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
no argument from me on those...
How about all the entitlements getting flushed...
How about killing off all the pork...
well... you know what I mean....
Yada yada yada, I guess you think smuggling doesn’t exist. But we were talking about Yachts and big boats. How you going to get those across the border. Lie and bluff?
In order to gain on a Rolex one has to travel. It’s not going to be worth the gain on one Rolex. If they bump up their gamble to a case of such items, for what purpose, to resell? Then they have to apply the NRST to their sales. And if they don’t and they get caught, prison.
So yeah, go to Canada and buy the Rolex with no NRST. Only problem is Canada will add their tax. Ok, so buy it on the street, you win. Get back across the border and then what. You got a Rolex at a discount on the street in Canada, better hope it’s not hot.
You’re talking low level crime here.
Fact is, the FairTax is tons easier to enforce than the Income tax.
And as for your boat building industry comments, I and just about anyone else can google and cut and paste. But I have family members that own a significant nationally known brand of boat manufacturing. To a person they would jump for joy at having the FairTax because it would make their lives dramatically easier.
Ask practically anyone in business, they will tell you they will vote for anything that makes their life easier.
Are you opining or generally interested in learning?
If you seek learning, I will be happy to answer your questions.
Ok...
I live in Seattle. Washington State nearly lost Boeing’s assembly and manufacturing operations.
The only thing that kept Boeing in the State were tax breaks. So your example is BS.
What else ya got? Hot Rolexes off the street?
it takes money at least in the short term to flush entitlements. especially the big middle class medicare and social security.
I don’t want my brains to fall out but I’m pretty open minded. :)
Why do you think the FairTax would be harmful to Roth IRA account holders?
I am amazed at your ability to generate BS. You have a talent for it.
Nothing you say is based on research or fact, just blathering. You think people can’t see through your lies?
I mean more paperwork? Huh? Retailers already print receipts for every transaction. Receipt machines have an easy code access to add a sales tax. And you’re talking about some absurd comparison as payroll to transactions?
Ever try selling Used Cars? I think you’re a natural!
Yeah, you pretty much got it. I don't care that "Corporate tax rates are 39% - federal - for any corporation earning over $75,000", and, quite frankly, I wonder why you do. I'm interested in the AVERAGE corporate tax rate. Why aren't you?
"So, to continue, if the drug dealer buys an item from a corporation that pays no federal taxes, he is still paying nothing."
The item the drug dealer buys from a corporation contains the cost of the labor to manufacture it. The cost of labor includes 7% FICA (employer) plus 9% FICA/Medicare (employee) plus employee withholding (15-20%), all of which flows directly from the employer to the federal government.
The drug dealer is paying these federal taxes today -- they're embedded in the price of the item today.
The Fair Tax would simply make them visible.
"Dude, look under the surface if you have an IQ above room temperature."
Dude, you're embarrassing yourself again. According to the link YOU provided, "During the 1990s, corporations as a group paid an average of 25.3 percent of their profits in federal corporate income taxes, according to new Congressional Research Service estimates."
Let's see. I used 25%. Gosh, I was off by .3%.
Ever try selling Used Cars? I think you’re a natural!
-
a booming business after the fair tax...
Try a little learning sometime before engaging mouth. You will only benefit.
Start with a rudimentary study of the supply chain and how each entity in the chain is taxed on a number of levels. Then remove all the taxes the FairTax abolishes (the embedded taxes) and shunt those embedded taxes to the retail end of the chain, then replace them with the NRST.
The result is that prices are stable.
You need to get that understanding so that you don’t slip into the quicksand of the yammering curds found on these theads. Don’t waste any more comment energy until you’ve smartened up on it. You’ll be thanking me later.
but a lot of taxes don’t show up in the form of higher prices. They can show up in the form of lower dividends, employment or wages.
Yes that is what I mean. The system is vastly more efficient than the Income tax.
An analogy is how can Honda Civic Hybrid get 56 mpg? Or the Toyota Prius?
Configuration changes and smart engineering can create great efficiencies.
And to carry our hybrid analogy further, it was an Auburn Michigan company that came up with the hybrid technology that Toyota picked up but not until after the American auto companies turned them down. And why was that? Because of status-quo politics.
It will be the same with the FairTax. K-Street lobbyists number over 53,000 and over half of those are there to game the tax code. But their days are numbered.
Already the public is getting educated. They want the Income tax gone. More and more Members of Congress are becoming Cosponsors and democrats are catching heat in their districts to get with the FairTax. One democrat has already signed on. There are new documentaries being produced to clarify just how the FairTax works and there will be Truth in Taxes legislation once statistical studies are published. As soon as the American voter gets it that they are paying a chunk of their earnings into each purchase be it a Starbucks Latte or a Milwaukee Sawzall, they will be hammering Congress worse than they did Comprehensive Immigration Reform.
The FairTax will do for the economy what barnicle cleaning does for ships. It will knock off the leaching entities and free up that money and leave it with the person that earned it. The money supply will stay the same. Assuming the Fed does nothing, money will shift from taxing entities back to the wage earner. The losers will be lobbyists and IRS employees. Money back in the hands of consumers will fuel economic growth without increasing the Money Supply.
Right now the Fed is in a bind because their money creation is inflationary and causes a run on the dollar. On the other hand to sustain economic growth they know that the American household must get access to more money. But the days of the home as piggybank are fast fading and tax cuts are impossible because of the baby boomer retirements coming.
The FairTax is exactly what is needed and yes it will put $$$ in people’s take home pay and keep prices stable.
Hmm. It seems I did have it wrong. But since I paid 30% of the $30K, someone is going to have to cut me a check for 30% of $10,210, or $3,063, which is my overpayment. Which is the same whether I spend $30K or $30M.
So the government will give everyone $3063/yr?
The whole point of a Roth IRA is that unlike tax deferred With tax deferred investments such as a 401K the government lets you invest a larger amount of money by not taxing that income first, but still taxes that income and all capital gains as they are withdrawn from the account.
With a Roth IRA you do not get to invest pre-tax dollars. You invest post tax income, but the government promises to never tax that money or any gains from investments made with that money every again.
If we shift to a sales tax under the Fair tax the effect on earnings from the 401k is minor at most, because the income will no longer be taxed as it is withdrawn, and you will instead pay taxes when you consume things during your retirement.
With the Roth IRA, all those earnings that the government promised to never tax as income now get taxed through an extremely high consumption tax which completely voids all benefits of putting the money in a Roth IRA. Those people put that money in a special retirement account that they were not allowed to withdraw it from except under specific hardship conditions until their retirement, but the Fair Tax removes all benefits for doing so, and those benefits would be huge under our current tax system.
I've chosen to invest a considerable portion of my income in my Roth Ira that I could have otherwise invested in my 401K and not have had to pay any taxes on that money. I know a number of people that converted other retirement investments to a Roth IRA when they first were offered because they were such a good investment and people didn't think Congress would allow people to keep investing in them for long. Converting them however meant paying income taxes on those investments that had been pre-tax investments.
The second way that the Fair Tax is harmful to Roth IRAs and all savings for that matter, is that it is going to create a huge price inflation spike when it is implemented. The 30% sales tax will be added on to the price of items. This will be offset by greater take home pay, so you will pay more for items, but you will also have more disposable income. The effect on future income is minimal. The effect on your savings from before the Fair Tax goes into effect is that your savings will now buy you about 20% less goods.
Fair tax proponents love to talk about how the increase in take home pay balances out the fact that you have to pay more for things when you buy them due to the sales tax, but they always seem to ignore the fact that no one is putting money into your savings to compensate. You already paid income taxes on those earnings, and the government sure isn't going to give those taxes back to you.
Some people will try and tell you that the price of goods will drop so that the price including the tax will match what you are paying now. That's complete B.S. The Fair Tax is revenue neutral when compared to the current tax system. The sales tax needs to make up for both personal and business income taxes that it replaces. The only difference is the difference in complying with the sales tax versus complying with the current income tax. Those cost saving also only effect domestic products. Imported goods aren't going to see those cost savings, so they are just going to jump in price by the amount of the sales tax.
Paying tax at every single transaction will effect the economy, and there is no guarantee for about half of the proposals, i.e. product costs will go down etc.
Not everyone wants to buy used either.
Tax reform will happen, especially if FDT gets in, but it won’t be FT without major revision at least,and even then I don’t see it. The middle and upper middle classes alone will not buy this as a group.
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