Posted on 01/20/2008 6:29:07 AM PST by Man50D
During an election season, one of the first losers is the truth. The current misinformation campaign against the FairTax has been particularly virulent. Last month the FairTax was being panned by some columnists as a "crackpot scheme," even though it could be collected exactly the same way as its close cousin, the value-added tax, which is the most successful tax in the world. This month the FairTax is being vilified by various columnists as a tax increase for the middle class, even though it would provide a substantial tax cut for two-parent middle class families. Specifically, in a recent column, George Will asked, "Do you want a president (Mike Huckabee, proponent of a national sales tax of at least 30 percent) pledged to radically increase the proportion of federal taxes paid by the middle class?" Similarly, Time magazine's business and economics columnist Justin Fox wrote a blog piece entitled, "The FairTax and its big break for the $200,000-plus crowd."
The FairTax is a national sales tax that would replace the income taxes, the payroll taxes, and the gift and inheritance taxes. It would be a 30 percent sales tax on retail purchases. Since 30 cents is 23 percent of $1.30 (the amount you would pay on a $1 item), a 30 percent FairTax would cost you about 23 percent of your consumption. To help you pay the tax, you would get a prebate check or a debit card credit at the beginning of each month equivalent to the amount you would pay when buying necessities. In 2007, that amount would have been based upon $10,210 spending per adult and $3,480 spending per child.
(Excerpt) Read more at worldnetdaily.com ...
The FT changes the rate and the tax base for SS (&MC).
That isn't correct. The same laws govern both entitlements; the FairTax merely funds them as required in those bills using the rates and base specified in those bills.
Your "double taxation" claptrap is just that. Merely invest the money instead of spending it and no earnings from any of that is taxed - and your effective tax rate will no doubt be lower, too.
... and I’ve pointed out to you that the wording of the bill puts the lie to your notion ...
The FT changes the rate and the tax base for SS (&MC).
As I explained to you on another thread, both of your assertions are untrue as are the other claims made in your post.
Actually - this thread ... see #601.
And you miss the point that with the FairTax the effective tax rate on purchases will be less than the effective income tax rate is presently. With that being the case people are even MORE likely to consume (as well as invest) hence the increased economic activity that the economic studies predict.
How long is it presently???
They have different meanings.
And you miss the point that with the FairTax the effective tax rate on purchases will be less than the effective income tax rate is presently.
The effective rate will be lower, and revenue to government remains the same (revenue neutral) - that makes sense to you?
With that being the case people are even MORE likely to consume (as well as invest) hence the increased economic activity that the economic studies predict.
What you're saying is that the maxim "you get less of what you tax" is false.
Your statement is counter intuitive, which means that human beings are likely to behave differently than what you and the economic studies, predict.
It is likely that the financial services sector of the economy will grow, but it is also likely that other, taxed economic activity will contract. One economic study conducted for a retailers association predicted an overall economic slow down and concomitant unemployment.
Australia's experience with a 10% sales tax was a 37% drop in construction and recession. That result was totally unforeseen, BTW.
I'm not sure I understand your question.
They have different meanings.
Really?? And you think that being patronizing is a way of educating stupid little me??? Get real. I assume they can mean different things since they have separate definitions in most dictionaries. Whether they have "different meanings" or not the poster was using them to mean basically the same thing and perhaps your comment should be directed to him.
Yes, perfect sense - since the tax base is broader than under the income tax. If you think otherwise, let's see your reasoning and the numerical examples to back it up.
Since under the FairTax the effective tax rate is lower than it is under the income tax, more consumption under the FairTax indeed follows the "old saw" you're trying to misuse. You are the one who is attempting to turn it on its head and subvert human nature, not I.
The retailers "economic study" you refer to has been outdated for some time and was never an economic study (or anything like it) of the FairTax. It was commissioned from a consulting firm, not an economist, but did not review the FairTax (which wasn't even on the congressional calendar at the time).
I believe your citation of Australian "sales tax" is quite far afield as in fact it was actually a VAT (and is normally described that way - check Wikipedia for example)and not a retail sales tax on consumption items. It was much like the Canadian GST (Goods and Services Tax) which is also more in the nature of a VAT rather than an actual retail sales tax on consumption.
In both of these countries the VATs are rife with exemptions and exceptions which merely makes them readily malleable to political mischief mush like our good old US of A income tax - "special strokes for special folks" as it were. The FairTax avoids that silliness for good reason. And those VATs also suffer from the rampant paperwork fraud that seems to always be a tagalong with any VAT since paper is easy to falsely generate to "apply" for a fraudulent refund.
If you don’t understand the question then that seems to imply you think the present SS/MC system treats all “fairly” and no one will ever believe otherwise. Is that really what you’re trying to say?
As I recall, my original comment WAS directed to him.
Yes, perfect sense - since the tax base is broader than under the income tax. If you think otherwise, let's see your reasoning and the numerical examples to back it up.
I don't need numbers. "Tax base" means taxable activities, not taxpayers.
The retailers "economic study" you refer to has been outdated for some time and was never an economic study (or anything like it) of the FairTax. It was commissioned from a consulting firm, not an economist, but did not review the FairTax (which wasn't even on the congressional calendar at the time).
Umm - look up the consulting firm and see what they do.
I believe your citation of Australian "sales tax" is quite far afield as in fact it was actually a VAT (and is normally described that way - check Wikipedia for example)and not a retail sales tax on consumption items. It was much like the Canadian GST (Goods and Services Tax) which is also more in the nature of a VAT rather than an actual retail sales tax on consumption.
The GST is a tax on consumption and is also a VAT.
Fram Wikipedia: Sales taxes are normally only charged on final sales to consumers: because of reimbursement, VAT has the same overall economic effect on final prices.
Also from Wikipedia The preceding months before the GST became active saw a spike in consumption as consumers rushed to purchase goods that they perceived would be substantially more expensive with the GST. Once the tax came into effect however, there was plummeting consumer consumption and economic growth, that by the first fiscal quarter of 2001, the Australian economy plunged into negative growth for the first time in more than 10 years.
In both of these countries the VATs are rife with exemptions and exceptions which merely makes them readily malleable to political mischief mush like our good old US of A income tax - "special strokes for special folks" as it were. The FairTax avoids that silliness for good reason.
Right, and the FairTax will be free of any diddling by politicians. It will be written in stone, like the Ten Commandments.
Nope. What I'm saying is that employers pay a share and employees pay a share. While ultimately the cost is passed on in prices, a direct relationship exists between work and eligibility for benefits. There is a certain logic to delivering benefits to those who make contributions through payroll deductions.
The FairTax breaks the direct relationship to work by eliminating payroll deductions and employer contributions, and funding SS through a general sales tax.
Adding to the previous post - I can't think of a better plan to expand socialism in the US than the FairTax.
From prebate to Social Security and Medicare funded with a sales tax, its a plan worthy of Marx.
I have a little problem with that, too. If the "fair tax" replaced the current income tax, my family would be better off. Until my husband and I retire. Then we would be paying 30% more for everything we buy with our retirement savings, which have already been taxed once.
I don't need numbers.
Perhaps not but let me explain it this way. Consumption is a broader base than income (with both being "taxable activities").
Consulting firms are known as "hired guns" and are used as such in many parts of business activities (including the Retail trade group involved). But that doesn't alter the fact that what the "studied" wasn't the FairTax.
Your attempt to justify your position about the Aussie GST by means of your "primary economist" would be funny if it weren't so incorrect. From your "primary source" about the Aussie GST:
The GST (Goods and Services Tax) is a value added tax of 10% on most goods and services sold in Australia.
Than says nothing about it being a sales tax AND a VAT. It is a VAT (period). And your attempt to characterize it as an equivalent to the FairTax is pathetic nonsense. Your source does not even mention that additional taxes were imposed as a supplement. The description of the Canadian GST also calls it out as a VAT (not your pretense that it is a sales tax and a VAT). They are both VATs (period).
It will be written in stone, like the Ten Commandments.
I doubt that - but it certainly won't be a VAT with supplemental income taxes (and all sorts of exclusions and exceptions in different states) to start life as the taxes you seem to admire.
For that matter why is it fair that only wage earners are used to support SS and MC. There are certainly benefits paid to non wage earners done in other than a relation to wages. Is that fair? Shouldn't the non-wage earners have to "contribute" also? Or perhaps it would be "fairer" to merely deny them any benefits at all??
Surely you're aware that it will VERY shortly be impossible to fund some of those entitlements through the present income base without massive alterations. It that "fair"???
Perhaps you can suggest a "fair" funding method under the present tax system. I have no doubt that congress would be welcoming of any ideas you might have.
I can't think of a better plan to expand socialism in the US than the FairTax.
I can - in fact it's easy:
Continue the present income tax system. After all it's a progressive tax that the 2nd plank of Marx's Manifesto says is a great thing for populace control. (The FairTax isn't).
Also, keep on expanding entitlements such as SS and MC which are as socialistic as they come.
Might as well also throw in some more of those welfare programs for the poor as we have presently - or even expand them. The cost can be hidden and disguised within the income tax system and there's lots of political cover with the K Street crowd working both sides of the aisle.
And, let's see, since the SS/MC entitlements can soon no longer be funded from income perhaps we can start a NEW tax form based upon oldsters and sick folks paying more (since they're the ones who you claim benefit from those programs). I guess that's fair, too, but maybe a little over the top socialistic.
I have a little problem with that, too.
You shouldn't - since it isn't true but merely more of the demagoguery put forth by some on these threads.
The fact is that under the FairTax you pay NO tax on any savings (previously taxed or not) nor on any investment income that they might generate. You are taxed only when you purchase certain things at retail for consumption (which you control) - and not everything is taxed when purchased.
Among the things not taxed under the FairTax are:
1) annual amount paid out for loan payments, including both principal and interest. (include existing mortgage, auto, and all other loan payments.)
2) annual tuition payments made for education for any age, any level. Include annual student loan payments
3) annual amount of all funds deposited to any savings account or retirement account through a government plan, through your employer, or privately, and all funds used to purchase any stocks, bonds, business, or investment vehicle of any kind.
4) annual amount of all funds you have donated to any Church, profit or non profit charity or organization, or given to any individual through a gift, inheritance, donation, or court order, including child support.
5) estimated annual amount of all taxes paid to any State, County, City, Municipal, Township, and other local governments. Include state income and sales taxes, property taxes, school district taxes, deed transfer taxes, occupational taxes. Include both State and Local taxes paid throughout the year, through payroll deductions and estimate those paid on your own, such as sales taxes.
6) annual estimate of funds spent on purchases of used items (jewelry, clothes, used real estate, used cars, used furniture, antiques, etc.).
7) donations as a political contribution to an individual or political party
What is taxed is not taxed at "30%" as the distorters like to present, either. The actual tax cost to the buyer is the cost of the thing purchased without tax plus your effective tax rate under the FairTax which is typically less than half your effective income tax rate.
IOW, your actual costs will be lower than they were previously since your purchasing power is increased and keep in mind that under the income tax any purchases you make will have some cost component of the income tax embedded into the cost of the thing purchased (which is eliminated under the FairTax).
The claim to try to get people to believe that "everything they buy" will be "30% more" is a demagogue's delight. Don't fall for it.
And that proves?
Consulting firms are known as "hired guns" and are used as such in many parts of business activities (including the Retail trade group involved). But that doesn't alter the fact that what the "studied" wasn't the FairTax.
Do you understand that those studies conducted by economists that FairTaxers are always pointing to were commissioned by the FairTax organization? You do realize that they were "hired guns" for the AFFT.
Than says nothing about it being a sales tax AND a VAT. It is a VAT (period).
A VAT and a sales tax are both consumption taxes.
And your attempt to characterize it as an equivalent to the FairTax is pathetic nonsense. Your source does not even mention that additional taxes were imposed as a supplement. The description of the Canadian GST also calls it out as a VAT (not your pretense that it is a sales tax and a VAT). They are both VATs (period).
Additional taxes were not imposed as a supplement to the Australian GST, other taxes already existed; some were eliminated, and others were lowered - get it?
VAT, sales tax; a consumption tax by any other name is still a consumption tax.
I doubt that - but it certainly won't be a VAT with supplemental income taxes (and all sorts of exclusions and exceptions in different states) to start life as the taxes you seem to admire.
You haven't got a clue as to what I admire, so don't even try - it makes you look silly.
You do however pay tax on financial services provided by the bank and/or other institution, as well as on excess interest.
1) annual amount paid out for loan payments, including both principal and interest. (include existing mortgage, auto, and all other loan payments.)
The service (time spent by employees) provided by the lending institution is subject to the FairTax.
3) annual amount of all funds deposited to any savings account or retirement account through a government plan, through your employer, or privately, and all funds used to purchase any stocks, bonds, business, or investment vehicle of any kind.
FairTax collected on bank service for maintaining you account and excess interest. FairTax paid on service for retirement account. FairTax paid on brokerage fees and service.
4) annual amount of all funds you have donated to any Church, profit or non profit charity or organization, or given to any individual through a gift, inheritance, donation, or court order, including child support.
Forgot the 30% FairTax when the money is spent?
5) estimated annual amount of all taxes paid to any State, County, City, Municipal, Township, and other local governments. Include state income and sales taxes, property taxes, school district taxes, deed transfer taxes, occupational taxes. Include both State and Local taxes paid throughout the year, through payroll deductions and estimate those paid on your own, such as sales taxes.
Federal, state, county and city governments must pay the FairTax on their employees compensation and all their purchases - where do you think their tax money will come from?
6) annual estimate of funds spent on purchases of used items (jewelry, clothes, used real estate, used cars, used furniture, antiques, etc.).
Repairs on that used car will include the FairTax. Repairs and remodeling on that used real estate will include a 30% tax on materials and labor. Want to insure your antiques and used jewelry, include the FairTax. Need to alter those used clothes, 30% tax on labor. Need to have them cleaned, 30% tax on cleaning.
IOW, your actual costs will be lower than they were previously since your purchasing power is increased and keep in mind that under the income tax any purchases you make will have some cost component of the income tax embedded into the cost of the thing purchased (which is eliminated under the FairTax).
How will your purchasing power be increased?
The claim to try to get people to believe that "everything they buy" will be "30% more" is a demagogue's delight. Don't fall for it.
Demagogue, thy name is FairTax.
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