Posted on 01/28/2006 1:15:41 PM PST by Eaglewatcher
The FairTax does not tax wealth at all, Robbie, and has been pointed out to you many times. It taxes consumption (which may sometimes by the spending of wealth; but then it is no longer wealth, but consumption).
Your semantic games and wordplay are just trivial chatter.
SOME of the costs in a product stem from payroll and wage taxes generally withheld from the employee, but some of the costs embedded in the things sold contain the embedded costs of business income taxes which cascade from level to level and embed themselves into costs over and above the payroll/wage taxes.
These embedded taxes are not readily apparent to most people unless they "look under the hood" and consider the spreadsheet examples I've given on many threads that point up this mechanism. There are even some fools who try to pretend that embedded taxes do not exist - but clearly they do and that is one of the reasons that exporters are at a disadvantage pricewise vis-a-vis other countries; part of the higher prices are indeed these embedded taxes.
The assumption is that the failing manufacturers will become successful again. If not, then their stocks are worthless now and I don't see that happening with such entities as GM and Ford.
So, one day, they will be profitable again and the elimination of the corporate income tax will not only help them to be more profitable, it will allow them to grow productivity which will make everyone more wealthy.
But the manufacturers will then bear less of a burden than at present, not a greater one. It is individuals who pay the taxes now - the fact that businesses handle some of the funds, paperwork, etc. all eventually bubbles down to be paid for by the individual in the long run in vaarious hidden and disguised forms so that taxpayers really do not know what their tax burden is.
With the FairTax, the individual tax burden is quite visible. And since the FairTax is designed to be revenue neutral, the "overall" tax burden on the economy will be no worse than at present.
In fact, it will actually be much less than at present in that we will now see millions of individuals presently paying basicallly nothing in income tax who will become sizeable "contributoprs" tp tax revenues when they purchase things at retail with their ill-gotten gains. That will reduce the tax burden on the rest of us since right now that money must be dredged up from somewhere (read: from you and I).
Well said, Turborules, well said!!! Sounds like it's from the heart, too.
The reasons the American auto companies are hurting are 2 fold, The stupid contracts & benefit packages they negoiated with the UAW & their cars are not very good.
No tax reform is going to change that.
Tell folks you are going to abolish SS & Medicare, and see how long your political party lasts.
What does the method of taxation have to do with SS & Medicare benefits?
Repeal the tax and fund SS/Medicare with a retail sales tax. Consumption is a substantially more stable tax base than taxable income and can assure the solvency of SS & Medicare for as long as the people figure they are needed.
Here's one more fact to take into account. There are probably more folks employed in the tax industry than there are in the domestic automobile industry. How much unemployment do you really want in the country?
Fact? Really? You care to cite a source study for this so-called fact of yours.
Certainly if true, are you telling us the economy is benefited by the federal income tax? Hardly.
Economic Burden of Taxation
William A. Niskanen
Presented October 2003
Friedman Conference
Federal Reserve Bank Dallas page 6.
www.dallasfed.org/news/research/2003/03ftc_niskanen.pdf"Given that the elasticity c implicit in recent U.S. fiscal conditions is about 0.8 and the average tax rate is about 0.3, the marginal cost of government spending and taxes in the United States may be about $2.75 per additional dollar of tax revenue. One wonders whether there are any government programs for which the marginal value is that high. Given the estimate of the long-term elasticity c from the U.S. time-series data, the marginal cost of government spending and taxes may be as high as $4.50 at the current average tax rate. "
You can't complain on one hand about the lack of a viable manufacturing industry, while on the other lamenting the potential of people in tax accounting and consulting would have to shift what they do from a parasitic existence on the economy to a productive roll looking to expand the productivity andf fortunes of business instead of constraining them to minimize taxes.
Sorry but many members of my family have been involved in tax accounting for many years and they tell my the time they waste in dealing with tax issues instead of bottomline concerns of their companies is a negative to their jobs. They perceive that going to a simplified consumption tax system would provide much greater opertunities for them than their current endevours in the economically sterile exercises in supporting the tax system.
The VAT (sales tax) has been a drain on the European economy for a generation. You can hide the tax as it is in the present system, layer it in a VAT, or put it all on the end as a sales tax. It doesn't really matter, the government is going to make sure its take doesn't go down.
So true, but irrelavent as regards a retail sales tax the FairTax legislation implements.
A VAT is levied on business purchases throughout the chain of production and passed on to the customer, hidden in price.
A retail sales tax is levied on the final customer of consumption goods and products clearly separated from price and is not levied on business purchases at all.
Comparing a retail sales tax to a VAT is comparing apples with oranges and a fallacy in reasoning. Where the VAT is invisible to the customer and electorate, the retail sales tax is fully open to the final consumer through which government can be constrained by the electorate's perception of it.
"Imposts, excises, and, in general, all duties upon articles of consumption, may be compared to a fluid, which will, in time, find its level with the means of paying them. The amount to be contributed by each citizen will in a degree be at his own option, and can be regulated by an attention to his resources. The rich may be extravagant, the poor can be frugal; and private oppression may always be avoided by a judicious selection of objects proper for such impositions. "
"It is a signal advantage of taxes on articles of consumption that they contain in their own nature a security against excess.
They prescribe their own limit, which cannot be exceeded without defeating the end proposed - that is, an extension of the revenue."
Yes, it is from my heart...I have felt this way a long time...America is great because we all have the option to fail...or succeed...
Thanks Turbo
Amen my friend on shifting all the burden and expense of Accounts trying to reduce and delay a tax...is just a stupid loss of brain power... it builds and improves nothing...the more people know this the better... lets put these wonderful smart tax people to work on managing the growth of capital and the improvement to the bottom line with better quality, material, people and resources control...
and watch how well the world turns to good, instead of sweating over how to avoid some stupid inane, arcane, stupid, selfish, silly, mind numbing tax code...
to wipe out the need for K Street and any stupid special interest group sucking on the public teat...if your group or ideas can not support themselves by reason and favor...it is not needed and should not be funded by public funds...
While EEE lays around and maste..., er twiddles his thumbs and does absolutely nothing about the illegal structure in Washington that feeds on the income tax.
"A VAT is levied on business purchases throughout the chain of production and passed on to the customer, hidden in price."
Not always passed on. The average VAT in the OECD 15 countries is 18% -- but is rebated back to the manufacturer if exported to the USA.
This means that a European vehicle that sells for $30K in their own country can be sold at the same profit in America for 82% of that price -- only $24,600.
At the same time, an American car that must be sold here for $30K to make a profit will get a VAT added when it is sold in Europe -- making its total cost $35,400.
In short, the American vehicle gets taxed twice when sold in Europe and the European vehicle gets taxed not at all.
There is no mystery to this. The European countries made a conscious decision to engage in a trade war via tax systems. We are very late in trying to counter it. The FairTax will leapfrog their VATs by removing an even larger tax component from our manufacturing without the high compliance costs that their VATs burden their manufacturers with.
You don't travel to Europe much, do you?
Have you calculated what the retail sales tax rate would have to be to replace the current SS/medicare taxes? Are you going to exempt anything?
As for employment
Fact? Really? You care to cite a source study for this so-called fact of yours.
No study, unlike 'fair taxers' I can do simple math.
A quick Google show that GM has about 142,000 domestic employees. Ford was a little harder to locate. According to their last 10_K, Ford North America had 122,877 automotive as of 1994. (Note, in both cases, they employed more people overseas and in non-car making subs than here.)
So the total to beat is about 264,000.
There are about 40,000 Enrolled Agents. There are about 100,000 IRS employees. Care to guess how many accountants and auditors there are (yes, a lot of them are included in the previous numbers, so ignore the 140,000 we've already counted up to.) Per the BLS, the number is 1.2 MILLION. Add in support staff for them. Add in tax lawyers, their paralegals and secretaries. Add in the printers who generate the forms. Add in the folks who sell the software.
Yes, the tax industry employs about 5 times the number of folks that make cars, manage them, and take care of the overhead for those operations at GM and Ford combined.
You don't travel to Europe much, do you?
You ever ask a European as to who pay that VAT, they most figure that business is paying the freight, forgetting they foot the bill that the tax is paid out of.
However that is not where the real problem lay, for the higher rates are hidden by use of "exemption" which just means the business pays tax on its purchases, and does not receive a credit on its sales against that tax and is not allowed to collect a tax overtly form its customers. Neat little trick that effectively buries the tax within the price of specific goods upstream from retail.
But seeing you are so well traveled, you undoubtedly know that.
It is the higher rates that get hidden, when governements start getting flack from the elecorate that they start pulling the games to hide the tax. The facility and ease of hiding the tax is is the primary selling point of a VAT to governments. They can extract a much higher percentage of taxes out of GDP without raising voter displeasure due to the lack of transparency of the system.
Have you calculated what the retail sales tax rate would have to be to replace the current SS/medicare taxes? Are you going to exempt anything?
As a matter of fact it has been calculated for 2003 taking the Bush tax cuts into account, the current rate works out to be in the 19-20% range to replace both income and SS/Medicare. All retail goods and services are taxed.
In the legislation (authored in 1999, the rate was set a 23% [tax inclusive)] based on tax law effective at that time.
So the total to beat is about 264,000.
the tax industry employs about 5 times the number of folks that make cars, manage them, and take care of the overhead for those operations at GM and Ford combined.
Sorry misread your statement to count only that portion of the tax industry serving Ford & GM, not all the tax accountants etc serving everyone else as well.
To make a meaningful statement, one must compare the number of tax accountants etc necessary to support the entire manufacturing work force, not just a comparison of all in the tax industry regardless of who the serve to a few select businesses in manufacturing. And on that basis there obviously are not more tax accounts etc. than the rest of us poor slobs.
Further you are assuming that accountants do not do double duty, serving both regular business accounting needs as well as the tax side. I notice you do not attempt to prorate your numbers at all to reflect the fact that most cases the same folks handling books for business purposes also are the ones to handle the tax end as well. In fact that is the general case, and those folks are by no means at risk of loosing any jobs at all. In fact most I know look forward to getting tax matters off of their backs so they can concentrate on their company's bottom line and optimizing their business operations rather than meet tax regulations that get in the way of doing their real jobs.
Sorry I just don't see the dislocations you would like us to believe would happen and frankly to cause the nation to stay on the income tax to support employment in a parasitic industry that depends on a complex tax code for its existance is not a very smart way to go. I know for a fact that most involved in the tax industry today will be more than happy to see the end of that portion of their emploment and expand out into more productive endevours.
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