Posted on 02/25/2008 12:51:24 PM PST by Man50D
SUPPOSE A presidential candidate proposed taxing wealth and using the proceeds to reduce taxes on workers and provide a rebate large enough to cover taxes paid by poor workers. Such a candidate would be hailed by the left and reviled by the right.
Thus, it's remarkable that so many Democrats, with the exception of presidential candidate Mike Gravel, oppose the FairTax and so many Republicans, particularly presidential candidate Mike Huckabee, support it. In fact, the FairTax, which replaces all federal taxes with a federal retail sales tax and provides a rebate, represents a way to tax wealth, reduce taxes on wages, and disproportionately redistribute money to the poor.
A sales tax effectively taxes wealth?
It does. When we buy goods and services in a sales tax world, part of the payment goes to sales taxes. So we end up with fewer real goods and services.
Take Mr. Megabucks, who is sitting on $65 million and wants to buy a jet like Oprah Winfrey's - a 10-passenger, $50 million Global Express XRS. Under the FairTax, the jet costs him an extra $15 million because of the 30 percent sales tax. Mr. Megabucks gets the jet, but the extra $15 million, which he had budgeted for Beluga caviar, Dom Pérignon, and other flight snacks, goes to Uncle Sam.
(Excerpt) Read more at boston.com ...
You mean that sources who provide studies that tend to support the FairTax are actually supporters of the FairTax? I just can't believe it! Next thing you know, sources who provide studies that support the Flat Tax will be supporters of the Flat Tax. What the hell is wrong with these people?
Try answering the statement, instead of some fictional argument you just pulled out of thin air...
Care to re-think this statement?
Thank you for calling me stupid and illiterate. I have read the FairTax plan cover to cover, including the reporting requirements, the bonding requirements, the first year adaptation credits, etc. I know exactly what the FairTax plan eliminates.
Your trying to obfuscate the issue by zeroing in on only the sales taxes (5% here in Virginia) without considering all the other Federal level taxes small businesses have to pay is nothing less than disingenious.
No one but you mentioned state taxes which have absolutely no connection to the federal FairTax plan. What is your wife's business' total tax liability in relation to her gross yearly sales. Just the percentage. Take the tax she's paying this year, divide it by her gross sales, and tell us what the percentage is. Don't give us her numbers, we don't need it, just tell us the number. This isn't rocket science.
Also, your claim that the FairTax taxes profit is completely incorrect. Nowhere in the plan is there any provision for taxing profit. Only the retail sales are taxed.
Again, you made the assumption I was connecting to profit, I was giving an example of how high taxes on business would have to be to come up with the mythical 'savings' that would be 'passed on to consumers' to keep prices the same including the FairTax after the first year credits have run out.
But to get back to the main point of my original post, businesses do not simply eat their tax liabilities. They pass the taxes along to the customer in the prices of the goods and services offered and when the customer pays, they don't see the taxes. Hence, the hidden, embedded taxes.
Every business plan I have ever examined, taxes are a very minor line item and are overshadowed by costs for rent, cost of goods, advertising, etc. Payroll taxes are a small percentage of the overall cost of employees, and employees in any business but a service type business (Food service, repair service) are a lower percentage of cost than cost of goods sold.
Please do not put words in my mouth, assume I haven't read the plan, assume I'm an idiot - yes, I know how attractive this plan is to employees - something for nothing! They get (most) of their paycheck, plus a monthly prebate check, and everything works out because the prices remain the same. Most comfortable are those who have mortgages or outright own their home right now.
Personal comfort aside, anyone who is truly going to argue the pro should examine their own close situation to figure out how it will affect them - like knowing your wife's business tax liability, so you can point to it and say, "She pays (x) percent of her total sales to the federal government now, she can take that off her prices and people will save (x) percent off!"
It is specifically in black and white in HR 25. http://www.thomas.gov under the section taxes to be seperatly stated.
This identical to the system in europe which has imposed criminal liabilty for not issuing and not OBTAINING a reciept showing a sales tax was paid.
all in the HR 25 (and senate version).
One of the points of the Fair Tax was that the poorest people not be penalized. If you grow your own food (gardens, chickens, etc.) then you are supporting yourself and there is no tax on that. If you sell your surplus then you would be required to collect the 23% tax and forward it to the appropriate authority. I imagine that people would set a price for things they sell and then add on 23% just as they do with the state sales taxes.
Aww... you wrecked the “dumbest argument of the day”
I agree. You should try using some now and then, instead of ill-informed allegations.
The only “ill” thing is the FT cult - mentally ill...
Thank you very much for that critique. I will consider the source and ignore it.
Compliment gladly returned.
Except mortgages are taxed under the fairtax. And here is a few things about the embedded tax.
The truth about Embedded Taxes
What are Embedded Taxes?
According to the Fairtax Experts research (Jorgenson and Kotlikoff), embedded taxes are assumed to be all taxes paid which eventually get priced in the final price of goods. These include Corporate Taxes, Estate and Gift Taxes, Employment Taxes and Individual Taxes.
Are there 22-23% embedded taxes in the cost of goods?
According to IRS Stats for 2007, there were $2.461 Trillion worth of the 'embedded taxes' collected. According to FairTax Analysis the total amount of taxable goods and services for 2007 were $11.244 Trillion. So by definition, there are 21.88% embedded taxes in theses cost of goods.
Does the fairtax reduce/eliminate all these costs to the Producer?
Here is the rub, no it doesn't. Some of those savings will be realized by the Producer, but most of them will be realized by the Individual. Producers will only realize the savings from the elimination of the Corporate taxes and 1/2 of the Employment taxes, which amounts to $1.0 Trillion of the $2.46 Trillion taxes which are collected. So assuming the Producers pass EVERY penny of savings to the customer, they can only lower their pre-tax prices 8.9%. Once the 30% sales tax (23% inclusive fairtax) is added to the cost, on average costs of goods will have to rise about 18%.
Does fairtax research refute this?
No, both fairtax experts (Dr. Dale Jorgenson and who the fairtax.org has hired to research this affirm that prices will Rise assuming that wages stay at their current levels.
Is this bad?
For people who have accumulated wealth, yes, because this will amount to a double taxation on their wealth. For people who have little wealth, but will be able to take home a larger paycheck, no because they will be able to afford the higher prices with their larger paychecks and prebates. Kotlikoff readily admits and even brags that the fairtax is a tax on wealth.
But what about the Prebate?
The prebate will cost about $540 billion according to the fairtax numbers. This will add to the amount of tax that will need to be collected.
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