CALCULATE YOUR PERSONAL FAIR TAX RATE COMPARED TO YOUR 2004 INCOME TAX-FICA TAXES

FairTax web sites ^

[witchypooy]

IT'S YOUR PAYCHECK - KEEP IT ALL FAIRTAX CALCULATOR HR25/S25

Now that April 15 is past, it's time to tally up the tax score. Go to the FairTax calculator, http://www.pafairtax.org/calc.php and using 2004 figures, figure out (anonymously) what you would have spent in 2004 in taxes if we had the FairTax, the simple, honest, and progressive national retail sales tax, instead of our current complex income tax/FICA tax system.

TOTAL INCOME TAX + TOTAL FICA = TOTAL FAIRTAX : For your household, please remember to make an honest and accurate comparison. FairTax will fund social security and medicare with 1/3 of all sales taxes collected, thus eliminating FICA withholding from your pay also. Therefore, to be an honest comparison, you MUST take your total 2004 income tax paid PLUS your total FICA withholding for the year for social security and medicare, and add them together. This becomes the accurate figure for current income/fica you would compare to the projected FairTax shown on the calculator. You can get the total FICA withheld for the year off your last pay stub, or just figure 7.65% of your yearly gross wages. If you are self-employed you will figure 15.3% for FICA.

We are only dealing with the 7.65% FICA you pay yourself here. Remember, your employer also pays 7.65% for you under today's system. In Business bookkeeping terms, this is actually YOUR money that your employer must spend for your benefit, and really should also be added to your overall Income Tax/FICA costs today. Under FairTax your employer will NOT be paying FICA on your behalf. This business expense is eliminated. This FairTax advantage means more money for businesses to use to either lower prices, or raise wages.

The rebate of taxes paid up to the poverty level of spending for your household, that will be provided to ALL Americans under FairTax, is calculated and shown in the FairTax calculator formula. The HHS poverty lever table is also there, for all situations. This rebate essentially gives every American tax free spending on the necessities of life.

noirs@pafairtax.org

[Your Nightmare]

I have used Kotlikoff's 2000 Ways and Means testimony for my for my source of information, hardly the exact paper you are refering to.

The post I was replying to, #46, quotes a 1995 paper that references Kotlikoff's 1993 paper (where the numbers come from). I used that exact 1993 paper for my reply. Now you say you "have" used " Kotlikoff's 2000 Ways and Means testimony for my for my source of information, hardly the exact paper you are referring to." Well no sh!+. You "have" used it, but you didn't in #46.

What a joke...

It would appear you are making reference to a paper you claim is not available to all to check the context of his simulations or price change information.

I went to the source.

Interesting that you have not shown anything by actually stated by Kotlikoff relating to prices from his paper, you just claim the study somehow supports your view of price changes.

If you understood what real wages are you would understand that they relate to prices.

However as you indicate quite clearly, real wages are increased off the baseline of the simulation in the paper you refer to. Seeing that the base year, on which the simulation had to have been calibrated against, had to have been earlier than 1996, there had to have been nominal wage increases to which the NRST referenced above had to add to, your claim of no price decreases without nominal wages going down (in a lower cost environment for business) appears to be a bunch of baloney.

OK, you don't know what real wages are. It's basically purchasing power. If my take home goes up and consumer prices rise the same amount, my real wage doesn't change. If my take home stays the same and consumer prices stay the same, my real wage still doesn't change. Kotlkoff show real wages staying level initially so one of these two scenarios is what's happening.

I rather suspect the same is true of the study you are taking your information from especially as his Ways and Means Testmony indicates the Kotlikoff tends to favor tax rates 30% higher than the NRST legislation actually calls for to compensate for his anticipation of additional growth in government spending.

Kotlikoff makes it clear in his testimony that the 30% inclusive rate is required "assuming no decline in the real value of government purchases." That is means no additional growth in real government spending. Kotlikoff obviously doesn't fall for the AFT's Enron accounting.

I would say the main BS around here is coming from you, but I will reserve judgement on that one, as regards Kotlikoff's works, until I manage to aquire a copy of his study for perusal to see for myself what his simulation conditions actually are for his NRST rates, and assumptions and implementations of business costing effects with regard to pricing to the consumer.

Call your buddies at the AFT.

I am particularly interested in what Kotlikoff's paper has to say about inflation or deflation of tax included prices and any changes to the business cycle that he should have provided for in his simulation for it to accurately reflect shelf (i.e. producer) pricing of goods and services to the end consumer.

He doesn't say anything. Why would he? Prices don't mean anything. That's why economist use real terms.

[Your Nightmare]

You aren't paying attention. YN has stated he doesn't know anything about the 96 study...therefore he can't leave anything out...

To clarify, I do have Kotlikoff's 1996 study he did for the AFT but it's not a "static distributional analysis." That's what I don't know of, a 1996 static distributional analysis of Kotlikoff's.

[Your Nightmare]

YN states very explicit things that are apparently only found in that '96 study per:

That was a completely different post from the one we are talking about. Damn.

Are you telling us YN is just pretending to take this from Kotlikoff's '96 study and aren't real results? Or that he is claiming source material he doesn't have?

Neither, it's that you are confusing the issue by bringing in posts that aren't related to the one we are talking about.

[Your Nightmare]

That is why you find I reference Kotlikoff's 2000 Ways and Means committee testimony that can be found on the internet,

That is not what you referenced in post #46 WHICH IS THE ONE WE ARE TALKING ABOUT!

[rwrcpa1]

Note to self: buy bank stocks when Fair Tax passes. LOL

[Your Nightmare]

I provide material with internet sources where available or current news accounts so everyone can read what source there is in readily available form and see it in the context it exists.

What a total crock. You've been referencing Kotlikoff's and Jorgenson's unpublished reports to the AFT for years.

[rwrcpa1]

You know full well how the rebate works and is calculated.

[rwrcpa1]

Head of household registers and gets the check.

[rwrcpa1]

What half truths? If my 18 year old kid were living at home I would register and include him and get one check for the family. Once he left home I would take him off my list and let him register himself and get the money.

No different than claiming or not claiming him as a dependent now for income taxes.

[rwrcpa1]

Did you know Kotlikoff is endorsing the Fair Tax?

[ancient_geezer]

It would appear you are making reference to a paper you claim is not available to all to check the context of his simulations or price change information.

I went to the source.

Where, give us a link to it so we can all look at it.

 

I would say the main BS around here is coming from you, but I will reserve judgement on that one, as regards Kotlikoff's works, until I manage to aquire a copy of his study for perusal to see for myself what his simulation conditions actually are for his NRST rates, and assumptions and implementations of business costing effects with regard to pricing to the consumer.

Call your buddies at the AFT.

You mean you got

"Kotlikoff's "Replacing the U.S. Federal Tax System with a Retail Sales Tax - Macroeconomic and Distributional Impacts - Report to Americans for Fair Taxation" (which the AFT has chosen not to publish).

From AFT? You have indicated they don't want anyone to see it? So how do you come by a copy from them if they are not providing papers to anyone who asks?

That is not what you referenced in post #46 WHICH IS THE ONE WE ARE TALKING ABOUT!

My reference was wrong, looking at a different distributional analysis that Kotlikoff was marginally associated with.

The one I am speaking of is the same as you are referencing,

"Replacing the U.S. Federal Tax System with a Retail Sales Tax - Macroeconomic and Distributional Impacts - Report to Americans for Fair Taxation"

that you pretend AFT is hiding and doesn't give out, yet you certainly managed to get a copy of it easily enough. Just trying to confirm that you received it from AFT as obviously anyone who asks for it should be able to do.

[ancient_geezer]

I provide material with internet sources where available or current news accounts so everyone can read what source there is in readily available form and see it in the context it exists.

What a total crock. You've been referencing Kotlikoff's and Jorgenson's unpublished reports to the AFT for years.

Intersting that I have been providing internet sources to the Jorgenson material I have used, pointed to information that anyone may aquire at local libraries, and papers available for the asking from AFT.

Can't see anything at all hidden or unpublished where I have made reference. But I have seen lots of material not readily available to the causal reader with out substantial effort or cost from you.

[ancient_geezer]

I am particularly interested in what Kotlikoff's paper has to say about inflation or deflation of tax included prices and any changes to the business cycle that he should have provided for in his simulation for it to accurately reflect shelf (i.e. producer) pricing of goods and services to the end consumer.

He doesn't say anything. Why would he? Prices don't mean anything. That's why economist use real terms.

ROTFLMAO, in other words he has said nothing concerning prices in the paper you are looking at, inspite of claiming:

"This pretty clearly shows that there will be no change in prices relative to wages due to microeconomic effects."

Where the simulation shows real wage increase not decrease that you pretend, calibrated against the economy and tax law as it existed prior to 1996.

I now have a request to AFT for a copy of that paper, it will be interesting to see just what Kotlikoff actually had to say, what assumptions and economic factors were implemented, NRST rates and parameters he used were and how closely he tracked the provisions of HR25, which was authored and introduced into Congress in 1999, several years after that old '96 Kotlikoff study.

I have found AFT's usual turnaround to be a few days for general request, so I be back with you then after I have had the opportunity to take a close look at the study we are talking about and the results therein.

[Your Nightmare]

Just trying to confirm that you received it from AFT as obviously anyone who asks for it should be able to do.

I didn't get it from them. But I'm sure they have it since they paid so much money for it. You're so chummy with them, ask them.

[Your Nightmare]

ROTFLMAO, in other words he has said nothing concerning prices in the paper you are looking at, inspite of claiming:

Please go pick up a economics text book.

He didn't talk about "shelf prices," he talked about "real wages" which are wages in relationship to consumer prices.

Where the simulation shows real wage increase not decrease that you pretend, calibrated against the economy and tax law as it existed prior to 1996.

I pretend, huh? This is the paper you were indirectly referencing in #46 and it shows real wages dropping the first year.

[rwrcpa1]

Thanks for posting that article. I heard he did it but didn't have a chance to read it until now.

[Conservative Goddess]

I asked AFFT for a copy of Kotlikoff's original work and they readily provided me with a copy. Here are some excerpts:

The REAL wage rate that you quoted is in fact accurate. However, buried within the body of the paper is the following explanation for the initial slow REAL wage growth: "The initial decline in real wage growth as well as its subsequent slow rise, which is documented in Table 4, reflects the significant short-run increase in labor supply induced by the reform. Workers take advantage of lower effective taxes on their labor supply to work more."

There are other measures of welfare that are also considered in the paper. "Welfare changes are measured as equivalent variation --as the uniform percentage change in agents' lifetime consumption and leisure in the absence of tax reform that would leave them with the same level of utility they enjoy as the result of tax reform." Kotlikoff stratified the population into 'ability classes' and ran the model to see how each ability class would be effected. He found "...all ability classes enjoy significant welfare improvements in the long run. Class 1 experiences a 3 percent long-run gain, Class 6 experiences a 6 percent gain, and Class 12 experiences a 5 percent gain; i.e., the biggest winners are those in the middle class."

Furthermore: "The macroeconomic benefits from the reform occur fairly quicly. By the fifth year of the reform, output is 8 percent higher than it would have been absent reform. For the actual U.S. economy, a permanent rise in output of this magnitude would be non trivial. This year's growth rate in U.S. [year of the paper was 1996] per capita output is predicted to be about 1.4 percent. Achieving the 12 percent long-run increase in output predicted by the model through tax reform would otherwise require 8 years of compound growth at a 1.4 percent rate; i.e., this simulated tax refrom delivers the equivalent of 8 years of economic growth."

The conclusion, from the introduction of the paper is as follows:

"The model predicts significant macroeconomic and welfare improvements from implementing the proposed tax reform. In the long run, the reform raises the economy's capital stock by 42 percent, its labor supply by 4 percent, its output by 12 percent and its real wage rate by 8 percent. It also lowers REAL interest rates by more than one quarter. Moreover, the welfare levels of poor, middle class and rich members of society alive in the long run are all raised significantly, with the largest improvement being enjoyed by the middle class."

There is no Enron style accounting going on here. The slow real wage growth is a function of the increased labor supply.

[rwrcpa1]

Where did you get it? I'd like to see this paper too.

[ancient_geezer]

Kotlikoff makes it clear in his testimony that the 30% inclusive rate is required

Ahhh a rate set on expectations of spending rather than revenue neutral conditions, for reforms expected to replace current law and revenue receipts only.

You are aware are you not that tax reform legislation is acually supposed to be predicated on current law it is replacing tax reform bills try to adhere methods rather than lowering or raising the amount of taxation in order to to take tax rates out of the political sniping to concentrate on changing how taxation occurs rather than how much taxes to raise which is a budget issue not a basic tax reform issue.

You may want to fight budget battles, or raise taxes. However, that is to the intent or purpose of the Flat Tax legislation nor the Fair Tax NRST for that matter.

Budget battles and raising or lowering intinsic levels of taxation is a question best answered in the budget process, not in a taxreform measure with objectives to replace current law rather than propose increases or decreases on the level of taxation in the nation.

[Your Nightmare]

You may have missed this footnote:

The decline in the real interest rate as well as the rise in the real wage rate would be smaller if the model were modified to permit international trade in goods and capital.

I'm pretty sure that in the real world the US economy permits international trade in goods and capital.