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Locked on 02/18/2008 10:17:33 AM PST by Religion Moderator, reason:
Childish behavior |
Posted on 02/16/2008 3:30:21 PM PST by xcamel
One solution to the nation's long-term fiscal problems that has gained support in recent years is the idea of replacing all federal taxes with a 23 percent national retail sales tax called the FairTax. Unfortunately, the administrative problems inherent in this proposal make it impossible to take seriously, says Bruce Bartlett, former deputy assistant secretary for economic policy at the U.S. Treasury Department.
For example, under a FairTax scheme: A worker now netting $800 per week would immediately get a $200 raise and start taking home the full $1,000 gross wage that he is paid; instead of paying income and payroll taxes, workers would pay their taxes when they buy things.
The FairTax would impose a 23 percent tax on all goods and services (this is not really correct, but for now we'll accept it at face value for analytical purposes).
Whether he is better off or not depends on what his effective tax rate is: Assuming he spends all his income and no more than that, he will be no worse off if he now pays 23 percent of his income in taxes. That is, his effective tax rate is 23 percent; in this case, the FairTax is a wash, the worker is no better off or worse off in terms of taxes than he is now.
But what if the worker is now paying less than 23 percent of his income in federal taxes? In this case, he is clearly worse off, says Bartlett: The prices of the things he buys will rise by more than his income rises from the elimination of income and payroll taxes. Conversely, if one is wealthy and in a tax bracket above 23 percent, that person would be much better off. His income and payroll taxes would fall by much more than the prices of goods and services he consumes would rise.
Source: Bruce Bartlett, "Why the FairTax Won't Work," Tax Notes, December 24, 2007.
For text:
Examples:
But what if the worker is now paying less than 23 percent of his income in federal taxes?
Less than 23% in federal taxes on income means the worker filing as single has to be paying less than 23 - 7.65 (SS/MC) = 15.35% in income taxes on ***taxable*** income of less than $37,060:
http://www.irs.gov/formspubs/article/0,,id=164272,00.html
For 2007 tax tables:
T = Taxable Income
Formula: $4386.25 + .25(T-$31,850) = .1535T ==> T =~ $37,060.
Adding in the standard deduction of $5,350 and personal exemption of $3,400 brings the gross pay to $45,810 or about $23 per hour rate. That's par for an electrician or pipefitter.
But! The FairTax rebates this worker 23% of DHHS poverty level of $10,210 or $2,348!
Assuming reasonably as brainless Bartlett does that all taxable income is spent or $37,060 is spent, the NRST paid is 23% of $37,060 or $8,523.80. Next subtract the rebate of $2,348 and the net NRST consumption tax paid is $6,175.80.
Under the FairTax our worker pays net $6,176 in federal tax whereas under the Income/Payroll tax system he pays:
SS/MC Payroll tax of 7.65% of gross $45,810 =~ $3,504 Income tax FICA 15.35% of Taxable $37,060 =~ $5,689
for a total of $9,193.
This bit of arithmetic is too much for the density of Mr. B's cranial capacity.
In this case, he is clearly worse off, says Bartlett:
Uh huh....
The prices of the things he buys will rise by more than his income rises from the elimination of income and payroll taxes.
I guess estimates by leading economists above this neaderthals' paygrade of federal embedded taxes of between 22% to 23% just wooshed past his attention span.
Conversely, if one is wealthy and in a tax bracket above 23 percent, that person would be much better off. His income and payroll taxes would fall by much more than the prices of goods and services he consumes would rise.
Yes, of course Comrade Bartlett. We must preserve our Marxist Income tax to ensure all those well-heeled doctors and lawyers are kept in check even if we must hurt the electrician and pipefitter. We must all be miserable together. After all it is the way of America! (not necessarily the 'American way', which more and more are forgetting as they march to a supreme nanny state in a world of socialism).
The only point this nimrod made that prevents assigning a full 'F' on this dismal effort of his is that he used the inclusive rate of 23% in comparison with the inclusive income and payroll tax structure. But he could not help sniping that it wasn't really 23%. Of course it is 23% if one is using the full denominator and it's 29.9% if one uses the exclusive or net denominator.
Bring it on Bartlett! If you are the best that that K-Street can put up against the mighty FairTax then 2013 is going to be a cakewalk!
American manufacturers under the ingeniously innovative uniquely American FairTax are going to kick some major @ss across the globe!
The FT is revenue neutral.
Taxes don't compound.
Where are you getting your numbers?
Back to attacking people right out of the box. You never learn, do you.
Just wondering if you ever depart from rhetorical posturing?
Mighty? Only as a web cult.
That's what the FT claims.
Hitler wrote a book too.
This just proves you don't know what you are talking about. Neal Boortz wrote a book but he didn't come up with the plan.
The origins of the FairTax began with a group of businessmen from Houston, Texas, who initially financed what has become the non-partisan political advocacy group Americans For Fair Taxation (AFFT).
He also ignored the prebates.
Hint: "read the book" isn't an answer to anything.
The Fair Tax supporters will destroy the USA faster than the DEMs....that is the cold truth of the matter....FT is one of the worst ideas ever to thought of by mankind’s brain....
don’t believe so..you’d have to show me where you learned this..the tax is inclusive within the $, not added on..So it's really a hidden tax Fairtaxers pretend to despise?...don't believe so..you’d have to show me where you learned this..the tax is- not- inclusive within the $...That would be unlawful. (since when does "$" mean price?)
btt
“It’s a non-starter.”
Even at 23%, I will barter and hoard.
No, it isn't.
... instead of the mostly single digit sales tax we have today.
The Fair TAX IS NOT, nor is it claimed to be, " instead of the mostly single digit sales tax we have today."
“Fair Tax” proponents use 23% arguing that’s how income tax is calculated today ....
That is not even close to the truth.
...but when people realize that 30 cents will be tacked on to every dollar they spend (i.e. it’s really 30%), the research shows that they will balk at the idea.
If they don't know anymore about what is going on now versus wht the FAir Tax wil be than you do, they sure will balk at it. But if they find out the truth about it all, they will prefer it to the unmanageable thievery that is going on now with the Income Tax setup.
The FT will punish barterers.
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