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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:
Hell, you deliberately started that by posting that Bartlett traxh, which has been refuted at least a dozen time over the past mointh or so. AND YOU KNOW IT, BECAUSE IT HAS BEEN POSTED RIGHT HERE ON THIS FORUM.
It is from a tax standpoint. People who barter aren't helping the rest of us pay the expense of government.
Unfortunately FDR gave Americans Social Security. Millions upon millions have been paying into that Ponzi scheme and they expect a return on it.
It is a promise that must be kept.
The FairTax is revenue neutral to stave off fights over budgets. Once it gets enacted and people see the rate, woe to any Congress that attempts to raise it or not lower it.
The FairTax is the correct hand to play. Nothing else will get rid of the corrupt tax lobby that pits group against group while buying members of Congress to be part of their stable.
That’s why you better learn how to fight.
If everyone was a wimp like you suggest, we would have illegal amnesty shoved down our throats by now.
The FairTax is the largest reform movement in existance today and is the fastest growing. It is a People movement and does not depend on political party or political personalilty. It has a life of its own.
The Income tax took 50 years to become legal. The FairTax has only been introduced as the FairTax since 1999. Given its rapid rate of growth, it won’t take much longer to pass, merely a few years.
State sales taxes are calculated using the NET price as a base. Income taxes are calculated using the GROSS income as the base. To compare the two, you need to use the same base. Thats all the Fair Tax people are trying to do. They are trying to be technically accurate.
Here is a question for you: If you spend all of your income on taxable items and there is a 23%(30% by your standards) federal sales tax, what percentage of your income did you spend on the federal sales tax? A) 23% B) 30% C) 18% D) 124%
"The terms ‘wage’and ‘salary’ mean all compensation paid for employment service including cash compensation, employee benefits, disability insurance, or wage replacement insurance payments, unemployment compensation insurance, workers’ compensation insurance, and the fair market value of any other consideration paid by an employer to an employee in consideration for employment services rendered." HR 25 Text
And all the same record retention, audit, lien, collection, etc. stuff will still exist, so why exactly would the Fair Tax be any easier?
Of course there is still the main issue -- if you make your living by providing a service to people, like painting, or plowing snow, or whatever, those people have to pay the Fair Tax in addition to whatever they pay to you, or you can collect and remit the money for them. In either case, your price just jumped by 20% or more. So what happens then? Well you get less business, because when prices rise people buy less. But you need the business, so you have to drop your price - back to where it used to be when you paid taxes. Net effect -- you're right back to where you were, except that now everything you have to buy, like the gas for your truck, or the rent for your house costs a lot more. Some deal!
I'll try to give it a shot....
Right now, income tax is just that - tax calculated and charged based on income. This includes your paycheck, capital gains and investment income, and business receipts, among other things. Now those businesses that get a tax bill based on their sales don't just shovel the money out of their profits; they incorporate that expense into the wholesale cost of producing the product.
Therefore by eliminating that additional 'cost' to manufacture, the item has a lower cost of production leading to a lower wholesale price, leading to a lower retail price. This lower price is then offset by the FT 'sales' tax, resulting in a net zero sum change.
Theoretically, this results in a tax that is applied directly to the country's GNP and collected at the point of sale to the end consumer when dollars are spent. Conversely, what we have now is a taxation system that is disconnected from the GNP and instead taxes dollars as they are earned at a rate determined by how much the government wants to spend over the next year.
Of course, a person would pay a sales tax on goods and services purchased with money he/she took from savings/retirement accounts. As I understand it, the “source” of the money used to make purchases is quite irrelevant.
To me, then, the relevant question would be what else would change (in terms of tax liabilities) for that person under the Fair Tax “system”, and would those other changes offset having to pay the sales tax on such purchases. IOW, would that person be better off, worse off or the same under the different systems?
I’ve heard arguments both ways (pro-FT and anti-FT) and it seems to come down to “whom do you believe?”. Right now, I’m not at all sure who I believe.
If it's in a Roth IRA or personal savings it isn't. Your straw man failed.
They exclude embedded federal and state income taxes?
Nonsense.
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HAHAHAHAHA You wouldn’t know “a rational, thinking person” if one fell off a rood and landed on top of your head.
Liar.
I'd be interested to know which one of those lies do you believe that we believe -- and why do you think so?
179 posted on 02/16/2008 9:05:44 PM EST by Turret Gunner A20
If you are referring to the Fair Tax, you haven’t the slightest idea of what you are talking about.
Oh, I forgot -- you don't know how to do anything else.
I am not sure the FairTax would work, but...if this guy wants anyone to take him seriously, he should at least honestly present the numbers. He omitted the prebate, which is going to change the calculations at the low end.
Fine--Let's calculate the FairTax your way. FairTax is 30%. Then the IRS rate calculated the same way is also 30% of what's left after taxes.
Now are you willing to discuss the merits of the FairTax? Or are you just trying to avoid defending our current income tax because you would be immediately recognized as irrational??
I didn't invent it out of thin air like the FT fake rate. That's how every sales tax in every state has ever been calculated.
Now are you willing to discuss the merits of the FairTax?
Sure. Where does the money for the monthly entitlement payments come from?
So whats the answer to my multiple choice question? You can guess if you have to.
From the taxes collected by the FairTax. This is what undercuts the argument that the FairTax is regressive.
So lets take an example I'm familiar with - a small software company. (The same basic business model applies to architects, accountants, surveyors, and many other knowledge worker types of companies.) The salaries of the employees are essentially the only "cost of production", and the other costs, like office rent, electricity, etc. are unlikely to change much based on the tax regime. In fact the rent increases by 23%, since its taxable, and so does the electricity bill.
Since the employees will now be paying a 23% sales tax in order to keep them happy you're going to have to let them keep what you used to deduct from their pay for taxes. Put another way, you can't very well give them a pay cut when the Fair Tax becomes law. So the business only sees a reduction of its share of the previous FICA and Medicare taxes, which are around 7.6% of the salaries.
So how is it that your selling cost is going to go down by 23% when your cost savings are only 7.6%?
More precisely, if you have sales of 2.0 Million and a payroll of 1.7 Million, then you save about $130,000 in payroll taxes, but your customers have to fork over an additional $460,000. So even if you use all of the tax "savings" to push your prices down, so your sales drop from 2.0 Million to 1.87 Million, your customers still end up paying an additional $430,000 in taxes.
I don’t spend all my income or savings on new retail items.
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