Posted on 05/14/2006 1:59:13 PM PDT by RobFromGa
If the FT was so great and perfect, why hasn't the great state of Georgia dropped everything to implement it to replace it's state income taxes?
..... sagebrush rolling... crickets chirping...
That's right. This is why some say purchasing power will remain constant. Folks still pay tax, just pay the nrst instead of income, payroll, and embedded taxesExcept, for MY "purchasing power" to remain constant I have to charge the additional 30% tax to my customers that I didn't previously charge...get it?
I'll play along. FL is doing just fine on a sales tax. It's really not a big deal, and our economy is screaming along at a furious pace.
In fact, we attract lots of folks from the frozen north who are sick of paying a state income tax.
Why you and others are against it is truly a mystery to me. I guess you think it will slow down new home construction? It hasn't slowed it down here!
I thought you were saying that prices would increase by the amount of the tax. Perhaps I've confused you with Lewislynn who says this regularlyWith perfect accuracy. Just as prices increase the amount of state sales taxes...
The cultists are too invested in their entitlement scam to even care that they stand exposed.
[Except, for MY "purchasing power" to remain constant I have to charge the additional 30% tax to my customers that I didn't previously charge...get it?]
No, you don't.
Show us your numbers. Gross, non-wage costs, wage costs, and your profit. I'll be happy to show you how you DON'T need to charge 30% more to your customers to maintain your own purchasing power.
If you won't put up numbers, then we'll assume you realize your error.
I'll be happy to show you how you DON'T need to charge 30% more to your customers to maintain your own purchasing power.Who's stopping you?
If you won't put up numbers, then we'll assume you realize your error.There is no error. What is it with you clowns and this "error" thing? Did you all go to the lunatic's class of "error" spotting?
I don't have wage costs, the rest is irrelevant (not to mention none of your business) to your assumptions.
You claim you will have to charge your customers 30% more than current prices. That is dependent on what taxes you currently pay and what your current costs are -- because both of those will decrease under the FairTax.
How can you possibly say they are irrelevent and expect anybody to take you seriously ?
Of course I could provide numbers for you, because you've obviously not even done your own numbers. You are just making blanket generalizations.
Here are your numbers. You refused to provide numbers, so don't complain about these.
Under Income & Payroll Tax
Actually there is a case where lewislynn may actually have to up his prices by 30%.
The key lay in the validity of an assumption involving any specific business actually paying a tax under the income/payroll tax system or for that matter having any costs related to it.
There is a whole cash sector of the economy that has no declared incomes or payrolls on which taxes are paid or for that matter even an accounting kept in order to comply with the current system.
To assume all businesses actually pay taxes or even have tax compliance costs under the income/payroll tax system is clearly be in error by IRS statistics. For it is clear many individual, small businesses actually manage to incur neither according to the IRS's investigations into the matter.
The cash sector is one of many reasons there exists a very large discrepency between what theoretically would be collected as tax revenues by the government and what it actually collects.
It looks like you've ignored the taxes paid by non-corporate businesses. You've also under-estimated corporate business income taxes, and pretended that market forces do not exist. So your 8% price drop figure is a tad low, andd your FairTax inclusive prices are therefor a tad high.
I'll tell you what will really happen:
Out of a $9T national retail sales, corporate income taxes were $300B for 2005. Non-corporate business income taxes were $300B. Employer-side payroll taxes were $380B. Business compliance costs including non-corporate business were $200B. The non-corporate businesses will retain $150B of their income taxes to give themselves a 15% increase in take-home pay and maintain their FairTax purchasing power.
Net Taxes passed along in retail prices = $1,030B / $9T = 11.4% which is what prices should fall while maintaining current after-tax profit levels for all American businesses.
On your imported vs. domestic beer example, you miss the obvious market issues. If both are currently selling for $10 a 12-pack, then the consumer has already assigned equal value to them. The total cost for the imported 12-pack must stay the same as the domestic beer or it will lose market share. So both domestic and import beers will fall to $8.86 before tax and $11.50 including FairTax. A 15% price increase overall.
With the tax rebate, some people will be able to afford MORE beer -- import as well as domestic -- than they could before.
That is true. His statement was very specific about HIS own business and customers.
So you are saying that Lewis's statement might be a confession that he operates illegally and pays no taxes on his business ?
He would also have to have zero costs from vendors -- that is the only way he would have no savings to pass along to his customers.
I wonder what business he is in ? I suppose the above criteria would apply to a drug dealer if his drugs were imported, or a prostitute/gigolo, car thief, or any service provider employing only illegal workers.
I tend to give Freepers the benefit of the doubt, so I assumed Lewis was an above-board businessman. I'm sure he has a reasonable explanation, but I won't ask him for anymore personal info. He seemed a bit paranoid about me wanting the numbers to calculate the embedded taxes for his business.
Oh and as to "errors":
Your take home pay was increased by 20% per Rob's assumptions
I missed that Rob assumptionBUSINESS COSTS: If we assume that businesses get to keep their half of the payroll taxes (7.65% of all payroll costs up to first $95k per employee), plus taxes on corporate profits (average <2% of Cost of Goods sold) and some tax compliance savings (being generous we'll call this 1% savings), this gives the business about 8% of cost savings with which to potentially reduce prices.
I told you I don't have "wage costs" and I also don't want the FCA. Sorry no savings there.
Using your numbers:
My take home under the income tax was $216,000 AFTER TAXES... My take home under your scam is $257,000 BEFORE taxes or $198,000 AFTER TAXES or .
Under your two scenarios $84,000 (14% of the gross) was collected from my business activity under the income tax...Under the sales tax $158,000 PLUS another $59,000 (when I spend my money) or a total of $355,890...OR 52% of the even higher gross was collected.
So, using your numbers including the HUGE 20% increase "error" my net takehome as well as lower "non-wage costs" was an even smaller percenatge of a 14% increase in prices
Bottom line is your entire assumption is either a gross mistake or a pathetic lie...you can't even make the numbers work when you make them up yourself...Here are your numbers. You refused to provide numbers, so don't complain about these.
Those are NOT my numbers. Don't blame me for your idiocy because I chose to not furnish you with my personal financial information on a public forum.
You are focusing on the existing savings and ignoring the future of that savings and your ability to save faster under the FairTax.
Look at $100K existing savings, where you are able to add $5K each year under the PIT but would be able to add $10K each year under the FT.
In 5 years, the PIT would leave you with $165K if it earns 10% and then you pay a 25% PIT. The FT would leave you with $225K at that same 10%.
Since FairTax inclusive prices will be 115% of the old prices, you just got a great deal. Instead of being able to buy $165K worth of 'stuff' you'll be able to buy that same stuff for $144K, pay $44K in FairTax, and have another $37K left over to spend on more 'stuff'.
Only under very special conditions -- like Roth IRA's -- where there would be little/zero PIT owed, or you have no time left for the savings to grow, does the FairTax hurt your existing savings.
[Under the sales tax $158,000 PLUS another $59,000 (when I spend my money) or a total of $355,890...OR 52% of the even higher gross was collected.]
And you wonder why people ridicule you for your lack of math skills. $158K + $59K = $217K collected. And the $158K was not paid by you, but by your customers. To get a percentage of the total income involved, your denominator would need to include all the incomes of your customers -- so they had the money to purchase your products.
If you want to compare the taxes collected under the PIT vs. the FairTax, then you need to include all the numbers. Implied was $30K of embedded taxes that you paid under the PIT when you paid your non-wage expenses. You also paid 10% of the $216K take-home pay as embedded taxes when you spent it. So your total taxes under the PIT was $24K + $60K + $30K + $22K = $136K and your customers paid $200K PIT in order to have $600K after-tax money to buy your products. So the PIT total taxes collected were $336K.
But your focus on the taxes collected is all nonsense.
Ask yourself this question: Would you rather have a job that pays $75K and your taxes total $25K, or would you rather have a job that pays $200K but total taxes of $100K ? Do you really care that the higher paying job paid 4x as much in taxes, or are you going to focus on the $100K vs. $50K after-tax income ?
The proper focus is the purchasing power comparison between the PIT and FT. My example held your purchasing power identical between the two.
BTW, what is it that you think somebody could do with information about gross, profits, etc. of an anonymous poster's business ?? I didn't ask you to post your tax return, SS#, etc. Your paranoia always surprises me.
the tax bite (taxes paid and compliance costs) is not taken solely out of retail sales (more properly called "personal consumption expenditures") as you claim. The tax bite comes out of the entire GDP of $12 T (yes, the equipment sold to a business - found under "Gross Domestic Investment" not "Personal Consumption Expenditures" - has a tax bite as does Government Consumption. )Redoing your math with the proper denominator:
Net Taxes passed along in retail prices = $1,030B / $12T = 8.6% which is what prices should fall while maintaining current after-tax profit levels for all American businesses.Hmmmm ... that seems to put the number right where Rob said it would be.
Under Income & Payroll Tax
Under FairTax
Increase in prices: $131K / $600K = 21.8%
Purchasing Power delta: (288/216)/(1.2) = 1.1
Note, purchasing power for this individual rose 10% because he was an extraordinarily high income earner (> 96% of all earners.) He may (or may not) choose to lower prices more depending on his competitive pressures and business needs.
Interestingly enough, if this businessman DOES lower his prices further, he is eroding the value of the tax base needed to raise the required revenue: prices lowered by MORE than the saved tax cost = smaller FairTax base = less FairTax collected => Higher rate = higher prices. Either way, the customer is going to pay the 20% price increase.
If this businessman was of more modest means, his prices would still increase about 20%, but his take-home would have not risen as much:
Under Income & Payroll Tax
Under FairTax
Increase in prices: $73K / $381K = 19%
Purchasing Power delta: (73/63)/(1.2) = 0.97
To break even, this businessman would have to increase prices further (another $3K). That would bring his price increase to 20%.
You have incorrectly assumed too much non-wage price reduction, 100% compliance with "net-zero-purchasing-power-delta" target by highly profitable businessman (read that "businessmen in noncompetitive markets") and ignored the net purchasing power decrease of highly competitive (low profit) businessmen.
Yet another example of how anecdotal analysis does not tell the whole story.
You also paid 10% of the $216K take-home pay as embedded taxes when you spent it.I only purchase imported products.
And you wonder why people ridicule you for your lack of math skills. $158K + $59K = $217K collected. And the $158K was not paid by you, but by your customers.Speaking of math skills so was the $59,000.
But your focus on the taxes collected is all nonsense.It isn't to the tax collectors who are requiring me to collect and remit it.
Ask yourself this question: Would you rather have a job....Ask yourself this question: why do you ask that question about jobs when we are talking about a business?...You obviously don't know there is a difference.
My example held your purchasing power identical between the twoHow sweet of you but I'm not interested in what YOU do for me.
Meanwhile back on earth if I had employees that would get their gross (100% of their paychecks) why did you arbitrarily choose to reduce my takehome from (PIT)$300,000 gross (I'm self-employed, there are no deductions from my "paychecks") to (AFT) $257,000 gross? Where is it written I should not expect to also get my gross?
BTW, what is it that you think somebody could do with information about gross, profits, etc. of an anonymous poster's business ??You're right, post your tax returns here then we'll talk about it.
In 5 years, the PIT would leave you with $165K if it earns 10% and then you pay a 25% PIT. The FT would leave you with $225K at that same 10%.$225 minus 23%(current teaser rate) = $173,000 to spend and if the "basic rate" was 4% you'd pay an additional 30% tax on the remaining 6% earned...Yes there would be a sales tax on some interest earned AND or paid not to mention the new 30% tax on any bank fees.
Using the same rationale that wage earners get to keep all of the income and payroll taxes that were previously withheld from their paychecks, regardless of what the effect is on their Purchasing Power, the same is true for the business owner.
For small businesses, the taxes on the corporation's profits are passed along to the owners of the business through a K-1 form. This income is shown on the 1040 and is taxed at the business owners' own personal income tax rate.
Since wage earners get to keep their income and payroll taxes, so do the business owners. Do you really think that business owners are going to give their employees their "full" paychecks and not do the same for themselves? They will both need the money to pay the inflated prices that are going to be charged in the market.
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