| Final-Fan said: Eomund said: Final-Fan said: I'll do a thorough response later, but for now: Your list neglects my objection that the FairTax gives a huge tax cut to the rich that's paid for by the middle (and lower-middle and upper-middle) class. I'll be checking the posts for other possible oversights. [edited out my little misunderstanding.] Let me respond to this objection now. Sorry about not including it before, I just forgot about this objection. First, what is wrong with a tax cut for the rich? They would still be paying the majority even under this chart: I still maintain that this chart is inaccurate, but even so it proves my point. The "rich" still pay 45.9% of the taxes. The rich pay more taxes because they have more wealth. What is the matter with this? In fact, according to wikipedia (I know, I know, but they stole it straight from an IRS report), "the top 1% pay 36.9% of federal tax (wealth 32.7%), the top 5% pay 57.1% (earning 57.2%)[you mean wealth right?], top 10% pay 68% (wealth 69.8%), and the bottom 50% pay 3.3% (wealth 2.8%)". So the wealthy already pay much less in taxes relative to their wealth than the bottom HALF of American taxpayers. . Just for fun, here's a graph of wealth vs. income: First, WRONG. The rich pay more taxes because they have more INCOME. That is what the current system taxes, INCOME not wealth. Second your numbers for the percent go to prove my point. The top 3,000,000 (the top 1%) wage earners pay 36.9% of total federal taxes right? They would then each pay about $270,600 of their income, not their wealth (if the federal tax you mentioned was the total revenue to the government). Your assertion that "the wealthy already pay much less in taxes relative to their wealth than the bottom HALF of American taxpayers," is also slightly skewed. You say they pay less in relation to their wealth, but the top 1% pays 4.2% more! The bottom 50% only pay .5% more than the wealth they have. Is that fair? Now before you argue that the "evil rich" (as you seem to be saying, but correct me if I put words in your mouth) have more money and wouldn't miss it compared to the lower classes, lets review. What type of tax system do we have in America? That's right, we have an INCOME tax system. The more a person makes, the higher rate you get taxed. That is a so called progressive income tax system, the rich pay more than the poor. This system is not supposed to tax wealth, but instead it is supposed to tax the wages a person earns. I call that a penalty for aspiring to get out of poverty. What percent taxes does a super rich person pay when he does not work any more? Everything he has is in an IRA or a tax free investment. He can spend his money at his leisure and doesn't worry about income because he doesn't need to work. What tax would be fair to levy on him? A thing you seem to be saying is that the wealthy need to pay their fair share of taxes, and I will agree that the rich need to pay more than the other groups in order for the system to work. The FairTax will tax everyone based on their wealth, just like you want. If a person doesn't have the money to spend, he can't be taxed on it. Also it seems that the second 5% (the second half of the top 10%) only have 12.6% of the wealth yet they are included in the 68% of the tax dollars. [edit: deleted graph] http://www.faculty.fairfield.edu/faculty/hodgson/Courses/so11/stratification/WealthIncome07.gif Now lets get to your next assertion, the "tax cut" would be paid for by the middle (upper and lower middle). Lets look at what happened under current law when the "Bush Tax Cuts" (PLEASE DO NOT GET INTO BUSH POLICY IN THIS THREAD). With the rates for the "top" were cut, revenue to the government increased dramatically. No group(s) paid for those tax cuts. The reason that government tax revenue increased was the tax base increased. The tax cut allowed for more investment and job creation. This employed more people, all of whom pay taxes thereby increasing revenue. Actually, this is incorrect, according to FactCheck.org and all of their highly placed and very official sources, many coming right from the Bush Administration itself. "The impact of the tax cuts on economic growth is a matter of debate among economists. We're not voicing a view on whether the tax cuts should have been enacted; that, too, is a separate discussion. But it is clear they did not "increase revenues." To look at a private enterprise with a similar philosophy we will look at Wal-Mart. Wal-Mart makes money, lots of it. Why do they make money? They sell lots of things for cheaper than elsewhere. This is only to show that when you decrease the price, more people come to buy your inventory. The same is true with tax policy. When you cut taxes, people have more to do with whatever they decide. EXCUSE ME, BUT NO NO NO NO NO. You very recently conceded that prices will go up if people's paychecks do and to the same extent; and you JUST NOW admitted that everyone but the very rich and very poor will get a tax hike. Where are you pulling this out of? I never admitted "that everyone but the very rich and very poor will get a tax hike," you put those words in my mouth from your own conclusions. I used Wal-Mart as an example because they have lowered their prices to barely cover costs, yet they make money. How is this possible? Let me answer in one word, VOLUME. When you increase volume of sales (or the number of people in the tax base) you can lower rates. This is a chicken or the egg argument however, which comes first? The tax cuts to bring more people in, or bringing more people in then lower rates. In America I submit that the more people feel the tax is "fair" the less they avoid it. When there are tax cuts, people take less steps to protect their income from taxation, thereby increasing taxable income and revenue.
Many people will decide to simply spend it. Others will invest or save it. Some will do some of both. All three will help stimulate the economy. The stimulated economy will pay more taxes than a higher rate would be able to do. Taxes are not a zero sum game. When you add more people to the tax base, by cutting taxes, you increase government revenue. It was shown under Reagan as well. He cut the highest tax rate from 70% to 28%! Then the government went from collecting about $500B to $1T! He doubled the revenue by cutting taxes. I'm going to have to ask you to account for a decade of normal economic growth (as opposed to what Reagan's tax cuts are supposedly responsible for) into that analysis. Then we can discuss this further. What is "normal economic growth"? If you are talking about the technology boom in the 90's I do not think that can or will happen again. Now tell me again how tax cuts are a bad thing? I understand you will probably disagree with my point of view, but this is shown in the facts of the past. Only not. Only not not... wait... :) Now the FairTax. You claim that it will be a tax cut for the "rich" and it seems according to your chart that they would pay 7.6% less as a percentage of total taxes collected. This does not mean that the other groups will see a tax increase to remain at revenue neutral. These charts (I posted them earlier too) show the effective tax rate of current law and the FairTax:
and
These charts seem to me to be showing that the effective rates are going to decrease under the FairTax. Effective tax rates are rates people end up paying after the tax refund (Current law) and prebate (FairTax) are applied. The FairTax will increase the tax base, similar to how tax cuts increase the tax base. Thereby increasing revenue to the government without raising tax rates on anyone. So I disagree that your claim that the "huge tax [edit: misspelling] cut to the rich [that will be] paid for my the middle (and lower-middle and upper-middle) class," has validity based on past tax cuts and the effects they have had on government revenue and the economy. I refer you to my earlier post (in fact, now that I look, it was right after the LAST time you whipped out thos two graphs): Even if I were to grant that the graph that FactCheck.org uses wasn't properly fact-checked (which I emphatically do not), the trends still hold true. The extremely poor and very rich benefit at the cost of the middle class. And, hey, you trust your precious Americans for Fair Taxation, right?
The "rich" may be the "primary beneficiaries" under the FairTax but they are not the only ones, and I am not talking about the "poor" here. When the middle class is no longer taxed on income or Capital Gains, they will invest more and increase their monthly income; they will also boost the economy. Also, I want sources on your allegations about the graph, and don't forget that the source has to specify that it is the data that THAT graph draws on that is incorrect. I would like to add that the AFT's objection to the graph FactCheck uses is "but it doesn't count payroll taxes!" which fall only on the first $95,000 and are regressive anyway. So if those were factored in, it should show a MUCH, MUCH BIGGER tax cut on the upper end of the spectrum than the Treasury-data-based graph does. No wonder the AFT doesn't want you to see it. Payroll taxes do not fall only on the first $95,000. The first $95,000 of payroll tax is the Social Security portion of payroll taxes @6.2%. The Medicare portion of the payroll tax is 2.6% and has no cap. Also I do not dismiss the word regressive. Regressive is the opposite of progressive and falls hardest on the lower classes. You cannot dismiss what you just said, because it is true. Payroll taxes are regressive and hurt the lower classes the most. |
I also forgot to mention that under Reagan "stagflation," as it is known, dissappeared. He reduced inflation and invigorated a stagnant economy, all the while doubling federal tax revenue using a tax cut. When the top 1% cannot invest and manage companies the way they need to invigorate both the company and economy, because of taxes, the economy falters and slips. Sqrl has pointed this out before.
Another great result of the FairTax is that 13 Trillion in legal off-shore accounts will be able to come back to America and be invested. It is in off-shore accounts now to protect it from the current tax structure. Under the FairTax it can come back to America because it will be untaxed. Research shows that it takes $100,000 to create ONE new job. How many new jobs can be created under the FairTax with that much new investment?
The income tax we have punishes achievement. The higher wage you earn, the higher rate you get hit with. When the top 1% pays 36.9% of the total tax bill, and the lesser groups do not pay their own fair share, but instead get handouts from the government (like the Earned Income Credit), we are redistributing their money to the people who are not as high achieving. Who are we to take from people who have and give it to those who have less? I am all for helping the poor and lower class, but it should be done out of CHARITY not out of redistribution by government. Wealth redistribution is not charity, it is robbery.
[EDIT: I do not know what happened exactly. How did my post go beyond the boundaries? Little help?]
[EDIT: I think I fixed it... ]
