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.
Was my conclusion correct in that you were describing imports?
I was describing net exports, the normally excepted measure of trade balance, NIPA/GDP measure of exports - imports. So the description is in regard to both in relation to each other. Export volumes would initially increase as trade advantage is exploited from repeal of the business side income and payroll taxes under the FairTax act. Dollar would appreciate against world currency markets, imports would increased volume adjusting price downward towards matching domestic prices. The net result would trend back toward balance.
I agree that sales taxes do not affect exports I was merely referring to the payroll taxes.
There are no payroll taxes under the FairTax, they are repealed along with income taxes.
No payroll tax, no income tax, only retail sales taxes levied at the retail sales counter.
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.
Which just mean we would not only appreciate the dollar, we would retain a competitive advantage in our exports in foriegn markets from which the U.S. economy will benefit.
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.
The WTO does not prevent us from removing the CNIT, it prevents us from creating a subsidizing our exports. With the WTO rules anyattempt to rebate CNIT to an exporter is seen as a subsidy of our export goods under GATT/WTO definitions.
Going to a national retail sale tax that is applied equally against both domestic and foreign retail goods and services does not create a defacto tariff, and modifying our system to an exclusively indirect tax such as the NRST is, is not prevented under WTO/GATT.
That is the problem it cannot be quantified.
You seem to have knowledge in this area and I have not paid much attention are there other payroll/SS type taxes in Europe other than VAT?
Thanks for the link to the paper. Since it is 55 pages I will have to wait for more time to give it proper study.
That helps wrt some of the potential problems. However, nothing is going to eliminate the problems with big ticket items though.
first because today's rates are INclusive and second because it's harder to figure today's rate as exclusive.
That's because before you can do your calculation you first have to know what the true income tax rate is.
Second you're "exclusive income tax rate" isn't calculated from your gross income. The sales tax is paid from gross income...No comparison there.
The result of your calculation for your bogus rate is a percentage of (of = muliplied times) already taxed adjusted gross income. Conversely if the "exclusive income tax rate" is a tax on it would be a rate ON after tax income.
Not only is your calculation for "exclusive income tax rate" not a comparable rate. It isn't a "tax rate" by any definition of tax.
I assume that your use of the abbreviation "FT" means FairTax and not Flat Tax. In any event my comments were to the poster (not you) who was offering up notions of "profit maximization", "demand curves", etc. (among other ideas).
Despite your claim and pretense of economic snobbery, most of the FairTax backers grasp the issues quite well, thank you.
Your representations merely illustrate why economics is called "the dismal science". There are many economic theories that may be cited to illustrate almost any point one chooses (the meaning of the "dismal science" phrase since it is not a science at all, but merely - given the trappings of such by those such as yourself who wrap themselves in calculational economics - has the appearance of a science but is merely a manner of expression).
And one does not deed to "deal with" economic theory at all to realize the deleterious effects of the income tax and the fact that a good bit of this is passed forward to consumers. To argue otherwise as you do is nonsense no matter how many "economists" you may cite. Most people are not foolish enough to sign on to such a representation.
With respect to economics and economists (or even "economists" such as yourself), there is this to illustrate their Alice-In-Wonderland approach to things
THE DISMAL SCIENCE:
"A slang term used to describe the discipline of economics. It was given this description by Thomas Carlyle, who was inspired to coin the phrase by T. R. Malthus's gloomy prediction that population would always grow faster than food, dooming mankind to unending poverty and hardship.
While this story is well known, it has been debated and deemed to be inaccurate by some. Those doubting the story say that Carlyle was reacting not to Malthus but economists such as John Stuart Mill, who argued that institutions, not race, explained why some nations were rich and others poor. Carlyle attacked Mill, not for supporting Malthus's predictions about the dire consequences of population growth, but for supporting the emancipation of slaves. It was the discipline's assumption that people are basically all the same and thus entitled to liberty that led Carlyle to label the study of economics "the dismal science". The connection was so well known throughout the 19th century, that even cartoonists would refer to it knowing that their audience would understand the reference."
So, you see, economists never agree on anything (not even to the meaning/origin of the term for which their discipline (discipline, not science) is known: To pretend that you (or your sidekick with the Nightmare VAT) have all the answers to all economic concerns is ludicrous as is the repeated promotion of off-topic points.
Why are big ticket items any different than little items? They in fact are probably carrying MORE embedded tax cost because of the nature of the production process. The amount of embedded tax cost increases at each level of production, where the production process is NON-vertically integrated. The little ticket items, that are produced in a single process....are not going to carry much embedded tax cost.
FairTax will be MOST beneficial to those items with a complicated production, in a non-vertically integrated process....like cars...homes.....appliances. Most of those things are assembled, but the sub-assemblies are made by various producers.
You need to get out of the classroom some.
To see the all-too-common implementation of the VAT, check the links given in this post (#97):
http://www.freerepublic.com/focus/f-news/1401516/posts?q=1&&page=97
You will see that all of these countries (and they are typical of the over 100 VAT countries) have not only a VAT but also personal and (usually) corporate income taxes as well. The VAT as implemented in actual practice is a logistic, administrative, compliance, and evasion nightmare. It is certainly far worse than only an income tax system.
An Internet search for actual experiences with the VAT will show you some of these nightmare experiences.
You're getting into math again. Fool.
THe kennedy example is not related. First, we're discussing an increase in rate, not a decrease.Really? I thought we were discussing dropping the corporate income tax rate to 0%. Isn't that a reduction? What rate are we discussing is going to increase?
You're babbling again and embarrassing your partners in crime (the SQL crowd).
Better go take your mdedications.
Exports do not depreciate the currency. Exports strengthen the currency.
I understand there are no payroll taxes under FT my post reflects that.
Being a reserve currency causes the dollar to be over-valued.
WTO rules would not allow the US to claim a trade advantage for removing CNIT. I never said the rules would prevent the US from removing it.
Nor would I argue that sales taxes are the equivalent to a tariff.
Because they are financed.
That is my belief as well. I have a paper on it to review but have not had time as yet.
In fact, the discussion was about ELIMINATING the rate, not decreasing it. It's like the Little Man (paraaphrased from Ogden Nash):
"I saw a man upon the stair
A little man who wasn't there.
He wasn't there again today--
Gee, I wish he'd go away!"
If it ain't there it can't be reduced - it's already gone.
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%.
LOL, tax inclusive rate is absolutely no problem at all it is a bills defined rate to be applied to NRST + shelf price.
Multiply the NRST included payment for goods and services by the legislated rate, the amount of tax that is listed on your purchase receipt will match. If it doens't you yell at a clerk and get a store manager to make it right just as you would do today in any retail sale tax situation.
A seller wanting to calculate the tax inclusive price from the amount he expects to retain for his goods or service after remitting tax collected , simply uses the formula:
(Amount retained from payment after NRST)
(1- NRSTrate)
To establish the NRST tax inclusive payment required for products to collect the correct amount of NRST in the payment.
Don't see that as paricularly mysterious or difficult or requiring extensive complicated tables.
This does not affect me since arithmetic is not a problem. But we are in an era when many can't do simple division.
Same ones don't know to multiply either, and to check the rate against amount of tax collected in a reciept now is beyond many of them, and less likely to even occur to them to do so far as my experience in dealing with the MTV set.
Those that are inclined to chech tax amounts on a sales slip, appear to be wizards on their handheld calculators and such, inspite of all their other short comings. A problem that I figure is probably the root of why they are arithmetic challenged in the first place.
Don't see the problem in either case, the first don't care and are not inclined to in the first place, no matter what they do. The second case has it covered.
You're getting into math again. Fool.
Isn't that your bogus "exclusive tax rate" math/table AG spams the threads with?
Who's the fool again?
You thought wrong. ANother poster and I were discussing results of increasing it to 95%. You got it backwards. No surprise.
No "claim" is required to remove them ... the FairTax is border-adjustable taxation as is the VAT currently used by Euro (and other) countries.
This would cause problems for the VAT countries if we go to the FairTax since that would be the only tax here, but the VAT countries typically have (in addition to the VAT) corporate and/or personal income taxes which work to embed some costs into their exports thereby making them les price-competitive.
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