Posted on 09/01/2007 6:18:37 AM PDT by Man50D
In what way? Exactly why would there be a "pay cut."
Mark
Your company is still paying that extra $20,000. In a FairTax world, it will save that money, and be able to lower its prices accordingly, only if it can reduce your salary to $80,000. In other words, your take-home pay is the same as before. Sure, you'd get to "keep 100 percent of your paycheck," as Boortz and Linder repeatedly write, but it would be a smaller paycheck. That's kind of a big thing to leave out.
Boy, talk about "slight of hand!"
The savings to the company has NOTHING to do with the fact that the employees will be taking home their entire income, with the possible exception of the roughly 7.5% savings in the "employer's contribution" to FICA and medicare. That cost is a cost of employment, and the savings may or may not be passed on to the employee, it may be kept, or it might be split up between the two. The embedded taxes mentioned by Linder and Boortz are the corporate taxes and compliance costs of the businesses.
If an employee makes $100,000 a year, he will continue to make that $100,000, however the employee's take home pay will reflect the actual earnings of the employee, rather than hiding the taxes paid.
Mark
Frankly, something that I would LOVE to see, and something that might really motivate a serious discussion on taxes is a bill that I call the "Financial Awareness Bill of 2007." A very simple bill, completely revenue neutral, it would simply outlaw federal tax withholding. Each employee would be personally responsible for writing a check once a quarter and mailing it in to the government. Given the fact that on April 15, if you ask anyone how much they paid in taxes, you'll get a response back from about 90% that "I'm getting a refund!" I wonder how long the tax system would stay intact at that point.
Mark
Embedded taxes consist primarily of payroll taxes, do they not?
If the company keeps paying out this amount, just directly to the employee rather than to the government, how do their costs and prices drop?
If they stop paying this amount, wont the employees top line income drop by 23% or thereabouts? (15% income tax + 7+% SS.)
What is taxed?
The FairTax is a single-rate, federal retail sales tax collected only once, at the final point of purchase of new goods and services for personal consumption. Used items are not taxed. Business-to-business purchases for the production of goods and services are not taxed. A rebate makes the effective rate progressive.
Exactly what taxes are abolished?
The FairTax is replacement, not reform. It replaces federal income taxes including, personal, estate, gift, capital gains, alternative minimum, Social Security, Medicare, self-employment, and corporate taxes.
http://www.fairtax.org/site/PageServer?pagename=about_faq
Now, think of the hundreds or thousands of individual parts, tools, and other items needed to manufacture an automobile -- and the number of times the ingredients in those items are bought, changed and sold from the raw material stage to their final installation into the finished products.
At every level, the seller is subject to one or more of the above bold, underlined taxes which he in turn adds to the selling price of his product, and which is thus passed on to the buyer.
When these several levels of taxation are eliminated, a goodly portion (but not all) of which will be paid over their employees, it still doesn't take too much imagination to see that the protion retained by the seller, accumulating through the many levels of sales, can and will total quite a savings -- creating the ability to lower prices on the end products.
And competition will see to that.
At least the flat tax would tax those folks, as well as the drug dealers et al who are part of the underground economy.
Actually, a "flat tax" wouldn't generate as much revenue as the Fair Tax.
In the case of "trust fund babies," they pay taxes based on the interest and dividends generated by their trusts, or if those funds are "off-shore," on those funds brought into the country. If there are no earnings, and they're just living off of the money in the trust (and it's already been taxed once), then there would be no tax revenue generated. As for the "underground economy," if their earnings aren't reported, then no taxes are collected (hence the "drug stamps" that many states have, in order to make drug dealing "more illegal," since you're not paying the state taxes on the drugs!).
The Fair Tax is a consumption based tax. The more you spend, the more in taxes you pay. Even people in the "underground economy" have to buy stuff, so they'll begin generating tax revenue. And in a way, it's progressive too (and I'm NO FAN of progressive taxes!) For instance, if a wino spends $1.99 on a bottle of Muskatel, he'll be paying less in taxes than Kennedy when he buys a case of Chivas!
Mark
Dr. Dale Jorgenson....
Oh, I beg your pardon. If a person has DR. of something in fromt of his name, he is always right.
Gee, that's nice to know -- that means that I am always right, then. I have a doctor's degree.
Sorry, sport, he is as wrong in this case as you are.
I have dozens of times in several threads -- to you and several others, too. You totally ignore it, or come right back with the same lies, accusations, and inane questions. So, I'll just say again, Read the review the many threads, read the book, read the bills, and go to and study
http://www.fairtax.org/site/PageServer?pagename=about_faq
That is, if you can read.
Thanks for the courteous reply. I’m not convinced, though.
In any revenue-neutral change in the taxation system, by definition some will come out ahead, and some will get screwed. Those differences in themselves will have some profound effects on the economy, as well as on individuals, and I seriously doubt anyone has thought through all the implications.
Law of Unintended Consequences and all that.
Which is why the FairTax research was funded with 20 million dollars. AFFT thought the economists would recommend a flat tax but after all the research was complete, the consumption tax won out.
No it's not perfect but no other alternative has been so thoroughly vetted as the FairTax. All of the implications have been more thought through than any other system, except for the current one.
In the five states that do not have a retail sales tax I guess a collection mechanism would have to be established? Who pays for this?
About enforcement: when I was in business every so often I’d be visited by a State Revenue Office who would look at my books to make sure I was paying the appropriate amount of sales tax. Who does enforcement for the NRST?
And, again, when I was in business, I collected 6% sales tax. But the state only asked for 5%. The other 1% was a fee "paid" to me by the state for the labor of collecting, reporting and paying sales tax. Anything like this in the NRST?
How is the tax collected? Retail businesses collect the tax from the consumer, just as state sales tax systems already do in 45 states; the FairTax is simply an additional line on the current sales tax reporting form. Retailers simply collect the tax and send it to the state taxing authority. All businesses serving as collection agents receive a fee for collection, and the states also receive a collection fee. The tax revenues from the states are then sent to the U.S. Treasury.
http://www.fairtax.org/site/PageServer?pagename=about_faq
Question # 10
But you still haven’t explained how this is done in those five states that don’t have a sales tax.
And you didn’t address at all my question about enforcement.
And I’ve got another question:
I’m starting a new retail business. How do I start paying the NRST? Do I have to notify somebody that I’m now in business? If so who?
Thanks, that’s my take as well, at least on that aspect of it all.
That was the man who did the study (who was paid by the fairtax organization) agreeing with that.
Those taxes that the employee will now be pocketing were the majority of the 'embedded taxes' according to the man who did the study. But of course you know more than him.
In reality there probably wouldn't be. But in order for the economist to get the 23% reduction in costs they had to assume employees would take a paycut in the amount of taxes they paid. So without a paycut there would be little savings to the employer and in reality prices would rise.
Dr. Jorgenson was the fairtax expert who authored to the study for the fairtax organization that came up with the 23% embedded tax. So I am just quoting the same expert that the fairtaxers used, only I am HONESTLY representing his results.
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