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Suppose we reach a flat tax...
Self | 07-26-02 | BradyLS

Posted on 07/26/2002 10:12:09 PM PDT by BradyLS

Suppose Government works together to roll back taxes to a 10% flat tax/sales tax. Whatever. States and Municipalities roll back taxes, too. Government does just what it's supposed to by the Constitution. It happens in, say, 20 yeras

Okay, what happens to the buying power of our income? I think it should at least remain constant, which would allow people to save and invest without any problem. But is there a danger that inflation would explode to eat up all the dollars that would return to us? I know it may sound naive or even stupid, but I think this is a real concern if we can successfully produce a flat tax and roll back the tide of government.


TOPICS: Business/Economy; Free Republic
KEYWORDS: income; inflation; taxes; taxreform
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To: BradyLS
A flat or sales tax is the easiest way to reduce taxes and government. When sales tax increases are proposed they are vary difficult to get through- even a percentage point. With the federal income tax you have about half the voting population paying essentially very little to no taxes at all- exactly why Democrats and (yes) Republicans have had no problem creating new entitlement programs, regulations, or government agencies. Imagine if Tsongas won in 92 and instituted the gas tax- there would be an outcry and Washington would be forced to make cuts.
21 posted on 07/27/2002 3:54:41 PM PDT by Fast 1975
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To: lewislynn
So have you read their proposal since what I read shows investment income is exempt from taxes unless it is spent on consumption? Also you incorrectly assume that the removal of all current taxes will have no effect the price charged for a given commodity.
22 posted on 07/27/2002 3:58:43 PM PDT by Libertarianize the GOP
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To: BradyLS
There is no inflationary pressure, because the money supply is the same and productivity is the same. The only thing that changes is who's spending the money.

Increasing savings, if that happened, would also be neither inflationary or deflationary. Savings are invested in capital projects and the economy grows.
23 posted on 07/27/2002 4:08:54 PM PDT by Ramius
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To: Jesse
The RINO party

There is NO such thing as The RINO party. However there are some RINOs in the Republican party, just as there are some DINOs in the DemocRAT party

24 posted on 07/27/2002 4:13:58 PM PDT by Kaslin
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To: Libertarianize the GOP
So have you read their proposal since what I read shows investment income is exempt from taxes unless it is spent on consumption?

If by proposal you mean the actual bill...yes I have, and you need to read IMPLICITLY CHARGED FEES FOR FINANCIAL INTERMEDIATION SERVICES

Also you incorrectly assume that the removal of all current taxes will have no effect the price charged for a given commodity.

I didn't say it wouldn't but to say matter of factly it would, would certainly be incorrect.

What I did say is their 23% rate is tax inclusive "of the gross payment". and would increase whatever base prices are by 30%+.

In other words in a state with a 7% sales tax for example, a $100.00 before tax price would be :

$100.00 + 7% = $107.00
$107.00 + fairtax = $139.00 (gross payment)
$139.00 (gross payment) minus 23%(gross payment tax) = $107.00

On that item you would have paid 32% (not 23%) tax on the $100.00 item.

Don't beleive it's a gross payment tax?

`(b) RATE-

`(1) FOR 2003- In the calendar year 2003, the rate of tax is 23 percent of the gross payments for the taxable property or service.

It gets worse. If you like Social Security bureaucrats "determining" the tax rates you'll like the fairtax.....

As I said, I've been beyond their rhetoric and read the entire bill......

25 posted on 07/27/2002 4:44:17 PM PDT by lewislynn
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To: lewislynn
Your links don't work.
26 posted on 07/27/2002 5:36:25 PM PDT by Libertarianize the GOP
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To: Libertarianize the GOP
Try This and This If those don't work read the whole thing
27 posted on 07/27/2002 11:43:42 PM PDT by lewislynn
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To: Kaslin
When the percentage of RINOs exceeds true republicans, then it is the RINO party.
28 posted on 07/28/2002 11:56:37 AM PDT by Jesse
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To: BradyLS
Okay, what happens to the buying power of our income?

The problem is, if a flat tax is implemented, it will be implemented in a way that still brings in roughly the same amount of revenue as before. That is because politicians believe that government spending is inelastic. The primary benefit of a flat tax, IMO, is that it would vastly simplify the tax code, and more corporations, businesses and individuals would make their financial decisions on what performs the best, instead of having to factor in what provides the best tax benefits. It would also reduce the ability of politicians to pander by offering tax breaks.

29 posted on 07/28/2002 12:03:27 PM PDT by dirtboy
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To: BradyLS
I think abolition of the IRS is the only way to get out of deflation at this point. the accrued costs of tracking everyone and their cash have simply succeeded in tying industry and the economy in a knot. Our economic pre-eminence in the world was established prior to computerized tracking of everyone's details-and such freedoms in the long haul are a prerequisite for economic leadership.
30 posted on 07/28/2002 3:09:07 PM PDT by mo
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To: BradyLS
go to www.nesara.com....
31 posted on 07/28/2002 3:10:25 PM PDT by mo
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Comment #32 Removed by Moderator

To: lewislynn
I have not bothered to read the bill because the people representing it have been unable to answer some specific questions and so it seemed to me to be a working draft not a final plan. All bills are modified as they proceed through the Legislative process and so the current bill is unlikely to be the final version.

If as advertised the National Retail Sales Tax is revenue neutral then initially it will have no affect on the net amount of money available for the purchase of goods or to invest. Taxing consumption while not taxing investments should lead to a shift away from consumption and towards investment. With the rebate for necessities, necessities will have a net decrease in cost because taxes will no longer be included in the price. Beyond that you can argue that some prices will have a net increase or decrease depending on the difference in the percentage of the cost due to taxes.

Every thing I have seen or read says interest is exempt so where did you find different info?

Gross payment tax in some ways is typical Government in trying to make numbers look better but it is a true representation of the percentage of the payment that is spent to fund Government.

I prefer the National Retail Sales Tax because it will allow for the easy flow of Capital to where it can be most efficiently used. Current income and Capital Gains taxes discourage the sale of assets and reinvestment because the new investment has to justify the loss due to taxes paid.

33 posted on 07/28/2002 8:31:43 PM PDT by Libertarianize the GOP
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To: Libertarianize the GOP
I have not bothered to read the bill because the people representing it have been unable to answer some specific questions

That should tell you more than you want to hear...What are your questions? I'll bet I can answer them using their bill or papers written they choose to ignore.

With the rebate for necessities, necessities will have a net decrease in cost because taxes will no longer be included in the price. ...How do you guarantee that?...Government imposed price controls?

There is not a "rebate for necessities". The "rebate" based solely on family size is the same for everyone everywhere.

`SEC. 301. FAMILY CONSUMPTION ALLOWANCE.

What are necessities and what do they cost?...Do we ask the bureaucrats at the central government to tell us what is necessary, then to put price controls on them....

Rent would be taxed. Do you think rent is a necessitiy?...Do you think rent for like units is the same everywhere?...Should the central government impose rent control so the rebate will be fair for everyone?

Utilities would be taxed. Do you think utilities are the same price everywhere?

The "sales tax rebate" is included in the tax rate, you'll be getting a little of your own money back...there's no free lunch.

Gross payment tax in some ways is typical Government in trying to make numbers look better but it is a true representation of the percentage of the payment that is spent to fund Government.

Sounds like you're making excuses for fraud in the government to me.

Every thing I have seen or read says interest is exempt so where did you find different info?

In the bill. That's why I suggest you read the bill. That's where you'll find the truth. If what you say is true (we know it is) the bill would be changed in it's final version. Then what makes you think it'll be better than their dangling carrot?

From HR2525:

`SEC. 801. DETERMINATION OF FINANCIAL INTERMEDIATION SERVICES AMOUNT.

I prefer the National Retail Sales Tax because it will allow for the easy flow of Capital to where it can be most efficiently used.

The revenue neutral "sales tax" would be a major tax shift directly to the consumer.

I am a small business and I can tell you matter of factly that my business expansion depends on YOU the consumer having more money rather than the other way around. OH, and I, like other businesses am profit driven. If I get tax releif I ain't passing it on to you.....

It's no different than companies moving offshore to avoid taxes or labor costs or whatever...they aren't doing it to lower prices they're doing it to increase profits. Show me one example where it's resulted in reduced prices to consumers.

Companies will not lower prices out of the kindness of their hearts. The only thing that ultimately drives down prices is reduced sales.

We'll have to agree to disagree on the sales tax.


34 posted on 07/28/2002 10:29:29 PM PDT by lewislynn
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To: lewislynn
Two things; interest is not taxed just financial fees, you appear to be concerned that my original forecast of deflation is accurate.

I am a small business and I can tell you matter of factly that my business expansion depends on YOU the consumer having more money rather than the other way around. OH, and I, like other businesses am profit driven. If I get tax releif I ain't passing it on to you.....

Less money chasing the same number of goods will result in you lowering your prices in order to get business and compete with others, deflation. One question that no one has touched is what will be the effect if our economy where to shift slightly from it current consumer driven to a slightly more investment driven economy.

35 posted on 07/29/2002 12:48:58 AM PDT by Libertarianize the GOP
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