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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: lewislynn
The profit is collected FROM someone else therefore the tax has to be from someone else.

WHo??? Customers via prices???!!!!!

461 posted on 03/09/2005 9:35:56 AM PST by Principled
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To: Your Nightmare
Uh, the flat tax uses income minus savings as a base. It's subtracted from this base. It doesn't "add" to prices.

Irrespective of base calculation, the flat tax does indeed add to prices. Remember the taxes and tax costs (for the flat tax, that would include employer "contribution" payroll taxes)? Those costs are added to prices, subtracted from wages, or removed from ROI.

462 posted on 03/09/2005 9:40:35 AM PST by Principled
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To: MOX
You'll get a kick out of his posts I promise. This guy's been everywhere and done everything. He's happy to correct everyone. He's a legend in his own mind!

yep

463 posted on 03/09/2005 9:42:01 AM PST by Principled
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To: Principled
There is no one exclusive (no pun intended) way to express tax rates. There is more than one way that may be used each time. The method you choose may or may not be the same I choose.
You obviously didn't read my post. "There are none so blind..."
464 posted on 03/09/2005 9:42:28 AM PST by Your Nightmare
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To: lewislynn

Better check your math again.


465 posted on 03/09/2005 9:42:58 AM PST by Principled
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To: elbucko
I belive that is what will occur with a flat tax or an NRST.

Yes, we know you think that. We were asking why.

466 posted on 03/09/2005 9:44:52 AM PST by Principled
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To: Willie Green; ancient_geezer
I dare say you are wrong

I throw down the gauntlet.

Elaboration and substantiation of your statements are required for complete argument and thorough rebuttal to your claims.

467 posted on 03/09/2005 9:45:37 AM PST by Finger Monkey (H.R. 25, Fair Tax Act - do the research, contact your legislators, get this puppy passed.)
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To: Your Nightmare

You obviously didn't read my post. "There are none so blind..."


468 posted on 03/09/2005 9:47:14 AM PST by Principled
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To: Principled
Irrespective of base calculation, the flat tax does indeed add to prices. Remember the taxes and tax costs (for the flat tax, that would include employer "contribution" payroll taxes)? Those costs are added to prices, subtracted from wages, or removed from ROI.
May be added to prices, and if those taxes are added to prices, they most certainly aren't fully. You need to read up on tax incidence.
469 posted on 03/09/2005 9:49:05 AM PST by Your Nightmare
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To: BerthaDee
Posing as "tax reform", the NRST (HR 2525) also represents a "land grab" where business interests are favored over individuals purchasing for their own use:

This a significant inequity between individuals trying to buy their own new homes and landord/investors looking to buy the same single family dwelling as a rental investment. This disparity has long term implications affecting the distribution of private property. The American tradition favoring individual property rights is reversed. The NRST would discourage individual "consumption" of real property.

"... legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind. The descent of property of every kind therefore to all the children,...

But it is not too soon to provide by every possible means that as few as possible shall be without a little portion of land. The small landholders are the most precious part of a state."

-- Thomas Jefferson to James Madison, Oct. 28, 1785 -- PROPERTY AND NATURAL RIGHT


470 posted on 03/09/2005 9:56:45 AM PST by Willie Green (Go Pat Go!!!)
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To: Principled
You obviously didn't read my post. "There are none so blind..."
You totally ignore the math I showed.

So let me ask you a question. Lets say I have a 10% tax inclusive state sales tax rate and a 20% tax inclusive federal sales tax rate. What is my total tax inclusive sales tax rate?
471 posted on 03/09/2005 9:57:12 AM PST by Your Nightmare
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To: Your Nightmare
P: Those costs are added to prices, subtracted from wages, or removed from ROI.

yn:May be added to prices,

That's what my posts connotes (some would say denotes). Didn't you read it? None are so blind...

472 posted on 03/09/2005 9:57:22 AM PST by Principled
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To: Your Nightmare
Let's say I have a 5th degree polynomial. If I divide it by a 3rd degree polynomial, what is the degree and number of terms of the quotient?

And this matters as much as your request!

Why would you choose a difficult method to calculate rate? You should use the easiest method - and to everyone it's unique to the situation.

473 posted on 03/09/2005 9:59:36 AM PST by Principled
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To: balrog666

"You are truly a fool - I don't know too many landlords, and certainly no commercial renters, who don't call out sales taxes as additional payments on top of rent and the responsibility of the leasee. You do the math. The renter pays it.

In my buildings the renter will pay it or be evicted. Welcome to the NRST."

Are your buildings residential or commercial?


474 posted on 03/09/2005 10:10:41 AM PST by phil_will1
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To: lewislynn

I'm not sure what point you're trying to make here. The taxes included as part of the utility bill under the FairTax would be pretty cut and clear. There would not be several hundred thousand pages of deductions, exemptions, etc. for them to hide behind. Even under a flat income tax, business taxes would be applied to income minus expenses and wages and many corporations will look for avenues to lower what ends up taxable to them for an advantage.

Are you saying that under a flat tax, there will be no cheating by corporations? No corporations looking for an advantage over the others and no representatives looking to change the flat income tax code to help certain constitutient industries have an advantage? Remember, our current tax code started out as flat with 4 total pages including instructions. Here is what Richard E. Byrd, speaker of the Virginia House of Delegates warned about that system:

"A hand from Washington will be stretched out and placed upon every man’s business; the eye of the Federal inspector will be in every man’s counting house . . . The law will of necessity have inquisitorial features, it will provide penalties, it will create complicated machinery. Under it men will be hailed into courts distant from their homes. Heavy fines imposed by distant and unfamiliar tribunals will constantly menace the tax payer. An army of Federal inspectors, spies and detectives will descend upon the state . . . Who of us who have had knowledge of the doings of the Federal officials in the Internal Revenue service can be blind to what will follow? I do not hesitate to say that the adoption of this amendment will be such a surrender to imperialism that has not been since the Northern states in their blindness forced the fourteenth and fifteenth amendments upon the entire sisterhood of the Commonwealth."

Meanwhile, Professor Seligman argued for the "FLAT" income tax stating that Americans value their freedom far too much to allow it to deteriorate into one that asked when you purchased a stock, for how much, and for how much and when it was sold.

It is hard to make an argument that any income based tax could be consistent with the definitions of a free society, even the one that existed in the "progressive" era of the early 1900s


475 posted on 03/09/2005 10:13:10 AM PST by 4edm 4ever (Let's change the initials IRS to INS and send them to chase terrorists instead of working Americans.)
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To: Principled
Why would you choose a difficult method to calculate rate?
Me? It's not my choice, it's the choice of the AFT.

BTW, I noticed you didn't answer what should be simple math.
476 posted on 03/09/2005 10:28:17 AM PST by Your Nightmare
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To: Your Nightmare
If there's a simpler way, why not use it?
477 posted on 03/09/2005 10:32:01 AM PST by Principled
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To: phil_will1
Are your buildings residential or commercial?

Both. How is that so few of you understand that your lease is a contract. You will abide by the terms or be in violation (and evicted).

My leases state that all taxes (state, federal, local), with the exception of state property taxes, will be paid by the lessee in addition to the rent amount.

Every car lease, every major capital equipment lease, and every building lease has similar provisions, unless written by idiots.

So everybody that is renting a house, leasing a car, or renting a building will get zapped with a 30% increase in their rental costs on day one of the NRST.

End of this lesson of the obvious.

478 posted on 03/09/2005 10:34:29 AM PST by balrog666 (A myth by any other name is still inane.)
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To: lewislynn

Lewislynn, in your math you forgot the final step. You said you would "play the silly price game" but then forgot that there would be no additional net tax on the final consumption. Your example shows the landlord reducing his rent by 25% pre-tax but prices on the goods going up by 23%.

In other words, if he had $750 after tax currently to spend, and 25% of the costs of his goods and services is the cost of the embedded system, his pre-tax FairTax costs for those same goods would only be $562.50 and his after tax cost approximately $732. He doesn't lose purchasing power in that example.

If you're going to use an assumption, you need to follow through on it.


479 posted on 03/09/2005 10:37:59 AM PST by 4edm 4ever (Let's change the initials IRS to INS and send them to chase terrorists instead of working Americans.)
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To: balrog666
My leases state that all taxes (state, federal, local), with the exception of state property taxes, will be paid by the lessee in addition to the rent amount.

The "rent amount" includes costs the landlord pays now that will be gone under the nrst. That's what's being missed. Your myopia is preventing you from becoming informed.

480 posted on 03/09/2005 10:39:09 AM PST by Principled
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