Posted on 05/03/2005 3:16:24 AM PDT by RobFromGa
Retail sales of new houses would be hit. Yes. I agree. However, existing homes would not. How many retail home sellers are there out there? How much of their current costs are payroll/compliance costs? Ect...
It's even worse for cars. Take a $30g car, knock 23% off it from payroll/compliance, and then add it back in ONCE at point of retail. Not "MANY times over" as you assert.
Of course, if I am on one side of an issue, it is almost axiomatic that you are on the other side. No matter the facts or logic arrayed against you. You are unassailable in your "opinions". Not correct, mind you. But unassailable none the less.
WRT reply 180, you know there is a difference, but if you do not, then I can't figure out how in the past you made so much sense based on your projected intelligence.
"It costs 30 grand per year for my son's college and you think making it 40 is going to win converts? Such cases are only a few of the many flaws in the concept. "
Educational expenses are not taxed. In fact, because educational expenses will be paid for with pre-tax dollars, educational will become MORE, not LESS, affordable.
This illustrates something that I have noticed about the FairTax. Its opponents either (a) don't understand the proposal very well, or (b) have a vested interest in the current abysmal tax system.
If that's the case, you can probably find it on the Wayback Machine. Be sure to let us know.
"Sounds like you disagree with the economists who say that our historically low savings rate is a real problem that, if not addressed, is going to cause more economic problems in the future. After all, there is simply no way to increase savings without decreasing consumption."
Oh I definitely agree there is a problem...a really big problem. And, I think there is move afoot to curb the problem (i.e., bankruptcy legislation). I just think it might be a little premature to start solving these things yet, as taxes are only one among many problems that inter-relate. (Plus, its gonna be really ugly when all this comes tumbling down).
I wasn't aware that net national product was the base for the FairTax.
Figure it out, GDP is gross retail sales discounted for asset depreciation. Take out depreciation which is not a taxable quantity under a retail tax, you have a proportionate estimator of a full consumption tax base.
Using the Tax Foundations effecting total tax rate calculations based on NNP
http://www.taxfoundation.org/sr134.pdf page 15:
"In the calculation of GDP, consumption of fixed capital — commonly referred to as depreciation — is not subtracted. Since depreciation is not available to pay taxes, GDP is an overstatement of income for the purpose of measuring tax burdens. Depreciation is netted out of NNP."
is a quick and easy way to estimate not only direction of tax rate trends, but is demonstrably a fair estimator of magnitude as well when compared against more direct empirical measures of the Fair Tax rate made over time.
"Much easier to cheat under the current system. Cheating under the NRST requires collusion between at least two people. In cheating on income taxes one can go it alone."
Don't be too sure. That kind of collusion is already common in most of the country. I have heard in high tax places like MA or CT, there is always a separate cash price for big ticket items like cars (Correct me if I'm wrong about that), and lots of people employ housekeepers etc and don't pay the SS. And a big retail sales tax at 23 or 30% would provide an even bigger incentive to dodge.
The collection mechanism is already in place for the income tax. I say, close ALL loopholes, get rid of ALL deductions, and charge everyone a flat 10%. End of problem. With a flat tax you would still see nearly all of the IRS and high priced accountants looking for other employment.
Figure it out, GDP is gross retail sales discounted for asset depreciation. Take out depreciation which is not a taxable quantity under a retail tax, you have a proportionate estimator of a full consumption tax base.Net National Product is Gross National Product minus depreciation. From your link:
GDP vs. GNP - GDP measures domestic production within the 50 states, regardless of who provided the labor or capital, US citizens or foreigners. GNP measures the production of US "nationals," U.S. citizens regardless of where they are working.I guess you need to figure it out that the production of US national across the world is not the base for the FairTax.
I guess you need to figure it out that the production of US national across the world is not the base for the FairTax.
You also aren't accounting for the FCA.
As Tax Foundation themselves point out: http://www.taxfoundation.org/sr134.pdf page 15
"Overall, NNP provides the best statistical representation of the common notion of “spendable” resources. In 2004 NNP was $10,371.6 billion."
It all balances out well comparing with calculations of sales tax rate reflecting FCA, and providesg a fair representation of what to expect.
As I stated it is proportionate not a direct empirical measure. Even at that is still manages to provide a sense of magnitude as well as the trend of tax burden that is quite close when compared with prior direct emprical measures of the Fair Tax rate:
For me a 2005 target of a 19% tax inclusive rate for a national retail sales tax replacing income and payroll taxes is very reasonable revenue generator to start with and from which additional growth of the economy should fund a government maintaining fiscal restraint to the level of revenues provided.
TP
Let's say that you are in a 23% bracket right now. If you make $100, they take $23, right? That's 23%, right? No, it's actually 30% because you are left with $77 and the $23 that you paid in tax is 30% of the $77. Go buy whatever you want for $77.
Either stated as 'inclusive' or 'exclusive,' they still get the same dollars from you.
Under the FairTax, you get your entire $100. Even if you assume that price will not fall (even though they definitely will) if you buy $77 in goods, you have $100 to pay for them including the tax.
You are no worse off for several reasons:
1] You bought the same goods for the amount.
2] Prices WILL drop so you can really buy more.
3] If you buy non taxable goods, you will have more money to save.
4] You will get a prebate giving you money to cover the tax up to the poverty level.
5] You are paying tax only on what you SPEND on taxable goods as opposed to paying tax on your entire INCOME.
6] Currently your investments are taxed and your estate is subject to taxation, as are your gifts. Under the FairTax, they will not be.
7] There is no more reporting to the IRS. They are out of your life and you regain a small measure of liberty and privacy.
The FairTax may not be perfect. Few things are. But it is the best plan that I've seen. Be sure to read the info at fairtax.org and don't listen to the misrepresentations of those who have a vested interest in the current system. Some of these people will go to any extent to protect the current mess even though it is an abomination and destructive to most of the country and to our liberty just to line their own pockets.
And there isn't a mechanism for collecting sales tax? Also, what happens to estate taxes? Social(-ist) Security? All those other taxes that WON'T go away under a Flat Tax?
'Cause there would be start-up wanna-be's like me that would come along and under cut their prices, steal their market share, and laugh all the way to my private Island in the Bahama's.
For me a 2005 target of a 19% tax inclusive rate for a national retail sales tax replacing income and payroll taxes is very reasonable revenue generator to start with and from which additional growth of the economy should fund a government maintaining fiscal restraint to the level of revenues provided.And the FCA?
Excellent synopsis BTW... :-)
And the FCA?
Since FCA paid is proportionate to the tax burden, proportion is maintained which is all that is required for a reasonable index. The Tax Foundation rate calculations based on NNP as a base provide a reasonable index that happens to provide a fair estimator of magnitude in comparison to past direct empirical measure of the Fair Tax rate as well.
Yes. Plus, if you're going to call it a "sales" tax, then it must be calulated on the retail price then added to it.
Did you even read my post #10? Where's the collusion? Between who and who?
"In cheating on income taxes one can go it alone."
True. And the NRST is no different. But, cheating on the NRST nets you at least 30% plus state sales tax (say 8%) for a total of 38%. That's a huge incentive to cheat.
Yes. Plus, if you're going to call it a "sales" tax, then it must be calulated on the retail price then added to it.
Why? There is nothing sacred about a sales tax that says it has to be calculated as an add on. In point of fact representing a tax as an add on does not actually present a very good picture of the burden a tax system lays on one as it would be represented as a proportion of total as a tax inclusive measure does.
An add-on tax presumes it will be paid from some nebulous source other than what is proffered at the retail counter. The reality is it all come from gross resources we are able to acquire in providing for our families.
A rate that reflects the fraction of our resources used in tax is a much better measure than one that distorts that picture as the state sales tax rates calculations do.
| Inclusive Rate | Description | Exclusive Rate |
|---|---|---|
| 4.76% | Sample State Sales Tax --> | 5.00% |
| 10.00% | <-- Penalty for IRA/401k Early Withdrawal | 11.11% |
| 15.00% | <-- Marginal Income Tax | 17.65% |
| 15.00% | <-- NRST (not including SS/Medicare) | 17.65% |
| 15.30% | <-- Social Security/Medicare Payroll Tax | 18.06% |
| 17.00% | <-- Flat Tax (not including SS/Medicare) | 20.48% |
| 20.00% | <-- Capital Gains Tax | 25.00% |
| 23.00% | <-- NRST (including SS/Medicare) | 29.87% |
| 28.00% | <-- Marginal Income Tax | 38.89% |
| 32.30% | <-- Flat Tax (including SS/Medicare) | 47.71% |
| 39.00% | <-- Marginal Income Tax | 63.93% |
| 54.30% | <-- Max Margin Income/Payroll tax rate | 118.81% |
Note that any tax-inclusive rate larger than 50% would have a tax-exclusive rate of over 100% which clearly demonstrates the distortion that occurs when trying to view an addon (tax exclusive) calculation in any sense that is meaningful in terms of proportionate tax burden laid out of one's total resources.
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