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.
That calculation has you calculating a tax on a tax.
You are really headed for the moon now, you been talking to lewislynn too much.
Given a payment that includes tax within it, as you specified.
justshutupandtakeit: "New car 50 Gs including tax. What is the tax? "
To calculate the amount of tax in that payment one multiplies the payment by the tax inclusive rate.
That my freind is not a tax on tax, that is the calculation of amount of tax contained within a tax inclusive payment.
The rest of your reply, based on a garbage assumptions, is merely more garbage.
GIGO, Garbage In Garbage Out
Final Price = Price +Tax = Price + 30% that is the only clarity in this mess.
Your personal preferences have little to do with the acutal situation, which is to enact an tax system that replaces an income/payroll tax system. Not some state sales tax irrelavent to the debate.
| The Wrong Camera: The Denominator of the Tax Incidence Equation. Dan R. Mastromarco; LLM, Argus Group, Washington D.C. Tax Analysts Document Number: Doc 1999-32575 Citations: (October 8, 1999) B. Use a Consistent Size Screen to Portray It.
[129] In making comparisons between alternative taxing systems it is important to ensure therefore that these comparisons are consistent, fair in terms of expectations, and are well explained. Fair comparisons eliminate and do not exacerbate confusion over a relatively critical point as the means of expressing the tax rate. The only means to do so is to ensure that a tax-inclusive rate is compared with a tax-inclusive rate.
|
Naw ... it's called the FairTax and there are great amounts of good information about it here:
http://www.fairtax.org/index.html
Especially look at FAQ and Rebuttal tabs. The name-callers are attempting some humour.
Terms of Trade = "The conditions under which a nation carries on foreign trade, with reference particularly to the question whether such conditions are favorable or unfavorable." Dictionary of Economics
You are speaking of changing those conditions by making them more favorable.
Your excerpt should be read throughly with particular attention to the admission that elasticities will determine the effect of a FT. It does not support your view as much as you might hope.
Try Eastern KY where Loretta Lynn grew up.
I see no reason to launch into an economist citing contest since it adds nothing to the discussion.
"Standard theory"??? If you were being open minded, though, I think you would recognize that there are a numbe of economists who do not agree with your position (remember the "dismal science" discussion earlier).
Why would you think that? I have no idea about any of that. However, it is easy to see that you rely on textbook analyses to the exclusion of real world cases. Just like an academic does.
Good Grief!!! He's been studying looey-rithmetic!
That's TOO funny!
I have had no contact with LL at all on this or any other issue. But it is obvious that back calculating from the price including the tax has you calculating part of the tax on a tax. The 50 Gs you start with INCLUDES the tax which is then multiplied by a rate to get the total tax. Only 38500 is the price of the car so 38500*.23 is the tax on the car while the rest is the tax on the tax.
A "sales tax" taxes a sale. Hence the tax is on the price of the article, this is a tax on an article and a tax on a tax no matter how you cut it.
I have not implied that there is a common position on the FT merely on micro theory in general which has really been the point of my discussion.
Betcha don't have a mom born in "Cooter" though.
Wrong-O!! The "reward" is the removal of the border-adjusted taxation allowed by their requlations.
"If you remove non-income tax taxes from exports the other countries will remove their VAT taxes which will leave you with no change."
"VAT countries already do that; it is one of the main principles behind VAT taxation. Therefore, there would be no change in this respect."
"They have non VAT taxes as well."
I am well aware of that. Your point is? You implied that we should not convert to a border adjustable tax because other countries would retaliate with their VATs. I pointed out that they already are border adjusting their VATs. What point are you trying to make - that they will convert from other non-border adjustable taxes to those that are border adjustable (such as their VAT)?
Don't know about Mom ... I was just found under a rock.
Micro theory as relates to what?? The thread is discussing the FairTax and not micro theory.
Actually, that's why they tried their VATs originally but found that in practice they fell down badly and so had to be bolstered by other taxes such as personal and/or corporate income tax.
Even Zambia (which claims to have the wunnerfulest VAT on the planet) has both personal and corporate income tax as well as VAT. If Zambia does it, can others be far behind (acrually they're ahead, having had those systems longer with Z being a relative late-comer).
"There is no such rule I was speaking of obtaining an advantage by backing out income tax effects from export prices as is done with VAT. WTO doesn't care if you have an IT or not but will not reward you for removing it if you do."
No FairTax supporter that I am aware of has ever implied that the FairTax would convey a "reward" from the WTO. We are simply looking to eliminate the bias that our own tax system provides in favor of foreign producers at the expense of our own producers now. The FairTax would tax imports and domestically produced items equally, which is a much better deal for US producers than what we now have and better than any other specific proposal that I am aware of.
Of course, I'm not counting the Nightmare Flat or the Nightmare VAT, which can be anything you want them to be. I said "specific proposals".
Just more of the same old "We'll wear them down with circular arguments" tactic they have been employing for some time now if you ask me.
Personally I'm sorely tired of it.
That calculation has you calculating a tax on a tax. This makes my point even more pointed. The car costs 38,500 and you pay a 30% tax of 11500. Multipling the total price by the tax rate of 23% gives a tax on the car plus a tax on the tax. This is worse than I thought.It's an iterative process unless you convert the inclusive rate to the exclusive rate.
x 23% x 23% x 23% x 23% x 23% x 23%
Hard to think what you believe these posts prove. Many of the statements are conditiional saying "if this, then this" and "if that, then that" (Kotlikoff's quote wher he ASSUMES and then goes on to talp about this assumption) rather than any specific description and many of them come from the same folks who bring us such niceties ad the Tax Burden charts (JCT, CBO, etc.) which are anything but realistic.Because nobody knows how the Fed would react. They are all consistant in expressing the belief that either consumer prices and take-home pay stay the same; or consumer prices and take-home pay rise.
If you were being open minded, though, I think you would recognize that there are a numbe of economists who do not agree with your positionCan you name one?
?? That is already the case.
I never said anything about "retaliation" with VAT. The point is that there are taxes outside the US which offset the disadvantage to US exports.
Micro theory has price theory as a major part. It is price changes under FT which is one of its major points and which I have challenged wrt income taxes.
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