Posted on 09/17/2006 7:55:38 PM PDT by pigdog
NO it isn't. It IS a study that exposes the hidden costs of the current tax system however. Those costs accumulate somewhere. They don't just evaporate into the ether!
So YOU say but I STILL have seen no scholorly refutation of it!
Yes the Fair Tax will collect the same if not more revenue for the government but it will remove playing favorites which is what the poster you replied to was insinuating I believe.
In other words it doesn't matter how many dollars flow into the government, what matters is how that money flow is channeled and who controls the channel gates. Tax law is what controls the gates and every legislator has their hands in crafting more tax laws. In short, that is what elected office boils down to, how many tax gates can be influenced.
If the Fair Tax Reform was passed, Congress would have to succumb to a budget rather than cut deals on tax breaks.
I believe the Fair Tax will pass in 2019, just about the time when the dire consequences of demographics force an overthrow of the present system.
Unfortunately Americans wait until they suffer a 'Pearl Harbor' before they resolve to fix their messes, and even then, as in 9/11, resolve may be weakened over time. And we will wait until the present system crashes before reforming anything. The coming changes in demographics will spur the tax revolution.
2019.
The only hope for a sooner development is some sort of Fair Tax zone experiment, where all residents and resident businesses (with strict definition of residence) of certain geographic zones (because most people are geographic based) would be treated under a Fair Tax system.
Why, when reading your posts, does this (below) old addage come to mind?
If you are not part of the solution, there is good money to be made prolonging the problem.
What is your proposal - and how does it stack up against this possible solution.
PS - If you favor status quo - don't worry about the point by point comparison, it isn't needed.
The biggest problem is controlling spending and I don't see a 30% sales tax as a solution but a bigger problem. If I were to design new tax system it would be a combination of income and sales tax, with a much lower and flatter income tax and a much lower sales tax without the prebate but one that does exclue food and housing. There are three major problems with this proposal, besides all the dishonesty that is done pimping it:
1. It delinks Social Security from payroll. It will make social security into a bigger entitlement program than it is today, where the people who pay into it aren't the ones who neccessarily get the benefit. For instance, retirees who have already paid a lifetime of social security taxes, will now have to pay social security taxes everytime they buy something. They are paying social security taxes on their social security benefits.
2. The fairtax prebate is a new $600 Billion entitlement program in which every American gets a monthly check whether they pay taxes or not. This will be the biggest entitlement program ever.
3. 30% tax is too high and the way the tax is designed it can only result in an immediate 20% inflation. The high rate will increase tax avoidance and initially have a big negative impact on the economy.
There are several legitimate advantages to a sales tax, but doing an all out switch is a real dumb idea. I don't oppose reform, I oppose dumb ideas.
So YOU say but I STILL have seen no scholorly refutation of it!Then you haven't looked. Here's one, two, and three (at least). And there are others that discredit the ADL study directly. If you are truly interested (which I doubt), it shouldn't be hard to find some damning criticisms of the ADL study.
They don't just evaporate into the ether!But that's exactly what you and pigdog theorize...The exact words are "POOF! GONE!!"
The "hidden taxes" themselves (since they are not taxes but unproductive price increases) do not need to be replaced by a revenue neutral FairTax. Instead they are removed - POOF! Gone!!Someone is in ether.
It just does not sink into fairtaxers that these 'unproductive price increases' are business profits. And what fairtaxers just seem to assume is that businesses will happily take cuts in their profits so everyone else can have more money. It's all part of the fairy magic that goes into their 'analysis'.
I'm sorry that you cannot grasp that fact but it is, never-the-less, a fact.
I am sorry but that is simply incorrect. The costs in question are costs imposed by the tax system itself and, as such, CANNOT be profits.
Fairtaxers know that in competitive markets when costs are removed market forces take over and force price drops if market shares are to be maintained.
Lewis if the income tax system imposes costs, other than the taxes themselves, and the income tax system is removed those costs are removed as well.You don't understand what a "cost" is to an economist. It's not money spent. To an economist, you reading this email has a "cost."
I strongly suspect that I understand a great deal more that YOU think and yes, your reading this definately does have a cost attached.
I'm sorry, but none of those is a refutation of Dr. Paynes work IMHO.
No they are not. They are price markups. Compliance costs were not mentioned or considered. It is assumed that because the inputs are cheaper, that stage of production can reduce their markups more. But those markups are simply the profit. I know this will not sink in no matter how many times it is explained.
Quoting from Study #1:
In the end ADL used simplified versions in which each component of the burden is presumed to depend upon at most two of three tax form variables: the number of lines on the form, the number of line items in the form instructions to the Internal Revenue Code and Regulations, and the number of attachments requested that are IRS forms. The resulting model generated an estimated compliance burden of 2.7 billion hours for businesses in 1983 – a number five times higher than the aggregate estimated from the survey results – 546.7 million hours. The ADL study did not attempt to translate the estimates of time spent on tax compliance into dollar values. Slemrod (1996) argues that the shortcomings of the ADL model make its compliance cost estimates (and those of other researchers who have based their estimates on the ADL model) unreliable. Payne (1993) used the ADL model to estimate the number of hours devoted to compliance – 3.614 billion in 1985
So what it seems to be saying is the ADL overstated hours by 500% and then Payne extrapulated those numbers higher to get his. To me if someone thinks your numbers are 5 times too high, they are refuting it. But fairtaxers know different, I guess.
"Then you haven't looked."
And presumable have and offer 3 "refutations"??? Let's look at them in reverse order since that's how I happened to look at them.
"three" - A presentation to Ways & Means Committee of William Gale of Brookings Institute. Perhaps you haven't noticed (but others have) that Mr. Gale's handiwork shows up repeatedly throughout the heated opposition by status quo forces to tax reform such as the FairTax. He is a staunch status quo defender and if he's not personally on these threads, his views and disciples certainly are and his effect upon the Tax Panel report has been noted before.
In this notorious presentation at one point he opines that the FairTax (NRST) rate would HAVE TO be 94% tax exclusive. This is more than just a bit silly and it's surprising to see it in what should be a well-reasoned and scholarly effort ... which it is not. Also we note that Joel Slemrod (one of the authors of your link "one" is a Gale/Brookings colleague by reading one of the footnotes:
"Slemrod, Joel. 1996. Which is the Simplest Tax System of Them All? In Economic Effects Fundamental Tax Reform, edited by Henry J. Aaron and William G. Gale. Washington, DC: Brookings Institution Press, 335-391."
Indeed it seems that the fruit doesn't fall far from the tree - or in this case a left-leaning liberal think tank. We also note that within this paper (refuted some time ago by material on the AFFT website) that Mr. Gale plays his famous "reduce the base by casting out and ignoring part of it" as with respect to Payne's work he says something to the effect that Payne's numbers come up with $514 billion of which $236 billion cannot be included since it covers costs which "aren't typically included" in compliance costs. So Mr. Gale summarily casts out about half of the figure to end up with $277 billion - a trick which he (and the Tax Panel) have repeatedly done in attempting to attack the FairTax. A nice trick if you can get away with it. There are other flaws in his supposed "rebuttal" (or whatever you'd like to call it).
"two" - A link to Amazon to allow one to buy yet another book which Mr. Gale is involved with. It's a paperback but still awfully expensive and it's clear to me that "The FairTax Book" is a much better buy and offers more in the way of real information IAE.
"one" - Oh, my! A paper by Joel Slemrod from Michigan U. Hmmm! - Slemrod - Slemrod - where have we seen that name recently ... I know; in "three" of this post. The Slemrod paper, however, seems to be about tax compliance in medium to large businesses. Are we to assume that this applies to small businesses and individuals, too? IOW the "refutation" seems to be about something different from the Payne presentation.
So we find that none of the three links you give are at all workmanlike or make a convincing case. I think it best just to stick with Payne's information and observations - all of it and not just the half of it slashed off by Mr. Gale.
I'm sorry, but none of those is a refutation of Dr. Paynes work IMHO.Shocking!
"three" - A presentation to Ways & Means Committee of William Gale of Brookings Institute. Perhaps you haven't noticed (but others have) that Mr. Gale's handiwork shows up repeatedly throughout the heated opposition by status quo forces to tax reform such as the FairTax. He is a staunch status quo defender and if he's not personally on these threads, his views and disciples certainly are and his effect upon the Tax Panel report has been noted before.So you can't address what he actually said? Frankly, in the economic world, Gale is respected - Payne isn't even in the economic world.
Also we note that Joel Slemrod (one of the authors of your link "one" is a Gale/Brookings colleague by reading one of the footnotAre you going for the record for logical fallacies in one post? Joel Slemrod is an extremely respected economist. Why don't you address what he said instead of trying the "guilt by association" crap (oh, right, because that's all you got).
So what it seems to be saying is the ADL overstated hours by 500% and then Payne extrapulated those numbers higher to get his. To me if someone thinks your numbers are 5 times too high, they are refuting it. But fairtaxers know different, I guess.And then he took those hours and multiplied them by the average wage of "IRS employees and that of employees at Arthur Andersen, Inc.," or $28.31. And those are 1985 dollars!!
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.