Posted on 04/16/2016 11:56:43 PM PDT by JediJones
Arthur Laffer of Laffer Associates reacts to presidential candidate Ted Cruz's tax plan, in which Cruz proposes individuals above certain income threshold pay a 10 percent flat tax, and a 16 percent flat tax on companies.
http://video.cnbc.com/gallery/?video=3000509983
(Excerpt) Read more at video.cnbc.com ...
I hope you understand the futility of trying to inject reason into any discussion with a Trump supporter. Don’t confuse them with facts, their minds (?) are already made up.
congress that wouldn’t have anywhere to hide from a Constitutionalist President.
You must be referring to The Donald. Great choice of word you used “Constitutional” as in Article II, Section 1, Clause 5...
Yeah... I thought so.
I always thought prebating was silly. It perpetuates the idea that government should be paid for by those who can “afford” it, as though government has no value to those living at poverty level. I am no fan of progressivism and that is what the prebate does. Excluding “necessities” is just another form of that, with the whole goal being to untax the “poor” and overtax the “rich”, with government flunkies deciding what is a “necessity”.
I would say the real hangup is the incredibly high rate necessary to replace all other revenues. A high rate and a territorial tax means anyone who CAN choose to spend their money outside the territory WILL spend it outside the territory.
The top 1% earns over $2.5T of income and currently spends that money here because we have no VAT and they would still owe the income tax even if they lived and spent their money elsewhere. A high retail sales tax replacing the income tax would mean they have less reason to stay here and spend here. Without the revenue from a sales tax on their spending, a huge hole is left in the projected revenues. The Fairtax, for example, does not take this exodus into account and therefor expects $500B/yr more revenue than I think it should.
Even for people who stay, the high rate encourages evasion that a small rate applied at stages and embedded in prices would not allow. The Fairtax writers consider a high rate at retail to be a “feature” because it makes the high cost of government visible. I do not think they adequately (or at all) account for legal avoidance (expat) and illegal evasion in their revenue expectations. I started out as a Fairtax proponent and donated a lot of money to the campaigns of the sponsors in Congress, until the psychological effects really sunk in. The fact that pre-tax prices should be lower would not offset the psychological effect of a 29% sales tax.
I’d rather government not make those kinds of decisions. Not to mention that “deciding” how much each individual should “need” would be anything but “simple”.
5% for everybody and every business is plenty simple enough.
Let the complexity fall on the importers rather than the rest of us. Reciprocal VATs, duties and tariffs encourages trading partners to minimize their own.
You understand that “gazillionaires” are generally people in a position to pass their taxes onto others, right ?
Raise tax rates on CEOs and investors in order to lower tax rates for the middle class and you just see higher prices to pay higher CEO salaries and higher dividends to investors.
Why not, when the middle class consumers now have more money to spend due to their own lower tax rates ?
Attempts to “tax the rich” are a red herring.
Kellis91789 remarks on an aspect of VATs ...
[quote]
GRTs is that a GRT cascades and accumulates with multiple stages of production if those are separate entities.’
If I understand correctly, I had brought up that concern earlier and received this response [which I posted earlier] ...
~~~
[Babwa wrote how Cruz avoids ‘double counting’ — very clear description here.]
A problem with counting all business revenues is that it ends up being a double-counting. For example, suppose you love watching Disney movies on Netflix. Netflix gets revenues from your subscription, and then it uses some of that money to pay Disney for the rights to Disney content.
If we counted that money both at the Disney level and the Netflix level, we’d end up taxing the same basic product twice, merely because it involves two different companies. This is not good tax policy; that’s why modern tax systems try to avoid this.
The way the subtraction-method VAT fixes this is by, well, subtraction. Under this kind of tax system, Netflix would count all of its revenue, but then subtract the amount that it pays to other businesses, like Disney. Disney would then have to account for its own revenue and also file taxes. The result is that everything gets neatly single-counted, and nothing gets double-counted.
There’s also one other thing the tax subtracts: capital costs. That is, when Ford builds a new auto plant, it can deduct those business costs as well. This is an important aspect of the tax, and it marks a slight difference with corporate income taxes today (which also allow these costs to be deducted, but over a much more complicated schedule.)
http://taxfoundation.org/blog/ted-cruz-s-business-flat-tax-primer
— Babwa
Some nations are incentivized to consume rather than save.
Other nations are incentivized to produce and save.
For example — free trade has a terrible batting average that encourages more consumption and lags behind in production.
~~~
Pat Buchanan:
Academics revere Adam Smith, David Ricardo and Richard Cobden.
But none of them ever built a great nation. Patriots look to Alexander Hamilton and those post-Civil War Republicans who built the greatest national industrial powerhouse the world had ever seen.
Indeed, what great nation did free trade ever build?
As father of a united Germany, Chancellor Bismarck said, when he decided to build Germany on the American and not the British model, ‘I see that those countries which possess protection are prospering, and that those countries which possess free trade are decaying.’
[unquote]
http://www.freerepublic.com/focus/news/3399142/posts
So which court has found against Cruz’s eligibility.
Yeah I thought so.
The Supreme Court is the only one that will matter and that won’t happen unless the fools in Cleveland put Dirty Ted forward, which won’t happen. The entire nation perceives hims a dirty dealer. But if he is the candidate, he will be challenged by the slate of Judges that Hillary has on speed dial, and who have already agreed to run it to the supremos... and since Scalia is gone... it is guaranteed the end of the line for Ted, and the republican party as we have known it.
Teddy will not be the nominee for that reason, even if it was the only one. But of course, it is not. His negatives are up, his approvals are down and that is only going to grow as NY comes in tomorrow with the entire NE going against Ted, and for Trump, and some of would be Ted support will now be going for Kasich...
But regardless of how well Trump does Ted will have his delegates move within the construct of the GOPe to vote for raising the required delegates to whatever is necessary to stop Donald.
Which is why Teddy and his GOP e Bush Buddy planning staff whom Ted hired, need to go bye bye.
And they will.
Keep repeating trumpies lie about cruz all you want. You must enjoy being manipulated by this scammer.
The idea that it is “double counting” is incorrect — in that a PORTION of the amount is taxed at each stage rather than simply “twice” as “double” implies. So a tax may be applied to portions of a product a dozen times if that is how many stages of production and distribution it goes through before it is purchased at retail. That makes it sound worse, right ?
But consider that payroll and profit taxes are currently being paid at each stage of production and distribution for that product. There is no “credit” given to a manufacturer for the payroll taxes and profit taxes paid by the supplier of the components.
[ This is not good tax policy; that’s why modern tax systems try to avoid this. ]
This statement is simply untrue unless you want to count Corporate and Individual Income Taxes and Payroll Taxes as not being “modern”. There is nothing inherently wonderful about only taxing an item once, unless your goal is to have a huge tax rate be visible in a “starve the beast” strategy like the FairTax does.
I would note that the high VAT rates in Europe of 19%+ (which is all the consumer sees) do not seem to have achieved a reduction in government spending there. There has been no “starve the beast” strategic success there. Instead, it provides a huge incentive for the consumer to evade the VAT. I know people in Europe who buy Home Theater gear in other countries and have it shipped to them labeled “Birthday Gift” and their home country gets zero revenue from that purchase. If there had been a 5% GRT rather than a 19% VAT, the incentive to evade would not be enough to bother with such foreign purchases, shipping and risk.
BTW, did you notice the deduction/subtraction of capital costs ? That is the government making decisions about what is “good” business practice. Politicians and bureaucrats have no expertise at business. There is an assumption that capital investment is good when it may or may not be the most efficient way for a particular business to succeed. Why should a business that buys a bunch of equipment to increase production get a tax break that another company who spent that same amount on more/better labor did not get ? Let businesses invest in capital, r&d, employee benefits packages, etc. because it is the best decision for THEIR business and not because it carries a tax benefit.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.