Posted on 04/03/2008 12:03:31 PM PDT by Man50D
St Olaf's College, Northfield, MN
A debate will be held in Buntrock Hall, St Olaf's College, Northfield, MN at 8:00 PM, Thursday April 10th. The event is sponsored by the St Olaf College Republicans, but it is open to all interested parties regardless of political affiliation. David Strom, a graduate and professor at neighboring Carlton College will argue for the flat tax. Mr Strom is now President of THE FAIR MARKET INSTITUTE after a term as President of THE MN TAXPAYERS LEAGUE. He can be heard weekly on The Patriot, radio station 1280 AM, Saturdays from 9:00 am to 11:00 am. Dennis Madden will argue for the FAIR TAX. Dennis is the volunteer State Director for MN 4 FAIR TAX, an arm of AMERICANS FOR FAIR TAXATION, the grassroots organization working for the passage of HR 25 and S 1025, THE FAIR TAX ACT of 2007.
Date: Thursday, April 10, 2008
Time: 8:00 PM
Every month the government sends money which, for virtually all of us, represents a refund of FairTax paid, but not owed. No one is obligated to pay FairTax below the poverty level of spending. Therefore, that amount of FairTax is refunded monthly.
I suppose none of us should get an income tax refund because, under your definition, it is also welfare.
I would be pleased to have an open and balanced discussion of the issues you raised. However, your reference to "scammers" makes me think you are pretty closed minded. Please correct me if I am wrong.
"Flat" in the context of tax rates refers to a uniform marginal rate of tax using a consistent base. Both nrst and flat income tax have flat marginal rates.
But neither is flat at all if you're looking at is effective rates. They both have a nearly infinite number of possible effective rates. It is absurd to claim one set of infinite possibilities is "flatter" than another.
In the same way the prebate affects effective rate WRT spending, income earned affects effective rate WRT income. You can devise a scenario for ANY effective flat income tax rate less than the stated marginal rate. Similarly, you can devise a scenario for ANY effective nrst rate less than the stated marginal rate.
So I don't know how you arrive at your claim that one is flatter than the other unless you're comparing marginal rate of one system to effective rate of the other system. Both have flat marginal rates, both have wildly variant effective rates. Please explain.
Now, if you really are asserting that the current tax structure is flatter than the nrst, I think you're mixing up marginal and effective rates for sure. On it's face, the current system has multiple [seven?] marginal rates yet the nrst has a flat marginal rate. Both have infinite possibilities for effective rates less than the marginal rate [or max marginal rate in the case of the current system.]
So again, there is no way to conclude that the current system is flatter unless you compare the marginal rates to effective rates, which is nonsensical. Please explain your assertion "My argument is that the current tax structure is actually FLATTER than the fair tax, using fairtax.org’s own data.
Still telling the same old stale lies, eh?
a refund? prefund? if your read HR 25 at http://www.thomas.gov it is for the GOVERNMENT DETERMNED necesities amount. This is K Street Lobbyist bonanza money. This means every industry will lobby (and pay campaign contributions) for those politicians who give the most government determent cecessity determination for their industry. IOW a bigger car sales tax determination, a computer purchased sales tax determniation, cell phone expense dtermination (on top of local and state taxes.
It is all fun fun fun and will be percieved as free money to the great society...
I wish that argument had prevailed in 1913 when they were working on the first income tax.
I have read the pertinent parts of HR 25 and recognize that some government bureaucracy has the responsibility of establishing the level of "poverty" spending. This is being done now, so no new bureacracy would be required. (I have read some pertinent parts of the IRS code also, but a much smaller percentage.)
If the FairTax is implemented as conceived, all legal residents will be sent the same amount as a refund. The refund will equal the amount of tax paid on the poverty level of spending. I know this is a simpler way to get a refund than filing and retrieving a bunch of income and deduction records, then filling out what seems like a ream of complex forms and mailing them off to the IRS. And if you make a mistake you risk penalties.
Those of us that favor the FairTax look at this simplicity as an advantage, not a disadvantage.
If the principle of equal refunds can be maintained, any change in refund level will be paid by all taxpayers, and may result in raising the FairTax tax rate. The cost of the refund is included in the revenue that must be collected to implement the FairTax. That will be visible to everyone and the voters will have a chance to respond at election time. If Congress tinkers with the FairTax by, for instance, charging more tax on some items than others, the tax system will no longer be the FairTax as proposed.
It has been my observation that most of those who oppose the FairTax assume it will be changed it in some way, then criticize the changed version.
To pass the FairTax intact will take an effort at least as large as the one that beat back amnesty for illegal immigrants. And we will have to do it again when Congress starts tinkering in response to lobbyists. I think the advantages are worth the effort.
OldIRS vs NewIRS.
-Either way the size the the government employee based remains the same.
-Either way the size of the government remains the same.
HR 25 does not change the constitution, it only changes law. The so called simplicity of HR 25 is a falicy as you now have to register as a vendor, you have to register as a government approved family (just wait for the new-socialist-family engineers to grab a hold of what is a family) You have to PROVE your exemption which is just more paperwork in tracking all the exemptions.
Of course this assumes your industry has not simply moved, like the 1991 luxury tax caused, outside of the USA.
We need a system of reducing the size of governemnt and reducing taxation.
The FairTaxScam is simply premised on the absurd notion that we are taxed enough but just by the wrong means.
We need som OTHER proposal to get rid of the current tax system. Then again for all we know this proposal could be just another clintonesque self donation tax trust write off.
As an example, you will not find me defending the current size of government. I think the FairTax would do some things very well, and some things not at all. The intent of those who proposed the FairTax is to save the government spending battle for later. The transparency of the FairTax would be helpful in attacking spending. And since everyone would be paying the same highly visible tax, it becomes harder to sell the idea that everything can be financed by taxing the other guy--the "rich", the corporations, the evil oil companies, etc.
I think your example of the luxury tax killing some industries in the US in 1991 would not hold true under the FairTax. The luxury tax was laid on top of the existing tax load and put domestic countries at a competitive disadvantage. The FairTax would put domestic countries at a competitive advantage by removing their taxes and thus lowering their cost of production. Foreign products with embedded taxes in their wholesale price would be at a disadvantage in our domestic market. Many FairTax proponents suggest the business reaction would for companies move to the USA from where the taxes are higher.
No, I don't believe bureaucracy would disappear entirely with the FairTax. I do believe requirements on both business enterprises and the private citizen would be much less. Those collecting the FairTax would be paid to do it, instead of the current practice absorbing the cost of collecting the state sales tax or withholding tax. The compliance costs of administering withholding, keeping track of all income and deductions and arranging affairs to minimize the tax load would go down in a major way.
I believe the income tax is thoroughly embedded in our culture. We all have accumulated a lot of knowledge of how our own situation is effected by the income tax law. The FairTax would make most of that obsolete, something that I believe scares people--especially those people whose living is based on dealing with the income tax and its effects.
The FairTax would have to be pretty terrible to be worse than the yearly experience I have trying to pay no more income taxes than are legally required. With FairTax, the tax is paid with the transaction and it is OVER. I don't have to track much of anything or tell the government much about my personal affairs. April 15 would be just another day. Hallelujah!!
“It has been my observation that most of those who oppose the FairTax assume it will be changed in some way, then criticize the changed version.”
Absolutely. In addition, the FairTax opponents believe that they , and only they, can predict what the FairTax will evolve into. What they don’t comprehend is that even in the unlikely event that their worst case scenarios do unfold, the FairTax would still be better than the system we have now or any alternatives proposed so far.
“I would be pleased to have an open and balanced discussion of the issues you raised. However, your reference to ‘scammers’ makes me think you are pretty closed minded. Please correct me if I am wrong.”
You aren’t wrong; you are right on target.
.
[“It has been my observation that most of those who oppose the FairTax assume it will be changed in some way, then criticize the changed version.”
Absolutely. In addition, the FairTax opponents believe that they , and only they, can predict what the FairTax will evolve into.]
Not me. I look at the FairTax as written and see the huge incentives it provides for wealthy Americans and retirees to live abroad, and wonder where the FairTax is going to make up the $500B/yr tax revenue that will be missing when their $2.2T/yr spending happens outside the country.
I think that your concern is misplaced. As you can see from the link below, what is happening now is one of the largest migrations of the wealthy out of this country in our history. Much of that has to do with the loss of financial privacy which is part and parcel of the income tax.
In addition, by making US produced goods more competitive in the world market, the FairTax would produce huge numbers of good jobs. People with good jobs are unlikely to emigrate outside the country. There is also the matter of well over $10 trillion in capital which is outside the country now which would come back into the US if punitive treatment of capital were eliminated.
All in all, if taxes on savings and investment were eliminated, the US economy was growing at a faster rate and financial privacy were enhanced, I think you would see a net inflow of the wealthy, not the outflow that you fear.
I cannot help but also comment on the contrast between this concern and that of many FairTax opponents, who complain that the FairTax is unfair because it does not tax income and the wealthy would benefit disproportionately from that. So the FairTax has critics who believe that it is the best thing to ever happen to the wealthy and those who think it is so unfavorable that it will drive them out of the country.
http://actionamerica.org/taxecon/tickfast.shtml
The FairTax will allow the wealthy to escape taxation by living abroad without giving up their citizenship. It will be very simple to escape taxation legally compared to all the hoops they have to jump through now to give up their citizenship and then still pay US taxes for another ten years.
Money may be repatriated for investment in the US. That’s good for growth. But the returns on that investment won’t be spent in the US at retail and FairTaxed. So you still end up with a $500B hole in projected FairTax revenues.
I didn’t say the FairTax would ‘drive’ people out of the country. But there are many people that love traveling and living abroad and the opportunity to do their spending tax-free outside the US will give them an incentive to do so. That’s great for them, but it leaves a hole in your projected FairTax revenues.
I agree the FairTax would encourage manufacturing jobs in the US, but the incomes associated with those jobs, using the FairTax calculator, will have an effective tax rate of only 13% after the prebate and the untaxable mortgage interest, education spending, used goods, etc. An 13% overall tax rate doesn’t come close to funding the Federal government. The FairTax NEEDS the spending of the very wealthy to happen here in the US where their effective tax rate would be 20%. The wealthy won’t do that when they can just as easily run their investments while traveling abroad and visit the US as needed.
“The FairTax NEEDS the spending of the very wealthy to happen here in the US where their effective tax rate would be 20%. The wealthy won’t do that when they can just as easily run their investments while traveling abroad and visit the US as needed.”
You seem to be contradicting yourself. First you say that the FairTax won’t drive the wealthy from the country. Then you make the statement above. Also, you ignored my statement (which was backed up by a link) that that problem is already a very significant one. I believe that the problem will be less under a FairTax regime than it is now. I find it hard to believe that the wealthy will leave in such great numbers to avoid paying a bit more for their “stuff” even though the quality of life in this country is substantially higher than any of the low tax jurisdictions they might opt out to.
Also, if there is a net outward migration under the FairTax (which I doubt), you would have to net it against both (a) the net outward migration which would have occurred under a continuation of the current system, and (b) the repatriation of some of those who have already left who would welcome the restoration of financial privacy. It isn’t nearly as simple as you make it out to be and (absent any research to the contrary) I cannot accept your premise that the wealthy would leave en masse.
Also, do not other countries insist that you pay their taxes if you live there for an extended period of time? Let’s remember that many European countries have a VAT, which would be born by foreign visitors consuming there. You seem to be assuming that Americans can avoid all tax burden by just moving out of the country under the FairTax and that the amounts saved by not paying the FairTax in the US won’t have to be netted out against the taxes which they will pay in their chosen country of residence. I am not as confident as you seem to be that that is a good assumption. Therefore, I have no idea where you came up with your estimate of a “$500B hole.”
[You seem to be contradicting yourself. First you say that the FairTax won’t drive the wealthy from the country. Then you make the statement above.]
No contradiction. There is a difference between being “driven” and taking advantage of an opportunity.
No country in the world attempts to tax the income of tourists. Yes, in some places there are VATs and GSTs, but most of those are significantly less than 23%. And by choosing countries that rely heavily on income taxes on their citizens, rather than VATs, you truly could live tax-free.
I did address your linked article when I said that there are many hoops to be jumped through currently to emigrate from America, so we should expect the numbers to increase dramatically if the FairTax makes it so much easier to keep US citizenship while avoiding US taxes by living abroad.
The $500B figure is based on the 23% FairTax applied to 66% of the spending done by the top 1% of income earners ($2.2T), plus the spending of retirees ($1.2T). Basically, I estimate that 2/3rds of that demographic’s spending ($2.4T) would happen outside the US if the FairTax goes into effect. 23% of $2.4T ~ $500B.
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