Posted on 07/19/2006 7:26:18 AM PDT by Arcy
The FairTax was on the primary ballots in three Georgia counties yesterday. I have the results of the voting! Here you go.
Gwinnett County:
Total Votes: 35,755 Yes - 31,068. 86.9% No - 4,687 13.1%
Cobb County:
Total votes: 39,458 Yes - 33,598. 85.15% No - 5,860. 14.85%
Fayette County:
Total votes: 11,517 Yes - 9,828. 85.33% No - 1,689. 14.67%
According to Boortz the results of this vote will be personally handed to President Bush today via a Washington insider. The purpose of which is to convey the FACT that there is great support for this solution to current tax system and that this is a plan that can get the voters to the polls. Many of which called and e-mailed Boortz to say that they had no plans of voting yesterday until they learned that the Fair Tax was on the ballot.
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(Excerpt) Read more at boortz.com ...
I could only tax food. It would be a consumption tax and it would tax the ENTIRE population but the base would be much smaller than the FairTax base and the rate would be through the roof.
You could. However that is not what HR 25 does, quite the contrary.
Once again you hope to raise the strawman and demonstrate your repeated MO.
We're not talking about total spending nor whether the state and local taxes change or not at all - those are extraneous to the analysis of comparative purchasing power of a given wage.
Also so that there's no mistake, the assumption implicitly made is that the 2003 CBO rate figures are the same as for 2006 (and yes, we realize there will be slight changes, but these are generally pretty minimal) and the use of 2006 prebate levels to bring the examples into the present time frame.
Despite your claim that you did not include the prebate in income, you actually did so. To be "included in spending" as you claim it had to be considered as income. And you are, in effect boosting their income by the full amount of the prebate which completely unbalances any comparison in actual purchasing power of the same wages as you've implicitly unbalanced them. That's not a valid comparison at all but one of apples and oranges. The issue is not whether the prebate is received and eventually spent for taxable things or not, but how much the $97,000 will purchase under each tax system. That would make it a valid comparison - and that's what Principled and I have done in discussing it with you.
Done in this way and using the income tax rate you've stipulated of 17.3% (which I think is low using the more general All Households rates) and the price reduction of 9% stipulated by Principled (and others), the actual comparison of the $97,000 in wages (M1K family) winds up with a buying power of (income tax) $80,219 and (FairTax) $87,886 or almost a 10% increase under the FairTax. It should be noted that this is done in a manner that assumes that ALL $97,000 is taxed by the FairTax rather than be reduced by the myriad of things untaxed (which reduce the taxable - spendable for taxed things - income under the FairTax).
Your example also makes the assumption that ALL income is taxed under the FairTax including the full amount of the prebate which has been thrust into income and fully taxed by the marginal FairTax rate rather than the effective FairTax rate (which you've not determined). The income tax rate in the CBO tables IS the effective rate, and the rate for the FairTax also needs to be made the effective rate rather than using merely the marginal rate there.
You need to first calculate the purchasing power allowed on the $97,000 caused by the stipulated 9% price decrease and then calculate the effective FairTax rate on that amount. And you're not increasing the wages (which remain $97,000) but increasing the purchasing power of those wages. The purchasing power increase must first be calculated since that's the amount of "stuff" you'll be buying (and to which the FairTax effective rate applies). So why don't you take the same amount in wages ($97,000) and do your analysis on the same wages in the two systems since that's what's being discussed? Done that way the comparison should be more realistic and more like the figures either Principled or I have shown here.
In fact the FairTax WILL reach more people - many more - than the present income tax since those in the illegal economy will now be paying "full boat" taxes after many years of leeching off of income tax payers.
You keep yammering on endlessly (and senselessly) about "broad evasion" and "widespread black markets" while never defining them nor giving any concrete examples of what those would be in detail nor how they would operate under the FairTax.
Unfortunately for you (since you've not read the bill) you have no clue as to what enforcement tools are available under the Fairtax, but they certainly are there. And in addition, the state sales tax authorities have some of their own also.
Could you restate that in some decipherable language?
"... Repetition doesn't make something true ...."
As with most of your posts, please keep your own comment (above) in mind at all times as you post.
We're not "talking" about the Chicken Little stories you raise at all - you're merely throwing them "out there" hoping that some, not thinking, will buy into the ideas.
In fact it could certainly be that to sell in the US that foreign sites will have to comply with the US tax laws and, in fact, may be forced to by the WTO agreements.
A number of threads ago (many) you rattled on and on about how you would start a business and buy all of your purchases tax free by doing so. Most of the FairTax supporters were hugely encouraging you to do that so you could feel the tender mercies of the sales tax collection authorities who - after all - have many civil and criminal penalties for that sort of thing and many states already are used to dealing with you tax deadbeats. By all means, DO IT!! And quickly.
And in fact despite the oft-repeated misstatements of the income tax loving crowd, it's not a "30%" tax on goods since (as you apparently don't know) the typical effective rate is less than that. But you income tax storm troopers like to over-hype things that aren't true.
And it's you guys trying to pretend that Jorgenson said so and so and that is has, somehow, been misstated by FairTax supporters since the only crew misstating what he said is those of you who prefer the income tax (for whatever reason).
$97,000 * (1 + 9/91) = $106,593 wages.
Wages don't increase, only what they'll buy (prices fall). If you choose to instead use all the savings for wage increase, I think you're wrong. Folks have a contracted wage already. But I'm willing to go with this for now.
$106,593 + $4,853 FCA = $112,446 total spending.
THere's an error in your addition. 106593+4853=111446. This changes the remainder of the calculations. I'll correct them as I go. Nevertheless, according to your assumption that there will be no price reductions, only wage increases, this methodology is fine.
$111,446 * .23 = $25,632 gross FairTax paid
Again, according to your assumption that there will be no price reductions, only wage increases, this is possible. But note the unlikelihood of someone spending 100% of their money on taxables. Note the unlikelihood of have no existing loan payments. Note the unlikelihood of giivng zero to charity, etc.
$25,632 - $4,853 FCA = $20,779 net FairTax paid.
$20,779 net tax paid / $106,593 income = 19.5% effective tax rate.
Besides minor arithmetic problem, you omitted your final calculation comparing the income tax purchasing power to the nrst purchasing power. I'll do so below.
Remember that I have allowed ALL of your assumptions reducing nrst buying power.
Under the income tax, we both got $80,219
Under the nrst, I get (after correcting and using your assumptions) $85,013.
THe nrst is more - even using your assumptions.
We are using CBO numbers. But lewis, the CBO knows nothing of the nrst's Family Consumption Allowance and therefor does not include it in their numbers!
THe reason the FCA should have its buying power increased is that due to price reductions, a dollar will buy more stuff under the nrst (pre-nrst). The dollars from the FCA will buy more just like the dollars you earn.
I allowed the calculation above however- noting the unlikelihood of your nightmare's assumption of having all employers choose to give all their savings in the form of increased wages. In my future calculations, I will presume that contracted remain costant and that prices fall.
THe likely scenario is workers keep their contracted wage and the savings are used to lower prices.
As you can see, it didn't matter.
YN:No I didn't. I added it to their income to get their gross spending.
What isn't clear is why you would think that employers will use 100% of their savings (which I think will be more than 9%) to increase wages when all of their employees already have a contrated wage.
The more likely situation is that contracted wages remain constant and the savings (again 9% is too low IMO, but will use it for now) used to lower prices.
I didn't. I asumed that contracted wages would remain constant and that savings of 9% of retail prices would be used to reduce prices.
In this far more likely scenario, the FCA's dollars buy more just as the dollars in wages. That's why the purchasing power of the FCA increased. Each dollar of FCA would buy 9.89% more.
Of course, IMO a more realistic savings amount would be 12%, making each dollar buy 13.64% more. But for now, I'm willing to use the cost reduction estimates of the anti-nrst folks.
So they can pay higher Canadian income/payroll/gst/excise taxes embedded in stuff online, evading U.S. taxes more than they do now? Sure you may get some to buy that one, I don't.So they get it from the Bahamas. Way to miss/avoid the point.
Underground economy - could also easily be another $1T, or 10-15% of GDP from prostitution, drug trafficking, gambling, smuggling, illegal gun sales, tax evasion, etc.All the money entering the "underground economy" is taxed today. The FairTax would get it on the way out. No difference except in timing.
Also unreported cash income from cash business - taxi drivers, waiters/waitresses, bars, craftspeople, carnivals, fleas markets, illegal immigrants, etc.Don't you think there would be MORE cash businesses, etc. with a 30% sales tax?
y MO, of necessity has been one of continually correcting your deliberate mistatements and misrepresentations.Really? Should we dig up YEARS of your misstatements about Jorgenson?
Interesting I do not recall that Jorgenson ever claimed that GDP would not increase, or that the total price that consumers would pay would not decrease giving them a measurable benefit over replacing just the income tax system with a generic national retail sales tax system.That wasn't the main point of contention, was it? The main point of contention was Jorgenson's producer price drops that you claimed were achieved without nominal wage decreases. You were wrong then like you usually are now. The truth is secondary to FairTaxers. Promoting the FairTax is paramount above all else.
Again your MO shows through, narrow focus lacking context and playing on lack of knowledge as you always do.And your MO now includes rewriting history. I guess if history showed that I was so wrong for so long I would want to rewrite it, too.
You could. However that is not what HR 25 does, quite the contrary.I wasn't contending that the FairTax base was larger or smaller than the current system, was I? Principled stated that "we'll all pay less" because the NRST base is larger. My point was that the size of the base does not determine how MUCH tax pay, just the rate. You had to jump in with your irrelevant BS.
Once again you hope to raise the strawman and demonstrate your repeated MO.Strawman, indeed.
We're not talking about total spending nor whether the state and local taxes change or not at all - those are extraneous to the analysis of comparative purchasing power of a given wage.What!?! They are no extraneous to purchasing power. The federal government could get all their revenue from state and local governemtn and not tax individuals or businesses at all. Would our purchasing power increase? Hell no. We would just be paying the same tax through another method. This is just more FairTax hucksterisms.
Also so that there's no mistake, the assumption implicitly made is that the 2003 CBO rate figures are the same as for 2006 (and yes, we realize there will be slight changes, but these are generally pretty minimal) and the use of 2006 prebate levels to bring the examples into the present time frame.Why not just use 2003 data for both? Hmm? I guess it's just a coincidence that using 2003 income data and 2006 FCA amounts benefits your cause.
Despite your claim that you did not include the prebate in income, you actually did so.I did not. I included it in spending. How are you to determine total FairTax paid if you don't know how much they spent?
To be "included in spending" as you claim it had to be considered as income.You do expect people to spend their FCA, don't you? Does it have to be considered income for them to spend it?
And you are, in effect boosting their income by the full amount of the prebate which completely unbalances any comparison in actual purchasing power of the same wages as you've implicitly unbalanced them.Oy. You are clueless. People will spend their income and they will spend their FCA. To determine how much a person spent YOU HAVE TO ADD THE FCA TO INCOME! Geez, this isn't that complicated.
The issue is not whether the prebate is received and eventually spent for taxable things or not, but how much the $97,000 will purchase under each tax system.And the FairTax gives them $4,853 in FCA additional to purchase stuff with.
That would make it a valid comparison - and that's what Principled and I have done in discussing it with you.And in the process ignored the fact that people would pay FairTax when they spent it. The value of the FCA is reduced by the amount of the FairTax. This is why the bill multiplies Social Security payments by the EXCLUSIVE rate to determine the new level. For some reason they decided to multiply the poverty level by the INCLUSIVE rate to determine the FCA.
THe 2006 FCA is 4508.
The 2003 FCA you used was 4853.
Using the 2006 FCA helped your cause, YN.
Maybe they'll give some to charity - not taxed.
Maybe they'll use some on tuition - not taxed.
There are myriad nontaxed spending possibilities. For this reason, a better way to do it is to subtract an the amount of spending on taxables that ends up tax free due to the FCA. In our case, 19,600 would be tax free.
Subtract 19600 form 97000 to get 77400. From then on, assuming it's ALL spent and on taxables, the tax amojnt would be 77400*.23=17802.
Subtract that from 97000 and get 79198. Then increase its buying power by 9% (although I believe the number to be closer to 12%, I'll use 9 for now). Ends up 87030.
To determine how much a person spent YOU HAVE TO ADD THE FCA TO INCOME! Geez, this isn't that complicated.
No, you don't. IF you assume it's all spent and all spent on taxables, that's ONE way to do it.
But you can't assume that 100% of earnings and 100% of FCA are spent on taxables. Not nearly. A better way is to exempt 19600 of spending from tax and spread the tax over all remaining purchases.
That's one way to see it. They could also use it to offset taxes on taxable purchases of 21100.
The black market, shadow economy, black economy, gray economy (those terms all mean the same thing) or what ever you want to call it, has been defined for you, and examples have been given.
It is interesting that you have no problem quoting government sources and accepting their authority when those sources appear to support your position, but reject them as incompetent and biased when they conflict.
Frankly, your blatant denial of glaring holes in the FairTax plan do not engender confidence.
Principled stated that "we'll all pay less" because the NRST base is larger.
My point was that the size of the base does not determine how MUCH tax pay, just the rate.
Your statement: "Uhh, if the FairTax is revenue neutral, the size of the base doesn't matter. That only changes the rate, not the amount of taxes we are paying."
My comment to such was a response in regards today's taxpayer under the income/payroll tax system with it's narrow base (taxable income) base and narrow population on which those taxes are imposed. The taxpayer of today being the beneficiary of going to a retail sales tax only system the person being addressed in the calculations.
My statement in reply: The size of the base certainly does matter, as you note the rate falls for those paying taxes today.
As a consequence of a larger base reaching a greater proportion of the population, those paying taxes now pay less and realize a gain in purchasing power.
Those who have evading paying taxes in the past, pay more taxes in taxes through the purchase of goods and services. Lower tax rate spread across a larger base means the taxpayer of today has greater purchasing power due to that lower rate.
You had to jump in with your irrelevant BS.
The only BS flying around here is that which you inevitably throwout to take the focus off the essentials. The current payer of taxes under the current system will be much better off under a retail sales tax only system. Which is but one benefit of a larger base that also spreads the tax across a much larger population of potential taxpayers.
For contrary to your characterization, the statement was quite relevant to the discussion of whether or not a taxpayer under the current system will realize an increase in purchasing power under the retail sale tax of HR25.
Once again, you misstate and try to narrow the context, and create yet another strawman, a habit that has become so ingrained with you you just can't seem to give it up.
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