Posted on 08/27/2007 7:53:49 AM PDT by Turret Gunner A20
more paperwork.
more examination and audits of sales.
more IRS invastions.
Even if that were true, do you really think them overseas governments would never figure out our secret economic weapon and retaliate?
The cost of labor in the manufacture of stuffed animals for Fisher Price is $1 in China and $8 in the US. The FairTax ain't gonna equalize that.
The “Fair Tax” would be a worst case scenerio for my wife and I. We have both been working very hard full-time for about 25 years (in our late 40’s) paying an average of 38% in combined taxes per year, living frugally and saving as much as possible. In about a year, we plan on selling our California home, moving into an existing mobile home on my parents property, and helping them out in their old age for about 6 months of the year, and living off the interest on our savings (interest should come to about $25K/year...little or no income tax, due to “progressive” Calif./Fed tax rates). For the other 6 months we plan to buy a truck/RV combo ($50K or so) and travel the country until we get to be about 60-67 years old (our 401K’s, pension, Social Security?? kick in then). We then take our savings and build a new home for our later years. So for us under a “Fair-Tax”, the double-taxation would begin immediately, starting with the truck/RV $50K purchase, and then later on with the site-built home??? Not sure if “Fair-Tax” sales taxes would apply to building a new home on property you own. Fortunately I think the chances of the “Fair-Tax” passing in anything near it’s current form are low, maybe 1 in 1000 or less.
What do you think all those 50 new collection offices (not counting the satellite offices) would be doing? Sitting around twittling their thumbs?
Actually you and your wife would be a lot better off if the Fairtax were in place under the scenario you lay out. First, you would receive any interest you earn completely free of taxation. Secondly, you would not pay ANY tax at all on your spending up to the current poverty level. And thirdly, all those pretax investments (401ks etc.) would enjoy a HUGE windfall in that there would now be no tax due when you withdraw the funds.
That truck/RV combo would likely not cost you any more under the Fairtax, with the tax included, than it would under the income tax as both of those items require very long supply chains for their manufacture. All of the taxes, and all of the costs associated with filing those returns, winds up in the price of every part going into both items. All of that would disappear with the fairtax in place.
Or NRST will nudge the states into conformity with the FairTax.
From
A National Retail Sales Tax: Consequences for the States
While many desirable macroeconomic consequences would follow from adoption of a national retail sales tax, there would also be serious effects on state and local government finances. Absent the IRS, it would be more difficult to maintain viable income tax systems. And the costs of financing state and local government services would rise sharply. State and local tax bases would be substantially broadened if they conform to the NRST base; nonetheless, higher rates would be necessary to replace existing revenues and to finance costs of paying the federal tax on state and local government service delivery. Together there seems to be little in a national sales tax that states and localities would find palatable.
For the founding fathers, a balance between federal government and state rights was an issue and the Constitution is a result of the compromise reached. I doubt they would have accepted a federal tax system that reached into the states and taxed every single sale of goods and services conducted (with the exception of business to business, of course) whether between individuals, individuals and business, government and business, government and individuals.
While the FairTaxers promise more freedom from government with their scheme, it looks like the NRST puts the federal government smack dab in the middle of the day to day economic life of Americans in an unprecedented way.
While the FairTaxers promise more freedom from government with their scheme, it looks like the NRST puts the federal government smack dab in the middle of the day to day economic life of Americans in an unprecedented way.I've asked more than once (without reply) at what point does a state worker administering a federal tax NOT become a federal employee?
It kind of looks like the state becomes a contractor for the federal government.
By your argument prices would continually be going down. And yet prices, in general, rise ALL THE TIME. Therefore your argument is false. Pricing isn't a race to the bottom.
Too bad you didn't bother to read my argument. Nowhere did I claim that prices would be continually going down. I said there was price competition. And I reiterate my statement that anyone who doesn't understand this concept is too ignorant to be involved in serious discussions involving economics.
To help, though, I'll give you a tiny primer. When an expense (e.g. taxes) involved in creating a service or commodity goes down, the developer of that commodity has several options: they can pocket the increased revenues (e.g. increase profits, invest in infrastructure, raise wages, etc.), lower prices, or both. Companies that engage in competition (non-monopolies) many times choose to lower prices in order to increase market share thereby increasing their total revenues. Competitors will frequently lower their own prices in order to avoid losing market share.
Attempts by an industry to avoid this competition(collusion, price fixing, etc.) are illegal though most of the time the laws are unnecessary in any commoditized market.
I hope this has relieved some ignorance. You may have to use a dictionary for the more technical terms.
I think you mean Palm Beach. West Palm Beach is just another FL city, mostly middle-class, but including some pretty major slums.
We all know gas prices go up because of the Dick Cheney-led conspiracy controlling prices.
But did you ever wonder what causes them to go back down?
It's because of the competitive pressure created when margins are excessive.
If worker's comp rates go down for all staffing services, Kelly and Snelling will both have their costs decrease by the same percentage. Since both companies have a high fixed cost of being in business, a slight increase in sales translates to a highly disproportionate increase in profits.
In my own business, for instance, with admittedly very high fixed costs, $1000 in increased sales translates to well over $500 in net profit.
Both Snelling and Kelly can make a lot of money by stealing business from the other. Each is under intense price pressure from their customers, who often price shop the competition, and who may very well be aware of the drop in costs.
The only way prices don't come down is if the staffing businesses conspire to keep them up, which is illegal and seldom works very well anyway. The conspiracy gets set up because the conspirators are greedy and unscrupulous; and these are the people you expect to keep their word to the other conspirators and not cut prices to make more money for themselves?
Besides, what is to stop Joe Smith, manager of the local Kelly, from quitting his job and starting his own service, with lower rates used as a way to get business quickly?
The higher the excess profit margin, the more incentive there is for others to enter the field and grab some of that gravy.
You really ought to be aware this is all Free Market 101 and was covered in detail by Adam Smith in 1776.
You omit a few things. Not all workers comp goes up the same. There are “frictions” to entrance into a market or industry, such as availability of capital, availability of labor, industry-specific knowledge, legal restraints such as non-compete agreements. Gas prices jump up and drift down. No one wants to be first. Most businesses don’t face a store on every corner. Sometimes a billion dollars or more is required to begin an enterprise, and what if the market conditions change in the meantime?
Competition by price is for fools and losers. Perhaps we learned this in a higher level course, or by the hardest experience.
Oh, and there are no “excess profits”.
You’re right. The free market is messy and sloppy. But as a pricing mechanism it works, most of the time pretty well and all of the time to some extent, unlike any alternative that has ever been implemented or even proposed.
Only an idiot who has never operated a business would claim that price competition doesn’t exist and isn’t a key factor, often the key factor, in how a business prices its goods or services.
For that matter, there is downward pressure on prices even in the absence of a competitor who will do the job cheaper. In my own business, I can often get another project by reducing my price slightly. Let’s see, would I rather have $900 or not have $1000? If my costs have gone down recently, am I not more likely to go for the $900?
I probably used the term “excess profits” inaccurately. My knowledge of economics is largely practical rather than theoretical.
When I said “excess profits” I meant the high profit levels, a result of demand exceeding supply (Point A), that induces competitors to expand their capacity and new competitors to enter the field. As others have pointed out, the expanded capacity eventually catches up with demand and exceeds it (Point B), resulting in price competition that eventually forces less-efficient competitors out and the stabilizing of prices at a level that provides more “normal” profit levels (Point C).
You really don’t want to argue this point with me, as I’ve spent the last five years riding this roller-coaster, with Point C reached in the last year.
I find it extremely bizarre that anyone on a “conservative” forum would argue against the most basic principles of free market economics.
I don’t argue against, but we do not live in an age of classic Caapitalism.
Today’s corporate leaders show little of the guidance of Smith’s “invisible hand”, nor much enlightenment. In the corporate culture optimize always means maximize.
Smith would puke. Put in keyword optimization and count how far down you go to get away from math or statistics.
The black market,drug dealers and all underground types paid the same tax when they purchased goods prior to the Fairtax as they will after the Fairtax
A $1000 watch before the FT incured the 23% embedded tax that was paid by the retailer.
With the FT the 23% embedded tax is paid by the buyer with no change in the total price,still $1000
Complete fallacy that these people types will now pay more taxes under the FT plan
Yes, but you see, often those who are opposing the fair tax claim that the embedded taxes are a mere fraction of the 23% claimed by fair tax supporters. So by their argument, the drug dealers would be paying MORE in taxes than they are now.
No,thats not what Boortz says-the 23% embedded tax on new purchases now paid by the retailer will be offset by the the buyer WITH NO CHANGE IN TOTAL PRICE
Their claim is under the Fair Tax Plan is these people will now pay more taxes
How could they pay more in taxes if they believe the 23% is a fraction of the 23% enbedded tax
If they believe it will be more than 23% than all taxes will move up to that level and everyone will be paying more,not just the underworld.
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