I never said it wasn't possible,What about all that "apples to apples" stuff?
That is what I gave you.No it isn't. You changed their consumption level. How is that a fair comparison of an income tax vs a consumption tax?
I notice you had to convert the the gross expenditure to price and to do so you used the least price decline of all products (why not the largest or the average or all of them in a tabel?),
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. It isn't. In fact it makes it harder. Reinforcing my belief that the use of the much less understood tax inclusive sales tax rate is only because it's a smaller number. It's just deceptive marketing.
We could talk all day about the issue of "embedded taxes" and how much they affect prices. It won't get us anywhere. It's all speculation.
Which is precisely what I said had to be done to compare rates between systems of different bases. The have to be converted to the same base for comparison.But you didn't show me the equation with the tax inclusive rate. That's because you have to use the tax exclusive sales tax rate before you can figure out what portion of your income is going to taxes (the tax inclusive income tax). There still is no reason to use the tax inclusive sales tax rate except to confuse people. (I would say that is the main intent, no one has been able to show me why the inclusive rate is important, which means it's not unintentional confusion, but outright deception.)
For total accuracy and completness however you failed in coverting to price. Ideally you should have chosen the range of (20-25%) that product prices may decline or their average (22.5%) for an better comparison.Again, we weren't really discussing the final percentage, just how you get there. But to totally accurate you would have to factor out state and local sales taxes before you reduced the prices and factor them back in after. You would also have to ask if the 20-25% drop is a drop in retail prices or a drop in manufaturing cost and factor that into your price drops. (example: $80 manufacturer cost + $20 profit = $100 retail price. $60 reduced manufaturer cost + $20 profit = $80. A 25% drop in manufacturing costs only equals a 20% drop retail price cost.) But we could go on like this for days.
And let folks decide which they prefer, without all the arithmetic and overstate the more modest message of NRST proponents as it can be stated for all income groups.
But then we get into how much prices might drop and if the 29.87% would generate enough revenue for the government. Both of which are as suspect as the need to use the tax inclusive sales tax rate.
Anyway, back on topic, it seems you weren't able to show me a comparison between my income tax rate and the tax inclusive sales tax rate after all.
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.