Posted on 10/12/2005 8:39:34 AM PDT by pigdog
TAX REFORM COMMISSION? YEAH ... RIGHT.
The president's so-called tax reform commission telegraphed its intentions several months ago when members stated that they were not going to recommend a full reform of our federal tax system, rather they were going to recommend some incremental reforms. The The FairTax Book hit the book stores and debuted at No. 1 on the New York Times Bestseller's list. Politicians and other Beltway denizens told co-author Congressman John Linder that the success of The FairTax Book was a certain indication that the people of this country were in the mood for wholesale reform. Who knew?
Now we're starting to get an indication of what the tax reform commission is going to recommend. It's very simple. Tax increases, not tax reform.
(Excerpt) Read more at boortz.com ...
I agree. With a national retail sales tax, we would have to repeal the sixteenth amendment, or we would just end up with a new federal tax. That would not be easy.
A flat tax could be passed with a super majority requirement for raising the rate, Steve Forbes's excellent idea. I could actually see that passing.
I want to make it clear that I am not assigning malice to Boortz, either. I simply observe that his logic is incoherent.
And you try to base your self-serving vanity "analysis" upon the work of a single economist when, in fact, many have reviewed the FairTax and 75 of them have caused to be delivered a signed letter to each Congressman and the President urging the adoption of the FairTax for the benefits it would bring to the country and its taxpayers (which benefits the work of the economist you criticize also highlighted).
Your claim that Boortz was misrepresenting things in the book is foolish since it was you doing the misinterpretation; not Boortz. He was trying to straignten out things for morons that misinterpreted things in making his effort at clarification.
You Squirrels are failing in your claims of lying, misrepresenting, etc. simply because that isn't true and most people reading and making their own judgements realize that isn't the case.
You, of course, are welcome to your erroneous opinions.
Simple - there are no income tax (or other) forms relating to income that a taxpayer needs to fill out with the FaitrTax and there is only a single rate which affects everyone the same.
Efforts to change that rate or hide preferences in the bill have no "hooks" to be latched onto. The rate is visible to all. Both you and I pay the same rate just as does Bill Gates and Bill Clinton.
You do not understand where the Indian VAT came from and why it was not a sales tax in the same way as the FairTax. In fact, it was quite different and more akin to the supposed "sales taxes" in the present EU VAT countries.
These were transaction/turnover sales taxes that cascaded and for this reason were converted to a VAT to try to eliminate the effects of tax cascading and evasion therefrom. There's a very good description of it here:
http://www.freerepublic.com/focus/news/1498423/posts?page=50
at post #50. I suggest you educate yourself before continuing with such notions.
The lead-in to the thread you gave is not particularly informative - or correct - and was refuted thoroughly by the 450 posts on the thread.
Perhaps you should read them to find that out.
And I merely obvserve that YOUR logic in incorrect.
As you might see if you'd viewed current derivations of the revenue neutral FairTax rate, the 30% you claim to be the rate (which is merely the tax-exclusive rate in the bill presenly; the t.i. rate is 23%) would be quite high as would the figure in the book.
As pointed out to you the present figure is 23.8% but, hey, a Squirrel being within 20% or so is "rignt on the money" as most of us have seen.
Your revenue neutral numbers are nonsense. Go look up some real ones.
And a flat tax of any sort is a wonderful idea and would leave us with:
a) payroll/withholding taxes,
b) thousands and thousands of pages of tax code which no one understands and which can be easily modified,
c) no manner in which to help US companies in being more competetive with exports (no border-adjustability of taxes),
d) consumer prices artificially increased due to cascading embedded tax costs,
e) the massive evasion - and lost tax revenue - we now have with the illegal economy (which is not even considered evasion by the SQL crowd since it can't be addressed as under the FairTax),
f) huge wastage of taxpayer "individual capital" in complying with tax laws and filling out tax forms when such time could be better spent playing tiddlywinks or mowing the lawn,
g) political control of the publics financial decisions to a large part by tinketing with the tax laws ... and then changing them again when it is seen they do not work as advertised,
h) no means at all for enticing home-grown capital that has fled the country due to taxation to return,
i) no manner of attracting foreign capital into the US to help boost our economy and create jobs,
j) and no doubt others which I lack the mental energy to pursue.
Perhaps others would like to expand the list.
This is true. No jurisdiction in the world has found a sales tax rate in the 10-15% range (non-tax-inclusive) sustainable due to evasion. The non-tax-inclusive rate of the so-called "Fair Tax" is, as you observed, 30%.
When sales tax rates get that high, sales taxes are converted to VATs. We've seen it in Canada, South America, Europe, Africa and most recently in India.
I have never investigated the flat tax because of my interest in the NRST. All I know is the few sketches of information I picked up here, there, and yonder. My opinion is that the appeal of it is that you only report a small amount of information when you file, the postcard thing, and the rate is fixed and is the same for everyone.
However, it seems to me that the figuring of the tax you owe, the number you put on the postcard, involves pretty much all the machinations of taking deductions, etc., that are in the present system. It is just reported on a simpler form and the final calculation is fixed rather than determined by a tax table.
Is that correct?
"On review, and after reading the critiques of opponents to the FairTax plan, we have concluded that there is one element of the FairTax that could have been present with more clarity in the book; the concept of embedded taxes and keeping 100% of your paycheck....
...Now here's what we didn't explain well in the book. Every employee of any company involved in American commerce is also a provider of a service, and, as such, the employee incurs a tax liability as a result of his or her work...
...We write in The FairTax Book that the competitive pressures of the marketplace will force prices down when embedded taxes disappear from the cost of retail goods and services, and we cite 22% as the average amount of those embedded taxes. Does this 22% include the income and payroll taxes that are paid by employees? Yes, it does. So ... what does this mean to your paycheck after the FairTax becomes law?...
When the FairTax is implemented, and when business and personal income and payroll taxes disappear, your employer is going to have to make a decision. He will either take some or the entire amount he had been withholding for federal income and payroll taxes and add it to your weekly check, or he will readjust your pay figures so that your entire paycheck will be equal to what you used to call "take home pay" before the FairTax. The employer may also decide to do a little of both. Either way, you can see that the amount of money you actually receive as pay – the amount you can put into your bank account – will not decrease, and may actually increase.
END BOORTZ "CLARIFICATION"
This is compared with Boortz's repeated statements in the FairTax Book about the takehome pay rising by a substantial amount:
CITES FROM FAIRTAX BOOK
page 59, they state: “Once the FairTax takes effect, you’ll be receiving 100 percent of every paycheck, with no withholding of federal income taxes, Social security taxes, or Medicare taxes and you’ll be paying just about the same price for T-shirts and other consumer goods and services that you were paying before the FairTax.”
page 83: “Remember that the poor, along with everyone else—will no longer have Social Security taxes or Medicare taxes removed from their paychecks. Whatever they earn, they get on payday. For most of those we categorize as poor, this would mean an immediate 25 to 30 percent increase in their take-home pay.”
page 84, they make it clear though that even though the workers will keep all of their paychecks for a big raise, they still believe that because of “the disappearance of the embedded taxes, the total price paid for consumer goods will remain very nearly the same”.
And then on page 111, they tie it all together with a Quick Review in which they erroneously assert “Here’s what happens when we pass and implement the FairTax plan:”
“We start collecting 100 percent of our earnings on our paycheck.
“We all get virtual raises, since payroll taxes are no longer siphoned from our checks.
“The prices of consumer goods and services remain essentially the same, with the removal of the embedded taxes compensating for the added consumption tax.”
Page 82: "it would create a financial bonanza for the poor and the middle class."
Page 85: "it's clear that low-income Americans will be better off, much better off, under the FairTax Plan... income tax abolished...whole paycheck with no federal withholding.. and they would recive a payment each month...Wow.
Page 88: "for those in the lowest income levels...it's all benefit and no burden."
Page 138: "The FairTax would give the average income worker a 50% increase in take-home pay."
Your claim that Boortz was misrepresenting things in the book is foolish since it was you doing the misinterpretation; not Boortz. He was trying to straignten out things for morons that misinterpreted things in making his effort at clarification.
You can read these quotes from the book and claim with a straight face that I am a moron who misinterpreted his book? He clearly was promising 100% of current pay, and then he backed off on those claims and acknowledged that the 22% embedded taxes included these withheld income and patroll taxes.
Boortz was busted over a major selling point of the plan and he acknowledged that the argument many have been making for so long was correct. He changed his understanding of the plan in a very major way.
"We" have seen it nowhere since none of the countries you mention have a "sales tax" that was at all like the FairTax. NONE.
You're merely distributing disinformation. The "sales taxes" you mention were like the Indian transaction/transfer tax - see post #85 just above for more definitive information.
The has never - NEVER - been a definitive study by any recognized economist of any standing that supports your claim about sales tax rates above 10 - 15%. That is an outright falsehood you have manufactured unless you can post a link to such a study for us to examine.
Most of the EU countries you include were REQUIRED to convert to a VAT as a condition for joining the EU no matter what tax system they had before.
The number on the postcard is merely the attraction put forth for the public but your presumption about the actual calculation method is correct.
It is all of the other things mentioned in #89 that should be of more concern, I think, since their effects are much greater than just the calculation. And, after all, it is clear from almost 100 years of trying that income tax laws can be easily changed to screw up anything (witness the current Tax Panel's work - even though not presently a change in law, think of what it would do were it to become so).
b) thousands and thousands of pages of tax code which no one understands and which can be easily modified
With a flat tax with one exemption for lower incomes and no deductions, almost all of those pages would disappear.
c) no manner in which to help US companies in being more competetive with exports (no border-adjustability of taxes),
Who needs the tax code to subsidize exports? just hand out corporate welfare checks, as we do now, if that's what we want.
d) consumer prices artificially increased due to cascading embedded tax costs,
All the hidden costs of compliance such as tax sheltering and uneconomic tax-related business decisions would go with a flat tax.
e) the massive evasion - and lost tax revenue - we now have with the illegal economy (which is not even considered evasion by the SQL crowd since it can't be addressed as under the FairTax
That's an advantage of the NRST, that it would capture a lot of drug and other crime money
f) huge wastage of taxpayer "individual capital" in complying with tax laws and filling out tax forms when such time could be better spent playing tiddlywinks or mowing the lawn,
With a flat tax you just fill out a postcard (if your family makes more than $48,000 a year, if not, you do nothing)
g) political control of the publics financial decisions to a large part by tinketing with the tax laws ... and then changing them again when it is seen they do not work as advertised,
Put in a super majority requirement for raising the flat rate, and eliminate all deductions, and you've just dropped a nuke on K Street.
h) no means at all for enticing home-grown capital that has fled the country due to taxation to return,
When Russia instituted a flat tax, massive amounts of hidden capital suddenly reappeared. With a low, fair, simple, rate, it usually makes more economic sense to pay than avoid.
i) no manner of attracting foreign capital into the US to help boost our economy and create jobs,
A growing economy is what really attracts foreign investment. Hong Kong, a tiny island with no natural resources, has a flat tax and big foreign investment
I can add another to your list: a big red "FEDERAL TAX 25%" at the bottom of every receipt would be a huge pressure to lower the rate and lower federal spending.
Thanks for your list. I think there are many advantages to a NRST. However, I think it is feasible to pass a super-majority requirement for raising a flat tax rate, but I don't see a constitutional convention to eliminate the sixteenth amendment ever happening. Incumbents and lobbyists would fight it to the death.
His explanation of embedded taxes is not correct - but that's beside the point. the fact remains that no book author affects the agreements and contracts that determine gross pay - and that gross pay will still apply after the FairTax passes so that employees will be getting their entire gross pay. The employer will have little wiggle room in most cases to fiddle with gross pay so your claim of all wages dropping is ridiculous - it's out of the hands of both you and the employer as well as book authors or even the FairTax bill itself.
As for your assertions about the original book, let's take them in order:
"page 59, they state: “Once the FairTax takes effect, you’ll be receiving 100 percent of every paycheck, with no withholding of federal income taxes, Social security taxes, or Medicare taxes and you’ll be paying just about the same price for T-shirts and other consumer goods and services that you were paying before the FairTax.”"
pg. 59 - The only thing I see to quibble with here is the use of "just about the same price" since it allows opponents such as you to claim that phrase in incorrect. The phrase, though, is quite open to interpretation (and, in your case I think, misinterpretation) and would be true DEPENDING ON THE INTERPRETATION OF THE PHRASE. The rest of the statement is certainly correct notwithstanding your attempt to warp the author's garbled "correction" into something it is not. As I pointed out it is the economy itself that determines the pay as 100 % or not and it is very clear that it will be 100%. Certainly the taxes mentioned are gonzo.
"page 83: “Remember that the poor, along with everyone else—will no longer have Social Security taxes or Medicare taxes removed from their paychecks. Whatever they earn, they get on payday. For most of those we categorize as poor, this would mean an immediate 25 to 30 percent increase in their take-home pay.” "
pg 83. Are you objecting to the numbers here? The increase quoted is certainly open to whatever the author used as the percentage base and SINCE YOU DON'T KNOW THAT BASE it is certainly your own misinterpretation of either his statement or his base numbers. the rest of the passage is certainly true.
"page 84, they make it clear though that even though the workers will keep all of their paychecks for a big raise, they still believe that because of “the disappearance of the embedded taxes, the total price paid for consumer goods will remain very nearly the same”. "
pg 84. Very similar to pg 59 in that the phrase "remain very nearly" is in the eye of the beholder and you have beheld (interpreted it) differently. That certainly does not mean it is a misrepresentation on the author's part. I have shown several times on these threads that there is obviously a good bit of room (without considering payroll/withhholdings) for prices to decline with the removal of embedded tax costs. The writer's choice to use the phrase "remain very nearly" apparently grates on you, but it is certainly not incorrect or a misrepresentation - except in your own somewhat biased view.
“We start collecting 100 percent of our earnings on our paycheck. “We all get virtual raises, since payroll taxes are no longer siphoned from our checks. “The prices of consumer goods and services remain essentially the same, with the removal of the embedded taxes compensating for the added consumption tax.” ""And then on page 111, they tie it all together with a Quick Review in which they erroneously assert “Here’s what happens when we pass and implement the FairTax plan:”
pg 111 - let's identify the 3 claims as a, b, and c. For a) - we've already covered that as no doubt correct and determined by the economy. For b) - that's certainly a correct statement unless you wish to somehow misinterpret the word "virtual". For c) - we've just covered that as on pg 84 with slightly different wording so that my comments on pg 84 apply here. In view of these notations, I see no validity at all for you to include these three in your carping and misinterpretation of the book.
"Page 82: "it would create a financial bonanza for the poor and the middle class." "
pg 82. That seems an accurate enough statement though the term "financial bonanza" may be what sets you off here. Again - the author's choice whether you believe it to be overblown hyperbole or not. It is hardly a misrepresentation - except perhaps in your biased view.
"Page 85: "it's clear that low-income Americans will be better off, much better off, under the FairTax Plan... income tax abolished...whole paycheck with no federal withholding.. and they would recive a payment each month...Wow. "
pg 85. Hard to see what puts your teeth on edge here except, perhaps, the word "wow". the statement is accurate enough and definitely not a misrepresentation as you claim (the "wow" notwithstanding).
"Page 88: "for those in the lowest income levels...it's all benefit and no burden." "
pg 88. True. If you think this is a misrepresentation or lie of some sort then you don't understand the economic help the FairTax bill offers the lowest income levels.
"Page 138: "The FairTax would give the average income worker a 50% increase in take-home pay." "
pg 138. There is no definition of "average worker" so its quite possible that the 50% figure is targeted at some wage he was looking at. Calling it a misrepresentation is a real strech since certainly there will be a substantial takehome pay increase for most workers. Had I written that part of the book I might have used "substantial" rather that "50%" or perhaps included the case being looked at for the claim. The author made other choices but I can't see that "misrepresentation" would be one of them.
I say again: "Your claim that Boortz was misrepresenting things in the book is foolish since it was you doing the misinterpretation; not Boortz."
""Boortz was busted over a major selling point of the plan and he acknowledged that the argument many have been making for so long was correct. He changed his understanding of the plan in a very major way.""
The only thing I can see that's "busted" is your own arse in trying - and failing - to make your case of lying and misrepresentation. I've said several times that you whould withhold your fire ... and you should.
You are the one who continues to sell a Free Lunch plan, and it is you who is dooming the FairTax to oblivion. Reasonable people understand that every wage earner in America is not going to receive an increase in take-home pay coupled with all prices remaining about the same. This is obvious to everyone but a totally dysfunctional FairTax true believer.
At least Boortz admitted that the embedded taxes include the employee's payroll and income taxes. In fact they make up the majority of these embedded expenses. I guess this is what you mean by his "explanation of embedded taxes is not correct". But this is exactly the same understanding that Dr. Jorgenson had of the embedded taxes.
FairTax R.I.P.
Most of the EU countries you include were REQUIRED to convert to a VAT as a condition for joining the EU no matter what tax system they had before.
And provision made to allow them to retain their retail sales taxes on top of it all as well. LOL
| http://europa.eu.int/eur-lex/en/consleg/pdf/1967/en_1967L0227_do_001.pdf FIRST COUNCIL DIRECTIVE Having regard to the Treaty establishing the European Economic Community,and in particular Articles99 and 100 thereof; Having regard to the proposal from the Commission; Whereas the main objective of the Treaty is to establish,within the framework of an economic union,a common market within which there is healthy competition and whose characteristics are similar to those of a domestic market; Whereas the attainment of this objective presupposes the prior application in Member States of legislation concerning turnover taxes such as will not distort conditions of competition or hinder the free movement of goods and services within the common market; Whereas the legislation at present in force does not meet these requirements; Whereas it is therefore in the interest of the commom market to achieve such harmonisation of legislation concerning turnover taxes as will eliminate, as far as possible, factors which may distort conditions of competition, whether at national or Community level,and make it possible subsequently to achieve the aim of abolishing the imposition of tax on importation and the remission of tax on exportation in trade between Member States; Whereas, in the light of the studies made, it has become clear that such harmonisation must result in the abolition of cumulative multi-stage taxes and in the adoption by all Member States of a common system of value added tax; Whereas a system of value added tax achieves the highest degree of simplicity and of neutrality when the tax is levied in as general a manner as possible and when its scope covers all stages of production and distribution and the provision of services;whereas it is therefore in the interest of the common market and of Member States to adopt a common system which shall also apply to the retail trade; Whereas,however,the application of that tax to retail trade might in some Member States meet with practical and political difficulties; whereas,therefore, Member States should be permitted, subject to prior consultation,to apply the commom system only up to and including the wholesale trade stage,and to apply,as appropriate,a separate complementary tax at the retail trade stage,or at the preceding stage; Whereas it is necessary to proceed by stages,since the harmonisation of turnover taxes will lead in Member States to substantial alterations in tax structure and will have appreciable consequences in the budgetary,economic and social fields; *** SNIP *** |
The VAT has never been about replacing Retail Sales Taxes in Europe.
The VAT has always been about tax system harmonization among EU members and replacement of business turnover tax systems.
From stem to stern, the claim that VATs are primarily intended as a replacement for retail sales tax has been a total misinformation campaign regards the FairTax from day one.
Of interest is that the retail sales tax is being proposed at as a replacement for the Russian VAT because of all the regulatory problems that VATs impose on businesses inducing fraud and evasion of it.
| http://en.rian.ru/business/20050928/41534170.html MOSCOW, September 28 (RIA Novosti) -- Head of the Russian Presidential Administration's Expert Board told journalists Wednesday on the sidelines of an investment conference in Moscow that the new sales tax instated to replace VAT will not be introduced before 2009. "The projections have been made and the text (of the proposal) is ready," Arkady Dvorkovich said, referring to the proposals that will be submitted to the cabinet. He said, however, that the final decision "should be made by politicians. "I, for one, believe that sales tax is preferable, while the biggest risks are involved in the uncertainties of the transition period," Dvorkovich said. VAT and sales tax are variations of turnover tax, but, whereas VAT is collected as a product moves down the line from producer to end consumer, sales tax is a consumption tax that is collected only once, at the point of purchase. The current VAT rate in Russia is 18% with a preferential rate of 10% for "socially important" staple goods. Russia used sales tax in 1998-2003, simultaneously with VAT, but it was then abolished. Dvorkovich had said earlier that VAT could be replaced with sales tax in March 2005, when the head of the Expert Board addressed the possible abolition of VAT in 2007 with the simultaneous restoration of a 10-15% sales tax. |
And a flat tax of any sort is a wonderful idea and would leave us with:
a) payroll/withholding taxes,
On the personal side, the Flat Tax is just a wage tax anyway. It wouldn't matter if it's split into FICA and general revenue.
b) thousands and thousands of pages of tax code which no one understands and which can be easily modified,
There wouldn't be "thousands and thousands of pages of tax code." The Flat Tax is as simple as:
(WAGES - STANDARD DEDUCTION) x TAX RATE = TAX OWED
Even you could handle that. It's much easier than adding up all the sales taxes on your receipts to figure out how much you've paid the government.
c) no manner in which to help US companies in being more competetive with exports (no border-adjustability of taxes),
Border adjustably is pointless. The countries that have moved to a Flat Tax have seen their economies thrive, all without border adjust ability.
d) consumer prices artificially increased due to cascading embedded tax costs,
First it was embedded taxes. Then it was embedded tax costs. Now it's cascading embedded tax costs. Next it will be double super secret cascading embedded tax costs. You never have been able to comprehend the whole "tax incidence" idea, have you?
e) the massive evasion - and lost tax revenue - we now have with the illegal economy (which is not even considered evasion by the SQL crowd since it can't be addressed as under the FairTax),
The illegal economy would thrive with the FairTax. Organized crime, in particular, would love it (besides being able to sell black market goods, there would be no need for money laundering).
f) huge wastage of taxpayer "individual capital" in complying with tax laws and filling out tax forms when such time could be better spent playing tiddlywinks or mowing the lawn,
It would take, literally, less than 5 minutes to determine your taxes (it might take a little longer for you).
g) political control of the publics financial decisions to a large part by tinketing with the tax laws ... and then changing them again when it is seen they do not work as advertised,
The Flat Tax is no more susceptible to tinkering than the FairTax - it might be less so.
h) no means at all for enticing home-grown capital that has fled the country due to taxation to return,
Now you are really showing your ignorance. Foreign earnings are not taxed under the Flat Tax. Foreign earnings could be repatriated without penalty.
i) no manner of attracting foreign capital into the US to help boost our economy and create jobs,
Except a booming economy.
j) and no doubt others which I lack the mental energy to pursue.
I don't think energy is your problem, it's capacity.
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