Posted on 05/14/2006 1:59:13 PM PDT by RobFromGa
[If my competitors are of the Fairtax mind to lower their prices the amount of the income tax they would no longer pay, I'll be that much stronger in less than a months time.]
Only if you consider being out of business as 'stronger'.
By definition, if they are 'competitors' and they lower prices, your share of the market will fall unless you lower your prices as well.
Well, let's add a few on the plus column, then:
Lower interest on public debt (Fed savings $120B/yr, State & Local $80B/yr)
State & Local taxes lowered by adoption of FairTax and tapping underground economy
Increase in purchasing power for educational expenses
Avoidance and evasion limited to 15% of total retail sales purchased outside of large retailers
Huge increase in personal consumption as individuals see larger paychecks and lower interest rates
Expansion of economy by 10% brings in additional $230B/yr
I'm afrazid they'll never understand ... Looey and Dimp-Dimp both have a "little problem".
Dimp-Dimp doesn't understand economics or even the way in which businesses operate and Looey doesn't understand that even more (and is lousy with numbers to boot).
Could it be that they just don't WANT to understand??
I think Dimples is doing a fair analysis, but he wants to answer a different question than the claim I was addressing with lewis.
Lewis is just so focused on every possible negative, and his logic and math skills are so bad, that he makes a fool of himself.
Watching lewis try to present a logical argument is like watching a 3-year old spin around and around to make himself dizzy, then bounce off the walls trying to cross a room.
To me you are simply a fraud, thus no point in discussion. For this reason you are being put on my "to ignore" list. You might wish to check # 15 from Hitman, though.
A grossly mis-analyzed piece of work, Nightie.
As you know, the government "taxes itself" at present (come to think of it, maybe you DON'T know that since you miss so many other important points).
This idiocy of your is quite meaningless and I won't bother to post the rebuttal that shows this for the red herring it is unless you persist in this nonsense. To be considered on a comparable basis both the income-based tax and the FairTax must have the government "tax itself" since they now do.
There is no point whatsoever in doing otherwise but of course you like it since it distorts the base (unrealistically) in favor of the Status Quo you're working so hard to retain.
And perhaps a link to the particular post you mention escapes you, too?
The 20% devaluation mentioned is not going to occur and there have been many examples to show this (including some on this thread). Overall the disposable personable income for most taxpayers (including those with legacy savings from the former tax system) will be greater, not less.
This is partly due to the prebate which lowers the effective tax rate considerably even for someone spending at twice the poverty level or even more and the fact that you may invest this money and receive untaxed gains thereby boosting the amount. It is only if spent for taxable items that the money is taxed. The income it earns can accumulate untaxed.
Since prices will drop with the advent of the FairTax anyone also receiving wages will have a large wage increase in addition. Even after adding in the FairTax after the price decrease there will be little if any purchasing power decrease. It could very well increase and there are ongoing studies to try to assess this.
Claiming that no one has addressed the point, however, is not accurate.
Happy to be on your "ignore list" sGlob. Why don't you bother yourself to not post to me, too? I've never seen a post from you that has much but a lack of credence.
First, there is no difference (other than one you contrive) between an employee and a self-employed businessman. Both get compensation from their activity in the business sector; both pay wage taxes; both pay income taxes as individuals. To suggest that some fictitious difference is a valid reason to expect a self-employed businessman to relinquish a portion of his gross pay that his employees do not relinquish is patently unfair, not to mention unsupportable.
In reality, maintaining constant purchasing power is NOT (and never has been) the goal of business, government, or individuals. And that goal is not achievable unless the FairTax does not alter the distribution of the tax burden. As we all know, the FairTax DOES alter the distribution of burden so constant purchasing power for all CANNOT be a goal of the program. That you can show an example of a situation in which a businessman COULD lower his price to maintain constant purchasing power does not make such an outcome a desirable or likely goal for that businessman.
That you IGNORE the problem of the businessman who can only maintain constant purchasing power by RAISING his prices further than the average suggests the usual cherry-picking that anecdotal analysis requires.
You also IGNORE the fact that if a businessman does indeed reduce his prices more that the saved tax costs that he is actually eroding the tax base used by the FairTax folks to calculate the rate (thereby necessitating a higher rate.)
In the aggregate, prices will increase from 20% to 30% ... yes 30% (not including issues regarding the false claim of "revenue neutrality".) We've been through this before, and you've even agreed in the past that there are situations where a 30% increase will happen (remember that imported case of wine with the free shipping?)
The problem you have is not the averages, it's the distribution of cash flows; they are not uniform. By the nature of income tax, cash in excess of the averages resulting from the elimination of the income tax will go to those business sectors where profits are high and competition is low or nonexistent; cash short of the averages will go to the most competitive, least profitable businesses.
In short, those with least incentive to reduce prices get the extra cash; those with the most incentive to reduce prices get screwed.
[...(non-competetive markets in general) and certain imports without domestic competition (Flat Panel LCDs for instance.)]
This logic always amazes me. What is it that you think has determined the price for these items ?
The prices of goods in non-competitive markets are a reflection of the disposable income of the customers.
If the PIT has left the typical customer with enough income to pay 1% of annual take-home pay for an LCD monitor, then the new FT-inclusive price for an LCD monitor will also be 1% of the new total income. That is the value that the present customers have assigned to the item. As the price (defined as a percentage of disposable income) falls, more people will decide to purchase. If the price rises, fewer will purchase.
If customers earned $35K under PIT with take-home of $30K to afford a $300 LCD monitor, then under the FT, the price of that LCD monitor will shift to where it's FT-inclusive price will be 1% of $35K = $350 means retail price drops to $270 before adding the FT.
Let's not forget that imported goods contain profits for both the manufacturer and the local distributor and retailer. Otherwise, the maker would not be in the US market to begin with.
In competitive markets, prices fall to the lowest price that provides an acceptable investment return after all costs have been covered.
In non-competitive markets, prices exceed the above formula but must establish their value as a percentage of the customer's disposable income.
[First, there is no difference (other than one you contrive) between an employee and a self-employed businessman. Both get compensation from their activity in the business sector; both pay wage taxes; both pay income taxes as individuals. To suggest that some fictitious difference is a valid reason to expect a self-employed businessman to relinquish a portion of his gross pay that his employees do not relinquish is patently unfair, not to mention unsupportable.]
To which I obviously disagree. There is no reason to treat two business owners differently. A man who runs his own business has made a choice to actively participate by being an employee. Another man may choose a passive role and hire a manager to run everything. Obviously, he would not pay the manager the full profits from the business. Just because owner & manager are one person does not mean you can toss out the logical and economic distinction that there are two roles being filled.
A 'fair' expectation for an owner/manager is that he retain the portion of PIT and Payroll taxes as the equivalent employee would, and retain the net profits that the owner would. To retain the owner's PIT would be double-dipping as compared to the other owner who had hired an employee to manage things.
I think the new 30% tax on services (and rent) are probably the most obvious problems with this boondoggle, at least in terms understandable by the common man.
[We've been through this before, and you've even agreed in the past that there are situations where a 30% increase will happen (remember that imported case of wine with the free shipping?)]
I agreed that if the assumption was no tax costs embedded, then there would be no price reduction available without affecting the maker's profits.
We did not discuss the forces that determine prices, including the maker's need for customers, and the customer's method of assigning a value to a product. Those forces will dictate that the price WILL FALL until the FT-inclusive price equals the same portion of disposable income as it did under the PIT. Essentially, it will fall by the same amount as the domestic product or other alternatives that the customer values equally.
As you know, the government "taxes itself" at present (come to think of it, maybe you DON'T know that since you miss so many other important points).That's interesting but I wasn't talking about the government taxing itself - I was talking about the government taxing another government.
You don't think they'll notice they have a much larger paycheck and that the government is sending them an FCA ?
They will be so focused on a price going up that they will ignore the extra thousands of dollars that are going into their bank account ?
You must not think the common man is very bright.
Lower interest on public debt (Fed savings $120B/yr, State & Local $80B/yr)Interest on public debt is already contractually locked in. If interest rates do decline, NEW debt might decline, but CURRENT debt will remain as pre-FairTax Interest Rates.
State & Local taxes lowered by adoption of FairTax and tapping underground economyThe FairTax does NOT tax the underground economy; it merely shifts the tax bite from the point there money ENTERS the underground to where money EXITS the underground. States and localities must now pay 30% FairTax on consumption purchases and salaries; nowhere in all the FairTax propaganda nor in the ramblings of its proponents is this fact EVER acknowledged. States and localities will need to RAISE tax rates to compensate.
Increase in purchasing power for educational expensesI'll grant you this one; but it doesn't take the FairTax to make that so.
Avoidance and evasion limited to 15% of total retail sales purchased outside of large retailersThis fails acknowledge inevitable shifts in purchasing behavior. Avoidance over the ENTIRE base will increase as used goods become favored over certain new goods. This fails to acknowledge inevitable changes in black market purchase levels. The current FairTax base/rate calculations fail to take even you limited avoidance and evasion into account.
Huge increase in personal consumption as individuals see larger paychecks and lower interest ratesWell, this one is just flat out false. ALL the economic models of consumption taxation predict significant DROPS in consumption in the early years of implementation (and ALL of them hold prices AND purchasing power constant - neither prices nor take home wages rise.
Expansion of economy by 10% brings in additional $230B/yrWell, the question is whether the FairTax will allow such expansion. The models used to predict such a windfall hold prices constant, take home pay constant, and purchasing power constant (for ALL). That will not happen under the FairTax: Prices will rise non-uniformly, take-home pay will rise non-uniformly; the net outcome is shifts in consumption not contemplated by the models. Before any expansion can take place, the Tax rate must rise to maintain revenue neutrality, further raising prices. And, given that the actions of the Fed are not modeled in simulations of consumption taxes, it's quite likely that the Fed response will be to throttle any growth that does happen to current levels. Since we will have experienced a significant DECLINE in GDP prior to any growth, it's not at all clear when (if ever) we would catch up.
Certainly your observation is correct about the business owner, but the FairTax opponents cannot agree to this as it throws a monkey wrench in their carefully skewed calculations.
The owner has this situation precisely because of his choice to not work for someone else for a living but to get the big bucks that automatically come (yeah, right!) from owning a business. That upside potential (realized or not) is why the owner is never promised a rose garden because of owning the business. He has lots of opportunity however that also includes the opportunity to not do well.
In fact the owner is in a position to take advantage of the increased economic activity afforded by the functioning of the FairTax. This presumes, however, that the owner has the mental/emotional wherewithal to take advantage of those opportunities and not sit around whining like some on these threads about how they think the FairTax will do them harm. If that is their concern, perhaps they should be working for a paycheck instead of owning the business.
Ding, ding, ding! Yes, people tend to be stupid. Is that a surprise to you?
No wonder you don't understand the difference between an employee and a business owner.
You apparently do not realize that it is the same situation as at present where the Federal government taxes states by forcing them to pay employees more to compensate the employees for paying federal income tax (as well as state).
The two situations in effect result in the taxing of government - state or local - by the feds. Failing to do so in one case or the other unbalances the equation as I'm sure you know.
Giving a tax-free advantage to any government entity is a really, really, really poor idea. In fact, it's a non-starter. Apparently you really DON'T grasp the significance of that.
You actually might want to read the post before you reply with one of your stock BS answers.
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