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

[RobDownSouth]

Dear God, I think AJ and Ish are being deliberately obtuse.

Sales tax is virtually always quoted as a tax exclusive rate: You buy a widget for $1.00, and your state sales tax is 7%, you pay $1.07.

You buy a new widget with the new UnFairTax, you will shell out $1.30 (plus state tax). This is a tax-exclusive rate of 30% AND a tax-inclusive rate of 23%...but you'll still be out $1.30 out of pocket.

 

[Ishmael]

Look back at where I go the numbers from.

AJ was postulating that a widget that used to cost a dollar would now be 95 cents, because it would lose 23 cents of embedded taxes, but the tax added would only by 23% of the lower price.

I was pointing out that this would not collect enough tax, or (alternatively) result in less than 77 cents, so the price would really need to be a dollar to net 77 cents.

You could look it up.

Are you seriously postulating that the framers of the legislation did NOT take the price reductions into consideration?

Ishmael

 

[firespin]

Are you seriously postulating that the framers of the legislation did NOT take the price reductions into consideration?

Ishmael

What are you talking about?

Their goal was to convert income taxes to consumption taxes.

To imagine that the total price of (commodities with consumption taxes applied) would be less than commodities without them is preposterous.

Even if you had perfect conversion of hidden taxes to explicit taxes, the best you would get is break-even.

If a manufacturer of a $1.00 widget was able to reduce his effective price to 77 cents by virtue of savings from not paying hidden taxes, he still had to charge $1.00 including the tax in order to pay the gummint its 23% and keep the 77 cents.

Meanwhile, all the employees of his supply chain got their (gross) income whacked down to net income level, because that's why his cost was lower.

 

[firespin]

Dear God, I think AJ and Ish are being deliberately obtuse.

It comes easily to some.

 

[Ishmael]

What are you talking about?

Their goal was to convert income taxes to consumption taxes.

To imagine that the total price of (commodities with consumption taxes applied) would be less than commodities without them is preposterous.

Even if you had perfect conversion of hidden taxes to explicit taxes, the best you would get is break-even.

If a manufacturer of a $1.00 widget was able to reduce his effective price to 77 cents by virtue of savings from not paying hidden taxes, he still had to charge $1.00 including the tax in order to pay the gummint its 23% and keep the 77 cents.

Meanwhile, all the employees of his supply chain got their (gross) income whacked down to net income level, because that's why his cost was lower.

Wrong again. It's becoming more and more obvious that you haven't read the texts available concerning the Fair Tax. The history goes way back and the proposal came about as the result of the efforts of a couple of guys that commisioned a group of economists to come up with the fairest tax possible. There was no other charter and there was no political affiliation taken into consideration. And both of those gentlemen presumed that the product would be a 'flat tax.' The result was a consumption tax with relief for the poorest of taxpayers.

That initial proposal was put out for public critique and review. Several small flaws were found and tweaked out of the proposal before it was entered into the congressional docket.

There remain but three complaints concerning the bill and only one has any merit. That being that there is the risk of having two tax systems, the consumption tax AND an income tax. That was fixed by tying the activation of the consumption tax to the repeal of the 16th amendment.

The other two consist of the accounting method trick you keep trying to play here and the complaint that the poor will be hurt the most. And now, apparently, the detractors have given up on that and switched to. "the rich won't be hurt enough". In any event it is all class warfare rhetoric.

Now, regarding prices. Some prices will increase as a result of the tax, others will actually decrease. These increases/decreases will be as a result of the sector of the economy they occupy. Overall prices will remain neutral as will government tax reciepts. I clearly stated that some sectors will enjoy greater savings associated with their respective tax servicing costs than others. It should have been obvious to anyone reading that statement that those sectors that enjoy the greatest savings would be the sectors that could pass along the greatest savings to the consumer, and it should be just as obvious that the converse would also be true.

Ishmael

 

[firespin]

Wrong again. It's becoming more and more obvious that you haven't read the texts available concerning the Fair Tax. The history goes way back and the proposal came about as the result of the efforts of a couple of guys that commisioned a group of economists to come up with the fairest tax possible. There was no other charter and there was no political affiliation taken into consideration. And both of those gentlemen presumed that the product would be a 'flat tax.' The result was a consumption tax with relief for the poorest of taxpayers.

That initial proposal was put out for public critique and review. Several small flaws were found and tweaked out of the proposal before it was entered into the congressional docket.

There remain but three complaints concerning the bill and only one has any merit. That being that there is the risk of having two tax systems, the consumption tax AND an income tax. That was fixed by tying the activation of the consumption tax to the repeal of the 16th amendment.

The other two consist of the accounting method trick you keep trying to play here and the complaint that the poor will be hurt the most. And now, apparently, the detractors have given up on that and switched to. "the rich won't be hurt enough". In any event it is all class warfare rhetoric.

Now, regarding prices. Some prices will increase as a result of the tax, others will actually decrease. These increases/decreases will be as a result of the sector of the economy they occupy. Overall prices will remain neutral as will government tax reciepts. I clearly stated that some sectors will enjoy greater savings associated with their respective tax servicing costs than others. It should have been obvious to anyone reading that statement that those sectors that enjoy the greatest savings would be the sectors that could pass along the greatest savings to the consumer, and it should be just as obvious that the converse would also be true.

Ishmael

How quaint that you are the arbiter of merit.

I like this graphic, that shows the tax burden by current income level under the current system and the new system.

http://upload.wikimedia.org/wikipedia/en/d/df/NRST-percentile.png

Of course, you'll say that has no merit...but, alas, that comment would also have no merit, so we'd be at a stalemate.

 

[Ishmael]

From the very same source. *chuckle*

http://upload.wikimedia.org/wikipedia/en/thumb/e/e7/FairTax_married.png/400px-FairTax_married.png

Ishmael

 

[Frisco_Slug_Esq]

Look back at where I go the numbers from.

AJ was postulating that a widget that used to cost a dollar would now be 95 cents, because it would lose 23 cents of embedded taxes, but the tax added would only by 23% of the lower price.

I was pointing out that this would not collect enough tax, or (alternatively) result in less than 77 cents, so the price would really need to be a dollar to net 77 cents.

You could look it up.

You, again, are correct only if you think in terms of a zero sum game. Economically speaking what has occurred is increased spending power, basic supply and demand. You also expand the pool of taxable events by taking it from payroll "check" events to POS events, in short the government would be financed then not on wages, but on economic activity which is a greater dollar amount overall and thus even though you DO collect less tax per widget, you sell more widgets and tax more individuals...

 

[Frisco_Slug_Esq]

It comes easily to some.

If my ally in almost any conversation were Throb, I would SERIOUSLY re-examine my premises...

 

[firespin]

From the very same source. *chuckle*

http://upload.wikimedia.org/wikipedia/en/thumb/e/e7/FairTax_married.png/400px-FairTax_married.png

Ishmael

Only if you mean the page where it's linked, Mr. Arbiter. This graphic was commissioned by the fair taxers.

Everybody pays lower tax rates, but it's revenue neutral? Surely you can see that that is just an empty promise

 

[More_Malarky]

I do not mind taxation though it is out of control.

This maybe off topic but what really gets my goat is all the little fees that local government hits ya with.

Permit to put up a fence
Permit for about everything you wanna do with YOUR property
Yearly "inspection" fees of your rental units
MY FAVORITE......Privilege To Work TAX ....What the fuck

You get the picture

What really pisses me off is how our money is spent. Our government is exactly what our founding fathers have warned us about and I for one am close to joining a radical militant group to overthrow those lying stealing fat cats in Washington.

I would rather vote them out of office but I forgot to register

 

[firespin]

If my ally in almost any conversation were Throb, I would SERIOUSLY re-examine my premises...

He has his limitations, to be sure, but he seems to be able to do the math on this one.

The funny thing is that I harbor no predisposition against the fair tax, or other system. I just think the arguments against it are pretty sound, and the proponents don't tend to take them seriously...they arbit them as without merit, for example. (Assuming "arbit" is a word.)

No tax jurisdiction has ever made a 30% (exclusive) sales tax work. That seems like an issue, right off the bat. But even assuming it did work, there's the graph I posted (where all the bars have to sum to 100%) that shows that the burden shifts to the people in the middle of the income spectrum. That should be in the first paragraph of the explanation of the plan.

 

[Frisco_Slug_Esq]

Even Whoopie Goldberg has gone off on taxation as you describe it.

Oprah has a home/mansion in California she refuses to live in full time and Limbaugh quit NYC...



My biggest pet peeve is the property tax for it deprives you of one of the three pillars of Liberalism (classic).

 

[Frisco_Slug_Esq]

He has his limitations, to be sure, but he seems to be able to do the math on this one.

The funny thing is that I harbor no predisposition against the fair tax, or other system. I just think the arguments against it are pretty sound, and the proponents don't tend to take them seriously...they arbit them as without merit, for example. (Assuming "arbit" is a word.)

No tax jurisdiction has ever made a 30% (exclusive) sales tax work. That seems like an issue, right off the bat. But even assuming it did work, there's the graph I posted (where all the bars have to sum to 100%) that shows that the burden shifts to the people in the middle of the income spectrum. That should be in the first paragraph of the explanation of the plan.

The problem is that you don't have a sound argument.

"No tax jurisdiction has ever made a 30% (exclusive) sales tax work. "

Show me one that has made a hidden inclusive tax work! Look around, the lights are going out in that shining city on a hill...

The people need to know the actual percentage at which they are being fleeced, and the only way to actually make them angry about it is to bring it out into the light of day and make EVERYONE vested in the tax for 51% will GLADLY fuck over the 49% with today's level of economic education, a state you, sadly, display every single time you say the tax rate will be 30%...

 

[Frisco_Slug_Esq]

Only if you mean the page where it's linked, Mr. Arbiter. This graphic was commissioned by the fair taxers.

Everybody pays lower tax rates, but it's revenue neutral? Surely you can see that that is just an empty promise

Form of ad Hominem.



That's Throb's purview, not ours...

 

[Frisco_Slug_Esq]

Firespin...




Do you believe that lowering taxes stimulates an economy and increases revenues or do you believe it lowers revenues?

 

[JohnnySavage]

He has his limitations, to be sure, but he seems to be able to do the math on this one.

The funny thing is that I harbor no predisposition against the fair tax, or other system. I just think the arguments against it are pretty sound, and the proponents don't tend to take them seriously...they arbit them as without merit, for example. (Assuming "arbit" is a word.)

No tax jurisdiction has ever made a 30% (exclusive) sales tax work. That seems like an issue, right off the bat. But even assuming it did work, there's the graph I posted (where all the bars have to sum to 100%) that shows that the burden shifts to the people in the middle of the income spectrum. That should be in the first paragraph of the explanation of the plan.

I looked at this topic last year during one of these threads. I have to say, I agree with you. The Fair-Taxers rely on two assumptions: 1) that people will spend the extra money in their pay checks; and, 2) there will be a race to the bottom in retail prices. Both assumptions are false - in my opinion. People may just as easily save what they were paying in income taxes as spend it and retailers aren't going to lower their prices - that'd be stupid.

The bottom line is that I would pay more in taxes under the current system. As it is now, my net income tax (State and Federal) divided by my gross income is about 16% and I'm pretty happy with that.

 

[More_Malarky]

I would spend my extra money from tax cuts on sluts

 

[Frisco_Slug_Esq]

And when we save and invest, what happens Johnny?

More economic activity? Hmmm...?

More BANK loans?

How many times have we heard, "The American Savings rate is too low?"



PS - It's AMERICA! Were you born yesterday? The money, for the most part, is GOING TO BE SPENT!!!

AND not wisely...

 

[Frisco_Slug_Esq]

I would spend my extra money from tax cuts on sluts

... and slots!

I could afford Chivas EVERY day...

Drop the cheap Canadian!

Some Cubans...

 

[JohnnySavage]

And when we save and invest, what happens Johnny?

More economic activity? Hmmm...?

More BANK loans?

How many times have we heard, "The American Savings rate is too low?"



PS - It's AMERICA! Were you born yesterday? The money, for the most part, is GOING TO BE SPENT!!!

AND not wisely...

HA! No, when we save and invest, AIG gives our money to Goldman and it evaporates.

The Fair Tax depends on growth in the economy, which means consumer spending. A strong savings rate is only important in a stagnant economy, and in the absence of excessive consumer credit.

 

[Frisco_Slug_Esq]

HA! No, when we save and invest, AIG gives our money to Goldman and it evaporates.

The Fair Tax depends on growth in the economy, which means consumer spending. A strong savings rate is only important in a stagnant economy, and in the absence of excessive consumer credit.

The Fair Tax will more likely produce a growing economy than a progressive income tax.

It also gets Congress back out of their little protection racket...

 

[JohnnySavage]

The Fair Tax will more likely produce a growing economy than a progressive income tax.

It also gets Congress back out of their little protection racket...

I agree, but I'm not willing to pay more out of spite.

 

[Frisco_Slug_Esq]

I agree, but I'm not willing to pay more out of spite.

I can think of a myriad of ways to pay less; besides, you're ALREADY paying the FairTax and INCOME Tax and Congress is most pleased that you keep forgetting that fact...

 

[Ishmael]

Only if you mean the page where it's linked, Mr. Arbiter. This graphic was commissioned by the fair taxers.

Everybody pays lower tax rates, but it's revenue neutral? Surely you can see that that is just an empty promise

And, of course, the graph you posted had NO political axe to grind. Get real. Neither would turn out to be a true reflection of reality. Any form of taxation will, per force, have unintended consequences associated with it. The public will adjust to any new system in a manner that would be unanticipated by any group trying to model the behavior. Consequently I look at neither of those graphs as anything more than a politically weighted indication of possible results and in that context I would posit that the Boston Univ. study has far less political bias than the presidents commision.

That being said, I have already acknowledged that the middle class will pay proportionately more in taxes even if that is manifested by reduced savings in taxes. This is NOT as a result of any intentional, or for that matter unintentional, bias in the legislation. It is an artifact of the purchasing habits of the middle class. They just happen to spend more on non-essential shit as a proportion of disposable income than anyother group. Couple that with the fact that it is also the middle class that is primarily engaged in the underground economy, an economy that would be recovered for tax purposes under the legislation. These artifacts are artifacts of choice.

Both charts reflect a reduced percentage of taxes recovered from "the rich." A fact that certainly feeds the fervor of those so eaten with envy that they chose to engage in class warfare. What is lost in the discussion is a fact I brought out earlier and that fact is that most of those 'rich' are in reality businesses that will no longer be subject to taxation. This occurs as a specific acknowledgement that businesses do NOT pay taxes and never have paid taxes. They merely act as intermediate tax collectors for the government. And the understanding of that reality is essential in understanding why both graphs show a shift in the tax burden. The Fair tax columns, and I really don't care which graph you use, merely takes the hidden taxes and redistributes same into the proper quintiles. Consequently the Fair tax columns probably reflects the reality of both systems whereas the current system column merely perpetuates the myth that businesses pay taxes.

Ishmael