Posted on 09/08/2005 4:48:28 AM PDT by Your Nightmare
A bestseller advocating radical tax reform contains a critical flaw that misleads readers, according to a report in the October issue of MONEY Magazine.
...
While consumers would pay a federal sales tax on purchased items, the authors argue that prices at the store would stay the same. The reason: everyone involved in the process of production would no longer be paying taxes, so they could charge less for their goods and labor.
If true, that would mean a dramatic increase in Americans' purchasing power.
But, according to the MONEY report, the book fails to make clear that, in order for pre-tax prices to fall so sharply, companies would also have to cut wages they pay.
"Sure, you'd get to 'keep 100 percent of your paycheck,' as Boortz and Linder repeatedly write, but it would be a smaller paycheck," MONEY senior editor Pat Regnier writes. "That's kind of a big thing to leave out."
(Excerpt) Read more at money.cnn.com ...
One day you may figure out what the word "AND" means, and when you do get back to me.
Not one person has argued that point. DUH. The whole issue is whether they can keep 100% of their current paycheck AND (that darn word 'and') prices come down 20%. Really, you are being stupid.
"all their research"???
That's hilarious. There have been many, many economists study and research the FairTax. And yet you guys sieze upon a single one. In fact, the FairTax is the most thoroughly investigated and researched tax bill ever put before congress.
It has been studied by far more than a single researcher (nor did he do "all their research" - that's nutso boffo, pal).
Stupid is as stupid posts, Rongie - and your'e the living, breathing example of that.
So- let's see ... you're now admitting that workers will get to keep 100% of their gross wages including what were payroll tax withholdings??
Goodness, the lead-in article that your compadre Nightie was hyping to high heaven was stating the workers would take a pay cut. You guys can't even get your own stories straight. Which is it, eh??? (And you have the temerity to call others stupid?)
SAYS it all.... This is from the usual set of Marxist clowns that want to protect the current Progressive tax system... They are on the same side of Ted Kennedy and Hillary Clinton...
You are posting from CNN.. LOL!
You a the biggest idiot on this forum. They were talking about the assumptions of the model, not what will actually happen. No one can help the fact that Dr. Jorgenson assumed workers gross pay would go down and net pay would stay constant. You don't seem to understand context or much else for that matter. You have been arguing this far to long to really be that stupid. I really don't understand you.
One of your better jokes ... "... evenhanded article ..."!!!
It is clearly nothing of the sort - not is the lead in text offered by Nightie.
They just make the BS up as they go along... I guess that is the Marxist way....
You obviously are not well informed about the FairTax and how it works. I suggest you first read the bill and then spend some time on the FairTax website and THEN return to discuss it.
Here's the bill:
http://thomas.loc.gov/cgi-bin/query/z?c109:H.R.25:
Here's the FairTax website:
http://www.fairtax.org/research.html
FairTax supporters do not describe it as magic at all (that is the FairTax opponents making the claim that we do) but as a greatly beneficial tax law that will greatly aid our country's economy - and most taxpayers.
I was referring to the Money Magazine article, which was far too long for you to comprehend.
That is another of your "misststements of fact". You seem COMPELLED to lie.
Show us that the statement you make in this post is anything but a barefaced lie.
Demonstrate that the claim you make has anything real to back it up. You can't do it.
Well, Rongie, if THAT's the point, then how much CAN you decrease them by without cutting wages???
Show us how you arrive at these numbers.
Well, hey, Rongie, let's get your story straight. Are you now saying on THIS post that wages cannot increase and prices fall at the same time?
I thought the last time we looked, you guys were saying wages would fall. Can you not agree on what it is you're lying about?
The painful truth
Toward the end of The FairTax Book, there's a handy little box summarizing what the authors say will happen if we make the switch to a sales tax. Here are the first three points:
From our checks.
Consumption tax we would be expected to pay on life's basic necessities.
This sounds pretty good. Of course, we know that it isn't nearly as big a gift as it seems because we'll have to pay some of it back in taxes when we buy things at the store, right? Er, apparently not. Boortz and Linder write:
We'll explain this bit about "embedded taxes" in a moment. But first, let's consider what Boortz and Linder appear to be saying. Prices at the store are the same. Your boss stops taking all that money out of your paycheck. Uncle Sam is sending you money instead. And, oh yeah, the government is still up and running.
This just can't happen. "It is practically and logically impossible for the government be collecting the same amount of money as before and have everyone suddenly be better off," says Daniel Shaviro, a tax law professor at New York University.
Part of the problem is the way Boortz and Linder are using the idea of embedded taxes. In an eight-year-old study paid for by AFFT, Harvard economist Dale Jorgenson noted that because the taxes paid by everyone in the chain of production are embedded in the cost of goods, prices could decline an average of 20 percent if all those taxes were scrapped. The FairTax Book devotes an entire chapter to this idea.
What The FairTax Book fails to mention is that prices can only fall this sharply if companies cut wages. I asked Jorgenson about this, and he agreed. Say your salary is $100,000 a year today, but you take home $80,000 after taxes.
Your company is still paying that extra $20,000. In a FairTax world, it will save that money, and be able to lower its prices accordingly, only if it can reduce your salary to $80,000. In other words, your take-home pay is the same as before. Sure, you'd get to "keep 100 percent of your paycheck," as Boortz and Linder repeatedly write, but it would be a smaller paycheck. That's kind of a big thing to leave out.
I pressed the point with Boortz and Linder. Boortz denies that the book intentionally overpromises. The introduction, he notes, emphasizes that "this book isn't about saving a penny in taxes." But he concedes that the book is confusing about this, and vows to correct it in later printings. Fair enough.
You have been totally discredited and yet you still keep digging a deeper hole.It's been fun to watch, hasn't it?
what part of that do you fail to understand????????????????????????????????????????????????????????????????????????
It really ain't that hard what we are saying.
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