ANOTHER UNINFORMED FAIRTAX CRITIC

Nelz Nuze ^ | May 6, 2009 | Neal Boortz

[Turret Gunner A20]

... and this time it's none other than Dave Ramsey. The FairTax is a bold proposal. It is only natural that people are going to try to criticize it. Is it too much to ask for these people to do at least a modicum of research so that they at least appear to know what they're talking about?

This time the culprit is Dave Ramsey. I like the guy, and I like his approach. His sermons on living debt free are right on, and no doubt he's helped millions of people to improve their financial. OK .. mighty fine. But now he's taken it upon himself to opine that the FairTax simply isn't, in his words, "fair."

Let's take this quote from Ramsey's article: "People would only pay taxes on items they buy, except for food, basic clothing and other kinds of necessities." Most of the FairTax supporters know that this is just flat-out wrong. The explanation is incomplete.

If Ramsey really was informed on the FairTax he would know that you pay taxes only on items that you buy at the retail level, and that food, basic clothing and other kinds of necessities are included. Ramsey would also know about the prebate. He would know that every household in this country --- that is, every legal household --- would get a credit or check from the Treasury Department every single month equal to the FairTax they would be expected to pay on the basic necessities of life during the following month. This FairTax prebate is so essential to the FairTax plan that to ignore it, or to be unaware of it entirely, is worse than careless.

Ramsey also writes of the FairTax "This means it's more of a burden on poor people, because they would pay a higher percentage of their overall income."

Sorry, wrong. The poor, poor pitiful poor would pay virtually nothing - zero percent of their income - to the federal government. [ALERT! Brilliant thought follows!] To pay any taxes at all to the feds the poor would have to spend above the poverty level. If they're doing that ... they're not poor. Pretty easy, isn't it?

I wonder why Dave Ramsey doesn't get it? Is there a chance he just shot from the hip here without doing any real research? The FairTax deserves better than this flippant, uninformed treatment.

Dave Ramsey could be a good proponent of the FairTax. He's very bright, and he would recognize the beauty of this plan if he just would take the time to actually study it. Knowing what you're talking about .... Is that too much to ask?

Weird, this audio clip on YouTube seems to show Ramsey supporting the FairTax. Huh. Maybe he's lost changed his mind since that was recorded.

[Hostage]

Still waiting Filo!

Did you give up?

You should. Because you dug yourself into a hole that you cannot climb out of.

Here I will answer for you since you have wisely chosen to give up.

From this link:

http://www.nytimes.com/2008/07/30/us/30homeless.html

the number of chronically homeless is less than 200,000. Let’s say they all get a rebate of $196 per month, the maximum allowed for an individual using the 2007 poverty line.

And assume that these homeless don’t spend one dime on NRST taxable items, so they keep all of their rebate of $196 and if they spend any of it, they spend it on NRST non-taxable items such as used blankets, clothes, etc.

200,000 x $196/mo. = $39.2 million per month or 470.4 billion per year, less than a half billion.

Now if any of these 200,000 spend any of their rebate on NRST taxable items such as food or rent, then the amount above of $39.2 million will be much less.

But as there is no source for more people living in such squalor (having less than $392 per month to spend for all necessitities), then the only way you can justify the existence of ‘millions’ of such people is to ‘imagine’ them into existence.

Isn’t that true Filo?

You have to ‘imagine’ millions collecting more revenue than they create by retail spending, right?

Yeah, you have to ‘hallucinate’ these millions into existence, right?

Yeah right! Damn right!

In order to back up your claim that the FairTax Rebate is a massive socialist wealth distribution scheme, you have to ‘hallucinate’ millions of people into existence that would be taking more in rebate than they every generate through consumption.

And these people do not exist! Except in your mind!

Ergo, the FairTax is not a socialist wealth distribution system.

[Ted Grant]

I’ve never been satisfied by any Fair Tax advocate’s answer to the issue of double taxation of post-taxed savings.

Unless that hole is filled, I can’t back the so-called ‘Fair Tax.’

[Hostage]

How much have you put into after tax savings or retirement? Approximately?

[xcamel]

It’s pointless to argue with them. The **are** the koolaid.

[Hostage]

You have no argument to begin with. The only thing you can fall back is “Koolaide drinking” or “the FairTax is a ‘crock’”.

These are no words and phrases used in argument. They are street terms to express frustration at getting an imagined point across, a point that does not exist.

[xcamel]

Why, because your tax plan will indeed stage the second largest theft of wealth in history, outside the obama administration?

[Ted Grant]

My post taxed savings, in cash, is around $ 550k.

[Ted Grant]

Not counting investments I have made with post-tax money. Just liquid resources.

[Hostage]

Says who? You?

You have no argument, just a bunch of spew.

No credible backup, no credible references, only a few fellow idiots that join you in your collective nonsense.

There is no ‘theft’.

You pay the NRST with your purchases and from that NRST you get a rebate. No ‘theft’ involved.

[Hostage]

How much after-tax savings? $50,000? $100,000? Give an approximation or an example.

[Hostage]

Ignore Post #290. I saw your previous post.

$550k.

[Hostage]

What kind of after-tax investments?

What do you plan to do with the $550K?

[Ted Grant]

Stocks, bonds, CDs.

I’m undecided on how I will spend my savings. But when I spend it, under the Fair Tax, it would be subject to Federal taxation again.

[xcamel]

exactly... at 30% once you can finally enjoy the fruits of your life’s work...

[Hostage]

Here’s how I look at my after-tax cash and portfolio.

First, part of my wealth is the ‘growth’ portion from original after-tax principle amounts. For example, $100,000 put into a Roth IRA is now worth $250,000. Only $100,000 was taxed.

The same with stock if we are lucky enough to not have a paper loss in today’s market, I would look at my initial after-tax investment of say about $1 million and see that it has grown to $2.5 million. So $1.5 million is not after-tax, it is untaxed. And under the FairTax, the $2.5 million will have no cap gain, and $1.5 million will be taxed for the first time if it is spent on retail.

So I am looking at having $230,000 of the the original taxed amount of $1 million be given over to the federal government. And at this level of wealth, the rebate doesn’t matter much.

But what would I buy for $1 million? Would I draw on it in retirement for living expenses? Living expenses would not be large expense items for me so the Rebate would mean something then.

Would I buy real estate? New or used?

If I buy a beautiful new home for $1 million, I will see $230,000 go to the federal government. But as it stands now, if I buy the new home, I am paying everybody in the supply and production chain and the builder, I am paying all their federal taxes associated with bring that home to market. Numerous analyses put those taxes at 20%.

On the other hand, if I buy outside the USA, I will probably pay little if no tax at all on the purchase of new real estate, except for the embedded taxes of the building and suppliers, etc.

And that is how it stands for any major new purchase.

Now what might be feasible to overcome this double taxation objection is to include a provision that those withdrawing from a Roth or from documented after-tax principle amounts only (not growth), that they can present a certified letter from their bank or retirement account, and be exempt from paying the NRST, except for a ‘glitch’.

This ‘glitch’ is exemplied as follows. To build a home under the FairTax, it will be less costly, there is no doubt because all the present taxes will be gone. Costs will be lower all up and down the production and supply chains. A stud at Home Dept selling today for $2 retail will be priced on the shelf at $1.60. Adding in the 29.9% NRST exclusive rate will bring its purchase price to $2.08. For a builder it will be much less.

In other words, new homes will not cost as much to build under the FairTax. They will be sold at roughly the same price as today because the NRST will be added.

That means when you spend your after-tax savings on new items, your price will not be much more. So there is an argument against giving you and me a huge tax break via exemption.

If I or you want to buy a new home with our after-tax principle, we may petition the FairTax legislation for an exemption but we may also have to get cost appraisals on the new property comp’d with similar used properties to show we are not getting hammered twice.

Follow?

[lewislynn]

And so it is that a person’s FairTax rebate will also come from tax revenues! Eureka!

Great,under the Fairtax everyone will have more money to spend than they earned .

Lunacy, ignorance or Obama socialist logic...you choose

[Hostage]

Yeah just like our tax refunds today. We get more money to spend.

Yeah a person’s FairTax rebate will come from tax revenues, taxes that they have already paid in consumption. That’s why it is called a ‘rebate’, a refund of taxes the person paid spending up to the poverty line.

Only I won’t be getting my tax refund once a year, instead I will be getting my tax refund once a month.

But you are wrong to say that the FairTax rebate comes from money not earned. It comes from money already spent. It is a refund of taxes paid when spending; i.e consumption taxes.

Now if you think it comes from money not earned, then you are fixated on earnings, on income taxes. And we know that is what you hoping to preserve. But where someone gets their money to spend is not relevant because it is not what they earn but what they spend that is relevant. Are you going after foreign tourists visiting and spending in the USA? Why do you care where they got their money?

I know that people won’t be getting more rebate than they spend, unless they are homeless bums.

And you did not respond to my previous post to you.

That means you are without argument, you have no points to make, just nonsense and sniping is all you are reduced to.

[lewislynn]

Yeah a person’s FairTax rebate will come from tax revenues, taxes that they have already paid in consumption.

If in your mind, paying 6K in taxes from 40K in earnings results in $46K in spending then your stupidity is beyond words...I don't know how else to say it.

[Filo]

the number of chronically homeless is less than 200,000.

Last time, brainless one:

This isn't about homeless, although they fit into the category.

This is about anyone who spends less than the "break-even" amount for their prebate.

Assuming the accurate $700 a month number I used before (as opposed to your mathematically challenged BS) any individual making under about $8,500 a year falls into this category.

Clearly two-member households under $17K as well, and so on.

From the US Census Bureau, as summarized here the number is far, far larger than the 200K BS in your transparent straw man.

The 2006 numbers appear to be around 9 million individuals and roughly 20% of two earner households.

Again, even if it were just one person the program would be socialist and, therefore, unconstitutional (a debate you ran away from - the first intelligent thing I've ever seen you do.)

So sorry to jump back in, but your BS was too much to take.

I’m really done now. You can keep posting your idiocy for the world to see. I have confidence that the rest of the Freepers reading this can recognize how desperately stupid you really are and how vacuous your “argument” has been.

In the end if this were the only flaw with the FT I might still support it, but it's just one of many. . .

[xcamel]

It is a good day for another FT slapdown... enjoy the welts.