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.
Why would the government need to know my income if it wasn't collecting taxes on it?
Unless there's strict language that would limit the government to only knowing the purchase amount of any object and the subsequent tax, they'll know everything you buy under an NRST. They'd have to to be able to impliment any "audits" that are forthcoming...
Aside from the actual need to file a return, what's the NRST have that a simple flat tax wouldn't (aside from the "underground economy" angle, which mostly involves skirting taxes for illegal things that should be left up to states to decide whether or not they're illegal anyway)?
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.
You won't be in business too long if the purpose is to purchase and consume food. In addition eventually the Treasury Department will be knocking on your door for such a ridiculous scam.
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?
You do not take into account the FairTax will drop mortgage interest rates by about 25 percent (about 1.75 points) as bank overhead falls due to considerably less mandatory compliance. Also first-time buyers save for that down payment much faster, as savings are not taxed. The result will be much more affordable new housing.
My wife works for a crane company.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???
Your wife works for a crane company and somehow this has to do with you "picking up the slack"? What slack are you referring to? Foreigners, including Germans, will have nothing to do with the Fair Tax just as they don't collect taxes for our current tax system. This portion of the paragraph makes absolutely no sense!! As for a manufacturers and grocers passing on the savings you forget one important factor called competition. They won't all charge the same price. Some will charge less and the others will be forced to follow or lose business.
You keep referring to the "Feds". ThePEOPLE are the federal government and not Congress. You're only trapped if you don't do anything to change the system. Such a defeatist attitude only feeds into the problem we have with our current tax system. It's sad to think you would rather pay any amount of tax to the very politicians you don't trust.
If even one percent of the population is like me, their consumption of new items would drastically drop under an NRST, at the least for 6-18 months while they sat back and waited to see how it would pan out. Consumer spending is currently 70+% of GDP, you knock a percent or two off that and you will be initiating the economic apocalypse.
I'm thinking it would end up being a microcosm of what happened to the US boat building industry when they slapped on luxury taxes. The transition period is the wrench in this idea, though I don't for a minute sweat any suffering that bureaucrats might be exposed to.
not just survive...Speaking for yourself?
Despite your selective memory the two of you were discussing the Jorgenson/Wilcoxen IGEM simulation and after a few posts here was the final conclusion of the sequence where you were discussing whether wages would go up, down, or sideways:
Dimples"As for wage direction over time, I believe there is too much aggregation in Jorgenson's simulation to make any specific predictions. ... All in all, there is little to be gained for attempting to glean such information from this study, since there appears to be no indication wage dynamics were modeled."
To which ancient_geezer responded:
"The(sic) you hit the nub of it, not even Jorgenson has quantified what wages would do in any of his models as an output."
... and that was the end of the discussion with you agreeing nothing could be determined about wages.
You've made this very weak attempt at deflecting the discussion and changing the subject. That was in response to my original comment on this thread:
"You fall prey to what others have done in claiming that the economist Jorgenson has claimed wages must fall. He did not despite all the opponents' claims that he did so. That's not what his study showed and you even agreed with that assessment with ancient_geezer in earlier postings. Are you now wishing to take back what you said to him? Sort of like putting the Genie back in the bottle isn't it? "
I'm afraid that your efforts to put the Genie back in the bottle have failed miserably as has your attempt to change the subject.
As for your efforts to educate your trainees as to how to sell a used car - stick to trying to protect the income tax; even the trainees do a downright poor job of selling anything but that's understandable.
Besides, I prefer rollerskates.
If you'll notice, these guys can't even sell that piece of junk to each other.
Post #113 Oh sure, a National Sales Tax on everything. Great idea. Not!
Post #156 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.
Post #157 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.
Post #185 The deal could always be changed later once this system is set up. There's nothing to prevent that from being done.
Post #194 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.
None of your comments to me provide any alternative. Instead all you do is state the negative. Providing one link without any explanation in your own words is tantamount to doing nothing.
You won't be in business too long if the purpose is to purchase and consume food. In addition eventually the Treasury Department will be knocking on your door for such a ridiculous scam.
Ridiculous scam?!?! It's PAR for the course in business today!
You do not take into account the FairTax will drop mortgage interest rates by about 25 percent (about 1.75 points) as bank overhead falls due to considerably less mandatory compliance.
NOT! Bank costs don't contribute squat to mortgage interest rates, the cost and availability of money does. Most banks don't even hold them anymore, they're packaged and resold in blocks to investors.
Your wife works for a crane company and somehow this has to do with you "picking up the slack"?
Parse that sentence better. I said "If B to B (that stands for Business to business) isn't taxed in this [NRST] scenario, why do I have to pick up the slack?". I.e. why does the onus for supplying the government with revenue fall entirely upon the citizenry (apparently, through my reading of the thread)? You think they'll be able to sell that part to the libs???
The PEOPLE are the federal government and not Congress.
No, they aren't. This is supposed to be a Republic, not a direct democracy...
It's sad to think you would rather pay any amount of tax to the very politicians you don't trust.
Is putting words in others mouths a common habit of yours?
Obviously you haven't read the bill. I suggest you do so to see that your fears are unfounded.
We have a special wazoo auditor just for that.
Actually, the sort of thing you describe goes on right now and the people doing it are better off at present than under the FairTax since the marginal income tax rates are higher and they can get a bigger reward for, probably, a lower risk than under the FairTax. The states are already quite used to ferreting out those falsely claiming "resale" in order to try to escape any tax. It doesn't work too well since with the FairTax the number of points to audit drops form 120 Million to fewer the 20 million and the resources to do the audit will be greater.
... but it keeps them busy since they're easily entertained!
Why would NRST cause GM to fail? New car prices will respond to the market, and GM will be able export at a lower price due to decrease of embedded taxes...
...Read the bill, you will need to get an exemption for your purchases, and will be subject to audit....
And who audits? The X million guys who just had the sign over their offices changed from "IRS enforcement" to "NRST audit dept"...
Yeah but with about 80% less collection points....what tax system do you propose that has no audits or enforcement?
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? Property tax rate increases, the ones Californians are essentially immune to because the assesment only changes to new value when the property changes hands.
What does that have to do with NRST? What are your "assumptions'?
In general, my dislike of an NRST is primarily from the standpoint of it not starving out the politicians fast enough.
So its better to keep what we have them put them on a diet? Do you have a proposal that is passable?
I'll probably be more inclined to agree with it after the economic collapse that hovers over us at the moment (I'm a "Gloom and Doomer" to some). Note the tagline, it's what we need to get back to at some point...
Sorry you are so full of doom and gloom, we could use some help in saving the Nation, IMO NRST is a start,part of a plan,something realistic and doable. It beats watching the water rise and screaming for FEMA to help without being prepared ahead of time.
Return to non-fiat money system and elimination of anything not Constitutionally authorized to the Federal Government (and we can phase out the programs to keep the caterwauling down some)...
And who else is supporting this and what are its chances of success? How would it be implemented?
I would expect the car salesman selling the shiny new car to make fun of our current car, even as he made up stuff about the car he was selling us.Good point. Especially since the salesmen telling you how wonderful it is have never started the car, heard it run or driven it...
Yeah I have heard some of your "used" car salesmen telling me how great their old gas hog lead sled rusbucket is and that it should not be replaced with a more modern,lightweight more efficient model, the old model just needs a tuneup and a paint job, upholstery, tires, motor and transmission....the new one has cooties and will put the poor people who repair and sell old clunkers out of busines..
what tax system do you propose that has no audits or enforcement?
Uh, as far as individuals go, how about the one that was working pretty well before 1913...
And who else is supporting this and what are its chances of success?
Plenty of people would support it if they understood a little history. No one politically would...
How would it be implemented?
Since there has never been a fiat currency\money operating nation state that survived for more than ~250 years, I'm convinced it will "self impliment" in due time...
Well first off it would reduce the price of our exports by cutting out many hidden embedded taxes in their cost of production, advertising and shipping....a flat tax does not change that it may reduce complexity some but still taxes income rather than consumption.
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