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 ...
is taxed... which is now included (tax inclusive sales tax, remember) in the price which is now included in the price... which is now included in the price... which is now included in the price... which is now included in the price...
Which, with rounding errors, is the tax inclusive price.
Tax inclusive sales tax rates are pretty silly, huh.
We demand a transparent tax. The FairTax. Since congress created the Income Tax and IRS in 1913 it has proven that neither can be trusted to honor their word. With a transparent FairTax the people will speak loudly with one voice and demand that government reduce spending.
If you don't like tax transparency shining the spot light on you you've made it obvious that you have something to hide and must be removed from congress..
BTW your flat income tax (or is it VAT today?) measures its income tax and its payroll tax with tax inclusive rates - you know, the amount withheld from your checks is measured tax inclusive under the Flat income tax. The flat income tax would also allow you to measure the tax costs hidden in prices tax inclusive.
Of course, just like the nrst, rates can be expressed either way. Except for withholding - because there is no withholding under the nrst. ANd the amount the nrst adds to prices is not hidden - it's visible on receipts... both in amount and tax inlusive rate.
How do the VATS you love express their rates (this depends on country)?
You are right, but perhaps a simpler way to put it is that the final cost is 129.87 which is 100/(1-.23)if the untaxed value is 100. The same thing applies to income tax, if your company wants to give you a true-value bonus of a $100, they have to gross it up according to that formula, where 23% is your marginal tax rate.
More than a little over the top. No one was asking for personal information and your faux hissy fit reaction does make my BS detector buzz.
the lack of a sales tax on the used car would make it a more attractive purchase at its old price than a new car -- more people will buy the used car than they otherwise would -- the price will go up due to demand because of this, until the gross price of the used car and that of the new car will be close to the normal balance. The new car may be a bit lower in gross price, because of the lower demand due to the buyer switch, but used car prices will get up most of the way to what the taxed price would be.
This is a silly argument. So, I'll just agree with you; tax inclusive is silly but even flat tax supporters use them. Most flat tax proposals call for a 19% tax on the individual, a 19% tax on business profit and retention of payroll taxes at a total of 15.30%. Ignoring the business profit tax which IS a tax collected by business FROM someone else, the 19% individual income tax and 15.30% total payroll tax adds up to a total burden of $34.30 on every hundred dollars on an INCLUSIVE basis. In other words, for every $100 an employee takes home, his pre-tax earnings was subject to a 34.30 total tax burden.
Using your same chart, someone who takes home $100 after being subjected to a 34.30% inclusive flat income tax/payroll tax (both replaced by the FairTax) has to generate a value to the business of $152.20 in exchange for his labor to be able to purchase $100 in goods and services. In other words, the inclusive rate of the flat income tax could also be expressed throughout your chart as a 34.30% tax upon a tax until you get to the total of $152.20. Verifying that: $152.20 minus 34.30% in tax burden equals $100. So what's your point...that the flat taxers are deceptive?
Your chart shows that under the FairTax an individual could provide a value to the business of $129.86 in exchange for his labor and buy just as much in goods and services for his family. Whether the difference between $152.20 and $129.86 comes to the worker in the form of increased earnings, lower prices at the store, higher dividends on his investments or some combination he and the country are still ahead.
This advantage doesn't even include the fact that businesses will not pay the business input taxes under the FairTax (compared to 19% on profits) or the reduced compliance costs.
Sometimes it seems flat tax supporters on here argue that business taxes aren't passed on to others (consumers/laborers/investors). The only thing I've ever seen debated is where the incidence of corporate taxation falls. Corporations are things...artificial entities. Increased expenses in any area of the business, is money that has to be diverted from other areas.
Hope springs eternal!
Pre-tax utility prices would drop. Federal and State income taxes are part of the bill you pay today. Here is part of an article from David Cay Johnston on this issue:
Oregon Hearing to Look at Utility's Charging for Taxes It Didn't Pay
By DAVID CAY JOHNSTON
PORTLAND, Ore., June 9 - A state judge has ordered a regulatory hearing into whether Portland General Electric, a unit of Enron, fraudulently collected more than $665 million from ratepayers to cover corporate income taxes that Enron never paid.
Because utilities are legal monopolies, the prices they charge are set by state utility regulatory boards, federal and state corporate income taxes are some of the expenses to be included in rates paid by customers.
Entity Level Taxation.....refers to corporate taxation as it occurs in a standard "C" corp....or that which is inflicted on the shareholders of an "S" corp, or that which is inflicted on a partner/LLC member via Subchapter K, or that which a sole proprietor pays via a schedule C.
NONE of these entities will be taxed....as a result, the building materials produced, regardless of the business form employed, will no longer carry any embedded tax or compliance cost.
Support for your numbers? Anyone can throw numbers around. You quote 2% as embedded tax cost.....how did you arrive at that number? How many levels of production did you assume? What was the marginal rate of the entity? Did you include the employer portion of FICA at each level of production?
Without citation....your numbers are meaningless.
Pre-tax utility prices would drop.They would drop and then they would rise immediately when they added the FairTax to the utility bills. They are taxable, too.
If you review my posts, you'll see that I assert the government will have no cause or reason to know what you PURCHASE. They will have to know your wages in order to calculate social security benefits payable. However, I intend to cast off my SSN as soon as possible after the FairTax is enacted. The government has no business knowing what I make, or meddling in my retirement, or my healthcare. The SSN is going to be used for all of those purposes.
NONE of these entities will be taxed....as a result, the building materials produced, regardless of the business form employed, will no longer carry any embedded tax or compliance cost.Except the owners/shareholders of these entities would now be paying a tax on their personal consumption so they will require an increase in their pre-tax return or they would suffer a decline in personal purchasing power.
BTW your flat income tax (or is it VAT today?) measures its income tax and its payroll tax with tax inclusive rates - you know, the amount withheld from your checks is measured tax inclusive under the Flat income tax.But a flat tax is a subtractive tax so the inclusive rate is the correct method. A NRST is an additive tax so an exclusive rate is the correct method.
Your point is?
Have you ever looked at a utility bill? Most are loaded with taxes (not income taxes) that won't be eliminated. Those taxes, regardless of what utility prices do, WILL be taxed under an NST.
Sorry for the delay....plugged into shore power now....coffee in hand.....life is good.
Ok......with respect to the World Trade Organization...they've consistently used our system of corporate taxation as a weapon against US manufacturers. Our clumsy attempts to remove the cost of taxation from the goods that we export have been answered with retaliatory tariffs.
The Domestic International Sales Corporation was ruled an unlawful subsidy, as was the Foreign Sales Corporation, and most Recently the Extra-Territorial Income Exclusion. The FSC/ETI debacle resulted in the horrendous piece of legislation known as the American Jobs Creation Act of 2004...HR 4520. That was the corporate tax bill that repealed the ETI subsidy, but provided a zillion narrow subsidies and giveaways to any corporate interest with a lobbyist on the payroll. It added untolled complexity to the Internal Revenue Code.
Moreover, our arcane adherance to a system of global taxation of corporate profits with offsetting credits for foreign taxes paid, drove the corporate inversion phenomenon....whereby our corporations fled the US and re-incorporated in tax havens. While this did not result in a significant loss of jobs in the US, it did further reduce corporate tax revenue collected by the Treasury. If memory serves, the corporate net income tax accounts for only about 10% of total collections today.
The FairTax abolishes the corporate income tax and all entity level taxation. This will be a boon not only for shareholders, but consumers and for the employees as well. It will also remove a tool of manipulation from the WTO quiver and because the US will have a zero corporate tax rate, we will attract corporations from around the world. In fact, the Fair Tax includes a provision whereby foreign corporations are going to be taxed at 23%....domestic corporations at 0%. We learned our lesson from the corporate inversions....these provisions of the bill should attract an enormous amount of capital to the US shores...reincorporation in the US.....and with it jobs for all.
Those people who now find it difficult to find a job, difficult to compete...will have infinitely more opportunity once this system is enacted.
So, when you look at the total net effect.....you need to consider not only the nominal tax impact on each and every level of consumption....but the effect on economic opportunity for all...and the priceless effect of removing the WTO from the export equation. Only then will our goods be able to compete on a level playing field..and the balance of trade should improve.
That's a cliffnotes version of the international considerations...hope that helps to clarify another facet of this diamond.
Our income tax adds to prices too. Why is it tax inclusive?
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