why do I have to pick up the slack? You really think that (a) the manufacturer will pass all the saving on? You really think an individual will reap benefits from this hypothesized cost savings when it's worked its way through the tilt-up walls of the neighborhood grocer???
Imported products are taxed only when sold in the USA. USA products are currently taxed at all stages of production, but under a NRST will only be taxed if sold in the USA to non businesses, exports of USA products will be more competitive. If it is used in a business, it is not taxed, what slack are you picking up? It is being used to produce things not consume them, ie. Consumption Tax. Yes prices are set by supply and demand an if one tilt up grocer charges too much and makes a large profit, competition will come along and lower the prices until a reasonable profit is made based on risk, just like now.
NRST is for suckers who think that they could trust the average politician as far as they could throw them. The NRST is only out there because the alternative is either flat tax, or the federal government goes back to the constitutional means of tax collection for themselves and gets the hell out of all the touchy feely crap that states should be doing and letting each other learn from the benefit of what would turn out by some to be their gross stupidity.
Uh I am not a sucker and I resent the remark, especially since you don't seem to have a real tight grasp on the NRST before coming to such a conclusion.
If states were responsible for all of the crap the Feds have taken upon themselves, you'd quickly see everyone move from the ones run by do gooder fools. As it is, we're trapped.
Um so having a NRST that lets everyone know what they are paying instead of hiding it in withholding, SS etc is bad ? Seems to me the first thing we must do is get everyone to see exactly what they are paying for this doo gooder nonsense. At the same time we will be taking the power away from Congress and giving it back to ourselves....They tax us too much we quit spending and save our money. Right now our only option is to quit making as much money and that hurts us more than them.
Even the concept of a 23% rate for an NRST is stupid, the Feds should maybe get 10%, if it were to cover their actual duties. All the other crap that creates legions of New Orleanites among the productive class should be left to states to either sink or swim upon...
The concept of 23% is dictated by the fact that a change in the law needs to be revenue neutral. Its a start, once people see what the govt is costing us, they can put pressure to cut spending. I agree the feds are doing far more than they should in many cases, and National Defense should be their primary function.
You're high if you thing the NRST would eliminte an onerous enforcement arm...
It won't eliminate an enforcement arm, however it will be less intrusive and much smaller. Collection points will be reduced about 80%...
So what is your idea, keep things as they are?
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