Posted on 10/09/2007 5:27:15 AM PDT by Man50D
Ron Petrucci's Sept. 24 letter addressing Charles Firth is right on a number of points. We have been running more than an $800 billion trade deficit. That can't go on for very long. Ron says we're a debtor nation and we are.
Our manufacturing continues to move overseas to "more tax friendly" locations. We can't exist by providing each other services. Picture everyone doing their neighbor's laundry. We need to produce products to exist.
What Ron neglected to say is that the reason for that migration is our tax system. Federal taxes and associated compliance costs comprise an average of 25.9 percent of prices of our goods and services. Imported goods and services arrive at our shores essentially tax-free, because most foreign governments encourage exports by rebating their taxes at their borders. We don't do that.
When we try to sell there, they add their taxes to our prices, so our goods and services end up bearing double taxes. American companies have a raw deal both ways. That's why they have trouble competing.
There is an answer, though in the form of HR 25, The Fair Tax Act. That bill is in the House ways and means committee. It is the most thoroughly researched tax bill ever.
For the second time, a group of noted economists recently wrote a letter to Congress and the president, urging them to pass it and sign it into law.
The bill already has more cosponsors than any other tax bill in 80 years. It is a grass-roots proposal. It will pass only if enough citizens support it and tell their representatives. If passed, the current federal tax system would be replaced by a national retail sales tax applied at the final retail sale and collected by the states.
Net retail prices paid would be about the same. Revenue raised would be about the same. Collecting a sales tax is much more efficient than collecting an income tax, it provides a steady revenue flow and everyone would pay.
It needs to pass now, though, before this president leaves office, because no first-term president will entertain changing the tax system, and Social Security will run out of liquid assets at about the end of the next president's first term.
Check the proposal out at www.fairtax.org
That did not leave because of taxation, it left because it was simply more profitable to pay foreign workers to make the stuff and ship it back to the USA.
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and our workers are making more money
My, you are hysterical today. Tone it down and think deeper.
Get this - taxes paid by one are ALREADY passed on to the next consumer under current taxing schemes.
If my business is accountancy, and I pay some % of taxes, I’m passing the cost of those taxes on to you in the form of fees high enough to cover my costs, INCLUDING taxes.
Why do you think our wage rates are higher than the rest of the world, hmmm ? In part, it’s to cover our high tax rates.
The Fair Tax would screw over people with Roth IRAs.
The inevitable rise in price inflation would also devalue everyone's post tax savings, which would be very significant for a large portion of the population.
The Fair Tax is revenue neutral. It moves the burden of corporate taxes to a sales tax. It moves the burden of the personal income tax to a sales tax. However, it does not remove the tax burden.
If the tax burden is shifted, rather than removed, where are the benefits coming from?
Reduced compliance costs for one, but there will still be considerable compliance costs as well as tax fraud.
The real place where they are expecting benefits is by increasing the cost of imported goods more than they increase the costs of domestic goods.
It is an import tariff that isn't an import tariff. American companies would be relieved of their direct income tax burden, while foreign imports would still have their tax burdens in their countries.
However, American exports would not be taxed. No corporate taxes, and no sales taxes since it is sold outside the US. Despite the 14% in sales taxes in Ottawa, Canada I would be able to have significant savings buying US goods that were exported to Canada, paying Canadian taxes, and then sneaking the goods back into the US.
Different people are bound to have different opinions on if that is fair or not just like different people have opinions on forms of protectionism vs forms of free trade.
However, this is going to have a very similar effect as putting an import tariff on all good imported into the US to shift a sizable portion of our tax burden to such a tariff.
If you think such a broad tariff is a good idea, then the main remaining problem with the Fair Tax is it's effect on savings.
If you don't think such tariffs are a good idea, then why is this really and better than a flat income tax with no deductions or exceptions which would also drastically reduce compliance costs?
Try thinking thru the points rather than screaming and whining nonsense. It usually works.
so lower the rates. Don’t shift them on one sector of the economy. A sector that is mostly very small business and deals with a lot of unmarked cash...
Ask landscapers, roofers, drywallers and other trades whether they are already being undercut by illegals avoiding the current tax scheme.
There is no perfect tax; there are just some that are “better” than others.
Personally, I’d rather a system that takes a % off the top at the source than one where I and every other individual and business entity spend hundreds of hours a year in paperwork and thousands more in accounting services to satisfy the government enforcers.
right and the prebate will giver everyone free money to pay for the tax so they can get another prebate. Its a perpetual motion machine.
which is where the fairtax scam fails utterly.
In order to know where the sales are, the IRS(whatever successor name) will still require the constant access and audit power. They will even, based on prior behavior, impute the level of business you should have and should pay.
Instead of 50 employees being the ledger, it will be all the individual transactions. Much more paperwork than simple quartly deposits.
Past history will show how easy it will be to avoid taxes. Those with the means will do so easily, frequently, and totally legally. This will shift the tax to the middle class where the prebate will now move dependence on a goverment check up the ecconomic scale. Nancy Pelosi and Ted Kennedy will be happy.
Yeah, facts can be a tough thing to overcome. Mississippi has a new Nissan plant and soon a new Toyota plant. No tax complaints I can see.
but it is much easier to have a very low rate with an income tax than dump everything on a fair tax and have a much higher rate as a result.
A high rate means a bigger underground economy.
Excellent points.
The first one you made I did also - whether you have an IRA/401k or a Roth, someone will be screwed. That would need to be addressed for sure.
This country was run on import/excise taxes from its inception until 1916. It served us well then and wouldn’t hurt us now IMO. Every other country uses this system.
I don’t see compliance costs being more onerous to a business than the current collection of state sales taxes. If you think otherwise I’d like to know why you think so. You will never get rid of tax fraud. I think compliance/enforcement will be significantly less costly because there will be less opportunity to fudge, and there will be fewer entities reporting taxes.
I also think that the savings/investment rate of individuals will tend to increase because the tax will be visible on consumption, thus discouraging some.
The downfall of a flat tax is that we keep the IRS and have the annual exercise of reporting income etc. Then there will be the same pressures from special interest groups to give specific exemptions for perceived social steering and we’re right back to the garage Stalinist system we have now.
If 25% of the total price is tax costs already paid it sorta makes you wonder how 50% off or even 25% off sales are possible.
Ever hear of overstock sales? How about loss-leaders?
Since “fair taxes” (whatever we call them) would be paid on most items, I hardly think consumers buying a big screen at Best Buy will evade the tax, and that ain’t small business dealing in cash.
Would small cash-based businesses continue to report lower sales than they actually do ? Of course - I don’t see much of a change there. I would be absolutely astonished if the majority of sub shops reported even 75% of their actual business, for example.
Corporate taxes are, what, 25% of profit? If profit is 10%, then corporates taxes are about 2.5% of the price.
When they say federal taxes are 25.9% of prices, they're referring to corporate taxes plus payroll taxes (employer and employee) plus employee withholding. All of that money is built into the price of the product, is collected by the employer, and is forwarded to the federal government.
"Many still don’t pay individual taxes, which the Fair Tax would correct."
Some don't pay individual taxes -- like illegals and criminals. And under the Fair Tax, I'm going to go out on a limb and guess that those same people won't be collecting and forwarding the Fair Tax either ("let's see, your heroin comes to $900 plus the Fair Tax for a total of $1200, please").
Guess that higher standard of living has nothing to do with higher pay then.
What is it with you guys dissin’ America’s success...
“Free money” ? Hello, that would be the money the individual/family earned. Or are you one of those who believe the government owns your income except for what they allow you to have ?
no because the government can incorporate an home electronic allowance in the prebate.
The electronics industry will petition for a prebate allowance as an INCENTIVE to boost their industry.
Have you ever run a business ? You collect a % of your sales for state sales tax. You then report and send that money to the state on a monthly basis. If they think you are keeping those taxes they audit you.
What is different than what most businesses do now ?
You mean like, "With the Fair Tax, prices remain the same, you get to take home your gross pay, AND you get a prebate check every month for $500.
Ever see that on a Fair Tax thread at least once?
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