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OPEN LETTER TO BOORTZ/LINDER (FairTax)
self | August 22, 2005 | RobFromGa

Posted on 08/22/2005 6:53:28 PM PDT by RobFromGa

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To: Tribune7

If the market can bear $1.23, then that's all it can bear. If the vendor is still getting $1.23, then you are not adding the 23% tax, which will make the price $1.61. So this vendor, whose cost has been reduced by 23% is trying to get $1.61 for a loaf of bread, when everyone else is lowering the price and selling more loaves, which results in a higher total profit. Competition will make the price go down.


301 posted on 08/23/2005 7:55:54 PM PDT by SALChamps03
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To: Tribune7

If the market can bear $1.23, then that's all it can bear. If the vendor is still getting $1.23, then you are not adding the 23% tax, which will make the price $1.61. So this vendor, whose cost has been reduced by 23% is trying to get $1.61 for a loaf of bread, when everyone else is lowering the price so that the total price including the tax is about $1.23, and selling more loaves, which results in a higher total profit. Competition will make the price go down.


302 posted on 08/23/2005 7:56:48 PM PDT by SALChamps03
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To: SALChamps03
OK, cite the lies and misrepresentations.

The Biggest lie about the fair tax is that everyone gets to keep 100% of their current paycheck AND prices still fall 22% because of 'embedded taxes'. The argument quotes a 1997 study done by then Harvard Professor Dr. Dale Jorgenson. Boortz tells us:

"Harvard economists have estimated this embedded tax to be around 22 percent of the cost of those goods. That 22 percent represents the payroll taxes and corporate business and income taxes paid by every manufacturer, shipper, wholesaler, merchandiser and retailer having any connection whatsoever with the product you have purchased. These taxes are all added to the cost of consumer goods."

According to Neal the 22% embedded taxes does not include the $1.3 Trillion of taxes paid by employees through income taxes and FICA. However, the Harvard economist who did the study says otherwise. In testimony the House of Representatives (see page 105 on link http://www.access.gpo.gov/congress/house/pdf/104hrg/26312.pdf), Dr. Jorgenson says:

"Since producers would no longer pay taxes on profits or other forms of income from capital and workers would no longer pay income taxes on wages, prices received by producers, shown in the fifth chart, would fall by an average of twenty percent."

303 posted on 08/23/2005 7:57:40 PM PDT by Always Right
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To: lewislynn

There is no evidence to support this claim. Why would wages have to decrease after taxes on businesses, that are passed on to consumers ANYWAY are eliminated. What justification would also require wages to decrease?


304 posted on 08/23/2005 8:00:50 PM PDT by SALChamps03
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To: lewislynn

There is no evidence to support this claim. Why would wages have to decrease after taxes on businesses, that are passed on to consumers ANYWAY are eliminated? What justification would also require wages to decrease?


305 posted on 08/23/2005 8:01:05 PM PDT by SALChamps03
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To: SALChamps03
Competition will make the price go down.

Exactly.

306 posted on 08/23/2005 8:02:31 PM PDT by Tribune7
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To: Gvl_M3
I posted it here on FR some time ago but the article from which I excerted is still avaliable here.
307 posted on 08/23/2005 8:02:49 PM PDT by Bigun (IRS sucks @getridof it.com)
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To: groanup
"http://www.fairtax.org"

Thanks /sarcasm

I've spent the last 3 hours reading that site trying to find where they calculate the 23% total embedded costs.

If you are really trying to be helpful, give me a link to a specific article.

As to the depreciation, the only thing I found on that was its reference to the tax code. That is why I'm asking. If you could show me the other costs, I wouldn't have to "look less than Einstein."

I hate to say it, but I'm starting to see where RobfromGa is coming from. I really want to believe in the Fair Tax. I think it would be boon for our economy. But, all I'm getting is rhetoric about the decrease in prices. If you can show me the embedded cost of the current system to be 15-20%, I'll jump back on board in a second. For now, I'm waiting a little more.
308 posted on 08/23/2005 8:03:26 PM PDT by Gvl_M3
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To: SALChamps03
There is no evidence to support this claim. Why would wages have to decrease after taxes on businesses, that are passed on to consumers ANYWAY are eliminated. What justification would also require wages to decrease?

Because the taxes currently in the wages are also passed on to the consumer. If these taxes go in the pocket of the employee, the added sales tax will increase the price of goods. Employees will have more money to spend, but prices for everything goes up. The only way to keep prices level would be for employees to take a pay cut in the amount of federal taxes they currently pay. There is no free ride simply by shuffling how taxes get paid.

309 posted on 08/23/2005 8:05:06 PM PDT by Always Right
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To: sitetest

In 2001 (for which a goodly amount of numbers are available), taking only major industries (Form 1120) from the IRS SOI Tax Stats it seems that almost a million businesses had $595.4 Billion subject to tax and actually paid $204.8 Billion. This appears to me to be a tax rate of about 34.4% and nothing like the low percentage numbers you're been hyping for tax rates.

'Course the IRS is probably wrong, right?

In addition, there are many more S-corps, partnerships, and individual proprieterships and they pay taxes as well possibly even in a higher tax bracket but surely not dramatically lower.

Perhaps you have some better source thatn the IRS SOI?


310 posted on 08/23/2005 8:06:10 PM PDT by pigdog
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To: pigdog
In 2001 (for which a goodly amount of numbers are available), taking only major industries (Form 1120) from the IRS SOI Tax Stats it seems that almost a million businesses had $595.4 Billion subject to tax and actually paid $204.8 Billion. This appears to me to be a tax rate of about 34.4% and nothing like the low percentage numbers you're been hyping for tax rates.

$595 Billion of taxable profit probably represents more than $4 Trillion of Gross Revenues. Since the fair tax is taxing gross sales, looking at a percent of tax of the profits is not valid.

311 posted on 08/23/2005 8:12:59 PM PDT by Always Right
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To: Always Right

You've been making this claim regularly with no demonstration of its veracity. Show us where Dr. J. makes the inclusion of employeee taxes that you claim he did. And don't bother to post that ridiculous conditional statement that Nightie and others have been posting hoping to fool some people. That shows nothing of the sort.

Let's see your unequivocal demonstration where he did as you claim. Counting the employees taxes as you claim is nonsense.


312 posted on 08/23/2005 8:13:51 PM PDT by pigdog
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To: Gvl_M3
You came on here talking about depreciation. As a corporate employee your lack of knowledge of that subject is appalling. I was simply sick and tired of you bringing that subject up again and again. You were told at least five times how it works and you continued to waste band width. I don't care what you think about the fair tax and I don't care how much you echo the "newcomers" mantra about how we are all a bunch of shrill voices. You fit the pattern of Squirrels and you are qualified as one of them.
313 posted on 08/23/2005 8:16:20 PM PDT by groanup (shred for Ian)
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To: SALChamps03
I'd suggest you read my letter again with your FairTax blinders off. I never said the taxes deducted from an employee's paycheck go to the employer.

Your post reads like a regurgitation of the book which includes the mis-representation that employees will increase their purchasing power by 25+% overnight with the FairTax.

314 posted on 08/23/2005 8:18:37 PM PDT by RobFromGa (Afghanistan, Iraq, Iran-- what are we waiting for?)
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To: Your Nightmare

The FairTax base is consumption, not income. Your numbers are a bad set of mix and match foolishness - and untrue to boot.

You are mixing income tax bases and consumption tax bases - and the two are quite different and cannot be manipulated like that.


315 posted on 08/23/2005 8:18:41 PM PDT by pigdog
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To: pigdog
Nightmare's quote is a valid illustration of what Jorgenson study showed, but there is also (see page 105 on link http://www.access.gpo.gov/congress/house/pdf/104hrg/26312.pdf), where Dr. Jorgenson says:

"Since producers would no longer pay taxes on profits or other forms of income from capital and workers would no longer pay income taxes on wages, prices received by producers, shown in the fifth chart, would fall by an average of twenty percent."

This clearly shows when Jorgenson was talking about the 20% prices would fall due to embedded taxes, he absolutely included employee paid taxes. Of course the fair tax organization owns Jorgenson's study and could produce it anytime they want to. But of course they do no want to.

316 posted on 08/23/2005 8:18:50 PM PDT by Always Right
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To: SALChamps03
OK, cite the lies and misrepresentations.

Just read this thread from start to end, it is all spelled out in black and white-- both sides.

317 posted on 08/23/2005 8:20:40 PM PDT by RobFromGa (Afghanistan, Iraq, Iran-- what are we waiting for?)
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To: Always Right

If Dr. J's study is not available anywhere on the net, hopw is it you claim to know so much about it and how he does things???

Seems a BIT inconsistent.


318 posted on 08/23/2005 8:20:50 PM PDT by pigdog
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To: groanup

Dear groanup,

" You're still talking about SS here. That is not the discussion. My question to you was: what about tax policy? What is yours?"

I told you, groanup. If you don't like my answer, that's fine. It doesn't change my answer, which is, until you start to resolve the problem of the size of the federal government, you're addressing the wrong question.

If what you're saying that it isn't politically feasible to do the right thing, that doesn't mean we should go off and do the wrong thing. I don't believe that the transition to an NSRT would do less than badly harm the economy, possibly permanently, as long as the government is trying to collect 20% of GDP that way. I also don't believe that collecting 20% of GDP in that way would be anything less than very harmful to the economy, even on a steady-state basis.

"A couple of hundred years ago an entire nation was in upheaval. That nation adopted a set of laws that put all of the power in the hands of the people who dwelled in that nation. That had never been done before. Can you imagine the havoc and mania that should have occurred?"

Actually, the period between the beginning of the Revolution through some time after the adoption of the Constitution saw plenty of havoc and danger and difficulty, plenty of disruption and upheaval, death and destruction, and loss of fortune.

"Well, it worked."

Yup. It worked. Not without great cost. Nonetheless, it worked, and it's still working. Even economically.

While most of the rest of the world struggles, we seem to keep chugging along.

That's a key difference between now and 200 years ago. Two hundred years ago, things really WERE broken.

Today, there are things that could work better, but our economic system is far from broken. It is still the envy of the world.

From my perspective, you want to implement a proposal that I believe actually will break it. You don't see it that way, of course. If you did, you would oppose it, because you're a loyal, patriotic American, at least, from what I can see.

But so am I. And my perspective, that comes from my own experiences, experiences of a business owner of 20 years, experiences of someone with some formal knowledge in the matters at hand, experiences of an experienced, long-term investor, experiences of someone who has seen ideas come and go all my life, experience that tells me that 1. much of what is being promoted here is just fiction; 2. what is actually true and good about an NSRT isn't enough to put at risk an economic system that mostly works, and works better than mostly anywhere in the world.

I've tried to hammer at the fictions presented here in these threads. Seventeen percent embedded corporate income taxes. * chuckle * A small business owner's personal income taxes are now his business taxes. LOL!

That these and other proven fictions are bandied about by the proponents of the NSRT, and appear to be little questioned by any of you does not inspire confidence in me that your judgment is superior to mine.

I see neither the crisis that you see, nor do I see in the NSRT the solution to the problems we actually do have.


sitetest


319 posted on 08/23/2005 8:23:24 PM PDT by sitetest (If Roe is not overturned, no unborn child will ever be protected in law.)
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To: Gvl_M3

"If you are really trying to be helpful, give me a link to a specific article"

http://www.google.com/search?hl=en&q=75+economists+fair+tax&btnG=Google+Search

Please, knock yourself out.


320 posted on 08/23/2005 8:24:53 PM PDT by groanup (shred for Ian)
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