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The Case for the 'FairTax'
Wall Street Journal Online ^ | March 7, 2005 | Laurence J. Kotlikoff

Posted on 03/08/2005 9:20:44 AM PST by n-tres-ted

Our tax code is a mess for a reason. Special interests pay for special favors. And with 17,000 pages and counting, there's plenty of places for our politicians to hide the kickbacks. Meanwhile, all the exemptions, deductions, exceptions and special provisions reduce the tax base, which means higher tax rates and smaller incentives for individuals and companies to produce income. And whether the tax breaks are set in fine print or spelled out in bold type, they generally favor the rich, making our tax system less progressive than is generally believed.

No tax system is perfect, but ours is so awful that fundamental reform is the only option. Fundamental reform is not just a necessity; it's also an opportunity to stop taxing income and start taxing consumption. My colleagues and I have been studying income and consumption taxation via computer simulations for some time now. We've found that switching from taxing wage and capital income to taxing consumption can significantly improve economic efficiency and growth. What's more, it can make our tax system much more progressive and generationally equitable.

(Excerpt) Read more at online.wsj.com ...


TOPICS: Business/Economy; Constitution/Conservatism; Culture/Society; Government; Miscellaneous; News/Current Events
KEYWORDS: fairtax; kotlikoff; taxes; taxreform
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To: Petronski

What percentage of used homes/buildings are abandoned with this big market drive to purchase new construction? Would the population just stop expanding?


241 posted on 03/08/2005 12:10:15 PM PST by CSM (Currently accepting applications for the position of stay at home mom.)
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To: Conservative Goddess
"There is nothing in the bill that grants the government the right to know what you buy or when. The prebate comes to you so that you ALONE can decide what is a necessity, and what isn't. THERE IS NO TRACKING AND REPORTING SCHEME WITH THE FAIRTAX!!!! "

yet. there is nothing that prohibits them either.

242 posted on 03/08/2005 12:10:23 PM PST by camle (keep your mind open and somebody will fill it with something for you))
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To: camle
but i wasn't aware that anybody's life was at stake here. hopefully you aren;'t taking this that seriously.

All of our lives are at stake, or at least the part that goes to earning income. The fact that someone has the power to point a gun in my face and tell me how much of my life they will steal from me is deadly serious. I'll ask one more time (not just to you camle):

By what right?

243 posted on 03/08/2005 12:10:46 PM PST by numberonepal (Don't Even Think About Treading On Me)
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To: CSM

i don;t think that they can without facing shareholder lawsuits of the class action variety. they have a fiduciary responsibility to them, not to their consumers.


244 posted on 03/08/2005 12:11:37 PM PST by camle (keep your mind open and somebody will fill it with something for you))
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To: camle

Retailers are compensated for collecting this tax. Everything is taxed, nothing is exempted....so this will not be difficult to implement. MOREOVER, you need to look at the net burden to retailers. Under the FairTax plan, retailers will no longer have to comply with the internal revenue code....on net, they will be better off.


245 posted on 03/08/2005 12:13:04 PM PST by Conservative Goddess (Veritas vos Liberabit, in Vino, Veritas....QED, Vino vos Liberabit)
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To: Conservative Goddess

Thank you M'lady :)


246 posted on 03/08/2005 12:13:17 PM PST by Leatherneck_MT (A Patriot must always be willing to defend his Country against his Government)
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To: camle

"You don't have any idea how the proposal would work. I would suggest suspending judgment until you become more informed."

"but whilst we're trading illusions about intelligence, might I suggest you study economics?"

I didn't question your intelligence, I questioned your understanding of the proposal. I did not suggest that you aren't intelligent to comprehend it, just that you had not invested the time to do so. I have found in my life that almost every time I make a judgement without gathering the necessary information, I have erred.

I'm certainly no economist, but I think that I have demonstrated a grasp of that subject that is at least the equal of those on here who staunchly defend the status quo.

Fortunately, the FairTax was developed by a group of professional economists whose grasp of the field far exceeds mine.


247 posted on 03/08/2005 12:13:27 PM PST by phil_will1
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To: willgolfforfood
2. When the Republicans realize that the tax is regressive, and taxes the poor at substantially higher rates than the current tax system, then they will be for it.

Not true. The Fair Tax will completely "untax" the poor by eliminating payroll taxes. The poor will pay no taxes until they spend amounts above the poverty line. That makes the Fair Tax more progressive than the present system.

248 posted on 03/08/2005 12:13:31 PM PST by n-tres-ted (Remember November!)
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To: ancient_geezer

you see? ,my version of the Flat Tax treats ALL income as income. ALL income is taxed regardless of source. whether i's capital gains, returns on investments, wages, whatever. This is where Forbes and I part ways. One's entire portfolio is taxed at the same rate as is the income of everybody else. no loopholes, no exceptions.


249 posted on 03/08/2005 12:13:54 PM PST by camle (keep your mind open and somebody will fill it with something for you))
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To: Zon
Thanks for posting that. Any observer can now see something you hid in your previous post -- the fact that I was talking about responding to your insult, not initiating an insult cycle.
250 posted on 03/08/2005 12:14:00 PM PST by expatpat
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To: Valpal1
It ain't the tax code, it's the spending.

Naw...like junkies, you have to deny them their fix.

And I would say...the more they get the more they spend....

Well wait a minute...it's REALLY the more they get, the more they OVER spend..!! LOL!!

They ain't never gonna reduce spending....if we keep giving it to them.

251 posted on 03/08/2005 12:14:48 PM PST by Osage Orange (What's duct tape called in Arkansas?.........................................................Chrome)
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To: Willie Green

Actually, global tax harmonization requires a complex tracking and reporting mechanism. The FairTax is the only system which dismantles the tracking and reporting systems such that the globalist fantasy of international tax harmonization will be thwarted. You are once again, WRONG!


252 posted on 03/08/2005 12:14:53 PM PST by Conservative Goddess (Veritas vos Liberabit, in Vino, Veritas....QED, Vino vos Liberabit)
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To: camle

"i doubt that indubitibly, my friend. no corporation faced with a 20-30 percent windfall is going to ignore it's fiduciary responsibility to it's shareholders and pass that blindly on the consumers. in fact, I doubt that there will be ANY price reductions. what there WILL be is dividend increases, profit taking, and stock rising. the rich will benifit, the middle class will get little if anything."

I never expected you to be so full of envy and so aggressive in holding the class warfare line.

The automotive industry is so tight and every .1% point of market share means a lot to the manufactures, so yes as costs decrease these cost savings are either passed along to consumers or used to upgrade the vehicles. The advantage is the artificial competitive edge given to foriegn producers would no longer exist. The burden would be placed on both a Toyota and a Ford.

Just to bring you a bit of perspective on this, price negotiations for parts in autos is negotiated out to the 0.0001, fractions of a cent.


253 posted on 03/08/2005 12:15:21 PM PST by CSM (Currently accepting applications for the position of stay at home mom.)
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To: camle
if they suddenly find their profit margin up by 20-30% they wold be financially misfeasant to give that money away

Did your neighborhood gas station lower it's prices when the price of oil went down?

And what CSM said:

If you don't believe they will lower their prices, then you must be willing to start a business competing with them in the market place. It would be a gold mine.

254 posted on 03/08/2005 12:16:07 PM PST by numberonepal (Don't Even Think About Treading On Me)
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To: numberonepal

the IRS wouldn't come "Git me" (I love that expression, BTW) they would come and "Git" the shopowner. So we let the Nazis pick on the jews, takes the heat off us.

Unless there is a general clamor, there will not be any spending reductions., the best way to generate such a clamor is to strip out all the gimmicks and show people just how much they are paying.

yes, I just said to get rid of witholding. I favor monthly billing.


255 posted on 03/08/2005 12:16:29 PM PST by camle (keep your mind open and somebody will fill it with something for you))
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To: Wolfie
and not support a Flat Tax on income instead?

Because you take away choice.

256 posted on 03/08/2005 12:16:50 PM PST by numberonepal (Don't Even Think About Treading On Me)
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To: Conservative Goddess

i have found your arguments logical and reasonable, even if I disagree - thank you.

could you poiont out where in the constitution or federaslist papers the founders favored taxes on consumption? I know they didn't like income taxes, but...


257 posted on 03/08/2005 12:17:52 PM PST by camle (keep your mind open and somebody will fill it with something for you))
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To: camle; EternalVigilance

and an huge sales tax is fair? how?

Seems to me the people ought to pay taxes commensurate with "what they actually take out of the common pot, not what they leave in."--
From Thomas Hobbes, Leviathan, for "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."

And by assuring all voters perceive the butchers bill we pay today for large government restraint for demands from more from government is encouraged in all; not just those few at the upper end of the income spectrum that get hit in the face through the income tax filings.

 

The Honorable James DeMint (R-SC)
United States House of Representatives
APRIL 5, 2001

 


If you're among those who pay little or no federal income taxes, what do you care about tax cuts? Moreover, *** So many Americans paying little or no federal taxes makes for a natural spending constituency. It's like me in the restaurant: What do I care about extravagance if you're footing the bill?
--- Walter Williams


258 posted on 03/08/2005 12:18:29 PM PST by ancient_geezer (Don't reform it, Replace it!!)
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To: elbucko

Retailers are compensated for collecting the FairTax. Moreover, they will no longer have to comply with the applicable provisions of the Internal Revenue Code. On balance, retailers will be better off.

New businesses will simply need to obtain an exemption certificate, similar to those provided currently by the states, for purchases made in the course of business, for resale to the ultimate consumer.


259 posted on 03/08/2005 12:18:36 PM PST by Conservative Goddess (Veritas vos Liberabit, in Vino, Veritas....QED, Vino vos Liberabit)
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To: Conservative Goddess
The Fair Tax removes all dis-incentives to work, save and invest for the future.....and that will help us to generate REAL economic growth. I think I'm in love with Conservative Goddess. Please don't tell my wife (she's Conservative Goddess II).
260 posted on 03/08/2005 12:19:01 PM PST by numberonepal (Don't Even Think About Treading On Me)
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