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Adequately in your mind only. There are no calculations to support the supposed pre- and post-Fair Tax equality in bottom-line product prices. It's just assumed. But even if 100% of the per-unit savings from corporate tax reductions were to be magically passed on to consumers through lower product prices, you the buyer will have to offset those savings as part of the Fair Tax surcharge in order for revenue neutrality to be preserved. These amounts merely shift from being part of the product cost to being part of the Fair Tax cost. There are no savings on a gross basis. Worse yet, that isn't the question that was asked. A 30% surcharge puts a huge premium on new goods. Other posters have touted the re-use and recycling effects of the Fair Tax as consumers hold onto existing products longer. How does this effect not reduce the demand for new goods, and therefore also production and employment?
The savings is not a blind assumption but a conclusion from evaluating the effects of a reduction in product manufacturing costs on consumer prices. When manufacturers have the option of reducing costs to outsell the competition, they will do so. I'm not sure reuse and recycle will be a substantial activity under the FT, though there may be some. Even so, the costs of goods with the FT will not be anymore expensive than before, so I don't feel there will be a substantial affect on demand, especially since the economy will be boosted.
The objective of the FT is not to provide a savings, but to provide a simpler, economically stimulating, more visible, more discretionary solution for raising government revenues.
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Not once is the matter addressed of how the tax evasion schemes that a 30% premium on sales of new goods and services will promote are to be detetcted and dealt with, nor is the matter of how those efforts will be paid for. That was the question. This is not an answer to it. I'm not sure what question this was supposed to be an answer to.
This addresses who will be responsible for the enforcement of the tax system. Tax evasion will likely be less prevalent since the system will be much less expensive, less complicated, and with only a single point of collection. Besides, no individuals will be involved and nearly 80% of businesses won't be involved as well. These small amounts of tax evasion will be paid for by the state, likely with the savings they'll incur from the lessened administrative costs of collecting income taxes on their employees.
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Well, most studies so long as you exclude all of the studies that have shown the opposite. And even if we just throw caution to the wind, it is still possible for a great number of reasons that shortfalls against revenue neutrality will occur. You haven't indicated what mechanism will exist to enforce the promise of revenue neutrality should such an event transpire.
No mechanism will need to exist because revenue neutrality will be accomplished. If not, governmental pork will need to be cut, not a bad thing.
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No, the calculations showing promised revenue neutrality at 30% as being realistic depend on 100% penetration. States would love to have greater than 50% penetration. Their revenues would go up without having to pass a tax increase. No one has shown how the Fair Tax can or will close the gap between 50% and 100% penetration. If the Fair Tax achieves only 50% penetration, the surcharge will need to be 60% instead of 30%, so explaining the path to 100% penetration would be a fairly significant matter.
That's not true. Penetration will only need to be approx. 20% of businesses to provide revenue neutrality.
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What will the cost be to the SSA and to the states for maintaining and updating this national database on a real-time basis and where is the money for that effort coming from? Also not addressed is the matter of privacy issues.
I addressed both in my previous post.
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Well, no, that can't be true as the Fair Tax will add 30% to the price of a new home and 0% to the price of an existing home. That's not the same. This new differential will have signficant effects on real estate markets and on the construction trades. What do you think those will be?
The construction costs are already built into the cost of existing homes. New homes will not have those costs, so new homes will continue to be as attractive as they are now, and the markets not affected. Actually, the entire housing market may be affected positively by the economic boom provided by the FT.
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That's not likely to be a confusion that I would fall into. The interest portion of the P&I for the first monthly installment of a 30-year fixed mortage for $400K at 6% is $2000. That amount represents a new purchase of financial services, as would the slowly declining interest component of P&I in each succeeding month. State and local governments do not tax these purchases. If 100% penetration is to be maintained, the Fair Tax will have to. That's an extra $600 that a homeowner has to cough up that first month, and very nearly that much in each month thereafter. If the Fair Tax people decide not to tax these purchases, then they have fallen back from 100% penetration and the 30% surcharge rate will have to rise in order to make up for that loss so that revenue neutrality can be maintained.
Mortgage interest would not be taxed because the interest in itself is not a service. The charge for the service would be included in the closing costs as they are today.
If you're saying what I think you're saying, you are wrong. If we decide that 10% of everyone's income is what we need to run the country, then everyone needs to pay 10%, whether you're rich or poor. I don't really like the idea of a flat tax, but whatever
That's not what I'm saying at all. I'm vehemently against a flat tax.
What I'm talking about is a concept called EQUAL BURDEN. It's a tax on wealth, not a tax on income. (Wealth being all money, not just money earned by labor. It also means what a person has at the end of the day, after the basics are covered. ) So a person who makes $70K may only have a net worth of $10K. So they would be taxed on the $10K, not on the $70K because the other $60K went for basics.
It's explained here:
Another approach to fairness would be to ask all taxpayers to suffer roughly the same dent in their lifestyles. For example, if taxes force a middle class person to look for a house 10% cheaper than the ones they would like, then taxes should also force the rich to look for a house 10% cheaper than what they might have liked. Similarly, if a middle class person would have 10% of his income left over after his basic expenses, then a rich person also should have 10% left over after his basic expenses. This is what equal burden taxation might have looked like in 2001:
Simply having more money than someone else is no reason I should pay a higher percentage of my income in taxes.
Why? There are many notions of fair. If you have a higher percentage of income than another, why wouldn't you pay taxes proportionally? So if your income is 20% higher than average, who says it isn't fair to pay 20% more in taxes. Notions of fair can be sliced and diced in many ways. The most important part of it, is what is good for society as a whole.
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There is a political philosophy that does agree with you, btw...it's called Communism. And it doesn't work.
If you think such a thing, then I suggest you go back to your Marx-Engel reader, and reread it, because you don't understand Communism.
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And the best way to get an educated population is to let the private sector duke it out and leave government out of it.
Education is not a consumer product. It cannot be quantified in dollars and cents. It should not be subject to profit. And for profit models (like Edison schools) have proven to be failures. Furthermore, there is no proof that private schools are better.
Why PRIVATE SCHOOLS ARE RARELY WORTH THE MONEY Forget the myth that private schools are the best. Our survey shows many public schools are every bit as good -- if not better. (http://money.cnn.com/magazines/moneymag/moneymag_archive/1994/10/01/89175/index.htm - broken link)
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Why is it people will go on and on about how dumb Americans are and about how badly our schools are failing, yet fail to point the finger at the obvious cause?
People are ignorant of the truth and have been spoon fed rhetoric for decades. Say a lie often enough, and people believe it.
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Government education is probably second only to socialized medicine as a bad idea for America.
It's only worked successfully for centuries.
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There is a reason we have the best health care in the world (in spite of our health care problems, we still have the best).
Proven to be false over and over on this thread and in others. (mortality rates etc.)
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It's the same reason private schools routinely leave public schools in the dust in nearly every measurable category. It's called competition.
Proven to be false up message.
Well, the burger flipper is a lot easier to replace than the guy signing the paychecks. There will always be burger flippers. But keep punishing success and we may run out of paycheck signers. That is the reality.[/quote]
You must remember to include state and local taxes when considering the costs of 911 Centers compared to the U.S. Military. I believe you'll come to a different conclusion. Do you realize how many more law enforcement and other public safety employees and the facilities that house them that we have in the U.S. than military and their facilities?
Even if the prevelance of calls are higher in 911 centers, (a fact that you have produced no evidence to prove), you are entirely ignoring that there are many other public resources that are used by wealthy. Roads, schools (are they teaching employees how to read?), bridges, government legal protections and the court, shipping, FDA and on and on. The more you have at stake, the more your interests are being protected by all things the government offers. Just because the benefits are a little intangible on a ledger sheet doesn't mean they aren't being utilized.
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One can hardly make it to work without roads either. But, of course, this is a silly argument about who benefits the most from roads.
If you have 100 employees using the same road to get to your place of business, that won't run without those employees, you are utilizing the roads 100 times more than the individual. (Not including your own personal useage of course.) If that road is suddenly unusable, your employees may be out of a job, but your business is entirely ruined. (And that means you lose everything, which is more than your employees.)
That's not what I'm saying at all. I'm vehemently against a flat tax.
What I'm talking about is a concept called EQUAL BURDEN. It's a tax on wealth, not a tax on income. (Wealth being all money, not just money earned by labor. It also means what a person has at the end of the day, after the basics are covered. ) So a person who makes $70K may only have a net worth of $10K. So they would be taxed on the $10K, not on the $70K because the other $60K went for basics.
Aren't you confusing "Net Income" (Gross income minus debt equals what is left over) with the term "Wealth" (Money plus assets minus debt equals wealth)?
If you have 100 employees using the same road to get to your place of business, that won't run without those employees, you are utilizing the roads 100 times more than the individual. (Not including your own personal useage of course.) If that road is suddenly unusable, your employees may be out of a job, but your business is entirely ruined. (And that means you lose everything, which is more than your employees.)
Your example of roads is interesting. However, the tax scheme you suggest is federal in nature - yet, many of the roads you allude to are LOCAL in nature - not federally funded.
Are you suggesting that both Federal and State tax schemes be retained?
Thank you rosba. I get tired of arguing with these self-centered clowns.
Them that have the most to loose should pay most of the cost of protecting what they have. Just consider it as government as an insurance policy against foreign marauders.
I think we should replace the current grossly unfair tax system, including state and local sales and property taxes, with a single federally administered progressive income tax on all income from all sources, including illegal, with a base deductible set at the 80th percentile of income.
The savings is not a blind assumption but a conclusion from evaluating the effects of a reduction in product manufacturing costs on consumer prices.
Where are those calculations and evaluations? What is the difference between a conclusion and an assumption? The Fair Tax people are pulling numbers out of a hat.
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Originally Posted by Amaznjohn
When manufacturers have the option of reducing costs to outsell the competition, they will do so.
Option? Unless they are drop-dead forced to, corporations aren't going to pass a dime's worth of savings on to consumers.
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Originally Posted by Amaznjohn
I'm not sure reuse and recycle will be a substantial activity under the FT, though there may be some.
Some? You are putting an artifical wedge of 30% between comparable new and used goods. You don't expect consumers to react to that? This seems to me to be more of the dream-like thinking that fairly permeates Fair Tax literature...
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Originally Posted by Amaznjohn
Even so, the costs of goods with the FT will not be anymore expensive than before, so I don't feel there will be a substantial affect on demand, especially since the economy will be boosted.
And you don't have anything to point to that demonstrates either price-equality or increased demand. It's all "Then a miracle occurs" and we move on to the next phase.
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Originally Posted by Amaznjohn
The objective of the FT is not to provide a savings, but to provide a simpler, economically stimulating, more visible, more discretionary solution for raising government revenues.
Aside from a questionable claim of stimulation, none of that is real-world relatable. Should we take it that the entire Fair Tax argument is an emotional one?
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Originally Posted by Amaznjohn
This addresses who will be responsible for the enforcement of the tax system. Tax evasion will likely be less prevalent since the system will be much less expensive, less complicated, and with only a single point of collection.
Tax evasion schemes start to become significant once a differential of 10% or so is present at any single point. You're going to create 30%. You'd be better off with a euro-style VAT. They do get away with rates as high as 25%, but their evasion problems remain managable because the tax is imposed in smaller parts at many successive points within the production stream. There is no single point at which enough of the tax can be avoided to make serious evasion schemes practical. You are trying to go in exactly the opposite direction while pretending that there will be no ramifications from that. And you just pass the costs of whatever problems might arise from your miscalculations off onto the states, expecting them to foot the bill for keeping the federal government afloat. That's at least a good way to keep those costs out of the Fair Tax calculations. Somebody else's problem.
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Originally Posted by Amaznjohn
Besides, no individuals will be involved and nearly 80% of businesses won't be involved as well. These small amounts of tax evasion will be paid for by the state, likely with the savings they'll incur from the lessened administrative costs of collecting income taxes on their employees.
What savings are those? What actual costs involved in withholding federal taxes from gross wages will be saved in a system that still has to deduct state and local taxes, insurance premiums, 401-K contributions and all those other things that regularly come directly out of one's paycheck? Is it the cost of the ink that would have been used to print the lines summarizing federal taxes withheld?
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Originally Posted by Amaznjohn
No mechanism will need to exist because revenue neutrality will be accomplished. If not, governmental pork will need to be cut, not a bad thing.
A slight degree of hubris is detected. Revenue neutrality will be achieved simply because the Fair Tax people say it will. The fact that both their theories and their numbers are riddled with holes should be disregarded. And if not, well, the government just goes out of business. Simple.
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Originally Posted by Amaznjohn
That's not true. Penetration will only need to be approx. 20% of businesses to provide revenue neutrality.
Let's put this into some 2007 context. The existing taxes that the Fair Tax would hope to replace had a combined penetration of just over $7.0 trillion. At a combined effective rate of just under 33%, they brought home a little less than $2.3 trillion in revenue. To provide revenue neutrality at an effective rate of 23%, the Fair Tax will need a penetration into about $10.0 trillion worth of transactions. That's roughly a 43% increase in the total volume of things that will need to be taxed. Where are you going to get those?
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Originally Posted by Amaznjohn
I addressed both in my previous post.
No, you didn't. There was no estimate offered for the total cost of building and maintaining the national database on which the monthly issuance of prebate checks will depend, and no indication of how that cost would be met. Safe to assume I'd bet that the cost, whatever it is, will be excluded from Fair Tax net revenue projections.
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Originally Posted by Amaznjohn
The construction costs are already built into the cost of existing homes. New homes will not have those costs, so new homes will continue to be as attractive as they are now, and the markets not affected. Actually, the entire housing market may be affected positively by the economic boom provided by the FT.
What? Construction costs are not included in the cost of a new home? Something got lost there in translation. Meanwhile, in addition to granite counter-tops, new homes will come with a 30% Fair Tax surcharge. Existing homes will not. The entirely imagined economic boom will not change that fact, one that is again not addressed in this reply.
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Originally Posted by Amaznjohn
Mortgage interest would not be taxed because the interest in itself is not a service.
Yes it is. What do you think interest is? It's the charge that you pay in exchange for a financial service...namely use of the money. For every month in which you do not pay off the mortgage, you pay a new interest charge in exchange for a new service...the new month's use of the money. The Fair Tax is defined as applying to all purchases of new goods or services.
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Originally Posted by Amaznjohn
The charge for the service would be included in the closing costs as they are today.
If you prepaid at closing the interest due to be paid over the life of a 30-year fixed mortgage at 6% on $400K, you would have written an additional check for $463,352.76. It would have been a lot cheaper just to pay cash for the house.
Where are those calculations and evaluations? What is the difference between a conclusion and an assumption? The Fair Tax people are pulling numbers out of a hat.
Option? Unless they are drop-dead forced to, corporations aren't going to pass a dime's worth of savings on to consumers.
Some? You are putting an artifical wedge of 30% between comparable new and used goods. You don't expect consumers to react to that? This seems to me to be more of the dream-like thinking that fairly permeates Fair Tax literature...
And you don't have anything to point to that demonstrates either price-equality or increased demand. It's all "Then a miracle occurs" and we move on to the next phase.
Aside from a questionable claim of stimulation, none of that is real-world relatable. Should we take it that the entire Fair Tax argument is an emotional one?
Tax evasion schemes start to become significant once a differential of 10% or so is present at any single point. You're going to create 30%. You'd be better off with a euro-style VAT. They do get away with rates as high as 25%, but their evasion problems remain managable because the tax is imposed in smaller parts at many successive points within the production stream. There is no single point at which enough of the tax can be avoided to make serious evasion schemes practical. You are trying to go in exactly the opposite direction while pretending that there will be no ramifications from that. And you just pass the costs of whatever problems might arise from your miscalculations off onto the states, expecting them to foot the bill for keeping the federal government afloat. That's at least a good way to keep those costs out of the Fair Tax calculations. Somebody else's problem.
What savings are those? What actual costs involved in withholding federal taxes from gross wages will be saved in a system that still has to deduct state and local taxes, insurance premiums, 401-K contributions and all those other things that regularly come directly out of one's paycheck? Is it the cost of the ink that would have been used to print the lines summarizing federal taxes withheld?
A slight degree of hubris is detected. Revenue neutrality will be achieved simply because the Fair Tax people say it will. The fact that both their theories and their numbers are riddled with holes should be disregarded. And if not, well, the government just goes out of business. Simple.
Let's put this into some 2007 context. The existing taxes that the Fair Tax would hope to replace had a combined penetration of just over $7.0 trillion. At a combined effective rate of just under 33%, they brought home a little less than $2.3 trillion in revenue. To provide revenue neutrality at an effective rate of 23%, the Fair Tax will need a penetration into about $10.0 trillion worth of transactions. That's roughly a 43% increase in the total volume of things that will need to be taxed. Where are you going to get those?
No, you didn't. There was no estimate offered for the total cost of building and maintaining the national database on which the monthly issuance of prebate checks will depend, and no indication of how that cost would be met. Safe to assume I'd bet that the cost, whatever it is, will be excluded from Fair Tax net revenue projections.
What? Construction costs are not included in the cost of a new home? Something got lost there in translation. Meanwhile, in addition to granite counter-tops, new homes will come with a 30% Fair Tax surcharge. Existing homes will not. The entirely imagined economic boom will not change that fact, one that is again not addressed in this reply.
Yes it is. What do you think interest is? It's the charge that you pay in exchange for a financial service...namely use of the money. For every month in which you do not pay off the mortgage, you pay a new interest charge in exchange for a new service...the new month's use of the money. The Fair Tax is defined as applying to all purchases of new goods or services.
If you prepaid at closing the interest due to be paid over the life of a 30-year fixed mortgage at 6% on $400K, you would have written an additional check for $463,352.76. It would have been a lot cheaper just to pay cash for the house.
I give!! I've provided answers that you choose to ignore and no amount of explanation or figures or sources is likely to change that fact. For example, you don't pay sales taxes on mortgage interests now, nor would you under the FT. The costs for service is included only in the closing costs. And, I've explained time and time again that the reduced costs of manufacturing new goods, including houses will compensate for the FT cost, similar to the reduced costs of computer manufacturing has reduced the costs of computers. If this would not have occurred then computers would cost upwards of $10,000 each.
Just wait for Boortz's new book in February and read it. Though it will only reitterate what I've provided, it will make good fodder for your cynicism.
Option? Unless they are drop-dead forced to, corporations aren't going to pass a dime's worth of savings on to consumers.
Depends on the marketplace, doesn't it? Assuming no cartels or monopolies, why wouldn't I be able to capitalize on an opportunity to gain massive marketshare due to lower prices?
I enjoy the intensity of the debate. Maybe its time for another tax revolution. I have got some old tar - any of you fair taxers got some feathers? Let the games begin!
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