Fair Tax Solution for Ford, Delphi & American Manufacturing

The New Media Journal.US ^ | January 28, 2006 | Merrill Bender

[merrillbender]

It does not assume pretax wages going down at all.

It does assume a 22% price drop.

My example cahnges the price drop to 10% and it is dtill good for the Senior couple.

[merrillbender]

75 Economists was the line. Open Letter in support of the Fair Tax. That is significant.

The rest of us here are just armchair econoimists at best.

I certainly see no credential here that rise to that level for those opposed.

I am sorry maybe 2 or 3 economists but not 75.
(Gale, Bartlett rebutted at rebuttal section of www.fairtax.org)

[Your Nightmare]

It does not assume pretax wages going down at all. It does assume a 22% price drop.

Which can't happen without a drop in pretax wages.

My example cahnges the price drop to 10% and it is dtill good for the Senior couple.

10% is still optimistic and even then this extreme example only shows the couple breaking even.

[merrillbender]

Is there a debate in the economic community. - YES

75 Economists signed a letter in favor.

How does that stack up in your mind?

Why would so many be in favor of such a system?

I assume you prefer the Flat Tax is that Correct.

Do you like the Stev Forbes plan at 17% with a $40,000 exemption and keeping the 7.65% payroll tax on top of that??

Or do you like the VAT better??

[Your Nightmare]

75 Economists was the line. Open Letter in support of the Fair Tax. That is significant.

Sorry, getting 75 economists out of the thousands in the U.S. to sign a letter is not very impressive. Your buddy Jorgenson once got over 2,500 economists to sign a letter "that global climate change carries with it significant environmental, economic, social, and geopolitical risks, and that preventive steps are justified." Does that make it true?

The point is, you can get a certain number of people to sign anything and 75 is a pretty small number.

[Your Nightmare]

I assume you prefer the Flat Tax is that Correct. Do you like the Stev Forbes plan at 17% with a $40,000 exemption and keeping the 7.65% payroll tax on top of that??

I favor a flat tax but don't support any particular plan - but S.1099 is the best I've seen so far.

Or do you like the VAT better??

A VAT would be better than the FairTax.

[pigdog]

"Let's take a look what information you can find if you wander off FairTax.org: "

Surely ... and most of it complete nonsense as has been shown before many times, Nightie. I don't know why you have the temerity to post this trash again after it has been repeatedly hammered. Must go with Looey's philosophy of telling the lie enough times and it becomes true>

IAE:

Well, Nightie your #238 on this thread (of which you seem so proud) is just the same old rehash you're done previously. Perhaps you have re-arranged the order of some of the snippets, but that can easily be sorted out in my response to your original opost of this nonsense which was ---

---

"The 11 cut-and-pastes you stitched together in your post (and aren’t YOU the guy continually criticizing ancient_geezer for HIS cut-and-pastes??) Fall into 2 categories - FUD (Fear, Uncertainty, and Doubt) and OOC (Out of Context quotation). The FUD Factor items are marked with a “*” and the OOC items with a “+”.

The 11 items are:
1 - Garner (Zodrow, Gravelle, Gale)*
2 - Koltikoff+
3 - Response to Gale by Mastromarco/Burton+
4 - Mastromarco/Burton real estate +
5 - CBO Price Level*
6 - Slemrod/Bakija; Taxing Ourselves*
7 - Gravelle & Esenwein; CRS Overview*
8 - Wilkins; National Retail Federation*
9 - Zodrow; Transitional Issues*
10 - Bull & Lindsey; Monetary Implications*
11 - Hall; Price Level*

Let’s take the OOC items first -
Item 2 (Koltikoff) - in a two paragraph discussion of whether or not the FairTax is regressive in theory, the author made certain assumptions to illustrate a point. You merely took these assumptions and presented them as though they were a fact - his belief - he was presenting. They were assumptions to illustrate a point, not fact he was presenting.

Item 3 (Response to Gale) - You conveniently left out the portion where the responders point out that prices would drop with the assumption of the FairTax, and that Gale, in fact, was contradicting himself. Here’s a link to the entire response midway on page 14 (through midway on page 15) where it says:
” J. Gail Perspective: Consumer Pricing: Up, Down and Sideways Simultaneously”. Gale completely overlooks the fact that prices would drop with the onset of the FairTax as the responders point out. After this price drop, prices would then be raised up again to some degree by the sales tax which is the meaning of their statement “... prices will increase by the amount of the sales tax but returns to labor and capital will be higher.”

Item 4 (Real Estate Foundation) - The footnote you posted from this response also suffers from the same flaw in reasoning as Item 3 just above. Price will first decrease with the advent of the FairTax causing the after tax increase in wages mentioned as well as the increase of prices back in an upward direction from their decrease to the lowered level mentioned above

So much for your out of context quotations. Next we take up the FUD Factor Items:

Item 1 (Garner) with points from (Zodrow, Gravelle, Gale) - As with almost all of the liberal FairTax opponents, the discussion presents what amounts to a description of a VAT structure (calling it a “consumption” tax) and comparing that to a flawed description of the FairTax (which includes a discussion of exemptions/exceptions “required”). In addition the discussion goes on to the SQL “leap of Faith” (as do you) that prices MUST increase with the advent of the FairTax ... while showing no such convincing (or even fairly convincing beyond just stating it) evidence of why this would happen. Garner is obviously not too familiar with the FairTax as he describes a decline in bond values and the idea of corporations “losing” their depreciation - which of course is nonsense under the FairTax. He also uses heavily from well-known SQL sources such as Zodrow, Gravelle, and Gale which in and of itself should merit serious concern.

Item 5 (CBO) - Hardly a benefactor of the Status Quo (yeah, right) but also makes the “Leap of Faith” as in Item 1 that prices must increase with the advent of the FairTax. They do, of course, but only after first declining by the removal of the income tax component leaving them more or less the same overall. Despite that lapse, the opinion is offered that the Fed will step in to raise prices (without any clear or convincing indication of why this might be so; merely the claim that it is so).

Item 6 (Slemrod/Bakija) - Here, from a long time SQL advocate (Slemrod) we see the similar liberal “Leap of Faith” that the sky would fall in the opinion (offered again without any backup) that corporate earnings would fall by 20%. A slightly different twist is given in that the Fed rather than raising prices would now, God-like, merely “monitor” prices to decide if any action need be taken to PREVENT A PRICE RISE (rather than causing it as in Item 5. Perhaps rather than calling these sorts of SQL ploys a “Leap of Faith” (which of course they are), they should be called the Chicken Little Syndrome.

Item 7 (Gravelle & Esenwein - CRS) - Once again we see the Chicken Little Syndrome in full operation where any price reduction due to the FairTax is completely ignored and sweeping statements reflecting a great lack of understanding of the FairTax are made by claiming that the tax “must be paid” in an example industry having a 1-2% profit margin which “now owing a tax equal to 20% of receipts” - all the while ignoring the fact that the business does not pay the sales tax (at all, let alone out of its “profit margin”), but that the customer of the business pays the tax. In addition, the CRS folk seem to not understand that the FairTax is border-adjustable as well as the old unwarranted assumption about lower wages being required (for some reason). There are a good number of other flaws in the paper itself other than the selected snippet posted. We also see the use of the old chestnut of anonymous “... economists who judge a consumption tax to be superior to an income tax may nevertheless be skeptical about the advisability of making the change because of these transition effects. You’d think that at least these “unnamed economists” would appreciate the credit (?) of being named.

Item 8 (Wilkins - National Retail Federation) - This is a study originally commissioned by the NRF from Coopers & Lybrand (who had, as I recall, Wilkins as the leader of the group doing the “investigation”). It is of the Chicken Little/Leap of Faith persuasion and is impossible to tell much about - aside from the lack of veracity - since, despite requests, it was never published so others could investigate its pronouncements. This link:
http://www.fairtaxvolunteer.org/smart/PwCRebuttal.pdf
has a refutation of the Wilkins/PwC/NRF “study”. A HIGHLY RECOMMENDED READ!!

Item 9 (Zodrow - Transitional Issues) - this is merely George once again “doing his thing”. He pretty much makes the usual Chicken Little observations, but is at least honest enough to mention that the “... opinion on this issue is certainly not unanimous.“ And goes on to cite the Jorgenson 25% or so price decline. Kudos, George, for inserting a bit of much needed honesty into the discussion. Makes the Leap of Faith about the Fed being magical and omniscient.

Item 10 (Bull & Lindsey - Monetary Influences) - Makes the Leap of Faith about the wage decline without even considering the removal of the cascaded income tax in prices. This may be one of the reasons that Lindsey is no longer a Presidential Advisor on the economy.

Item 11 (Hall - Price Level) - Why is it not surprising that someone largely thought of as an author of the Flat Tax be strongly in favor of that over the FairTax (which he nowhere demonstrates an understand of aside from the requisite Leap of Faith that wages will be lowered and prices raised (the Chicken Little Syndrome again) while ignoring any price reductions offered by the advent of the FairTax.

So, let me see now if I have this straight ... the FairTax supporters may not use the economic data which is presented in good detail on the Americans For Fair Taxation website (because you say so) while you are quite free to use all of the snippets you can gather up from the known SQL defenders (who seldom, if ever, admit to being so - just like you) even if they are only op/ed pieces with little or no economic detail? By George, I think I’ve got it!!! "

---

To be correct we should note that the study in #8 is now "available", but only if you wish to buy it - which I certainly do not since it's been heavily rebutted.

That "stuff" is no better now than then - but nice try to try to trick the unwary!

[pigdog]

And the basis for your statement is???

[merrillbender]

i would like to hear your thoughts on my prevoius post on Falt and VAt.

and please answer this question for me.

Under the current system compliance costs are estimated anywhere form 250 billion annually to 400 billion annually.

Would you consider this an unproductive expenditure best spent somewhere else in the Economy?

What might your alternative tax system be??

[pigdog]

Actually, they don't have to Nightie, since it isn't available to them through the democratic (or any other process) - but it is available wo us in the US if we just don't let fools like you distract us.

[pigdog]

It takes one to know one ... and on that basis you certainly qualify.

To my knowledge merrillbender has never made the pretense of liking the income tax is someone could just explain "one more thing" to him as you have done in your attacks on the FairTax.

[RobFromGa]

experience, and an ability to read tax tables.

[Your Nightmare]

Surely ... and most of it complete nonsense as has been shown before many times

No it hasn't. Your rebuttal is a joke. It ranks up there with FairTax.org's "rebuttals."

You aren't the Court Jester of Fairies for nothing!

[CSM]

Do you have a link to a thorough article regarding Exxon's profits? I'd like to see their revenues as well as the hard profit number.

[pigdog]

I don't know that the poster was saying that tax policy DRIVES trade, but that certainly it has an influence on in since as most know having border-adjustable taxation helps to lower export prices of our manufacturers.

Certainly the WTO countries know this and hammer us repeatedly to try to keep us at this disadvantage - they love it that we have the income tax and they can prevent any sort of border-adjustable taxation on any form on income-based tax.

[merrillbender]

Thanks Pigdog,

I see you are very famliar with Nightmare and his ways.

Does he have an alternative ever or is he just a SQL??

[Your Nightmare]

Under the current system compliance costs are estimated anywhere form 250 billion annually to 400 billion annually. Would you consider this an unproductive expenditure best spent somewhere else in the Economy?

This is a logical fallacy. You ask a question about an assertion as if it's true. I doubt the validity of your assertion. We do not expend $250-400 billion complying with the current system.

What might your alternative tax system be??

The Flat Tax. It's a consumption tax without the critical problems of the FairTax.

[Your Nightmare]

Do you have a link to a thorough article regarding Exxon's profits? I'd like to see their revenues as well as the hard profit number.

http://www.msnbc.msn.com/id/11098458/

[pigdog]

Sorry, Nightie, you're wrong (again).

[pigdog]

Uh-huh ... and how many Squirrel economists have signed a leter praising the benefits of the income tax system???