Hmmm, Payroll taxes currently make up about 42% of total revenues, get rid of SS/Mediscare that NRST tax rate could very easily be dropped to approximately 11% based on current tax data.AG, the inclusive rate is confusing you again. You can't do percentages like that with the inclusive rate (you could with the exclusive rate). Multiplying the inclusive rate by 58% doesn't generate 58% percent of the revenue of the original rate because you are changing the gross payment (taxing the tax).
LOL!
Posting of fantasyland dreams as reality are signs of desperation...or dementia.
So to figure out the NRST rate you just use the "Total Effective Federal Tax Rate"? I wasn't aware that it the NRST rate was calculated that way.
Its not. however total federal tax revenue expressed as a percentage of NNP fair approximation for purposes of estimating tax burden and trends. Of course the HR25 only replaces ~94% of total tax revenues and not the total tax revenue but hey what do you expect of a estimate..
AG, the inclusive rate is confusing you again.
Nah, childs play.
You can't do percentages like that with the inclusive rate (you could with the exclusive rate).
Sure you can. You just include the total federal tax revenues in the base, just as Taxfoundation does in calculating percent of NNP for its estimate of effective federal tax rate.
In repealing a portion of the tax (such as payroll taxes in the repeal of Social Security) the dollars released from tax revenues merely return to the economy spuring economic growth and a larger consumption tax base with a lower tax burden.
Maybe you should consider switching to avoid confusion.
The only confusion is that which you would like to introduce by using a state tax measure instead of maintaing a tax base consistant with the taxes being replaced.
Since you seem to think the use of tax inclusive measure is so confusing, prehaps you need a bit of education as to what the terms are about.
It certainly appears that you do have a problem in you understanding when you say things like
doesn't generate 58% percent of the revenue of the original rate because you are changing the gross payment (taxing the tax).
When the dollars available for consumption increase with the repeal of a tax, the economy grows in supporting lower rates than one would otherwise calculate. Using an improper substitutions and static analysis not account for releasing dollars for personal consumption out of the of federal tax revenue decreases is a common oversight when not thinking in terms of the whole instead of just a fixed consumption bucket to calculate static but erroneous rates from. Using the total dollars expenditure in tax inclusive measure helps to avoid that kind of error in calculating rates.
In anycase it appears you need a refresher as to the difference between tax-inclusive and tax-measures and why it is important to select the proper one to measure tax burden on total resource, as opposed to merely tax amount adding to a fixed price.
The Wrong Camera: The Denominator of the Tax Incidence Equation. Dan R. Mastromarco; LLM, Argus Group, Washington D.C. Tax Analysts Document Number: Doc 1999-32575 Citations: (October 8, 1999) B. Use a Consistent Size Screen to Portray It. [118] When considering the rate of a national sales tax, or any tax for that matter, one must always decide which of two distinct means of portraying this rate -- the "tax-inclusive rate" or "tax- exclusive rate" -- best expresses the tax burden. Which one we employ changes absolutely nothing in terms of the taxes that are actually raised or paid by the taxpayer under the taxing regime examined, in the same way that measuring a journey in inches or meters does not change the distance. However, how the rate is presented changes how the relative tax burden is perceived by those who wish to compare the merits of competing tax proposals. Confusion results when we compare alternatives under different measuring scales. [119] The sales tax is particularly susceptible to this confusion because state sales taxes are normally expressed on a tax- exclusive basis, while income, estate, and payroll taxes, as well as the Flat Tax and other VATs, are normally expressed on a tax- inclusive basis. If we were to express a sales tax rate as a percent of the product price as is done in the states, we would be unfairly overstating the burden of the tax when we compare it to what it is meant to replace at the national level. Or conversely, we would be greatly understating the relative burden of the federal income and payroll taxes for those who don't have time to learn the different measuring systems. [120] Presentation of a rate of tax on a tax-exclusive basis simply means that the rate of the tax is expressed as the tax paid over a base determined after the tax was already imposed (for example, taxable income under our personal income tax system that is net of the tax). In other words, a tax-exclusive rate would be defined as: $ tax paid [121] The rate therefore reflects the ratio of taxes paid to what is left in the base, such as net of tax income. [122] On the other hand, defining the rate of tax on a tax- inclusive basis simply means that the rate of the tax is expressed as the tax paid over the base before the tax has been imposed. In other words, a tax-inclusive rate would be defined as: $ tax paid [123] Since the base of the tax before the tax is imposed is always more than the base after tax (the denominator is greater), expressing the tax in a tax-exclusive way will always yield a higher rate. In other words, it will express the tax as having a higher burden. /56/ [124] Let us take the following example.
[125] Clearly, one might say that the income or Flat Tax rate is the lower rate, 20 percent, since the taxpayer paid $200 on $1,000 of pretaxed income. That is because the income tax and VATs are normally looked at (unquestionably looked on) on a tax-inclusive basis. However, when we view traditional state sales taxes we might say that the state sales tax rate needed to raise $200 of revenues is 25 percent, even though the sales tax rate raises the same amount of revenue as a 20 percent tax-inclusive income or Flat Tax rate. The taxpayer would be considered to have paid the tax at a 25 percent rate since the taxpayer paid $200 of tax on $800 worth of goods exclusive of tax. That is because the state sales taxes are normally looked on on an after-tax or tax-exclusive basis. To use our formula for tax-exclusive representation: $ tax paid or, $200/$800 or, 25 percent. [126] Which is the correct way of expressing this rate? To the casual observer, it is obvious which tax to prefer. All else being equal, one would prefer a 20 percent rate over a 25 percent rate. But that same person may be surprised to find out that they are saying the same thing, and paying the same tax. [127] The problem with using a tax-exclusive basis for determining the rate of a national sales tax and a tax-inclusive base to portray the income tax is that it can be very misleading. Let us look at a taxpayer who is at the top marginal rate under each taxing scheme. The tax-inclusive and tax-exclusive rates would be compared as shown in the charts just above and just below. [128] In the tax-inclusive chart, we see comparisons that we are used to seeing. This chart reflects the maximum marginal rate of the current personal income tax system as 43.3 percent. /57/ Here the sales tax rate is 23 percent and the Flat Tax rate is 32.3 percent, reflecting the combined payroll and Flat Tax burdens. /58/ But the tax-exclusive chart indicates that the income tax with the payroll tax bears a maximum marginal rate that is 75.8 percent of the tax- exclusive base. Even the federal individual income tax alone reflects a maximum marginal tax-exclusive base of 43.3 percent. According to the chart above, the Flat Tax bears a maximum marginal rate of 47.7. The FairTax plan bears a maximum marginal rate of 29.9 percent. In this chart, the taxes paid are calculated as a percentage of what remains after tax. [129] In making comparisons between alternative taxing systems it is important to ensure therefore that these comparisons are consistent, fair in terms of expectations, and are well explained. Fair comparisons eliminate and do not exacerbate confusion over a relatively critical point as the means of expressing the tax rate. The only means to do so is to ensure that a tax-inclusive rate is compared with a tax-inclusive rate. Footnotes:
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