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 idiotic MARXIST tax system we currently labor under puts such a burden on our products that they cannot fairly compete.
Sorry to burst your tax bubble but taxes aren't the problem. Taxes are minute compared to all the other government regulations at all levels.
If you want to be a champion for business, then you should be stomping your feet and beating your fists over regulations, not taxes.
The ADA alone is a huge cost to business if not a killer.
Where oh where do gross profits come from?From whatever mechanism the business uses to generate profits. If the business sells widgets, they get their profits by selling widgets for more than it cost to make them. If they can't sell them for more than it cost to make them, they loose money and don't pay income tax.
Look under sales reciepts as there is NOWHERE else for them to come from!Technically, that's not correct. Plenty of companies have investment income of their own. But if you are trying to say a business embedded their income tax in the price of their products, that's just pure bunk. A business sells a product at the market equilibrium price whether they have to pay an income tax or not. They get what they can for it, not what they want (or even need).
pre-zactly. LOL........under deadline pressure....more when I can FREEP.
"Go look at any annual report and see if income taxes are listed under expenses."
Ok, I did just that. All three annual reports that I checked showed income taxes as a line item on the INCOME STATEMENT and were subtracted from revenues to arrive at Net Income.
Have you ever heard of EBIT (Earnings Before Income Taxes)? Any idea what the difference is between EBIT and Net Income?
Geez. I can't believe we are actually debating whether or not income taxes are an expense. This may be even dumber than the time we debated whether costs have any effect on prices. Actually, we have debated that obvious point several times on FR threads.
I think the economics/finance professions call this hurdle rate of return.......
If the after tax profit doesn't meet the hurdle....it doesn't get manufactured in the US....maybe offshore.....but not in the US.
And what makes you think that a SINGLE supporter of the Fairtax bill, including it's author, would continue to support it if it were modified as you suggest it might be?
Gee I hate to break this too you but I'm pretty sure one of the authors of the fairtax (Linder's not the author) has already presented an alternative plan to the Presidents committee...YN can confirm.
"How exactly will it be more difficult to change the tax code under the fair tax?"
One of the most significant differences is that deductions against income are taken off the table by the FairTax. That is where most of the complexity in the current system is. Computing sales is a piece of cake compared to the myriad of deductions that have to factored in to compute taxable income. Could congress complicate what now is a very simple and straighforward proposal? Sure. Could it do so to the extent that it would resemble the 60,000 page monstrosity that we now have? Now way.
There are other reasons that the FairTax will be an enormous simplification, but I will save them for later.
Ok, I did just that. All three annual reports that I checked showed income taxes as a line item on the INCOME STATEMENT and were subtracted from revenues to arrive at Net Income.Were you expecting to see something else? If the company had a positive income, they pay taxes on it (actually, not necessarily). If they didn't, they don't. Income taxes, if paid, reduce net income.
Gee I hate to break this too you but I'm pretty sure one of the authors of the fairtax (Linder's not the author) has already presented an alternative plan to the Presidents committee...YN can confirm.The BEST Tax
but words and thoughts from ones own hand matter.
Lets me see:
1) On the one hand, the research, data and information from trained authorities in the subject don't matter;
2) While on the other hand, the adhominen musings, fantasies, general bloviating and unfounded assertion of a an unknown brain surgeon pretending to be a plumber do.
Gottcha, I think I go hire the plumber, I really rather not have the swimming pool in my basement.
"Gross profits, maybe?"
How do they then differ from other costs?
2) While on the other hand, the adhominen musings, fantasies, general bloviating and unfounded assertion of a an unknown brain surgeon pretending to be a plumber do
A self portrait.
"Now go to the balance sheet and look under assets and then under liabilities. Do you see taxes under these?"
Like most of the "debates" you are involved in, this one is getting far afield and irrelevent.
Let me explain basic accounting to you. Assets and liabilities on the balance sheet reflect timing differences with respect to the recognition of expenses and revenues. Does the fact that your utility bill shows up as a liability in accounts payable mean that it isn't also an expense? No, it just recognizes the difference between when you pay something (or it is paid to you)and when it is recognized.
You said that corporate income taxes are not a "cost" to a business which can be anticipated and products cannot therefore be priced accordingly. That is a demonstrably false and even ridiculous statement that has been debunked here and on other FR threads.
Your attempts to confuse the issue and and move the debate into all kinds of extraneous and technical areas is duly noted. The more educated and sophisticated lurkers on this thread won't be persuaded by such transparent and juvenile tactics.
Enough said.
Other "costs" are a cost of doing business. The widgets a company makes can't be made without incurring those costs. They are factors of production. Income taxes are not."Gross profits, maybe?"How do they then differ from other costs?
Does the fact that your utility bill shows up as a liability in accounts payable mean that it isn't also an expense?Does your utility company send you a bill only if you make a profit? Does your company require utilities to operate and produce whatever it produces? Utilities would a factor of production.
You said that corporate income taxes are not a "cost" to a business which can be anticipated and products cannot therefore be priced accordingly.I don't believe I said that exactly (the anticipated part). I believe I said they weren't a factor in pricing. If a business could raise their price to account of income taxes, they would do it anyway. A business attempts to maximize profits whether they pay tax on those profits or not.
That is a demonstrably false and even ridiculous statement that has been debunked here and on other FR threads.By whose standards has it been debunked? Yours?
Your attempts to confuse the issue and and move the debate into all kinds of extraneous and technical areas is duly noted. The more educated and sophisticated lurkers on this thread won't be persuaded by such transparent and juvenile tactics.I believe it was you who asked what category of financial transaction taxes would be in.
Post 592 was a correction for part of post 590, which I post part of to you in my reply in post 595.
Sorry to burst YOUR bubble but taxes, and the structure of the tax system are, in fact, a HUGE problem and I defy you to find a credible economist who will say otherwise.
Taxes are minute compared to all the other government regulations at all levels.
Regulations are the method by which the BIG fish limit competition from small fish. Only the BIG fish can afford to comply with them! They DO have and effect on prices but to say that effect is greater that that of the tax system is ludicrous!
what's a tax fraud nitwit?
"Businesses will attempt to maximize their profits regardless of the income tax they might owe, and if they are successful, at the end of the year, the income tax is a liability they must pay."
Bigun responds:
And where oh where will the funds necessary to pay this liability come from? (if they are not built into prices?) The tooth fairy?
YN responds:
Gross profits, maybe? (How do they get there if they are not included as a component of prices?)
Bigun responds:
Where oh where do gross profits come from?
Hint: Look under sales receipts as there is NOWHERE else for them to come from!
YN replies:
From whatever mechanism the business uses to generate profits. If the business sells widgets, they get their profits by selling widgets for more than it cost to make them. If they can't sell them for more than it cost to make them, they loose money and don't pay income tax.
if you are trying to say a business embedded their income tax in the price of their products, that's just pure bunk. A business sells a product at the market equilibrium price whether they have to pay an income tax or not. They get what they can for it, not what they want (or even need).
(and how long will the be in business doing that?)
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.