ANOTHER UNINFORMED FAIRTAX CRITIC

“The ‘bias’ towards foreign producers is in effect because other nations tax far less than we do.”

No, that is incorrect again. Are you trying to set some record for most misstatements on a FR thread?

The bias against US producers is because the US, unlike almost all major economies in the world, has no mechanism to “border adjust” its taxes. Of the 30 countries in the OECD, 29 of them have a border adjustment mechanism in their tax systems. That one country which does not have such a mechanism has the largest trade deficit (on either a relative or an absolute basis) of the group; in fact, the other 29 have a net trade surplus. Does anyone think that is coincidence?

“A 3-4% reduction in the Federal budget would have the same effect as the FT and it would be sustainable since taxes are actually being lowered.”

Do you have a source to back up that statement? I’m sure you wouldn’t just make something like that up without some credible research to support it.

Would you?

No, that is incorrect again. Are you trying to set some record for most misstatements on a FR thread?

Actually it's not incorrect nor has anything else I've yet posted.

It's the FT side that has been spouting nonsense, you less than most.

The bias against US producers is because the US, unlike almost all major economies in the world, has no mechanism to “border adjust” its taxes. Of the 30 countries in the OECD, 29 of them have a border adjustment mechanism in their tax systems. That one country which does not have such a mechanism has the largest trade deficit (on either a relative or an absolute basis) of the group; in fact, the other 29 have a net trade surplus. Does anyone think that is coincidence?

Which is to say that other nations tax less than we do.

I.e. they encourage their domestic companies to keep jobs at home rather than discouraging it by making it more expensive to do so. They don't bleed down their own industry.

So, in the end, I said what you said with fewer words.

Go figure.

Do you have a source to back up that statement? I’m sure you wouldn’t just make something like that up without some credible research to support it.

The source is the numbers I used. Every dollar taxed is 2-3 dollars lost to productivity.

While I'm sure I've posted a link to that source here or elsewhere before I'm equally sure I don't remember it off the top of my head.

It is, nonetheless, a widely supported figure.

Feel free to look it up.

Hell, you know what, I'm feeling froggy. Click here for one source.

Filo we know you are very slow in comprehension.

Let’s repeat it again in the hopes that you finally get it.

The Congress has the power to ‘Lay’ and ‘Collect’ taxes.

‘Lay’ means establish a law to implement and administer.

The FairTax is a law that imposes a tax on retail purchases once spending is above the poverty line.

Let’s repeat the point you are missing in CAPS:

The FairTax is a law that imposes a tax on retail purchases ONCE SPENDING IS ABOVE THE POVERTY LINE.

There is nothing unconstitutional in the above law and it remains constitutional even in the event the 16th Amendment is repealed.

So the question then comes to HOW the FairTax law can best implement and administer the portion I typed in CAPS for you.

And the answer is simple: refund the tax up to the poverty line in the form of a rebate. Because the government will not be tracking how much each individual spends, it cannot be called a refund, therefore it is called a rebate. But it is in effect a refund to every American up to poverty.

The prebate is an attempt to answer the objection that the Fair Tax would be a disproportionate burden on the “poor:”
“Since the poor have too spend all of their money the tax fall disproportionately on them.”
To head off that issue, the Fair Tax pays “prebates” that return taxes on monies spent up to the poverty level. Since it makes a point of NOT checking on people's income, these prebates are sent to everybody who qualifies.
There probably would be a lot of attempts at fraud with people registering dogs, goats, hamsters, and dead relatives for the prebates. How is that different from the fraud in the current system?
Personally, I could live without prebates. Its about time the “poor” started paying their fair share.

Yes. After-tax savings that exist when the FairTax is enacted will get taxed again when they are spent. I know its not fair, but nothing is perfect.

I don't see what you mean by “incorporating socialism and encouraging a two-tiered taxation system.” We already have much worse in the income tax. Personally, I'll be happy to see the Earned Income Tax Credit die, and the income tax replaced by a single rate sales tax.

The FairTax does not address spending. It addresses how taxes are collected and take them away from politicians as tool of “social policy.” Spending will have to addressed elsewhere. Its simply a means of creating a predictable tax environment for people and businesses to operate in and eliminating may of the perverse incentives created by the income tax.

If someone can solely live off the prebate, without fraud, well, God bless ‘em. I'm not going worry about it; as I said before there is already much worse in the income tax.

The current tax system is bludgeon in the hands of corrupt politicians, generates perverse incentives and an uncertain environment for business and allows enormous sums of money (mostly illegal) to escape taxation. It punishes (taxes) productivity.
The FairTax is a potential remedy to these issues. Its not perfect, but it probably is better than what currently exists.
It was not created to address spending, merely to be revenue neutral. Spending is different issue from the FairTax.

Filo we know you are very slow in comprehension.

And yet I realized that you are a moron immediatly.

Hmm.

The Congress has the power to ‘Lay’ and ‘Collect’ taxes.

‘Lay’ means establish a law to implement and administer.

Still no argument and you still haven't answered the question.

Let's ask it another way.

Can the Federal government implement special taxes only on black people? Jews? Catholics?

Can they implement tax policy that specifically prohibits free speech or jury trials ($500,000 tax on speaking engagements or to seat a jury?)

Or does The Constitution somehow prevent these things in spite of the fact that "The Congress has the power to ‘Lay’ and ‘Collect’ taxes?"

Or are you still too thick to get it?

There is nothing unconstitutional in the above law and it remains constitutional even in the event the 16th Amendment is repealed.

Then, again, I challenge you to show me where The Constitution allows for the redistribution of wealth.

You can't.

Socialism is unconstitutional.

Well done Little Ray. And especially excellent that you get the connection between 'disproportionate burden' and rebate.

One point though:

Yes. After-tax savings that exist when the FairTax is enacted will get taxed again when they are spent. I know its not fair, but nothing is perfect.

Actually as it stands now, when after-tax savings are withdrawn and spent on retail products and services, the purchaser is paying embedded federal taxes of about 20%. This 20% in the pricing will be eliminated under the FairTax. So the purchaser will be paying an additional 23% - 20% = 3% under the FairTax. The additional 3% is necessary for the rebate provision.

Everyone I have explained the extra 3% to has cheerfully agreed to pay even more than 3% if it gets rid of the Income tax.

Another point is that the taxed portion of the Roth IRA is restricted from withdrawal without penalty unless some very tight conditions are met. No such conditions exist under the FairTax.

Yet another point, the earned growth on a Roth's principle, meaning how much the principle grows while in an account, that portion is untaxed if the rules on withdrawals are followed. And this growth portion becomes much more than principle over the life of the account (unless it was invested in today's stock market).

So beware the 'double taxation trap' argument that these minor leaguers are spewing. Most CPAs I have held discussions with have chuckled at the false premises these anti-FairTaxers throw about. They know that retirements will thrive under the FairTax, just as they did before the Income tax became a huge millstone around the necks of Americans.

Filo? Filo? You are not paying attention Filo.

Let’s try once more Filo.

“The FairTax is a law that is imposed on retail purchases ONCE SPENDING IS ABOVE THE POVERTY LINE”.

Now repeat the above Filo, repeat to yourself Filo that the above is fully constitutional even without the 16th Amendment.

Try hard Filo. We know you can do it if you want to Filo.

Good luck. Tick tick tick......

The prebate is an attempt to answer the objection that the Fair Tax would be a disproportionate burden on the “poor:”

I understand that.

Personally, I could live without prebates. Its about time the “poor” started paying their fair share.

Agreed.

Besides, they are unconstitutional.

Yes. After-tax savings that exist when the FairTax is enacted will get taxed again when they are spent. I know its not fair, but nothing is perfect.

And since this is easy to fix I won't support the program until it is.

Only an idiot would volunteer 30% in additional taxes on hundreds of thousands of dollars worth of retirement savings.

I don't see what you mean by “incorporating socialism and encouraging a two-tiered taxation system.” We already have much worse in the income tax. Personally, I'll be happy to see the Earned Income Tax Credit die, and the income tax replaced by a single rate sales tax.

Until the FT is tied directly and irrevocably to the repeal of the 16th the only conclusion will be a NRST as well as an income tax.

If you think our government won't do this then you haven't studied history.

And the prebate is socialist so that’s the incorporation of that.

The FairTax does not address spending. It addresses how taxes are collected and take them away from politicians as tool of “social policy.” Spending will have to addressed elsewhere. Its simply a means of creating a predictable tax environment for people and businesses to operate in and eliminating may of the perverse incentives created by the income tax.

And as such it's a good alternative if the other flaws are fixed.

I'd support it, even at the revenue neutral rate, if the double-taxation, prebate and ties to the 16th issues were fixed.

Even with the inept math used to justify its existence.

The FairTax is a potential remedy to these issues. Its not perfect, but it probably is better than what currently exists.

Imperfect and probably aren't really good enough, are they?

It was not created to address spending, merely to be revenue neutral. Spending is different issue from the FairTax.

And since spending is the real issue I'd rather focus on that than waste time with the FT nonsense.

“Which is to say that other nations tax less than we do.”

No, that is NOT what I am saying. I am saying that it is the presence/absence of a border adjustment mechanism for both this country and our trading partners which is causing these economic distortions. You can have high levels of taxation with and without a border adjustment mechanism and you can have low levels of taxation with and without a border adjustment mechanism. The two have very little to do with each other.

You continue to ignore subtleties such as static vs dynamic scoring and the importance of a border adjustment mechanism in affecting the balance of trade and insist that the structure of the tax system is irrelevant. In your mind, the only variable affecting the tax system’s effect on the economy is the level of taxation, and not the structure of the system. I think that you would find that most economists would agree that even if we could reduce the overall tax burden by 25% (which would be enormous in today’s environment), the structural problems with the current tax system would still contribute to a number of adverse economic trends.

While I respect your view that tax rates are everything, I do not agree with it.

The two have very little to do with each other.

No, they have a lot to do with each other, and that discussion doesn't refute what I said at all. . .

You continue to ignore subtleties such as static vs dynamic scoring and the importance of a border adjustment mechanism in affecting the balance of trade and insist that the structure of the tax system is irrelevant. In your mind, the only variable affecting the tax system’s effect on the economy is the level of taxation, and not the structure of the system.

Ultimately that is correct.

Yes structure and some other factors contribute but they are ultimately in the noise relative to the absolute level of government involvement in the economy.

Lower taxes and raise GDP, raise taxes and lower GDP.

That is absolute.

The rest is, at best, tweaking. I think that you would find that most economists would agree that even if we could reduce the overall tax burden by 25% (which would be enormous in today’s environment), the structural problems with the current tax system would still contribute to a number of adverse economic trends.

True, but we'd still increase economic productivity dramatically in spite of those trends.

While I respect your view that tax rates are everything, I do not agree with it.

They are not everything but they are far and away the most important thing.

If someone is diagnosed with cancer and also has a zit treating the zit while ignoring the cancer is a fairly stupid course, wouldn't you say?

And yet Fair Taxers want to adress the blemish first.

I disagree.

Excellent points Phil. FR is fortunate to have you commenting here.

The issue of clinging to static versus dynamic scoring is a particularly egregious one by staffers in Executive and Congress joint committees. Congress has been told, even mandated to use dynamic scoring yet the low level staffers continue to drag their feet and ignore the instructions.

Dittos also to your point out the border adjustment issue.

Now about that 16th Amendment provision....that one still needs work!

....and that food, basic clothing and other kinds of necessities are included....

I can see all kinds of problems right off the bat with defining what foods are taxed and what aren't, what constitutes 'basic clothing', and what is a necessity and what isn't. Would caviar be taxed? Sirloin steak? Lobster? How many shirts, socks, trousers, sets of underwear, etc. am I allowed under 'basic clothing'? How will I know when I exceed the limits? Is highspeed interned a necessity? How about air conditioning? Is TV a necessity, and if so would my 42" Plasma TV be tax free? I like to read, how about books? Are my books taxed or just some of them? Is a car a necessity? If so, will a high end BMW be tax free? There are almost too many questions that would need answering before someone can take the Fairtax seriously.

Well Filo, you have an ‘interesting’ way of viewing taxation.

“The FairTax is a law that is imposed on retail purchases ONCE SPENDING IS ABOVE THE POVERTY LINE.”

I think you need to explain WHY you think the above law is unconstitutional, WHY it is ‘wealth redistribution’ especially as it is IDENTICALLY THE SAME FOR EVERY AMERICAN WITHOUT ANY CHANGES WHATSOEVER.

Let’s see how your hallucinations explain the above.

I am curious where you got the idea that the FairTax would impose a retail tax on only certain items?

FYI the FairTax NRST is applied on each and every RETAIL product and service in the USA or under its jurisdiction.

But, the FairTax abolishes all other federal taxation with exception of gas taxes and GSE taxes which are inconsequential.

By abolishing all federal taxation, the FairTax lowers the cost of all products and services by an average 20%.

So an NRST rate of 23% minus 20% costs yields an additional 3% of taxation.

Most people are overjoyed to pay an extra 3% if it means getting rid of the Income tax.

Well Filo, you have an ‘interesting’ way of viewing taxation.

At this point we are not discussing taxation - we are discussing distribution.

“The FairTax is a law that is imposed on retail purchases ONCE SPENDING IS ABOVE THE POVERTY LINE.”

I think you need to explain WHY you think the above law is unconstitutional, WHY it is ‘wealth redistribution’ especially as it is IDENTICALLY THE SAME FOR EVERY AMERICAN WITHOUT ANY CHANGES WHATSOEVER.

I've already done that.

Don't blame me that you're functionally illiterate.

If even one person gets a distribution that exceeds what they are paying in taxes during a given year then they are having wealth redistributed to them.

As it stands, many millions will probably fall into that category with the FT.

Welfare is unconstitutional therefore the welfare-like provisions of the FT are as well.

Read The Constitution and pay especially close attention to the Tenth Amendment.

If you manage to find a provision in that document that allows the Federal government to redistribute wealth you let me know.

Failing that, the Tenth holds - Powers not enumerated in The Constitution are reserved to the States or to the People.

Don't sweat your inability to understand. Congressman Linder didn't get it either.

Of course in his case that represents a failure to adhere to his oath of office. . .

Read it again. Boortz is criticizing Ramsey for not understanding the FairTax.

Specifically, Ramsey is quoted as saying:

“People would only pay taxes on items they buy, except for food, basic clothing and other kinds of necessities.”

This is blatantly false. The FairTax legislation does none of what Ramsey is saying.

Here’s the FairTax legislation:

http://www.fairtax.org/site/PageServer?pagename=about_bills

http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.25:

And study the FAQ on the FairTax website!

http://www.fairtax.org/site/PageServer?pagename=about_faq

especially Item 1:

http://www.fairtax.org/site/PageServer?pagename=about_faq_answers#1

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