Posted on 04/23/2004 4:39:23 AM PDT by Remember_Salamis
What about all that "apples to apples" stuff?
Common bases remember?
ancient_geeser #114: "To be able to add or substract or compare between the two measures you have to first convert them to the same base."
Because this discussion wasn't about how much prices would drop. It was about whether or not using the inclusive sales tax rate was nessesary to make a comparision to the income tax.
Fine, I accept your calculation as being valid for the conditions you want to specify
NRSTrate = (($77,500 * 80%) * 29.87%) - $4,646 / $104,626 = 13.26% saving the rest for a idillic and pastoral retirement
Compared with the income/payroll tax system lowest rate results:
ITrate = ITnet/GrossIncome = $35,270/$100,000 = 35.27% and government get to decide who gets that idillic and pastoral retirement on your nickel.
And let folks decide which they prefer on your calculations.
But you didn't show me the equation with the tax inclusive rate.
Sure I did, you just didn't want to accept the result I gave without your followup editorializing
Save max:
NRSTrate = 100*((0.23*$77,500)-$4,646) / $104,626 = 12.59%
With implicit price reduction=NRST tax inclusive rate,(i.e. 23%), a good midrange value greater than 20% but less than the maximum of 25% closely refecting the expected price declines consistant Dr. Dale Jorgenson studies.
Dale. Jorgenson, Replacing the Federal Income Tax, The Economic Impact of Taxing Consumption: Hearings Before the House Committee on Ways and Means (Vol. II), 104th Cong., 2d Sess., (statement of Dale Jorgenson, Ph.D., Chairman Harvard University, Department of Economics on March 27, 1996, at p. 105) (reprinted in Joint Economic Committee, Roundtable Discussion on Tax Reform and Economic Growth, 104th Cong., 1st Sess. 1996 at. p. 79).
There still is no reason to use the tax inclusive sales tax rate except to confuse people.
So you would have all believe, though the essential reason is obvious:
Under the NRST with FCA, one pays less than 23% of personal consumption in tax vs the average of greater than 23% of gross income of the income/payroll tax.
The NRST will be no worse than the current system in tax burden laid upon the individual family.
Which is a true and modest comparison between the two systems without hyping one way or the other.
But since I accept your calculation as being valid for the conditions you want to specify
NRSTrate = (($77,500 * 80%) * 29.87%) - $4,646 / $104,626 = 13.26% saving the rest for a idillic and pastoral retirement
Compared with the income/payroll tax system lowest rate results:
ITrate = ITnet/GrossIncome = $35,270/$100,000 = 35.27% and government get to decide who gets that idillic and pastoral retirement on your nickel.
I'll let folks decide which they prefer on the basis of your calculations.
Anyway, back on topic, it seems you weren't able to show me a comparison
This sure looks like "a comparison" to me, generated by me based on a midrange value between (20-25%) in price decline to be expected on a fixed basket of goods an services.
Save max:
NRSTrate = 100*((0.23*$77,500)-$4,646) / $104,626 = 12.59%
Or spend max and no saving
NRSTrate = NRSTnet/GrossIncome = $18,794.68/$104,646 = 17.96%
Or anything inbetween max invest and minmum possible spending to max spending and no saving and investment as the individual citizen may choose.
Or limit individual liberty to make such choices, because government has already limited your options for you:
ITrate = ITnet/GrossIncome = $35,270/$100,000 = 35.27%
between my income tax rate and the tax inclusive sales tax rate after all.
Or use yours as well, will I will forever enshrine, after cleaning up the format abit, thank you:
NRSTrate = (($77,500 * 80%) * 29.87%) - $4,646 / $104,626 = 13.26% saving the rest for a idillic and pastoral retirement
Compared with the income/payroll tax system lowest rate results:
ITrate = ITnet/GrossIncome = $35,270/$100,000 = 35.27% and government get to decide who gets that idillic and pastoral retirement on your nickel.
And let folks decide which they prefer on the basis of your calculations.
Where the real kicker is
All three calculated NRST tax inclusive effective rates are less than even just your
Your Nightmare: My effective tax rate (income tax + FICA) on my income is 19.77%
which does not account for hidden or embedded taxation in your purchases at all,
Nevertheless is greater than any of the three computation addressed:
Spend same $77,500 Save max $27,146:
NRSTrate = 100*((0.23*$77,500)-$4,646) / $104,626 = 12.59%
Your calculation, with intermediate spending $80.5K and saving $24.1K:
NRSTrate = (($77,500 * 80%) * 29.87%) - $4,646 / $104,626 = 13.26% saving the rest for a idillic and pastoral retirement
Or spend max $101,9K and no saving $0
NRSTrate = NRSTnet/GrossIncome = $18,794.68/$104,646 = 17.96%
Which, confirms the NRST proponents stand perfectly:
Under the NRST with FCA, one pays less than 23% of personal consumption in taxes vs the average of greater than 23% of gross income of the income/payroll tax.
The NRST will be no worse than the current system in tax burden laid upon the individual family.
All stated simply, truthfully, without hype and without recourse to the mathmatics, but does retain the sense of what the NRST is about, replacing the income/payroll tax system with the NRST.
But we could go on like this for days.
Sure can, but that's ok, just means more folks read the thread and get a whack at deciding what the NRST is about.
Thanks for the opportunity to walk through the NRST vs Family Income+FICA Tax calculation. It will provides the essential basis for comparing NRST impact as defined by aribitrary parameters.
Each new discussion provides yet another tool in the arsenal ;O)
Now that we have compared the NRST in terms of the Income/Payroll tax system;
Let us proceed with your analysis comparing the NRST 29.87% tax exclusive rate adjusted by FCA, and the Income/Paroll Tax(IPT) system converting it into tax exclusive terms.
Your go, and I poke holes in your analysis.
I give you the same parameters:
Recall that consumer prices that you pay out of your consumption spending contain a 20-25% corporate income/payroll tax related burden within them as well. Have you included that burden in your calculation of your "effective tax rate"?
Include them, I don't care. My effective tax rate (income tax + FICA) on my income is 19.77% Compare that to 23% sales tax and show my the computations to make the comparison. Assume family of three (husband, wife, and child) making $100,000, current consumption is $77,500.
Compare total effective taxes paid under IPT described above, with 23% NRST converting effective tax rates for equivalence in "Sales Tax" terms which you assure us that everyone so much more familiar with.
Please include all intermediate steps in you analyis for review. Just as I have for you.
Calculate and compare the total effective tax-exclusive IPT rate on the nominal tax free consumption price base, with the NRST total effective tax-exlusive rates
1) for maximum spending,
2)same dollars spent(max savings case) and
3) your equal goods and services case.
I await your math and results for critique and inspection.
No. That is the federal sales tax they would pay. This would be an increase in their expenditures.
Wrong, they pay 20-25% today embedded in the goods and services that local and state goverments purchase. That tax burden is repealed under the NRST.
since one must note those burdens are implicit in the prices those state & local governments pay for consumption now, and thus are embedded in the taxes you pay them today.
I thought the idea was to get rid of hidden taxes.
Sounds good, now change state tax law to do that, make the entire system one comprehensive retail sales tax system based on the NRST proposal, All taxes would become visible in one comprehensive composite tax with line items for each level of govenment, (NRST+State+ City+County) by those who pay them, the citizen.
Sounds good to me, but the first step is to get the federal system on line, by which the tax base is defined.
What? The taxes will be embedded in the sales, income, property, etc. taxes we pay our state and local governments.
If you pay em, you see them do you not? Visibility by the citizen of the bottom line he pays his government. However, NRST conformant tax system across the board would tax clean up the multiple tax situation nicely providing one place to look, hit on the grocery ticket.
With the NRST, the federal government will be taxing us ~$300 billion through the states. How is that making things more visible?
State an local taxes are paid by the individual citizen that's who needs to see them afterall.
While you're at it, don't have the federal government charge itself a sales tax. That's just phoney.
So is the Budget Enforcement Act and its static analysis revenue neutrality requirement. Get rid of that and the whole tax the government issue goes away. That is if you can get passed the liberal filibuster to kill that law. Its their source for their favorite "pay for that tax cut" game.
There will be no replacement of the income or payroll taxes, by any tax system without answering to that hurdle.
I prefer to tackle one hurdle at a time myself. Wholesale change of the method of taxation is more than enough bite without adding a million others on top of it.
I came to a common base using the tax exclusive rate, consistent income, and consistent consumption.
And I incorporated you computation for a final analysis in the tax inclusive base for comparison with the others. All rates were expressed for comparison purposes as a percent of gross = taxpaid/grossincome which is what a tax inclusive base is.
In none of your calculations did you keep consumption consistent.
So? You did, I compared it with the others for completeness.
How can you compare an income tax vs. a consumption tax if one of those factors is changing?
Simple calculate amounts just as I did, last step convert to the rate system required using proper divisor.
Use the range of value the variable factor may assume and build a table of max , min, and typical expected value.
So go for it. You are the one who says people can compare everything in sales tax terms, that everyone relates to.
I want to see your comparison and work providing the answers in a sales tax, tax exclusive base. Make the base = nominal taxfree price basis
100* total_taxes_paid / nominal_base_price in the three scenario's requested will be sufficient.
No B.S.--what are the odds of this thing passing Congress? Do you really think it will be adopted?
If the American people want it, and push for it. It can happen.
The fair tax has been in the works since 1996, its first introduction to Congress I believe was in that same year. Since then AFFT, its authors & primary promoters, & other tax reform groups have picked up the banner and have been advocating it ever since, with popular support measured in contributors to these organization there are nearly 1 million contributing individual citizens last I could get a track on it, and growing.
As far as Congressional support, with a Republican House, Senate and Adminstration, the support among Congress Critters has grown from 7 co-sponsors for the bill last session, to 46 co-sponsors with another 40+ declared to favor HR25 over other taxreform bills now in Congress. Even long term flat tax taxers such as Senator Richard Shelby as declared preference of the NRST over the Armey/Shelby Flat Tax he has advocated so long in the Senate. Prior to this session we had no introduction into the Senate, Earlier during the current session, the bill was introduced into the Senate by Senator Max Chambliss.
All over the nation prospective candidates are picking up on the NRST as part of their campaigns, this is especially true in Texas and Georgia. Where it is almost a requirement if your going to claim to be a candidate from those states. Linder of Georgia has held out against all comers maintaining his seat making it the central issue of his campaigns.
Delay and the Republican leadership of Congress, have bought into the NRST and have promised full hearings and press for a floor vote in the next session.
What more can I say, it's really up to us to learn about, educate our friends and neighbors about and push our representative to get it done.
Do I figure it can be done. I would not be spending all the time I do on it if I didn't figure on at least a chance of convince folks to push. Passage in next session ????
I've supported the Fair tax now for about 5 years, I see support growing and I am encouraged. That's really all I can say.
How stiff has the opposition been from accountants/tax attorneys/etc. and their respective lobbying groups?
I haven't heard of any organized opposition from such folks. Individual accountants I have talked to look forward to not having to deal with tax issues. Some Retail Groups aren't thrilled with it but they like the Income/Payroll tax even less and don't propose any better alternatives.
Most of the organized opposition I have run into come from folks against all taxation, those wedded to supporting the specific other tax proposals, and those who make their living lobbying Congresses as opposed to actually working in the industry.
I think I'll send off a query to the staff at AFFT and see what they say. I'm curious too, as I really have not run across any accountant or taxlawyer's groups formally in opposition.
I suspect that Taxman, who more connected with with the NRSTA people may have a quicker answer if he's around.
Or you could, again, not have the government pay itself and call it revenue. That would meet the requirements of the BEA just fine.
Actually it wouldn't as the BEA demands the same level of tax revenue to be produced as the law it replaces. The only way the BEA allows reduction of tax rate, is by cutting budgeted appropriations to pay for cuts in taxes collected. The liberal "pay for tax cut", game which is the driver of all this. Get rid of that game, which is the oppositions card in the hole to kill any tax reform bill, and you can get rid of government taxing itself.
But then you would have to increase the sales tax rate.
So you want to make citizens to pay more? Just to satify your sense of the fitness of things. I don't.
The reality is the tax rate would actually be able to fall if it weren't for the BEA, as the expenditure of goverment for goods and services would fall commensurate with the repeal of income and payroll taxes.
Problem is CBO static analysis methodology demanded under the BEA prohibits projecting tax rates on dynamic analysis of the economy.
And that's the whole point, isn't it. Funny accounting so hyou can sell this shell game and worry about the consequences later.
The funny accounting is imposed by political reality, as emboddied by the BEA, and which democrats use to great affect in thier attacks and tax reforms and tax cuts of any substantive kind.
I agree wholly the NRST would be much better off without government taxing itself, for the tax rate would actually end up lower, under a dynamic supply-side analysis of the economy. BEA and liberal opposition assures that will not be the route this or any other consumption tax bill will take until the day we can overcome 2/3's vote in both sides of Congress to void the revenue neutality provisions. DOA is the way the Dem caucus would like to make this bill through their BEA club. A goal you seem to share with them.
You might take a look at the list of HR25 sponsors sometime and ask yourself why you see very few democrats among the 46 co-sponsors listed. Those with a visceral opposition to this bill make up an interestingly composed caucus in Congress.
Sorry, you can't compare the effects of tax changes unless you keep the elements you are comparing equal.
The only thing clear you admit that you are unable to compare the two systems in Sales Tax Terms. Our only question becomes the reason why.
For reasonable and useful comparisons are readily attainable converting to the tax inclusive base of gross income.
Spend same $77,500 Save max $27,146:
NRSTrate = 100*((0.23*$77,500)-$4,646) / $104,626 = 12.59%
Your calculation, with intermediate spending $80.5K and saving $24.1K:
NRSTrate = (($77,500 * 80%) * 29.87%) - $4,646 / $104,626 = 13.26% saving the rest for a idillic and pastoral retirement
Or spend max $101,9K and no saving $0
NRSTrate = NRSTnet/GrossIncome = $18,794.68/$104,646 = 17.96%
All less than:
Your Nightmare: My effective tax rate (income tax + FICA) on my income is 19.77%
And much less than the total effective rate which includes embedded taxation on comsumption expenditure, the more representative figure of what is paid under the current system for your 3 person $100k earning family.
ITrate = ITnet/GrossIncome = $35,270/$100,000 = 35.27%
Using your method, I could come up with any number I wanted.
The boundries are limited by the stated conditions and limited to a range established by (20-25%) federal tax burden embedded in current consumption pricing. The values you calculate cannot exceed the boundry set by that parameter.
Hell, why don't you change their income while you're at it.
Income is not variable, you set the fixed conditions of:
Recall that consumer prices that you pay out of your consumption spending contain a 20-25% corporate income/payroll tax related burden within them as well. Have you included that burden in your calculation of your "effective tax rate"?
Include them, I don't care. My effective tax rate (income tax + FICA) on my income is 19.77% Compare that to 23% sales tax and show my the computations to make the comparison. Assume family of three (husband, wife, and child) making $100,000, current consumption is $77,500.
The only"varible" is "consumption spending contain a 20-25% corporate income/payroll tax" restricted to a narrow range, the limits of which are easily treated with three discreet values, min, typical expected, and max for comparative calculations.
You have made it obvious that you are unwilling to assay a sales tax based comparison on the that simple basis. I assure you, there is ample characterization of the parameters of the problem to make useful and appropriate comparisons.
Just as the tax inclusive comparisons using gross_income as a base show the NRST to provide a decided advantage for the individual case you have characterized; So will tax exclusive comparisons using the taxfree price base of the sales tax realm.
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