Posted on 01/28/2006 1:15:41 PM PST by Eaglewatcher
You missed an important fact in the article. Corporations do not pay taxes. They past the cost of the tax onto the consumer.Well Ford and GM aren't paying taxes because they lost money. So how is that embedded in the cost of their cars.
Certainly the labor and benefits packages are one reason their costs are high. Along with that, though, the component of income taxes embedded in their prices that presently has to be exported with the vehicles is another reason.
Removing the tax costs would help lower the prices. Perhaps you don't believ that a lowering of prices at all is helpful ... is that your belief?
Point us to a post where FairTax supporters have ever claimed that "corrupt politicians will magically do away with the 16th".
There's nothing "magic" about it, but with the FairTax as the tax law of the land the 16th is an anachronism - just like the Prohibition amendment - and would be repealed as serving no purpose.
I think it's like Taxman says - "Lead, follow, of get out of the way ..."!!
It seems that your "simple math" does not take into account all of the thousands of suppliers (and their employees) who sell things to the car companies. These folks should be in the mix, too, I'd think.
You're merely illustrating your ignorance of what embedded taxes are and how they cascade into prices. Even though a business loses money in a given year the embedded taxes are still there - cascading from level to level and embedding themselves into prices.
So your position seems to be that there are not tax costs embedded in prices??? Interesting ... how do they collect enough money to ever pay taxes then or purchase the components they buy which have tax costs embedded in them either from hidden taxes or the non-hidden taxes of other companies??? Perhaps you think they lose money every year or that no company raises prices to cover the taxes they pay??? That's as reasonable as most of your other notions, I'd say, and then your position would have to be that lowering costs (by removing tax cost components) would not help them either, eh???
There are probably many reasons why our auto industry is floundering....pension liabilities, labor contracts, stupidity generally...but with respect to manufacturing generally, taxes are a very significant reason why we can't compete in the world market.
Not only do we inflict the highest corporate tax rate in the OECD (please see: http://www.taxfoundation.org/news/show/1188.html ), but the WTO views our tax system differently than the VAT of Europe....the net effect of which is to allow subsidized imports to undercut goods produced here, on our soil. It's a travesty really.
Here is a link to an article written by Gary Clyde Hufauer of the Institution of International Economics, which explains this even more insidious reason why the income tax is such a bad idea....it goes far beyond relative tax rates.... http://www.iie.com/publications/opeds/oped.cfm?ResearchID=197
Relative tax rates cause distortions in the market that are undercutting our manufacturing sector. It's not the taxes paid directly, but the distortionary impact of our tax policy that is at fault here. Please see my post,
http://www.freerepublic.com/focus/news/1566999/posts?page=69#69
for some links to additional information on the subject.
BINGO!!!!!!!!!!!!!!!!!!!!!!!!
You hit the nail on the head!!!!!!!!!!!!!!!!!!!!!!!!!
WELL SAID!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Thanks to all the Fair Tax defenders.
Those that know the Facts, Love the Fair Tax.
Many will try to tear it down, with distortions and lies.
The truth is that Economists like the idea and Americans like the idea. Support is growing for the Fair Tax.
Don't spend to much time trying to convince the defenders of the status quo or those that work within or for the current tax scheme.
Reach out to other sites, other debates and forums to introduce the Facts about the Fair Tax.
Be conservative in your projections and your expectations for the Fair Tax. Every day Average American families can easily see that the Fair Tax is the best Tax reform choice for their children and grandchildren.
Use an updated and conservative economic model of a 10% price drop and 100% of your current salary coming home.
Use the example where a family in a 15% income tax bracket and a 7.65% payroll tax bracket had to earn $129 to bring home $100 in take home pay; Where the 10% price drop makes those products $90 and with the Fair Tax they now cost $117. This family is still $12 ahead compared to every $100 in take home under the old system.
Than add in the Prebate of $492/m for a married family of 4.
Than discuss American job growth and American Manufacturing growing in Amerca because we are the preferred Tax free zone in the world.
Go out and present to average Americans, friends and neighbors. Do not just debate with those who can not accept the facts of the Fair Tax and continue to distort the truth about it.
There are points that can be debated and we can agree to disagree on certain beneftis of the Fair Tax. Taking all the potential beneftis, the Fair Tax is the best choice for our future. The point is this is a Democracy. If enough voters call their Congressmen and women, we can promote a change.
Spend time conviincing those that have an open mind and getting them to call their legisaltors.
Call Your Congressman and Senators and Call the Whitehouse;
Weekly;Monthly.
Vist the Fairtaxscorecard and link to your legislator.
http://fairtaxscorecard.com/Scorecard.phtml?PHPSESSID=joom9alnechaldfb7q0hqrp7j6
Bingo, for it is the effect of the income tax system and the preferences/disincentives inherently built into it that are the root of the problems of that system of taxation.
The distortions come, not from rate differentials on different sectors of the tax base, but rather are predominately a result of the non-productive choices forced on business to minimize the impact of the tax. The costs attendant with that can be measured not only in high prices and low profits but loss of jobs and market to international competition.
Unfortunately the income tax system is more a tool of of political and economic control and manipulation than it is for merely raising revenue. As such it is a deplorable and economically inefficient system that must go if we are to survive economically in world wide markets.
Toyota and Honda are big on local procurment. If Ford and GM went away, the market for cars will still be there, and if the suppliers are competitive, they can stay in business.
You're merely illustrating your ignorance of what embedded taxes are and how they cascade into prices. Even though a business loses money in a given year the embedded taxes are still there - cascading from level to level and embedding themselves into prices.Show me one paper from a degreed economist that states that corporate income taxes or payroll taxes cascade. Just one.
So your position seems to be that there are not tax costs embedded in prices??? Interesting ... how do they collect enough money to ever pay taxes then or purchase the components they buy which have tax costs embedded in them either from hidden taxes or the non-hidden taxes of other companies???They don't "collect" money. They get a market price for their goods and services. If it covers their costs, they make a profit and pay taxes - if it doesn't cover their cost (like GM & Ford) they lose money and don't pay taxes. GM & Ford's prices had absolutely nothing to do with their taxes and very little to do with their costs.
Reach out to other sites, other debates and forums to introduce the Facts about the Fair Tax.In other words, the informed aren't buying the snake oil - try to convince the ignorant.
Use an updated and conservative economic model of a 10% price drop and 100% of your current salary coming home.Where is the "updated and conservative economic model" coming from?
Is this 10% price drop before the 30% tax gets added? With tax, that would mean a roughly 17% increase in prices paid for domestic items and a 30% increase in prices paid for foreign items (like oil).
"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."
In your haste for a reply, you forgot the dealer employees, suppliers, sub tier suppliers, raw material manufacturers, aftermarket parts manufacturers, financing employees, legal employees, and independent mechanics. The auto industry dwarfs every other industry in this country.
Hmmmm ... That sounds EXACTLY like something I would have said about you!
... Spend time convincing those that have an open mind ...
So where do YOU fall in the spectrum of "openness" of the mind. You appear to cheer-lead quite a bit, but, so far have completely ignored discussion of facts that are unpleasant to your belief system. That would appear to cast you into the "closed minded" camp.
Several posters, myself included, have written to you with specific rebuttals to claims of the FairTax and you have yet to respond in-kind. Perhaps you are working on detailed responses, perhaps you are holding your ears and covering your eyes ... time will tell.
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