Fair Tax gets 86% of vote in Georgia! Results will be sent to President Bush.

Nealz Nuze ^ | July 19, 2006 | Neal Boortz

[xcamel]

As I thought, you were badly confused again.
No problem.

[pigdog]

That example was specifically for the top quintile and uses CBO effective tax rates for 2003 - you could look them up if you cared to; in fact, you should.

That quintile has an income of $184,500 as I showed in the example and also gives the results shown in #658, and both the income tax rates and the FairTax rates are effective tax rates for that particular situation.

Also as I pointed out in the post, the benefits from the FairTax are clearly understated since by not removing things not taxed (loan payments, church and charity donations, state and local taxes, etc.) the effective FairTax rate is much higher that it would actually be.

If you'd like to look at a different income level, that can be done, too. Let's say you're in the middle quintile - a midrange taxpayer and M2K (married, 2 kids) - where your income is $51,900 and your effective tax rate is (again CBO figures for this income level) 12.5%. Out of your $100 wage slice, then, you could buy (and once again ignoring embedded taxes) $87.50 worth of stuff and under the FairTax the same $100 buys $97.40 - well over an 11% increase in purchasing power.

Keep in mind that that assumes ALL money spent under the FairTax went for taxable things which, in fact, would never be true as has been shown in this and earlier posts. If we use a 12% price reduction which is more in line with the 12 - 15% range most FairTax supporters believe will be the case, the purchasing power would be $87.50 and $100.90 for the income tax and FairTax respectively (again with the same assumptions detrimental to the FairTax. That would be more than a 15% increase in purchasing power for the FairTax.

So, you see, the tax rates being used (both income and FairTax) are the effective tax rates specific to the situation and not some rate picked out of the air for an "overall" rate - which would be misleading.

[Principled]

Your 656 was to me.

My 657 was to you.

Your apology is accepted.

[pigdog]

No, he wasn't - you were. He posed a specific question to you to answer and now you're trying to slide out from under it since you can't/don't wnat to answer it.

[Always Right]

Accoridng to CBO, the effective income/payroll tax combined rate for the 5th quintile is 24.5%.

Why use the combined rate for the 5th quintile? That has no bearing on the effective rate, except for the 5th quintile not the entire population.

If you can find some other data, have at it man. If you have a problem with the data, I suppose you could write a letter to the CBO! LOL!

My numbers come from NIPA for persona income and the IRS for income tax data. My number is the correct number because I have taken out the corporate tax and 1/2 payroll tax that is included in the embedded tax number. There is absolutely number wrong with my number. It is the average effective federal income tax rate borne by the individual.

[pigdog]

Oh, but you ARE mixing and matching since you quote a rate on the FairTax that is tax exclusive and you're unwilling to give a rate in today;'s tax system on a comparable basis. That both deceptive AND dishonest. And just plain wrong to boot.

As several posters have pointed out to you, the effective FairTax rates are considerably lower than those at present so if anything evasion should reduce, not increase.

[Principled]

I encourage you to find the numbers and do the calculations yourself.

[Principled]

It is the average effective federal income tax rate borne by the individual.

Great.

Then it will be a single estimate for the entire population. THe quintiles only make the estimates more accurate.

THE most accurate calculation would be an actual person. I have done this on myself with similar results.

[pigdog]

Sorry, but you're wrong and at least partly for the reasons you cite thinking they show you "right". Trying to use a single rate for the entire taxpayer population leads to greatly skewed results. Using the CBO quintiles gets you much closer to the actual results AND the CBO numbers include a comprehensive measurement of all income and they adjust for the ER portion of taxes both on the income side and on the rate side.

And I urged you to go look up the 2003 CBO effective tax numbers. You'll find them to be as I represented hem. The NIPA numbers are not useful for this purpose.

[Always Right]

I encourage you to find the numbers and do the calculations yourself.

I did. Is NIPA not the proper source for personal income data? It shows very plainly individual incoome is over $10 Billion. Is the IRS not a good source for income tax? It shows personal income tax after refunds plus 1/2 SS tax to be $1.1 Billion. My number is absolutely correct.

[Always Right]

I meant trillion instead of billion....

[xcamel]

For what? you reply made less than no sense.

[xcamel]

And "tons of BS" in the dept of FT must be in the "quadrillions" now.

[Your Nightmare]

Accoridng to CBO, the effective income/payroll tax combined rate for the 5th quintile is 24.5%.

What is the link to the data and which table are you using? The data I have from CBO (published in Dec 2005) shows the income/payroll tax for the highest quintile to be 21.1% (13.9% + 7.2%).

[Your Nightmare]

I see now. You are adding the corporate income tax rate. That's fair.

[Your Nightmare]

A married couple (one kid) today who earns $77300 (at the 4th quintile) can only purchase $64313 worth of stuff (using CBO's combined income/payroll tax rate at 4th quintile).

Why did you use the "All Households" table instead of the "Households with Children" table?

The "Households with Children" table shows the 4th quintile making $97,000 and their non-excise effective federal tax rate to be to be 17.3% allowing them to purchase $80,219 worth of stuff. This family under the FairTax and the family consumption allowance would have $101,853 pretax to spend. They would pay $23,426 in FairTax making their net purchasing power $78,426 — $1,793 less than under the current system. Their effect rate would be 19.1% under the FairTax. And this doesn't include the increase in their state and local taxes that most definitely would occur.

[lewislynn]

2). If I keep $77 after paying $23 in taxes, what is the tax rate?

You had $100 you paid $23 you have $77 left...the rate is 23%, what else can it be?

If you think it's 30% it's another glaring example of your inability of doing practical applications not to mention logic.

[pigdog]

The CBO numbers are better since they are not a single overall aggregate number but are more particularized to the individual taxpayer level. The quintiles get you further down to be more accurate for a given subset of taxpayers - the NIPA figures do not. I'd even like to see a further stratification of income/tax levels under the income tax but I've seen none that go below the quintile level. And there are other differences as well, but trying to pick a single representative rate that is meaningful for all taxpayers is ineffectual as well as misleading as can be seen from your figures. The CBO rates are effective rates for Comprehensive Household Income and the NIPA figures are not.

You're also using numbers from two completely different sources which have not been normalized in that BEA (NIPA) and IRS do statistical things quite differently. The CBO figures ARE normalized by the CBO and are from a single recognized source for such figures.

The 5th quintile was used in one example and a different quintile used in a different example which is something you cannot do with your data. the object is to show the effect on purchasing power under the income tax and separately under the FairTax for different economic (income) categories, not a single hypothetical (and non-existent) individual.

[lewislynn]

Why did you use the "All Households" table instead of the "Households with Children" table?

Why do you think?

[Always Right]

The CBO numbers are better since they are not a single overall aggregate number but are more particularized to the individual taxpayer level.

I really don't care about a cherry picked example. I care about the aggregate numbers.