Posted on 02/13/2005 10:41:05 AM PST by nsmart
The FairTax is the non-partisan national sales tax proposal that would replace all federal income taxes. These include personal, estate, gift, self-employment, alternative minimum, capital gains, FICA, and corporate and death taxes.
(Excerpt) Read more at WWW.FAIRTAX.ORG ...
"This is a loosing argument for you guys. Drop it and move on to something else."
If the decision were left to you, EVERY argument is a loser for the FairTax.
Fortunately, the merits of the proposal will be evaluated by Americans far more objective than you.
Assuming that is correct, I still would support the NRST over the current income tax system. Why wouldn't we want to bring the cost of government into the plain view of the citizens being governed? In my opinion, that would be the single biggest step towards spending reductions that could be taken.The problem with this line of reasoning is that ~40% of the taxes paid under the FairTax wouldn't be paid by citizens at the register, they would be paid by governments. By taxing governments purchases and the wages of their employees, the FairTax is effectively "hiding" ~25% of the federal tax burden in our state and local taxes.
If the decision were left to you, EVERY argument is a loser for the FairTax.Not true. It's a consumption tax, and there are lots of merits to a consumption tax. But it's not a cure-all.
Fortunately, the merits of the proposal will be evaluated by Americans far more objective than you.That's why I can hardly wait for these upcoming hearings. Then the merits of the poposal will be evaluated by Americans instead of basing their opinion of the FairTax on the marketing BS of the AFT.
Every business with employees will realize this savings - specifically any business you buy from... and every business they buy from.
That's not all, of course.
Vendors will be able sell to you for less, subs will be able to charge less, and any profits you make are all yours. Purchasing power of your personal dollar remains constant.
It will be faster/easier to save for a home and easier to qualify with lower rates.
I sense a lot of fear in your posts about your business - I understand that - you have to be able to manage the change - like any change. I know it will be a lot easier to qualify someone for a loan and I'm happy about that -
That will save me anither $40K, still about $1.7 million short of being able to keep my prices the same.
I don't know if you pay employer's share of payroll taxes - that will go away. And your self employment tax goes away too. You may use those funds for a productive purpose - giving a raise, reducing your prices, investing in a new machine?Don't forget Always Right has to pay the NRST on his personal purchases so he will be inclined to give himself a raise if he wants to keep his purchasing power the same. If he had investors, they would also be paying the tax on their consumption so to keep the real value of their return on investment constant, that return in nominal values must go up.
Lower interest rates is a laughable arguement. Interest rates and money supply is controlled by the fed. If all your rosey economic predictions came true, the fed would be forced to tighten the money supply and raise rates. Again, the pointie headed professors are clueless. Well educated, but clueless.
"By taxing governments purchases and the wages of their employees, the FairTax is effectively "hiding" ~25% of the federal tax burden in our state and local taxes."
Or could it be that 25% of the true cost of the state and local government is hidden in Federal subsidies via deductions?
Or could it be that 25% of the true cost of the state and local government is hidden in Federal subsidies via deductions?I don't think either achieve transparency of the tax burden.
Show me where Dale Jorgenson said pre-tax.
He said the price received by producers and for investment goods(capital assets) will fall 20-30%.
Of course it helps to know the definition in an equilibrium model that economists are speaking about when discussing "producer price"; that it is the consumer price discounted for taxes and subsidies. Producer price is the price received by the supplier (i.e. for the market considered) sans tax and subsidies as opposed to the total amount including tax and subsidies that is actually paid by the consumer to purchase a product.
| Algebraic Solution of Linear Supply and Demand Models R. Wigle Director Masters Program in Business Economics Wilfrid Laurier University May 9, 2001 http://info.wlu.ca/~wwwsbe/faculty/rwigle/ec238/ref/pe-algebra.pdf
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NRST is not paid by producers on their purchases for business purposes and all federal income and payroll taxes on business are repealed.
According to Jorgenson, including the NRST, from the consumer's perspective, the price of consumption falls 3-10% over the time frame of the study.
http://www.economics.harvard.edu/faculty/jorgenson/papers/baker.pdf
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Revised April 12, 1999. This paper was prepared for presentation at the
7. The inter-temporal price system provides the mechanism for re-allocations of resources in our simulations. Figures 10 and 11 give the impacts of the tax reforms on the prices of investment goods and consumption goods and services. Under the Flat Tax the price of investment goods drops by more that 6.8 per cent in 1996 and the price decline continues, falling only modestly to a little over six percent by 2020. The Sales Tax produces a reduction in investment goods prices exceeding twenty percent in 1996, rising gradually to between twenty-five and thirty percent over the period 2000-2020. Under the Flat Tax prices of consumption goods and services decline by more that 4: 5 percent in 1996, but this price reduction falls over time to around three percent in 2020. The Sales Tax reduces the price of consumption by a little over three percent in 1996, but this price decline increases to more than ten percent by 2020. 9. Since producers would no longer pay taxes on profits or other forms of income from capital and workers would would no longer pay taxes on wages, prices received by producers under the Sales Tax, shown in Figure 13, would fall by an average of twenty percent in 1996. Figure 14 shows that prices received by producers would fall by an average of twenty-five percent by 2020. The impact of the Flat Tax on prices received by producers is much less dramatic. Prices decline in the range of six to eight percent for most industries in 1996 and five to seven percent by 2020. |
Your probably right, but transparency is not what I would strive for. In the case of being able to push the burden closer to the tax payer, I would be supportive.
"With all due respect, Dr. Jorgenson is a pointie headed professor who has been bought and paid for by FAIR and has never spent one hour in a real business. It is just the same old boilerplate crap that doesn't even specifically apply. He simply assumes prices on everything fall, interest rates drop, wages go up, yada yada yada. Not impressed. I can point to sources that says Clinton is an honest man, doesn't make it so."
I have asked this question of the guardians of the status quo many, many times and have yet to get a straight answer, so I will try once more.
You and the other defenders of the current system say that some of the leading academic economists in the country don't pass muster with you, that they don't measure up to your exacting standards. So who would you prefer to rely upon in making economic forecasts - professional athletes, politicians, accountants, lawyers? Who do you believe has more credibility than economists?
I don't think either achieve transparency of the tax burden.
What is the current total effective federal tax burden expressed as a percentage relative to consumption expenditure?
Anyone who believes the Federal and State governments can actually collect 30% sales taxes on every transaction is either delusional or an ivory-tower professor from a second-rate school.
Equating IRS agents to KGB agents does not help to establish yourself as a series thinker.
Don't you think that your statement (which I'm not necessarily arguing against) is just a statement that supports the fact that the cost of government is already more than the citizens are willing to bear. How could it be possible that the revenue nuetral NRST becomes an unbearable burden when the cost is brought to light? Could it be that with the current structure the politicians can continue to expand their control out of the sight of the citizens?
How do you propose reducing the size of the government, to a level that the citizens are willing to bear, while still keeping the cost hidden from the citizens?
Do you have an alternative?
It is just the same old boilerplate crap that doesn't even specifically apply. He simply assumes prices on everything fall, interest rates drop, wages go up, yada yada yada.
Actually Jorgeson's IGEM parameters are set by empirical/econometric measures derived from historical data series responses between tax changes and corresponding changes in output prices, tax rates etc, not assumed values.
Given a historical series, NIPA:GDP etc, any researcher will end up with the same answers using an equivalent econometric approach.
http://www.economics.harvard.edu/faculty/jorgenson/papers/baker.pdf
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Revised April 12, 1999. This paper was prepared for presentation at the
The econometric approach to parameterization has several advantages over the calibration approach.First, by using an extensive time series of data rather than a single data point, we can derive the response of production patterns to changes in prices from historical experience. This is particularly important for the analysis of tax policies, since these policies have changed substantially during our sample period and tax rates have varied widely. The extensive time series evidence on behavioral responses to changes in tax policy is ignored in the calibration approach. A second advantage of the econometric approach is that parameters estimated from time series are much less likely to be affected by the peculiarities of a particular time period. By construction, parameters obtained by calibration are forced to absorb all the random errors present in the data for a single benchmark year. This poses a severe problem when the benchmark year is unusual in some respect. For example, parameters calibrated to the year 1973 would incorporate into the model all the distortions in energy markets that resulted from price controls and the rationing of energy during the first oil crisis. Econometric parameterization greatly mitigates this problem by reducing the influence of disturbances for a particular time period. Empirical evidence on substitutability among inputs is essential in analyzing the impact of tax policies. If it is easy for industries to substitute among inputs, the effects of these policies will be very different than if substitution were limited. Although calibration avoids the burden of data collection required by econometric estimation, it rules out substitutability among inputs by assumption. This can easily lead to substantial distortions in estimating the impacts of alternative tax policies. By contrast the econometric approach determines the extent of substitutability on the basis of empirical evidence. |
I am still on the side of a flat tax until someone convinces me otherwise.
"I am still on the side of a flat tax until someone convinces me otherwise."
Which flat tax proposal do you support - the Burgess bill?
".....is either delusional or an ivory-tower professor from a second-rate school."
Yes, indeed. A second rate school such as Harvard, MIT, Stanford, Rice.
LOL
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