Posted on 02/08/2006 5:07:55 PM PST by voletti
The President aims to end estate taxes for the wealthiest Americans. He also wants to scrap a $255 death benefit for the poorest The contrast in President Bush's new budget could not be more stark. On one hand, he wants to eliminate what he likes to call the "death tax" -- a levy imposed on a handful of the nation's biggest estates. On the other, he wants to end Social Security's lump sum death benefit -- a $255 check that the families of many of the nation's poorest use to help pay for their funerals.
There is a lot more in Bush's $2.77 trillion budget than that, of course. He'd boost spending for homeland security and the Pentagon, trim many popular domestic programs, and control the growth of Medicare by boosting premiums for high-income seniors and freezing or cutting payments for health providers, such as doctors, hospitals, and hospices. At the same time, the President asked Congress to make most of his first-term tax cuts permanent.
ESTATE PLANNING. That includes permanently eliminating the estate tax, or what conservatives like to call the death tax. Like most of what happens these days in the tax world, the story is complicated, but it goes like this: Starting in 2001, Congress began to gradually increase the size of an estate that would be exempt from tax. By 2009, estates of $3.5 million or less ($7 million for a couple that does the smallest bit of planning), would be tax-free. By 2010 all estates would be exempt from the tax, but only for one year.
So President Bush wants to permanently free all estates from the tax starting in 2011. The estimated annual cost: in excess of $50 billion in 2012, rising to more than $70 billion by 2016.
(Excerpt) Read more at businessweek.com ...
Garbage, my man. You certainly did indulge in personal attacks with the tired, old "koolaid" and "fairy tax" stuff - right out of the SQL playbook.
Your holier than thou attitude doesn't fit. Nor was the thread "hijacked" and the only snake oil and hokum I've noticed on the thread is that you've posted by using the tired old diatribes you do that were shown to be nothing meaningful long ago.
You would think after almost 90 years and thousands of tax laws that people in this country would be banging at the doors of our leaders and banging some heads as well.
Problem is, nobody gives a sh!t because they know that our government doesn't listen to us peasents.
I'd expect they would be one example of those who would pay more in tax under the FairTax than at present.
These threads turn into too much economic and numeric detail and miss the real point of the FairTax legislation.
The goal of the FairTax legislation is to end the obviously broken and intrusive federal tax system we currently have and replace it with a simple single rate, single stage retail sales tax that everyone participates in and everyone can understand and react to.
To remove perception of the tax burdens of the individual, is to remove the goad which assures accountability of government to the electorate. Federal tax rates are high and government grows ever larger because a majority of the electorate do not proportionately perceive the burden their demand for largesse imposes on the minority of citizens.
The siren call for representation without taxation is the formula that got us where we are at today. The ability to hide or disguise taxation from the view of large sectors of the electorate allows the Congress to get away with the creation of the evergrowing monster that it fosters.
A government which robs Peter to pay Paul can always depend on the support of Paul.
-George Bernard Shaw
Liberty and freedom have a price, responsibility. If the perception of burden laid by government is interfered with or avoided there are no brakes on the growth of government, the ultimate result is the end of freedom through creeping socialism.
There are certainly more than 600,000 who DO give one since there are that many who have signed on as FairTax supporters.
We just have to continue pressing the pols hard for reform.
It eliminates the income tax, its tax code provisions, the IRS (also defunding it), and requires the destruction of the income tax records. In addition it calls for a repeal the 16th amendment.
This is emphasized on the FairTax website as being one of the goals of the FairTax effort - to delete the 16th. They absolutely intend to get rid of it, but a tax bill cannot also be an amendment repeal bill.
http://thomas.loc.gov/cgi-bin/query/z?c109:H.R.25:
SEC. 2. CONGRESSIONAL FINDINGS.
- (f) Findings Relating to Repeal of Present Federal Tax System- Congress further finds that the 16th amendment to the United States Constitution should be repealed.
It is necessary for Congress to enact a separate Joint Resolution to propose repeal of the amendment in amendment for to the States under Article V of the the Constituion.
This provision calls for Congress to enact the required Joint Resolution proposing the amendment to the States for their ratification.
Now for your personal spin:
... No need to adjust as what the government pays today include taxes ... the gross (tax plus price) paid by government remains constant with what is paid today.
Then it should be a simple matter for you to show where Gale's analysis is incorrect. Again, a rebuttal should be able to directly show where errors in methodology or assumption occur. Gale makes no claims about the presence of a tax component in price. You are refuting something he did not say.
Cetainly it does[take into account legal avoidance] , as it is inherent to NIPA data series. Cash compensation not reported in tax returns today do not show up in the NIPA ...
You're not addressing the point. And neither did the AFFT rebuttal. Gale is talking about CASH compensation that DOES show up in the current NIPA. The AFFT base does not allow for any CHANGES prompted by the FairTax. The underground economy is NOT relevant to this point; it's relevant to the third point. THIS point talks about LEGAL avoidance:
-- businesses that change their compensation from CASH (currently accounted for in the NIPA as wages/salaries) to COMMODITY compensation - provide a company car, with paid maintenance and fuel, in lieu of a portion of salary - the car, its maintenance and fuel, are tax free business expenses (just as the salary would be.) The car, however, which was formerly accounted for in the PCE as a consumer purchase, is REMOVED from the PCE as a business expense and therefore generates no tax. LEGAL avoidance.-- REDUCTIONS in consumer purchases of taxable goods in favor of NON-taxable goods (used items) or investment. While this is both predicted by the AFFT and advertised as an ADVANTAGE of the FairTax by the AFFT, it is NOT reflected in its sizing of the tax base. LEGAL avoidance.
By no means does the FairTax tax rate assume 100% compliance on 100% of retail consumption purchases.
What it assumes is that 100% of the current consumption base REMAINS UNCHANGED, and that base has 100% tax compliance. And, again, the AFFT rebuttal is silent on this point.
The AFFT assumes that current income tax scofflaws will make no attempt to alter their consumption patterns in order to ILLEGALLY evade the sales tax and thereby erode the tax base. That is, in a phrase, a BRAINDEAD assumption. Current consumption levels contain NO significant distortions from federal taxation.
Those who do not willingly comply with INCOME tax laws are just as likely to shift their creativity to CONSUMPTION tax evasion. The fallacy in your contention is that INCOME tax evasion (currently invisible in consumption levels) will not shift to CONSUMPTION tax evasion (which would be invisible in income levels.)
To suggest that future consumption evasion is already reflected in current NIPA consumption levels implies that the distortions of an income tax are identical to the distortions of a sales tax. You, yourself have vehemently argued AGAINST that implication every time folks have suggested that a consumption tax levied on income has the same economic benefits as a consumption tax levied on retail sales.
For the record, the casual observer will note that, as usual, you didn't answer my original question. I see nothing in what you've posted here that is embodied in the Gale Rebuttal. It's all just your personal spin.
Your conclusion is fallacious. You might want to consider that the data in your table is distorted by businesses that generate little or no NET INCOME in the year of interest. In other words, my business might have used prior year loss carryovers, depreciation and other legal tax avoidance elements in addition to my itemized deductions and personal exemptions to lower my current year taxable income and my net tax to 0.
I still made enough money to pay my living expenses; and I reported it all, legally to the gov't. I, together with others in similar situations would be averaged in with true low income folk earning under $5K without tax preferences items. We would a) lower the average income before taxes, and b)raise the average annual expenditures ... and everything would have been reported, and no one would have spent beyond their means. But, some might draw the wrong conclusions by assuming that income, expenses and tax situations of all in any net income bracket are similar.
You are drawing the wrong conclusion also since the data can just as easily be biased in the opposite direction from your claim. It is hardly a one-way street and the table shows valid results for what no doubt occurs overall.
You merely don't choose to believe it (your "thoughts" are what you attempted to slide in to show biasing in only one direction - and you're welcome to your opinion but it is hardly airtight despite what you think). People often spend more than they make, Dimp, in a given time period. Perhaps not wealthy ole' you but a lot of us pore folk go into debt from time to time so we CAN spend more than we earn (and there are other reasons as well).
The point being made was that some spend more than the income they report and you chose to try to explain that away with only a single bias when in fact the bias works in both directions. I'd take the table's info over yours any day since you have a long track record on these threads that must be considered.
Then it should be a simple matter for you to show where Gale's analysis is incorrect.
I just did. In the statements provided.
You're not addressing the point. And neither did the AFFT rebuttal. Gale is talking about CASH compensation that DOES show up in the current NIPA.
And what cash compensation that is used to avoid tax, (by not declaring it) shows up in NIPA, for none of it is reported for the simple reason if it were reported it would be traceable and taxable.
There is no cash compensation to show up in the current NIPA that is not also taxed. Informal cash transactions are not in the NIPA data series. GDP is nothing more than aggregate retail sales traceable in business transactions. It does not include individual person to person cash trades or barter that are not report to government.
-- businesses that change their compensation from CASH (currently accounted for in the NIPA as wages/salaries) to COMMODITY compensation - provide a company car, with paid maintenance and fuel, in lieu of a portion of salary - the car, its maintenance and fuel, are tax free business expenses (just as the salary would be.) The car, however, which was formerly accounted for in the PCE as a consumer purchase, is REMOVED from the PCE as a business expense and therefore generates no tax. LEGAL avoidance.
Hate to tell you this but any business use purchase under the current system does not show up in the GDP accounts as a retail purchase as that would be double counting of product in GDP. Only retail sales to final consumers are included in GDP not the intermediate products (including such things as cars that are purchased for or converted to business use. In fact as is stated The consumer purchase is removed for the PCE as a business expense today, it will continue to be used removed from PCE as a business expense in the future. Where such a car is used for personal consumption and is not declared under the NRST it is an ILLEGAL conversion of property just as it is under the income tax system of today.
Removing the car from PCE, as is done today in such transactions, result in a taxbase that is smaller by that amount accounted for in using PCE resulting in a commensurately higher computed tax rate.
The FairTax position (for estimating the tax rate) is that the same amount of such conversions to avoid paying tax will continue at the same level as they do today to avoid payroll and business income taxes, not less and certainly not zero.
-- REDUCTIONS in consumer purchases of taxable goods in favor of NON-taxable goods (used items) or investment. While this is both predicted by the AFFT and advertised as an ADVANTAGE of the FairTax by the AFFT, it is NOT reflected in its sizing of the tax base. LEGAL avoidance.
Since the only legal reductions that can occur are those involving trade of "USED" goods, the tax is fully accounted for in NIPA data which are new goods and services provided in the year only. Passing used goods around from person to person implies a contraction in GDP that is NOT perceived to consistent with the economic studies of the FairTax. In fact GDP is expected to expand significantly which would mean more NEW stuff being taxed compensating for legal avoidance that can occur. Any reduction in GDP from investment is more than compensated by the change in import trade flows in a business tax free environment encouraging business growth in the US with resulting greater labor and capital income and expenditures in the domestic economy.
Sorry the rationale that everyone is going to buy used to avoid the the NRST just does not stand up to rational consideration.
What it assumes is that 100% of the current consumption base REMAINS UNCHANGED,
True even though the expectation that GDP (i.e. the PCE consumption base) will actually grow with the change to a consumption tax.
and that base has 100% tax compliance. And, again, the AFFT rebuttal is silent on this point.
The only assumption made is that the base will have the same compliance as the current system with its non reporting of personal use of business purchased assets and similar transactions to evade the income and payroll tax systems now in place.
The AFFT assumes that current income tax scofflaws will make no attempt to alter their consumption patterns in order to ILLEGALLY evade the sales tax and thereby erode the tax base. That is, in a phrase, a BRAINDEAD assumption.
Yes the would be a brain dead assumption and one that AFFT does not make, as all such illegal evasions occurs today and go unreported today in the NIPA data set. The assumption is that there will be no more evasion than is currently done under deduction fraud and illegal asset conversions in business today to avoid payroll and business income taxes.
Current consumption levels contain NO significant distortions from federal taxation.
LOL, current consumption levels and measure by GDP have no reports on which to increase the PCE component for such activity.
Indeed current PCE is fully compensated for the tax avoidance and evasion going on to get around the income and payroll taxes. It is presumed the same folks (e.g. small and single proprietor businesses) will continue the same pattern by declaring personal expenditures as business expenses thus not included as part of PCE and thus fully discounted in computing a reasonable estimate for taxbase and rate to be expected under the FairTax national retail sales tax.
Sorry but your rationale is refuted even by the very language used by Gale. PCE with adjustments for imputed transactions are fully derated for tax avoidance/tax evasion activities of the income/payroll tax system and the same level of tax avoidance and evasion assumed for purposes of computing the Retail Sales Tax rate.
For the record, the casual observer will note that, as usual, you didn't answer my original question.
A casual observer may, an informed one, however, would note that a rebuttal of the question was most certainly provided.
Certainly was answered with the facts about how the rate of the legislation is actually calculated using standard methodology using the NIPA data series.
I see nothing in what you've posted here that is embodied in the Gale Rebuttal.
The rebuttal I have provided is more than sufficient to meet the need. A clear explaination of the impact of current avoidence on PCE used as a taxbase for estimating tax rates.
It's all just your personal
spinknowledge.
Correctionm my "Personal knowledge" based on the simple facts of what the NIPA series includes that is used to calculate tax rate. It is interesting how you like to throw your own spin in to avoid acknowledging the rebuttal to your posed questions.
Your conclusion is fallacious. You might want to consider that the data in your table is distorted by businesses that generate little or no NET INCOME in the year of interest. In other words, my business might have used prior year loss carryovers, depreciation and other legal tax avoidance elements in addition to my itemized deductions and personal exemptions to lower my current year taxable income and my net tax to 0.
I suggest you find out what "household income" and "Consumer expenditure" means in the Consumer Expenditure Survey. It has nothing to do with what your business does in accounting for its taxes. It is a survey with regard to household finances not business. But you made a nice try at misdirection, unsuccessful as it was.
The Consumer Expenditure Survey is related to reported incomes of households and what households do with their after tax income. It is not a tax statement, though it does provide an entry for taxes paid by the household as one of many expenditure items.
It is a fact that lower income households do indeed spend more than they admit to in total income in any year. I suggest you take a look at the full table to understand the "household income" measure they are using, which is comprehensive income not the narrow sense of what is reportable for tax purposes or NET INCOME you would misdirect attention to.
"... Gale makes no claims about the presence of a tax component in price ..."
REALLY??? What's this comment by him, then, when on pgs 50-51 he says:
"... income taxes are “clearly incorporated in the price of goods that are bought and sold” ..."
Or perhaps you missed that little gem (along with others that don't fit your preconceived notions).
Your "LEGAL AVOIDANCE" diatribe makes little sense either since non-cash legal avoidance goes on today (and is also "not accounted for" using your circular reasoning). the fact that the illegal economy consisting of millions upon millions of (what should be) taxpayers evades taxes today where they would make significant "contributions" to tax revenue with the FairTax is one you'd no doubt like to avoid as shown by your side stepping, but you cannot. Like the elephant in the closet - it's there and you cannot explain it away by trying the diversion about "cash compensation in NIPA tables" and/or any conversions under either system. If the compensation shows in the NIPA tables it has presumably been reported (and in many cases taxed, no doubt) so claiming there is some sort of magical "conversion" that changes the balance to favor the income tax is truly folly.
There is certainly no reason to believe that legal avoidance will be any different under either tax system - your bloviating notwithstanding. The greater problem (financially and morally) by far is the one of tax evasion at present by the illegal economy and that is many, many billions greater under the present system where it will contribute many billions of tax revenue under the FairTax - thereby lowering the tax burden on the rest of us.
Further, your "... SCOFFLAWS ... BRAINDEAD ..." tirade is true idiocy since neither you nore Gale even begin to outline how such mass evasion under the FairTax could take place (nor why it would be more profitable that evasion presently - which is clearly at higher marginal rates). When you say:
"... Current consumption levels contain NO significant distortions from federal taxation ..."
... you present us with one of your LEAST-INFORMED quotes in many threads since clearly the federal coffers are greatly shrunken at present ("distorted") due to the income tax evasion by the illegal economy. Even you must surely recognoize that whether you'll admit it or not.
my business might have used prior year loss carryovers, depreciation and other legal tax avoidance elements in addition to my itemized deductions and personal exemptions to lower my current year taxable income and my net tax to 0.Hence a mid-week day at the beach in Santa Cruz...LOL!
Gale:
"... income taxes are “clearly incorporated in the price of goods that are bought and sold” ..."
Dimples:
"... Gale makes no claims about the presence of a tax component in price ..."
Can he not read or is he trying to mislead?
Good question ... do you really think that good ol' Dimp would try to mislead about the FairTax???????
(need one ask?)
[Yes the would be a brain dead assumption and one that AFFT does not make, as all such illegal evasions occurs today and go unreported today in the NIPA data set. The assumption is that there will be no more evasion than is currently done under deduction fraud and illegal asset conversions in business today to avoid payroll and business income taxes.
Current consumption levels contain NO significant distortions from federal taxation.
LOL, current consumption levels and measure by GDP have no reports on which to increase the PCE component for such activity.
Indeed current PCE is fully compensated for the tax avoidance and evasion going on to get around the income and payroll taxes. It is presumed the same folks (e.g. small and single proprietor businesses) will continue the same pattern by declaring personal expenditures as business expenses thus not included as part of PCE and thus fully discounted in computing a reasonable estimate for taxbase and rate to be expected under the FairTax national retail sales tax.]
Thanks for this insight. The fact that the FairTax rate is based on an already-reduced tax base wasn't really clear to me. I always suspected the NIPA and GDP figures would have no way of including the portion of the income and consumption bases that were off-book. I wish the AFFT materials I've read would have made it clearer that this missing portion of the FairTaxable base basically makes allowance for evasion.
Your explanation makes perfect sense. Was this relationship between the missing portions of taxable bases directly included in one of the "Rebuttal" papers at AFFT ?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.