Posted on 04/03/2006 3:27:33 AM PDT by Man50D
Fair Tax Ping!
(Denny Crane: "I Don't Want To Socialize With A Pinko Liberal Democrat Commie. Say What You Like About Republicans. We Stick To Our Convictions. Even When We Know We're Dead Wrong.")
"Built-in taxes raise the price of everything you buy. Corporations simply pass the cost along to the consumer."
yeah, right
(Denny Crane: "I Don't Want To Socialize With A Pinko Liberal Democrat Commie. Say What You Like About Republicans. We Stick To Our Convictions. Even When We Know We're Dead Wrong.")
I'm not saying the government isn't adding a lot of taxes, I just doubt we'd see prices go down. If people are used to paying $5 for a cheeseburger, they'll keep paying, and the compnay gets the extra.
Who pays $5 for a cheeseburger???
One thing not mentioned. Even illegals would have to pay the tax, but since they are undocumented, they wouldn't get the benefit of a prebate either. Poor bastards (not)...I guess the incentive to come here illegally just vanished. Fair Tax is the way to go.
taxes suck. I really feel bent over with no lunrication. I don't know how to make them stop hurting my backside... I vote for people who "say" they will do what I believe they will but do the exact opposite once they get into office further bending me over...
Yes, indeedy. This response squarely addresses the common fear that business would not pass along savings to the consumer. People who harbor this fear simply don't understand how the market works. They seem to think that businesses operate in a social vacuum. Businesses don't pass on savings to the consumers because they WANT to; the do it because they MUST, or watch their business evaporate before their eyes.
>>>>"One thing not mentioned. Even illegals would have to pay the tax, but since they are undocumented, they wouldn't get the benefit of a prebate either. Poor bastards (not)...I guess the incentive to come here illegally just vanished. Fair Tax is the way to go"<<<<
DITTOS!
The problem is most taxes are paid by individuals, not businesses. The fairtax research assumed wages would go down with taxes so the take home pay would be stay the same. The reality is most of the savings will not go to businesses, therefore prices will not come down nearly as much as fairtaxers claim. The cost paid by consumers will be quite a bit higher the fairtax even with competition.
Right up until a competitor figures out that he can sell more cheeseburgers by lowering his price, which of course will force the guy selling fewer cheeseburgers at $5 a pop, to reconsider his pricing structure.
Just how fair is the 'FairTax'?
We'll explain this bit about "embedded taxes" in a moment. But first, let's consider what Boortz and Linder appear to be saying. Prices at the store are the same. Your boss stops taking all that money out of your paycheck. Uncle Sam is sending you money instead. And, oh yeah, the government is still up and running.
This just can't happen. "It is practically and logically impossible for the government be collecting the same amount of money as before and have everyone suddenly be better off," says Daniel Shaviro, a tax law professor at New York University.
Part of the problem is the way Boortz and Linder are using the idea of embedded taxes. In an eight-year-old study paid for by AFFT, Harvard economist Dale Jorgenson noted that because the taxes paid by everyone in the chain of production are embedded in the cost of goods, prices could decline an average of 20 percent if all those taxes were scrapped. The FairTax Book devotes an entire chapter to this idea.
What The FairTax Book fails to mention is that prices can only fall this sharply if companies cut wages. I asked Jorgenson about this, and he agreed. Say your salary is $100,000 a year today, but you take home $80,000 after taxes.
Your company is still paying that extra $20,000. In a FairTax world, it will save that money, and be able to lower its prices accordingly, only if it can reduce your salary to $80,000. In other words, your take-home pay is the same as before. Sure, you'd get to "keep 100 percent of your paycheck," as Boortz and Linder repeatedly write, but it would be a smaller paycheck. That's kind of a big thing to leave out.
I pressed the point with Boortz and Linder. Boortz denies that the book intentionally overpromises. The introduction, he notes, emphasizes that "this book isn't about saving a penny in taxes." But he concedes that the book is confusing about this, and vows to correct it in later printings. Fair enough.
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