While death and taxes are both inevitable and both usually considered unpleasant, the only difference is you don't have to work just to figure out how to die. Likewise, figuring out how much you owe in taxes shouldn't be so much damn work.
Between personal taxes, my little investment firms taxes, and screwing with employment taxes at work I spend insane hours just trying to figure out how much money I need to send in. For gods sake. I work for a small company and only handle part of the tax issue - and its still a good chunk of my job. I cant imagine the BILLIONS G.E. spends on tax compliance BS.
"It clearly says in publication 15..." Hey, the 64 pages of Publication 15-E don't "clearly say" a god damn thing. I hold an accounting degree, a finance degree, and a law degree and its still a ton of work to try and comply. I want to give you the money I owe, there is no need fighting the system from the collections side. I know that. I want to give you the money.
For gods sake, just tell me how much I farkin owe and I'll pay it. I'll pay you what I owe in Income Tax, SS tax, Medicaid tax, Capital Gains Tax, Qualified Dividend arrears, Unemployment, 941 with holding... whatever. Just please, for the love of god, tell me how much I owe and when I should pay. Dont refer me to a 64 page document that is more concerned with sealing loopholes than explaining what everyone is supposed to do.
and by the way, I hate you.
XoXo,
A Tax Payer
One more thing. When I go anywhere else for goods or services I get a receipt that tells me what I am purchasing - right after the nice man at the counter tells me how much I owe. Even property taxes are done this way.
I hate you so very much.
The IRS is a complicated and convoluted system.
How do you feel about the "Fair Tax" or "Flat Tax" solutions?
The Fair Tax sounds like it would simplify tax collection and the tax codes on the surface, but what would it do to shrink the admin costs of the IRS?
Taxes would be collected regardless of immigration status, and the tax wouldn't be punitive on any income level due to rebates for those below the poverty level.
However, I'm always skeptical of the "free lunch". What's the catch?
The "free lunch" may be that the flat tax won't collect enough money. But I'm not sure.
And it's not like payroll deductions would end. You still have Medicare, Social Security and state taxes.
Any estimates on how much money a flat tax would generate, compared to the current system?
Flat tax blows, the fair tax is where it's at.
From what I've read of the "flat tax" there are concerns about collecting enough revenue. So far it looks like primarily former Soviet bloc countries like Russia, Lithuania, etc. are using this system. Three or four affluent countries are the UAE, Saudi Arabia, and Bahrain.
One example is what Dick Armey proposed:
"Married couples filing jointly to deduct $26,200, unmarried heads of household to deduct $17,200, and single adults, $13,100. $5,300 would be deducted for each dependent. A household would pay tax at a flat rate of 17% on the excess. Businesses would pay a flat 17% rate on all profits." His proposal excluded taxes on capital gains. (I'm loathe to use Wiki but sometimes you can find quick info).
Based on exclusions for capital gains and other wealth-building income, this would never pass muster with Democrats and would be used as a wedge issue even though there are a lot of Democrats in Congress who make plenty on capital gains in personal investments.
The "fair tax" is a 23% national sales tax on goods. IOW, I believe the way it works is that item at the dollar store would now ring out at about $1.32.
From fairtax.org: (//%22http://www.fairtax.org/site/PageServer?pagename=about_main%22)
"The FairTax Act (HR 25, S 1025) is nonpartisan legislation. It abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities."
So that would do away with all payroll taxes. They promise SS and Medicare would be totally funded.
I've not read Boortz' book on this, though I keep promising myself I will. I've heard tidbits about it on his show from time-to-time.
RWARN:
Any tax system implemented will be adjusted to raise the same revenue. Simply the means of collection would change.
I love the Fair Tax. It taxes people who want to SPEND money. Saving money wouldnt cost you.
For most, it would spread the tax burden out over your life. Currently, you get taxed when you are working and dont pay much when retired. Under the fair tax that burden would be spread out evenly. That makes sense, it would give everyone more money to invest and retire upon and more accurately reflect the services you 'buy' from the government.
Not to mention those that want to be frugal can avoid taxes if they really want to. Ie. Dont buy new things.
But MOST importantly, even better than making taxes inherently easier, is it will force people to recognize HOW MUCH they are spending on taxes. Currently, most people have no clue what their net taxes are. If the federal sales tax rate was 26% you would damn well know. Even if you were rebated more money than you spend on taxes - you still realize how much damn money they take from you.
quote:
Originally posted by iplaw
Flat tax blows, the fair tax is where it's at.
They are both inferior. Consumption as a percentage of income goes
down as a family gets wealthier. The wealthy would no longer have to pay a premium to live in this great country of ours. In fact, they'd get a discount.
Both just shift the burden onto the middle class. No thanks, I'd rather stick with a progressive tax. The rich can afford to pay more for things. They don't need us to subsidize them.
quote:
Both just shift the burden onto the middle class.
Could you please explain how you came to this conclusion? Have you read the Fair Tax plan?
quote:
Originally posted by Chicken Little
quote:
Originally posted by iplaw
Flat tax blows, the fair tax is where it's at.
They are both inferior. Consumption as a percentage of income goes down as a family gets wealthier. The wealthy would no longer have to pay a premium to live in this great country of ours. In fact, they'd get a discount.
Both just shift the burden onto the middle class. No thanks, I'd rather stick with a progressive tax. The rich can afford to pay more for things. They don't need us to subsidize them.
Only if you look at a wealthy family's investments as being stagnant or in a vaccum.
Gross reciepts on sales from a family with an income of $400,000 is going to be quite a bit more than a family with an income of $80,000. Any way you slice it whomever has more money, is going to be putting more tax back into the system. As long as there aren't exemtions for luxury items, I don't see how this works out to be relief for the wealthy. With the exception that they are not taxed for saving money which will wind up back in the economy via investments and eventually spent by someone else as discretionary income.
Savings gets ploughed into investments, which do include companies, whether it's direct or indirect action on the part of the saver, which helps create more jobs and more income base.
quote:
Originally posted by iplaw
quote:
Both just shift the burden onto the middle class.
Could you please explain how you came to this conclusion? Have you read the Fair Tax plan?
I've already explained it. In our progressive system, the tax rate rises as income rises. The rich pay more because they can afford to pay more.
In these other two, the rich will pay
less, proportionally, than the rest of us because consumption, as a proportion of income, drops as income rises.
If the rich pay less, and in your fair tax proposal the poor pay less (because of rebates), then who picks up the slack?
quote:
Originally posted by Chicken Little
If the rich pay less, and in your fair tax proposal the poor pay less (because of rebates), then who picks up the slack?
Well, you answered my question at least. You haven't read anything about it have you?
quote:
Originally posted by Conan71
Only if you look at a wealthy family's investments as being stagnant or in a vaccum.
Gross reciepts on sales from a family with an income of $400,000 is going to be quite a bit more than a family with an income of $80,000. Any way you slice it whomever has more money, is going to be putting more tax back into the system. As long as there aren't exemtions for luxury items, I don't see how this works out to be relief for the wealthy. With the exception that they are not taxed for saving money which will wind up back in the economy via investments and eventually spent by someone else as discretionary income.
Savings gets ploughed into investments, which do include companies, whether it's direct or indirect action on the part of the saver, which helps create more jobs and more income base.
You are going to have to do better than "quite a bit more".
Let's say that the family that earns $80K spends 80% of of its income on goods and services with a 23% sales tax. That means they would pay $14,720 in taxes.
So,
14,720/80,000 = an effective tax rate of 18.4%
And if the family making $400,000 spends 60% of their income on goods and services, you're right, it is quite a bit more. At 23% they'd pay $55,200 in taxes.
And,
55,200/400,000 = yields an effective tax rate of 13.8%
So, the "rich" family pays less, proportionally, than the "middle-class" family. This is exactly the opposite of the system that we have today. Yes, there are administrative issues with our system, without a doubt. But the progressive system just seems fairer to me.
quote:
Originally posted by iplaw
quote:
Originally posted by Chicken Little
If the rich pay less, and in your fair tax proposal the poor pay less (because of rebates), then who picks up the slack?
Well, you answered my question at least. You haven't read anything about it have you?
I know what he's pitching, and I think it's a con. Neal Boortz loses me when he says things like "Why didn't some of these students fight back?". I just don't think he's a credible source of information.
quote:
Originally posted by cannon_fodder
While death and taxes are both inevitable and both usually considered unpleasant, the only difference is you don't have to work just to figure out how to die. Likewise, figuring out how much you owe in taxes shouldn't be so much damn work.
Between personal taxes, my little investment firms taxes, and screwing with employment taxes at work I spend insane hours just trying to figure out how much money I need to send in. For gods sake. I work for a small company and only handle part of the tax issue - and its still a good chunk of my job. I cant imagine the BILLIONS G.E. spends on tax compliance BS.
"It clearly says in publication 15..." Hey, the 64 pages of Publication 15-E don't "clearly say" a god damn thing. I hold an accounting degree, a finance degree, and a law degree and its still a ton of work to try and comply. I want to give you the money I owe, there is no need fighting the system from the collections side. I know that. I want to give you the money.
For gods sake, just tell me how much I farkin owe and I'll pay it. I'll pay you what I owe in Income Tax, SS tax, Medicaid tax, Capital Gains Tax, Qualified Dividend arrears, Unemployment, 941 with holding... whatever. Just please, for the love of god, tell me how much I owe and when I should pay. Dont refer me to a 64 page document that is more concerned with sealing loopholes than explaining what everyone is supposed to do.
and by the way, I hate you.
XoXo,
A Tax Payer
You left out: sales tax, cable tv tax, electricity tax, natural gas tax, life insurance tax, cell phone tax, telephone tax, 911 fees, fcc fees, internet tax, excise tax, gasoline tax, .......
Using Quicken, I track every penny of tax I pay, including all of the above. 55% of my income so far this year has gone to taxes. Can't wait until July 15, when I can start paying myself!
Sadly, if the federal government suddenly came up with a solution (a flat or "fair" tax) to simplify taxes, we'd still have the State of Oklahoma, Tulsa County, and the City of Tulsa leveeing fees and taxes on everything. It wouldn't get any simpler.
It's also hard to imagine how much of the federal tax revenue comes from taxing the same money multiple times. So a one time bottom line simple flat or fair tax that eliminated all the taxes built into millions of different things, it would have to be very high to equal the same revenue.
quote:
Originally posted by Chicken Little
I know what he's pitching, and I think it's a con. Neal Boortz loses me when he says things like "Why didn't some of these students fight back?". I just don't think he's a credible source of information.
What about it is a con?
If you don't like Boortz, how about:
* Professors David Burton and Dan Mastromarco, University of Maryland and The Argus Group
* Laurence Kotlikoff, Boston University
* Stephen Moore, The Cato Institute
* Professor Dale Jorgenson, Harvard University
* Bill Beach, the Heritage Foundation
* Jim Poterba, The National Bureau of Economic Research
* Professor George Zodrow, Rice University and the Baker Institute for Public Policy
* Professor Joseph Kahn, Massachusetts Institute of Technology
I'll ask again, have you actually read the Fair Tax plan? If you have the questions you asked don't reflect it.
CL, points well taken, I see where you are coming from in your logic. Looking at your math, the family who makes $400K per year would still put four times the amount of taxes back into the system than the middle-income family.
With this system, at 60% consumption, that family has $240K per year to save and essentially re-invest in college educations for their kids who, with better paying jobs will put more back into the economy. They will save more personal funds for retirement, which means they need to take less out of SS and MC when they retire. They also get into investments which provide capital for economic growth.
Why are we so focused on tax rates? The bottom line is the total amount which flows into gov't coffers. The present tax cuts are generating record over-all tax revenues due to what happens when money is in the hands of individuals and corporations instead of the government. It is a proven concept which works. The present deficits have far less to do with tax cuts, than a Congress and admin which spend money like drunken sailors on payday.
Please don't let personal paradigms about Boortz keep you from wanting to learn more about this.
quote:
Originally posted by iplaw
What about it is a con?
It's a proposal to eliminate most forms of taxation and replace them with a 23 cent sales tax on the purchase of goods and services.
As I have said,
twice, and demonstrated once, under this system, the rich would pay less than they currently do and the middle-class would pick up the difference. That's regressive, and I believe it is a misrepresentation to call it a "fair" tax.
If someone presumes that I hate the rich, think again. With taxes, ultimately, it's about how much we have to surrender to the state. Under this consumption tax, a smaller group of wealthier people will surrender less. Presuming the government will still take the same amount of money, that means that a much larger group of middle-class people will have to surrender more in order to make up the difference. So, most of us will pay more and a few of us will pay less. That doesn't seem fair.
quote:
As I have said, twice, and demonstrated once, under this system, the rich would pay less than they currently do and the middle-class would pick up the difference.
You haven't DEMONSTRATED anything. You've
repeated yourself twice, which not the same as demonstrating. What statistics or figures do you have to back up this claim? What you
have demonstrated is bumper sticker and slogan level of knowledge about the Fair Tax.
BTW, sorry CL. I didn't see your calcs above...my bad, but I think CF has addressed it thoroughly.
I fit the definition of a middle-income American. I just pulled out my tax info for this last year.
All based on the return I filed last month:
Just to be stupid, I calc'd 100% consumption. I'd pay about $500 more per year in taxes under Fair Tax. Then I calc'd an 80% consumption rate, after housing expenses (which I don't believe would be taxed) so I would come out on the high side.
According to my calcs, between what my wife and I paid on Federal (actual net, less miniscule refund), SS withholding, and Medicare, we would save about $5K per year in taxes under the Fair Tax. That's before researching the pre-bates and exempted items.
Looks like tax relief to me.
The Fair Tax would also eliminate itemized exemptions that the wealthy are able to take advantage of that the average family can not take advantage of, unless they are in over their heads on a mortgage they struggle to pay each month.
Before you poo poo it, run the numbers for yourself and see what it works out to. If it doesn't work out for you then fine. I'd rather take a serious look at the message on this issue than to ignore it because of the messenger.
Chicken Little - this is long (1500 words to be exact, wait, I just added some more, damnit!), I know, but please skim it and read the bottom. I'm not interested in arguing, I want to try and figure out what your concerns are and what the Fair Tax does to remedy those concerns:
quote:
Originally posted by Chicken Little
Let's say that the family that earns $80K spends 80% of of its income on goods and services with a 23% sales tax. That means they would pay $14,720 in taxes.
So,
14,720/80,000 = an effective tax rate of 18.4%
And if the family making $400,000 spends 60% of their income on goods and services, you're right, it is quite a bit more. At 23% thChicken Little - this is long, I know, but please skim it and read the bottom. I'm not interested in arguing, I want to try and figure out what your concerns are and what the Fair Tax does to remedy those concerns:
QuoteOriginally posted by Chicken Little
Let's say that the family that earns $80K spends 80% of of its income on goods and services with a 23% sales tax. That means they would pay $14,720 in taxes.
So,
14,720/80,000 = an effective tax rate of 18.4%
And if the family making $400,000 spends 60% of their income on goods and services, you're right, it is quite a bit more. At 23% they'd pay $55,200 in taxes.
And,
55,200/400,000 = yields an effective tax rate of 13.8%
There are several things not considered by your argument:
1) You ignore the fact that most families earning any amount of money over the poverty line spend close to 85% of their income. There is a reason that 'rich people' live in big houses, drive expensive cars, go on lavish vacations, have giant diamonds, eat at fine restaurants, and buy $1000 purses.
The last on is because they are insecure, but the other items are explained because they SPEND MONEY.
2) As IPLaw pointed out, you ignore the fact that the money will be spent EVENTUALLY. The system will be a wash in the long run. If I indeed only spend 60% of my earnings over a 10 year period (apparently saving carefully for retirement) I have saved up $2.4 MILLION. This money will be spent continuing to live my lavish lifestyle when I retire - and taxed at that time.
If I earn zero dollars in retirement in a family of 2 and spend $240,000 a year getting a government rebate of $6,440 my effective tax rate is... infinite percent. He will pay $56,000 a year in taxes on zero income. Now THAT's a tax on the rich, you must the thrilled.
Likewise, the middle class man who saved up 20% of his earnings over ten years at 80K saved $160,000. Since he didnt save much for retirement he would have to cut back to $16,000 a year to retire for the ten years (10 years is of course arbitrary for easy math), when he spends his 16K he will be taxed $4,160 and receive a rebate of $6,440 for his family of 2. For a net GAIN on taxes of $2,280.00. So his effective tax rate is negative infinity on earnings.
So the rich pay infinite taxes after earnings cease and the middle class get PAID after retiring.
Ignoring the ridiculous example, it illustrates how spending patterns after retirement wash out the difference.
3) Legacy Fortunes
If you are worried about large legacy fortunes not being taxed fear not! If there is one thing legatees can do well it is spend their inherited money.
Basically, in response to your fears of cash hording, the entire point of wealth is to effectuate its buying power. No one, NO ONE hordes wealth forever. it is circulated and distributed in the long run. At any given moment there are people saving excesses of money and other people spending excesses or money.
In the long run, the system is a wash.
4) Investment
The piles of untaxed cash you are worried about would not likely sit buried in the sand. They would fund development in this country and others. People with money generally give large sums to charity, to venture capitalists, and to investments. Savings fund new businesses, new ideas, and new projects that employ new people and provide new opportunities.
Currently, these excesses of capital discouraged by the tax system and largely confiscated by the government to be spent on crap we dont need for problems we likely caused with out last bout of spending.
6) The tax punishes the rich.
You seem to be interested in punishing the rich for their wealth. Or at very least, making sure they pay their fair share, which appears to be something like their share and the share for 7 or 8 other people according to the latest statistics.
But you are not punishing them for being rich, currently the tax system punishes them for EARNING money. If they are already wealthy it is not taxed - they are free to sit on their piles of money as they see fit. If it is earned over seas and spend here it is not taxed. If it is made in capital gains it is taxed less. If they run their own business or set up a shame corporation to siphon money (legally of course) it is taxed less deductions and offset by past or future losses. If they wish to transfer money to their children they can hire attorney's and accountants to set up tax abatement trusts or overseas venture investments with tax free maturity.
People with money currently pay less taxes than the middle class family does. Because we tax earnings, not riches. This is detrimental as it discourages wage earners with high potential from staying the work force and encourages expensive measures to avoid taxation - that are unavailable to the middle class.
The Fair Tax wouldnt punish people for earning excesses of money - it would punish them from spending excesses of capital. It would punish the exuberant lifestyle that they choose to live, not their success at their occupation.
Should the person who lives next door and drives the same car and spends similarly to you be taxed more simply because he is more successful at work? Or should the person who choses to buy a new Excursion pay tax by virtue of his consumption? As I said before, in the end game his wealth will be taxed.
6) The poor
The poor are not an issue in this discussion because under current federal law they pay no taxes (over 50% of American's are a net DRAIN on the Federal Government. They get more in handouts, entitlements, and "tax rebates" than they pay in to the system). Under the Fair Tax a person who spends less than the poverty limit will pay no federal taxes either. In theory, it would be possible to live off of the rebate check you get every month if one so chose.
7) Tax Avoidance
Currently the wealthy have the advantage in tax avoidance - because it costs significant money to find the loopholes and set up the accounts/trusts and ensure compliance. However, under the fair tax the poor have the advantage. The rebate system coupled with the taxation of NEW GOODS only would ensure that most major purchases by the poor and middle class would go tax free.
A rich person is much more likely to buy a brand new house, a new car, or a new appliance than a person of lesser means. I have a used washer and dryer, 2 used cars, an older house, and a used computer: all would have been tax free. Some people I know need the latest and greatest and would never dream of driving "some ones old car." So let them pay the tax, I'd be happy to see it happen.
------
Basically, Chicken Little, I am not tell you that you are wrong. I'm trying to explain to you why I believe your fears are unfounded. At the end of the day the rich would likely pay more in taxes as they consume much more and nearly exclusively new goods. Legacy fortunes would be taxable and umbrella trusts could provide no shelter while enabling wealth to be maintained by responsible people if they so desired.
Additional benefits:
1) Simple compliance: end product new goods are taxed. Period.
2) Transparency: We would know how much we pay in tax, and could EASILY work out what penny went where (1 cent of every dollar I spend goes to the Iraq war! Thats BS!)
3) Special Interests: The current tax code is manipulated repeatedly to support special interests. Those interests are more often than not something that does not help most people. Oil companies are a recent example, or car manufacturers, or railroads...etc. Money talks in Washington, you can buy your industry favorable tax status. The Fiar Tax would remedy this.
I'm not interested in telling you that you're wrong. I want to convince you that the Fiar Tax is not the regressive monster that you fear. What do you remain unconvinced of and how can I alleviate your concerns?
quote:
What do you remain unconvinced of and how can I alleviate your concerns?
What's it gonna take for me to put you in a Fair Tax bracket today?[:D]
(http://cache.jalopnik.com/cars/used_car_salesman.jpg)
You're not likely to convince me. War was made on the Progressive System years ago, if you had a "fair" replacement instead of a euphemism, it would have been done by now.
quote:
Originally posted by cannon_fodder
6) The poor
The poor are not an issue in this discussion because under current federal law they pay no taxes (over 50% of American's are a net DRAIN on the Federal Government. They get more in handouts, entitlements, and "tax rebates" than they pay in to the system). Under the Fair Tax a person who spends less than the poverty limit will pay no federal taxes either. In theory, it would be possible to live off of the rebate check you get every month if one so chose.
That's a pretty bold statement there. "50% are a DRAIN", even if true on an individual level, these are the people that allow corporations to operate. Their work allows companies to thrive, and wealthy people to get wealthy. They are, indirectly, the tax base of the US. Through their distribution of purchasing power and through their work, they are the driving force of the US economy.
This concept, that they could live off the money granted to them by the US gov't, is interesting. The whole argument against welfare is that the money is there in the first place, makes people not work. You want to expand that and institutionalize "free money" on a massive level.
You're taking a system that is complicated but works, and want to exchange that for something you believe in. You believe "pools of wealth" don't exist, you believe "poor are a drain", you believe "the wealthy have been punished", you believe "it can work". Let's just call it a "Faith-Based Tax", sounds fairer.
quote:
Originally posted by MichaelC
You're not likely to convince me. War was made on the Progressive System years ago, if you had a "fair" replacement instead of a euphemism, it would have been done by now.
You think "fair" would be enough to motivate those in Congress. Pfftt.
You do realize that there is a massive machine that is the IRS and its associated "bot" agencies and thousands of professionals which feed off that system don't you?
Those in charge aren't interested in the Fair Tax for the same reason those in OPEC aren't interested in green technology for cars.
I'm not a fan of the beaurocracy at the IRS. I think I'd hate it even more if I wore CF's shoes.
I haven't seen anything about the Fair Tax plan so far that raises my hackles. I would like to read deeper into it and see if there are any catches. I like the idea of simplification and believe it would be prudent for each individual to look at what it would do to their own tax situation prior to dismissing it alltogether.
The IRS budget, is somewhere between $10.5 and $11 bln per year. I understand it wouldn't gut the need for compliance and accounting, but on the surface it appears it would eliminate a fair number of necessary resources under the current system. Loss of jobs from the IRS? They can be absorbed into the private sector helping people invest and save their money. [;)]
First, it should be noted that you did not take issue with a single aspect of the Fair Tax. You sidetracked on the name, statistical payment of taxes, and my stance on welfare. But nothing substantive about the Fair Tax. Even after implying that it was regressive so you did not like it, you failed to rebut any of the reasons I presented that it would not be regressive. You should have just posted your first sentence and left it at that.
But since you didn't...
quote:
Originally posted by MichaelC
You're not likely to convince me. War was made on the Progressive System years ago, if you had a "fair" replacement instead of a euphemism, it would have been done by now.
"Fair Tax" is not a euphemism, it's the name of the bill. Referring to death as "passing away," or to rape as "sexual assault," those are euphemisms. It is far simpler to refer to Bills and publications by their names rather than in descriptive terms. However, if you so desire, we can refer to the Fair Tax as the National Sales Tax as presented in House Bill 25 draft 1 or Senate Committee draft 1025. I think Fair Tax is much easier to say.
But I agree that naming bills things like "the patriot act" and "save the kittens" or whatever is over done.
quote:
That's a pretty bold statement there. "50% are a DRAIN", even if true on an individual level, these are the people that allow corporations to operate. Their work allows companies to thrive, and wealthy people to get wealthy. They are, indirectly, the tax base of the US. Through their distribution of purchasing power and through their work, they are the driving force of the US economy.
Yes, people who receive a net payment from the Federal Government are, by definition, a drain on the treasury. I did not say they do not contribute to the overall wealth and wellbeing of our economy. I stated they take more money OUT of the federal government than they pay in under the current system.
LIKEWISE, under the National Sales Tax as presented in House Bill 25 draft 1 or Senate Committee draft 1025 the poor would remain a net drain.
So there is no argument to be made that it is detrimental to the poor. An argument you did not bother to raise, instead taking issue with how I stated the fact.
quote:
This concept, that they could live off the money granted to them by the US gov't, is interesting. The whole argument against welfare is that the money is there in the first place, makes people not work. You want to expand that and institutionalize "free money" on a massive level.
I have no desire to hand out any more free money than is already granted. The idea behind the rebate in the National Sales Tax as presented in House Bill 25 draft 1 or Senate Committee draft 1025 is to ensure that no one is taxed at or below a certain 100+% of the poverty level. Instead of having complex regulations, deductions, and brackets to determine taxes it is simplified in that no one is taxed on the first $X they spend. All other's are taxed.
So the rebate is NOT a governmental handout, it is MEANT to be a rebate of taxes paid in. However, the government will actually save money by simply paying this money to everyone instead of trying to figure out at what point Mr. Blow spent to the X dollar. It is nothing more than an administrative decision to reduce overhead. Since the VAST majority of people will spend above the poverty level in a given year, rebating the money as a blanket is far easier.
However, should someone spend less than the poverty threshold set, then they will indeed be getting a government handout. Currently this is done in the form of the "Earned Income Tax Credit" (if you want to talk about bad names, how about a tax credit you get for not paying taxes?). The addition of the rebate ensures that the tax is progressive so long as the person making more money... spends more money (a point that you also chose not to address).
If you would like to discuss the elimination of socialism in the form of bogus tax policy in its current form, I would be happy to.
quote:
You're taking a system that is complicated but works,
The system works in the sense that it collects money for the treasury. Under that low threshold, nearly any system would work. The National Sales Tax as presented in House Bill 25 draft 1 or Senate Committee draft 1025 would certainly work under this definition and help streamline the process - eliminating tens of BILLIONS in compliance costs and closing loopholes.
quote:
and want to exchange that for something you believe in.
Of course. Only a fool would deny wanting to exchange the current system with a system they feel is far more efficient.
quote:
You believe "pools of wealth" don't exist,
Absolutely not what I said. I said those "pools of wealth" (which, incidentally is not my phrase as the quotes would suggest) are eventually disbursed. That view is based on the notion that the purpose of wealth is to acquire its purchasing power. If not the current, future generations of wealth holders will spend that resource and it will be taxed.
If, for some odd reason, they chose not to spend any money then it sits as an investment and contributes to the economy as a whole. Win-Win. However, I do not know of a single rich person is history who has not seen their wealth spent within a couple of generations. Even as we speak the two richest men in the world (Gates and Buffett) have plans to disperse all of their wealth within 100 years. If they spend all their billions, who do you think will not?
quote:
you believe "poor are a drain"
(again, I never used the phrase "poor are a drain," that is your phrase)
In the context that the poor in this country take more money from the treasury than they pay in, yes, that is a correct statement. As described above, they contribute to the economic success of our economy and the wealth of nations... but are a drain on the treasury for the purposes of discussing NET taxation. It should be pointed out that this was brought up to illustrate why the poor are not an excuse to withhold support of the National Sales Tax as presented in House Bill 25 draft 1 or Senate Committee draft 1025.
quote:
you believe "the wealthy have been punished"
Again, a phrase I never used. Quotes are to delineate a statement previously made verbatim. Not to reference a concept previously eluded to.
The closest to this statement I made was that many people think the rich should be punished for earning wealth. That is the very essence of a progressive tax system. The more money you make, the higher % of income you surrender on a progressively increasing scale.
Certainly that has to be viewed as a punishment? Are they being rewarded with higher taxes? No, fines and the loss of money are generally viewed as punishment. You assault someone, you run a red light, or you file your taxes late they take money away as a punishment. Loss of wealth is a punishment.
Thus, a progressive tax system punishes the wealthy.
quote:
you believe "it can work".
never made the statement... nor even implied that.
If I were to make a similar statement, it would be that "I believe will work better than the current system." That goes without saying since that was the essence of my post.
quote:
Let's just call it a "Faith-Based Tax", sounds fairer.
I thought we agreed to call it the National Sales Tax as presented in House Bill 25 draft 1 or Senate Committee draft 1025. The tax has nothing to do with "faith." One is not taxed on or receive rebates for ones faith. The tax is of no relation, let alone based on faith. That would be a horrible name.
---
Now shall I make up a bunch of quotes and attribute them to you as your stated beliefs?
quote:
Originally posted by cannon_fodder
First, it should be noted that you did not take issue with a single aspect of the Fair Tax.
Nor will I. The onus is on you. I don't care if you get a tax break. Don't care if I get a tax break. This isn't a "tweek", this is a demolition of the Progressive System for no apparent reason. You have no idea if a "Fair Tax" will work, you have no idea what the effects will be. All you have is a bunch of belief, which is all Faith is. So yes, it is Faith-Based because you don't have a f***ing clue if it will work or what it will do. Don't know what the word "faith" means? Look it up.
The quotes are me summarizing. Rant and cry all you want about it. I don't care.
[}:)]MichaelC, if you weren't so funny you be just pathetic. Thanks for the laughs. You're trying too hard to be a crank...[}:)]
CF: You're just wasting your time. He's just being a wanker for the fun of it.
quote:
Originally posted by MichaelC
Nor will I. The onus is on you. I don't care if you get a tax break. Don't care if I get a tax break.
If you are happy with the current tax system you are in the minority. For every tax dollar sent to Uncle Sam there is 16 cents spent in compliance costs. That's horrible! If we could streamline the system the government could collect and extra $400,000,000,000.00 in taxes without costing employers or individuals any money.
The system is prone to open attacks by lobbyist. It requires an expert to navigate. And its prone to outright abuse because it is so complex the government doesnt really know what is required of taxpayers.
That's a system that works?
AGAIN - the only way that it is defined as WORKING is in that it bring money in. Under that definition
ANY TAX SYSTEM WILL WORK. Sending out soldiers to take property is a tax system that would work.
quote:
This isn't a "tweek", this is a demolition of the Progressive System for no apparent reason.
It is the demolition of our current system BECAUSE IT IS HORRIBLE. For the reasons described above the apparent reason is that it's broken. We would be replacing one progressive tax with another - so all the socialist and everyone else will have their progressive tax system in place.
quote:
You have no idea if a "Fair Tax" will work, you have no idea what the effects will be. All you have is a bunch of belief, which is all Faith is.
[/quote[
Faith is an supported belief. National Sales Tax as presented in House Bill 25 draft 1 or Senate Committee draft 1025 has evidence supporting its usefulness from similar constructs at the state level as well as other nations. Not to mention many noted economists.
This is not an unsupported belief. I'm not asking you believe that there is an invisible man that lives in the cloud and wants you to eat the flesh of his sacrificed son ever 1/52 of the solar year or he will cast you into a pit of fire. I'm asking you to use reason, logic, experience, and economics to try and understand why this would be a change for the better.
quote:
So yes, it is Faith-Based because you don't have a f***ing clue if it will work or what it will do.
Per above, yes, yes we do. Sales tax works very well at the state level in most states. Some to the exclusion of other fund raising methods. Economists believe it will work. As do members of the US Congress.
Perhaps you do not have a fncking clue because you have not studied the proposal and instead refuse to listen to any points on the issue. A fine way to inform yourself and make sound judgments. Clearly you do not WANT to be persuaded and refuse to acknowledge any arguments - since the ostrich has its head in the sand everything must be OK on the surface.
quote:
Don't know what the word "faith" means? Look it up.
As you command:
Main Entry:
1faith Listen to the pronunciation of 1faith
Pronunciation:
\#712;f#257;th\
Function:
noun
Inflected Form(s):
plural faiths Listen to the pronunciation of faiths \#712;f#257;ths, sometimes #712;f#257;thz\
Etymology:
Middle English feith, from Anglo-French feid, fei, from Latin fides; akin to Latin fidere to trust — more at bide
Date:
13th century
1 a: allegiance to duty or a person : loyalty b (1): fidelity to one's promises (2): sincerity of intentions2 a (1): belief and trust in and loyalty to God (2): belief in the traditional doctrines of a religion b (1): firm belief in something for which there is no proof (2): complete trust3: something that is believed especially with strong conviction; especially : a system of religious beliefs <the Protestant faith>
1) It is not a matter of duty or loyalty
2) It is not a trust in god nor religous doctrine
3) nor, as I pointed out above, is it a matter of belief for which there is no proof.
I would say I have a good handle on the definition and it does not apply. I presume you are attempting to argue that it is a matter of the third preferenced definition, but as I stated before: when one choses to ignore evidence he cannot claim evidence does not exist.
Quote
The quotes are me summarizing. Rant and cry all you want about it. I don't care.
If you did not care, you would not have mentioned it. For that matter, I am proud to point out that I did not indeed rant - I merely pointed out the fact of the matter. Also, as a matter of fact, I have yet to shed a single tear over this situation. Though your dedication to ignorance on this matter might be said to drive a man to tears.
quote:
Originally posted by cannon_fodder
If you did not care, you would not have mentioned it.
Care about what? That you haven't gotten over the fact that this tax will never fly, or that you still don't know what it will do? Collecting taxes doesn't matter much, if you demo everything decent about the US in the process.
quote:
Also, as a matter of fact, I have yet to shed a single tear over this situation. Though your dedication to ignorance on this matter might be said to drive a man to tears.
Bring it on you lump of sh!t. You want to start hurling insults be my guest.
[}:)][}:)] Hey MichaelC...How long many more bombs are you going to throw before you lock the thread?
This is just getting better and better.
[}:)][}:)]
quote:
Originally posted by iplaw
[}:)][}:)] Hey MichaelC...How long many more bombs are you going to throw before you lock the thread?
This is just getting better and better.
[}:)][}:)]
Just a few more posts I suppose. CF wants this to be personal, I kind of like it personal. Unfortunately, that gets me in trouble. Always a drawback somewhere.
Boy you're a hateful little man...[}:)]
BTW, what did CF do to make this personal? It's a fricken discussion over taxes for pete's sake.
This must be a first for the Internet. Someone actually getting pissed off over a tax thread. Someone call Guinness I think we have a new world record!
I don't get pissed over taxes. That's why I support the current tax system. [:P]
I remember sitting in my Antitrust class with a proff by the name of Brian Johnson teaching. It was one of the only classes I feel I learned something in during law school.
I remember one day, one of these "Po People" action groups were on campus soliciting help for their organization. They were asking law students with accounting backgrounds to help po people out with their taxes for free.
I'll never forget the look on Johnson's face and what he said to us when the girl who was pleading for our help left the room...
"Helping poor people with their tax returns???what the hell is this! Poor people don't even pay taxes! Damn, that was a waste of class time!"
The "Fair Tax" idea may function properly, and do little to no damage to the US. It may do exactly the opposite, and render the US unrecognizable within a couple years of passage. You won't be able to prove it either way. It takes an assumption, a leap of faith, to say "we'll suffer no damage." The only way to prove the effects of a "Fair Tax", is to have a "Fair Tax", and then watch and learn.
Taxes can be irritating, but they're also a fact of life here. I can't get too riled up about it, I just manage as best as possible and know what the damage will be. I do not spend everything I earn. On April 15th, I'm not broke. A "Fair Tax" system would benefit me. For me, that's not the point.
Since this thread is going downhill fast anyway:
Screw Brian Johnson. His class was fun and I learned a ton, but at the end of the day he gave grades based on how nice your legs were and whether or not you drank beer with him on a golf cart. Not that I did poorly, but seriously.
Of course, all that said, I would have taken any other classes he taught. The man was damn funny and new his stuff. Even if he was a prick and showed up hang over everyday.
Best lines:
"Christ, where I live my neighbors have nothing better to do than sit around and complain about me. Those bastards don't even really work."
- Umm professor, I thought you only worked teaching this class from 10-11:15 on Tuesdays and Thursdays?
"Shouldn't you be reading something?"
&
"For gods sake, I'm the smartest person in this entire university. Of course, that's like being the tallest midget."
quote:
Originally posted by cannon_fodder
Since this thread is going downhill fast anyway:
Bad timing man, bad timing. I'm trying to get this thing back on topic. [;)]
Perhaps the problem is that I do not see the downside. It is set up to be as progressive as the current state of affairs and exempts everyone that is currently exempt from taxes. Perhaps most important to the fed, it will collect the same amount of money.
I'm not trying to be daft, what are the downsides? In what way could it destroy the country?
quote:
Originally posted by MichaelC
The "Fair Tax" idea may function properly, and do little to no damage to the US. It may do exactly the opposite, and render the US unrecognizable within a couple years of passage. You won't be able to prove it either way. It takes an assumption, a leap of faith, to say "we'll suffer no damage." The only way to prove the effects of a "Fair Tax", is to have a "Fair Tax", and then watch and learn.
Pretty much the same thing we had to do with the progressive tax system, watch & learn.
There are some people who have seen enough of it, including myself.
Discovering that I would benefit from the Fair Tax by working some loose math, using liberal spending figures, pretty much means I have a vested interest in it now. I still want to read more and look into the depths of it.
quote:
Originally posted by cannon_fodder
Since this thread is going downhill fast anyway:
Screw Brian Johnson. His class was fun and I learned a ton, but at the end of the day he gave grades based on how nice your legs were and whether or not you drank beer with him on a golf cart. Not that I did poorly, but seriously.
Of course, all that said, I would have taken any other classes he taught. The man was damn funny and new his stuff. Even if he was a prick and showed up hang over everyday.
Best lines:
"Christ, where I live my neighbors have nothing better to do than sit around and complain about me. Those bastards don't even really work."
- Umm professor, I thought you only worked teaching this class from 10-11:15 on Tuesdays and Thursdays?
"Shouldn't you be reading something?"
&
"For gods sake, I'm the smartest person in this entire university. Of course, that's like being the tallest midget."
Oh the memories. Did he ever tell you the story of how he shot through his upstairs bathroom floor while he was doing his business in the bathroom...that one was fantastic.
quote:
Originally posted by cannon_fodder
Perhaps the problem is that I do not see the downside. It is set up to be as progressive as the current state of affairs and exempts everyone that is currently exempt from taxes. Perhaps most important to the fed, it will collect the same amount of money.
I'm not trying to be daft, what are the downsides? In what way could it destroy the country?
First, since you appear to like the talking points and FAQs, let's go right after one of them.
quote:
19 Should the government tax services?
Service providers are not exempt from the income tax today, and should not be exempt from the FairTax. Services now account for well over one-half of the gross domestic product (GDP). Neither consumption of services nor consumption of goods should be tax preferred. And it is economically foolish not to tax the fastest growing segment of our economy. Competition, not politics, should determine what goods and services cost.
Over half of the GDP. Explain how a 30% sales tax has no effect on services. For grins, if you need to reference, let's say "Weber's." You could go straight for Corporate Income Tax elimination, and how it offsets the sales tax. Might add in a little "how eliminating a payroll deduction" would offset it. Those assumptions aside, what are the effects on services if a 30% increase in sales taxes, is not offset by income tax elimination?
Try keeping it short.
Short version:
- It will be off set by elimination of income tax.
- People will still consume services at the same rate.
- Revenue collection will remain the same as a guarantee
--------------------------------
Since such short answers do not really aid in discussion, the long form:
1) I was not reading from talking points, I was addressing your areas of concern. Until now, I have not seen the list of 50 talking points you quoted from:
http://www.fairtax.org/site/PageServer?pagename=about_faq_answers
2) A 30% sales tax will have no effect on services for two primary reasons:
a) the elimination of income tax will free up the capital required to cover the new tax. There is no point in discussing the addition of a national sales tax to the current system, because that is not what I am advocating. Thus, it will be offset by definition of the Fair Tax proposal.
b) services are consumed at a constant rate. A 30% increase in cost across the board will have no effect on the services provided because all alternatives are equally taxed. People will still go to the dentist, rent cranes, hire attorney's and have their carpets cleaned at the same rate they currently do (just like when gas prices go up 25 cents in a week, people still drive).
- - - -
I'm not sure what your side points were concerning, the elimination of income tax and payroll deductions would all be offset by the new national sales tax. By definition it will be required to collect the same level of revenue. So any discussion of what effect not offsetting those would have is moot. BY DEFINITION, the income tax will be eliminated and totally offset by the national sales tax.
and that is short, considering many doctoral papers in economics and entire books have been written on this subject.
-------
And finally, I have never attacked you personally. I stated that you were trying to remain ignorant on the topic and describe such as sticking your head in the sand - by your own statements this was an accurate portrayal. However, it appears that you have decided to at least peruse some of the issues it involves, and I thank you for that.
Am I to understand that your true dislike of the FairTax stems from a simple desire to avoid change? It seems the common thread in your quips, that you don't want a new system because without regard to the current systems flaws it doesn't bother you. That is my current understanding. If you oppose it for some other reason let me know - proposing 'short answers' to economics questions whose answer is outlined in the very document you quote:
quote:
The short answer is that there is no provision in the FairTax bill (HR 25) that would prevent having a national sales tax and the income tax.
; is not exactly clarifying your opposition.
[edit]if you do not recognize the flaws in the currents system as shown above, do not care about efficiency, or simply dont care at all just state so and I can talk to someone who does. If there is something you dont understand - if you dont know WHY I think it is a better system or want to convince me it is flawed, let me know. It appears you are sniping at the idea from any direction that is convenient without actually stating your opposition.[/edit]
I'm still reading up on it, but a few things popped into my head on this:
It would take a huge burden off the self-employed and sole proprietorships with tax compliance and social security taxes. There are lots of self-employed people who lack the discipline or cash flow to properly portion out and save their taxes. They wind up scratching their donkey when it's time to pay quarterlies or the big day of reckoning every April.
When I had my own business, I was paying about $3K per year for outside accounting services to audit my books and tell me what I owed in taxes because it was so friggin' frustrating to figure out and took time away from being able to make money.
Another advantage I'm seeing for the good of the workforce is getting rid of the portion of payroll taxes that employers must contribute now which is a part of overhead. New jobs could be created and funded by savings on payroll taxes. The cost of payroll taxes is one dis-incentive for smaller companies to hire new people.
I like the fact that all spending is pre-tax and is discretionary. I like that housing costs would now be pre-tax, as well as savings.
CF- let me make sure I read this correctly from the FT site-
"Service providers are not exempt from the income tax today, and should not be exempt from the FairTax. Services now account for well over one-half of the gross domestic product (GDP). Neither consumption of services nor consumption of goods should be tax preferred. And it is economically foolish not to tax the fastest growing segment of our economy. Competition, not politics, should determine what goods and services cost."
Services would be taxed, yes? IOW, I would pay sales tax on say, a haircut. My barber no longer has to sweat all the tax issues other than keeping track of his sales, reporting the sales, and remitting the taxes, yes?
You answered it as expected. You didn't answer my question.
quote:
Originally posted by cannon_fodder
Short version:
- It will be off set by elimination of income tax.
That's an assumption, pushed by those who are pro "fair tax". My question had nothing to do with the how the "end product" would or would not equal the amount of current income taxes. Let's put it another way.
You're going to remove a certain amount, 23% is their number, from the economy. That number is substantially more than a large number of people currently pay into the system through payroll deductions. The assumption being made is that "the price of goods and services" will stay the same because the difference between Sales vs Payroll will be offset by Sales vs Corporate Tax elimination. In other words, while the price of goods on the consumer end goes up, and while a large number of people would have less money day to day, there would be a reduction on the corporate end that would cover the complete sales tax.
My question is what if it doesn't? After all the numbers change, what if prices don't stay relatively (Income vs Cost) the same?
Also:
quote:
Am I to understand that your true dislike of the FairTax stems from a simple desire to avoid change? It seems the common thread in your quips, that you don't want a new system because without regard to the current systems flaws it doesn't bother you. That is my current understanding. If you oppose it for some other reason let me know - proposing 'short answers' to economics questions whose answer is outlined in the very document you quote:
How about not characterizing my opposition? How does that sound? Either you can answer the questions, or you can't.
I think what MichaelC is trying to say is that the devil he knows is better than the devil he doesn't know..... not that I am trying to put words in his mouth.
quote:
Originally posted by MichaelC
You're going to remove a certain amount, 23% is their number, from the economy. That number is substantially more than a large number of people currently pay into the system through payroll deductions.
Not true. Lowest segment of the working class (other than entry level minimum wage jobs) pays just over 22.5%. Hardly a substantial difference.
From irs.gov:
"The new law extended the 10 percent rate to cover the first $7,000 of taxable income for single persons, $14,000 for married couples. It also lowered the tax rates above 15 percent to 25, 28, 33 and 35 percent. This is a drop of two percentage points for each rate except the top one, which went down 3.6 points.
The new law also raised the standard deduction for married couples to $9,500 and extended their 15 percent tax rate to $56,800 of taxable income. Each figure is double the number for single taxpayers. The changes reduce the "marriage penalty" – the difference between the tax couples pay and the amount they would have paid as two single persons."
Add 6.2% for social security, 1.45% FICA (employee share) to 15% and it comes to 22.65%.
The primary group of people who are paying less are illegal aliens who claim 9 exemptions on their W-4, even when they are single, and they don't settle up at the end of the year.
quote:
Originally posted by Conan71
Not true.
Link please.
In my defense, your question was vague. I answered to the best of my abilities.
quote:
Explain how a 30% sales tax has no effect on services[?]
That is what I did. As well as attempting to answer your additional questions of the effects of a parallel income tax and other snippets implied.
My answer WAS NOT an assumption. If you take away the tax when you EARN the money and substitute a tax when you spend the money - the result is the same. To ensure that the tax is progressive the rebate refunds a certain amount of money - ensuring many poor pay no taxes. Instead of an assumption, it is a reasoned economic fact.
Your state assumption is wrong.
quote:
The assumption being made is that "the price of goods and services" will stay the same because the difference between Sales vs Payroll will be offset by Sales vs Corporate Tax elimination. In other words, while the price of goods on the consumer end goes up, and while a large number of people would have less money day to day, there would be a reduction on the corporate end that would cover the complete sales tax.
The price of goods on the consumer end is expected to go DOWN in the long run. Corporations will save more than 30% under the new scheme because there will be the elimination of the corporate income tax AS WELL as associated compliance costs. The price of goods on a gross basis will certainly go down and it is expected that in the long run the price will go down even considering the net tax effect.
Most people would have MORE money day to day as the government will not be taking you're money before it is due (ie. withholding). For those that do not have any withholding currently they will STILL come out ahead thanks to the prebate - which is paid at the START of the month.
so:
Cost of Goods Down, Money in Peoples Pockets UP. The economic data supports the opposite of your conclusions. I take it you just skimmed the website to find things to snipe at without reading the information?
quote:
My question is what if it doesn't? After all the numbers change, what if prices don't stay relatively (Income vs Cost) the same?
At any one moment, economics is a zero sum game. There is only a certain amount of money in the economy at any time. Other the long run, wealth can be generated or lost. Every indication is that the elimination of an income tax will allow the economy to generate wealth FASTER than its current levels. The net cost of goods is not supposed to stay the same, it is anticipated it will go down.
If it doesn't, the system will have to be tweaked. If for some reason competition does not lower prices at the realization of tax savings and prices rise and no new market competitors enter to under cut the field, then government will have a glut of tax revenue and the tax rate would be cut. If prices do not fall, the 30% tax rate would exceed needed revenues. The rate would be cut until the excess was reduced - lowering the net cost of goods.
quote:
How about not characterizing my opposition? How does that sound?
Like my conversation with IP over abortion, I feel the need to characterize your position. If a party in debate will not characterize their own position, one must define the argument so as to proceed. Otherwise, a party will raise point after point with no pattern or purpose other than with an intent to frustrate the one with a stated position. That serves no logical purpose as it does not foster the debate nor advance either parties understanding of the issue.
Therefor, not characterizing your position does not sound good to me. I would be happy to abstain if you would clearly state the basis for your opposition so that I might better understand it. My views are not set, it is possible that I have not thought of something that would be detrimental to implementation of the fairtax or that you have an underlying belief that would prohibit you from ever accepting the FairTax (ie. religous belief in abortion debate).
quote:
Either you can answer the questions, or you can't.
I can, and I have.
quote:
Originally posted by cannon_fodder
Your state assumption is wrong.
quote:
The assumption being made is that "the price of goods and services" will stay the same because the difference between Sales vs Payroll will be offset by Sales vs Corporate Tax elimination. In other words, while the price of goods on the consumer end goes up, and while a large number of people would have less money day to day, there would be a reduction on the corporate end that would cover the complete sales tax.
The price of goods on the consumer end is expected to go DOWN in the long run.
I granted that. Read it again.
I'll give you a third chance to answer my question.
This is going nowhere. No matter what you put in your response, he's just going to say you haven't answered his question...it's like Groundhog Day.
Your question:
quote:
My question is what if it doesn't? After all the numbers change, what if prices don't stay relatively (Income vs Cost) the same?
My answer:
quote:
If [the cost of goods does not fall], the system will have to be tweaked. If for some reason competition does not lower prices at the realization of tax savings and prices rise and no new market competitors enter to under cut the field, then government will have a glut of tax revenue and the tax rate would be cut. If prices do not fall, the 30% tax rate would exceed needed revenues. The rate would be cut until the excess was reduced - lowering the net cost of goods.
SUPER SHORT ANSWER:
If price stay high, tax get cut.
How did that fail to provide an answer to the question you posed less than 30 minutes prior? What happens if prices end up going higher - the government gets more tax revenue since its all based on sales. With more revenue than it anticipated it can cut the tax rate, which would result in exponentially lower prices (industry cost to make the goods goes down, consumer added cost to buy the goods goes down).
That simplified answer even IGNORES the the implication of a higher net income. Since withholding will no longer be an issue realized earnings will automatically go up, causing the actual relative cost to be less than the stated net cost. We don't need to worry about such complexities to answer the "what if" question.
What if we do not change anything and the tax code continues to grow more complicated every year and compliance costs continue to grow as a percent of GDP and special interest gain more loopholes? (of course, that question is more of a WHAT WHEN than an IF question, since it has happened every year since the end of WWII)
Comfort with something bad is a poor excuse to oppose something new.
quote:
Originally posted by MichaelC
quote:
Originally posted by Conan71
Not true.
Link please.
http://www.irs.gov/newsroom/article/0,,id=109817,00.html
Here's the '07 tax table to see what the difference would be on this year's earnings when filing next year:
http://www.irs.gov/formspubs/article/0,,id=164272,00.html
Keep in mind, the actual net tax rate at the 15% federal tax level (families earning betw. $15K and $77K) actually works out to just over 30%, taking into account employer contribution for FICA and SSI.
Most employees don't think about the 7.65% payroll tax their employers contribute since it does not show up on their pay stub. Essentially, this is money which could otherwise be paid as direct compensation to the employee, instead of paying hidden taxes on their behalf, if a company so chooses.
If you are self-employed, the SE tax paid by the individual is 15.3% up to $94K on top of their federal tax rate.
quote:
Originally posted by cannon_fodder
Comfort with something bad is a poor excuse to oppose something new.
Agreed. Shall we move on now?
quote:
SUPER SHORT ANSWER:
If price stay high, tax get cut.
Interesting. If the sales tax + cost versus income, is greater than the relative rate of Cost vs Income: the assumed perfect rate (30% sales tax to cover the Income Tax) gets cut. What happens next?
quote:
Originally posted by Chicken Little
The rich can afford to pay more for things. They don't need us to subsidize them.
Pretty much O/T,
This is an interesting dichotomy: The U.S. is one of the wealthiest nations. We pay more for prescription meds than other countries. Why? we help subsidize lower priced meds for poorer nations. Yet Dems are all about lowering drug costs.
Just interesting when we are talking about where we are willing to give and take on subsidizing others.
quote:
Originally posted by MichaelC
If the sales tax + cost versus income, is greater than the relative rate of Cost vs Income: the assumed perfect rate (30% sales tax to cover the Income Tax) gets cut. What happens next?
if ((Sales Tax + Cost)/Income) > ((rate*Cost)/Income), then what?
revised:
Net Cost/Income > rate of change in cost/income
Revised:
Net Cost > Rate of change in cost.
No idea what you are even asking. I tried to formulate it into some manner of sense, but it remains very unclear.
Tax + Cost = Net Cost
Both sides are "versus income" - so that would cancel out of the equation.
So it seems to reduce to "if gross cost > Rate of change of cost, then what?" But you can not compare the gross cost to the rate, it would be a % v. a real number and be > every time. It doesnt make sense.
Perhaps you misunderstood something. Previously, you ask what happens if prices stay high. To which, I replied high prices will result in greater tax collections. Greater tax collections would allow the tax rate to decrease and still result in the same funding. A lower sales tax would reduce the net cost of goods.
This relationship has nothing to do with income. The federal government does not look at peoples income before setting their revenue goals. They look at how much money they will need an set rates accordingly. If they collect excesses of money, they should cut the tax rate to match their budgeted receipts.
I am convinced you have no interest in this topic and only wish to waste my time.
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I am convinced you have no interest in this topic and only wish to waste my time.
ding ding ding... we have a winner.
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Originally posted by Conan71
http://www.irs.gov/newsroom/article/0,,id=109817,00.html
Thanks. Barring a certifiable miracle, I'll have to get back to you on this one.
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Originally posted by cannon_fodder
This relationship has nothing to do with income.
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That simplified answer even IGNORES the the implication of a higher net income.
Of course the relationship has to do with income. You're asserting that net income will be higher under a sales tax. I grant that. It will absolutely relate to GDP, which is where I began. You can look at it as a mathmatical equation, but Income X is not equal to Income Y. By default.
So...
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SUPER SHORT ANSWER:
If price stay high, tax get cut.
If the sales tax + cost versus income, is greater than the relative rate of Cost vs Income: the assumed perfect rate (30% sales tax to cover the Income Tax) gets cut. What happens next?
You seem to be confusing the major premise on which you argue. You asked what happens if prices do not fall - I answered VERY VERY VERY VERY clearly. If you dont understand the answer, I can draw a picture.
Now you are changing the subject to what real income will be, fine. But you need to signify your change in direction. Jumping from one argument to another without any direction is pointless, confusing, and will certainly not yield a meaningful result. No one would be expected to understand what you were trying to say.
SO... I assume you are not attempting to inquire as to the effects on real income if prices remained high.
Again, the question I am answering is:
What is the effect on real income if prices remain high and the tax rate is cut?When the tax rate is cut real income will go up, as it always does when taxes are cut. More money in pocket = real income up. When money in pocket goes up AND cost of goods goes down, as would result in the scenario you invented, real income goes up exponentially.
The previous explanation did not require an analysis of INCOME because the question was about what happens to PRICE. Price is not correlative to INCOME. If you actually read this, let me know. Price is correlative to cost of goods sold and demand, in our scenario it must be considered as the net of taxes. There is NO, none, zero inclusion of income in setting a price. One more time, INCOME HAS NOTHING TO DO WITH PRICE.
I figure I'll just type things three times in a single post instead of having to repeat myself in additional posts.
Now we are talking about income and the effect of taxes on real income. Real income is effected by the purchasing power of money in pocket. So either purchasing power or money in pocket can change. Purchasing power is directly related to real income - if you can purchase more your income went up. Money in pocket is also directly related to real income - if you have more money in your pocket it can go up.
Income taxes are negatively correlated to money in pocket. Sales taxes have no effect on money in pocket.
Income taxes do not directly effect purchasing power. Sales taxes are negatively correlated to purchasing power (net cost of goods rises).
So if an income tax is replaced with a sales tax money in pocket goes up and purchasing power of that money goes down. If the tax system is realizing the same income, the actual effect on purchasing power of a dollar is NET zero. However, when you factor in efficiencies in the system the net effect is a gain in purchasing power.
Short Answer:
Tax go down, real income go up.Perhaps that does not answer:
quote:
If the sales tax + cost versus income, is greater than the relative rate of Cost vs Income: the assumed perfect rate (30% sales tax to cover the Income Tax) gets cut.
which mistakenly assumes a "perfect rate" and states an illogical equation. But it is the closet to coherency I could make of the statement. You can paste the same thing 9 or 10 more times if you like - it will still be meaningless.
If you continue to fail to raise any substance my answers are likely to cease being meaningful. Not that you read them anyway, or that you care.
I am even more convinced you have no interest in this topic and only wish to waste my time.
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Originally posted by cannon_fodder
Short Answer:
Tax go down, real income go up.
That's an answer. Please continue, moving now into revenues. Given that a 30% sales tax replaces the "Progressive Tax" What are the effects of a sales tax rate cut on US tax revenues? For drama, let's assume it's cut down to a rate of 1%.
Your answers are leading me in a direction, we'll get there when we get there.
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Given that a 30% sales tax replaces the "Progressive Tax" What are the effects of a sales tax rate cut on US tax revenues?
Short Answer:
Tax Rev. stay same.You're welcome to just make you're point instead of wasting my time. I assume you are going to try to make a brilliant point by taking my forced over simplifications out of context or inserting another ridiculous hypothetical.
I'd also like to point out that my previous post had buried within in it the line:
quote:
If you actually read this, let me know.
Clearly, you are not even interested in the Fair Tax and just want to waste my time. You have shown nothing, done nothing, and proven nothing. You have wasted your time, mine and anyone who has read this. I grow bored of your antics, if you wish to have a serious discussion I would be happy to. If you want to continue discussing things on the basis of incomplete sentences - you will have to find someone else to play with. I chose not to reduce myself any longer to that level.
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Originally posted by cannon_fodder
Short Answer:
Tax Rev. stay same.
No matter what the sales tax rate, sales tax revenue in comparison to income tax revenue stays the same. Correct?
Incorrect.
It's like a drug. I suppose its because I'm killing the rest of Friday while I wait for a phone call. I'd explain more, but you dont even read posts and dont care anyway, so why bother.
But your statement is false.
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Originally posted by cannon_fodder
Incorrect.
Yeah. Probably incorrect. So, back to the question.
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Given that a 30% sales tax replaces the "Progressive Tax" What are the effects of a sales tax rate cut on US tax revenues?
We could probably assume that a higher tax rate would produce higher revenues, and lower tax rate would produce lower revenues. Barring some strange event: A 1% sales tax should produce less revenue than a 30% sales tax. And there may be a "bell curve" (I'm not saying it would ever get there) where at some point the sales tax would become so high that it would produce less revenue. Example: a 400% tax rate may produce less than a 370% rate. Is it reasonable to conclude that barring extremely high taxation, a higher sales tax rate means higher revenues?
This discussion has no bearing whatsoever on the Fair Tax. The FairTax is designed to have the SAME LEVEL of taxation as the current system. The SAME AMOUNT of revenue will be brought in. THUS, any discussion of diminishing returns of taxation without exterior influences is equally applicable to either an income tax or a sales tax and is moot.
Not to mention that is is a topic that could prompt another thesis and more debate. Higher taxes not only slow the economy but lead to black markets and give greater incentives to avoid taxes - income or sales. Hey, lets try this again, let me know if you read this. Higher taxes usually bring in more money until the populace decides it is not worth complying. Again, not effected by the TYPE of tax collected. From a demand on % of produce to an income tax.
Just state your point, I'm not wasting anymore time with you... its supposed to be too nice out this weekend. State your point and I will happily read it.
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Originally posted by cannon_fodder
This discussion has no bearing whatsoever on the Fair Tax. The FairTax is designed to have the SAME LEVEL of taxation as the current system. The SAME AMOUNT of revenue will be brought in. THUS, any discussion of diminishing returns of taxation without exterior influences is equally applicable to either an income tax or a sales tax and is moot.
I'll simplify it for you.
Excluding the concept of diminishing returns, a 31% sales tax should yield more in tax revenue than 29% sales tax. Correct?
I'll simplify it for you, state your point. You have taken 3 pages and have yet to make a point. I grow bored of your ceaseless banter, hypotheticals, back tracking, and clumsy direction.
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Originally posted by cannon_fodder
I'll simplify it for you, state your point. You have taken 3 pages and have yet to make a point. I grow bored of your ceaseless banter, hypotheticals, back tracking, and clumsy direction.
Grow bored then. And please answer the following question:
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Excluding the concept of diminishing returns, a 31% sales tax should yield more in tax revenue than 29% sales tax. Correct?
Excluding the law of gravity, an object in motion at a right angle to the Earth's surface will remain at that trajectory until impacting another object.
For god's sake, state your point. You've had 4 days and have yet to make a point. The suspense is killing me.
Don't hold your breath, he's just yanking your chain for the sake of yanking your chain.
I guess that's that.
Conan, you're up.
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Originally posted by Conan71
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Originally posted by MichaelC
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Originally posted by Conan71
Not true.
Link please.
http://www.irs.gov/newsroom/article/0,,id=109817,00.html
Here's the '07 tax table to see what the difference would be on this year's earnings when filing next year:
http://www.irs.gov/formspubs/article/0,,id=164272,00.html
Keep in mind, the actual net tax rate at the 15% federal tax level (families earning betw. $15K and $77K) actually works out to just over 30%, taking into account employer contribution for FICA and SSI.
Assuming that's true (since I can never tell for sure what the IRS is trying to say), the only people that would pay at those rates, would be dependents. Everything else is adjustable. If you want the IRS to take that amount, you can do that by claiming Zero deductions on the W-4. Most people claim at least one deduction, a large number of people even if single with no dependents, can claim themselves twice. With one or two, that drastically reduces payroll deductions on the individual.
On the SE tax, let's just say I'm fully aware of it.
If only you could ask for a refund, eh CF....
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Originally posted by iplaw
If only you could ask for a refund, eh CF....
If there's no baseline for agreement on what is real and what is not, then there's really nothing to talk about. I certainly could come at it from a different angle, but I'm really not looking for "The Fair Tax is 'Fair' because it has the word 'Fair' in it".
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Originally posted by MichaelC
I guess that's that.
Conan, you're up.
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Originally posted by Conan71
quote:
Originally posted by MichaelC
quote:
Originally posted by Conan71
Not true.
Link please.
http://www.irs.gov/newsroom/article/0,,id=109817,00.html
Here's the '07 tax table to see what the difference would be on this year's earnings when filing next year:
http://www.irs.gov/formspubs/article/0,,id=164272,00.html
Keep in mind, the actual net tax rate at the 15% federal tax level (families earning betw. $15K and $77K) actually works out to just over 30%, taking into account employer contribution for FICA and SSI.
Assuming that's true (since I can never tell for sure what the IRS is trying to say), the only people that would pay at those rates, would be dependents. Everything else is adjustable. If you want the IRS to take that amount, you can do that by claiming Zero deductions on the W-4. Most people claim at least one deduction, a large number of people even if single with no dependents, can claim themselves twice. With one or two, that drastically reduces payroll deductions on the individual.
On the SE tax, let's just say I'm fully aware of it.
I'm not sure I'm catching what you are saying with "the only people that would pay at those rates, would be dependents". Please explain.
Personally, my witholding works out to where I wind up owing a small amount to the gov't or I wind up giving them a very small, interest-free short-term loan. [;)]
Regardless of the number of exemptions on the W-4, the FICA and SS taxes remain constant and aren't reduceable when you file your 1040.
I'm Assuming from your comments you are self-employed, and I would assume your income tax range is 15% or higher. So your net taxation winds up being 30+%, and you have all the compliance issues and new things to decipher in the tax code every year. Sounds as if a Fair Tax would be in your favor, as well as millions of others.
Here's another reality which I've seen more than once is single "guest" workers claiming nine exemptions on their W-4. There is nothing to prevent them from doing it, and I seriously doubt they wind up settling up on April 15. The gov't still get's their full share of SS and FICA from them, but they get shorted big-time on the Fed. income tax.
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Originally posted by MichaelC
If there's no baseline for agreement on what is real and what is not, then there's really nothing to talk about. I certainly could come at it from a different angle, but I'm really not looking for "The Fair Tax is 'Fair' because it has the word 'Fair' in it".
And I never made that argument. I don't think anyone has. I even agreed to call it a ridiculously long name just to avoid that claim, but YOU kept calling it the Fair Tax.
I explained in great detail my position on the matter and answered many of your questions, to no avail. You simply restated and reissued your questions whenever I answered them in a way that you did not like. So don't pretend that I am the one avoiding discussion. Discussion is a two way street, you haven't discussed anything - only attempted to quell the opposition.
I even ask what your main opposition was so that I might be able to enlighten you or, conversely, that you might be able to enlighten me. You chose not to take me up on the offer and instead to continue maneuvering to make some grand "I got you" point.
Then you come back and imply that I failed to present an argument.
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Originally posted by Conan71
I'm not sure I'm catching what you are saying with "the only people that would pay at those rates, would be dependents". Please explain.
It's a base rate. If that is what we're assuming it is, claiming zero on the W-4 would get the listed amount deducted from payroll. I'm not sure if I explained enough there.
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Personally, my witholding works out to where I wind up owing a small amount to the gov't or I wind up giving them a very small, interest-free short-term loan. [;)]
That's the same with me, if I'm employed by another company. I give as little as possible, and expect very little refund or payment due on April 15th.
quote:
Here's another reality which I've seen more than once is single "guest" workers claiming nine exemptions on their W-4. There is nothing to prevent them from doing it, and I seriously doubt they wind up settling up on April 15. The gov't still get's their full share of SS and FICA from them, but they get shorted big-time on the Fed. income tax.
I understand that. But a lot of that depends on income level too. For example, if you are single and claim 2 W-4 deductions at 20K a year, you've maxed out your deductions pretty much. It won't go much lower with 3 or 4 or a greater number. The only way to rob the IRS beyond 2 W-4 deductions at that income level, would be to falsify a 1040, which we're assuming illegals won't even bother with.
quote:
Originally posted by MichaelC
quote:
Originally posted by Conan71
I'm not sure I'm catching what you are saying with "the only people that would pay at those rates, would be dependents". Please explain.
It's a base rate. If that is what we're assuming it is, claiming zero on the W-4 would get the listed amount deducted from payroll. I'm not sure if I explained enough there.
IOW- base rate, assuming no dependents. Basically the people who like to use the IRS as a savings account.
My bonuses are payable quarterly, rather than to have them taxed at a higher rate if they are paid as a lump sum, I have them spread out over the next 12 weeks along with my base. It would all wash out the same at the end of the year, but I have a problem giving interest-free loans.
The Fair Tax sounds like a good deal to me, but I don't want to base my enthusiasm soley on what I've heard a handful of Congressmen and a few comments on Boortz' show. I think I'll buy the book and learn some more on it, or if I have time spend more time on the web site.
So after my argument with the IRS I requested a letter of explanation (they claimed I was out of compliance but would not tell me where over the phone). They sent me the ENTIRE regulation guide for employment taxes as their letter of explanation.
IRS - "You're wrong."
Me - I thought we complied. Where were we wrong?
IRS - "We wont tell you where, and we will waive the fine, but you were wrong somewhere."
Me - If I was wrong, I want to make sure this doesnt happen again, where was I wrong.
IRS - "Somewhere."
Gee thanks. It's damn near impossible to comply when I'm trying as hard as I can to give them their frikken money. When you have to pay someone to figure out how to pay someone - the system is screwed.
About the same experience I had this year as far as no help. I tried to e-file. It was rejected due to a dependent's last name not matching the SSN. We claimed one of my daughters (yes, I had the proper paperwork from my ex) and my step-daughter who is living with us while going to school.
They wouldn't tell us which one was wrong. I double checked the socials went ahead, printed my return and filed it. I got a letter a couple of weeks ago stating the same thing about incorrect SSN, wouldn't say which dependent, and they very thoughtfully re-calculated my taxes for me- about an $1800 difference in their favor.
Turned out my ex was off three digits on my daughter's SSN. Called the IRS and they corrected it. It would have made it a little simpler if they would have just said in the first place which dependent didn't match up.
Pretty much they can't tell you where you effed up, just that you did and you have to figure it out on your own.
lol Conan, dont get me started on SSA. They got my Son's card wrong at birth and my wife's card wrong since we have been married.
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Originally posted by cannon_fodder
lol Conan, dont get me started on SSA. They got my Son's card wrong at birth and my wife's card wrong since we have been married.
Amazing though, certain immigrants can get a new card overnight. [;)]