Posted on 05/12/2005 7:46:54 PM PDT by Your Nightmare
Members of the President's Advisory Panel on Federal Tax Reform on May 11 expressed concerns over the FairTax national retail sales tax, a plan that has emerged as an alternative with a major grass-roots push.
Panel chair Connie Mack, vice chair John B. Breaux, and other members worried the plan would be difficult to enforce, would be regressive, and would require a high rate in order to take in enough money to fund the government.
Breaux raised concerns that the proposed 23 percent (tax-inclusive) rate would not be sufficient to raise the revenue necessary to fund the government. The Joint Committee on Taxation estimated that it would take as much as a 57 percent (tax-exclusive) rate to be revenue-neutral. Further, Breaux said he thought exemptions that would be carved out to make the sales tax progressive would also complicate it.
Mack, who raised concerns similar to his fellow panelists', said he was "intrigued" by the plan. "But if it's such a great idea, why haven't other political entities around the world pursued it?" he asked.
Americans for Fair Taxation Executive Director Tom Wright emphasized that the plan emerged after "thorough academic research" and "thorough polling" The strong grass-roots push has resulted in some of the group's 600,000 members appearing at each of the panel's hearings and has inspired a large comment-writing campaign to the panel in support of the plan.
Sales tax advocates were among the 20 witnesses who gathered before the panel for a full day of testimony on tax reform proposals. Although the group has held several other hearings in Washington and around the country, the May 11 meeting was its first hearing on specific reform plans since Bush appointed the panel in January. The panel has been charged with identifying tax reform proposals that are progressive, encourage charitable giving and home purchases, and are revenue-neutral. The proposals are due by July 31.
Among the tax replacement and reform plans presented to the panel were the value added tax, consumption-based tax, and the flat tax, as well as proposals that would use the current income tax as the foundation.
Witnesses generally claimed that theirs was the fairest, simplest, most flexible, most transparent revenue-neutral proposal that would improve economic growth and savings while meeting the president's criteria of encouraging charitable giving and home buying. Witnesses presenting consumption-based plans praised their overhaul as taking millions of low-income taxpayers off the rolls, being easy to transition to on a worldwide basis, and including safeguards to prevent new loopholes that would result in increased complexity down the road.
Tax reform panel members, who agree the current tax system needs to be fixed, grilled witnesses without revealing whether they will ultimately endorse a consumption- or income-based tax or a different mixture of the two.
This means that if business income tax rates went to 95%, prices would have no impetus to change? C'mon. Close the book and come outside once in a while.
Why would you want to do that? Why not just use the exclusive rate to figure that?
But to compare to today's rates, it would be infinitely stupid to use exclusive rates... first because today's rates are INclusive and second because it's harder to figure today's rate as exclusive.
Guess you have missed tha fact that the thread is about the FairTax. not theoretical profit maximization, demand curves, or anything else that so warms the heart of the two-handed economists.
Your attempts to drag things off-topic does you no credit.
Great argu,ment there - very literal. Perhaps you'd like to enlighten us with wat it was you were trying to poimnt out??? As it is you seem to be just stumbling around trying to locate insults to fling ... and missing wildly, to boot.
You seem to miss the point that under the FairTax only end-consumption sales are taxed and not things used for or to produce consumer resales.
There are no "pages of rules, regulations, and definitions" and there ARE volumes of those in fact for the present system - called the Tax Code. They are so complex and voluminous that no one uncdrstands - not even the IRS.
But to compare to today's rates, it would be infinitely stupid to use exclusive rates... first because today's rates are INclusive and second because it's harder to figure today's rate as exclusive.So why no put the exclusive rate in the bill and use the inclusive rate when comparing it to the current income/payroll rates? Because the inclusive rate is used not to facilitate comparison, but to facilitate deception.
Guess you have missed tha fact that the thread is about the FairTax. not theoretical profit maximization, demand curves, or anything else that so warms the heart of the two-handed economists.Actually, it's about picking apart the FairTax, which is exactly what we are doing. And one of the easiest things to pick apart is the FairTax supporter's inane and simplistic beliefs of how the current system affects prices.
http://www.losthorizons.com/Cracking_the_Code.htm
Was my conclusion correct in that you were describing imports?
I agree that sales taxes do not affect exports I was merely referring to the payroll taxes.
Imbalances do set up the means of returning to equilibrium I don't think there is any contention to the contrary wrt that. However, the fact that the dollar is a reserve currency for world trade prevents that mechanism from working completely.
VAT are not the only taxes in Europe and it is not unified wrt to tax systems. Some countries also have taxes on corporations as does the US. To that extent WTO rules would not allow the US to develop an advantage by removing CNIT.
I have heard of it from the FT folks but consider it a fraud which distorts the real tax rate. Calculating an inclusive rate gets very complicated nowhere near as simple as figuring out a 8% rate or 10%.
This does not affect me since arithmetic is not a problem. But we are in an era when many can't do simple division.
No they are not the same. Not even close those are much easier to calculate. Apparently this difficulty is beyond your grasp as well as how prices are formed.
The effect cannot be quantified....but it is undoubtedly exerting an influence over the price of the goods in the world market. For a scholarly view of the incidence of taxation.....please see:
Stephen J. Entin, TAX INCIDENCE, TAX BURDEN, AND TAX SHIFTING:WHO REALLY PAYS THE TAX?, Institute for the Research of the Economics of Taxation, Policy Bulletin No. 88, September 10, 2004, at: ftp://ftp.iret.org/pub/BLTN-88.PDF
I'm in favor of a national retail sales tax IF it replaces an income tax.
Why did the founding fathers have problems with an income tax?
Do I accept the view that those who make more should pay a higher PERCENTAGE of their income in tax?
If the issue is maintaining the current amount of money received, cannot that be mathematically determined based on national sales figures?
Price effects of the FT are exactly what is being addressed. Those arguing for FT do not grasp the issue of how prices are determined in a market system thus the argument that removing income taxes will lower prices is flawed theoretically. Most of economics boils down to prices.
If you want to argue that prices will go down you must deal with the economic theory which says they won't. (At least from the income tax removal.) I agree as regards payroll taxes at some point but they are in the price equations.
Not only are these issues NOT "off topic" but they constitute the most important aspects of the topic.
With respect to prices.....I direct your attention to section 902(a)(3) TRANSITIONAL INVENTORY CREDIT- The trade or business which held the qualified inventory on the close of business on December 31, 2006, shall be entitled to a transitional inventory credit equal to the cost of the qualified inventory (determined in accordance with paragraph (2)) times the rate of tax imposed by section 101.
On day ONE when the FairTax is enacted.....businesses with qualified inventory (Finished goods and WIP) will get a credit against the tax equal to 23%. No need to let the change in tax law work through the supply chain...it's a done deal on day one.
That will effectively remove all embedded tax cost from the inventory on hand on day one....and all prices to fall without sacrificing profit margin. Competition will certainly reset the intersection of the supply and demand curves....where the price is determined.
But what's the inclusive payment?
The amount listed in the receipt for "price inclusive of tax."
H.R.25Fair Tax Act of 2005 (Introduced in House) SEC. 2. DEFINITIONS.`(a) In General- For purposes of this subtitle--
SEC. 510. TAX TO BE SEPARATELY STATED AND CHARGED.`(a) In General- For each purchase of taxable property or services for which a tax is imposed by section 101, the seller shall charge the tax imposed by section 101 separately from the purchase. For purchase of taxable property or services for which a tax is imposed by section 101, the seller shall provide to the purchaser a receipt for each transaction that includes--
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Simply multiply the "tax rate" times the "price inclusive of tax", check the result against amount of tax paid. Exactly as one would check a tax bill today.
That you pretend otherwise is irrelevant. Your opinion is unimportant. Your only use is in identifying the deomoguery that will be used by the income taxers when this is debated.
grin
You're clueless...But what's the inclusive payment?The amount listed in the receipt for "price inclusive of tax."
As bad as you want this to be a vast right wing conspiracy to deceive you, it isn't.I don't think it's a vast conspiracy to deceive, I think it's limited to the AFT and their supporters.
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