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

[Saint Peter]

I cannot wait for my first Prekbate check.

That one is going for some over priced knives.

 

[RobDownSouth]

But since my sides are already hurting for laughing...




Where did you "dream up" that $1.30?

If a product costs $1 at retail, the FairTax adds 30%, for a total of $1.30. Since the 30-cent tax is 23% of $1.30, FairTax supporters say the rate is 23% rather than 30%.

Spin that. Try using facts in your answer this time.

UnSpinning The FairTax reports that 15% of all FairTax supporters suffer from "AJ-itis", a pathological inability to recognize that at 23% "tax inclusive" rate translates to a 30% "tax exclusive" rate (the rate actually paid at the cashier).

Spin that one too, AJ.

 

[Ishmael]

If you want to get any sort of fair-tax proposal through the congress, it must include a "soak the rich" provision of some kind or another. The "prebate" simply is not enough to cover that necessity. Given the political climate in the U.S., and the fact that our president rarely speaks of economics without using the term "fat cat", you can be assured that the only possible way a national sales tax will be implemented is as an additional tax on top of the payroll and income taxes.

Much of the objection appears to hinge on the belief that retail prices will not drop should Fair Tax replace payroll and income taxes as the primary federal taxation mechanism. Apparently there is a belief that retail prices for goods other than gasoline do not include the cost of payroll taxes, income taxes and regulatory fees that a manufacturer pays in the creation of their product.

To an extent, they are correct, as a lag between passage and price changes (as suppliers cash flow situation adapts to the new tax plan) - would for some time make it appear as if they are simply taking an additional 30% profit (as many would).

I'm in general agreement with you on the above. I suspect that the prices being charged by the larger retailers and service providers will adjust the fastest in that those are the concerns that will have a better handle on their embedded costs.

It is a difficult job explaining to people that they are already absorbing ALL of those costs in the prices they pay for goods and services when you have a group of demagogues out there screaming about "soaking the rich." There seem to be many that have a Scrooge McDuck vision of the rich sitting in a vault playing with their gold.

I also have difficulty believing that many service industries (law, accounting, cleaners, etc...) will drop their fees when the payroll taxes disappear. I do believe they will simply add 23% on top of their current rates and enjoy the bonus.

On this point I disagree. Oh, I'm sure some of the small office attorneys will do so. The ambulance chasers are already working a percentage of recovery biz. That leaves the large firms that deal primarily with businesses and the businessmen are going to go to them and say, "Hey, I just adjusted my prices to maintain my market share. I think you should do the same lest I shop elsewhere."

But as para 1 states - The Citizens of The U.S.A., have declared that they want something for nothing and elected those who believe the rich can pay for it all. There is no possibility of a tax which the rich can treat as, "voluntary" coming into existence. Until they have an "alternative minimum purchases" provision, it's not possible.

And the wealthy will find a way around that provision as well, just as they have every other gimmick in the tax regs.

Ishmael

 

[firespin]

The legislation clearly states the the 23% will be applied to the suggested retail price and added to that price. That is the ONLY formula that applies, all else is bullshit. Ignorant bullshit engaged in by what might otherwise be considered reasonably intelligent people.

If the suggested retail price is $.77, then 23% of that price is indeed $.18 and when you add $.18 to $.77 you do indeed come up with a tax inclusive shelf price of $.95. That's it, end of story, no further discussion required. It operates exactly the same as the current crop of tax inclusive excise taxes.

The only people that seem to be befuddled by that simple calculation are those that are determined to apply methodolgies NOT specified by the legislation.

Ishmael

Here's what the House version of the Fair Tax says:

‘(a) In General- There is hereby imposed a tax on the use or consumption in the United States of taxable property or services.

‘(b) Rate-

16
‘(1) FOR 2011- In the calendar year 2011, the rate of tax is 23 percent of the gross payments for the taxable property or service.

Well, would you look at that? It says what I said it did, and not what you just said. What are the odds of THAT happening?

Apparently though, Ish and Frisco are not alone...

"The 23 percent number in H.R. 25 is the equivalent of the 4.8 percent in the previous example. To calculate the real rate of the sales tax, we have to determine the original purchase price of an item. We can begin with the same $100 item, keeping in mind that a price tag that reads $100 has sales tax already built in. If our tax rate is 23 percent of the tax-inclusive sales price, then of the $100 final price, $23 of those dollars will be for taxes, meaning that the original pre-tax price of the item is $77. To get $23 in taxes on a $77 item, one must impose a 30 percent tax. In other words, a 23 percent sales tax on the tax-inclusive sales price is equivalent to a 30 percent tax on the actual price of the item.

FairTax proponents object to the 30 percent number, claiming that critics use the larger number to frighten people. Americans for Fair Taxation claims that it uses the tax-inclusive number to make it easier to compare the FairTax to the income tax that it will replace (since most of us think of income tax rates on an inclusive basis). But we are not accustomed to thinking of sales taxes inclusively. The result is that many FairTax supporters (about 15 percent of those who wrote to us, for example) do not understand that the 23 percent figure is tax inclusive.

Our analysis of the FairTax used a figure of 34 percent as the basic exclusive tax rate. One e-mailer complained that our number was at least 10 percentage points “higher than [the FairTax] is” because we calculated it as an addition to retail prices. But our 34 percent number is not 10 percentage points higher than the legislation. A 34 percent exclusive number is equivalent to a 25 percent tax inclusive rate – only 2 percentage points higher than the FairTax bill. We think that, intentional or not, the use of the tax-inclusive 23 percent rate has misled a lot of FairTax proponents."

http://www.factcheck.org/taxes/unspinning_the_fairtax.html

 

[firespin]

As far as what retailers might do, here's an interesting way to look at things.

Wal-mart sold $405B worth of stuff last year. That stuff cost them $306B...that it, on average, they mark up everything by 33% to cover all their costs including employee costs (direct and indirect, $76B), corporate taxes ($7B) and profit ($13B).

http://finance.yahoo.com/q/is?annual&s=wmt

So if we assume Walmart is able to eliminate income taxes, and 30% of its selling G&A due to reduced income and payroll tax withholdings (which is high), then they would save $30B on $405B worth of sales, or 7%, and could lower their prices by 7% and keep the same profit margin.

They could try to get their suppliers to reduce their prices as well...to achieve a 23% reduction in their prices to end users and thus make the sale tax invisible, they'd have to reduce costs by $92B, and they only have found $30B so far, and that's being generous. So they'd need suppliers to reduce $62B out of $306B, or, again, more than 20%.

Unfortunately for them, or Walmart, or us, many of those suppliers are not based in the US, so will not see any favorable change in tax treatment. Those hidden costs will still be there. (Wal-mart directly imports more then $30B from China alone, not counting indirect imports, or imports from other countries).

In a lot of business lines, the US part of the supply chain just isn't big enough to make it possible to remove hidden costs and keep price increase from happening with the imposition of a sales tax.

 

[firespin]

You might wonder why the extended discussion about relatively small differences in percentages. This post makes it clear why that's necessary:

The legislation clearly states the the 23% will be applied to the suggested retail price and added to that price. That is the ONLY formula that applies, all else is bullshit. Ignorant bullshit engaged in by what might otherwise be considered reasonably intelligent people.

This statement is provably false...the text of the bills is online, as noted earlier, and it doesn't say this.

This is, in a nutshell, the problem with fair tax proponents. They don't understand what will happen, even saying things that are demonstrably false, yet they feel no shame at dismissing the efforts of others to point this out. In the end, they only tarnish the goal they should in theory want to achieve.

 

[Ishmael]

Here's what the House version of the Fair Tax says:

‘(a) In General- There is hereby imposed a tax on the use or consumption in the United States of taxable property or services.

‘(b) Rate-

16
‘(1) FOR 2011- In the calendar year 2011, the rate of tax is 23 percent of the gross payments for the taxable property or service.

Well, would you look at that? It says what I said it did, and not what you just said. What are the odds of THAT happening?

Apparently though, Ish and Frisco are not alone...

"The 23 percent number in H.R. 25 is the equivalent of the 4.8 percent in the previous example. To calculate the real rate of the sales tax, we have to determine the original purchase price of an item. We can begin with the same $100 item, keeping in mind that a price tag that reads $100 has sales tax already built in. If our tax rate is 23 percent of the tax-inclusive sales price, then of the $100 final price, $23 of those dollars will be for taxes, meaning that the original pre-tax price of the item is $77. To get $23 in taxes on a $77 item, one must impose a 30 percent tax. In other words, a 23 percent sales tax on the tax-inclusive sales price is equivalent to a 30 percent tax on the actual price of the item.

FairTax proponents object to the 30 percent number, claiming that critics use the larger number to frighten people. Americans for Fair Taxation claims that it uses the tax-inclusive number to make it easier to compare the FairTax to the income tax that it will replace (since most of us think of income tax rates on an inclusive basis). But we are not accustomed to thinking of sales taxes inclusively. The result is that many FairTax supporters (about 15 percent of those who wrote to us, for example) do not understand that the 23 percent figure is tax inclusive.

Our analysis of the FairTax used a figure of 34 percent as the basic exclusive tax rate. One e-mailer complained that our number was at least 10 percentage points “higher than [the FairTax] is” because we calculated it as an addition to retail prices. But our 34 percent number is not 10 percentage points higher than the legislation. A 34 percent exclusive number is equivalent to a 25 percent tax inclusive rate – only 2 percentage points higher than the FairTax bill. We think that, intentional or not, the use of the tax-inclusive 23 percent rate has misled a lot of FairTax proponents."

http://www.factcheck.org/taxes/unspinning_the_fairtax.html

Your an idiot, I posted the legislation long ago.

Ishmael

 

[RobDownSouth]

Your an idiot, I posted the legislation long ago.

Ishmael

Spelling errors when denigratin' your opponent's intelligence detract from your post's overall effectiveness. Just sayin'.


You may have posted the legislation "long ago", but a quick perusal of your posts in this thread shows an almost criminal lack of understanding with regard to the bill's intent.

 

[Ishmael]

Go fuck yourself Dicklick.

Ishmael

 

[firespin]

Your an idiot, I posted the legislation long ago.

Ishmael

Your opinion would be more relevant if your ability to comprehend the legislation was more evident.

Do you really not understand what "23 percent of the gross payments" means?

I can't think of any other reason why you would have said this:

"The legislation clearly states the the 23% will be applied to the suggested retail price and added to that price."

At some point, you need to stop embarrassing yourself. It's not quite like denying that 2 + 2 = 4, but it is still denying basic mathematics.

If you only added 23% of the suggested retail price as tax, then you would be collecting 23 cents out of every $1.23, which is 18.7%, and you would be in violation of the fair tax law.

This difference is also important because

a) otherwise people will use the 18.7% rate to try to show that prices go down...take out 23%, add 18.7%...

b) it shows that the Fair Tax supporters try to explain things in ways that are easily mis-understood, when there are clearer ways available. They eschew clarity in the interest of misdirection.

 

[Frisco_Slug_Esq]

If you want to get any sort of fair-tax proposal through the congress, it must include a "soak the rich" provision of some kind or another. The "prebate" simply is not enough to cover that necessity. Given the political climate in the U.S., and the fact that our president rarely speaks of economics without using the term "fat cat", you can be assured that the only possible way a national sales tax will be implemented is as an additional tax on top of the payroll and income taxes.

Much of the objection appears to hinge on the belief that retail prices will not drop should Fair Tax replace payroll and income taxes as the primary federal taxation mechanism. Apparently there is a belief that retail prices for goods other than gasoline do not include the cost of payroll taxes, income taxes and regulatory fees that a manufacturer pays in the creation of their product.

To an extent, they are correct, as a lag between passage and price changes (as suppliers cash flow situation adapts to the new tax plan) - would for some time make it appear as if they are simply taking an additional 30% profit (as many would).

I also have difficulty believing that many service industries (law, accounting, cleaners, etc...) will drop their fees when the payroll taxes disappear. I do believe they will simply add 23% on top of their current rates and enjoy the bonus.

But as para 1 states - The Citizens of The U.S.A., have declared that they want something for nothing and elected those who believe the rich can pay for it all. There is no possibility of a tax which the rich can treat as, "voluntary" coming into existence. Until they have an "alternative minimum purchases" provision, it's not possible.

So true...! Sad, but true...

Some business already soaks the rich, hell Sensei always admonished me, when it comes to a service industry, people believe they get what they pay for and only respect that which costs them dearly, so never teach cheap, and NEVER teach for free...

But, the average person want to know more about what happens to commodities and products. We know why PCs outsell MACs, Gallon isn't $4 a gallon, sugar isn't $7 a pound, and coffee is under $10.00 a pound, they are subject to market forces and every time they have gone up due to shortage, when the volume returned, the savings was passed on in order to preserve market share.

 

[Frisco_Slug_Esq]

If a product costs $1 at retail, the FairTax adds 30%, for a total of $1.30. Since the 30-cent tax is 23% of $1.30, FairTax supporters say the rate is 23% rather than 30%.

Spin that. Try using facts in your answer this time.

UnSpinning The FairTax reports that 15% of all FairTax supporters suffer from "AJ-itis", a pathological inability to recognize that at 23% "tax inclusive" rate translates to a 30% "tax exclusive" rate (the rate actually paid at the cashier).

Spin that one too, AJ.

So, you're making it up.

Gotcha...

lol

 

[firespin]

Awww...so disappointed...it's been more than an hour, and there's been no attempt by the deluded to explain that:

- a correct understanding of the law is wrong

- in incorrect understanding is right (with no proof, of course)

- a personal insult.

 

[Frisco_Slug_Esq]

Awww...so disappointed...it's been more than an hour, and there's been no attempt by the deluded to explain that:

- a correct understanding of the law is wrong

- in incorrect understanding is right (with no proof, of course)

- a personal insult.

I'm deluded?

You're all over the map and not paying any attention to substantive refutations of that which you keep positing...

You've turned a simple .23¢ on the dollar to all sorts of meaningless percentages which is now, not only comparing apples to oranges but adding mangos, bananas, and Elton John...

 

[firespin]

I'm deluded?

You're all over the map and not paying any attention to substantive refutations of that which you keep positing...

You've turned a simple .23¢ on the dollar to all sorts of meaningless percentages which is now, not only comparing apples to oranges but adding mangos, bananas, and Elton John...

Yes, I think you are deluded.

But if you're not, you should be able to cite at least one non-Frisco, non-Ishmael source that agrees with you on how the Fair Tax works, since I've posted a few, including the law itself and the fair tax website, that say it doesn't work like that. Which you apparently think of as fruit salad. (But at least it's not global warming.)

Go ahead, let's see your substantive refutation. Link to it, if it's in this thread, using the criteria that it can't be something made up.

 

[RobDownSouth]

So, you're making it up.

Gotcha...

lol

One dollah, thutty cents.
You cannot spin away that fact, so now you're accusing me of "making it up".

At some point, you need to stop embarrassing yourself. It's not quite like denying that 2 + 2 = 4, but it is still denying basic mathematics.

Worth repeatin'.

 

[RobDownSouth]

Go fuck yourself Dicklick.

Ishmael

Quality rebuttal you have there.

Did you used to kiss your mother with that mouth?

 

[firespin]

This pretty much sums up why it's not easy bein' AJ:

http://1.bp.blogspot.com/_cBkbdLQJPmM/RsSCYZoJgMI/AAAAAAAAAHA/K3SPENoWf-o/s1600/red_sky_ufo3.jpg

 

[Frisco_Slug_Esq]

Yes, I think you are deluded.

But if you're not, you should be able to cite at least one non-Frisco, non-Ishmael source that agrees with you on how the Fair Tax works, since I've posted a few, including the law itself and the fair tax website, that say it doesn't work like that. Which you apparently think of as fruit salad. (But at least it's not global warming.)

Go ahead, let's see your substantive refutation. Link to it, if it's in this thread, using the criteria that it can't be something made up.

I did. You poo-poo'd the source. Then you quoted it in rebuttal...

When I quoted Throb's source in rebuttal you blasted me for the source being biased.

For me, it's turned into a lose-lose situation.

 

[Frisco_Slug_Esq]

This pretty much sums up why it's not easy bein' AJ:

http://1.bp.blogspot.com/_cBkbdLQJPmM/RsSCYZoJgMI/AAAAAAAAAHA/K3SPENoWf-o/s1600/red_sky_ufo3.jpg

Again, if Throb were my ally, I'd re-check my premises...

 

[firespin]

I did. You poo-poo'd the source. Then you quoted it in rebuttal...

When I quoted Throb's source in rebuttal you blasted me for the source being biased.

For me, it's turned into a lose-lose situation.

Sure you did. What reply was that, again?

 

[firespin]

Again, if Throb were my ally, I'd re-check my premises...

Ishmael isn't exactly a high-demand wingman.

Just sayin'.

 

[Frisco_Slug_Esq]

Sure you did. What reply was that, again?

That you can calculate the Fairtax percentage two ways (or your newest third way, or, like Throb, you can just pull a $1.30% OUT OF THIN AIR), but no matter which percentage you like for display purposes, the dollar amount collected remains the same...

 

[Frisco_Slug_Esq]

Ishmael isn't exactly a high-demand wingman.

Just sayin'.

Why, because he stated that this thread caused him to lose respect for you?

I lost respect for you when you backed McQueeg for President.

 

[firespin]

That you can calculate the Fairtax percentage two ways (or your newest third way, or, like Throb, you can just pull a $1.30% OUT OF THIN AIR), but no matter which percentage you like for display purposes, the dollar amount collected remains the same...

Everybody agrees you can calculate the tax two ways. Your way just isn't one of them.

You have to get to 23% of the gross, that's what the law says, as has been posted in this thread. You can do that either by taking 23% of total transaction, as income taxes do, or you can get the equivalent by adding 29.87% to the base price (23/77), as sales taxes do. So, you're right, it's not 30%, but close

The one thing you can't do is add 23% to the base price, because then you only get 18.7% of the gross transaction price.

I don't understand why you persist in making that claim with no proof and no citation, and ignoring the plainly worded contradictory information on your own fairtax web site. It's as if you enjoy being ignorant, evasive and derisive. Usually you don't like that behavior in your opponents...are you saying it's OK for you?