Wow, so many whoppers in one article!!
The Democrats will only fight when the total tax take of the Feds is reduced as President Bush has discovered. Wrong. If any tax cut plan helps the *rich* then the Dems fight it.
By the 60's even the most obtuse left wing professors and intellectuals had disavowed the most brutal aspects of communism. You must not have been near a university recently.
According to the I.R.S. 20% of the income is not reported at all and another 6% is not paid. We are looking at 74% reported and paid. What degree of inefficiency must the present system exhibit before a more rational approach is adopted? I would think that a NRST would enourage massive amounts of black market dealings.
When you raise tax on the affluent it increases the total tax take of the Feds, adversely impacting the consumer prices the financially challenged must pay. The impact is disproportionately negative because of their smaller incomes. What kind of a leap of logic is this?
For example if an affluent consumer comes into the supermarket to purchase $100.00 of groceries, she gets $77.00 worth of groceries and leaves $23.00 for the Federal Tax account of the vendor who then uses the $23.00 to feed his own tax account and to recoup the added cost paid to shippers and suppliers based on their higher prices occasioned by Federal Tax liability calculations. I think this description is about the income tax, but the writing in general in this article is VERY convoluted.
I hope that this author gets a better editor.
According to the I.R.S. 20% of the income is not reported at all and another 6% is not paid. We are looking at 74% reported and paid. What degree of inefficiency must the present system exhibit before a more rational approach is adopted?
I would think that a NRST would enourage massive amounts of black market dealings.
It is the high marginal tax rate coupled with the capacity to avoid income reporting through cash dealing that makes "black market dealings" profitable under the income/payrol tax system >35%. How would an NRST at 23% accross the board be any worse?
What you are over looking is the point of the article, all taxes plus the cost of compliance with the tax code are currently embedded in the price of all goods and services. Remove the taxes, and the impact of code complexity from conducting business, the nominal cost of production and shelf price of consumer goods can fall on the order of 20-25%.
Replacing the income/payroll tax system with an revenue neutral equivalent of 21-23% of the total payment for goods and services merely leaves the payment by the consumer constant with regard to the present system.
Under the income/payroll tax system an individual may evade reporting and paying federal taxes on their own. Under a Retail Sales tax, where the selling business is held liable for remitting taxes on sales and the customer merely pays the business, there is little incentive for a business to risk legal exposure by not paying the tax paid by the customer. Under the income/payroll tax it only takes one person to avoid the tax, under an NRST, it takes both a buyer and sell in collusion to evade the tax.
Enforcement, need only concentrate in the 20% of companies with 80% of the retail sales dollars to assure the same level of compliance as available in the income/payroll tax system. A large company is not about to risk it's capacity to do business by not collecting taxes from customers and remitting them to the state tax authorities, especially when the business is compensated for collecting that tax.
What kind of a leap of logic is this?
A pretty good one actually. Taxes & the costs of complying with them get passed on by business(the affluent being the owners thererof) and embedded into consumer prices, the point of the article remember?
Under the income/payroll tax system, those in the lower wage brackets not only get hit with income and payroll taxes at the front end reducing their discretionary income, they must expend nearly all they receive merely surviving with little to nothing left for investment above and beyond a hand to mouth existance. As a consequence the current income/payroll tax system impact the lower income brackets in a disproportionate manner, in comparison to those better off who have something left for investment after meeting survival requirements.
I think this description is about the income tax, but the writing in general in this article is VERY convoluted.
No it is about the combination of Federal income and payroll taxes as well as the costs associated with complying with them.
Consider, 23% taxes plus costs of compliance with those taxes, (removing the effect of taxes passed through to wages and dividends) are embedded with in the at price paid at the cash register. Remove those costs and taxes, $77 actually goes to paying for the goods(where no business income or payroll taxes are present).
I also refer you to the section of the following article about the Income/Payroll tax system and its impact on our economy "A. Hidden Upstream Taxes. " paragraph 39.
"[39] Dr. Dale Jorgenson, Chairman of Harvard University's Economics Department, believes that the price of goods and services are inflated by about 20 percent or more by upstream taxes consumers ultimately bear. In a recent paper Dr. Jorgenson estimated the built-in taxes contained in the price of goods and services. /22/ In the chart above, he quantified the hidden component of tax, estimating that producer prices would fall on repeal of upstream taxes an average of about 22 percent."
Looking at the accompanying chart, the range of values from industry to industry appears to be about 12-25%.
Economists Gary and Aldonna Robbins of the Texas-based Institute for Public Policy examined the case of dry cleaning a shirt, with a particular eye toward uncovering the hidden costs of taxes in price.
The Robbin's attributed over 33.6% of "consumer prices" to be due to federal taxation passed on to the customer.
The Federal Tax System
http://www.cbo.gov/showdoc.cfm?index=2125&sequence=0&from=1#pt1
From the Table 1 we may extract the proportionate contributions of each sector of taxes as they contribute to consumer price for the year 2000.
Those tax components which will not change prices as a consequence of enactment of HR2525
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Adjust for a conservative $600billion(1995 figure, AGCA '00, Payne '95, PillaBartlettNorquist '95 ) interest & cost of compliance effects.
Estimated change in consumption prices as consequence of enactment of a National Retail Sales Tax, repealing all business income and payroll taxes:
33.6*(1186.5/1945) = 20.5% in consumption prices
Which compares well with the Jorgenson empirical study of 22% fall in producer prices.
The two sources are in reasonable agreement, and I see 20-23% a reasonable value to expect prices to fall not only for customers here in the United States, but in our exports as well making them far more competitive on international markets.
Remove the impact of the Income/Payroll tax system then implement a 21-23% NRST on all goods and services, the total price paid by consumers at the register remains constant or decreases in comparison with current price levels. Add into the mix, the consumer gets to actually receive full gross pay(no withholding) and compensatory monthly pre-payment of retail sales taxes on the poverty level of goods and services for all legal residents, everyone ends up in a much better economic position than the current income/payroll tax system provides.
I hope that this author gets a better editor.
Some might hope one might become a better reader, looking for the guts of an article rather than style.