Posted on 10/19/2006 5:11:50 PM PDT by pigdog
As specified in Congressional bill H.R. 25/S. 25, the FairTax is a proposal to replace the federal personal income tax, corporate income tax, payroll (FICA) tax, capital gains, alternative minimum, self-employment, and estate and gifts taxes with a single-rate federal retail sales tax. The FairTax also provides a prebate to each household based on its demographic composition. The prebate is set to ensure that households pay no taxes net on spending up to the poverty level.
Bill Gale (2005) and the President’s Advisory Panel on Federal Tax Reform (2005) suggest that the effective (tax inclusive) tax rate needed to implement H.R. 25 is far higher than the proposed 23% rate. This study, which builds on Gale’s (2005) analysis, shows that a 23% rate is eminently feasible and suggests why Gale and the Tax Panel reached the opposite conclusion.
This paper begins by projecting the FairTax’s 2007 tax base net of its rebate. Next it calculates the tax rate needed to maintain the real levels of federal and state spending under the FairTax. It then determines if an effective rate of 23% would be sufficient to fund 2007 estimated spending or if not, the amount by which non-Social Security federal expenditures would need to be reduced. Finally, it shows that the FairTax imposes no additional real fiscal burdens on state and local government, notwithstanding the requirement that such governments pay the FairTax when they purchase goods and services.
(Excerpt) Read more at people.bu.edu ...
And in a previous paragraphs toward the top he says that inflation effects have not been sufficiently modeled. And in almost the next paragraph (in front of your quote) he says that the tendency would be for asset values to fall. Which is it?I don't know was said exactly, but those statements aren't mutually exclusive.
Yeah. So?
Not only would the purchase of a new home be taxed, unless it is purchased as a rental - then it would be tax free, but the renter would pay 30% FairTax every month on the rent.
Would the new home purchased as a business investment and later sold to an individual as a residence then be taxed because it was untaxed when sold as new? If the resale is taxed, and the value of the home increased, would the tax be on the original selling price or the current market price? What effect would giving a business or investor a tax advantage over private purchase of real property have on the market?
the price increase, were it possible to implement correctly and precisely,IOW, if it's done in dreamland it COULD work.
This is what you guys mean by instant 30% inflation?
You have a point about tax rates...
We have a state Point of Sales (POS) tax that allows for counties and cities to add to the state's base tax rate. At this point in time, our Democrat run county has a sales tax of 9.75 % on all taxable items excluding services and gasoline.
The rate was raised to this level after a ballot initiative which seemed to indicate that you were voting for a tax hike if you voted either way. I have a degree in English and stood there in the voting booth examining the initiative with a diagram. I was befuddled.
The upside to ballot initiatives is that the tax dies. However, much money is poured into campaigns to renew the taxes.
No Lewis. That is only ONE of several possible scenarios and certianly NOT the one I personally subscribe to. That in no way changes the fact that the VAST majority ARE better off even under that one.
No Lewis. That is only ONE of several possible scenarios and certianly NOT the one I personally subscribe to. That in no way changes the fact that the VAST majority ARE better off even under that one.
Colbert: "You said 'anyone who grew up on a farm knows that evolution exists'. Ok, are you saying a monkey can milk a cow?"
Agre: "Well, if I can milk a cow I suspect a monkey as smart as I am can milk a cow."
Colbert: "Are there monkeys as smart as you?"
Agre: "I'm sure there are quite a few, quite a few.
Colbert: "Oh really? mmhum. Do they give a Nobel prize for throwing your own feces?"
Agre: "........That's the Economics prize, I think."
You're just afraid to actually state your expectations about wages and prices because you know that we'll rip your "trying to take both sides of the issue" position to shreds. You are afraid to answer most questions, or put out real thoughts, because you know you can't make sense of the FairTax plan.
What do you think will happen to wages and prices under the FairTax plan? And what will be the effect on the value of the saved after-tax dollar? Simple questions. I've given my answer, now it is your turn.
Boy you're weaving. You gave no such thing. I asked: why, if the instant the FairTax becomes law, we will have upwards of 30% inflation such a fact has been ignored by myriad economists quoted in these discussions? We have seen a couple of references to inflation today buried in some analysis, but nothing addressing the earth shattering predictions by Rob,FG,PhD economist.
If the US had 30 percent inflation the international bond markets would be virtually destroyed overnight. Equity markets would take one look at the exploding interest rates and drop precipitously. The dollar? Who knows? With worldwide financial markets melting down it may be the only safe haven. Gold would go to 2,000 dollars an ounce.
I would think that some economist, somewhere would have addressed this prediction that upwards of 30% inflation in the US would be created overnight. Yet I don't see it. I'm asking you why?
If the US had 30 percent inflation the international bond markets would be virtually destroyed overnight. Equity markets would take one look at the exploding interest rates and drop precipitously. The dollar? Who knows? With worldwide financial markets melting down it may be the only safe haven. Gold would go to 2,000 dollars an ounce.Exactly. That's why the FairTax is a really, really bad idea. Really.
So you are on board with the idea that changing the method of taxation is a root cause of inflation, even though the amount of the tax is the same?
Now you are saying 30% inflation will cause economic ruin. This morning it was 15%, and I agree that it would be awful. That's why I don't see how you are so gung-ho for the FairTax scheme with 100% paychecks (which means 18-25% inflation).
So, Bigun describes the effects of the FairTax being implemented as the return of Jimmy Carter as President, a disaster of major proportions.
And, you see it as heralding the destruction of the international bond markets, equity markets, and exploding interest rates.
Sounds like a great plan!
And you still haven't answered my simple question that you are afraid to answer.
YOU are an out and out liar! Bigun has done no such thing as anyone who wishes to look can plainly see. The entire post is reproduced below.
To: RobFromGa; groanup
If the FairTax were proven to cause 15% or more inflation, would you support it?
I seem to recall having seen 15% and greater inflation rates in the U.S. fairly recently (can you say Jimmy Carter?). Was that because of the fact that we had an income tax at the time?
994 posted on 10/26/2006 8:59:03 AM CDT by Bigun (IRS sucks @getridof it.com)
Looks to me like he is saying that the 15% inflation is no big deal because we had that under Carter....
And you still haven't answered the question I asked:
If the FairTax were proven to cause 15% or more inflation, would you support it?
You don't usually post in the third person, calling yourself Bigun. Are you cutting and pasting notes sent to you by pigdog? Or someone else? Who is sending you your posts??
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