A "FAIR TAX" thread so U_D can "tear me to shreds..."

[RobDownSouth]

NOW we go to school......

Show me the link.
Show me where business is going to slash wages...

Challenge made, challenge accepted!

Your gross pay will be reduced to your net pay amount under the UnFairTax.


Here are the links to support my position; believe whatever you wish:

Part ONE

Much of the UnFairTax concept came from the work of the chairman of the Harvard Economics dept: Dr. Dale Jorgenson. He is quoted extensively in the UnFairTax book.

Dr. Jorgenson was asked specifically about the question of whether or not people’s paychecks would be reduced from their gross pay amount to their net pay amount.

Dr. Jorgenson said: “A more reasonable interpretation of my 1996 testimony is that workers would keep that after-tax pay; producers' prices would fall, but retail prices would be increased by the national retail sales tax.”

Read that again with me, AJ: AFTER TAX PAY!

Asked to further clarify so that there could be no misinterpretation as to the specific question: “when you say "workers would keep that after-tax pay" are you saying that if they are making $1000 a week now, and paying $200 payroll+income taxes now, that under the FairTax you were assuming that workers would get paid $800 and keep all of that? Or are you saying that you meant they would make $1000 under the FairTax?”

Dr Jorgenson responded: “I am saying that the worker would continue to receive the after-tax amount of $800.” Here's the LINK


Part TWO

On the FairTax official blog, Neil Boortz wrote:

We write in The FairTax Book that the competitive pressures of the marketplace will force prices down when embedded taxes disappear from the cost of retail goods and services, and we cite 22% as the average amount of those embedded taxes. Does this 22% include the income and payroll taxes that are paid by employees? Yes, it does. So ... what does this mean to your paycheck after the FairTax becomes law? When the FairTax is implemented… He (your employer) will either take some or the entire amount he had been withholding for federal income and payroll taxes and add it to your weekly check, or he will readjust your pay figures so that your entire paycheck will be equal to what you used to call “take home pay” before the FairTax.

Uh oh, to get those magic UnFairTax cost savings, employers will need to cut salaries! But he soothes his zealots' ruffled feather by stating your net (i.e. take-home) pay will never ever be lower than it is now! Gee, THANKS NEIL!

LINK: Boortz Clarifies "Keep 100% of Your Paycheck"



Part THREE

But wait, AJ...what does Dr. Laurence Kotlikoff, the other UnFairTax author have to say about all this?

I'm glad you asked!

According to Dr. Kotlikoff, (professor of Economics at Boston University):

“Private consumers would receive lower gross wages under the FairTax.”

LINK: What Rate Works? (PDF file, sorry about that! ) Page 23, by the way.

Part FOUR

UnFairTax critic Michael Graetz ripped apart the FairTax during a debate. The next day, FairTax.org issued a rebuttal defending Dr. Dale Jorgenson’s work saying "(Dr. Jorgenson's) study assumed that all of the tax cost savings (not including the reduction in compliance costs, however) would be passed on in lower prices and that workers would be getting their current net pay once the FairTax goes into effect.”

LINK: A FairTax Rebuttal
(another pdf file) see Page 8.

I hope this clears up your confusion!

 

[Ulaven_Demorte]

Challenge made, challenge accepted!

Your gross pay will be reduced to your net pay amount under the UnFairTax.


Here are the links to support my position; believe whatever you wish:

Part ONE

Much of the UnFairTax concept came from the work of the chairman of the Harvard Economics dept: Dr. Dale Jorgenson. He is quoted extensively in the UnFairTax book.

Dr. Jorgenson was asked specifically about the question of whether or not people’s paychecks would be reduced from their gross pay amount to their net pay amount.

Dr. Jorgenson said: “A more reasonable interpretation of my 1996 testimony is that workers would keep that after-tax pay; producers' prices would fall, but retail prices would be increased by the national retail sales tax.”

Read that again with me, AJ: AFTER TAX PAY!

Asked to further clarify so that there could be no misinterpretation as to the specific question: “when you say "workers would keep that after-tax pay" are you saying that if they are making $1000 a week now, and paying $200 payroll+income taxes now, that under the FairTax you were assuming that workers would get paid $800 and keep all of that? Or are you saying that you meant they would make $1000 under the FairTax?”

Dr Jorgenson responded: “I am saying that the worker would continue to receive the after-tax amount of $800.” Here's the LINK


Part TWO

On the FairTax official blog, Neil Boortz wrote:


Uh oh, to get those magic UnFairTax cost savings, employers will need to cut salaries! But he soothes his zealots' ruffled feather by stating your net (i.e. take-home) pay will never ever be lower than it is now! Gee, THANKS NEIL!

LINK: Boortz Clarifies "Keep 100% of Your Paycheck"



Part THREE

But wait, AJ...what does Dr. Laurence Kotlikoff, the other UnFairTax author have to say about all this?

I'm glad you asked!

According to Dr. Kotlikoff, (professor of Economics at Boston University):

“Private consumers would receive lower gross wages under the FairTax.”

LINK: What Rate Works? (PDF file, sorry about that! ) Page 23, by the way.

Part FOUR

UnFairTax critic Michael Graetz ripped apart the FairTax during a debate. The next day, FairTax.org issued a rebuttal defending Dr. Dale Jorgenson’s work saying "(Dr. Jorgenson's) study assumed that all of the tax cost savings (not including the reduction in compliance costs, however) would be passed on in lower prices and that workers would be getting their current net pay once the FairTax goes into effect.”

LINK: A FairTax Rebuttal
(another pdf file) see Page 8.

I hope this clears up your confusion!

Good lord... It's going to take a hell of a lot of tap-dancing to get around that trainwreck.

 

[Frisco_Slug_Esq]

Graetz misstatement: “For people to get their before-tax wage, either prices will rise or wages
will go down.” He further stated that, “[Dr. Dale] Jorgenson said that he agreed with me.” He
stated that, “Larry Kotlikoff said that wages won’t go down but prices will go up 30 percent” and
“Jorgenson assumes that wages will go down and therefore prices won’t go up. One of these is
true but not both of them.”

FairTax rebuttal: Economists have opposing theories on what will happen with the cost
savings resulting from the repeal of the current federal tax system. Jorgenson assumed that all
cost savings will be used to reduce prices, whereas Kotlikoff, for example, assumes that all cost
savings will go to increasing wages. Of course, both of these can’t happen. What does happen,
however, is that relative wages and prices will have basically the same relationship to each other
as they do today. Remember, the FairTax takes the same amount of taxes out of the economy as
the current system, however, it does so in a way that gets rid of tax related distortions in the
economy, promotes economic growth, and reduces compliance costs, so over time wages relative
to prices will rise and the standard of living will improve. Dr. Kotlikoff states that the FairTax
“would reduce the excess burden of our tax system by roughly two-thirds! A very conservative
estimate of this annual saving is 2% of GDP or about $250 billion for the coming year. Add in
the aforementioned $250 billion in wasteful tax compliance, and we're talking big bucks. But this
is still small potatoes compared with the gains in economic growth associated with adopting the
FairTax. Over the next few decades, the FairTax would likely raise U.S. GDP by 15% relative to
its alternative value.” Source: “The Case for the ‘FairTax,’” by Laurence J. Kotlikoff, Ph.D.,
The Wall Street Journal, March 7, 2005.

Graetz misstatement: “If you are now making $10 per hour and $3 per hour is taxes, the
FairTax people are saying that your after-tax pay will be $7 per hour.”

FairTax rebuttal: That could be the case, but only if one is also assuming that all tax cost
savings to businesses from repealing the federal tax system are used to lower prices (Jorgenson
makes this assumption in his study) rather than increase wages. It could just as well be that
employers will pay the above employee $10 and reduce prices by a lesser amount. It is
important to note that the Jorgenson study did not take into account the reduction in compliance
costs, which is also a substantial source of business tax cost savings that would be available for
price decreases.

Mainstream economists claim the FairTax will increase savings and investment, our
capital stock, our productivity, and ultimately the real wages (and disposable income) of
the U.S. worker. Work by Harvard economist Dale Jorgenson shows a quick 9 to 13
percent increase in the GDP after passage of the FairTax; similarly, Boston University
economist Laurence Kotlikoff predicts a 7 to 14 percent increase. And the figures in
these studies translate into more than economic abstraction. These figures show that the
real effect of taxes – how long people must work to pay for the federal government – can
be reduced. These figures also show that each day Congress delays passage of the
FairTax further suppresses the prosperity and economic well-being of the American
people and requires them to work harder to pay the costs of government, whatever those
costs.

Oh, it clears up my confusion all right.
If your employer decides to keep his widget prices high, he will sell less widgets and his competitors will fuck him over but good.
If your employer decides to keep your wages low, and you are GOOD at what you do, under an expanding economy, as per your own "experts" then someone else will offer you more money to do that job.

Now, about your confusion...,

What can we possibly do to help you?
__________________
The want of confidence in the public councils damps every useful undertaking, the success and profit of which may depend on a continuance of existing arrangements. What prudent merchant will hazard his fortunes in any new branch of commerce when he knows not but that his plans may be rendered unlawful before they can be executed? What farmer or manufacturer will lay himself out for the encouragement given to any particular cultivation or establishment, when he can have no assurance that his preparatory labors and advances will not render him a victim to an inconstant government?
Madison, Federalist 62.

 

[Frisco_Slug_Esq]

Good lord... It's going to take a hell of a lot of tap-dancing to get around that trainwreck.

Less than the opening act...

I assure you.

^^^^^

See?



Besides weren't you "proving" that I put you on ignore over this issue where you "tore me to shreads"and not your vile, mean, and derogatory posting style, laden with ad hominem attacks that serve to ignore the actual posts?


__________________
"Don't get stuck on stupid!"
Lt. Gen. Russel Honoré

 

[RobDownSouth]

Oh, it clears up my confusion all right.
If your employer decides to keep his widget prices high, he will sell less widgets and his competitors will fuck him over but good.
If your employer decides to keep your wages low, and you are GOOD at what you do, under an expanding economy, as per your own "experts" then someone else will offer you more money to do that job.

Now, about your confusion...,

What can we possibly do to help you?

Classic non-answer.

AJ, do you understand now how your take home pay will remain the same under the UnFairTax? Hmmmm?

 

[firespin]

Classic non-answer.

AJ, do you understand now how your take home pay will remain the same under the UnFairTax? Hmmmm?

I'm not optimistic.

He still thinks good economists to quote on the Fair Tax are the guys that developed it.

 

[firespin]

This was interesting:

'Add in the aforementioned $250 billion in wasteful tax compliance, and we're talking big bucks."

That's a lot of compliance. (Not big as part of the GDP, but still a big absolute number.)

The AICPA says there are 360,000 CPAs in the US.

Let's assume they make, on average $100,000 / year.

If they all work on tax compliance issues, as opposed to e.g. financial statements, financing transactions, regulatory issues...then we'd have $36 billion being spent on tax compliance.

So we're only short $214B in other compliance costs.

Oh, and we can add in $12B for the IRS, and $4B for H&R Block. So that's a help.

But, I'm not saying the $250B is a made up number. Just that it's not at all easy to justify.

 

[Frisco_Slug_Esq]

What about the money spent by companies trying to work around the tax codes? Compliance is not defined simply as "how much does it cost you to fill out your taxes." It is also how do the regulations retard my growth and competitiveness.



Wait a second firespin, it's okay for Throb to quote the same damned economists in order to make a nonsensical point, but then it's NOT okay to use them in rebuttal?

That's having your cake and eating it too...

He's trying to use half-truths as universal truths.

He's using U_D's original tact: You say prices will go down A_J? No they won't because business is greedy, and if it's me, I'm not lowering MY prices...

If you're going to use the class-envy and greed argument, fine. But at the same time you cannot deny basic economics and how that sort of greed just kills you in a competitive market when to comes to market share and employee retention.

 

[Ishmael]

Don't forget tho throw in the fees of the K st. lobbiests that spend untold millions bribing congress for either tax breaks for their clients, or tax regulations that harm their clients competitors. The guys that gerrymander the tax code hundreds of times a year. God forbid those guys should go out of business.

Ishmael

 

[firespin]

Wait a second firespin, it's okay for Throb to quote the same damned economists in order to make a nonsensical point, but then it's NOT okay to use them in rebuttal?

It goes to credibility.

You expect people to say something that enhances their position, even if it's a) optimistic b) misleading c) fraudulent. And of course it could be true,too, but you just don't know, so people discount it.

Whereas there's really no motivation to say something that makes your position look worse, e.g. people will only get after-tax pay, except that it's true.

If Nixon says "I'm not a crook", well, that's just politics.

Nixon says "I'm a crook", that's front page news.

 

[Frisco_Slug_Esq]

It goes to credibility.

You expect people to say something that enhances their position, even if it's a) optimistic b) misleading c) fraudulent. And of course it could be true,too, but you just don't know, so people discount it.

Whereas there's really no motivation to say something that makes your position look worse, e.g. people will only get after-tax pay, except that it's true.

If Nixon says "I'm not a crook", well, that's just politics.

Nixon says "I'm a crook", that's front page news.

Do you not note that THROB brought them up first?

Attack his credibility. Once he brought them up, I felt justified in using them to rebutt what HE was saying by cherry-picking them and holding them up as, "See A_J, the guys who built the thing say a,b,c..," while ignoring d though z...

Besides, the one he quotes, has his own competing plan; all he did was analysis...

 

[RobDownSouth]

Good lord... It's going to take a hell of a lot of tap-dancing to get around that trainwreck.

Notice how I responded to AJ's demand that I prove how under the UnFairTax your pay will be reduced to your current take-home pay.

I quote both authors of the UnFairTax, the official UnFairTax website, and the UnFairTax's chief admirer Neil Boortz. I gave him literally the pages where I got my information from.

Notice how AJ refuses to acknowledge my point, he's gone into babble-mode, sticking his fingers into his ears and bleating "la la la la la...I can't HEAR you!"

 

[cebalrai]

Don't forget tho throw in the fees of the K st. lobbiests that spend untold millions bribing congress for either tax breaks for their clients, or tax regulations that harm their clients competitors. The guys that gerrymander the tax code hundreds of times a year. God forbid those guys should go out of business.

Ishmael

Wait. You're talking about health insurance companies now?

 

[firespin]

Do you not note that THROB brought them up first?

Attack his credibility. Once he brought them up, I felt justified in using them to rebutt what HE was saying by cherry-picking them and holding them up as, "See A_J, the guys who built the thing say a,b,c..," while ignoring d though z...

Besides, the one he quotes, has his own competing plan; all he did was analysis...

Well, in fairness, you asked him to prove they said "a", and he did.

So the ignoring d through z is understandable.

It's your choice to support a tax plan you apparently don't understand, on the basis of changes you expect to happen but nobody else does.

Since you're not a professional bound by a responsibility to provide competent advice, there's not much any of us can do.

But, you should probably get used to being ridiculed and made to look clueless. Efforts to deflect the criticism with meaningless non-sequiturs don't really help all that much. Sorry.

 

[Ishmael]

Wait. You're talking about health insurance companies now?

Do you have a point here? I am speaking of the set of all sets that contain any group, organization, corporation, union, or individual that attempts to alter the tax code to their advantage either through tax preferences for themselves, or erect tax obstacles for their competitors. A set of all sets would quite naturally contain the health care industry who engages in the same anti-competitive tax behavior as all the rest of the groups in the set. To focus on the health care industry to the exclusion of all others is to ignore the greater problem.

Ishmael

 

[firespin]

Don't forget tho throw in the fees of the K st. lobbiests that spend untold millions bribing congress for either tax breaks for their clients, or tax regulations that harm their clients competitors. The guys that gerrymander the tax code hundreds of times a year. God forbid those guys should go out of business.

Ishmael

That's another $3.5 billion annually.

http://www.opensecrets.org/lobby/index.php

Still a ways to go to get to $250B

And, of course, remember the income tax started out very simply.

There are many different types of sales, many different purchasers, and many types of transactions. To imagine that congress will keep these all the same, when even the fair tax doesn't (e.g. no tax on education expenses, or on used items) is woefully naive.

Why should the tax on a new yacht be the same percentage as the tax on a bag of rice?

Why should the tax on a used yacht be zero?

 

[Sean]

Do you have a point here? I am speaking of the set of all sets that contain any group, organization, corporation, union, or individual that attempts to alter the tax code to their advantage either through tax preferences for themselves, or erect tax obstacles for their competitors. A set of all sets would quite naturally contain the health care industry who engages in the same anti-competitive tax behavior as all the rest of the groups in the set. To focus on the health care industry to the exclusion of all others is to ignore the greater problem.

Ishmael

ROTFL.

 

[Ishmael]

That's another $3.5 billion annually.

http://www.opensecrets.org/lobby/index.php

Still a ways to go to get to $250B

And, of course, remember the income tax started out very simply.

There are many different types of sales, many different purchasers, and many types of transactions. To imagine that congress will keep these all the same, when even the fair tax doesn't (e.g. no tax on education expenses, or on used items) is woefully naive.

Why should the tax on a new yacht be the same percentage as the tax on a bag of rice?

Why should the tax on a used yacht be zero?

Try to research the impact on the taxpayer and consumer of those efforts. Only one way of making it go away without shredding the constitution.

Why shouldn't it?

Ishmael

 

[firespin]

Try to research the impact on the taxpayer and consumer of those efforts. Only one way of making it go away without shredding the constitution.

Why shouldn't it?

Ishmael

People make choices to minimize taxes owed; some legal, some less so.

Politicians use tax policy to reward some and punish others.

It doesn't make all that much difference how the taxes are collected, whether through withholdings or through sales taxes. Different states do it in different ways, but it's not a huge difference in the overall scheme of things.

It matters a bit more how much is collected, and who has to pay.

 

[Frisco_Slug_Esq]

Notice how I responded to AJ's demand that I prove how under the UnFairTax your pay will be reduced to your current take-home pay.

I quote both authors of the UnFairTax, the official UnFairTax website, and the UnFairTax's chief admirer Neil Boortz. I gave him literally the pages where I got my information from.

Notice how AJ refuses to acknowledge my point, he's gone into babble-mode, sticking his fingers into his ears and bleating "la la la la la...I can't HEAR you!"

Note then how you ignored the answer to your crap...

 

[Frisco_Slug_Esq]

Well, in fairness, you asked him to prove they said "a", and he did.

So the ignoring d through z is understandable.

It's your choice to support a tax plan you apparently don't understand, on the basis of changes you expect to happen but nobody else does.

Since you're not a professional bound by a responsibility to provide competent advice, there's not much any of us can do.

But, you should probably get used to being ridiculed and made to look clueless. Efforts to deflect the criticism with meaningless non-sequiturs don't really help all that much. Sorry.

Now who's frothing? I'm sorry that I strayed into your area of expertise...

You're no longer even discussing the points and you've ignored everything inconvenient to you.

 

[Frisco_Slug_Esq]

People make choices to minimize taxes owed; some legal, some less so.

Politicians use tax policy to reward some and punish others.

It doesn't make all that much difference how the taxes are collected, whether through withholdings or through sales taxes. Different states do it in different ways, but it's not a huge difference in the overall scheme of things.

It matters a bit more how much is collected, and who has to pay.

And to you, this is moral? acceptable? Is then subjective law preferable to objective law?

How were taxes raised prior to the rise of the Progressives (Social Democrats)?

 

[Ishmael]

People make choices to minimize taxes owed; some legal, some less so.

Politicians use tax policy to reward some and punish others.

It doesn't make all that much difference how the taxes are collected, whether through withholdings or through sales taxes. Different states do it in different ways, but it's not a huge difference in the overall scheme of things.

It matters a bit more how much is collected, and who has to pay.

Let's rewind a bit. There are no federal taxes on used yachts, corporate jets, or virtually anything else with the exception of the taxes that might be paid by the seller in the event they amortized the value of the item for business purposes. The buyer pays no federal taxes, period.

Now, let's stick a pin in your "tax collection" balloon. There are only three ways that taxes are collected, all taxes of any sort;

Voluntary - You discover a taxable event that the government may, or may not, discover, declare the tax and pay it.

Involuntary - A taxable event where the tax is collected without your having a say in the event. This is represented by sales taxes, payroll withholding, etc.

Force - The government discovers a taxable event that you are responsible for, you don't pay it, they take your shit and throw you in jail.

That's it, if you know another method of tax collection please let me know.

What you are actually refering to is the tax BASIS, not the method of collection and the tax basis makes a HUGE difference. The tax basis the federal government currently uses is a tax on income. The problem with a tax based on income is the manner in which income is defined. And that is why we have 7,500 + pages of tax code containing 3.4 + million words. The overwhelming majority of those pages and words are concerned with the definition of what 'income' is under various circumstances and exceptions. It is so complex that no one truly knows the code, even those charged with implementing it and every citizen that files taxes is in jeapordy of being charged with a felony everytime they sign their tax return.

And that is presicely the problem with a "Flat Tax" based on income. It would be subject to the very same gerrymandering that the current code has been bloated with.

In summation any tax based on income, no matter how simplified, will eventually become a bloated, gerrymandered abortion rife with exceptions, exemptions, and special interest set asides.

Changing the subject a bit. You have obviously read neither of the books dealing with the Fair Tax. You persist in parroting myths and half-truths. You insist that only the economists that participated in drafting the concept support it and nothing could be further from the truth. It is true that supporters/detractors of the Fair Tax are split along political lines, but those lines are NOT democrat vs. republican. The split is Libertarian/Conservative vs. Totalitarian/Progressive.

You persist in pushing the notion that there will be a shift in tax burden towards the middle class. This is NOT true. The middle class are already paying those taxes, but much like a blinkered and shadow-rolled horse, they are unaware that they are paying those taxes. The belief that you are operating under is nothing more than a government engineered deception, but I will concede that there is a segment of the population that prefer to be decieved as opposed to facing reality.

You persist in the class warfare/envy notion that it will all be OK if we just "stick it to the rich" without the faintest understanding that the "rich" just chalk the tax hike up to the cost of doing business and pass the tax along to the middle class and poor in the form of higher prices for goods and/or services. It is one of the most perverse forms of masochism on public display immaginable in that the very group that want to "stick it to the rich" are doing nothing more than engaging in self-taxation while believing that someone else is footing the bill. Ignorance and/or gross stupidity are the only words that apply to such behavior.

You overly concern yourself with the minutea of what group will be adversely effected, and some will, as well as how much the government will collect. Let me assure you that I really don't give a rats ass about those professions that will be adversely affected. For the most part they are part of the problem that gave us the abortion of a tax code we're dealing with today. I can also assure you that the government, any government, will figure out a way to raise the money it needs. I will also assure you that government tax reciepts are NOT the problem and never have been, it is government spending that is the problem. And that is one of the reasons I support the Fair Tax if for only the reason that everyone gets to actually see what their respective tax burden is without being decieved into the notion that someone else is paying the bill.

Ishmael

 

[Frisco_Slug_Esq]

I've said all that although not so nearly eloquently or in such a structured manner and he paid not one wit of attention to it for he doesn't want a discussion on the topic. I am beginning to think this is more personal and based upon my commentary during the election which is why he's blindly supporting the loony objections of Throb, whose not paying one bit of attention to the answers for all Throb wishes to do is to attack, attack, always attack...

Maybe you can awaken some curiosity in his thinking, but since he's smarter than I am, there's no way I can achieve that.



If my alliance becomes filled with strange bed-fellows, I tend to go back and look for which fork in thought I erred upon during my journey.

 

[Ishmael]

I've said all that although not so nearly eloquently or in such a structured manner and he paid not one wit of attention to it for he doesn't want a discussion on the topic. I am beginning to think this is more personal and based upon my commentary during the election which is why he's blindly supporting the loony objections of Throb, whose not paying one bit of attention to the answers for all Throb wishes to do is to attack, attack, always attack...

Maybe you can awaken some curiosity in his thinking, but since he's smarter than I am, there's no way I can achieve that.



If my alliance becomes filled with strange bed-fellows, I tend to go back and look for which fork in thought I erred upon during my journey.

I'm under no illusion that that post will be changing his heart or mind, it was obvious long ago that that is beyond anyones capability. I merely wanted to lay out the philosophical concepts in as concise a way possible rather than get buried in a pile of bull shit minutea.

Show me a man consummed with process and minutea and I'll show you a failed leader.

Ishmael