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To: ancient_geezer
Sorry, you can't compare the effects of tax changes unless you keep the elements you are comparing equal. Using your method, I could come up with any number I wanted. Hell, why don't you change their income while you're at it.
153 posted on 04/26/2004 6:46:55 PM PDT by Your Nightmare
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To: Your Nightmare

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.

160 posted on 04/26/2004 8:16:07 PM PDT by ancient_geezer (Equality, the French disease: Everyone is equal beneath the guillotine.)
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