Posted on 08/27/2007 7:53:49 AM PDT by Turret Gunner A20
You misunderstand what I said.
It is some fair tax opponents on here who claim that the 23% is far more than the current embedded taxes. And they claim it will not cause drug dealers to pay more in taxes.
But if they embedded tax today is LESS than 23% as they claim, and often claim by a large amount, then at a 23% NRST the drug dealers would be paying MORE in taxes.
If the FT Plan becomes law the employee will keep his after tax pay,not the gross pay.
In the example by Dale Jorgenson,the Harvard Economics Professor who is the father of the National Sales tax,an employee earning $1000 a month and paying $200 in fed income taxes and payroll taxes would keep $800 under the FT Plan as he kept under the current system
The $200 now the employer gets to keep goes toward reducing PRODUCERS PRICES,but RETAIL PRICES would be increased by the National Retail Sales tax Any gains by workers and investors would be the result of increase economic efficiency
Meaning if the producing price fell by 23%,the retail price would be increased by the National Sales Tax rate of 23%
I.e, no change in price to the good or services before or after the FT Plan
All of you can email Dr Dale Jorgenson at djorgenson@harvard.edu
to get this info
Current example $100,000 annual salary,$80,000 net after Fed and Payroll taxes
Monthly gross $8333
Monthly net $6666
Under FT Plan employee would continue to receive the same net figure of $6666 and the $1667 difference would go the employer to reduce production costs
Further payroll reductions to the $6666 figure:
Health Ins
Life Ins
State Inc Tax
IRA
401K
Net figure $5000 take home pay
$5000 take home pay deduct expenses:
Mortgage
2 car payments
credit cards
Utilities
Car Maint&gas
Food,clothing and drugs and medical
Total expenses $4000
Disposable income $1000 to buy goods and services that did not change in price from before the FT plan to after it.
It’d true that some of these deductions and expenses will be taxed at the sales tax rate,but a lot of them,mortgages,credit cards notes etc won’t be taxed at near the sales tax rate.
Not that great a deal to me or the gov’t
Anyone who claims the current embedded tax is less than 23% is out of the loop.
The Fed tax and payroll tax alone makes up the 23% before you get into excise taxes,duty taxes etc.
I will expect to be paid my full salary, with no FICA and no SS or medicaid deductions. And I would expect that the additional SS payroll tax paid by my company for my labor would also be returned to me; since we are changing the way we are being taxed.
None of the fallout is clear in the proposal. If the changeover were to be phased in over 20 years or so, or started as an experiment in one or two states, it would be tolerable, and recoverable. But as proposed, it is a MOAB in the economy, and nobody knows its fallout.
Absolutely, on one hand the FTers say the black market will newly be taxed as profits pay the FT consumption tax. On the other hand, they say regular people pay embedded tax now on retail sales, so hence no price change after FT. More duplicitous argument and smoke from this crowd.
Thanks. I probably made the argument against their black market claims 100 times, and I am not sure anyone has ever seemed to have gotten it. Illegal activity still cheats the system, just in a different way.
That belies the Fair Taxers' argument that all retail prices have embedded income tax of about the 23% level. All these groups pay embedded income taxes when they spend their money.
So which is it? These people escape taxation, or we all pay embedded taxes? The FTers are smoke and mirrors dissemblers.
May I suggest you read either the book or the legislation?
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