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.
Nightmare WAIT!!
Let's really compare Flat to Fair at the $50,000 level - Family of 4.
FLAT TAX S1099 - Check me make sure I got this right.
Family of 4 is $36,600 total in exemption _ Right??
That leaves $13,400 for the Flat Income tax at 17% for $2,278.
Plus the Payroll tax of 7.65% or $3825 -- Right??
Total Taxes paid $6,103.
After Tax Purchasing Power is $50,000 - $6,103 = $43,897
FAIR TAX with my 10% (conservative) price Drop and no change in gross pay.
How much will it cost this family to buy the same products purchased above for $43,897.??
With 10% Price drop those same products and services cost you $39,507. Now add on the Fair Tax(30%) for those products and your new total is $51, 360.
This FAmily receives a Prebate of $5902. Net with their $50,000 salary you see they are ahead by $4542.
THEY ARE AHEAD BY $4,542 !!!!!!!!
WOW - SMILE SMILE SMILE !!!
Under YOUR Flat Tax they had purchasing power of $43,897 with nothing left over.
Under my conservative version of the FAIR TAX they bought they bought exactly the same products and services and have an EXTRA $4,542 left to spend, or save.
I THINK I WIN AGAIN !!!!!!!!!!
WAIT WAIT I THINK DIMPLES SAID HE COULD ONLY SUPPORT A 5% DROP.
ok TO PURCHASE THE SAME products and services under the above Flat Tax at $43,897 a 5% price drop lower that to
$41,702.. Add in the Fair Tax and you are now at...
$54, 213. TAke the $50,000 gross pay and the $5902 Prebate for a total of $55,902 and you see that this FAmily is ahead by $1689.
WOW !!! I WIN AGAIN !!!!!!!!!
FAIR TAX WINS AGAINST THE FLAT TAX EVEN WITH THE CRITICS LOW LOW PRICE DROP OF 5%.
PLUS THE MANY OTHER BENEFITS. WOW IT JUST KEEPS GETTING BETTER AND BETTER !!!!
Still smiling....
Respectfully submitted
Merrill Bender
I won't repost your post but you should readit again.
I kept 23% for the Fair Tax and 17% for the Flat Tax.
Now if you want to change the Fair Tax rate than I will change the Flat Tax. I already agreed the final revenue neutral rate may change and I believe we agree that would occur for both my FAir Tax and your Flat Tax ? Do you AGREE????
IF Yes, than my example is still a NET 5.2% and your's is a net 7.65 %.
You would agree that 5.2% is LESS than 7.65%???
So Say it? I WIN - I WIN - I WIN !!!!!!!!!!! FAIR TAX WINS OVER THE FLAT TAX !!!!!!!!
This comparision has NO Price Drop at All. I WIN WIN Win!!!!!
I am sorry to be so loud.
Respectfully submitted
Merrill Bender
"I know you FairTax people like to think the FairTax will have low compliance costs but I'm afraid they will be significantly higher than you think - and they hit a particular industry (retailers) harder than others. To be truly neutral economically, shouldn't the burden be distributed across all businesses? "
A very odd paragraph since the FairTax supporters don't "think" it will have low compliance costs. It demonstrable will have them - zero, in fact, for actual taxpayers. And they aren't considered guilty until they prove themselves Innocent to the tax folks (who they will then have no intercourse with) unlike the present (or any income-based tax).
As for the "burden" being distributed across all businesses - there is no "burden" and retainers are paid to collect the FairTax.
And so:
"... on the personal side the Flat Tax is just a wage tax, just like the payroll tax, so it's not that big of a deal (certainly not as much as y'all like to make out of it) ..."
... oh, so you're saying it's just like what we have from the personal standpoint and not a big deal ...??? that clears it all up then I guess. Does one, then, still have the "guilty until he proves he's innocent" thingy? The responsibility of "proving" your complete income? And are our rates lowered due to the illegal economy kicking in tax bus? Are our exporters helped by border-adjustability of the "non-round" tax (presumably the Nightmare Flat, whatever that is which we've never discovered).
And let's see - this "standard personal exemption" isn't subject to modification by Congress nor is it possible for the K-Street crowd to obtain special favors for favored taxpayers just as at present while hiding them in some corner of the existing, arcane Tax Code?
And, Nightie, those getting the prebate aren't "profiting from the FairTax system" as you so quaintly (and erroneously) put it. They're merely getting a refund of taxes, not a "profit".
As for housing, the buyers will still be having to purchase (and save a downpayment) with after-tax income just like now whereas with the FairTax the money is untaxed (and here's more of it if the buyer pays attention). They'll also be paying the higher interest rates just like at present. And there is no "bias" between new and used homes under the FairTax since used homes have already been taxed ... remember the FairTax precept of taxing a thing once and only once.
Under your Nightmare Flat, the folks with savings will still be hit with the embedded tax when they eventually buy things so they hardly get off scot-free. That's no different than paying the tax when they consume. That's the same "double taxation problem" that you attribute solely to the FairTax. Tain't so.
Sec. 905 is in the bill to make an incentive for foreign corporations to become domestic corporations for tax purposes (move here and pay no taxes) and to attract capital which it will certainly do.
As for SS & MC funding the FairTax will be much more beneficial in providing adequate funding while we all try to get rid of the entitlement albatross. The Nightmare Flat (or other similar) does nothing of the sort.
Are you perhaps Alan Greenspan in drag???
THEY ARE AHEAD BY $4,542 !!!!!!!!Golly, all these examples with people paying less taxes under the FairTax. It makes me wonder who is paying more to make it revenue neutral.
Competition is the key. Without all the burden of taxes based on income, this countries workforce, all of its workforce will be competitive.
IF Yes, than my example is still a NET 5.2% and your's is a net 7.65 %.Any revenue neutral tax plan, by definition, will collect the same amount of revenue as the next one. As a whole, we, as a nation, would be paying the same amount of taxes, it just the individual burdens would be shifted around. If someone would pay less, then someone else would pay more. You seem to relish the fact that low income people might pay less under the FairTax than they do now, but if they pay less, who would pay more?
"If there remains a funding deficit, then we need to bite the bullet and pass a special tax, linked directly to the underfunded programs, and with a specific sunset provision, to fund the shortfall. "WHAT???? ANOTHER TAX??? Surely you jest!! Truly spoken like a liberal democrat. I certainly would prefer the plan outlined by merrillbender or by eliminating the entitlements (even cold turkey). With the FairTax funding of enitlements by all taxpayers I think it more likely that more taxpayers will be willing to mug their CongressCats to stop the nonsense since they'll see clearly how much it's costing them. There's no such incentive when some government costs and their funding are hidden from view.
"Such a tax is a Consumption Tax, but allows for incentives to set aside tax free funds that will NEVER be taxed. I believe this to be an important feature to wean people off of the teat of government support in retirement.The FairTax cannot offer that."
Balderdash. The "tax free" funds that will NEVER be taxed exist only in your dreams since under any form of income-based taxation this money will be taxed when spent by the hidden taxes embedded into the prices of things (and don't try the nonsense that there is no such tax or that it is minimal). The funds will be taxed when spent under either tax system. The FairTax at least has the offsetting benefit of not taxing income or investments until spent for consumption so that one can accumulate capital more easily getting a step or two up the economic ladder sooner
As for the prebate it is no more a "transfer payment" than your April 15 income tax refund. It represents a refund of taxes paid. Letting people keep an "exempted amount" merely leads us right back into the path of K_Street lobbyists fighting for "special things for special taxpayers" and would be exactly the wrong way to do things. I find the prebate much cleaner, more economically efficient, and much preferable.
the Jorgenson models actually show the FairTax better in nearly every aspect than the so-called "flat" tax (whichever one it might be). But you guys continually cavil against Prof. J's work ... now you think it's neat??? Wish you'd make up your minds. Despite the claims of you Squirrels, I see no "problems" with the wage/price behavior of the FairTax. Indeed it's highly beneficial as most people grasp.
In addition, there's no un-smooth integration of the FairTax as you imply since it functions by replaces the existing system, not co-existing with it.
As for your SQL status,it is clear that your primary objective is to attack all things FairTax since you never have any specific alternate but - just like Nightie - refer to vaguely defined concepts that don't exist in legislative (or other form). Since you don't agree with Nightie on the "non-round tax", perhaps the combined plans could be called the Dimp-Nightmare Tax plan??? Or should it be Nightmare-Dimp??? These tough choices give one a terrible headache.
WHAT ??????
MY Questions was....
IF Yes, than my example is still a NET 5.2% and your's is a net 7.65 %.
YOUR ANSWER WAS TO SOMETHING ELSE. lET'S TRY AGAIN. Not Revenue neutral rate but net rate of tax in our example of a family of 4 making $25,660 and comparing your Flat Tax rate of 17% to my Fair Tax rate of 23%. Stay on point now.
Again, MY NET example and in a worst case scenario for this family has no price drop included.
Final net tax rate under MY Fair tax is 5.2% and YOur final NEt RAte is 7.65%.
THis Family PAYS LESS with the FAIR TAX and Pays more with your Flat Tax.
Come ON SAY IT - " The FAIR TAX WINS !!!!!!"
I win on the other example too!!!!!!
Come On - JUST SAY IT - "THe FAIR TAX WINS !!!!!"
ASKED AND ANSWERED HOW MANY TIMES????
CONSUMPTION ON A LARGER TAX BASE THERE FOR THE RATE FOR ALL CAN BE LOWER.
More important stay on point.
Comparing YOUR FLAT TAX TO MY FAIR TAX. THIS FAMILY IS $4,452 AHEAD.
SAY IT - " FAIR TAX WINS AND NIGHTMARE'S FLAT TAX LOSES"
DON'T CHANGE THE SUBJECT THE NUMBERS ARE RIGHT THERE.
Well, for one Dimp's supposed "uncle" who has almost three times the poverty level of income and John Kerry & wife as has been mentioned several times on these threads. Also, those in the illegal economy will - gladly, no doubt - become first-time taxpayers of a significant amount.
I doubt it, Nightie, but you ARE showing your attack penchant toward all things FairTax. It's doubtful if that that will be any more successful than in the past.
You're missing the point of all this.
My dislike of the FairTax is based on the multitude of misrepresentations under which it marketed; misrepresentation you continue to make. The analyses and rebuttals I've offered are intended to expose those misrepresentations. Only after an honest representation of the impacts of the FairTax can we get to a debate about whether there is a "better" system of taxation and what the parameters of that system might be.
First, let's recap a few of those misrepresentations:
1. Prices will drop by significant amounts because the FairTax removes hidden taxes; you get to keep 100% of your paycheck.
First, prices don't drop at all! FairTax supporters usually neglect to include the tax when making this claim. After-Tax prices rise under all but the most ridiculous scenarios; the debate is over how much they rise. Given that only ER payroll tax, Business income tax, and some amount of compliance cost are in play, the data suggests a MAXIMUM pre-tax price drop of about 8%. Recent admissions by Boortz/Linder that not all businesses will pass on 100% of those savings as price reductions (common sense,) the likely number is closer to 5% or less. Yet, the FairTax website continues to explicitly quote Jorgenson's 22% embedded tax number AND more for compliance cost reduction suggesting a number in excess of 22%. We all know that is not true. Get the FairTax Marketing Machine to correct that error, and we'll move on.
2. Everybody gets a 30% raise in take-home pay (and variants of that like "you earn $129 to take home $100; the FairTax gives you $129 to take home.
This is patently false. No income bracket or tax bracket pays an effective tax rate of 29%. The HIGHEST effective rate is paid by the over $250K income earners at about 26% (including FICA); $50K earners pay about 15% (including FICA); lower lever earners pay even less. Yet the FairTax website continues to say
The income tax bracket most people fall into is 15 percent, and all wage earners pay 7.65 percent in payroll taxes. That’s 23 percent right there, without taking into account the 7.65 percent employer matching! On top of that, you have to add in all of the hidden taxes embedded in the price of everything you buy, from goods (averaging 22 percent) to services (averaging 25 percent).It attempts to make you think you're really paying 15% + 7.5% + 7.5% + 22% for a grand total of 52% in taxes. Note that this included THREE falacies, first that your marginal rate is your effective rate, second, that the ER FICA is a tax YOU pay, and third, then double counts the embedded payroll and income taxes in prices! Get the FairTax Marketing Machine to correct that error, and we'll move on.
3. Seniors do better under the FairTax.
Not if you're single and have modest income. Yet the FairTax website makes it sound like seniors all come out ahead. It does this by perpetuating the "prices don't rise" myth discussed earlier. Get the FairTax Marketing Machine to correct that error, and we'll move on.
I could go on, but, you've never bothered to respond to me about these false claims and the others I've attempted to discuss with you the last three times I asked you. You probably won't respond to this one, either.
Represent the FairTax FAIRLY, and then we can talk about comparative programs.
"You're nothing more than someone, safely ensconced behind her computer screen hurling insults and lies behind a cloak of anonymnity."
Unlike you, I am willing to leave my computer and debate tax reform and my preferred approach on its merits. In fact, I do speak on the FairTax on a regular basis. That is in a public setting where may name and qualifications are presented for all to evaluate.
In addition, I think that most posters on here would consider me civil and courteous (whether I agree with their point of view or not) until I am insulted. When that happens, I see no reason to respect anyone who does not respect me.
How many more net tax PAYERS are there under the FairTax than under the Income Tax????
Which Tax PAYERS pay more so that your Family of 4 can pay less ???
"Any revenue neutral tax plan, by definition, will collect the same amount of revenue as the next one. As a whole, we, as a nation, would be paying the same amount of taxes, it just the individual burdens would be shifted around. If someone would pay less, then someone else would pay more. You seem to relish the fact that low income people might pay less under the FairTax than they do now, but if they pay less, who would pay more?"
Illegal immigrants and drug dealers would pay more than they do now. In addition, on an overall basis, there would be hundreds of billions in compliance costs savings.
First
Nightmare, MY caps represent the smile attitude I was trying to elicit form you earlier. I also said quite nicely that I respectfully submit.
And each time I repeat my specific comparison of the Flat Tax Facts as you laid them out and compare them to a specific scenario that that is farther than most Fair Taxers would go in limiting the benefits of the Fair Tax and the level of Price drop, you avoid answering and change to something else not germane to the post.
So, to clarify and define, My caps are one of joy with a smile, not a nasty smile but a collegate smile of believing I have won the Flat Tax versus Fair Tax debate. NO disrespect intended at all.
You stated what you supported and you stated what form it took in a Flat Tax; most probably S1099.
In each scenario I have laid out, the families are ahead with the Fair Tax over the Nightmare Flat Tax.
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