Herman Cain about the Fairtax issue TODAY (3pm ET) on RIGHTALK.com!

I'll go out on a limb here and suggest that ALL employment agreements have an employer as one of the parties.

But all employers and employees don't have binding agreements/contracts...

"But all employers and employees don't have binding agreements/contracts..."

Very true .... which would be very fortunate for most workers in the aftermath of the FairTax's passage. With GDP growth in excess of 10% in year 1 of the FairTax world, businesses will be competing heavily for quality workers. That will exert upward, not downward pressure on wages. It seems to me that you are the one who was concerned about inflation in some of the older threads for just this same reason.

It seems to me that you are the one who was concerned about inflation in some of the older threads for just this same reason.

You're confusing inflation with exorbitant 30% statutory price increases due to taxation.

With GDP growth in excess of 10% in year 1 of the FairTax world

What makes you think that GDP will grow in excess of 10% in the first year?

With GDP growth in excess of 10% in year 1 of the FairTax world, businesses will be competing heavily for quality workers. That will exert upward, not downward pressure on wages.

That, not income taxes, is exactly what's causing outsourcing and the loss of domestic jobs today...So how is that a good thing again?

Add me to the ping list

Guess it's one of them better late than never days ;O)

A Taxreform bump for you all.

If you would like to be added to this ping list let me know.

John Linder in the House & Saxby Chambliss Senate, offer a comprehensive bill to kill all income and SS/Medicare payroll taxes outright, and provide a IRS free replacement in the form of a retail sales tax:

H.R.25, S.1493
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
Refer for additional information: http://www.fairtax.org, http://www.salestax.org & http://www.geocities.com/cmcofer/ftax.html

Go FAIRTAX! FREE AMERICANS TO PRODUCE, ELIMINATE THE IRS/IRC ABOMINATION!!!

There will be no 'fair tax'. Trust me.

My mama, done toll me to never trust strange men.

Granpap always added abit to it from Thomas Hobbes, Leviathan it is fairer to tax people on what they extract from the economy, as roughly measured by their consumption, than to tax them on what they produce for the economy, as roughly measured by their income.

http://www.fairtaxvolunteer.org/smart/faq.html

you will fine these questions addressed among others:
#7 How is the Social Security system affected?
#8 How does the FairTax affect Social Security reform?

#15 What about senior citizens and retired people?
#16 Are seniors taxed twice on savings, once when they saved it, and now again when the spend it?

Corporate income tax is usually small. Profits are converted into investments and investors are paid through capital gain rather then dividends. You are also jumping to the assumption that a reduction in costs (assuming there are some) would be passed on to the consumer as a price reduction.

Hmm seems your overlooking a few things regarding business taxes, like you left out payroll taxes that are repealed in the NRST legislation, and taxes cost business alot to minimize them and stay profitable. That business may not pay a corporate tax to the government at all because of a loss, but will still have all those costs associated with having to deal with the feds and their tax regulations.

Repeal them taxes causing the problems, guess what, business competes for your dollars in the most direct fashion and cost effective way they can, lower price to steal market from a competitor whenever they realise a cost savings.

What is intresting about the NRST is with taxfree saving and investment competing for dollars going to highly visibly taxed products and services, business will have more competition than ever to get them dollars out of your pocket into theirs.

http://www.taxfoundation.org/compliance2002.html

Overhead Compliance Costs

The complexity generated by the growth and constant change of the tax code creates two general types of economic cost: overhead and opportunity cost. Overhead can be divided into three principal activities: the economically sterile exercises of tax planning, compliance, and litigation, all of which act like tax surcharges on taxpayers.

• The first type of overhead is tax planning, which in this context refers to all the economic decisions that individuals and firms make to maximize their benefits in the tax code.

• The second type of overhead, tax compliance, refers here to the basic actions required to file the federal income tax, including record keeping, education, form preparation and packaging/sending.

• The third type of overhead is tax audits and litigation, referring to the cost of the IRS and the Tax Court, as well as all the legal costs that taxpayers incur while dealing with these two government institutions.

Of these three costs, the second, tax compliance, is the only one estimated in this report. It is for this reason that the data presented here should be viewed as extremely cautious estimates of the federal income tax compliance burden on taxpayers.

*** snip ***

The Burden of Compliance Costs

As shown in Table 3, Table 4 and Table 5, the Tax Foundation estimates that in 2002 individuals, businesses and non-profits spent over 5.7 billion hours complying with the federal income tax. Using an hourly cost of $29.98 for individuals and $37.26 for businesses and non-profits, the estimated cost of compliance in 2002 is $194 billion (See Methodology section for details about how the hours and wages were determined)—Individuals bear a cost of $86.1 billion, businesses bear a cost of $102.5 billion and non-profits bear a cost of $5.4 billion. Therefore, the overall compliance cost surcharge alone amounts to nearly 20.4 cents for every $1 collected by the federal income tax.

For the rest we can look to Dr. James L. Payne's [Costly Returns: The Burdens of the U.S. Tax System] with a much more comprehensive evaluation used in my number representing the costs of the Federal tax system to business establishing 65 cents for every dollar of total tax revenue collected, assessing record keeping & forms processing, as well as tax planning, computers and software purchased to fulfill IRS requirements, Enforcement costs, Disincentive costs to production, Disincentive costs of tax uncertainty, Evasion and avoidance costs, Government costs etc.

And

American General Contractor's Association
http://www.agc.org/Legislative_Info/Members_Testify/testimony_04-10-00.asp

To this we must add the shear wastefulness of the colossal compliance costs of the current tax system. To administer the tax laws, the IRS directly employs about 112 thousand employees. The IRS budget is about $8 billion. However, direct expenses of the IRS are not the central compliance problem; rather, it is the expenses that are pushed forward on the taxpayer to be tax collector, tax accountant, and record-keeper.

According to the non-partisan Tax Foundation in 1997 Americans spent no less than $225 billion complying with the income tax. The most recent projections made by the IRS of tax returns to be filed in Calendar Year (CY) 1999 indicate that the grand total, or sum of all major tax return filings, will be 228.2 million. This number is then expected to grow at 1.24 percent annually until CY 2005, when the grand total return count is expected to reach 245.2 million. This does not include the 1 billion information returns that will be filed. In addition, more than 8 billion forms and instructions are sent to taxpayers each year, enough to encircle the globe several times.

Paperwork is the most visible compliance cost, but it is clearly not the only, and perhaps not the largest compliance costs. Return processing, determining liability, recordkeeping and other burdens are an estimated 19 to 33 % of the total revenue raised by the income tax system and 2.0 to 3.5% of the Gross Domestic Product (GDP)[an additional 3% of GDP₁₉₉₉ = $279Billion]. We waste money each year on seeking to avoid taxes, avoid trouble with the IRS, interpret the laws or determining the best course of actions with the laws.

Who pays these compliance costs? You do. The hardest hit segments of our economy are middle income wage earners and business owner. Small corporations in particular endure compliance costs estimated to be several multiples of the tax actually collected. Although duly included in the National Income Product Accounts (NIPA), payments made to tax lawyers, accountants, IRS agents and other tax professionals do not really improve our collective standard of living. These compliance costs are wasteful expenditures, which absorb so much time and energy of American people that they roughly approximate in costs the assets of the entire building industry. None of this is necessary.

Adding to the costs and to unfairness, our tax laws are so complicated not even the common tax lawyer can understand them. There are a number of ways of measuring complexity; one of which is the number of penalties issued and then abated for reasonable cause. There are more than 34 million civil penalties issued each year; more than a third of all small firms receive payroll tax-related penalties alone. More than 50 percent are abated.

The tax system is now so monstrously complex that it is beyond the ability of any one person to understand it. Understanding the system is certainly beyond the reach of most mere tax lawyers, accountants and tax administrators. A system that is so complex must be administered in an arbitrary and unfair way. If no one really understands what the law is, it is impossible to administer fairly and uniformly - and of course, it is not so administered.

Our government embroiled its citizens in more than 35,000 litigation actions. Taxpayers sustained more than 3 million levies. As long as we insist upon an income tax system, the system needs to be complex. The system needs to be enforced with a heavy hand. The system needs to have all of the 34 million in civil penalties. The system needs to be intrusive. It is the price we have to pay for an income tax system.

Perhaps most troublesome, we have gotten little in return for this payment because our current tax system has inspired an increasingly lower level of compliance. Despite the costs of enforcing and maintaining our system, tax evasion is at an all time high. Today's income tax system has invited massive noncompliance. According to the IRS own statistics, only about 80 percent of taxes owed are voluntarily paid -- $200 billion are not. In 1992, the tax gap was estimated to be $127 billion. Taxes evaded continue to be in the range of 22 to 23% of income taxes collected. These IRS figures did not include taxes lost on illegal sources of income. Evaded taxes increased by 67% in the decade between 1982 and 1992. As a percentage of Gross Domestic Product (GDP), tax evasion has reached 2.0% compared to 1.6 % in 1991.

Our current system is also problematic because much of the burden of the current system is hidden from the American taxpayers. Most taxpayers have been taught that an amorphous entity - business -- must pay its fair share. However, they do not understand that businesses are merely a collection of individuals engaged in a productive enterprise. When businesses are taxed, the taxes result in fewer businesses, lower wages or higher priced goods and services if the taxes can be pushed forward. In some businesses, taxes cannot be pushed forward and the owner must endure these taxes. Businesses don't pay taxes, people do; however, the corporate income tax and the employer share of payroll taxes perpetuate this myth.

It is not a harmless myth. The hidden cost of our tax system ensures that Americans remain ever ignorant of the increasing proportion of federal taxes they pay. Taxes are now more than 20 percent of Gross Domestic Product, and despite the claims of tax cuts, Americans pay more now than we have in the history of our nation, including the height of World War II. Upstream taxes only ensure that taxpayers cannot see the true cost of our government, raise the costs of goods and services and ensure more taxes in the future.

There is another problem with hidden taxes. Apart from ensuring the system lacks integrity, hidden taxes buried in goods and services reduce exports, and result in lower profits, lost productivity and a competitive advantage to foreign commodities.

Taken altogether, the true tax burden impressed upon us all through higher prices and loss of productivity exceeded the revenue collected by the govenment by substantially more than the $593 billion estimate of James Payne in 1995:

Town Crier Staff Writer
Clyde Noel : http://www.losaltosonline.com/latc/arch/9528/

"In a book titled "Costly Returns," economist James Payne estimates the nation's bill for tax record-keeping, audits, filing tax attorneys and accountants totals an astonishing $593 billion. To put it another way, that's more than twice as much as last year's entire defense budget and $240 billion more than all 1996 Social Security outlays."

As well as a few more studies that things can actually be worse:

Killing the IRS, By Daniel J. Pilla, Reason Magazine July 1995

"There is little about a flat-tax system that will trim the staggering cost of tax law compliance. At present, this burden is estimated at $700 billion annually. Much of the cost is associated with recordkeeping and tax law enforcement, neither of which is reduced by a flat tax. A flat tax certainly involves a simpler tax return, but return preparation is the smallest component of tax law compliance.
The solution to our tax problem is to adopt a national retail sales tax in place of the personal and corporate income tax. Only a sales tax can eliminate the invasiveness of the IRS, since one's income and lifestyle are irrelevant."

http://www.heritage.org/Research/Taxes/hl565.cfm

An American Economic Review study found that every dollar of taxes could impose as much as $4 of lost output on the economy, with the probable harm ranging between $1.32 and $1.47
Edgar K. Browning, "On the Marginal Welfare Cost of Taxation," American Economic Review, Vol. 77, No. 1 (March 1987), pp. 11-23.

"Another study in the Journal of Political Economy estimated that the corporate income tax costs more in lost output than it raises for the government."Jane G. Gravelle and Laurence J. Kotlikoff, "The Incidence and Efficiency Costs of Corporate Taxation When Corporate and Noncorporate Firms Produce the Same Good," Journal of Political Economy, Vol. 97, No. 4 (1989), pp. 749-780.

Chief Executive, The New directions in tax reform -
May 1995.

Tax expert Ernest Christian Jr., a partner with Washington's Patton, Boggs & Blow, reckons these are low estimates or at best incomplete. Citing a U.S. Treasury study which indicates that 6 billion man-hours are consumed each year just in the record keeping for income and payroll tax returns alone, Christian says the true burden on the U.S. economy is probably closer to $1 trillion. For example, Jane Gravelle of the Congressional Research Service estimates that economic loss from the corporate income tax is equal to about 97 percent of the corporate tax revenue collected.

STATEMENT OF REPRESENTATIVE DICK ARMEY
HEARING ON THE IMPACT ON
INDIVIDUALS AND FAMILIES OF REPLACING THE FEDERAL INCOME TAX
Committee on Ways and Means, Full Committee, 4-15-97 Testimony

Hinders Economic Opportunity

According to a study by Jane Gravelle, an economist with the Congressional Research Service, and Larry Kotlikoff, an economist at Boston University, the corporate income tax costs the economy more in lost production than it raises in revenue for the Treasury. Dale Jorgenson, the chairman of the Economics Department at Harvard University, found that each extra dollar the government raises in revenue through the current system costs the economy $1.39.

Economic Burden of Taxation
William A. Niskanen
Presented October 2003
Friedman Conference
Federal Reserve Bank Dallas page 6.
www.dallasfed.org/news/research/2003/03ftc_niskanen.pdf

"Given that the elasticity c implicit in recent U.S. fiscal conditions is about 0.8 and the average tax rate is about 0.3, the marginal cost of government spending and taxes in the United States may be about $2.75 per additional dollar of tax revenue. One wonders whether there are any government programs for which the marginal value is that high. Given the estimate of the long-term elasticity c from the U.S. time-series data, the marginal cost of government spending and taxes may be as high as $4.50 at the current average tax rate. "

You are now on the pinger ;O)

Ping to you, see reply #66 above.

OOPs!! make that #71 :O/

HC ping

That business may not pay a corporate tax to the government at all because of a loss, but will still have all those costs associated with having to deal with the feds and their tax regulations.

That impact is still debatable. You are imposing a new and challenging burden on every business by forcing them to collect a federal sales tax. You may be adding to the operating cost, not reducing it.

To my fellow Illinois FReepers:

I would love to have you in attendance as I debate Bruno Behrund on January 4th!

EV

DEBATE:

Flat Tax vs. Fair Tax -

WHO: Bruno Behrund vs Tom Hoefling

Bruno Behrund - is the IL Director for Freedom Works:

http://www.freedomworks.com

talk show host

http://www.extremewisdom.com

and Townhall.com Meetup member.

There is some info on the Flat Tax at freedomworks.com site.

Tom Hoefling is National Political Director for Alan Keyes and a long time advocate for fundamental tax reform. He has attended our Chicago Townhall.com Meetup several times.

For info on the Fair Tax go to:

http://www.fairtax.org

WHEN:
Tuesday, January 4
7 pm - 9:00 pm (official end); we have the room until 10 pm.

WHERE:
Lincoln Restaurant
4008 Lincoln Ave. & Irving Park Rd & Damen (4000 N, 2000 W)

Chicago, IL 60618
tel: 773.248.1820

COST: order at least $5 off the menu and we get private room.

FREE PARKING behind restaurant - entrance off of Irving Park Rd. going west from Damen; get ticket as you drive in and exchange for token at cashier.

PUBLIC TRANSPORT: 2 blocks west of Irving Park on the Brown Line.

PLEASE RSVP at:

http://townhall.meetup.com

*If your plans change after rsvp'ing, it would be very helpful if you would let me know. A dependable RSVP number is good for EVERYONE you, the guest
speaker(s) and the Lincoln Restaurant. Your cooperation is greatly appreciated.

Rich Johns

rich.johns@iglide.net

bttt

Hope you're having a blessed Christmas season, my friend!

You are imposing a new and challenging burden on every business by forcing them to collect a federal sales tax.

Imposing burden indeed, lets count it up

no business income tax,
no employer's excise to Social Security or Medicare,
no NRST on business purchases,
no NRST on sales to businesses

Hmmm looks like all raw materials, manufacturing, transportation, indermediate services are relieved of the horrendous overhead and deadweight loss inherent in the current system, nor do they take on any new ones.

A very challenging burden indeed in trying to figure out what to do with the cost savings and release of resource for productive use.

You may be adding to the operating cost, not reducing it.

Lets see at retail level, new goods retailers are saddled with collecting and remitting National Retail Sales Tax to their respective state tax adminstrations in parallel with their state retail sales taxes and receive a compensation for doing from the feds.

Unfortunately they have give up fileing and paying income and payroll taxes so, Oops!! sorry there it seems that they are better off.

Retail service no longer pay income or payroll taxes but end up paying a percentage of their gross reciepts to state tax adminstrations like every other retail business. Fair trade of there it looks to me.

Perhaps you can explain where these unspecified added burdens you imagine are going to happen are coming from?