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

[firespin]

Keep in mind the fair tax idea was bankrolled by really rich people, including Bob McNair, who owns the Houston Texans. He made his money selling power generation, eventually cashing out to Enron. Oh, and Leo Linbeck, who's a billionaire.

These guys have a lot of money in any scenario, but suffice it to say they wanted to get rid of the IRS and substitute a consumption tax...and not because it would hurt them. Quite the opposite, in fact.

 

[Frisco_Slug_Esq]

The overhead savings is 23%, the new tax rate is 30%. Show me a fair tax article that claims otherwise.

The FairTax Five

The gloves are off as critics try to pick apart the FairTax. Trouble is, it's just a replay of the same five FairTax myths:

"The 23% rate is misleading. It's actually 30%"
Well, actually...
"It's not enforceable and evasion will be rampant"
Well, actually...
"It will not be revenue neutral at 23%"
Well, actually...
"The FairTax is not politically viable"
Well, actually...
"The FairTax is regressive and shifts the tax burden onto lower and middle income people"
Well, actually...


Fairtax.org

As the FairTax gains more national attention, questions have again arisen about whether the FairTax rate is 23 percent or 30 percent. In the toxic environment that often accompanies public policy debates, FairTax.org has even been accused by some of misleading the public, even though full descriptions of "tax-inclusive" and "tax-exclusive" calculations abound on our Web site. We hope the following explanation puts all such questions to rest -- at last.

Let’s use an example to illustrate the difference between tax-inclusive and tax-exclusive tax rates.

Assume there is a worker named Joe who earns $125 and spends all of his earnings. Let’s further assume that the government requires him to pay $25 in taxes.

If the government put a tax on Joe’s income, he would earn $125 before tax and would have $100 after tax to spend at the General Store. Thus, Joe has to earn $125 to have $100 to spend. Joe would also have to file an income tax return.

If the government put a tax on what Joe spends, he would earn $125 and would have $125 to spend at the store. Of the $125 paid by Joe to the storekeeper, $100 would be for the goods he bought at the store and $25 would be taxes that the storekeeper would send to the government. Joe would not have to file a tax return, as the storekeeper sends the tax in to the government.

Either way, Joe pays $25 in taxes and the government gets $25 in taxes. With a tax on income, Joe pays the $25 directly to the government, and with the tax on spending (sales tax), he pays the $25 in taxes indirectly when he buys something from the General Store. The General Store sends the tax that Joe paid to the government.



We may report the tax rate as $25/$125 = 20 percent, which is the tax-inclusive rate (meaning that the tax is included in the base). Alternately, we may think of the tax rate as $25/$100 = 25 percent, which is the tax-exclusive rate (meaning the tax is excluded from the base). The 23 percent FairTax rate set out in HR 25/S 1025 is a tax-inclusive rate, as is the current personal income tax, whereas most state-level sales taxes are quoted on a tax-exclusive basis. For ease of comparison, FairTax.org gives the tax rate both ways. Both rates are relevant, since the FairTax is replacing an income tax system, and 23 percent correctly represents the tax burden compared to the current system.

To review some of the research that determined a 23% (inclusive) rate is correct, please read Taxing Sales Under the FairTax: What Rate Works? This paper is a collaborative effort of 5 respected and independent economists.

See source for chart

Show me your source, and I'll peruse it in the morning.

 

[Frisco_Slug_Esq]

Keep in mind the fair tax idea was bankrolled by really rich people, including Bob McNair, who owns the Houston Texans. He made his money selling power generation, eventually cashing out to Enron. Oh, and Leo Linbeck, who's a billionaire.

These guys have a lot of money in any scenario, but suffice it to say they wanted to get rid of the IRS and substitute a consumption tax...and not because it would hurt them. Quite the opposite, in fact.

I mentioned all that already.

Now, I really do need to scoot...

I don't understand Progressive Republicans and their leftist fixation on "the rich."

Why do you want Igor's goat dead?

 

[RobDownSouth]

<snip>


Home owner deduction from WHAT Throb?

If the builder wants to make more, then guess what Throb, he does what he does now, he charges more for his services. Looks like he can pad it $20K and STILL come in cheaper...

You're not USING math, you're using Demagoguery...



You WIN! Congratulations! You can leave happy now!

AJ, as you well know (or should know), home owner mortgage interest deduction is currently the largest single middle class tax break under the current tax code. When this disappears the middle class will be paying proportionally more tax than the Paris Hiltons of the world.

Your glib comment that a builder should simply charge more for his services shows an appalling lack of understanding of basic economics: when there is substantial used inventory on the market at price n, a builder unilaterally charging n+ price increase will ultimately realize less money in a capitalist market.

 

[Frisco_Slug_Esq]

They lose the home owner's deduction on WHAT?

ON WHAT THROB???






Mama always said...

 

[Frisco_Slug_Esq]

Damn you're a slow thinker...

 

[Frisco_Slug_Esq]

Gee, if his houses are cheaper...




Maybe, JUST maybe, more people, people who aren't paying an income tax that can't be DEDUCTED from...



... just maybe more of them can afford to buy houses, and that would mean the builder could line up even more subcontractors and build even more, I mean, it's JUST A THOUGHT...

(You don't need the deduction dummy if you're not paying an INCOME tax...)

 

[firespin]

The FairTax Five

The gloves are off as critics try to pick apart the FairTax. Trouble is, it's just a replay of the same five FairTax myths:

"The 23% rate is misleading. It's actually 30%"
Well, actually...
"It's not enforceable and evasion will be rampant"
Well, actually...
"It will not be revenue neutral at 23%"
Well, actually...
"The FairTax is not politically viable"
Well, actually...
"The FairTax is regressive and shifts the tax burden onto lower and middle income people"
Well, actually...


Fairtax.org



See source for chart

Show me your source, and I'll peruse it in the morning.

I posted a source previously, start with that one.

You never addressed why everybody keeps all their gross income, yet costs to make something go down. You can't do both. Your reference makes the same error.

 

[firespin]

I mentioned all that already.

Now, I really do need to scoot...

I don't understand Progressive Republicans and their leftist fixation on "the rich."

Why do you want Igor's goat dead?

I don't mind if the rich want to pay less taxes. Heck, I'm one of them.

I just think it's odd that they are doing it in a sneaky, underhanded way that would e.g. make my relatives pay more taxes while promising the opposite, that's all.

 

[firespin]

From your link:

"We may report the tax rate as $25/$125 = 20 percent, which is the tax-inclusive rate (meaning that the tax is included in the base). Alternately, we may think of the tax rate as $25/$100 = 25 percent, which is the tax-exclusive rate (meaning the tax is excluded from the base). The 23 percent FairTax rate set out in HR 25/S 1025 is a tax-inclusive rate, as is the current personal income tax, whereas most state-level sales taxes are quoted on a tax-exclusive basis. For ease of comparison, FairTax.org gives the tax rate both ways. Both rates are relevant, since the FairTax is replacing an income tax system, and 23 percent correctly represents the tax burden compared to the current system."

There are two different rates used when looking at this different ways.

23 percent is tax-inclusive, as compared to the income tax.

30 percent is tax-exclusive, as used in a sales tax computation.

 

[RobDownSouth]

Another inconvenient truth about the UnFairTax is that the price of gasoline will go up at least 30% overnight if the UnFairTax is passed, since the UnFairTax places a tax on all imports.

The UnFairTax supporters insist that wholesale price will go down a magic 22%, but a commodity is a commodity, and Uncle Sam can't go up to Mr. OPEC and say "Gee whiz, Mr. OPEC, we've passed something called a "fairtax" here...please lower your prices accordingly".

It's a simple fact that UnFairTax folks refuse to realize.

The UnFairTax is a fraud designed to increase taxes on those earning between $30K and $200K per year, and decrease taxes on those earning over $200K per year. If you think Paris Hilton needs to pay less taxes, by all means support the UnFairTax.

 

[unregistered]

 

[RobDownSouth]

ON WHAT THROB???
Mama always said...

Refer to my previous post.
P.S. Does raising your voice make your point somehow "more valid"? Hmmm?

Damn you're a slow thinker...

Says the man who is unable or unwilling to realize the difference between "tax inclusive" and "tax exclusive"...

Gee, if his houses are cheaper...
Maybe, JUST maybe, more people, people who aren't paying an income tax that can't be DEDUCTED from...
... just maybe more of them can afford to buy houses, and that would mean the builder could line up even more subcontractors and build even more, I mean, it's JUST A THOUGHT...

(You don't need the deduction dummy if you're not paying an INCOME tax...)

His houses will not be cheaper, you agreed with my math earlier.

And a person making between $30K and $200K per year will be paying MORE in taxes, another inconvenient truth you choose to overlook.

 

[firespin]

Do yo have a link supporting that figure for Corporate taxes? Non Income taxes paid by Corporations in 1999 are estimated at 844 Billion.

From the tables in here:

http://www.gpoaccess.gov/usbudget/fy09/pdf/budget/tables.pdf

Individuals pay a lot of non-income taxes, too.

 

[firespin]

Where do you read that?

I'm asking now, show me that, because it's not anywhere that I've read other than far left sources that make the same mistakes and assumptions I've already pointed out.

I'll be back tomorrow, don't think you reply made me run away; that's something only someone like Throb would claim...

Still running away?

 

[Frisco_Slug_Esq]

AJ, as you well know (or should know), home owner mortgage interest deduction is currently the largest single middle class tax break under the current tax code. When this disappears the middle class will be paying proportionally more tax than the Paris Hiltons of the world.

Your glib comment that a builder should simply charge more for his services shows an appalling lack of understanding of basic economics: when there is substantial used inventory on the market at price n, a builder unilaterally charging n+ price increase will ultimately realize less money in a capitalist market.

Throb, do you know the difference between gross and net?

You quote the gross instead of the net when talking about builder profit.

 

[Frisco_Slug_Esq]

Another inconvenient truth about the UnFairTax is that the price of gasoline will go up at least 30% overnight if the UnFairTax is passed, since the UnFairTax places a tax on all imports.

The UnFairTax supporters insist that wholesale price will go down a magic 22%, but a commodity is a commodity, and Uncle Sam can't go up to Mr. OPEC and say "Gee whiz, Mr. OPEC, we've passed something called a "fairtax" here...please lower your prices accordingly".

It's a simple fact that UnFairTax folks refuse to realize.

The UnFairTax is a fraud designed to increase taxes on those earning between $30K and $200K per year, and decrease taxes on those earning over $200K per year. If you think Paris Hilton needs to pay less taxes, by all means support the UnFairTax.

Congress can offset that in a heartbeat. Besides, most of them WANT the price to shoot up to save the environment.

Keep flinging...

Paris Hilton will actually pay more in taxes because she's a shop-a-holic...

 

[Frisco_Slug_Esq]

Still running away?

Nope...




What have ya got?

Remember for every minor negative you dig up, I have a huge positive!



Detractors:

If you hate the bloody rich and want to soak them for their "fair" share why leave in place a tax structure that allows them to buy breaks and favors from Congress?

 

[unregistered]

 

[firespin]

Congress can offset that in a heartbeat. Besides, most of them WANT the price to shoot up to save the environment.

Keep flinging...

Paris Hilton will actually pay more in taxes because she's a shop-a-holic...

Wait, I thought the problem with the current system was congress making too many exemptions?

But let's say they do that. People in the US buy about 50 million gallons of gasoline per day, at (say) $2.50 / gallon, that's $125 million per day, or around $50 billion per year, and the tax would be $15 billion. So we need to come up with another $15 billion to replace that. That's about another half a percent on everything else.

 

[firespin]

Nope...




What have ya got?

Remember for every minor negative you dig up, I have a huge positive!



Detractors:

If you hate the bloody rich and want to soak them for their "fair" share why leave in place a tax structure that allows them to buy breaks and favors from Congress?

Well, for openers, do you understand the whole two rates, 23% inclusive = 30% exclusive, yet?

 

[Frisco_Slug_Esq]

Wait, I thought the problem with the current system was congress making too many exemptions?

But let's say they do that. People in the US buy about 50 million gallons of gasoline per day, at (say) $2.50 / gallon, that's $125 million per day, or around $50 billion per year, and the tax would be $15 billion. So we need to come up with another $15 billion to replace that.

I'm not talking about an exemption, I talking about the elimination of federal highway taxes on gasoline (not to mention domestic overhead, think Alaska, natural gas, shale), which would be replaced by revenues from the 23% tax on the gas. So the price of gas would actually go down.

Why?

And again, the cost of gas won't go up 30%. It's still a fallacy.

An expanding economy is the best way to bring in more tax revenues.

What happens when prices go down? This is 101 stuff. Demand goes up...

 

[Frisco_Slug_Esq]

Well, for openers, do you understand the whole two rates, 23% inclusive = 30% exclusive, yet?

Do you understand the 30% is based on a fallacy, that you HAVE to get the same amount of tax per widget?

 

[firespin]

Do you understand the 30% is based on a fallacy, that you HAVE to get the same amount of tax per widget?

I don't know that it's a fallacy...it's part of being revenue neutral. It's based on the math, as even the fair tax organization admits.

They could make the tax percentage number smaller, but you need 30% exclusive to compensate for 23% inclusive and be revenue neutral. Or so they claim. Disagree? Take it up with the sponsors of the bill.

 

[firespin]

I'm not talking about an exemption, I talking about the elimination of federal highway taxes on gasoline (not to mention domestic overhead, think Alaska, natural gas, shale), which would be replaced by revenues from the 23% tax on the gas. So the price of gas would actually go down.

Why?

And again, the cost of gas won't go up 30%. It's still a fallacy.

An expanding economy is the best way to bring in more tax revenues.

What happens when prices go down? This is 101 stuff. Demand goes up...

If you add a new, yes, 30% sales tax, even if you remove a smaller tax, the price will go up, and consumption will go down. This is 101 stuff, too.