University Economists review "FairTax"

Americans for FairTax ^ | current | University Economist listed in article

[Eaglewatcher]

-1- An Open Letter to the President, the Congress, and the American people Concerning Reform of the Federal Tax Code

Dear Mr. President, Members of Congress, and Fellow Americans,

We, the undersigned business and university economists, welcome and applaud the ongoing initiative to reform the federal tax code. We urge the President and the Congress to work together in good faith to pass and sign into federal law H.R. 25 and S. 25, which together call for:

• Eliminating all federal income taxes for individuals and corporations,

• Eliminating all federal payroll withholding taxes,

• Abolishing estate and capital gains taxes, and • Repealing the 16th Amendment

We are not calling for elimination of federal taxation, which would be irresponsible and undesirable. Nor does our endorsement call for reduced federal spending. The tax reform plan we endorse is revenue neutral, collecting as much federal tax revenue as the current income tax code, including payroll withholding taxes.

We are calling for elimination of federal income taxes and federal payroll withholding taxes.

We endorse replacing these costly, oppressively complex, and economically inefficient taxes with a progressive national retail sales tax, such as the tax plan offered by H.R. 25 and S. 25 – which is also known as the FairTax Plan. The FairTax Plan has been introduced in the 109th Congress and had 54 co-sponsors in the 108th Congress.

If passed and signed into law, the FairTax Plan would:

• Enable workers and retirees to receive 100% of their paychecks and pension benefits,

• Replace all federal income and payroll taxes with a simple, progressive, visible, efficiently collected national retail sales tax, which would be levied on the final sale of newly produced goods and services,

• Rebate to all households each month the federal sales tax they pay on basic necessities, up to an independently determined level of spending (a.k.a., the poverty level, as determined by the Department of Health and Human Services), which removes the burden of federal taxation on the poor and makes the FairTax Plan as progressive as the current tax code,

• Collect the national sales tax at the retail cash register, just as 45 states already do,

• Set a federal sales tax rate that is revenue neutral, thereby raising the same amount of tax revenue as now raised by federal income taxes plus payroll withholding taxes,

• Continue Social Security and Medicare benefits as provided by law; only the means of tax collection changes,

• Eliminate all filing of individual federal tax returns,

• Eliminate the IRS and all audits of individual taxpayers; only audits of retailers would be needed, greatly reducing the cost of enforcing the federal tax code,

An Open Letter to the President, the Congress, and the American people -2- • Allow states the option of collecting the national retail sales tax, in return for a fee, along with their state and local sales taxes,

• Collect federal sales tax from every retail consumer in the country, whether citizen or undocumented alien, which will enlarge the federal tax base,

• Collect federal sales tax on all consumption spending on new final goods and services, whether the dollars used to finance the spending are generated legally, illegally, or in the huge “underground economy,”

• Dramatically reduce federal tax compliance costs paid by businesses, which are now embedded and hidden in retail prices, placing U.S. businesses at a disadvantage in world markets,

• Bring greater accountability and visibility to federal tax collection,

• Attract foreign equity investment to the United States, as well as encourage U.S. firms to locate new capital projects in the United States that might otherwise go abroad, and

• Not tax spending for education, since H.R. 25 and S. 25 define expenditure on education to be investment, not consumption, which will make education about half as expensive for American families as it is now.

The current U.S. income tax code is widely regarded by just about everyone as unfair, complex, wasteful, confusing, and costly. Businesses and other organizations spend more than six billion hours each year complying with the federal tax code. Estimated compliance costs conservatively top $225 billion annually – costs that are ultimately embedded in retail prices paid by consumers.

The Internal Revenue Code cannot simply be “fixed,” which is amply demonstrated by more than 35 years of attempted tax code reform, each round resulting in yet more complexity and unrelenting, page-after-page, mind-numbing verbiage (now exceeding 54,000 pages containing more than 2.8 million words). Our nation’s current income tax alters business decisions in ways that limit growth in productivity. The federal income tax also alters saving and investment decisions of households, which dramatically reduces the economy’s potential for growth and job creation.

Payroll withholding taxes are regressive, hitting hardest those least able to pay. Simply stated, the complexity and frequently changing rules of the federal income tax code make our country less competitive in the global economy and rob the nation of its full potential for growth and job creation.

In summary, the economic benefits of the FairTax Plan are compelling. The FairTax Plan eliminates the tax bias against work, saving, and investment, which would lead to higher rates of economic growth, faster growth in productivity, more jobs, lower interest rates, and a higher standard of living for the American people.

An Open Letter to the President, the Congress, and the American people -3- The America proposed by the FairTax Plan would feature:

• no federal income taxes,

• no payroll taxes,

• no self-employment taxes,

• no capital gains taxes,

• no gift or estate taxes,

• no alternative minimum taxes,

• no corporate taxes,

• no payroll withholding,

• no taxes on Social Security benefits or pension benefits,

• no personal tax forms,

• no personal or business income tax record keeping, and

• no personal income tax filing whatsoever.

No Internal Revenue Service; no April 15th; all gone, forever.

We believe that many Americans will favor the FairTax Plan proposed by H.R. 25 and S. 25, although some may say, “it simply can’t be done.” Many said the same thing to the grassroots progressives who won women the right to vote, to those who made collective bargaining a reality for union members, and to the Freedom Riders who made civil rights a reality in America.

We urge Congress not to abandon the FairTax Plan simply because it will be difficult to face the objections of entrenched special interest groups – groups who now benefit from the complexity and tax preferences of the status quo. The comparative advantage and benefits offered by the FairTax Plan to the vast majority of Americans is simply too high a cost to pay.

Therefore, we the undersigned professional and university economists, endorse a progressive national retail sales tax plan, as provided by the FairTax Plan. We urge Congress to make H.R. 25 and S. 25 federal law, and then to work swiftly to repeal the 16th Amendment. Respectfully,

Donald L. Alexander Professor of Economics Western Michigan University

Wayne Angell Angell Economics

Jim Araji Professor of Agricultural Economics University of Idaho

Ray Ball Graduate School of Business University of Chicago

Roger J. Beck Professor Emeritus Southern Illinois University, Carbondale

John J. Bethune Kennedy Chair of Free Enterprise Barton College

David M. Brasington Louisiana State University

Jack A. Chambless Professor of Economics Valencia College

Christopher K. Coombs Louisiana State University

William J. Corcoran, Ph.D. University of Nebraska at Omaha

Eleanor D. Craig Economics Department University of Delaware

-4- An Open Letter to the President, the Congress, and the American people

Susan Dadres, Ph.D. Department of Economics Southern Methodist University

Henry Demmert Santa Clara University

Arthur De Vany Professor Emeritus Economics and Mathematical Behavioral Sciences University of California, Irvine

Pradeep Dubey Leading Professor Center for Game Theory Dept. of Economics SUNY at Stony Brook

Demissew Diro Ejara William Paterson University of New Jersey

Patricia J. Euzent Department of Economics University of Central Florida

John A. Flanders Professor of Business and Economics Central Methodist University

Richard H. Fosberg, Ph.D. William Paterson University

Gary L. French, Ph.D. Senior Vice President Nathan Associates Inc.

Professor James Frew Economics Department Willamette University

K. K. Fung University of Memphis

Satya J. Gabriel, Ph.D. Professor of Economics and Finance Mount Holyoke College

Dave Garthoff Summit College The University of Akron

Ronald D. Gilbert Associate Professor of Economics Texas Tech University

Philip E. Graves Department of Economics University of Colorado

Bettina Bien Greaves, Retired Foundation for Economic Education

John Greenhut, Ph.D. Associate Professor Finance & Business Economics School of Global Management and Leadership Arizona State University

Darrin V. Gulla Dept. of Economics University of Georgia

Jon Halvorson Assistant Professor of Economics Indiana University of Pennsylvania

Reza G. Hamzaee, Ph.D. Professor of Economics & Applied Decision Sciences Department of Economics Missouri Western State College

James M. Hvidding Professor of Economics Kutztown University

F. Jerry Ingram, Ph.D. Professor of Economics and Finance The University of Louisiana-Monroe

Drew Johnson Fellow Davenport Institute for Public Policy Pepperdine University

Steven J. Jordan Visiting Assistant Professor Virginia Tech Department of Economics

Richard E. Just University of Maryland

Dr. Michael S. Kaylen Associate Professor University of Missouri

David L. Kendall Professor of Economics and Finance University of Virginia's College at Wise

Peter M. Kerr Professor of Economics Southeast Missouri State University

Miles Spencer Kimball Professor of Economics University of Michigan

James V. Koch Department of Economics Old Dominion University

Laurence J. Kotlikoff Professor of Economics Boston University

Edward J. López Assistant Professor University of North Texas

Franklin Lopez Tulane University

Salvador Lopez University of West Georgia

Yuri N. Maltsev, Ph.D. Professor of Economics Carthage College

Glenn MacDonald John M. Olin Distinguished Professor of Economics and Strategy Washington University in St. Louis

Dr. John Merrifield, Professor of Economics University of Texas-San Antonio

An Open Letter to the President, the Congress, and the American people -5- Dr. Matt Metzgar Mount Union College

Carlisle Moody Department of Economics College of William and Mary

Andrew P. Morriss Galen J. Roush Professor of Business Law & Regulation Case Western Reserve University School of Law

Timothy Perri Department of Economics Appalachian State University Mark J. Perry School of Management and Department of Economics University of Michigan-Flint

Timothy Peterson Assistant Professor Economics and Management Department Gustavus Adolphus College

Ben Pierce Central Missouri State University

Michael K. Pippenger, Ph.D. Associate Professor of Economics University of Alaska

Robert Piron Professor of Economics Oberlin College

Mattias Polborn Department of Economics University of Illinois

Joseph S. Pomykala, Ph.D. Department of Economics Towson University

Barry Popkin University of North Carolina-Chapel Hill

Steven W. Rick Lecturer, University of Wisconsin Senior Economist, Credit Union National Association

Michael Rizzo Assistant Professor of Economics Centre College

Paul H. Rubin Samuel Candler Dobbs Professor of Economics & Law Department of Economics Emory Univeristy

John Ruggiero University of Dayton

Michael K. Salemi Bowman and Gordon Gray Professor of Economics University of North Carolina at Chapel Hill

Dr. Carole E. Scott Richards College of Business State University of West Georgia

Carlos Seiglie Dept. of Economics Rutgers University

John Semmens Economist Phoenix College, Arizona

Alan C. Shapiro Ivadelle and Theodore Johnson Professor of Banking and Finance Marshall School of Business University of Southern California

Dr. Stephen Shmanske Professor of Economics California State University, Hayward

James F. Smith University of North Carolina- Chapel Hill

Vernon L. Smith Economist W. James Smith Dean of Liberal Arts and Sciences and Professor of Economics University of Colorado at Denver

John C. Soper Boler School of Business John Carroll University

Roger Spencer Professor of Economics Trinity University

Daniel A. Sumner, Director, University of California Agricultural Issues Center and the Frank H. Buck, Jr., Chair Professor, Department of Agricultural and Resource Economics, University of California, Davis

Curtis R. Taylor Professor of Economics and Business Duke University

Robert Vigil Analysis Group, Inc.

John H. Wicks, Ph.D. Professor Emeritus Department of Economics University of Montana

F. Scott Wilson, Ph.D. Canisius College

Mokhlis Y. Zaki Professor of Economics Emeritus Northern Michigan University

An Open Letter to the President, the Congress, and the American people -6-

[pigdog]

So, let's see - your theory is that everyone sells the same thing at the same price sort of automatically???

Darn, wish I'd have known that when I paid $1.27 for those same cough drops that were $1.02 at a different store. It sure is noce to have such an edycated economic type advising us. (Be sure to let all the stores know that, too, since some appareently aren't too steeped in your theory).

[pigdog]

Show us, say, four errors that you have admitted by giving us links to the spost on these threads where you've lied made errors. You actually have quite a large body of work to choose from.

[Principled]

Not if you sub-contract out, or haven't you heard of outsourcing?

So your subs don't have payroll expenses either eh. Right....

[Principled]

And why, exactly, would someone buy from you if your price was higher than the market price?

Variations in quality, consumer preference, myriad reasons.

Why do you think all prices of a good are not the same? Milk can go for $3.25 or $3.89 or $2.99.

It is preposterous for you to assert that only one price will sell.

[lewislynn]

So your subs don't have payroll expenses either eh. Right....

I don't know, maybe they sub too or maybe they're in another country eh.

[Principled]

So you jack up your price to achieve whatever profit you want.

No. That's stupid. Stupid, stupid, stupid. That's not what was said now, was it?

How is it possible you wouldn't cover costs?

When costs are greater than available funds. You are how old?

Can't you "simply increase the price" of your products?

You can if you like, but you cannot price to the extent of eliminating sales - because sales revenue is the only indefinite stream of cash flow with which costs may be paid.

[pigdog]

Actually, trusting Congress has nothing to do with it and is not required.

You should read the bill, HR25:

http://thomas.loc.gov/cgi-bin/query/z?c109:H.R.25:

It states clearly that it ELIMINATES the income tax (and several others), the appropriate parts of the tax code, the IRS (and defunds it as well), and requires the income tax records to be destroyed. Trust is not inbvolved. It's all in the bill which, when passed, would be the law.

You 16% "flat tax" isn't really flat at all and also includes payroll and withholding so it is really a 31.3% "flat tax". Why would anyone prefer that to a 23% (or less) FairTax???

[Principled]

I'm not ignoring them, they just aren't what we are talking about.

Everyone else is, you are too - but you are omitting them from your discussion exactly because they demonstrate the folly of your position.

The income tax system does indeed impose costs on business. Those costs in turn increase prices. That you reject this fundamental idea is laughable. You really think anyone is with you on this?

You may ignore tax costs if you like, but they remain an expense to business that ends up inflating prices.

Fool.

[Principled]

Your position is that costs incurred by a business aren't ever paid. You do see how stupid that is, don't you?

[Dead Corpse]

Some folks aren't interested in what is right, logical, or factual. They want to protect their own bacon at any and all costs.

Arguing with them is pointless. You can't convince someone the sky is really blue if they deny reality.

[kellynla]

Damn, Eagle...you've got some kind of record going for a thread. LOL
what's this? 13 days and counting...
KEEP IT UP!

[lewislynn]

Your position is that costs incurred by a business aren't ever paid.

Where did I make that my position? Is hiring sub-contractors taking a position to not pay costs?...Wouldn't paying a sub-contractor be a cost?

You do see how stupid that is, don't you?

I only see how stupid you look in your pathetic attempts to make everyone else think you're the smartest person in the room.

[pigdog]

You're right, of course, but it's both good phun and good exercise.

Besides, the hope is that others will learn more about the FairTax and how valuable it will be for our country. Couldn't care less about those who are already "lost" to the income tax system.

[Eaglewatcher]

Remember that the income tax started as a flat tax. The nations sales tax keeps the tax in front of the people all the time, there is no hiding it, no withholding and then a check returning some of your own money but making many people think they are getting something back.

[Eaglewatcher]

It is just a great issue. I believe that we are ready for a revolution in the tax system.

[lewislynn]

Principled:

"SImple, if you've ever been in a position to assess the impact of taxes on a business. You simply increase the price,

YN: So you jack up your price to achieve whatever profit you want.

Principled

No. That's stupid. Stupid, stupid, stupid. That's not what was said now, was it?

Yea, that's exactly what was said and it's stupid, stupid, stupid to deny it.

[kellynla]

oh, I couldn't agree more and we appreciate you keepin' it on the "front burner"

[pigdog]

And it's Looey, Looey, Looey for you to post such trash.

[Your Nightmare]

So, let's see - your theory is that everyone sells the same thing at the same price sort of automatically???

My "theory" is known as a "microeconomics" and it's not really mine. It's been around for quite awhile. I'm surprised you haven't heard of it before. It's pretty basic stuff.

[Your Nightmare]

Show us, say, four errors that you have admitted by giving us links to the spost on these threads where you've lied made errors. You actually have quite a large body of work to choose from.

First, you assume I've made four errors. Second, I'm not about to waste my time weeding through months and months of posts trying to find the very few where I made errors.

You, on the other hand, can't even admit you were in error for years in your interpretation of Jorgenson's work. You still continue to stick with your error to this very day (at this point it's just another one of your lies).