Posted on 08/28/2007 4:39:18 PM PDT by Bigun
The People Must Demand The Fair Tax
By Doug Patton
August 28, 2007
Last year, during the United States Senate race in Nebraska, Republican challenger Pete Ricketts suggested that every option must be considered when looking at ways to reform our federal tax system. Among the list of alternatives Ricketts said should be on the table was a national sales tax known simply as the "Fair Tax."
The Democrat incumbent, U.S. Sen. Ben Nelson, launched an attack on his opponent that was, at best, distorted and condescending, at worst, irrational demagoguery. One would have thought that Ricketts had suggested stealing all the assets of the poor and handing them over to Warren Buffet and Bill Gates.
Recently, the panel of pundits on ABC's "This Week with George Stephanopoulos," discussing the apparent rise in popularity of former Arkansas Governor Mike Huckabee's presidential campaign message, scoffed at Huckabee's unabashed promotion of the Fair Tax.
George Will, the token "conservative" on the panel, brushed it aside with the disbelief of an elitist who cannot understand the burden of the average worker who would love to take home his or her entire paycheck, as the Fair Tax would allow him or her to do. Will opined that Huckabee's second place showing in the Iowa straw poll was even more amazing given the fact that "he supported a national sales tax of thirty percent, which means that if you buy a one million dollar house, you'll be writing a check to the government for three hundred thousand dollars." Of course, the others on the panel readily agreed.
The elites of this country, who buy those million-dollar homes, are not enamored with the Fair Tax. They would be if they took the time to understand its appeal.
The Fair Tax would replace all federal income taxes. No more federal withholding. No more Social Security withholding. No more Medicare withholding. No more stealing from the paychecks of American workers before they even see it and then pretending to give them a refund, without interest, at the end of the year. No more saving receipts for tax deductions. No more IRS audits. No more April 15th.
Instead, the Fair Tax would put us in control. All consumer items would be taxed. Business purchases would not. By allowing us to make the determination about what we buy and when we buy it, the ability of our legislators to manipulate our behavior is eliminated. That is why the elites don't like it. They can't control the public's spending habits under such a system.
The current federal tax system is broken. It cannot be fixed. Since the inception of the federal income tax with the passage of the 16th Amendment in 1913, federal corruption and control have turned it into a Frankenstein monster that torments the people and serves the special interests. A tax on a person's income is a tax on production, and as Ronald Reagan once said, "Whatever you tax, you get less of."
Because the poor are forced to spend a disproportionate percentage of their resources to cover the tax on necessities, the Fair Tax hits them the hardest. That issue can be addressed by simply issuing a "prebate" check each month to every household in the country. Unlike disingenuous tax credits, deductions, exemptions and other loopholes in the current income tax code, a prebate check is a clean, honest method of covering the sales tax on food, clothing and shelter - up to the poverty level.
Of course, removing the income tax on corporations will reduce the cost of everything we buy, since corporations don't pay taxes. They simply pass them along to consumers. The Fair Tax plan calculates that removing the corporate income tax will result in a reduction in the cost of virtually every consumer item on the market. In fact, it will just about offset the tax on those products. Imagine paying the same price for something but having your entire paycheck to buy it.
And then there are the billions of dollars that flow untaxed through our economy today: drug dealers, prostitutes, pornographers, foreign tourists. Imagine how much revenue could be raised simply by taxing the things those people consume.
There would be no more audits, no more justifying deductions, and April 15th would become just another spring day. But only if the people stand up to the elites and demand it.
Where have you been?
What a quick response...thanks again for stating the thread
Can you tell me what “embedded taxes” are, please.
Heck! Even the president's tax reform commission refused to evaluate the FairTax bill as it exists but instead came up with a construct of their own to shoot down.
So you are calling me a liar, I see.
In my profession as a doctorate in statistics I see manuscripts every week that have not been published. I receive several emails every week with attachments asking for my comments. I attend conference calls and meetings where there is a discussion of ongoing results not yet published.
And if you ask anyone in my profession if it is normal to see unpublished results, they will say “of course”.
I know the architects of HR 25 and I know the staff analysts. There is a ton of data they are working through and I have contributed to analysis methods to be considered.
So there you have it. Call me a liar. Again I will ask you what will you do when you are shown to be wrong? Disappear?
And those aligned against the FairTax such as certain persons in Treasury refuse to show their data or discuss their analysis methods. They know their analysis methods are flawed.
They claim the micro-datasets used for analysis must be protected for taxpayer privacy yet they could easily scrub identifying information and release their data as is normally done in the process of secondary analysis. Off the record their analysts have admitted they are hiding and avoiding challenges because of politics.
That situation will not last too much longer as the delays are not going to be tolerated by Congress.
I realize that you did not address the question to me but I will give you my answer never-the-less.
When FairTax supporters use the term "embedded taxes" they are using it as shorthand for taxes imposed on businesses, and all the costs associated with those taxes as well, which find their way into the price of every good or service currently produced in the USA.
Every dollar a corporation spends, whether on taxes or anything else, eventually comes out of the pockets of individuals, specifically three groups of individuals: the corporation’s shareholders, in the form of decreased capital gains and dividends; its workers, in the form of lower wages; or its customers, in the form of higher prices.
Or, more plainly stated:
All taxes on business are simply a fiction to hide the total tax burden from the consumer.
They claim the micro-datasets used for analysis must be protected for taxpayer privacy yet they could easily scrub identifying information and release their data as is normally done in the process of secondary analysis. Off the record their analysts have admitted they are hiding and avoiding challenges because of politics.
That does not surprise me in the least.
That situation will not last too much longer as the delays are not going to be tolerated by Congress.
Music to my old ears!
If that is so, Jack Benny (remember him), paid less tax than I did earning a lot less than him. Same goes for the major of NYC, Bloomberg. He rides the subway, I drive a car.
Democrat Howard Dean bought the second suit of his adult life when he participated in the presidential debates.
Senator Shumer has a walk up apartment in NYC, and shares an apartment with 2 others in DC. I understand one of them has to sleep in the living room.
The clincher is, Russia opted for the flat tax, and by all accounts it's working better than expected.
Wrong. Something else for you to look up.
Ah.. so you don’t have a real job in the real world that interacts with the real economy... who would have guessed.
I know the architects of HR 25 and I know the staff analysts. There is a ton of data they are working through and I have contributed to analysis methods to be considered.With unbiased people like you helping them, I'm sure they come up with very accurate results - even if it doesn't support the FairTax cause. /sarcasm
$1.00 bet....how’s that?
The embedded (sometimes called "hidden") taxes and costs that could be eliminated and made visible by the Fair Tax are:
a) Corporate federal tax and the internal cost to keep track and file the information with the IRS (compliance cost) -- estimated at 1-2% of the cost of the product
b) Employer portion of FICA -- 7.65%
c) Employee portion of FICA -- 7.65%
d) Employee federal withholding -- estimated at 15%
Let's take a $100 pair of shoes (produced domestically) consisting of materials, labor and overhead manufactured today. For sake of argument, let's split the cost 50-50 ($50 for materials and overhead and $50 for labor).
That $50 in labor you're paying when you buy shoes today contains the employee withholding and employee portion of FICA I outlined above. If you apply those percentages and add them up, you'll see that the employee takes home around $38.67 and has $11.33 deducted and sent to the federal government. The company sends in their portion of FICA ($3.83) and expends compliance money for a total of $5.33.
(A side note: You often hear that illegals and criminals don't pay taxes. Yep they do. Every time they buy a $100 pair of shoes, $11.33 + $3.83 is sent to the federal government.)
I itemized so you can tweak the numbers if you want. For example, a service industry (legal, accounting, insurance, etc.) is mostly labor. Other industries (retail or highly automated manufacturing) are mostly material.
Under the Fair Tax some say the employee gets to keep his gross salary ($50), leaving his employer with only $5.33 to reduce his price. Some say the employee will take home the same amount, leaving the employer $16.66 to reduce his price. In both cases, the employer will also see the price of his materials drop.
Those who say the employee takes home the same amount say that prices will drop a total of 23%. Once the Fair Tax is added, therefore, the price will be the same as it is today. The difference is that now the total taxes are visible, not hidden.
On the other hand, there are those who say "you'll take home your gross pay". Well, you can see from the above that the employer has little with which to reduce his price (his portion of FICA, compliance cost, and reduction in materials cost). We have been using 9% as an average. Add the Fair Tax and prices will rise 18%.
One last thing. You can see from the above that this applies to domestic manufacturers only. Foreign manufacturers don't have FICA and withholding -- they have nothing with which to reduce their prices. Their prices will rise the full 30%.
You tell me. What percentage of what you buy at retail is imported?
I am not opposed to the fair tax in principle. It is just that with Corps, previously owned goods, and investments not being taxed I don’t see where the revenue is going to come from. I own three corporations so about the only thing that I would have to pay taxes on is the food and gas that I buy, everything else would be tax exempt. It sounds like a fantastically good deal for me :)
I don’t think the struggle is in the method of taxation it is in the fact that the government taxes too much. We need to cap the governments ability to tax and borrow.
I know the architects of HR 25 and I know the staff analysts. There is a ton of data they are working through and I have contributed to analysis methods to be considered.Yet you don't know what's in the bill
I have contributed to analysis methods to be consideredI'll bet they can hardly contain their laughter.
Still, nothing you've posted about the Fairtax so far is anything coherent let alone new and exciting...IOW, just more Fairtax lies.
The FairTax revenue estimates come from longterm historical consumption data. These data are stable. The FairTax/NRST analysis starts with these data and operates under the model that if taxes (income, payroll) taxes are taken out of one end and the NRST replaces it at the other end, the FairTax system of taxation is revenue neutral and consumption patterns are statistically the same given sufficient price stability.
Price and consumption stability is why the FairTax will be tested on selected states for evaluation. The full enactment may leave individual states with a choice, pay X amount of federal taxes and we don’t care how you choose to do it as long as it is lawful (Constitutional). However, the 16th Amendment will be repealed but the states may be allowed to administer their own income tax so long as they pay the federal government the level of taxes they have historically with year to year adjustments based on population data (apportionment).
This involves decentralization of federal government and this is where the ideological battle lies. The Uniformity clause is already in preparation for proper interpretation as it has been misinterpreted for several decades.
Decentralization is key to limiting federal government spending and allowing States to return to their historical roles in deciding local policy in all matters of their 10th Amendment jurisdiction. Quasi-Decentralization started with block grants but the uniformity clause still keeps power at the federal level.
And the FairTax is key to decentralization.
Looking back over the decades since Ronald Reagan, attempts to limit government spending and borrowing have failed because of the ability of legislators to manipulate the current Tax code or to run deficits without budget restraints. Both parties blame the other for failure.
The FairTax allows the electorate to understand increases in government spending by a simple monitoring of the NRST rate.
Recently, Kotlikoff estimated the necessary NRST rate for 2007 based on increases in government spending and consumption. The results were to increase the NRST from 23% to 23.82%.
It is widely believed that if the NRST were to edge up year over year, the electorate would notice and act accordingly.
I know the architects of HR 25 and I know the staff analysts. There is a ton of data they are working through and I have contributed to analysis methods to be considered.It's interesting that not long ago every other post by Fairtaxers used "the Harvard Economist Jorgenson says everything we buy is 22%embedded taxes"...Since that lie has been exposed (actually no one knows which is the lie, 100% paychecks or 22% embedded taxes can be removed) his name is dirt and you clowns are scrambling to come up with a new lie, of which you are a self-proclaimed contributor.
YN, remember the study/report that was due to come out about how the new (predetermined) rate was going to be 18%?...AG posted that lie a few times. Where is that study? So was working on a study the lie or was the predetermined result a lie? (where is AG these days anyway? Probably too embarassed to get involved again or was tired of being a (paid?) stooge for an obvious fraud)
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