Q: so why is there no evidence of such taxes being implemented anywhere in history if they are so good for both sides?

expected A: b/c evil socialists (which all governments are made up of) stopped it.

7/21/2006 11:43:13 PM

Quote :

""nationalized healthcare" bastard socialist j/k, i agree"

The ironic thing is that nationalized healthcare is required to keep US businesses competitive globally. In effect, the rest of the world has made this decision for us.

The time where businesses could shoulder healthcare costs is over. They now have to compete with companies who aren't responsible for their employees healthcare. The choice is nationalized healthcare or no healthcare. And nationalized healthcare is far cheaper.


[Edited on July 22, 2006 at 12:06 AM. Reason : ?]

7/22/2006 12:03:31 AM

Quote :

"The problem with a VAT is visibility."

Too true, that's why I call it a "Visible Value Added Tax" or a V-VAT. You see, while the tax itself is collected at all stages of production, the retailer is responsible for noting on the receipts the total amount of taxes paid on purchased items. For example, with a VAT of 20%, an end price of $120, the receipt will say "TV: $80; VCR: $40; Total: $120; taxes paid: $20"

It looks kinda silly, but I'd definitely be willing to live with a little silliness to escape the current tax regime or even your FairTax regime.

[Edited on July 22, 2006 at 12:13 AM. Reason : .,.]

7/22/2006 12:12:22 AM

Quote :

"so why is there no evidence of such taxes being implemented anywhere in history if they are so good for both sides?"

We currently have states which support themselves with a sales tax.

Our country was "implemented" without any prior evidence of success. The concept of gov't by the people was tantamount to blasphemy in the 18th century. Still, enough people who didn't get pulled down by the nay-sayers got the United States going.

I can understand reasoned concerns against the Fairtax. But to dismiss it out-of-hand simply because no one else has tried it yet is a sad reflection on the gumption of some Americans.

Quote :

"Visible Value Added Tax""

A VAT is a tax added at each step in the production of goods. So many different companies are involved in the production of most items. You would have to list the tax applied to each step of increasing value to the product. That would be a pretty long reciept.

The FairTax is applied only once at the point of sale. A VAT is applied again and again all the way down the line.

7/22/2006 12:38:59 AM

Quote :

"As a communist supporter, the last thing he wants is for our capitalistic system to succeed."

I assure you, I want nothing more than my own success. If other people succed as well, even better. Fairtax, however will only screw us all over.

Quote :

"Kris tried out his charts and arguments on the FairTax forum, where there are people there much more knowledeable than I. After they cut apart his argument, I don't remember seeing him respond again. Pity..It would've been very interesting."

I agree, however I wasn't granted that privledge. I was promptly suspended.

It's really quite a wonderful jack-off-a-thon you guys have going on there. Its ust a shame those liberitarians that value freedom so much have such a large problem with freedom of speech.

Quote :

"What do you mean by this statement?"

Sales taxes are regressive by nature. It takes consumption which is proportionally larger for the poor. You can add in a rebate, but the tax is still regressive by nature.

Quote :

"The rebate feature removes regressivity from the FairTax."

NO IT DOESN'T. Understand this: if something taxes consumption rather than income, IT WILL BE REGRESSIVE. There's no way around this. Your rebate just shifts the burden over.

Quote :

"The poor shouldn't be buying expensive things like houses and cars until they can afford it."

Perhaps they can afford the monthly payments. The purchase is still expensive.

Quote :

"Right now, the IRS collects taxes from around 180 million individual Americans and all businesses. Under the FairTax only about 15 million retail businesses would collect the FairTax at the checkout counter."

Those legitimate businesses aren't the ones that are going to be stealing. It's the ones that would arise that will have an insanely easy way around taxes. Just look at the new york cigarette market. Large sales taxes creates a large black market.

Quote :

"Our country was "implemented" without any prior evidence of success."

Rome?

Quote :

"The concept of gov't by the people was tantamount to blasphemy in the 18th century. Still, enough people who didn't get pulled down by the nay-sayers got the United States going. I can understand reasoned concerns against the Fairtax. But to dismiss it out-of-hand simply because no one else has tried it yet is a sad reflection on the gumption of some Americans."

Couldn't that justification be used for any type of system? What would you say if I used that arguement to justify my system of communism in the US?

[Edited on July 22, 2006 at 2:01 AM. Reason :

7/22/2006 1:58:56 AM

Quote :

"I was promptly suspended."

Funny, I've noticed a number of posters there who disagree with the FairTax and weren't suspended. I really wanted to see you duke it out with them there.

Quote :

"It's the ones that would arise that will have an insanely easy way around taxes."

There will be cheating in any system. But it's not "insanely easy" for a registered retail operation to evade the sales tax. The state will slap you down fast.

Quote :

"IT WILL BE REGRESSIVE. There's no way around this."

From the FairTax Book:
"The folks who wrote the FairTax plan knew that burdening the poor with a 23 percent retail sales tax would doom the plan from the outset. And since the FairTax was designed from scratch -as opposed to the current hodgepodge of rules and regulations we call the 'income tax' - its creators ensured that no one should ever have to pay the sales tax on the basic necessities of life. That's why the prebate -the monthly check covering taxes on all basic household necessities -was invented."

The tax is not regressive, because the poor pay NO fed income or FICA taxes! It is as proportionately progressive depending on how much you want to spend above the poverty line.

Quote :

"What would you say if I used that arguement to justify my system of communism in the US? "

I note that you included "my system of communism" I take it that would lead us to preclude the Soviet Union's failed attempt?

But I do agree with you that one shouldn't use the "it's never been done" to dismiss any new idea. The idea should make it on the merits.

7/22/2006 3:07:33 AM

Quote :

"Even the poor have to buy expensive things, houses, cars, etc."

i didn't say that there would have to be a flat price limit - all cars under 10k would be tax free, all houses under 100k would be tax free, all vacuum cleaners under $50 would be tax free, etc etc etc.

ya it would be a huge beurocratic cockfight, but what isn't? And since we got 4000 IRS employees twiddling their thumbs, they can be the ones who administer it

7/22/2006 8:22:18 AM

Quote :

"A VAT is a tax added at each step in the production of goods. So many different companies are involved in the production of most items. You would have to list the tax applied to each step of increasing value to the product. That would be a pretty long reciept."

You misunderstand how the tax works. The tax is flat at, say, 20%. At each stage of production you pay exactly 20% of your value added, which is sale-price minus materials.

So, a logging camp produces trees and sells them $10 a unit, paying $2 in taxes. A lumber yard buys the trees for $12 a ton and produces lumber selling it for $22 a unit, paying $2 in taxes (22-12=10), Home Depot buys the lumber for $24 and sells it to customers for $34 a unit, paying $2 in taxes (34-24=10). All told the product without taxes would have cost $30, but it cost the consumer $36 because of the 20% VAT.

Therefore, you don't need to say 'you paid $2 in taxes for trees, lumber, and sales' you just need to say we paid $6 in taxes. It doesn't matter how many hands it went through, as long as no one is breaking the law the customer can assume 20% of what he is paying went to taxes.

And the idea of exempting some items defeats the purpose. Not even items for export should be exempt (why not make foreigners pay our taxes?) If you want to help the poor/middle class then increase the rebate.

7/22/2006 9:23:03 AM

Someone correct me if I'm wrong, but this seems absolutely fucking impossible at a rate of 23% sales tax.

Looking at the consumption of the rich, they would have to spend ALL of their income on consumption(which is highly unrealistic) to just contribute ~23% of their earned income per year. On our normal system, doesn't the upperbracket get taxed 35% of their income? So in this best case scenario, assuming millionaires are blowing their entire yearly income, who the fuck is making up the 12% difference? Then you basically want to make it so the poor paying nothing. Where is the money coming from?

Can someone explaing this to me?

7/22/2006 10:28:28 AM

I can try to explain it, but I couldn't find the relevant data to back up my explanation.

You are right that the top bracket is 35%, but what is missing is the fact that rich people are able to afford tax attorneys to write off much of their income or simply not report some of it. The evidence for this was calculated by the IRS a little while ago that found the top 5% of earners were only paying on average about 24% of their income in taxes. The really interesting point of the study was that this figure was the highest in decades (back when the top bracket was almost 50% they were only paying 21%).

This is why some people dislike the income tax system so much, liars and cheats are able to sidestep the tax. (remember that 24% is an average, some are paying the full 35% and some are paying close to none).

Also, the point about the rich having to spend all their income in order to pay the tax is ignoring the fact that capital goods are also taxed (I hope). As far as the tax goes it doesn't care whether you are buying $1 million dollars worth of clothing or $1 million dollars worth of sewing machines to make clothing, you are still going to be taxed at 23%.

In this way, the only way the rich can avoid paying the full tax is to never spend nor invest their money.

[Edited on July 22, 2006 at 10:52 AM. Reason : sp]

7/22/2006 10:51:08 AM

Quote :

"Can someone explaing this to me?"

The experts who created the FairTax figured that a 23% inclusive sales tax would replace the current revenue collected by the income tax. Keep in mind that it is not a 23% tax on income. It is a sales tax levied on all new goods and services. With the FairTax, your income doesn't matter. ..just your consumption.

The overall tax effect on people will be lower because the tax base is broadened. There are far more consumers than wage-earners. According to the FairTax Book, a single household earning $50,000 would pay about 21.1% of income under the current system. Under the FairTax, it would be 16.2%.

The FairTax basically taxes wealth in the form of a sales tax. The rich tend to spend more and will pay more tax.

[Edited on July 22, 2006 at 11:06 AM. Reason : .]

7/22/2006 11:06:27 AM

Quote :

"I've noticed a number of posters there who disagree with the FairTax and weren't suspended. I really wanted to see you duke it out with them there."

I would have been glad to do it, but agian, they suspended me. I don't know who else they do it to, but they did it to me. I think the board itself makes it apparent that it is intended to be a fairtax jack-off-a-thon. They deleted my thread and removed my account.

Quote :

"There will be cheating in any system."

This isn't a good justification. What if I put out a box of candy bars and a sign that said "pay a dollar for each one". Obviously and store is going to have stealling, but does that make my idea equally succeptable to theft?

Quote :

"ut it's not "insanely easy" for a registered retail operation to evade the sales tax."

Registered retail stores are not going to be the one's breaking the law. Please just look at cigarette smuggling in new york.

Quote :

"The tax is not regressive, because the poor pay NO fed income or FICA taxes!"

Listen closely: REGRESSION IS NOT BASED ON HOW MUCH TAX THE POOR PAY. It's based on how tax system is based. This being if income goes up by one dollar, how the proportional tax burden effected. In ANY SALES TAX, when income goes up one dollar, proportional tax burden goes down.
This is due to the consumption level between incomes. As income goes up, proportional consumption goes down. As income goes down, proportional consumption goes up.

Quote :

"I take it that would lead us to preclude the Soviet Union's failed attempt?"

That's another debate.

Quote :

"But I do agree with you that one shouldn't use the "it's never been done" to dismiss any new idea. The idea should make it on the merits."

I agree, you guys should stop using that logically fallicious arguement.

7/22/2006 12:17:20 PM

Quote :

"Listen closely: REGRESSION IS NOT BASED ON HOW MUCH TAX THE POOR PAY. It's based on how tax system is based. This being if income goes up by one dollar, how the proportional tax burden effected. In ANY SALES TAX, when income goes up one dollar, proportional tax burden goes down. This is due to the consumption level between incomes. As income goes up, proportional consumption goes down. As income goes down, proportional consumption goes up."

But isn't your tax burden the ammount of taxes you pay? So if your taxes on "basic necessities" are paid, then isn't your tax burden effectively 0? So in the case of the fair tax, the tax is indeed regressive, but only on "luxury" items.

My biggest problem with the fair tax is allowing the government to decide what is and isn't a "basic necessity".

Although the fact that it doesn't account for state taxes is also worring given that between state and federal taxes (not counting sales tax) is about 20-25% so I can actualy see this making my taxes go up.

Are there any theoretical tax systems in which the government derrives it's income from the states and it's left to the states to decide how to aqquire taxes?

7/22/2006 12:43:40 PM

Quote :

"But isn't your tax burden the ammount of taxes you pay?"

The amount of taxes you pay relative to income.

Quote :

"So if your taxes on "basic necessities" are paid, then isn't your tax burden effectively 0?"

Then it just shifts the burden onto the poorest people above that line. This is where my graph and extrended explaination would come in handy.

7/22/2006 12:47:46 PM

yeah seems like this might lead to a lot of government-induced "morality" or something. not sure what it should be called, but basically the government/majority of voters deciding what people need or don't need.

7/22/2006 12:49:51 PM

Quote :

"Then it just shifts the burden onto the poorest people above that line. This is where my graph and extrended explaination would come in handy."

Right, but does it shift it to a point where it doesn't matter? Anyone up to the poverty line their tax burden is 0 right? Now what about the people right above that point? Let's put poverty at 10K for ease of argument. So family A makes 11K. If they save their extra thousand, they pay no taxes and their burden is still 0. If they spend that extra thousand, they pay their 23% in taxes, so their tax burden is $230 or relative to their income 2.1%

Now lets say family B makes 15K. If they spend save, again effective burden of 0. If they spend their extra money they pay $1150 in taxes or relative to their income 7.6%

Moving on family C makes 30k. If they spend all extra money they pay 4600 or relative to income 15%.

So it would appear to me that up to the poverty line, the tax is 0, at the poverty line it becomes progressive up to the point where you exceed the maximum spending for a consumer family then it becomes regressive but at that point does that regressiveness matter? I guess that depends on the maximum of consumer spending.

7/22/2006 5:45:45 PM

Quote :

"This is because the rich spend a much smaller portion of their income and thus are taxed on roughly the same income as the middle class (ie you may earn 100X more than me but only spend 4X as much as me)."

are you that fucking stupid. that seriously is the dumbest fucking argument I have EVER heard. Where does all of that money that "isn't spent" go? Does it disappear? Does it go into some big piggy bank in the sky and never return? NO! It gets spent some time. Just not TODAY. And, when it gets spent, it gets taxed. Jesus. Open your fucking mind to the obvious. Regardless of whether Fair Tax is a good plan, that "argument" against it is possibly the dumbest thing imaginable, and it shows how far dumbass liberals will reach in order to trick the poor into continuing to support their misguided policies.

7/22/2006 9:05:00 PM

Quote :

"are you that fucking stupid. that seriously is the dumbest fucking argument I have EVER heard. Where does all of that money that "isn't spent" go? Does it disappear? Does it go into some big piggy bank in the sky and never return? NO! It gets spent some time. Just not TODAY. And, when it gets spent, it gets taxed. Jesus. Open your fucking mind to the obvious. Regardless of whether Fair Tax is a good plan, that "argument" against it is possibly the dumbest thing imaginable, and it shows how far dumbass liberals will reach in order to trick the poor into continuing to support their misguided policies."

But you showed those commie liberals with your impenetrable logical fortress!

[Edited on July 22, 2006 at 9:08 PM. Reason : commies]

7/22/2006 9:07:50 PM

i did.

7/22/2006 9:11:39 PM

Quote :

" Wave goodbye to accountants,"

what about the vast majority of accountants, who never do anything tax related?

7/22/2006 9:31:06 PM

Quote :

"REGRESSION IS NOT BASED ON HOW MUCH TAX THE POOR PAY"

I hope you rail just as much against the social security payroll tax which is horribly regressive.

Anyway, let's look at it from another angle. We are already paying a hidden tax in the prices of goods and services. Each product you buy carries the embedded cost of all the federal taxes each participant in the making of that product had to pay. On average this embedded tax is about 22% of the price. Everyone is paying this embedded tax- the poor the rich and everyone in between.

So if we apply your thinking to this, this embedded tax is also regressive since it takes a bigger proportion out of the poor's income. The poor who may be spending all of their income each month are paying the 22% embedded tax.

The FairTax will remove these embedded taxes because there will be no federal tax consequence in the production of goods and services. So now let's say you spend $45 a week on groceries. The removal of the 22% embedded tax would bring them down to $35.10. Add the FairTax in and your groceries would cost $45.58.

But remember now you are taking home 100% of your paycheck and getting a monthly prebate on sales tax paid up to the poverty line. Also no more paying accountants to do your taxes. No more capital gains tax, No more death Tax. No more alternative minimum tax, No more self-employment tax. No more having to financially strip in front of Uncle Sam each April 15th. Wouldn't that be better than the mess we have now?

7/22/2006 10:22:29 PM

Quote :

"Right, but does it shift it to a point where it doesn't matter?"

I no longer have my data, but according to the study I did in my thread agianst fairtax, it creates a large spike right at the middle class, and slopes off logarithmically towards the rich.

Quote :

"So family A makes 11K. If they save their extra thousand, they pay no taxes and their burden is still 0."

Unfortunately we live in reality, and that doesn't happen. In the real world, these people are going to buy a car instead of taking the bus, they're going to buy a house instead of renting an apartment. They're going to buy their kids new school clothes instead of shopping at goodwill. If we ignore reality and the consumption curve associated with it, yes, fairtax would work fine, however "they just save this money" is niether realistic nor practical.

Quote :

"Where does all of that money that "isn't spent" go?"

Intro to macroeconomics. Anything that isn't consumption is savings.

Quote :

" It gets spent some time. Just not TODAY. And, when it gets spent, it gets taxed."

Unfortunately it doesn't proportionally get spent when compared to lower incomes. Consumption is consumption. Savings is savings.

Quote :

"that "argument" against it is possibly the dumbest thing imaginable, and it shows how far dumbass liberals will reach in order to trick the poor into continuing to support their misguided policies."

No, that arguement shows a basic understanding the basic consumption curve. Marginal propensity to consume goes down as income goes up. As marginal propensity to consume goes down, marginal propensity to save goes up. This is very very basic.

Quote :

"I hope you rail just as much against the social security payroll tax which is horribly regressive."

It's not attempting to get rid of the wonderful income tax system that helps the wheels of our economy well greased. Additionally the "A can't be bad because B is bad" is a very flawed arguement.

Quote :

"Anyway, let's look at it from another angle. We are already paying a hidden tax in the prices of goods and services."

The entire idea of "hidden tax" completely ignores the basic concept of profit. It is absolutely insane and I cannot understand why anyone would dare call themselves an economist and ignore this.

Quote :

"Also no more paying accountants to do your taxes."

Any monkey can do their own taxes. It is not very difficult. I do my own and I am certainly not an accountant by trade.

Quote :

"Wouldn't that be better than the mess we have now?"

No, we have the mess we have now for a damn good reason. It helps the economy function effectively. People didn't just sit around and make a complex tax system for no reason at all if there was a much easier and much more obvious sales tax system that would have worked better. Federal tax is complicated for a reason, taxing people effectively is really fucking complex. The income tax system does things that soften recessions and weaken inflation. It's really quite a wonderful thing.

7/23/2006 3:14:54 AM

Quote :

"People didn't just sit around and make a complex tax system for no reason at all"

Kris, I would like to introduce you to representative democracy. Everything is and always has been a compromise in which no-one goes home happy. In this case, in order to give tax breaks to everyones pet constituency we all must live with volume upon volume of tax code. Your blind faith in the utility maximizing ability of George Bush and his ilk is admirable, but I suspect misguided. Politics is not about making capitalism work, it is about getting elected, and the two have nothing to do with each other.

The income tax system is so complex because legislators want to give their pet industry a tax break and there is no one to stop them except other legislators which want to do the same thing.

7/23/2006 9:06:08 AM

Quote :

"Your blind faith in the utility maximizing ability of George Bush and his ilk is admirable, but I suspect misguided."

I don't give him any credit, but it has been a long road up and down, but things have gotten better moreso than worse. Many great people have helped set this wonderful income tax system. I'd give a good bit of the credit to FDR.

Quote :

"Politics is not about making capitalism work, it is about getting elected, and the two have nothing to do with each other."

I disagree. It is certainly to a president's best interest that the economy succeds. Sure there's a few other interests at work, but it's the best we've got.

Quote :

"The income tax system is so complex because legislators want to give their pet industry a tax break and there is no one to stop them except other legislators which want to do the same thing."

This raises the question, have you filed your taxes? I don't get a tax break for buying mcdonald's hamburgers. I get a break for charitable donations, and a few other things, but there isn't a lot of "pet industries involved".

7/23/2006 11:16:49 AM

Quote :

"The entire idea of "hidden tax" completely ignores the basic concept of profit. "

This statement will require extensive explanation.

A "A heavy progressive or graduated income tax." is one of the main tenets of The Communist Manifesto...a blueprint for the destruction of capitalism.

I think Kris makes it quite clear that he and other socialists will hold tight to the income tax like grim death and will produce an amazing collection of mish-mash to justify its continued existence.

On the other hand, if you are someone who is fed up the current income tax, it can be changed. Our country functioned very well without it for many years. LoneSnark nailed it when he said that the tax has become jerry-rigged by politicians over the years.

In 2002, American citizens and businesses spent 5.8 billion hours complying with tax-code - which cost an estimated $194 billion. Time and Money that could've been spent on something actually productive.

Despite Kris and his ilk, most of us agree that the current tax system is screwed up beyond repair. The FairTax is one way to replace it. The bill (HR25) is waiting in congress. It's up to us to apply pressure to our politicians to bring it out for a vote.

7/23/2006 11:42:04 AM

Quote :

"This statement will require extensive explanation."

OK, explain it. Explain why profit is no longer the difference between revenue and sales. And don't give me the old fairtax jerk-off speech.

Quote :

"A "A heavy progressive or graduated income tax." is one of the main tenets of The Communist Manifesto...a blueprint for the destruction of capitalism."

That's a strawman and has no bearing on my arguement or yours.

7/23/2006 12:06:25 PM

Before you make that religion Fair Tax thread...

7/23/2006 12:09:37 PM

Quote :

"I no longer have my data, but according to the study I did in my thread agianst fairtax, it creates a large spike right at the middle class, and slopes off logarithmically towards the rich. "

Well yeah that's obvious from looking at the numbers. I guess my question was where does the spike hit in middle class. If it hits hardest in the lower middle class then yes there's a problem. If it hits in the upper middle class then maybe not so much, especialy if it hits at the point where a bit more smart investing / saving would push the upper middle class people into the upper class.

Quote :

"Unfortunately we live in reality, and that doesn't happen. In the real world, these people are going to buy a car instead of taking the bus, they're going to buy a house instead of renting an apartment. They're going to buy their kids new school clothes instead of shopping at goodwill. If we ignore reality and the consumption curve associated with it, yes, fairtax would work fine, however "they just save this money" is niether realistic nor practical."

That's understood. My point was though, at it's maximum a family earning 11K has a tax burden of 2.1% and at minimum 0, but it's all dependent on what they do with that extra money. In either case it's no more than 2.1 and potentialy less which (ignoring state income tax for the moment) is less than their current tax burden.

If you could manage to dig up your old data or the thread you argued in that would be very useful. As I said, I still don't buy the whole thing but it doesn't seem like the disaster in the making some people think it is either.

It's also worth noting that because of the nature of the system a person's tax buden should never exceed (or indeed even meet) the fair tax rate. So given that ~20-25% is what most people pay in taxes it stands to keep people's actual tax burdens appropriate.

Running a few more numbers:

50k / yr max burden of 18.4%

80k / yr ........ 20.1%

100k / yr ....... 20.7%

200k / yr ....... 21.9%

So it seems the spike is right arround the 80k mark. Do you happen to have the data for what the average tax burdens are currently for such income levels?

7/23/2006 4:57:25 PM

Quote :

"If it hits hardest in the lower middle class then yes there's a problem."

It spikes up in the low middle class, and then slopes off.

Quote :

"especialy if it hits at the point where a bit more smart investing / saving would push the upper middle class people into the upper class."

This is another thing that economically that we can't expect to happen. Aggregately people don't can't be expected to act in the smartest way. You seemed to be focused on placing blame, you need to understand that blame is useless. People will act in a way, it's not their fault, it's simply what people do when put in this specific situation.

Quote :

"In either case it's no more than 2.1 and potentialy less which (ignoring state income tax for the moment) is less than their current tax burden."

That's simply not possible. We must retain the same amount of tax revenue. We know that this system is regressive. Therefore it is not possible that their tax burden could be less. The only reason it could possibly be so is due to the bad math used in fairtax's predictions.

Quote :

"Running a few more numbers: 50k / yr max burden of 18.4% 80k / yr ........ 20.1% 100k / yr ....... 20.7% 200k / yr ....... 21.9% So it seems the spike is right arround the 80k mark."

You didn't calculate it right. Tax burden is percentage of total income. We know that proportional consumption decreases as income increases, therefore we know that the tax burden of this system MUST go down as income goes up.

7/23/2006 9:50:30 PM

Quote :

"Kris All American 32253 Posts user info edit post Quote : "although it isn't substantially large so as to be a drain on the economy" This is probably my favorite arguement of theirs. It's essentially akin to "Let's get rid of cars so we won't have to spend all this money on roads!""

It's a legit argument. If we can hover around above the ground where we don't need the roads, why not go for the new system even if it might be a little painful to implement. See, anyone can use clever but pointless analogies.

7/23/2006 10:55:31 PM

I had a point there, it may have went over your head. It was "Just because something's expensive doesn't mean it doesn't work well."

7/23/2006 11:20:15 PM

Quote :

"Do you happen to have the data for what the average tax burdens are currently for such income levels?"

This might help. This is from FairTax.org FAQ

Is the 23% FairTax revenue-neutral rate higher or lower when compared to income and Social Security taxes people pay today?
Most people are paying that much or more today – much of it is just hidden from view. The income tax bracket most people fall into is 15 percent, and all wage earners pay 7.65 percent in payroll taxes. That’s 23 percent right there, without taking into account the 7.65 percent employer matching! On top of that, you have to add in the business taxes and associated compliance costs passed on to consumers in higher prices.

Effective tax rates vs. stated tax rates
Because the 23-percent FairTax rate of $0.23 on every dollar spent is not imposed on necessities, an individual spending $30,000 pays an effective tax rate of only 15.5 percent, not 23 percent. That same individual will pay 17.3 percent of his or her income to federal taxes under current law. See effective tax rates for a family of four at various spending levels in Figure 2.



Also
-- You can save and invest without any fed. tax consequences.
-- Our purchasing power remains bascially the same. The removal of embedded taxes will compensate for the added consumption tax.
-- The richest Americans and businesses will bring their money back to America.
-- The underground economy will now pay taxes.
-- Foreign tourists will be helping fund our social security system.
-- No more IRS intrusion into your private financial lives.
-- Government costs are still covered. Revenue Neutrality

7/23/2006 11:49:56 PM

Quote :

"Our purchasing power remains bascially the same. The removal of embedded taxes will compensate for the added consumption tax."

This is utter bullshit. Taxes increase cost, but cost has a much more complex impact on price. "Embedded" or "hidden" taxes oversimplify a complicated relationship.

7/24/2006 12:13:10 AM

Guess who else hates the current system? Former IRS Commissioner Shirley D. Peterson...

Quote :

"". . . when it comes to the workings of our tax system, I have just about seen it all, and that experience has led me to the conclusion that we should repeal the Internal Revenue Code and start over. Eight decades. . . have produced an impenetrable maze. I favor replacing the system.""

and this...

Quote :

"Today the income tax is in trouble, because its exaction's are forcing the middle class into poverty, and IRS abuses are routine." -- Paul Craig Roberts, former Asst. Secretary - U.S. Treasury "

7/24/2006 12:33:26 AM

Quote :

"It spikes up in the low middle class, and then slopes off. "

From my numbers it would spike in the upper middle class. Can you find your numbers?

Quote :

"This is another thing that economically that we can't expect to happen. Aggregately people don't can't be expected to act in the smartest way. You seemed to be focused on placing blame, you need to understand that blame is useless. People will act in a way, it's not their fault, it's simply what people do when put in this specific situation. "

Perhaps, but being that you're a person who believes heavily in people behaving as they are conditioned to do, is it not likely that current behavior is in part due to the current tax system (which does nothing to reward savings or investing and often punishes it)?

Quote :

"That's simply not possible. We must retain the same amount of tax revenue. We know that this system is regressive. Therefore it is not possible that their tax burden could be less. The only reason it could possibly be so is due to the bad math used in fairtax's predictions. "

Well, we don't HAVE to maintain the same revenue, but that's beside's the point. I don't understand how you say the burden couldn't be less. It's rather simple, if they spend money, their burden increases up to a point, if they spend less than the max they can spend their burden is less.

Quote :

"You didn't calculate it right. Tax burden is percentage of total income. We know that proportional consumption decreases as income increases, therefore we know that the tax burden of this system MUST go down as income goes up."

I calculated maximum burden. That is, taxes paid relative to total income assuming that all income over the poverty line is taxed (and therefore spent). Yes, spending could drop off sooner, but without the numbers to measure it by I couldn't say. At what income level does spending decrease? Do you have the numbers?

7/24/2006 12:36:32 AM

Quote :

"Can you find your numbers?"

I don't have them anymore, it was well over several years ago that I researched this subject, I no longer have my data. If you can point me towards consumption I might be able to get some new data here in a bit.

Quote :

" is it not likely that current behavior is in part due to the current tax system (which does nothing to reward savings or investing and often punishes it)?"

Savings are rewarded in our current system. I can name several systems of employer matched estate planning. Not to mention IRA's and roth IRA's. But that's besides the point. Don't just say "these people can save more and not pay as much taxes" as a justification for them paying more, explain a system behind it that changes their spending patterns, and frankly, with the lower class, and the lower middle class, often times saving is simply not an option.

Quote :

"Well, we don't HAVE to maintain the same revenue"

Yes we do. The system is supposed to be revenue nuetral.

Quote :

"It's rather simple, if they spend money, their burden increases up to a point, if they spend less than the max they can spend their burden is less."

You see, it's not a matter of if they spend money or if they don't, we have consumption curves to determine that. It can be rather difficult to dramatically impact marginal and fixed consumption.

Quote :

"That is, taxes paid relative to total income assuming that all income over the poverty line is taxed (and therefore spent)."

Well in order to do this you would need to calculate consumption relative to income. I don't think you did this.

Quote :

"At what income level does spending decrease?"

Margin propensity to consume decreases steadily as income rises. You'll notice consumption does not rise at the same rate as income, it rises slower, thus MPC (Consumption/Income) decreases like so:


You'll notice this can shift, but but for the most part consumption grows at the same rate, thus MPC declines at the same rate. As so:

7/24/2006 1:35:01 AM

Quote :

"Unfortunately it doesn't proportionally get spent when compared to lower incomes. Consumption is consumption. Savings is savings."

Actually, it ALL gets spent. Even if it's 200 years later, it gets spent. It might go into savings today, but if it comes out in a thousand years and is spent, then it gets taxed. If it stays in savings and never ever comes out, then I'd like to see how, honestly. If that's the case, then the money was effectively lost anyway.

7/24/2006 8:57:24 PM

Quote :

"Actually, it ALL gets spent. Even if it's 200 years later, it gets spent."

It's who is paying the taxes on it, and how often they're paying them.

Quote :

"It might go into savings today, but if it comes out in a thousand years and is spent, then it gets taxed. If it stays in savings and never ever comes out, then I'd like to see how, honestly. If that's the case, then the money was effectively lost anyway."

I'd hate to break it to you, but if you can't even follow this, I really don't think you have any chance of understanding economics, or really anything else. The fact that you were ever even involved in anything at NC State that gave you an email address still surprises me.

7/24/2006 9:03:05 PM

Quote :

"It's who is paying the taxes on it, and how often they're paying them."

In that case, you aren't caring about "regressive" vs "progressive." You only care about feeding more money to the money grubbing pig that is the gov't. And that's hardly a good argument to try and use against FT.

Quote :

"I'd hate to break it to you, but if you can't even follow this, I really don't think you have any chance of understanding economics, or really anything else. The fact that you were ever even involved in anything at NC State that gave you an email address still surprises me."

I hate to break it to you, but ad hominem mixed with intellectual elitism really never works in a serious discussion.

7/24/2006 10:09:26 PM

Quote :

"burr0sback: [...] serious discussion"

lollercaust


So will any of the Libertarians admit that the fair tax is devised to be so tremendously unpalatable to the average household, that if it were ever enacted the public would demand that government spending be reduced manifold?

There's literally no other reason for it existing.

It's a good thing this will never happen, thanks in part to its proponents' dishonesty.

7/24/2006 10:21:19 PM

but...but...they wrote a book about it! and neil boortz likes it!

7/24/2006 10:54:18 PM

Quote :

"So will any of the Libertarians admit that the fair tax is devised to be so tremendously unpalatable to the average household"

I can assure you that the FairTax is not a libertarian conspiracy. In fact, most hard-core libertarians dislike it for the mere fact that it is still a tax.

The FairTax project was started by a Houston businessman who was fed up with all the time he had to waste in tax compliance. He started FairTax.org. At the start, no one tax plan was favored, the group considered many Flat Tax, VAT, consumption etc.

7/24/2006 10:59:57 PM

Sooo,

Spend billions revamping our system, shift the tax burden onto the working class, reduce consumer spending, etc...

So that we don't have to file taxes anymore?

7/24/2006 11:10:14 PM

Quote :

"shift the tax burden onto the working class, reduce consumer spending, etc... "

The working class is already paying 17% federal income and 7.65% social security taxes (total over 24%) PLUS the average embedded 23% tax on all goods and services. The FairTax removes the embedded taxes, prices will reamin about the same, everyone gets their whole paycheck and the power to control their tax-paying through their control of consumption. The working class will benefit a lot.

Remember that the FairTax is only applied once to NEW products. There is no tax on used items. As to reduced consumer spending... consider this answer:

Quote :

" Some people will avoid buying a new car or other new products because of the tax. This is actually a good thing. Our country is plenty wasteful as it is. We would benefit from a little more reusing. There will be an increased demand for used cars. This demand will drive the price of used cars up. However, if nowone bought a new car, the price of used cars would eventually skyrocket as the used car supply dwindled. Used car prices would approach new car prices, including tax. People would then buy the new car. New cars will continue to be sold in large numbers, maybe just a few less. The initial statement was that people would stop buying new cars and the economy would take a dive. Such naysayers have a right to be concerned. If only 10% of the new car buyers postponed buying a new car for a year, or settle with picking up a used car--the auto industry would take a dive. Let's look at one person, we'll call him Sam. Every three years, Sam buys a new car. The new car Sam desires is $25,000. National Sales tax will bump the total price to $32,500. Sam was a Flat Tax proponent and now under the Fair Tax, he just cannot bring himself to buy a new car. Besides, Sam finds the same model just one year old for $23,000. He makes the deal and drives home in his new used car. Sam could have purchased the new car with payments of $988/mo. The used car will cost him $699/mo, saving $289/month on car payments. What do you think Sam will do with that extra money. He will spend it. He will go out to dinner, he will take a trip, he will buy new clothes. Some parts of the economy do a little worse, othe sectors will do a lot better. What else could happen. One car company could recognize the increased demand for used cars and improve the maintainability of their cars. The car would be designed to never rust (make it out of plastic). The engines would be designed to be replaced easily and cheaply. Better access to window motors and door locks will cut down repair times. This new car will become a status symbol for people who wish to conserver resources just as the ugly old Volvo's were recognized for safety. These "new Volvo" drives could save 25% on there transportation costs. Eventually that savings will be spent. This is how our standard of living increases. One item will cost us less and we can spend the savings on other items. Over the years, our workforce migrated from agriculture to industry as the majority of our spending moved from food to meterial. Replacing the income tax with a national sales tax will change buying habits. The Fair Tax will treat all products and services the same. Nothing will be subsidised with a tax credit. All items will compete for our hard earned money on an equal playing field. We will all make economic decisions based on the accurate unsubsidized prices. Economic inefficiencies and unwise spending will be reduces. Spending on existing products will decrease. This is a good thing. It will free up money for other things. The economy as a whole will be better off and our standards of living will incr"

7/24/2006 11:39:09 PM

Quote :

"In that case, you aren't caring about "regressive" vs "progressive." You only care about feeding more money to the money grubbing pig that is the gov't."

Regardless of that, we live in reality, and in reality, we have taxes, and we have to pay them.

Quote :

"And that's hardly a good argument to try and use against FT."

You're right, because supposedly, fairtax is revenue neutral.

Quote :

"I hate to break it to you, but ad hominem mixed with intellectual elitism really never works in a serious discussion."

Correct agian, this may be a personal best for you!
but I don't think I could get in a serious discussion with you any more than I could with a monkey with downs syndrome.

Quote :

"The working class is already paying 17% federal income and 7.65% social security taxes (total over 24%) PLUS the average embedded 23% tax on all goods and services."

EMBEDDED TAXES ARE BULLSHIT. TAXES EFFECT COST. COST DOES NOT NECCESARILY EFFECT PRICE!

Quote :

"prices will reamin about the same"

This simply isn't possible, and anyone that isn't completely brainwashed can see it. Let's put ourselves in a world where economics doesn't exist. In this world there really is a 23% embedded tax on goods, there is also 24% income tax. How can the price possibly be the same as it is with the 23% and the tax revenue be the same? Even a child can see that doesn't add up.

7/25/2006 12:14:30 AM

Quote :

"EMBEDDED TAXES ARE BULLSHIT. TAXES EFFECT COST. COST DOES NOT NECCESARILY EFFECT PRICE!"

You haven't read up on opportunity costs, have you?

7/25/2006 8:58:20 AM

Jesusalmightygodinheaven, I am sick of fairtax threads.

7/25/2006 11:29:53 AM

The progressive bracketing of the tax is not the primary issue, although it is an issue.

It disproportionately discourages consumption and promotes investment. This type of manipulation creates an unstable market prone to crashes. Investment controls are essential to any economy that aims for continual growth.

[Edited on July 25, 2006 at 11:35 AM. Reason : *]

7/25/2006 11:33:48 AM

Quote :

"Schuchula: Life's short. Take chances. The most powerful country in the world shouldn't be forced to 'stick with the evil we know."

In regards to the Income Tax, I couldn't of said it better.

Quote :

"It disproportionately discourages consumption and promotes investment."

How can you save too much and invest too much at the same time? Most Americans have a negative savings rate. A tax system that promotes savings would be welcomed.

Businesses that have moved off-shore because of lower taxes on capital and labor will come flocking back. America will become the worlds biggest tax-haven, creating jobs and investment.

7/25/2006 12:10:52 PM

The income tax is one of the few worth keeping. I would even consider expanding it, to completely replace the property tax.

The businesses moving offshore will be obsolete provided we keep developing new industries here at home.

[Edited on July 25, 2006 at 12:36 PM. Reason : why does it ask this?]

7/25/2006 12:35:12 PM