How to defeat Bush's SS plan, soak the rich and give it to the poor.

[*******]

Some people WILL do that ER. There are people who are doing just fine right now charging MORE for their prodyct than neccessary because they are good at sales.

Others will take them to the cleaners for choosing such a poor strategy.

Here's an example that came from one of my Martial Arts business publications. When the Gubenator came here from Austria, he and his brother (buddy?) went into the family trade of bricklaying. They did everything the could to work cheaper than anybody else but they soon found themselves in a failing business. Then he jacked up the prices and billed themsleves as "European Specialty Bricklayers" and the rest is history since that endeavor funded his body-building...

 

[Eroticus_Rex]

Some people WILL do that ER. There are people who are doing just fine right now charging MORE for their prodyct than neccessary because they are good at sales.

Others will take them to the cleaners for choosing such a poor strategy.

Here's an example that came from one of my Martial Arts business publications. When the Gubenator came here from Austria, he and his brother (buddy?) went into the family trade of bricklaying. They did everything the could to work cheaper than anybody else but they soon found themselves in a failing business. Then he jacked up the prices and billed themsleves as "European Specialty Bricklayers" and the rest is history since that endeavor funded his body-building...

So you maintain there would be a short-term market shift, but competition in the marketplace would prevail. Makes sense....

 

[*******]

And what about the tax savings for mortgage interest deductions on income tax? That would vanish, and a lot of people would panic...

You point out to them that they are no longer paying 12% FICA and no longer hiring and paying bookkeepers to comply with an IRS code that the IRS doesn't even fully understand because it was written by politicians, arguably some of the most likeable, but dumbest, people on the face of the planet.

In fact, they won't be paying income tax. They get to keep, and spend ALL their money.

It's an easy trade-off when put upon the scales...

 

[Ishmael]

I foresee the cost NOT going down, but the builder pocketing the newfound profit margin.

I would....

Won't happen. One builder MAY try that. And even get away with it once or twice. But there's another builder out there that will see an opportunity to grab market share by giving the buyer that 30% price break. The same thing will happen in all markets with all goods and services. Your "windfall profit" window of opportunity might last a month, if that long.

Ishmael

 

[RobDownSouth]

Lets look at some examples

Example 1: Current system

$40,000 Land cost (25%)
$48,000 Labor cost (30%)
$32,000 Material cost (20%)
$40,000 Misc overhead/compliance cost (25%)
===================================
$160,000 total cost of building house

The builder typically has gross profit margin of 20% :$40,000

The house would then be priced at $200,000

So Joe Homebuyer pays $200K, gets the homeowner deduction and builder gets $40K


Example 2: Flat tax

$40,000 Land cost (25%) (unchanged)
$33,600 Labor cost ($48,000 reduced by 30% flat tax)
$22,400 Material cost ($32,000 reduced by 30% flat tax)
$36,000 Misc overhead/compliance cost (compliance costs won't go away totally, I'll be generous and knock 10% of $40,000 due to flat tax)
===================================
$132,000 total cost of building house

The builder still has gross profit margin of 20% :$26,400
This makes the pre-tax price of the house $158,400
Add the 30% flat tax and you have a house priced at $205,920

So Joe Homebuyer pays $205K, gets NO homeowner deduction and builder gets $26K

So the homebuyer pays MORE, the builder makes LESS and the flat tax proponents claim this is a GOOD thing?

Must be something in the "mathmatical" sic calculations I am missing.

 

[*******]

So you maintain there would be a short-term market shift, but competition in the marketplace would prevail. Makes sense....

That's why I'm so in love with the idea.

Isn't it about time that taxation made some sense that even the dumbest layman can discern?

 

[*******]

Throb, I would be for a flat tax too except for one thing.

That's how our present system started.

Then the politicians used divide and conquer to pick on minority groups (yes, ironic that the rich are a minority, but they do it to smokers too) and you get what we got here today.

It's near impossible to pick out someone at the register for a certain sales tax bracket which is one of the briliant and salient points of the idea.

I don't dispute your math, I distrust the vehicle.

But I could go for it over what we have now. Agreed?

 

[*******]

Additionally, Throb, and here's something to ponder, when I re-sell that home, it's not taxed again which means somebody not as well off as I am, gets to make somewhat of a step up in life...



And there will be no more Capital Gains tax which is nothing more than legal rape, pure and simple.

 

[*******]

And just imagine the increase in foreign investment (especially at the expense of the European Union... Like the sound of that? I do... )!

 

[Ishmael]

Where in the hell are you getting your land cost % from Rob? Los Angeles?

Land as a percentage of value is highly variable from location to location. Your 25% is outrageously high. I can buy land for $10,000/acre all day long in my area and I'm certainly not rural. Building lots in developed, noncommercial, locations are relatively more expensive. Maybe $30K so a worst case is around 15%. Nationally I suspect the average is much lower than that.

You also assume that the price of land won't be adjusted downwards too. After all, the seller no longer has to pay any tax on the sale, capital gains or otherwise.

However, I would expect that market to take longer to adjust.

By "homeowner deductions" I'm going to presume you're refering to the interest deduction. Granted, that deduction can be substantial in the front end of a mortgage. However, if you're counting on your income rebate check to make ends meet you're already in deep shit and probably shouldn't be in that house to begin with.

The other point is that there is NO tax at all on an existing structure being resold. The only houses that are going to be taxed are new construction properties.

Ishmael

 

[RobDownSouth]

Additionally, Throb, and here's something to ponder, when I re-sell that home, it's not taxed again which means somebody not as well off as I am, gets to make somewhat of a step up in life...



And there will be no more Capital Gains tax which is nothing more than legal rape, pure and simple.

That's certainly one way of looking at it.

Flip it around, though, and see your statement from a builder's perspective:
"I now have to compete with the existing home stock in the United States, and those sellers have a 30% price advantage....I'm ruined!"

 

[*******]

Gawd, I know I'm picking on a dead horse here Throb, but there's I reason I started this thread by talking about the poor.

Just as soon as a flat tax is initiated, your side of the aisle, and I don't mean you personally, nor am I trying to point fingers and create division, will immediatley start talking about how unfair it is to the poor and how the rich aren't paying their fair share and then we get right back into class warfare and "fixing" the tax code to make it fair. HR25 goes right to that issue by letting the poor keep ALL their money, because. let's face it, that 12% FICA hurts them way more than it hurts you or I and because the rich simply spend more, the de facto pay more taxes without being singled out by politicians.

It's a win-win.

 

[RobDownSouth]

Where in the hell are you getting your land cost % from Rob? Los Angeles?

Land as a percentage of value is highly variable from location to location. Your 25% is outrageously high. I can buy land for $10,000/acre all day long in my area and I'm certainly not rural. Building lots in developed, noncommercial, locations are relatively more expensive. Maybe $30K so a worst case is around 15%. Nationally I suspect the average is much lower than that.

You also assume that the price of land won't be adjusted downwards too. After all, the seller no longer has to pay any tax on the sale, capital gains or otherwise.

However, I would expect that market to take longer to adjust.

By "homeowner deductions" I'm going to presume you're refering to the interest deduction. Granted, that deduction can be substantial in the front end of a mortgage. However, if you're counting on your income rebate check to make ends meet you're already in deep shit and probably shouldn't be in that house to begin with.

The other point is that there is NO tax at all on an existing structure being resold. The only houses that are going to be taxed are new construction properties.

Ishmael

I used figures from the National Association of Home Builders, Ishmael. The link is HERE

I think they have a tad more experience in these sort of calculations, your anectdotal evidence notwithstanding.

You're certainly welcome to your opinion that land values could potentially plummet based on changes to the tax code. I happen to disagree with your opinion.

 

[*******]

I, as a builder, no longer have to hire and keep on a Human Resources staff to keep track of all the taxes on my employees and I no longer have to worry about a simple mistake costing me my business when the IRS comes for me.

Guilty or innocent, I have to hire lawyers when those fuckers coma a'knocking on my door...

I can simply build new homes, and there will always be some demand for new homes and the remodling of old ones.

Plus more people get a shot at home ownership and that's a real good thing that promotes a healthier more stable society and we stop looking around for people we can victimize to make things more fair when it comes to funding pet political projects.

Plus it will make congressional spending more transparent (removing the SS IOU system that no one can understand or even track) and easier for us as citizens to cry bullshit when Congress tries to spend more than it takes in. Plus they can't cut special deals that favor their rich buddies when writing tax code and we all want that don't we.

No more income tax, no more bennies for those industries rich enough to hire lobbyists. That's more fair for both you and I, the ones who actualy pay taxes (since the idea that corporations pay tax is simply a myth and now we return full circle because that's one of the imbedded costs we're talking about).

 

[Ishmael]

Gawd, I know I'm picking on a dead horse here Throb, but there's I reason I started this thread by talking about the poor.

Just as soon as a flat tax is initiated, your side of the aisle, and I don't mean you personally, nor am I trying to point fingers and create division, will immediatley start talking about how unfair it is to the poor and how the rich aren't paying their fair share and then we get right back into class warfare and "fixing" the tax code to make it fair. HR25 goes right to that issue by letting the poor keep ALL their money, because. let's face it, that 12% FICA hurts them way more than it hurts you or I and because the rich simply spend more, the de facto pay more taxes without being singled out by politicians.

It's a win-win.

Ahhhhhhh, another point there bro.

That matching % your employer pays to FICA in your name represents a windfall for the employer. When I hire some one I factor that number in as my cost of hiring that individual. Whether the employee know's it or not, that money, all of that money, is coming right out of their pay check. I don't deduct it, I just don't pay it to them.

Should HR-25 become law there's a 6% raise laying on the table for every employee in the country. If the individual employee doesn't figure it out, the unions damn sure will and they'll have it figured out before the ink is dry on the paper.

Ishmael

 

[*******]

Yes, Ish, it's better not to get draged down into specific numbers and specific industries and to try to discuss this on a point-by-point basis because you can get drug down and easily beaten by a point not enirely on tangent.

It's best to keep it on the level of widgets and principles. That's why I am not going to dispute Throb's numbers. I'll give him that AND the "Bush is an Idiot" bcause you cannot apply the same exact argument to a car or a loaf of bread.

 

[*******]

[sidebar to brag]

Shortly after we purchased our home here, land values skyrocketed.

Even Looney Laurel, whom we've talked about before, paid way more than market value for the adjacent land, which doubled the value of our land.

Of course, now we have to hold long-term to avoid getting raped by the current tax code...

 

[RobDownSouth]

I, as a builder, no longer have to hire and keep on a Human Resources staff to keep track of all the taxes on my employees and I no longer have to worry about a simple mistake costing me my business when the IRS comes for me.

Show me a builder with employees and I'll show you an incompetent builder.

Most builders today subcontract everything out and have skeletal staffs. Only the largest builders have a "human resources staff" today. I'd say virtually all builders outsource their few employees to payroll companies. Honestly, human resource costs as a percentage of builder costs are trivial.

Say I am building 10 houses. I subcontract out my plumbing to a plumbing outfit. Flat tax is enacted. Do you think my plumbing contractor is overnight going to decrease my cost 30%? I highly doubt it.

 

[*******]

Good point, but I think still off target.

Then you get a new subcontractor, but again, that's geting mired in a specific nit.

He, the subcontractor, then has gotten the huge savings and it is in his best interest to pass that on and hold on to his market share. Eventualy someone pays the cost. Agreed?

You know I could go on about this forever, and I will get back to it tomorrow. But today is turning out to be one of the spectacular, gorgeous, beautiful days before the Spring Monsoon hits and I mean to go enjoy it.

I want to thank EVERYONE for the civility and thought that they have poured into this thread. Thank you, thank you, thank you. You deserve a pat on the back.

For once, we managed to do Lit proud.

Have a great day!

 

[RobDownSouth]

Yes, Ish, it's better not to get draged down into specific numbers and specific industries and to try to discuss this on a point-by-point basis because you can get drug down and easily beaten by a point not enirely on tangent.

It's best to keep it on the level of widgets and principles. That's why I am not going to dispute Throb's numbers. I'll give him that AND the "Bush is an Idiot" bcause you cannot apply the same exact argument to a car or a loaf of bread.

Ah, but the devil is in the details.

The reason I brought up the housing industry is because it will suffer the most under a flat tax system.

I simply don't see how flat tax can be implement without devasting the building and construction industry.

I've heard some chattering about exempting new housing from flat tax as well. One serious drawback to that: to remain revenue neutral, the flat tax would have to be increased to somewhere between 43-57%. A 30% sales tax is bad enough, a 57% sales tax would cause rioting in the streets.

 

[Guest]

I was thinking maybe you were on to something, until I hit paragraph five.

Tell ya what-- get OFF fairtax.org and go find the info for yourself. Actually go and read the bill. It's a bad idea, it favors the rich, and it's potentially disasterous to our economy.

In the meantime, there is NOTHING WRONG WITH THE CURRENT SOCIAL SECURITY PROGRAM. Y'all have been getting smoke blown up your asses for a long time about SS by a lot of people, and I've gotta admit, I worried as well when I first heard some of the numbers. But there's some interesting information that has been left out. You see, in times of SS surplus, the money was used to buy bonds. Those bonds are due to mature starting next year through about 2018. With the dividends from those bonds, SS payouts can continue at the current rate until 2042. Add to that the money that has been "borrowed" from social security to cover excess defense spending that has yet to be repaid, and SS is suddenly looking pretty gawddamned good.

The answer to social security reform is not a massive, dangerous restructuring of the whole program. The very idea of privatization is idiocy on the highest level. Changes to a vital program like this need to be made a little at a time, with a lot of thought. Ideas like raising the SS income cap, assessing and recovering "undistributable" dollars paid under false SS numbers by illegal immigrants, and allowing the option to voluntarily turn down social security for those who have no need of it and have prepared well for their retirement.

This swaggering American cowboy routine is wearing a bit thin for everyone, I think. It doesn't work with our foreign policy, and it doesn't work with our economy. This world is one of nuance and shades of grey. You cannot handle economic issues with "you're either with us or against us" and sweeping, rediculous, across-the-board reform.

 

[landslider]

Just inherited a farm (198 acres) from a distant relative and been inquiring about land values in that area.

Because it is within commuting distance of a major city, it looks like an ordinary (but buildable) acre goes for 15 to 20k.

An acre of land directly on the river is now going for 33k.

If it had an commerical potential (and only a few acres would), such lots could go for more.

 

[landslider]

any commercial

 

[*******]

Ah, but the devil is in the details.

The reason I brought up the housing industry is because it will suffer the most under a flat tax system.

I simply don't see how flat tax can be implement without devasting the building and construction industry.

I've heard some chattering about exempting new housing from flat tax as well. One serious drawback to that: to remain revenue neutral, the flat tax would have to be increased to somewhere between 43-57%. A 30% sales tax is bad enough, a 57% sales tax would cause rioting in the streets.

Well, I am not advocating a flat tax, so there is some failure to communicate, I guess, I am for a National Sales Tax. I see no study that indicates a 57% sales tax. But if that WERE the true imbedded cost of governmental taxation and compliance then that $1.00 widget would now cost $0.43 and the tax would still bring the total cost in at under $1.00 as I have shown before.

 

[*******]

How do arrive at such a blod assertion that HR25 favors the rich?

And there is a flaw in Social Security that will cause two workers to have to pay for each retiree in short order. Now this has been a consistent looming problem irreguardless of which adminisration has been in control, be it Democrat or Republican.

HR25 fixes this by basing social security NOT upon the workers and producers, but upon the total tax revenues which go up, even when the work force shrinks. If you are submitting that Social Security will never be allowed to fail, I agree because the money will have to be taken out of general revenues and taxes will have to be raised as well as the retirement age. Clinton raised taxes and now I see a Republican calling for a raise in the retirement age.



A government powerful enough to make a promise is one powerful enough to break a promise...

And we haven't even touched the inherent RACISM of the current system.

And a National Sales Tax returns your privacy and freedom from Napoleonic Search and Seizure of your assets.

As to references to swaggering cowboys and foreign policy, that is a discussion for another thread and so I will let it pass without further comment.