The FairTax - gaining steam!

[razztazz]

razztaz, I can see it is pointless to argue with you and a waste of my time.

Have a good day.

Charlie

I knew you hadn't read the book. Have a nice day. Anybody else? The buffet is open. Serve yourself

 

[Mr._johngalt]

I knew you hadn't read the book. Have a nice day. Anybody else? The buffet is open.  Serve yourself

I am done with this topic, but I have read "The Book". I'm talking the Bible folks, much more interesting than this tax stuff. I did bog down in the Old Testament a little, especially with that "Numbers" chapter,
and I'm an accountant. Anyway, I did it just to say I had done it.
Can't say I was inspired but I can quote a lot of scripture.

JG

 

[sgeeeee]

Anyone who believes that corporations are going to pass along tax reductions in their pricing has never sat in on a large corporation marketing meeting that sets prices.

The un-Fair tax lets corporations and the wealthy out of paying a number of direct taxes and pushes all tax collection onto the consumer. Anyone who believes that this kind of program is going to be good for the consumer probably believes in the tooth fairy.

Anyone who believes that we can move from an income tax system to a sales tax system and still allow retired consumers to come out ahead apparently doesn't understand what "income" and "consumption" mean.

But on the other hand . . . anyone who isn't outraged by our current administration just isn't paying attention.

 

[Mr._johngalt]

Anyone who believes that corporations are going to pass along tax reductions in their pricing has never sat in on a large corporation marketing meeting that sets prices.

The un-Fair tax lets corporations and the wealthy out of paying a number of direct taxes and pushes all tax collection onto the consumer.  Anyone who believes that this kind of program is going to be good for the consumer probably believes in the tooth fairy. 

Anyone who believes that we can move from an income tax system to a sales tax system and still allow retired consumers to come out ahead apparently doesn't understand what "income" and "consumption" mean.

But on the other hand . . . anyone who isn't outraged by our current administration just isn't paying attention.   

I'm outraged, so I guess that means I am paying attention.
Agree completely on your take on the "tax thing". Good post!

JG

 

[P.S.]

Haven't read the book and quickly browsed through 11 pages...
but the tax doesn't seem fair to me. Maybe I've been brainwashed by the government..
but let me get this straight:
two families, exact same consumption, in all respects alike except that one inherits millions of dollars and make $250,000/y and the other family makes $60,000. They pay the same amount of taxes? I guess it depends on your opinion of what one reasonably owes in order to partake in one's society/ live in a country/ enjoy the benefits, etc.

 

[Patrick]

Anyone who believes that corporations are going to pass along tax reductions in their pricing has never sat in on a large corporation marketing meeting that sets prices.

The un-Fair tax lets corporations and the wealthy out of paying a number of direct taxes and pushes all tax collection onto the consumer.  Anyone who believes that this kind of program is going to be good for the consumer probably believes in the tooth fairy. 

Anyone who believes that we can move from an income tax system to a sales tax system and still allow retired consumers to come out ahead apparently doesn't understand what "income" and "consumption" mean.

But on the other hand . . . anyone who isn't outraged by our current administration just isn't paying attention.   

Quite a bit of personal criticism of "anyone" in this post.  How about some facts instead of personal attacks?

 

[charlie]

Of course companies will charge what the traffic will bear ......
but not at the expense of loosing market share.  Why do you
think inflation is not raging today?  It is in some part, at least, due
to the lack of pricing power in many sectors of our economy.

SG, I think you may be making the mistake of extrapolating one
or two data points to draw a general conclusion.  I seriously doubt
that you have sat in on a representative number of companies
marketing meetings.  Take my sector for example (laundromats).
It is very hard to raise prices to match inflation due to the
extreme saturation of the market in the "good" areas.  

The American auto manufacturers would welcome the chance to
regain some market share as well, IMO.  The list is a long one.

BTW, I am still waiting for you to correct the calculation error
in an earlier post that I responded to in reply #91.  Your
conclusion based on that example is not supported by a
correct calculation.

I also showed how an old couple (my wife and I) with annual
consumption of about $35,000 would still do marginally beter
under the fair tax system ...... but you won't buy that probably
because I assumed a 15%  pre fair tax reduction in prices.

I think we are at the point where we should agree to disagree,
don't you?  The only reason I posted this was to provide a
counter balance.

Cheers,

Charlie

 

[Austin_Explorer]

The un-Fair tax lets corporations and the wealthy out of paying a number of direct taxes and pushes all tax collection onto the consumer.  Anyone who believes that this kind of program is going to be good for the consumer probably believes in the tooth fairy. 

I can also reason that a tax system that actually discourages work and is less discouraging of consumption is not the type of policy that can make a country great.

Attempting to require that a new tax system be to the benefit of everyone at all times is requiring a fool's errand. Yes, consumption will cost more. Production less. Saving less. Frugal living less than new consumption. And so on. I am not A consumer, but rather consumer is just one hat that I wear.

All of my arguments about this tax issue relate to what I think it would mean to the country. For every argument that the sales tax proposal is unfair I can come up with an example of how the current system is unfair. No system will be fair for every possible example you can conjure up. Get over it.

As for the tooth fairy, how do YOU explain the money under my pillow?

But on the other hand . . . anyone who isn't outraged by our current administration just isn't paying attention.   

On this we agree!

 

[sgeeeee]

SG, I think you may be making the mistake of extrapolating one
or two data points to draw a general conclusion.  I seriously doubt
that you have sat in on a representative number of companies
marketing meetings.

Only a handfull. Of course we studied general practices of every company we could in the process and we had people attending those meetings who consulted or worked for dozens of other companies. If my data base is too weak to depend on, what data base are you working from? How many have you sat in on? It's easy to nit-pick someone who attempts to put up real numbers, but I'm waiting for you to back up your own assumptions with even one data point. For example, why do you assume that corporate taxes add 30% to the price of new products. I know that for most electronics and semiconductors this number is more than an order of magnitude too high. It might be that high for liquor and tobacco, but I am skeptical that corporate tax has significant impact on the cost of most items we buy.

Take my sector for example (laundromats).
It is very hard to raise prices to match inflation due to the
extreme saturation of the market in the "good" areas.  

How will the un-Fair tax change that, Charlie? Let's imagine, for a moment that suddently every laundromat owner can save 7 cents on every washer load . . . are you all going to go out and reduce the cost per load to the consumer? I want to see those coin operated machines that accept 93 cents.

The American auto manufacturers would welcome the chance to
regain some market share as well, IMO.  The list is a long one.

Yes, and what data or marketing survey are you reading that indicates that the Fair Tax will change the fate of the American auto manufacturers? That's rediculous. There is not such data from any reliable source. Just because some neo-con spouts that propaganda doesn't make it true. The American auto manufacturers have plenty of problems that keep them from being more competitive with Asian manufactureres. Frankly, I doubt that you could give American cars away in much of the world.

BTW, I am still waiting for you to correct the calculation error
in an earlier post that I responded to in reply #91.  Your
conclusion based on that example is not supported by a
correct calculation.

I've been camping for the past 3 days and haven't gotten a chance to read all the posts, Charlie. Can you tell me which of the many pages your post is on? And which conclusion of mine do you think is in error? I'll look at my calculations again. But I posted detailed calculations for 6 different cases. I've yet to see one of the proponents of this idea post anything but hand-waving worship of the neo-con mantra.

I also showed how an old couple (my wife and I) with annual
consumption of about $35,000 would still do marginally beter
under the fair tax system ...... but you won't buy that probably
because I assumed a 15%  pre fair tax reduction in prices.

I think we are at the point where we should agree to disagree,
don't you?  The only reason I posted this was to provide a
counter balance.

Charlie, I believe that you are going to believe whatever you hear spouted from this administration. I am going to believe what the calculations show me. I've plugged in real data for my life situation and I can see that the un-Fair Tax does not seem fair to me at all. In fact, it would cost me an equivalent of about $250,000 in current retirement nest egg value (about $9000 per year). So, I guess we have reached that point. You will have blind faith in the neo-con administration. I will place my faith in real data and calculations.

 

[sgeeeee]

Quite a bit of personal criticism of "anyone" in this post.  How about some facts instead of personal attacks?

This is almost funny.

I've posted three posts with complete calculations of six different tax situtations -- 3 for working couples and 3 for retired couples. I've used both real income, tax, and spending data for 2 cases and real tax rates with hypothetical income and spending for 4 others.

The criticism from those with blind faith in the neo-con proposal has been to speculate wildly about how the situation might change. These speculations about the impact of tax infrastructure and corporate income tax on the price of products have been offered without a single piece of data backing the arm-waving.

Actually, it seems unbelievable to me that we even need to discuss the detailed dollar and cents impact of this proposal to see through it.

For all of you un-Fair Tax proponents: If you are convinced that you will pay less, who do you think is going to pay more?

It's not the corporations. They will no longer have to pay taxes directly.

It's not the ultra-wealthy. They get much of their lifetime income from capital gains and from inheritance.

And if you think that this Fair Tax is going to be so much more efficient to collect that we will save enough money to reduce overall tax burden for everyone . . . well, I would like to sample some of the Kool-aid you are drinking. Show me some data. I don't believe it.

 

[unclemick]

World trade, fair trade, international competitiveness - World is Flat ala Friedman.

Taxing and revenue along with health/pension business costs will be intertwined in mix.

Don't anybody run out of gas - this will be with us for a while.

Me - I'm still waiting for Hillary to tell me it's okay to put aside pooh-pooh recycling and kayaks - so I can devote more time to studying the fair tax.

The Russian 2001 jump start/or not - depending on which think tank study one Goggle's up - has both sides lining up 'the study/survey/analysis' juices.

As an old relic of the Cold War - if someone whispered 'fair tax gap' and 'the Ruskie's' into my ear - who knows how I would react.

 

[Cal]

For all of you un-Fair Tax proponents:  If you are convinced that you will pay less, who do you think is going to pay more?

Before I give serious consideration to any proposal, this is what I want answered. If you think that "everybody's a winner" then you're not living in the real world.  Somebody is going to pay more tax and somebody is going to pay less tax. If you want serious consideration of this proposal, tell me who we're going to screw when this gets passed. And if you don't know who's going to get screwed, guess what........

 

[amt]

For all of you un-Fair Tax proponents:  If you are convinced that you will pay less, who do you think is going to pay more?

Charlie, I believe that you are going to believe whatever you hear spouted from this administration.  I am going to believe what the calculations show me.  I've plugged in real data for my life situation and I can see that the un-Fair Tax does not seem fair to me at all.  In fact, it would cost me an equivalent of about $250,000 in current retirement nest egg value (about $9000 per year). 

You answered your own question.  Wealthy people like you who have amassed a fortune out of the sweat equity of the working class should be ashamed to want to cling on to the current system which rewards free spending and borrowing, while punishing hard work.  You rich people are opposed to fairtax out of selfishness.  You like the current system because you can avoid income tax much more easily than you can the fairtax.  You can ask your lobbyists to get more gimmes at the expense of the rest of the American people.  Did you know the income tax percentage of Mrs. Teresa Highness Kerry?  It's around 12%.  Definitely less than that of someone who is making $20,000/yr. 


Your blind hatred of this administration makes you so blind to everything.  Are you still living in 2000, dreaming of President-elect Al?  Get over it.  After all, the fairtax is not Bush's idea; he didn't even look into it until recently.  I'm not his favorite fan, but I do pity people like you filled with hatred.

 

[sgeeeee]

. . . For every argument that the sales tax proposal is unfair I can come up with an example of how the current system is unfair.  No system will be fair for every possible example you can conjure up.  Get over it.

. . .

Of course all tax systems have deficiencies.  But before we all drink the Kool-aid and chant the neo-con mantra, "Fair Tax is better.  Fair Tax is better. . .", let's at least look at who wins, who loses and by what amount.  How can we have a reasonable discussion on the merits of the proposal while the proponents make the naive and unjustified claim that we all win.  I've presented quite a bit of data indicating that middle class and upper middle class retirees will be big losers and that high wage earners will be big winners.  There are clearly other consequences of this proposal, but that's enough for me to see that I don't think it's fair.  

If someone believes that retirement by the middle class is bad for the country and that the rich are paying way too much in tax, then this is the tax proposal for you.   :

 

[Cal]

Your blind hatred of this administration makes you so blind to everything.  Are you still living in 2000, dreaming of President-elect Al?  Get over it.  After all, the fairtax is not Bush's idea; he didn't even look into it until recently.  I'm not his favorite fan, but I do pity people like you filled with hatred.

Then, please answer my question: who is going to get screwed in this fair tax deal?
Do you really think the government will be able to cheaply and effectively give out a rebate to everyone so that this tax is not regressive? Do you know a lot of low income people?  I do at my workplace. Many don't even have bank accounts. Where are they going to cash these rebate checks? Many do not even live at the same address for more than two years. Where are these checks going to be sent? Do you know how many pay checks we get back at work because the employee didn't give us their new address? And you think this system will reduce bureaucracy?

 

[sgeeeee]

You answered your own question.  Wealthy people like you who have amassed a fortune out of the sweat equity of the working class should be ashamed to want to cling on to the current system which rewards free spending and borrowing, while punishing hard work.  You rich people are opposed to fairtax out of selfishness.  You like the current system because you can avoid income tax much more easily than you can the fairtax.  You can ask your lobbyists to get more gimmes at the expense of the rest of the American people.  Did you know the income tax percentage of Mrs. Teresa Highness Kerry?  It's around 12%.  Definitely less than that of someone who is making $20,000/yr. 


Your blind hatred of this administration makes you so blind to everything.  Are you still living in 2000, dreaming of President-elect Al?  Get over it.  After all, the fairtax is not Bush's idea; he didn't even look into it until recently.  I'm not his favorite fan, but I do pity people like you filled with hatred.

Wow. :

I was addressing the Fair Tax proposal and it's impact on different people, but I have no idea how it would affect Teresa Kerry. If I knew more about her tax situation, my guess is that I would think that she is not paying her fair share of taxes. Of course based on the trends I saw in the analysis of my earlier posts, my guess is also that the Fair Tax would only serve to reduce her tax burden even more. I also know nothing about Al Gore's tax situation. I'm not sure what either Kerry or Gore have to do with the Fair Tax proposal or what point you are trying to make by bringing them up.

You seem to have missed the point of the earlier analysis of the Fair Tax. It tends to let the rich off, not tax them at higher rates. From your comments, it sounds like you didn't understand that and believed that it would result in higher taxes for the rich.

As for me, my career, lifestyle and tax situation, your hatred is clear. But you really don't know anything about me.

 

[retire@40]

Did you know the income tax percentage of Mrs. Teresa Highness Kerry?  It's around 12%.  Definitely less than that of someone who is making $20,000/yr.

Again, you are making up the facts and then you are believing them and putting a spin on them to try to convince the weak.

If you told the WHOLE story, you would have said she invested in tax free municipal bonds just like anyone else could, even you.

And by the way, someone that makes $20K a year would only pay just over 7% of that in income taxes.

 

[HFWR]

Any "fortune" I have amassed was from my own sweat equity, and somewhat intelligent investing, and LBYM. If I have to give it all to the "poor", when I'm broke, then WB or BG can give me some of theirs...

hehhehheh (with apologies/kudos to unclemick)

 

[charlie]

SG, you consistently make the same mistake in your calculations.
If a widget is priced at $100, you will pay an additional tax of $30,
not $23. 

This alters the conclusion in your post #76 (couple earning $100,000)
posted on Aug 11, 2005 at 12:25:27 on this thread.  I replied on
post #91, same thread.

As for corporations not paying any taxes, that is bogus.  All companies
and the government too for, that matter, will pay the fair tax on goods
and services not directly tied to the price of a widget (indirect overhead).

Companies will have to pay the tax on new equipment, new buildings,
etc. as I understand the proposal.

As for the tax already built into the current price of goods and services,
the estimate is 22-25% according to the studies quoted by the fair
tax group.  You probably won't believe that so please point me to a
reference that rebuts that estimate.  I would truly like to study a
contrary report.

Your post #74 on page 5 is disingenuous at best.  You not only make
errors in the fair tax calculation but you use a year in which you
bought a new car to claim that you are getting screwed by $9000
per year.  You should do a re-calculation using an average annual
expenditure and don't forget the prebate of $4283 you would receive
annually under the fair tax system to draw your conclusion.

Like you, I go by the numbers ..... just try to get yours right, please.

Cheers,

Charlie

 

[sgeeeee]

SG, you consistently make the same mistake in your calculations.
If a widget is priced at $100, you will pay an additional tax of $30,
not $23. 

This alters the conclusion in your post #76 (couple earning $100,000)
posted on Aug 11, 2005 at 12:25:27 on this thread.  I replied on
post #91, same thread.

Charlie,

I'll take these one at a time. While I read some articles that claimed the Fair Tax proposal was actually a 30% sales tax, I found others that used 23%. I used 23% in my calculations since that is clearly the least offensive to retirees. A 30% rate makes everything worse for retirees.

But here's another way for you to look at the data. In my calculations I did not assume that prices would be reduced by elimination of corporate taxes. If I grant you a 23% reduction in product costs resulting from elimination of the corporate tax with a 30% Fair Tax, then the resulting effect is the same as no reduction in product cost and a 23% Fair Tax. In other words, the numbers come out the same.

Price*(1-Corp Tax Savings)*30% = Price*23%

Solve for Corp Tax Savings and you come up with 23%

So all the results are consistent with your assumptions. If, on the other hand, corporate tax savings is less than 23%, then the negative impact on the retiree is significantly worse than I specified. In fact, for my own situation in 2004 (my first year in retirement), a 30% Fair Tax with no corporate tax saving would have cost me $14,328.30 more than I actually had to pay. That's more than 54% worse than I indicated in my post. The current nest egg value required to pay this Fair Tax burden through 30 years of retirement would be more than $358,000.

Thanks for pointing out that my calculations were probably optimistic and that the Fair Tax might actually be much worse for retirees.

 

[sgeeeee]

. . .
As for corporations not paying any taxes, that is bogus.  All companies
and the government too for, that matter, will pay the fair tax on goods
and services not directly tied to the price of a widget (indirect overhead).

Companies will have to pay the tax on new equipment, new buildings,
etc. as I understand the proposal.

So you are saying the corporations will pay tax under the new proposal. I think that is true.

As for the tax already built into the current price of goods and services,
the estimate is 22-25% according to the studies quoted by the fair
tax group.  . . .

But the corporations are still going to save 22% to 25% in taxes.

Which is it? Are they going to pay taxes or are they going to reduce costs because they don't pay taxes?

Anyway, as you can see in the post above, I grant you 23% tax savings and all my calculations work as presented. If you want to change that, you can follow the procedure I outlined in my first post and you will still see that the Fair Tax transfers tax burden from the ultra-wealthy onto the middle class retired in a very big way. The only thing that changes with these numerical assumptions is the breakpoints where that transfer happens.

 

[sgeeeee]

. . .You probably won't believe that so please point me to a
reference that rebuts that estimate.  I would truly like to study a
contrary report.

. . .

I am skeptical of a number provided without backup by the proponents of the proposal. I would think that the ratio of corporate tax to product cost varies dramatically from product to product. Items requiring high amounts of high skilled labor might include quite a bit of social security and medicare tax in their tax. Items that are mass produced by machines using low skilled operators might not be significantly impacted by tax.

But the point has been addressed. Take the 23% of the proponents and the 30% Fair Tax rate and read the numbers as they are.

 

[sgeeeee]

. . .
Your post #74 on page 5 is disingenuous at best.  You not only make
errors in the fair tax calculation but you use a year in which you
bought a new car to claim that you are getting screwed by $9000
per year.  You should do a re-calculation using an average annual
expenditure and don't forget the prebate of $4283 you would receive
annually under the fair tax system to draw your conclusion.

. . .

Charlie, those are the numbers from my records and my tax returns for those years. As for the car purchase, it is difficult to compute the exact impact on my annual expense rate. The reason it does not add much (if any) is because I compute my budgets with and without infrequent purchases, then average the cost of those infrequent purchases over all 9 years that I've kept accurate records. DW and I plan to spend money on computers, house maintenance, foriegn travel, car purchase, etc. on an infrequent basis. On years we don't buy a new car, we pay for a trip to Egypt or Peru, etc. Since I've only had one full year in retirement to look at, I'm not sure what to consider average yet. My spending in 2003 was actually the anomolous year in spending. DW and I cut way back the latter half of that year as we entered retirement. We were a little bit nervous about giving up salary and we were far too conservative. It took awhile before we became comfortable spending as much money as we now do on travel.

I did include a prebate of $3000 in all calculations. That's a number I found in one of the articles I read. If $4238 is the actual prebate amount, then the amount of Fair Tax I have stated is off by $1238 in each case. I think it is fair to say that this number is in the noise.

 

[charlie]

The best link I have found so far on the Fair Tax proposal is shown
below.  It has a long list of reference articles and studies.  The
article seems to be fairly unbiased, IMO, presenting pro and con
viewpoints on each issue.

I highly recommend that all of you take a look:

http://en.wikipedia.org/wiki/FairTax#endnote_endorsement

Cheers,

Charlie

 

[Patrick]

Did you see the Senator from Georgia on Van Susterin last night?  He made it sound good. 

The book is on the New York Times Best Seller list.