Posted on 01/28/2006 1:15:41 PM PST by Eaglewatcher
Supporters of a Legislative package commonly called the FairTax, point out that no other tax reform and replacement idea comes close to providing the economic benefits for American working families and the growth of American Manufacturing like the Fair Tax HR 25/ S25. Major U.S. Manufacturers like Ford Motor and Delphi Corporation are facing difficult challenges and are planning or proposing major changes in order to compete in the global marketplace and to compete within the American marketplace.
Talk Radio has been a buzz on the plan by Ford to cut 30,000 jobs and close several facilities. For months, cities with Delphi Parts plants have be stewing over negotiations and plans that want to cut wages and possibly close facilities. Though part of the solution is to be more efficient and certainly to produce what the customer wants to buy, the other part of the debate is unfair trade practices and unfair labor wages in these competing countries.
Radio Talk Show host Neal Boortz is one talk show host that has discussed the solution for American Manufacturing repeatedly. He has also written a New York Times best selling book, “The FairTax Book” in conjunction with Congressman John Linder of Georgia. The book lays out the problems with our archaic income and payroll tax system and than reviews the benefits of the Legislative Replacement package sponsored by Congressman Linder and based on the 10 years of work and research conducted by Americans for Fair Taxation.
On Television, CNN's Lou Dobbs and Bill O'Reilly show their outrage on how American Manufacturing Jobs are leaving American Shores but provide no comprehensive solutions in their form of “sound bite journalism”. They and many other Americans misunderstand and dismiss the serious grassroots support and supporting research for a solution that will truly help the "little guy" and restore good paying American Jobs. (The Fair Tax HR 25/ S25. www.fairtax.org)
The solution for Ford, Delphi and American Manufacturing in general is not trade barriers or tariffs but is fair trade. But how do you get Fair Trade when competing countries do not pay a Fair Wage. American Workers do not need to compete globally by lowering their wages to such Draconian levels. Fair Tax supporters point out that the solution for better paying American manufacturing jobs at home is to have the lowest taxes on American Manufacturing companies.
American Manufacturing goes where it costs them the least to do business. Even with the higher costs of fuel to ship those goods from overseas, the low wage is what helps some countries compete and it is the Lower business taxes that helps other countries compete.
In Europe, Ireland has had the strongest economic growth and best employment numbers because they have the lowest taxes on business (Corporate tax 12 %). The Solution for America is Lower Taxes on American Manufacturing not Lower Wages on American Workers. The incentive for business to stay in America and not outsource is lower taxes on Corporate earnings with less tax compliance costs.
Ultimately, It is the consumer that pays the business tax in the end on all products and services. Business taxes like business costs for manufacturing are just worked into the price. The Consumer pays the tax not the business.
What if the United States had the lowest Corporate tax in the World? Would not business flock here to manufacture? What if instead of the Bahamas being the Offshore tax haven for business or Corporate headquarters that for Tax purposes those businesses made New York, or California, or Chicago their Corporate home and their preferred place to manufacture from and ship around the World?
There is such a tax plan in Congress waiting in the wings to rev up our Economy, by providing the right incentive for American Manufacturing to stay in America, for Good paying manufacturing jobs not to be outsourced, for American Families to have more take home pay, to make U.S. Soil a Tax free zone for business that can export products around the world Tax-Free. This is how we save American jobs and this is how we compete against substandard wages paid by our global competitors.
The Legislative Package in Congress has been around for several years; it is well researched and has sound economic data to back it up. It is commonly called the FairTax and has over 45 Co-Sponsors in the House and Senate. The bills are HR25 and S25. According to the Fair Tax Scorecard 155 Legislators are leaning in favor. Last Spring 75 Economists sent an open letter to Congress and the President in favor of the Fair Tax. They were joined by Alan Greenspan’s testimony in favor of a consumption tax as a replacement for an Income tax.
From an American worker stand point, the key point is that the Fair Tax helps save American jobs and promotes American Manufacturing that stays on U.S. Soil. It allows American workers to take home an average 30% larger paycheck each and every week by eliminating any federal withholding for income tax or payroll tax from an American workers paycheck. American workers take home 100% of their paycheck!!
American Manufacturers have the incentive to stay in the US and not outsource because they pay no Corporate tax. New American Manufacturing is created because Capital investment in the US is tax-free. Building new plants in the US will cost them less because of lower taxes. The Exports they send overseas pay no tax and are cheaper for sale in the global marketplace. This allows American Manufacturing to compete globally because of lower taxes and not lower wages like Delphi is trying to accomplish.
The Fair Tax is a revenue neutral replacement of the individual and corporate Income tax; payroll tax, capital gains tax, the Alternative Minimum Tax (AMT) and the Death Tax (Estate Tax). It is replaced with a National Sales Tax on retail purchases of all new products and services and supports the funding of the National Budget including Social Security and Medicare.
According to the Legislation, the national sales tax will be included in the price tag you see on a product and will be broken out as a separate line item on your receipt so that Americans know how much they are being taxed and how much they are sending to Uncle Sam with every purchase.
American Families do not have to wait until April 15th to get a refund of their own money. Middle Income Families will take home an average 15% more because of no Income tax withholding and an additional 7.65% because of no payroll tax withholding. Under the Fair Tax, the tax collected replaces the income that funds the national budget and replaces the payroll taxes that fund Social Security and Medicare.
The Fair Tax Legislative package is much more than just a national sales tax it is a package that also has a Prebate (rebate) system that truly untaxes the poor and treats everyone equally and fairly. No forms to keep, no receipts to log in or file. Everyone gets the same prebate check based on family size and valid Social Security cards for each family member.
Maid or Millionaire; the simple way to be sure no one pays a national sales tax on the essentials is not complicated exemptions but to simply send each household a monthly check (debit card) to cover the national sales tax on all spending up to the poverty line for that Family size.
Health and Human Services calculates the poverty line for a married couple with 2 children at $25,660 for the year 2005. The Fair Tax assumes every family of 4 will spend at least that much and sends them a prebate to cover the national sales tax on every dollar up to $25,660. The Inclusive tax rate is 23% or $5,902. The Fair Tax sends each month $492 (5902/12). If that family makes less than $25,660, they still receive the monthly check for $492.
It is a fact, if you make more you spend more. Under the Fair Tax if you spend more you pay more. With the Prebate, the Fair Tax is progressive in that the net tax rate for those American families at the poverty line is a true ZERO; for those at twice the poverty line the net rate is about 11.5%; at 4 times poverty that family is about 17.2%; and the wealthy at 10 times the poverty line and higher, average between a 20 to 23% net federal tax rate.
The Fair Tax truly untaxes the working poor by eliminating the payroll tax of 7.65% and allowing the working poor to take home 100% of their paycheck and receive an additional $5,902/ year to cover the National Sales tax on essentials like clothing, food, housing, or daycare. (Family of 4)
Trillions of Offshore dollars that wealthy individuals and wealthy Corporations hold offshore because of America's current tax laws will return to US shores under the Fair Tax. This capital will find a tax free zone in America and want to invest in American Manufacturing and business that will not only sell to Americans at home but to the entire world. American Exports will not have the 23% national sales tax on them for export. These exportable products will also drop in price because we have removed a major cost element from the supply chain. With no business income or payroll taxes, the cost of those products will go down. With no IRS you reduce the compliance costs dramatically for complying with the IRS rules and regulations. This savings throughout the supply chain will also be reflected in a lower price at home and for export.
It depends on the economist and it depends on the economic model but the estimated price drop on products and services is between 10 and 25% on average. Something you bought for $100 under the income tax will drop to somewhere between $75 and $90 dollars. When you add in the National Sales Tax the final price will be between $97.50 and $117.00. (30% exclusive tax rate equals 23% inclusive or income tax equivalent rate)
Under the Income tax a lower middle income tax family had to earn $129 in order to take home $100. This is based on a 15% income tax withholding and a 7.65% payroll tax withholding.
Under the Fair Tax you take home more money and you have more money to spend even after buying the same items and paying the Fair Tax. You take home $129 and spend $117 with the Fair Tax to buy the same $100 worth of goods you bought with $100 in take home pay under the archaic Income and payroll tax system. You are $12 ahead and on top of that will receive the monthly Prebate check.
Under the Fair Tax Legislative package you lower taxes on business; you give them the incentive to produce and manufacture here within the US and not in China or India, or Mexico.
The way to compete in the 21st Century is not to cut our wages in half. The way to compete in the world is to provide the incentive for business to do business inside the US.
The Fair Tax Legislative package does so much in so many ways. Our American Economy will boom when American manufacturing is growing in the US. The Fair Tax is the best vehicle to do that.
When the Lobbyists and their paid economists come out against it beware. With out the convoluted tax code, Lobbyists, Congressmen, congressional aides and "K" Street will lose a lot of their power and influence. If they come out against it than it must be good for average American families.
Every Politician that came out in support of this idea last election cycle won. This is a winning issue for politicians and when average American people are presented all the facts of the Fair Tax 80 to 90% love it. Get the Facts at www.fairtax.org
If Average American workers can get people like Lou Dobbs and Bill O'Reilly to truly study all the facts that support the Fair Tax, perhaps we can get them to join the over 75 economists that wrote a letter to Congress last Spring in support of the idea. The Fair Tax is the most comprehensive solution to aid American Workers, American Families, American Manufacturing and the American Economy.
"I'd absolutely cherish seeing lewislynn, Your Nightmare and RobFromGa go head to head against ancient-geezer, Principled and phil_will1 in a live, in-the-flesh debate before a man-in-the-street audience."
Dream on, Zon. They would never show up.
"BS. I've been a Flat Tax supporter for years."
As well as a VAT supporter for years.
"A net profit margin of 9.74% seems pretty high for a commodity product like gasoline and it's 60% higher than the profit margin they made in 1997. But that's irrelevant."
I'm very glad that you threw in the irrelevant disclaimor at the end of this very liberal/socialistic sounding statement.
"What's is relevant is that their costs went up 25% and their profits went up 44%."
I think you are misunderstanding my position. I simply was stating that we should not get worked up over the media villianizaton of big oil. 9.74% is nothing to get worked up over, especially considering the enviro wacko limitations on their ability to grow their business.
I actually agree with many anti-fairtaxers on these threads that the spending power of consumers remains constant to today's dollars. You can't convince me that the consumer's spending power will be reduced, and the Fairtaxers can not convince me that the spending power will be increased.
That doesn't matter. The economy will be set free. Corporations will be set free of the tax structure. Individuals will be set free to save, or spend, chosing when to be taxed.
The government will be bound by the people. When the citizenry is fully aware of the burden of the government's spending with EVERY PURCHASE, it will be much easier to get spending reductions. As a result, the people will be fully educated on the impact of the socialists among us.
I see nothing wrong with bringing the socialists into the light of day. I actually am very perplexed that anyone would want to keep the burden of government hidden from the poeple by burrying it as deep as possible in the economy in the form of a VAT or maintaining the status quo.
As well as a VAT supporter for years.What does "support" mean? I answered questions. I cleared up misunderstandings. I said it was better than the FairTax - what isn't?
I'm very glad that you threw in the irrelevant disclaimor at the end of this very liberal/socialistic sounding statement.What? I was just saying the market changed and they are to charge higher prices and get a higher profit margin. I'm not knocking them for making a profit.
I actually agree with many anti-fairtaxers on these threads that the spending power of consumers remains constant to today's dollars. You can't convince me that the consumer's spending power will be reduced, and the Fairtaxers can not convince me that the spending power will be increased.I'm glad you are honest enough to admit that. My opinion is that some people's spending power will go up and some people's will go down. Taken as a whole, it will stay the same. If there are "winners," there will be "losers."
"If there are "winners," there will be "losers.""
I'm not sure I believe that in the sense that I am reading it. Do you mean this in the sense that the rich get rich at the expense of the poor? Don't you believe the pie can grow?
...Think about it, if you could eliminate 7.65% payroll tax paid by the employer(not part of gross salary) and eliminate the corporate income tax; and eliminate 80 to 90% of the economically wasted 250 to 400 billion in compliance costs...
Well, that would get you to about 8% ONLY IF 100% of those amounts were applied to price reduction. THAT WILL NOT HAPPEN!
You have to realize that the roughly $900 Billion you are talking about is spread over about $11,000 Billion of GDP. And ANY business that retains even a part of the payroll or profit tax reduces that 8% to a smaller number. Wishing it were larger doesn't make it so.
... 10% price drop is conservative and reasonable expectation just to most businessmen let alone economists. ...
Again, you're playing in fantasy land. The numbers just don't add up. Your opinions and expectations don't jive with the numbers.
The idea that a wage drop is required for a 10% price drop in the supply chain is false.
Then you clearly don't understand Jorgenson's study; and there appears to be no other study to confirm your opinion on this ... and the numbers from the real economy are not in your favor.
Do you mean this in the sense that the rich get rich at the expense of the poor?The distributional analyses I've read show the upper and lower classes doing well under a NRST. That's leaves the middle class. Generationally, the young generation does better at the expense of older generations. Winners and losers.
"Right, you've got to marginalize decent."
dissent?
dissent?That too! ;-)
"I didn't push a VAT. I have stated that I would prefer a VAT over the FairTax and I have answered questions (corrected Fairie's lies, more like) about the VAT. That's not 'pushing' the VAT."
That is fortunate for you, because a VAT is about as popular among Americans as poison ivy at a nudist colony.
"And you are the most shameless person on Free Republic. I can only imagine how the rest of the Fairies cringe every time you post."
As has been demonstrated in previous threads, you have a very vivid imagination.
"The point is, you can get a certain number of people to sign anything and 75 is a pretty small number."
Really? How many economists have endorsed S 1099?
"What happened is the soft drink companies, all working at the same time, were able to change the market."
Typical SQL spin. You make it sound like some grand conspiracy. The soft drink companies didn't just decide on their own to raise prices, they were forced to by cost increases of their most important ingredient. If they had colluded together to form an oligopoly to increase profits and subvert the competitive market place, that would have been illegal.
Bottom line is that they did EXACTLY what you said that companies don't do - they raised prices in response to cost increases. No amount of your spinning is going to change that.
The top 50% of 2003 taxpayers paid an average rate of 13.35% in taxes as of updated Oct. 05 figures. That represented income of $29,019 and up so that it is clear the 15% figure used by merrillbender is right on the money and yours is not. As income raises the rate also increases to a point of an income of $57,343 the average rate is 15.38% which once again tallies with merrillbender and not you.
So your "analysis" attempting to overturn his postings is just more of your misinformation. The takehome he presents seems just fine - yours certainly does not.
The figures from the Tax Foundation above do not include the 15.3% payroll taxes; merely income tax. Or, to put it another way ... you're wrong!!
Of course if they know in advance their exact tax burden they can do that. Almost no one I know is that prescient ... perhaps you are????
Who is it you claim is trying to marginalize opponents???
$129 is the new gross that come home versus the $100 in take home pay under the old system.
For ALL taxpayers grossing under $90K (the FICA limit) their total Federal Tax burden (income AND payroll) is less than 20% of gross. For those under $50K, the total Federal Tax burden is under 15%. NO ONE, not even those grossing in excess of $250K pays a total Federal Tax burden of 29%.
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