Posted on 01/09/2005 6:59:57 PM PST by ancient_geezer
FairTax would replace federal tax system with simple alternative
By Peter Ueberroth
REPLACING our income and Social Security tax systems with a consumption tax FairTax, the best supported bill in this election cycle, depends not on whom is in the White House but on American taxpayers of all strata expressing their ire to elected servants.
Women did not win the right to vote through quiet parlor discussions alone; they also marched in the streets. Unions did not achieve collective bargaining until they sat down and shut down manufacturing plants. Blacks took their seats at the front of the bus and at the lunch counter, and then took to the streets. These grassroots successes set the example for how we replace our fatally flawed income and payroll tax systems.
As for a rate comparable to income/payroll taxes, delivering the same revenue raised today, an organization I support (FairTax.org) quotes 23 percent. This rate is generally confirmed by many of the leading public finance economists in the country: Dale Jorgenson, Harvard (22.9 percent ); Jim Poterba, MIT (23.1 percent ); Laurence Kotlikoff, Boston University (24 percent); and rates from 22.3 to 24 percent from Stanford University, The Heritage Foundation, The Cato Institute, and Fiscal Associates.
Under the FairTax, effective tax rates go down for the middle class. Their paychecks come to them complete, with no federal withholding of any kind. Their paychecks are no longer minus the regressive Social Security tax, which is even more painful to working poor.
Gone would be the dooms-day threat of huge payroll tax increases to fund much needed Social Security reform. Under the FairTax, no American pays a dime of tax, hidden or obvious, on the necessities of life up to the poverty level. Individuals keep no records, file no returns, and suffer no audits.
Financial institutions are no longer required to perform taxpayer surveillance operations. Under the FairTax, individual American taxpayers become invisible to the federal tax collector, as do their families, churches, and businesses.
A net tax increase or tax decrease? This will be up to the individual. How much tax they do pay is entirely based on how they choose to live their lives.
The FairTax is progressive, substantially lowering rates for lowest-spending Americans when compared to the current system, keeping them low through the critical lower-middle class range, and approaching the maximum, effective tax rates only for our biggest-spending wealthy. For a chart demonstrating this progressivity, use this link: www.fairtax.org/images/taxrates.jpg
As to evasion, we are Americans, we hate taxes, and we have ingenuity to spare. We will cheat very successfully. However, with a 90-percent reduction in points of surveillance, record keeping, filing, compliance, and enforcement, when compared to the income tax system, the FairTax makes enforcement a relatively easy task.
Not to impugn the hard and successful work of the current state sales tax organizations, which have the option to collect the new federal tax. Their compliance statistics are much better today than the IRS's. To aid these organizations further, a common federal base simplifies their collection of sales taxes incurred by Internet or catalog sales. And with some 90 percent of sales taxes collected by less than 10 percent of retailers, do you really think Cindy Consumer is going to charm Charlie Cashier at Wal-Mart into collusion to violate federal tax laws?
Imported goods pay the tax, so there is no advantage of cross- border transactions for law- abiding citizens, though the FairTax is no violation of our current trade treaties.
Finally, I've not touched on the job creation, financial services, charitable giving, and residential real estate boom, and robust, deficit-shrinking economy economists say the FairTax engenders. We in the grassroots certainly do need to drive our elected servants onto the FairTax legislation.
Newport Beach resident Peter Uberroth in 1984 was president of the Los Angeles U.S. Olympic Organizing Committee and and was named Times Man of the Year. He was also a major league baseball commissioner and a former candidate for governor of California. Visit the FairTax Web site at http://fairax.org .
YN appears to certainly holds to Bartlett's NCPA representation of the VAT.
But I'll let him answer for that himself.
"You keep missing the point. You are asking personal financial questions when you offer nothing about yourself and your motives."
"I have answered the same question I am asking you."
That illustrates EXACTLY what I am talking about. In your mind you and you alone get to decide what questions can be asked and what questions have to be answered. I categorically and unequivocally reject that notion. You don't have the right to dictate who posts to these threads, you don't have the right to determine what "the issue" is, and you don't have the right to determine what questions can be asked and what answers are mandatory.
Your ongoing attempts to dominate the discussion in this manner is the height of arrogance.
"I think that most of the paid people are clerical staff who answer the phone and maintain the web site.
If anyone knows different, please correct me."
Don't upset their delusion with the facts, Ray. They think AFFT has a huge marketing budget and has money to spread around everywhere. We must be doing something right if we project that sort of image.
"I missed it. 11% of what?"
11% of the price at that level in the supply chain.
"My statement is absolutely true. You didn't have that or any other example when we communicated by e-mail."
Yes, I did. I had a much more detailed spreadsheet than the very simplistic one that I posted here. You were provided a copy of that spreadsheet. You did the exact same thing then that you are attempting to do now: confuse the uncertainties over assumptions with the validity of the cascading mechanism. Your arguments were just as disengenuous then as they are now.
"Using your 'simple example' of how embedded taxes are cumulative at ever higher ratios you should therefore have no problem illustrating at what point the imedded tax is 100% (or more) of the product/service...care to illustrate that part of your equation?"
If I posted it here, it would take a huge page and because of formatting would be hard to follow. I will instead answer your question narratively. I'll even go one step further and answer an analagous question: If the FairTax is progressive (meaning that the effective rates increase as consumption increases), at what point does the effective rate of the FairTax exceed 23%?
The answer in both cases is the same: they are both asymptotic curves, meaning that they approach a constant but never reach it, even if you extend the curve into infinity. If you were to go thousands of levels deep into the supply chain, you would reach a point where accumulated taxes account for well over 99% of the price you would be paying. However, that would be a strictly academic exercise, since supply chains don't reach thousands of levels deep in the real world. I don't need to extend a spreadsheet thousands and thousands of supply chain levels to understand and explain what is going on.
"What does privatizing SS have to do with the fairtax bill?"
If you had read and comprehended my previous posts on that subject, you would understand. Privatization is a minor part of the social security debate. A much, much bigger part is what I refer to as the demographic time bomb issue. All of the arguments about private accounts saving Social Security miss an important point – the number of retirees will increase in the next 30 years by 100 percent and the number of workers supporting them will increase by 15 percent. Just this week, both Dr. Kotlikoff and Chairman Thomas were in the news (seperately) talking about this and how the only way to address this aspect is
to convert social security from a payroll based revenue model. As far as I know, the FairTax is the only FTR proposal which does this.
What the hell difference does it make who gets paid for what? This is the arena of ideas. I don't care if Your Nightmare gets paid for his ridiculous rants, he has that right. I would like to know it, but even if I don't, I can suspect it and make my decisions about his opinions thus.That's all I asking. That if someone has a financial relationship or official position with a group with a dog in this fight that they disclose it. That way we can "make decisions about his opinions thus."
It does not now, and never has, mattered one whit who is getting paid by whom when the merits of a proposal are being discussed!
It would be interesting to see how much time and resources the status quo is throwing at tax reform rejection. Coupled with the fact that the status quo folks make up reasons to reject tax reform.... tells us that they KNOW they're in the wrong - but are willing to sell the US out to protect their little corner of marxism. JMHO.
Why would that post be instructive to understanding your motivations for rejecting tax reform?
Why would that post be instructive to understanding your motivations for rejecting tax reform?First, because motivations are off the table.
"To which phil_will1 himself replied 'It's no use, rwr. YN and LL will never reveal their hidden agendas.'"
That was a true statement when I posted it and it remains a true statement.
I posted a very simple example on the last tax reform thread (the one that turned into a 1,000+ post marathon) and showed corporate income taxes alone accumulating to just over 11% on the third level of a supply chain.Do you have any study from an economist illustrating the corporate income tax "accumulating" through the supply chain? I've looked and can't find one.
If that's the case, what are your motivations?
Even though YN says motivations should not affect quality of discussion, he still refuses to disclose. Why?
If that's the case, what are your motivations?They certainly aren't financal. I've spent my own money purchasing research material. My motivation is that I think the FairTax would be a horrible disaster for this country. There are better methods for tax reform.
I didn't ask what your motivations weren't. I asked what they are. Are you still unwilling to disclose?
Even though YN says motivations should not affect quality of discussion, he still refuses to disclose. Why?You need to catch up on the thread. It's your guys throwing a fit about questions of motivations.
"First, because motivations are off the table."
To borrow a phrase from The Great Communicator: "There you go again."
Somehow, somewhere you got the notion that you and you alone have the authority to determine what is "on the table" and what is "off the table". I can't say it any plainer than I already have - I totally reject such a ridiculous position and no matter how many times you insist that you have that authority, I will refuse to recognize it.
If motives aren't at issue, then my personal finances are irrelevent. Even if they were relevent, it is an invasion of my personal financial privacy, almost as much as having an income tax which forces me to disclose every detail of my personal life to the federal government once a year. There is a law that requires me to disclose to the federal government. There is no law which requires me to post personal financial information on the internet - thank goodness!
Separately, I am caught up. I am asking about your motivations.
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