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> FairTax (h.r. 25), Should it be passed?
Should we pass 'FairTax' (hr 25)?
Should we pass 'FairTax' (hr 25)?
Yes [ 25 ] ** [39.06%]
Yes, with modifications [ 9 ] ** [14.06%]
No, need something better [ 17 ] ** [26.56%]
No, I like Income Tax [ 13 ] ** [20.31%]
Total Votes: 68
  
crashfourit
post Jun 10 2004, 04:58 PM
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Topic of debate:
Due to the intrusive nature and complexity of Income Tax and Coprerate Gains Tax,
should we pass the 'FairTax' (h.r. 25)??

(NOTE: please read about it before you place your vote.)


Information about it:
http://www.fairtaxvolunteer.org/smart/index.html
http://www.fairtax.org
http://www.fairtaxvolunteer.org/main.html
The Library of Congress: Thomas (search for hr 25)

This post has been edited by crashfourit: Jun 10 2004, 05:01 PM
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overlandsailor
post Jul 7 2004, 03:01 AM
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QUOTE
Hey OLS- you got 2000.00 back when you only paid 1000.00- doesn't that make you a welfare recipient then?


No, but it does make me one of those on the receiving end of wealth redistribution. whistling.gif

I may not agree with it, but I'll take it until someone gets enough sense to get rid of it (or better yet, until I make too much to qualify for it any longer).
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Platypus
post Jul 7 2004, 01:24 PM
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QUOTE(SWM28WDC @ Jul 6 2004, 03:30 PM)
Lower consumer prices would be from elimination of the 'hidden' payroll taxes in the supply chain, as well as reduced cost of complying with tax laws.

There are certainly costs there, but enough to make a 20% difference? Not even close. You'll need to provide some proof of that claim (not shift the burden by requiring disproof).
QUOTE
Corporations don't pay taxes...

Oh yes, there's a suggestion we can all be sure is 100% based in idealism and not greed.
QUOTE
Not paying taxes (and most of them don't anyway now...you have to make a profit to pay taxes) allows them to either have more profit (and lose out to competitors) pay better wages (and steal productive workers from their competitors) or lower prices (and sell more than their competitors).

You make it sound like these are three discrete choices, with perfectly predictable consequences for each and no room for combination or compromise between them. That's a fallacy (the excluded middle) and it's dishonest. Companies can have more profit without losing out to competitors if those competitors have other disadvantages, if purchase decisions are based on factors other than rational choice (as the economists use the term), if substitution costs are high (ditto) and for a host of other reasons. Labor markets aren't perfectly fluid, so your second possibility isn't as simple as you make it out to be either. Then there's market saturation and that old supply/demand curve. Even if they could sell for a lower unit cost, there might be greater profit in selling fewer units at higher margins.

The fact is that very often neither your first option (which you present as something companies would want to avoid) nor your second/third (which you present as things they would embrace) apply. Real life does not conform to such simplistic models, transparently designed to support a choice already made. Not taxing companies is a form of mercantilism, giving US companies a temporary and artificial advantage vs. foreign ones, decreasing the need for innovation and meaningful competition and hurting US business in the long run...while at the same time eliminating 10% of federal revenue. It's just a giveaway.

QUOTE
Right now, taxpayers spend 30% MORE on complying with tax laws (and tax avoidance) than they do on taxes.

And your source for that would be...?

QUOTE
Income for a family of four / 2000 tax rate / fairtax rate
$22,500 / 20% / 0%
$45,000 / 25% / 11.5%
$67,000 / 28% / 15%
$90,000 / 33% / 17%


Revenue-neutral my foot. This is simple math, kid. Eliminating a substantial portion of revenue from corporate and payroll taxes, then cutting the remainder by half or more, leaves a huge shortfall. Even if all this magic you believe in were real, it would be ridiculous to expect economic activity to double from all this "stimulation" (self-stimulation by its proponents).
QUOTE
The site details how the necessities of life are untaxed, more fairly and completely than they are untaxed now.

...and fails to account for the issue already raised about the poor giving the government an interest-free loan during the year (until they get their rebate) while the rich do not.
QUOTE
The rebate allows you to live at the poverty level without paying ANY taxes

Wrong. You pay the taxes, and get paid back months later.

I've seen a lot of tax-reform scams in my time, but this one pretty much takes the cake. It's a cynical attempt to fool people who don't understand economics (or even basic math) with high-sounding but ultimately empty rhetoric. It's despicable.
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overlandsailor
post Jul 7 2004, 07:30 PM
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QUOTE
QUOTE
Corporations don't pay taxes...


QUOTE
Oh yes, there's a suggestion we can all be sure is 100% based in idealism and not greed.


The reality of it is that companies do not pay taxes. Consumers do. Every tax dollar paid out by a company is covered in the costs of their products. This extends to all the regulation costs, licensing fees, processing fees, etc. Not to mention the massive costs of trying to comply with all the tax laws, regulations, etc. (and get the best deal you can in the process).

If you eliminate these costs too businesses, their prices may or may not go down based on a multitude of factors. But if you increase these costs to businesses I guarantee their prices will go up.

Those price increases disproportionally harm lower income families. If a new regulation or tax costs a business an additional 5% to do business then they will raise their prices accordingly. If their product is say, baby formula, that additional 5% cost to the consumer (lets say $0.50 a can, at 8 cans a month of $4.00 a month) will have a much bigger impact on the family that earns $20,000 a year (and has a $200.00 a week for budget (a total reduction on 2% in available money for their family's food) then it will have on the family earning 1,000,000.00 a year (with lord knows what for a food budget).

Of course this assumes the company can do that without loosing market share to foreign companies assuming this hypothetical cost is not applied to them (as is usually the case). If they can't raise the price because of this then companies typically go to the next choice, cut labor.

QUOTE
giving US companies a temporary and artificial advantage vs. foreign ones, decreasing the need for innovation and meaningful competition and hurting US business in the long run...while at the same time eliminating 10% of federal revenue. It's just a giveaway.


I agree here, which is why I support FAIR trade. However, it the foreign companies that currently have the artificial advantage in that they don't have to deal with many of the regulations and requirements we place on our domestic businesses. To me, a change to this fair tax would not give American Companies and unfair advantage, but would level the playing field a little better.
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SWM28WDC
post Jul 7 2004, 10:22 PM
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Regarding the 20% reduction in pre-tax prices. Letters 3 & 4 address your question.

I listed three possible alternatives regarding what would happen to the money saved by corporations not paying taxes. Im sure reality would be some mix of the three. None of the alternatives seem that bad to me: 1) higher corporate profits = booming stock market, strong dollar. 2) higher wages = more money in my pocket 3) lower sale price = more purchasing power.

I'm not sure how untaxed corporate profit gives US companies a "temporary and artificial" advantage over foreign one is supposed to be a valid argument. If in fact it is "temporary and artificial", then it's irrelevant, and shouldn't be argued over. I believe that the advantage will last as long as foreign governments charge corporate taxes. I don't think its artificial, either. It's a real and concrete advantage to operate without having to deal with taxation. The companies are still "paying taxes" through the fact that their product is taxed. Would you feel differently if every company had to pay 23% on gross receipts rather than having the consumer pay 23% at the register? It's a wash either way.

Lower operating costs don't decrease the need for innovation, they just shift the whole domestic market towards better efficiency.

Poor writing on my part, US taxpayers spend an additional 30% complying with the tax codes. From here.

Revenue Neutrality
platypus, i appreciate the debate, but don't call me 'kid'. It's not constructive.
I doubt that the 4 salaries listed account for a complete representation of ALL salaries in this country.

If you read the literature on FairTax, you will often hear the tax rebate referred to as a "Prebate". That's because it arrives every month, physically or electronically, PRIOR to consumption. The government's actually giving you a free 30-day loan.
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Platypus
post Jul 8 2004, 01:30 PM
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QUOTE(SWM28WDC @ Jul 7 2004, 05:22 PM)
I'm not sure how untaxed corporate profit gives US companies a "temporary and artificial" advantage over foreign one is supposed to be a valid argument.  If in fact it is "temporary and artificial", then it's irrelevant, and shouldn't be argued over.

The advantage might be temporary, but its effects would last much longer. It's a matter of what incentives are created. If the system rewards true competition and innovation, then the economy will benefit. If the system takes away that incentive by ensuring markets overseas even if companies remain inefficient and complacent, the economy will eventually suffer...and by the time the effects become manifest it will be too late to do anything about it. Mercantilism such as you suggest is inherently anti-capitalist, with all that implies.
QUOTE
Poor writing on my part, US taxpayers spend an additional 30% complying with the tax codes.  From here.

Yeah. "Poor writing." Uh huh.
QUOTE
platypus, i appreciate the debate, but don't call me 'kid'.  It's not constructive.

Neither are cooked figures, logical fallacies, and ignoring or dismissing points you don't like in favor of relying on mere repetition to grind opponents down. Matthew 7:3, my boy.
QUOTE
I doubt that the 4 salaries listed account for a complete representation of ALL salaries in this country.

There is no income distribution for which removing 10% of the revenue base and cutting the rate on the remainder by half will be revenue neutral. Basic math again.
QUOTE
If you read the literature on FairTax, you will often hear the tax rebate referred to as a "Prebate".  That's because it arrives every month, physically or electronically, PRIOR to consumption.  The government's actually giving you a free 30-day loan.

So who calculates the prebate? Who ensures at the end of the month that what the government sent at the beginning was actually the right amount? "Prebates" end up being very much like income withholding, both in terms of who pays how much and in terms of jacking those administrative costs right back up to where they were before.
QUOTE(overlandsailor @ Jul 7 2004, 02:30 PM)
The reality of it is that companies do not pay taxes. Consumers do. Every tax dollar paid out by a company is covered in the costs of their products.

Yeah, some reality. If I as an individual sell you something, nobody would argue that you're really the one paying the taxes, but if I incorporate then that changes? Right. Even I can see how to drive a fleet of trucks through that loophole. People already shift personal costs and investments to shell corporations because of the preferential tax treatment those corporations receive. This plan would just encourage them to do that even more because there'd be even more bang for the buck. That supposed revenue neutrality, already looking pretty questionable, just receded even further into the distance.

It's still a plan so broken that even ignorance cannot explain its' advocates zeal. For that explanation one has no choice but to consider deliberately misrepresented self-interest.
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Jaime
post Jul 8 2004, 01:38 PM
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Platypus - stop with the belitting name calling. It is against the Rules of this forum.

TOPICS TO DEBATE:
Due to the intrusive nature and complexity of Income Tax and Coprerate Gains Tax, should we pass the 'FairTax' (h.r. 25)??
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SWM28WDC
post Jul 9 2004, 01:05 AM
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As I understand it, the advantage to American industry vs. foreign industry is the lack of hidden taxes, including employer's share of OASDI, FICA, etc. in all American-produced products. Lack of corporate taxes is also beneficial, but something like 60% of American Companies pay NO taxes each year already (Wall Street Journal). Compare individual income and corporate income taxes below. It's a matter of TAX ACCOUNTING for enough business expenditures to eat all of your profits, ergo no taxable income. If foreign companies have no hidden taxes in their product, the FairTax allows American products to compete fairly with them. If foreign products do contain hidden taxes, the Fairtax gives an advantage to American industry. FairTax does not address protectionist tariffs, it's out of the scope of the project.

Poor writing, i'm sorry, I do make mistakes.
I have attempted to debate this argument as honestly and fairly as I can, I'm not out to mislead anyone. I'm not poor, I'm not rich. I already don't pay FICA, because I'm a local government employee (firefighter) with a pension, so I'd gain less by FairTax than most. I like the simplicity and honesty of the system.

Some math for you, with links to .gov sites for you to check up on me. The numbers are from 2002, the latest year I can find full data for.
The fairtax proposes to eliminate these taxes. Facts from GPO
Income taxes from Table 2.1
Individual Income Tax.....................$858,000M
Corporate Income Tax....................$148,000M
Payroll Taxes from Table 2.4
On Budget Social Insurance.............$185,000M
Estate and Gift Taxes -Table 2.5..........$27,000M
TOTAL..........................................$1,218,000M

The fairtax plans to raise this money by taxing consumption in the US.
According to Table 2.5.5. Personal Consumption Expenditures by Type of Expenditure from the Dept. of Commerce, Americans spent $7,385,000M in FY2002. However this number includes imputed consumption of owner-occupied housing, and educational expenses, which totaled $810,000M and $188,000M respectively. This leaves a 'tax base' of $6,376,000M.

$1,218B / $6,376B = 19%

The fairtax also proposes to pay each US citizen with a SSN a monthly tax rebate, of 1/12th the tax rate x the poverty level for their family size, PLUS an adjustment to remove the "marriage penalty". Assuming, conservatively, that 250M people receive the most they can (i.e. they were all single adults), which was about $2000 per year, this is another $500,000M the tax would have to raise.

$1,718B / $6,376B = 27%

Now, I must explain tax-inclusive and tax-exclusive. I don't mean to merely be repetitive here, but I think it needs to be repeated.
Consumers in the US must pay an additional 27% for what they buy. They must spend $8,094B to recieve $6,376B worth of goods and services. This 27% is the tax-exclusive rate, which is the way we are comfortable expressing sales taxes. If I want a $1 candy bar, I must pay $1.27 for it, under fairtax.

To compare this rate to the income tax that it would replace, we must state it as a tax-exclusive rate. In this case it is equal to $1,718B / $8,094B or 21%, which is a few points UNDER what FairTax has predicted. I trust their math better than mine, but I think they are intentionally being conservative. In this case, I must earn $1.27, of which I pay 21%, or $.27 in taxes, before I can buy that $1 candybar.

That is why the 27% sales tax compares to a 21% income tax rate. However, the effective rate is lowered by the prebate, which effectively removes the taxes paid on the necessities of life. This monthly prebate is calculated by taking the poverty level calculated by the USDHHS for each family size, multiplying it by the tax rate (21% by my calculations), and dividing it by 12 for a monthly payment. Fairtax.org calculates this number to be $178/mo for a single person in 2004 in this FAQ. There is also a correction amount to prevent a marriage penalty: a married couple's prebate size is twice a single person's, and increases at the same rate for additional dependents. Administration is simple, as the only information required is SSNs, Married or Single, and a Routing number. Whoever or whatever replaces the IRS would administrate it.

Please restate your final paragraph (not the inflammatory one-liner), as I'm not sure what you're arguing about.

If you are debating whether or not corporations pay taxes, I believe we've covered that. First, more US companies do NOT pay taxes than do. Second, those that do, pay taxes out of revenues at the expense of some combination of profit, wages, investment, or price.

If you are debating whether or not this will lead to increased tax evasion, I offer this FAQ.
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Platypus
post Jul 9 2004, 02:18 AM
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QUOTE(SWM28WDC @ Jul 8 2004, 08:05 PM)
That is why the 27% sales tax compares to a 21% income tax rate.

So, if we accept this huge bag of assumptions and simplifications, the "fair tax" is comparable to a 21% income tax. Where does a 21% income tax fit into the grand scheme of things? I suggest you go check the IRS stats to see how many people currently pay 21% or more (total rate, not marginal rate) and how many pay less. I'd certainly make out like a bandit under this system, with my high income, but I'd feel pretty guilty about all those poorer people whose tax bills would increase.
QUOTE
If you are debating whether or not corporations pay taxes, I believe we've covered that.

Yes, we have, and the outcome was not favorable to the "fair tax" proponents.
QUOTE
If you are debating whether or not this will lead to increased tax evasion, I offer this FAQ.

That "answer" in the FAQ is little better than assuming magic will happen. For example, they claim that "the increased fairness, transparency, and legitimacy of the system will induce more compliance" as though tax evaders are interested in fairness or legitimacy. The transparency point hardly counts either, since the "fair tax" leaves corporations with no taxes to evade and thus no need for concealment. They also say "because tax rates decrease, tax evasion is less profitable" but 27% is not a decrease for most people. The whole FAQ is a similar exercise in misinformation. Consider this:
QUOTE
Is the 23% FairTax higher or lower when compared to the income taxes people pay today? Most people are paying that much or more today – much of it is just hidden from view. The income tax bracket most people fall into is 15 percent, and all wage earners pay 7.65 percent in payroll taxes. That’s 23 percent right there, without taking into account the 7.65 percent employer matching! On top of that, you have to add in all of the taxes embedded in the goods you buy (another 20 to 30 percent).

"Tax bracket" refers to marginal, not total rates which are actually lower. Also, payroll taxes max out at a less-than-spectacular income level and "20 to 30 percent" is a gross overestimate of the taxes embedded in other goods (except for a few such as alcohol, tobacco, and gasoline). It's obviously in their interest to exaggerate regarding the taxes people pay now, so of course they do so. Then of course there are the groundless and meritless attempts to associate the "fair tax" with progress:
QUOTE
Cars replaced the horse and buggy, the telephone replaced the telegraph, and the FairTax replaces the income tax.
...
Do women have the right to vote in this country? Did we pass Prohibition? Did we repeal it? Do Blacks enjoy freedoms far beyond the lunch counter and mass transit? Do free-market economies dominate Eastern Europe, peoples once under the boot of communism? All these were grassroots efforts that effected significant changes in our nation and the world. Is the current income tax system any less a yoke around the necks of otherwise free peoples? We think not.

Then there are the transparent appeals to authority, claiming a strong basis in economic theory without actually quoting or even paraphrasing so much as one actual economic theorist:
QUOTE
As a wide range of economists agree on the economic expansion the FairTax delivers, charitable contributions benefit also.
...
Even a cursory study of history shows that nation/states that relied on consumption taxes flourished and prospered

One more piece of dishonesty buried in the discussion of charity also deserves mention. Note how they claim there's a charity exemption to mollify people who believe there should be one, but there's no mention of how it is to be administered and it's not factored into their tax-rate calculations. This is classic "have your cake and eat it too" chicanery of the kind Dubya is known for: promise the moon, try to avoid questions about how you'll pay for it, and hope nobody notices the disconnect.

This "fair tax" proposal remains a scam, SWM. I know it sounds good on the surface; the people who put together the site are undoubtedly a lot better at advertising than at policymaking. It doesn't hold up to an informed and rational analysis, though. Don't be taken in by pretty words and empty promises.
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SWM28WDC
post Jul 9 2004, 05:29 AM
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[quote]So, if we accept this huge bag of assumptions and simplifications, the "fair tax" is comparable to a 21% income tax.[/quote]

Please back up your statement with relevant facts. You saying something doesn't make it so. You've questioned every fact I've put up here, yet your statements contain none. Please tell me what assumptions and simplifications I've made. I used the numbers right out of the US Gov't websites & reports, and came up with a number very similar to that proposed in the FairTax website. Tear that apart with math if you will, i'd respect that.

[quote]Yes, we have, and the outcome was not favorable to the "fair tax" proponents.[/quote]
By who's estimation? Yours? Mine?

[quote]as though tax evaders are interested in fairness or legitimacy. [/quote]
... Almost 40 percent of the public, according to the IRS, is out of compliance with the present tax system, mostly unintentionally due to the enormous complexity of the present system (from same FAQ)

[quote]The transparency point hardly counts either, since the "fair tax" leaves corporations with no taxes to evade and thus no need for concealment.[/quote]
Corporations are taxed an additional 29% over the price of the goods sold, this is collected at the point of sale in the form of a national sales tax.

[quote]They also say "because tax rates decrease, tax evasion is less profitable" but 27% is not a decrease for most people[/quote] You say 27% is not a decrease, yet in previous posts you claimed there was no way to raise enough money by cutting out corporate income tax and halving taxes on individuals? Which is it?

[quote]The whole FAQ is a similar exercise in misinformation. Consider this:[/quote] and then you go on to quote from the FAQ, but fail to counter meaningfully any points made therein: the fact explicitly says "tax bracket"; payroll taxes do not either "max-out" (Medicare taxes of 2.9% of the employees income must be paid on ALL income) nor is it a "less-than-spectacular income level" when Social Security (12.4%) maxes out...it's $87,900 a year, more than at least 80% of the population makes. In fact, in all but the highest income quintile, payroll taxes are higher than income taxes.

[quote]"20 to 30 percent" is a gross overestimate of the taxes embedded in other goods [/quote] Please provide references to back this statement.

[quote]Then of course there are the groundless and meritless attempts to associate the "fair tax" with progress:[/quote]
The grounds were to provide comparisons of feasibility with other seemingly insurmountable political changes.

[quote]claiming a strong basis in economic theory without actually quoting or even paraphrasing so much as one actual economic theorist:[/quote]
It's a FAQ. Just like anywhere else, if you want details you must look further.
Dale W. Jorgenson, Ph.D., Harvard University
Joseph Kahn, Decisions and Ethics Center, Stanford University
Arthur P. Hall, Ph.D., Senior Economist, The Tax Foundation
Your claiming that there are none is groundless and meritless.

[quote]Note how they claim there's a charity exemption to mollify people who believe there should be one, but there's no mention of how it is to be administered and it's not factored into their tax-rate calculations[/quote]
They never claimed a charity exemption. They claimed "charitable contributions benefit also." Current charitable donation laws rebate the donor at their marginal rate, effectively allowing the donation to be made with pre-income-tax dollars. Under FairTax the donations (and all other purchases) would be made with pre-income AND payroll tax dollars. For further info read this policy paper.

[quote]It doesn't hold up to an informed and rational analysis[/quote]

I would like to hear one, seriously. You use words like " tax-reform scams", "despicable", "high-sounding but ultimately empty rhetoric", "cooked figures". I believe you to be capable of intelligent debate. Show me where the numbers don't add up. Show me where the burden of taxation is moved from and to. The god's honest truth is that I don't think it will change the purchacing power of individual Americans that much. It will lower the cost of government, and lower the cost of compliance with tax laws. It will encourage foreign investment in American workers. It will encourage savings on the part of American citizens.
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Platypus
post Jul 9 2004, 01:39 PM
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[quote=SWM28WDC,Jul 9 2004, 12:29 AM]You've questioned every fact I've put up here, yet your statements contain none.[/quote]
That would be because you're the one making a proposal, and therefore the burden of proof lies with you; opponents are under no particular obligation to introduce additional data except as it suits their purposes for refutation. Nonetheless, and contrary to your claim, I have provided quite a few facts - not numbers, perhaps, but numbers are not the only facts. There have been facts about basic math, the nature of corporate taxation, evasion, etc. For the most part, though, simple analysis using the facts you've provided has been sufficient to make my points.
[quote]Please tell me what assumptions and simplifications I've made.[/quote]
For assumptions try perfect compliance. For simplifications try "forgetting" to account for the cost of a charity "benefit" (oh no, can't call it a deduction). I was agreeing to accept your numbers despite those for the sake of argument, though, so maybe you should take what you can get.
[quote]I used the numbers right out of the US Gov't websites & reports[/quote]
Yes, "it came from the government" always works. Did you know that there are two separate measures of unemployment at BLS, another at census, and at least a couple of others (that I know about) available from government websites? Of course, everyone uses the one that suits their purposes. Why do you (actually fairtaxvolunteer) use personal consumption numbers from Commerce to compare with revenue numbers from IRS, and additionally exclude a trillion dollars without properly justifying the number or explaining why it should not count as income? According to the government numbers you cite, without fiddling or dissembling, the "fair tax" would need to raise $1.2T plus the cost of the prebate, charitable-giving exemptions, and other necessary adjustments - almost double the number actually used - to be revenue-neutral. Yes, fairtaxvolunteer used government numbers...used them like I use a handerchief to blow my nose.
[quote]Yes, we have, and the outcome was not favorable to the "fair tax" proponents.[/quote]
By the fact that my reductio ad absurdum from 8:30am yesterday remains unaddressed. You were the one to claim victory prematurely with "we've already covered that" and yet you're also the one who has left a challenge unanswered.
[quote]... Almost 40 percent of the public, according to the IRS, is out of compliance with the present tax system, mostly unintentionally due to the enormous complexity of the present system (from same FAQ)[/quote]
Note how the 40% figure, and especially the "mostly unintentionally" part, are not backed up by anything. Even if they were correct, those aren't necessarily the people I was talking about. The point remains that people who deliberately evade taxes - whose transgressions are typically greater and add up to the majority of lost revenue - pretty obviously do not care about fairness or legitimacy and will not change their behavior on that account.
[quote]Corporations are taxed an additional 29% over the price of the goods sold, this is collected at the point of sale in the form of a national sales tax.[/quote]
Those taxes are paid by the consumer, not the producer, and so you don't get to credit them twice. You might as well count them several times, and claim that a lower tax rate would suffice, but that might be too easy for people to see through.
[quote]You say 27% is not a decrease, yet in previous posts you claimed there was no way to raise enough money by cutting out corporate income tax and halving taxes on individuals?  Which is it?[/quote]
Basic math strikes again: this time it's the difference between average and median. Most people are taxed at less than 27% (addressing the median) but most dollars are taxed at more (addressing the average). There's no contradiction there.
[quote]then you go on to quote from the FAQ, but fail to counter meaningfully any points made therein[/quote]
I had already done that; the latter part of my post was meant to highlight the "selling not telling" nature of the marketing copy put out by fairtaxvolunteer. Do I have your permission to make that point? I happen to think it's pretty topical, but this wouldn't be the first time I had been held to a unique standard on this site.
[quote]nor is it a "less-than-spectacular income level" when Social Security (12.4%) maxes out...it's $87,900 a year, more than at least 80% of the population makes.[/quote]
Is that a decent income? Yes. Is it a stellar income? No. More importantly, when you consider how far many incomes extend above that line (there's that average vs. median thing again) it turns out that a great deal of income is exempt. What percentage of Bill Gates's income is subject to social security taxes, for example? How many median incomes does that balance out? I will concede, though, that for the Average Joe the full figure does apply.
[quote][quote]"20 to 30 percent" is a gross overestimate of the taxes embedded in other goods [/quote] Please provide references to back this statement. [/quote]
No, it's your claim (by proxy). You back up the number.
[quote]It's a FAQ.  Just like anywhere else, if you want details you must look further.
Dale W. Jorgenson, Ph.D., Harvard University
Joseph Kahn, Decisions and Ethics Center, Stanford University 
Arthur P. Hall, Ph.D., Senior Economist, The Tax Foundation
Your claiming that there are none is groundless and meritless.[/quote]
Imitation ("groundless and meritless") is the sincerest form of flattery. Yes, we all know that if you round up a hundred economists you'll probably get two hundred opinions. Some people around here continually repeat the most amazing nonsense that they got from some laissez-tricher economist or other. The question is not whether you can dig up a few outliers, but what the consensus would be and whether the rationales they can provide stand up to scrutiny. No attempt has been made to meet that challenge; all we have instead is appeal to (dubious) authority.


One of the things I occasionally do IRL is technical "due diligence" on business plans. That entails making sure that the numbers add up, that the capability claims are credible, that references to protocols and algorithms are valid and appropriate, etc. It does not entail me constructing a detailed counterproposal; as I've pointed out, the burden of proof remains with those making a proposal. If I ever saw a proposal where the numbers had been cooked this badly, where the signal to noise ratio (where signal is verifiable facts and noise is buzzwords and such) was this low, my recommendation to investors would not be to forget it. I would recommend that they remember it, so they could preemptively deny consideration to the authors in the future and not have to waste their time or mine with further analysis. That's how bad it is. So I've thrown in a few choice words - directed at the original authors, not you. Boo hoo. I have also, whether you like it or not, tried to address directly several of the more glaring flaws in the proposal, and that's more than such a proposal deserves.
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SWM28WDC
post Jul 9 2004, 02:52 PM
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Thank you platypus.

The questions you raised about basic math appeared as if you didn't understand the difference btw median and mean, etc., specifically a chart showing lower tax rates for four or five income levels does not mean that all income levels are lower.

I've given reasons that support the idea that fairtax will have better compliance than the current scheme. Specifically, much fewer returns, many more collectors, and much simpler code. I'm still unclear on your contention with the charity 'benefit'. Why does the fairtax have to raise additional money to cover charity deductions...there are no deductions for charitible donations, because there is no tax on charitable donations.

I used numbers from commerce because that's what fairtax uses, I don't know why they used it. Tell me another source, and explain the difference, and I'll look. I have no reason to doubt that the dept. of commerce's numbers are at least a reasonable approximation of what is consumed in this country every year. If that consumption is taxed, it will raise revenue. That revenue must be equal to what the IRS currently brings in. That is why I used the two sources, Commerce and IRS. The math I did, I believed to be good, and was approximately equal to what the FairTax proposes. Where is the TRILLION dollars I missed? Did I need to raise another Trillion? Did I exclude a Trillion dollars from consumption? I was clear on what I excluded from income: a measure of consumption by owner-occupied housing...owners pay a tax on the purchase of their home, not on their use of it. The other exclusion was for education, like other monies spent on production, it is excluded.

If you have such a poor opinion of the US government's statistical ability, why do you place faith in the existing IRS? Do you have a source of statistics you find palatable? If you don't it's all a crap-shoot anyway. Who knows how much money will be raised by income tax next year? Who knows how much money the US Gov't will spend next year? Who knows how much money americans will spend next year? My guess is that none of these statistics is any more 'knowable' than the others.

My answer was: the corporate revenue not spent on corporate taxes will be 'spent' on a combination of the following: profit/dividends, internal reinvestment/increased productivity, better wages/increased productivity, lower prices/increased volume.

I don't feel the need to back up the 40% of returns are incorrect, it's believable enough for me not to doubt it. Only those taxpayers that operate a business would be required to file, drastically reducing the numbers of filers, by 90% according to fairtax. This means less chaff among the wheat for tax fraud investigators to find. Likewise, the 60,000 some pages of the tax code would be reduced by several orders of magnitude.

The taxes are paid by the consumer. Would it be different if all US corporations were taxed at 23% of their gross revenue? It seems to me that the consumer price would be the same. Please be specific here, it's an opportunity for you to shine. As best I can tell, the consumers exchange money for products. 23% of that money goes to the gov't. In the alternative I just offerred, producers recieve money for products, and 23% of that money goes to the government. What is the difference? For this portion of the argument assume that the 23% is revenue neutral vs. current IRS individual, corporate, gift, and estate taxes.

You may make any point you want. If it differs from mine, I will not concede it if your point is merely a statement of your opinion.

Selling not telling. Of course, they're selling, emotion, not reason rules the roost of politics. Most of their figures are backed elsewhere on their site in further depth. You then discount these, as 'they're from the government' or otherwise. What facts can we count on in common?

What portion of Bill Gates income is subject to income tax? What is income? Who's definition? Back to your argument that even the government has more than one definition of income. I don't know Bill's finances personally, but my guess is that most of his 'income' is unrealized capital gains in M.

QUOTE
No, it's your claim (by proxy). You back up the number.

I will do so further at a future date. For now, would you accept that 15.3% of direct labor costs are 'hidden'. Would you also agree, that for most products, labor costs are a very significant portion of total costs? The labor of producing the raw materials, manufacturing the product, building and maintaining the means of production? Delivering the product to the consumer? In all steps, labor is a significant portion. Likewise, the cost of tax accounting at each step is not cheap, as your stellar income shows.

'boo-hoo' who's crying. I'm just trying to keep this debate civil. I have yet to see one of the 'glaring flaws' you have pointed out. I have heard you state that it won't work, and then make references to basic math, basic economics, etc. If it's so basic, take a paragraph or two and explain it, please. I don't like being wrong, but will concede. If I'm wrong I'd rather you proved it to me now, rather than allow me to continue in my ignorance. Thanks again for the debate. I mean this. I won't be responding until monday, because sometimes IRL I like to go to the beach.
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Ultimatejoe
post Jul 9 2004, 04:16 PM
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Gentleman, lets try to keep the tone of this debate civil please. flowers.gif
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NXS
post Jul 11 2004, 02:40 AM
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I vote yes. It is good for low income people to pay no tax while it would limit the big spending associated with the rich today.It does need to be a variable tax, with the larger the purchase an entity makes the more it pays.
I do not care if somebody makes $1,000,000 a year, if they only spend $55,000 a year tax them like that.
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ValiantForTruth
post Oct 16 2004, 03:06 PM
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I vote YES!!! The "FairTax" plan is simple, fair, and less intrusive in our lives (no more tax-filing-paperwork, saving receipts,etc...."yuk". Let businesses do it - they already are anyways) , and will bring jobs and business back to the USA. The cosumption tax is also "broader based" than taxing "income" and is more stable in slow times. The more you spend, the more tax you pay. And you must spend over the poverty level before you pay ANY taxes at all. Sounds FAIR to me. I'm all for it!! The sooner the better.
mrsparkle.gif

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SWM28WDC
post Oct 16 2004, 09:22 PM
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While I still think the 'FairTax' would be a big improvement over current corporate and individual income taxes, I think that revenue should be raised from sources other than commerce or income, as much as possible. Specifically, charging market rates for natural resource use, as well as developing pollution taxes, would raise revenue while internalizing market externalities, and making a more efficient market.

Also I am starting to prefer a Tobin-style transaction tax (www.apttax.org) over a tax on consumer goods. With the other taxes mentioned, federal corporate and personal income taxes could be eliminated with a 0.1% tax on all financial transactions.
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ValiantForTruth
post Oct 23 2004, 03:33 AM
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QUOTE(SWM28WDC @ Oct 16 2004, 05:22 PM)
While I still think the 'FairTax' would be a big improvement over current corporate and individual income taxes...

Like you said, not just an improvement, but "a big improvement."
QUOTE
...I think that revenue should be raised from sources other than commerce or income, as much as possible.  Specifically, charging market rates for natural resource use, as well as developing pollution taxes, would raise revenue while internalizing market externalities, and making a more efficient market.


If you raise revenue this way, wouldn't it be "hidden" from the consumer?
And if "hidden" then wouldn't it be easily "changed" (ie. increased) by whoever is in charge?
And if these "sources" are charged a tax, wouldn't that tax become a "cost" of doing business?
And if it is a cost of doing business, wouldn't that influence the "price" that the "source" charges for their goods or services?
Thus, wouldn't this tax actually be a penalty NOT on the "source" but rather on the Consumer? crying.gif

What you propose sounds like what we have now... "social engineering" through taxation...(?). Financial penalties appear to be ineffective, as they are simply "passed on" to the consumer in the form of higher prices. hmmm.gif

The "FairTax" (while eliminating taxes on income) taxes not only goods but "services" also. And all govt. revenues are "visible" to the conusmer. Doesn't the taxing of "services" raise additional "revenue while internalizing market externalities, and making a more efficient market"?

QUOTE
Also I am starting to prefer a Tobin-style transaction tax (www.apttax.org) over a tax on consumer goods.  With the other taxes mentioned, federal corporate and personal income taxes could be eliminated with a 0.1% tax on all financial transactions.


I don't know enough about this plan to respond. Maybe you'd like to share more about it?

Don
www.fairtax.org

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Vampiel
post Oct 25 2004, 07:05 AM
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Pass H.R. 25? NO, but modified, YES

Eradicate all federal taxes on your check. All of them. Replace this with a federal flat tax on spending. Your paycheck gets bigger, but when you spend this on anything the price increases because of the federal tax, so this will make spending more expensive but earnings are more profitable.

1) No one can loop around this short of 'under the table' purchases (therefore illegal workers will have to put money into the government and the rich can no longer higher lawyers to loop around taxes)
2) The replaced federal tax will bring in more money for the federal government, yet the balance of purchase vs. income will be the same for consumers

Allocate, in percentage of the federal tax to programs. This in turn will allow the government to allocate what is needed more freely because the funding will be one huge pot. This is how businesses work. I make money and it is all put into one bank account, one big account with no predetermined amount that is put into what. I decide what percentage of that money goes were and why. Not only will this make it easier for the average consumer to file their taxes, it will cut out alot of government red tape to allocate money to a bill. In other words they dont have to say 'hey this money was supposed to be for social security'. No, every year is different and the percentage's should be different without having to cut through the red tape to allocate it elsewere. This will make government spending more effecient which in and of itself is huge. Not only will this make spending on what bills that need the money allocated easier to be spent on, it will make the government process faster which everyone knows needs improvement. As stated it will also increase government revenue with no inflation/deflation. In other words it will essentially Flip-Flop the entire system from taking money in pre-allocated amounts from your paycheck to one fund for the government to decide were the money needs to be allocated from purchases. Not only will this bring the government more money, this will also benifit the consumer by;

1) If you save the money you do not pay any federal taxes personally with the money that is saved during that time yet you make interest off of it if it is in a savings account (note : personally but that does not mean the money is not taxed as explained here)
2) Tax filing is much easier and will not cost you a penny

This only means that the IRS will not be abolished but will be downsized considerably, and perhaps even given another name, basically it will no longer be the IRS but a system will still be present. This will bring in more benefits to businesses. Businesses get additional tax credits by providing reciepts from business transactions. The entire purchase is calculated into the tax credit, therefore since the purchase actually increases because of the higher percantage of tax you would actually recieve more back.

Pro's
1) The government makes more without consumers making less as far as the income/spending balance
2) Illegals cannot get around it
3) The rich cannot get around it
4) The IRS is essentialy gone; downsized to only benfit businesses
5) Businesses get higher tax credits; as explanied here and and here the more money a business has the better off they are, and the better off the US economy is (jobs, expansion, etc..) If you dont believe in risk's ask Donald Trump his opinion when he came back from losing millions and filing bankruptcy as did the US economy come back from the technology sector plummit and 9/11 as explained here as well as here
6) The government process is cut in time which leads to more decisions quicker instead of the stupid sluggish process in place now which will increase government productivity

Con's
1) It has not been tested on a federal level, but has been on a state level such as Texas (Houston has the fastest growing job sector in the US, starting with GWB as governer I might add)

This post has been edited by Vampiel: Oct 25 2004, 07:09 AM
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SWM28WDC
post Jan 17 2005, 12:20 AM
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QUOTE(ValiantForTruth @ Oct 22 2004, 11:33 PM)
QUOTE(SWM28WDC @ Oct 16 2004, 05:22 PM)
While I still think the 'FairTax' would be a big improvement over current corporate and individual income taxes...

Like you said, not just an improvement, but "a big improvement."
QUOTE
...I think that revenue should be raised from sources other than commerce or income, as much as possible.  Specifically, charging market rates for natural resource use, as well as developing pollution taxes, would raise revenue while internalizing market externalities, and making a more efficient market.


If you raise revenue this way, wouldn't it be "hidden" from the consumer?
And if "hidden" then wouldn't it be easily "changed" (ie. increased) by whoever is in charge?
And if these "sources" are charged a tax, wouldn't that tax become a "cost" of doing business?
And if it is a cost of doing business, wouldn't that influence the "price" that the "source" charges for their goods or services?
Thus, wouldn't this tax actually be a penalty NOT on the "source" but rather on the Consumer? crying.gif

What you propose sounds like what we have now... "social engineering" through taxation...(?). Financial penalties appear to be ineffective, as they are simply "passed on" to the consumer in the form of higher prices. hmmm.gif



No, charging companies the market rate for the use of federal resources would NOT be a hidden tax: the companies that currently obtain use of these resources still charge what the market will bear. If each company had equal access to such resources, raising a tax on them would be 'hidden', however, since the products of such companies compete with the products of companies without such access, the price is set at the margin; not by the company with the advantage. Because the tax is simply charging the market rate, the tax would never be higher than the price set by natural competition.

Example. Farmer A raises cattle on his families farm and sells the finished cattle to a processer for the market rate, say $1 a pound. It costs this farmer $0.98 to raise this cattle. Agribusiness B (a large political donor) raises cattle on federal land leased at sub-market rates, such that it costs Agribusiness B $0.90 a pound to raise finished cattle. The cattle still sells for $1 a pound, Agribusiness B keeps the $0.08 a pound as a windfall profit. My system would require competing farmers to bid (annually?) on grazing rights; businesses would not bid more than they could afford & still be profitable.

The analogy extends to mineral rights, drilling rights, timber rights, grazing rights, fishing rights, and spectrum rights. A similar analogy extends to patent rights, however there is a benefit of limited duration patents to foster invention.
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Just Leave me Al...
post Mar 1 2005, 04:29 PM
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unsure.gif Had to vote no for two reasons. #1) A consumption tax discourages spending and encourages saving. Sounds good at first, but what are we going to stop buying? Food? Energy? I say Services will be bought less and less and 2/3 of the US economy is run on services. If done, it would have to be filtered in slowly or there are going to be serious economic repercussions. #2) I do not see how this is much simpler than the current code with all of the rebates and sales tax monitoring of companies that would have to be done.

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deerjerkydave
post Mar 23 2005, 09:28 PM
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I voted yes mostly because the current income tax code is too complex. Just take a look at Publication 17, Income Tax Instructions for Individuals! It's a whopping 322 page document! dazed.gif This is the result of Big Government Gone Bad. Warning, do not click this link unless you have high speed internet as it is a two megabyte pdf document.
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