Dimples, nightmare, yur nightmare.
I thank you for your responses and though they may be repeats for you, i was interested in your alternatives and why.
I focused in part on the "Regressive" issue not knowing where you were coming from. In some discussions, I find this a big issue for many people. It does not seem to be a concern for you.
To get most Democrats to agree to any kind of reform, something that offsets what many call"regressive" has to be addressed. Payroll taxes are the most Agressive unless you take the argument that EITC is the offset for that. I believe it is an offset for income tax - hence its name.
I beleive Payroll tax is still greater as a percentage on the average family than excise taxes.
2nd point on SS/MC issue;
The Fair Tax doesn't solve it but it puts us on a track to better funding of it by broadening the tax base. With stronger economic growth we have more revenue going to the programs. If x % goes to SSI and Y% goes to MC, as GDP grows revenue increases. I also like the "fairness" of the idea of everyone supporting these important programs with every penny they spend. The burden can not be placed solely on 2 younger workers for every retiree.
My problem so far with your Flat Tax solutions is if we exempt all Retirement income from any taxation or very limited taxation. Than with longer life expectancies we will have generational warfare.
People retiring at 65 and living to 95 will have 30 years of great benefit with little to no taxation.
Because the payroll tax is flat that is why it is Regressive. That is the definiton that most Democrts have used. Because it is Flat, those that can least afford the essentials have a flat 7.65% taken out of every paycheck.
If you have a Flat Income tax and propose NO exemptions than you fit into the traditional Democratic view of Regressive taxation on the working poor and middle class.
Dimples Posted: You seem to be advocating for high earners to pay more for each dollar of SS benefit they will receive than a low earner. Nothing "fair" about that. That would be like charging a high earner more for the same loaf of bread that a low earner would be charged simply because of his ability to pay. Not very "fair" of you.
But that is exactly what we do with the flat income tax. The more you make the more you pay for a loaf of bread. The bread is all the services Government provides its citizens. If you make $100,000 you pay a flat 17% and pay 17,000 for the same amount of Government the FAmily earning $50,000 that pays only $8500.
You must admit SS/MC taxes are just that taxes. You are not buying or investing at all. They are taxes that go into the general fund in a "pay as you go system" just like everything else goes into and out of the federal budget.
In Social Security, I believe and have written about the "Tier 2 Soultion" Whether you ae a maid or a millionaire , you should receive a flat payment for SS that covers up to the poverty line. ($9,570/individual). Keeping Seniors out of poverty was the original goal of SS and we should return to it.
Read Article: New deal for a New Century – Fair Tax plus the Tier 2 Solution.
http://fairtaxreform.blogspot.com/2005/05/new-deal-for-new-century-fair-tax-plus.html
The Fair Tax doesn't solve it but it puts us on a track to better funding of it by broadening the tax base.But the rate is adjusted every year based on the wage base. A broading base doesn't raise more money if you lower the rate.
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.
What you believe is incorrect. The EITC is a refundable credit ... even if you paid NO income tax amounts. It's net effect in such cases is to offset payment of payroll taxes.
My problem so far ... [is that] ... we will have generational warfare.
That is precisely what we have today, and precisely what you advocate under the FairTax: the current working generation pays the benefits of the retired generation. You do NOT solve that problem.
My SS/MC reform DOES solve it: after full transition, workers are funding their OWN retirement plans; retirees are living off their OWN retirement plans and MOST are not taking a DIME of government money!
People retiring at 65 and living to 95 will have 30 years of great benefit with little to no taxation.
Yep, and most will not require a DIME of government assistance; the tax burden on the working generation will be SUBSTANTIALLY reduced (because they are not paying for ever-expanding intergenerational transfer payments;) and the size of government will have been reduced about 50%. Are you saying you don't like those outcomes? or are you saying you PREFER to have a system intergenerational transfer payments where government remains present (or increases its presence) in everyone's personal finances and intergeneration warfare is continued?
But that is exactly what we do with the flat income tax. The more you make the more you pay for a loaf of bread. The bread is all the services Government provides its citizens. If you make $100,000 you pay a flat 17% and pay 17,000 for the same amount of Government the FAmily earning $50,000 that pays only $8500.
And so it is with the FairTax. The more you spend, the more you pay for you share of government services. Are you suggesting that the FairTax is any different?
Your argument here is specious. Given you seem to think that a flat percentage tax (like the FairTax) is "unfair" perhaps you'd rather entertain a Head tax where every PERSON pays the same AMOUNT (regardless if wealthy, income, spending, family size, etc.) Actually, I like that idea best ... but even I don't think such a plan would have a chance of passage. Besides, if this is what you're advocating, then you'd better revisit and reconsider your screed on Regressivity.
They [SS/MC taxes] are taxes that go into the general fund in a "pay as you go system" just like everything else goes into and out of the federal budget.
Well, no they don't. They are accounted for differently than the general fund, AND they are specifically linked, by statue, to benefits. I'm all for reforming SS/MC; and I'd rather perpetuate the funding "Sword of Damocles" over the head of the programs to kindle real reform than ease the funding burden and forever perpetuate and grow the welfare state. Apparently, you prefer the welfare state.
... Whether you ae a maid or a millionaire , you should receive a flat payment for SS that covers up to the poverty line ...
Well on that point we'll have to simply disagree. I do not support ANY "guaranteed annual income" program. I do NOT support providing government assistance to ANYONE who is not demonstrably in need. I do NOT support the expansion of the welfare state, the role of government in funding retirement, the expanding role of government in providing healthcare, nor any other similar government program.
I want the government taking as LITTLE from the private sector as possible. I certainly wouldn't support everyone giving it tax money equivalent to a poverty like stipend just so it can give it back (hey, that sound suspiciously like the "prebate!")
That's another reason why I don't support the FairTax.