Posted on 01/20/2008 6:29:07 AM PST by Man50D
I understand that there is a significant difference between a group of commercial consultants who stay in business by selling their services and a group of university professors who do not do that. If you're trying to convince anyone that there is some sort of equivalence of intellectual honesty between thesse two groups you've got a real tough sell on your hands. I've hired commercial consulting firms of this sort and explained to them the objectives they needed to reach and guess what ... they reached them (and were then paid).
A university professor does not have his opinions for sale in that way and if you think so you're sadly mistaken.
A VAT and a sales tax are both consumption taxes.
Gee, thanks for the self-evident truism. Does that mean you think the FairTax and a VAT are somehow the same??? The FairTax is nothing like a VAT in that it taxes only certain retail sales for end consumption and does not tax b2b sales as does the VAT which (despite the theoretical refunding of the b2b taxes) cause embedded tax costs to cascade down to other business levels. And the theoretical refunding of these taxes doesn't work at all well, either, since it always adds many layers of bureaucracy and expenses in verifying and attempting to control fraud in the elephantine bureaucracy. Every VAT counttry I know of has serious difficulty with this issue and most realize that the best way to inflate the bureaucratic levels is to have a VAT.
Also, most of the countries you're trying to use as wonderful examples of the VAT tax form have actually added other taxes after the VAT was instituted. And my point still stands. Both of your sources refer to the two countries as a VAT (not a sales tax plus a VAT - which seems to be something you made up out of whole cloth). In fact it is more truly a VAT plus an income tax - and here's the current income tax table:
Tax rates 2007-08Taxable income
Tax on this income$0 – $30,000
29c for each $1$30,001 – $75,000
$8,700 plus 30c for each $1 over $30,000$75,001 – $150,000
$22,200 plus 40c for each $1 over $75,000$150,001 and over
$52,200 plus 45c for each $1 over $150,000
And both countries with their VATs (and the income tax as well) have all sorts of exclusions and exceptions which is VERY different from the FairTax which has neither of those things.
Only certain financial intermediation services are taxed and these are specified in the bill to prevent bundling such services into items (as now done) to escape taxation. The same applies to the excess interest for much the same reason.
The service (time spent by employees) provided by the lending institution is subject to the FairTax.
If youthink that's true, please cite it from the bill, otherwise admit it is not so.
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.
Similarly here - show this from the bill - otherwise drop the matter.
Forgot the 30% FairTax when the money is spent?
This merely seems to be a meaningless comment.
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?
From the tax revenue as shown in the various economic papers that show the FairTax to be revenue neutral. Several of those papers had been linked here in the past but you perhaps didn't read them. Also there had been a number of actual numerical examples over the past 5 or so years that clearly demonstrate the increase in purchasing power. Too bad you missed those, too.
I knew you couldn't get through an entire post without lapsing into the "30% tax" on everything demagoguery since you very well know that it's not 30% and it's certainly not on everything as the 6 items above indicate. "Demagogue"??? People who live in stone houses shouldn't throw glasses.
Again, tax base refers to taxable activities, not people. I suppose FairTaxers get all gleeful when they think of taxing an unproductive child 30% when he buys something with his allowance - but where does his allowance come from?
I've hired commercial consulting firms of this sort and explained to them the objectives they needed to reach and guess what ... they reached them (and were then paid).
Good, then you know exactly what's wrong with the FairTax studies.
BTW, if you admit to controlling the outcome of studies to conform to your own particular agenda, how does that impact your credibility on these threads?
A university professor does not have his opinions for sale in that way and if you think so you're sadly mistaken.
When the AFFT claims all kinds of benefits for retail sales and economic growth, why in the world would they commission a study to prove the opposite?
The FairTax is nothing like a VAT in that it taxes only certain retail sales for end consumption and does not tax b2b sales as does the VAT which (despite the theoretical refunding of the b2b taxes) cause embedded tax costs to cascade down to other business levels. And the theoretical refunding of these taxes doesn't work at all well, either, since it always adds many layers of bureaucracy and expenses in verifying and attempting to control fraud in the elephantine bureaucracy. Every VAT counttry I know of has serious difficulty with this issue and most realize that the best way to inflate the bureaucratic levels is to have a VAT.
I'm willing to bet the theoretical refunding works just fine until it meets up with reality just like the theoretical FairTax works just fine on paper and in commissioned studies.
Also, most of the countries you're trying to use as wonderful examples of the VAT tax form have actually added other taxes after the VAT was instituted. And my point still stands. Both of your sources refer to the two countries as a VAT (not a sales tax plus a VAT - which seems to be something you made up out of whole cloth). In fact it is more truly a VAT plus an income tax - and here's the current income tax table...
The example I cited also uses a much lower consumption tax rate. The point I was making (which seems to have flow right over your head) is that the imposition of a 10% tax on consumption precipitated a 37% decline in construction which resulted in a recession even with a concomitant reduction in remaining tax rates and the elimination of some taxes. Whether the effective tax rate is lower and/or if people have increased purchasing power is irrelevant when all them peeps start controlling when, where, and if they pay the FairTax. For an economy like ours, based on consumption it will be an economic disaster.
And both countries with their VATs (and the income tax as well) have all sorts of exclusions and exceptions which is VERY different from the FairTax which has neither of those things.
So what are those lists of economic activities that will be tax free you like to post, about then?
Well, no, since it was the Retail group that hired the hitmen to do its bidding in shooting down any sales tax while the Fairtax organization charged the academicians with determining what the effects of a specific and detailed tax plan might be on the economy - and to back up their studies with facts - something the consulting group did not do since after all what it "reviewed" was not the FairTax at all.
If I were you I'd not be throwing around things like charges of someone else not being credible. In fact, I've been quite honest with no hidden agenda which is more than can be said for a number of your efforts on this exact thread. And you forget that the "claims" that you claim came as a result of the economic studies after they were done, not before. I support the FairTax and it is still completely unclear as to what tax system you support - so do you have one?
And, let's see, you think if, say, the FairTax organization would like to know the effects of the FairTax from a dynamic analysis standpoint they shouldn't be allowed to have economists determine what that might be? Are we to suppose they must be bound by your ridiculous strictures???
The theoretical FairTax will be very much like the one in reality and will do just fine, thanks. And your claim that the Aussie GST of 10% had such a terrible effect that it almost destroyed the construction industry and precipitated a recession is weak and completely unsupported. The truth is no doubt something else (as we've learned from many of your overblown statements) and - if there really were such a severe effect it was just as likely brought about by adding the 10% VAT on top of the other taxes they had at the time or by adding additional taxes on top of the VAT plus whatever tax they had to start with. Since you have no economic backup to backstop your claim, it can merely be overlooked.
And such foolishness - you believe that having a lower effective tax rate as taxpayers will do with the FairTax than under the income tax will result is LESS consumption??? What nonsense; there will be much more of an incentive to consume, not less, since consumption under the income tax carries a higher effective tax rate - but of course you don't understand that. The areas of things not taxed have been presented several times on these threads and I suggest you go look them up if you truly don't know what they are.
Do you know the difference between facts and faith? A FairTax fact would be the bill as written, FairTax faith is how the bill's supporters claim human beings will behave if the new rules were put in place.
If I were you I'd not be throwing around things like charges of someone else not being credible.
You exposed yourself as not credible when you stated that you manipulated "purchased" studies to support the conclusions you wished to reach. No wonder you doubt the intentions of others, you project on them.
I support the FairTax and it is still completely unclear as to what tax system you support - so do you have one?
First, you want to change the method of tax collections, it is therefore incumbent on you to prove that it is better than, not equal to, what we currently have in place.
What I support is fiscal responsibility in government spending, something even FairTaxers claim their plan does not do. IMHO, ain't nothing gonna clean up the mess without directly addressing the mess rather than a feel good plan to sweep around the carpet edges.
The theoretical FairTax will be very much like the one in reality and will do just fine, thanks.
For the FairTax to work just as supporters claim it will, human beings must behave just as FairTaxers claim they will. That is the fly in the FairTax ointment.
And your claim that the Aussie GST of 10% had such a terrible effect that it almost destroyed the construction industry and precipitated a recession is weak and completely unsupported. The truth is no doubt something else (as we've learned from many of your overblown statements) and - if there really were such a severe effect it was just as likely brought about by adding the 10% VAT on top of the other taxes they had at the time or by adding additional taxes on top of the VAT plus whatever tax they had to start with. Since you have no economic backup to backstop your claim, it can merely be overlooked.
I didn't say the construction industry was almost destroyed (hyperbole), I said there was a 37% decline (fact).
What happened in Australia (facts) is that before the new tax went into effect, there was a flurry of buying, after, buying dropped off and a recession ensued. Overlook that if you wish, but overlook it at your own peril.
And such foolishness - you believe that having a lower effective tax rate as taxpayers will do with the FairTax than under the income tax will result is LESS consumption??? What nonsense; there will be much more of an incentive to consume, not less, since consumption under the income tax carries a higher effective tax rate - but of course you don't understand that. The areas of things not taxed have been presented several times on these threads and I suggest you go look them up if you truly don't know what they are.
What you don't get is that the day the FairTax went into effect, comparative effective tax rates become irrelevant to the consumer at the register.
You answer did not deal with the issue of people who are living off of retirement saving, instead of income. The fair tax could not be “typically less than half your effective income tax rate” if my effective income tax rate is zero (having already paid income taxes on that money when it was earned).
In addition, any investment income you obtain under the FairTax is not taxed unless you spend it for items that are taxed under the FairTax - and not everything is taxed. You'd certainly be no worse off financially and most likely quite a bit better off.
... precipitated a 37% decline in construction which resulted in a recession ...
... and you believe that your statement isn't "hyperbole"??? Perhaps not - demagoguery would be a more accurate description. What you don't seem to grasp is that your statement and reasoning are almost exactly backwards since taxpayers stampeding to consume prior to the FairTax becoming effective are doing themselves a HUGE disservice. since they'd be paying more than after the tax became effective.
So, let's get this straight, you're saying that lowering the effective tax rate of taxpayers from it's present level is somehow going to behave "differently"??? I dare say it most likely will, but I'd think the "difference" would be to boost the amount of consumption, not reduce it under the effect of the FairTax (which - unfortunately for your theory and comparisons) is quite a different animal from the two VATs you cited. Neither are the same sort of tax in the effect upon taxpayers since they actually raised taxpayers effective rates.
As for directing a consulting form to a desired result, indeed that is not uncommon - and it's what consulting firms are known for. That's quite a different thing that using one to "evaluate" an economic proposal (my "directions" related typically to construction projects where my company wished a certain type of result and the consulting firm could have no idea of what the desired outcome might be). That's quite different than making an economic study so cease your pretense and attempts to attack someone who supports something you detest. You're not even close to "shooting the messenger".
In fact, you'd be well advised to read this rebuttal in response to the charge by your "anti": forces on the matter.
The many different economic studies of the FairTax clearly support the idea that it is better than the present system - you merely don't wish to accept that for whatever agenda you may have ... and it's clear you do not wish to put forth a tax plan of your own but merely to attack, attack, attack. Apparently you really have none and are bereft of a solution to the ills caused by the present system. The vague generalities you present are something that almost everyone would like to see happen no matter the system - but they don't address the problem and are so pallid as to be useless in trying to correct the tax system and it deficiencies ... but perhaps you don't recognize that there are any???
How much less would they be paying after the FairTax? If the above is a fact rather than speculation, you should be able to answer the question accurately. For instance, how much will a pound of tomatoes cost after the FairTax. A box of Cheerios? A gallon of milk? A pound of butter? How much will I pay for middle grade gasoline at the pump? What will my rent be?
So, let's get this straight, you're saying that lowering the effective tax rate of taxpayers from it's present level is somehow going to behave "differently"??? I dare say it most likely will, but I'd think the "difference" would be to boost the amount of consumption, not reduce it under the effect of the FairTax (which - unfortunately for your theory and comparisons) is quite a different animal from the two VATs you cited. Neither are the same sort of tax in the effect upon taxpayers since they actually raised taxpayers effective rates.
Tax rates can't be lower if revenue to the government remains the same. FairTaxers contradict themselves when they claim their tax restores freedom to the taxpayer because it gives them the power to decide when, where and how much tax they choose to pay while also asserting that their consumption behavior will, in fact remain the same, or increase.
Please provide a cite that shows Australians were paying more in taxes after the GST was enacted.
Again, both a VAT and a sales tax are taxes on consumption. The method of collection may differ some what, but both are paid by the consumer at the time of purchase, and both have the same economic effect.
As for directing a consulting form to a desired result, indeed that is not uncommon - and it's what consulting firms are known for. That's quite a different thing that using one to "evaluate" an economic proposal (my "directions" related typically to construction projects where my company wished a certain type of result and the consulting firm could have no idea of what the desired outcome might be). That's quite different than making an economic study so cease your pretense and attempts to attack someone who supports something you detest. You're not even close to "shooting the messenger".
Well we know the FairTax is different, don't we?
In fact, you'd be well advised to read this rebuttal in response to the charge by your "anti": forces on the matter.
Okay, where's the rebuttal?
The many different economic studies of the FairTax clearly support the idea that it is better than the present system - you merely don't wish to accept that for whatever agenda you may have ... and it's clear you do not wish to put forth a tax plan of your own but merely to attack, attack, attack. Apparently you really have none and are bereft of a solution to the ills caused by the present system. The vague generalities you present are something that almost everyone would like to see happen no matter the system - but they don't address the problem and are so pallid as to be useless in trying to correct the tax system and it deficiencies ... but perhaps you don't recognize that there are any???
I am simply unwilling to kiss my brains good-bye and accept on faith a system shot full of holes.
Also you're quite wrong about tax rates not being lower to have revenue remain neutral. The rates certainly can - and will - be lower. You don't seem to grasp the idea of an expanded tax base taxed at a lower rate bring in the same amount of money. Check some of the economic studies you were pointed to on past threads instead of merely attacking some other aspect of the FairTax.
The GSTs of these other countries seem to be your interest; they certainly are not mine. Your diversionary tacctic will not work since I couldn't care less that you don't realize those are VATs which while it may tax (some part of) consumption does so in a substantially different was and causes cascading tax costs and creates a fraud-prone bureaucratic nightmare in the government "handing back" overpayments (even if they are real). Most countries stuck in the VAT tax form now realize that what it really amounts to is a neat way to balloon corruption and bureaucracy and is easily evaded.
It's truly too bad that you don't have some sort of positive presentation of your preferred tax system to accomplish all that the FairTax does - but then again you seem to realize that there isn't one. It's easier just to attack anything you can think up, isn't it?? A lot of would love to see what sort of tax system in detail you believe this country should have. Be sure and let us know should you think one up.
In other words, all you have is theory, you can't give specific examples of what prices will be lower, or by how much.
You don't seem to grasp the idea of an expanded tax base taxed at a lower rate bring in the same amount of money.
What I grasp is that just about every time I make a purchase of a good or service, I will be taxed (tax base). To know what I'm paying in taxes, I would have to keep all my receipts and add them up at the end of the year and compare the tax I have paid with the tax I paid on income. In other words, to compare income taxes paid with FairTax paid is a cumbersome endeavor and would require more time to figure and pieces of paper to keep than the income tax.
The GSTs of these other countries seem to be your interest; they certainly are not mine.
I have an interest in real world examples. What the Australian GST gives us is an example of the economic effect the implementation of a consumption tax has on economic activity. Honestly, I predict the Australian experience was mild compared to what we can expect with the FairTax - 1. because the GST is lower than the proposed FairTax rate; 2. because the GST is a VAT and harder to evade.
Most countries stuck in the VAT tax form now realize that what it really amounts to is a neat way to balloon corruption and bureaucracy and is easily evaded.
VATs exist because a sales tax at higher rates are very difficult to collect. Sales tax evasion exists right now in this country even though rates are relatively low. When rates are as high as the FairTax would be, the motivation to evade is powerful.
It's truly too bad that you don't have some sort of positive presentation of your preferred tax system to accomplish all that the FairTax does - but then again you seem to realize that there isn't one.
Tell you what, give me 20 million bucks and and I'll see what I can come up with.
What I realize is that The FairTax is riddled with flaws that stick out like a sore thumb to those who have not been sprinkled with Fairy dust.
No one asked you to "retain all your receipts" - that's merely the straw man (or woman) you dug up to make a shallow pretense of an argument. There are easier ways of arriving at the same information but apparently you can't think of any. That's your problem and not a failing of the FairTax.
The GSTs you cite as "lower" are only a part of the combined federal taxation laid on the populace in those countries and even those VAT portions are typically greater that the effective FairTax rate would be for most. So your attempt to take only a portion of the federal taxes the folks pay in those countries still fails. And the GSTs aren't "harder to evade" as most of the VAT countries (including those you mention) have discovered with the faking of invoices and other tax related paperwork while building a large bureaucracy built on that very paperwork. In a lot of respects it's as bad as our present income tax.
Your lame agreement that you have no tax system you back is really funny in view of the number of years you've spent attacking the FairTax and its supporters. And it's "riddled with flaws that stick out like a sore thumb" is even funnier since you've never been able to make a decent attack out of any of them despite continual attempts. Certainly I'd not give you 2-cents to come up with a tax plan. I'm pleased with the FairTax as it stands as are many others - and you have no competing tax plan to offer; that much is crystal clear.
In other words, you have nothing substantive to say.
Good grief - you don't even grasp what the VATs you try to present do that make them quite different from the FairTax. Talk about no substance ...
Ever heard the expression, "out of the frying pan and into the fire"? Well, the income tax is the frying pan and the FairTax is the fire.
Just because the FairTax is different doesn't make it better than the income tax.
Good grief - you don't even grasp what the VATs you try to present do that make them quite different from the FairTax. Talk about no substance ...
I grasp the concept of VATs and the FairTax just fine. What you don't grasp is that both are a tax on consumption, only the manner in which they are collected differ, the effect on consumption and economic growth is the same.
When you understand that, get back to me, otherwise, don't bother me.
I don't agree with your categorization of the frying pan and the fire. I believe it is more apt to say "the income tax is the frying pan and the VAT (or the flat tax - whatever that is) is the fire".
The VAT taxes in quite a different manner that the retail consmption tax since it taxes business to business transactions which can THEORETICALLY be refunded to the payer by application (and supplication, no doubt) to the government. In most countries the actual fact is that these VATs create huge bureaucracies of paperwork shuffling and fraudulent transactions along with the rest of the mandatory regulatory firepower and staffing to go along with it. IOW it is little better than the IT in either deadweight expense or complication - and those expenses are (just like under the IT) an unfunded mandate upon the taxpayer.
Even with the (so-called) refund provisions of the VAT systems a good bit of this B2B tax costs is passed forwarded being embedded and cascading forward as non-productive additional cost.
The income tax qualifies on much the same basis as the VATs with the unfunded mandates, cascading, embedded tax costs boosting prices, a horrid amount of complexity and bureaucracy as well as the ease with which the tax can be avoided.
The FairTax, being a retail consumption tax that does not tax B2B transactions, does not have these horrible downsides so I think your characterizations was incorrect as I said. If you'd like to revise it as I indicated above it would be more accurate and more honest.
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