Posted on 12/16/2005 2:20:48 PM PST by ancient_geezer
Laurence J. Kotlikoff, David Rapson NBER Working Paper No. 11831 ---- Abstract ----- This paper compares marginal and average tax rates on working and saving under our current federal tax system with those that would arise under a federal retail sales tax, specifically the FairTax. The FairTax would replace the personal income, corporate income, payroll, and estate and gift taxes with a 23 percent effective retail sales tax plus a progressive rebate. The 23 percent rate generates more revenue than the taxes it replaces, but the rebates cost necessitates scaling back non-Social Security expenditures to their 2000 share of GDP. The FairTaxs effective marginal tax on labor supply is 23 percent. Its effective marginal tax on saving is zero. In contrast, for the stylized working households considered here, current effective marginal labor taxes are higher or much higher than 23 percent. Take our stylized 45 year-old, married couple earning $35,000 per year with two children. Given their federal tax bracket, the claw-back of the Earned Income Tax Credit, and the FICA tax, their marginal tax is 47.6 percent. The FairTax imposes a zero marginal tax on saving meaning that reducing this years consumption by a dollar permits one to increase the present value of future consumption by a dollar. In contrast, the existing federal tax system imposes very high marginal taxes on future consumption. For our stylized working households foregoing a dollars consumption this year to uniformly raise consumption in all future years raises the present value of future consumption by only 45.8 to 77.4 cents, i.e., the effective marginal tax rates on uniformly raising future consumption via saving facing our households ranges from 22.6 percent to 54.2 percent. The FairTax also reduces most of our stylized households remaining average lifetime tax rates ? and, often, by a lot. Consider our stylized 30 year-old, single household earning $50,000. The households average remaining lifetime tax rate under the current system is 21.1 percent. Its 16.2 percent under the FairTax. |
Just noticed that Kotlikoff has released a second paper to NBER as well, I presume you have a copy of that one too.Yes. Don't you?
But then I don't seem to have the contacts you apparently have in getting a full copy before it goes online.I didn't get it before it went online. It's been up for almost a week.
Of course not, I like most of us mere peons wait for the online text.
But no problem, I am sure it will be readily available to us all soon enough.
I didn't get it before it went online. It's been up for almost a week.
That is indeed interesting seeing as the order pages
You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.
from http://papers.nber.org/papers/W11831 & http://www.nber.org/papers/W11858 & come up:
The paper you requested was not found.
If you think you have received this page in error please contact.
Support@SSRN.com
I take it then you are a subscriber to NBER and receive it through other channels.
Of course not, I like most of us mere peons wait for the online text.You should get an .EDU email address. Maybe you should check with your buddies at the AFT. Looking at the front page of "Would the FairTax Raise or Lower Marginal and Average Tax Rates," I notice this:
We thank FairTax.org for research support and Jane Gravelle and Alexi Sluchynsky for very helpful discussions and suggestions.
We thank FairTax.org for support.Even more paid for results. I guess if the honest economists aren't giving the results you want, buy your own.
You should get an .EDU email address.
I see you ride on a institutional achedemic membership. Good information to know.
Maybe you should check with your buddies at the AFT.
Since I'm not an employee of their's, I doubt that would be of much value I contrary to your beliefs.
I'll wait for $5 non-subscriber copy or AFT promised online copy that they have indicated to me they will provide when I checked with them to find out if they could provide some information on the paper.
Looking at the front page of "Would the FairTax Raise or Lower Marginal and Average Tax Rates," I notice this:
We thank FairTax.org for research support and Jane Gravelle and Alexi Sluchynsky for very helpful discussions and suggestions.
Seeing as FairTax.org are the authors and originators of the bill would you expect Kotlikoffto to request information from them. I find it interesting that Jane Gravelle of the Congressional Research Service and and Alexi Sluchynsky from the Kosovo Ministry of Economy and Finance were involved as well. That is good information to know.
Think maybe CSR and KMEF are in cahoots too?. Looks alot like an international conspiracy to me.
The manufacturing trade deficit in October increased $2.6 billion, or 3.6 percent,Your point is?
As you can see in the link manufacturing is alive and well in the US and is (gasp) growing.
Unbelievable. There is nowhere these guys won't go. But I still haven't seen THEIR research.
Lacking substance, all they have left is to attack the messengers.
As you can see in the link manufacturing is alive and well in the US and is (gasp) growing.I should have known you wouldn't understand what "relatively speaking" means.
Manufacturing is growing at the same time the manufacturing trade deficit is growing. No one said anything about a dead or even stagnant industry...
Walk into a business with a wide array of manufactured products like Home Depot then decide if "relatively speaking" there are more domestic made products or foreign made products..."relatively speaking" I would say there are almost no domestic made products...
Therefore I can safely say that the majority of Home Depot prices would not be affected by the elimination of domestic income taxes.
If you have evidence to suggest otherwise I'll be glad to consider it.
I understand exactly what "relatively speaking" means and I included it in my reply. But I also understand what "practically nothing" means and I wanted to point out that the inference was incorrect. Manufacturing is healthy and growing in the US. In fact, manufacturers can't get enough skilled workers in the US. It would grow even faster if we eliminated government education.
I see you ride on a institutional achedemic membership.You obviously don't.
Seeing as FairTax.org are the authors and originators of the bill would you expect Kotlikoffto to request information from them.You obviously don't know what "re$ear¢h $upport" means.
Nah, neverdid ride on insitutional credentials.
I don't use spell checker as much as you either.
I wanted to point out that the inference was incorrect.No it isn't. I purchase manufactured products everyday for my business, and MOST products with names of American corporations on them are NOT manufactured domestic. In fact the products you do find manufactured here are more likely only assembled here from components or materials that are NOT domestic...including fruit, vegetables, lumber products, iron, concrete or even John Deere tractors.
If the "embedded" income tax is a factor in across the board price reductions of manufactured products it would have 0 affect on price reductions, in fact the opposite is true because relatively speaking almost nothing is manufactured domestic...period. It would grow even faster if we eliminated government education.
Are we supposed to believe government education is going to be fixed by the passage of the Fairtax now?
If you had any clue to problems in manufacturing (obviously you don't) you would have correctly said the problem is government REGULATION not education.
You obviously don't know what "re$ear¢h $upport" means.
Hmmm, You apparently figure"res$search $upport" should come from the likes of Brookings or the DNC, Or any one of a very large number of folks with strong investments in maintaining income taxes or VATs in one form or another.
Yep that is really going to give us a good picture of what to replace income taxes with.
AFT at least has the advantage of coming out of the business community that have a strong stake in advancing economic growth and less government intrusion.
I'll go with them any day of the week over the current vested interests, both political and economic, in the current system of taxation.
Back to that again are we? Who has no clue?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.