@Eomund: Your whole post is based on your belief that what you read from FairTax proponents are trustworthy.
Firstly this$5000 is false. The Prebate which he just mentioned only refunds $196/monthly per person. That equals $2352 a year. Everything else is right.
Okay. I'm not gonna look up the figure, but that doesn't affect his argument. If anything it makes it stronger, but it's not central to the argument.
His rates are correct. The FairTax is a 23% inclusive rate, but if thought about as a traditional sales tax it is 30%. However the FairTax will already be included in the shelf price of every item, therefore the exclusive rate will never be seen. We already pay an inclusive tax on every good and service we buy of about 22%.
That's the most ridiculous thing I've ever heard. If you don't see it, it's not there? You can't let this simple sleight of hand get you!
I believe that the states could lower the sales tax rate a point or so after the FairTax because they would be getting additional revenue from it as well.
You're making a statement with 2 huge assumptions. The first doesn't affect your argument (possibility of lowering taxes), the second "... because they would be getting additional revenue" is a biggie. Let's see if this is justified in the following paragraph:
Under the FairTax, each business that sells new goods or services would be required to collect the FairTax. The business would then send the FairTax to the state they are operating in. Each business gets to keep the greater amount of 0.25% of the FairTax collected or $200 for their trouble of collecting the tax. Each state would receive the FairTax from all the businesses within its borders. The states also get to keep 0. 25% of the taxes that pass through their hands to offset the cost of collecting the FairTax. That 0.25% would be a sizeable amount in most states and could drop the sales tax rate a point in my opinion.
I don't see how 0.25% of 30% can cover say 7% state income tax when personal income tax is, say, 30% (some kind of average).
The 23% FairTax will produce the revenues under the current system. I have looked at how the economists figured that number and it works. It was amazing trying to follow them, not hard, just tedious.
You're looking at numbers from economists who support the fair tax. There are an ENORMOUS number of assumptions that go into these estimates. Economists disagree about these assumptions. So, to truly understand, you'll need to understand other economist's estimates, now just one or one group of economists.
Anyways the already pays income taxes for its employees, so what is the difference when they pay the FairTax? The decrease in the payroll and income taxes collected by the government from its employees would be offset by the FairTax it collected from itself when buying goods. I will explain this better. The price of goods reflects the total amount of the income taxes paid by employee, the payroll taxes, and corporate taxes. On average these embedded (embedded because they are part of the cost of doing business) taxes amount to 22% of the price (Note: this is also inclusive to the price of the good, just like the FairTax will be). The budget does not go up because of the FairTax. Let me point you to the study where those economists figured the rate of the FairTax. Taxing Sales Under the FairTax - What Rate Works?
No, no, no. You're still under the bind of the magical 22% (or 23%, whatever) "inclusive" number. Again, economists routinely disagree about the assumptions that go into these analysis. Why should I not think that the bias from the group that supports the FairTax to begin with is conditioned to make it work? Indeed--if that's the only group of economist that come up with those figures, all reasonable statistical estimator will say that with overwhelming likelihood, the true workable rate lies above this 22/23% rate (or 30% depending on the perspective).
The evasion issue is something that noone has completely worked out, either against the FairTax or in favor of it. I agree it could be difficult to stop tax evasion under the FairTax, but it is not as impossible as people think it is. There are many arguments to make here, but I will continue for now.
To me, this is of 1st order importance. Technically there's little point in arguing if this point isn't resolved, but like you said, we'll continue.
Bruce Bartlett is not known for being Fair to the FairTax. Nor are these government studies. Many of the government studies were done by Senators who jacked with the FairTax before they calculated it. They added exemptions to essentials and other things which they deemed, "politically feasible." They then calculated the rate based on the convoluted mess they put together, making the rate seem much higher than it would have to be. They added exemptions which are not necessary since the Prebate refunds all the taxes you pay on the essentials of life (upto the poverty line). Their study therefore is broken.
Aha! Their study is broken but the FairTax camp isn't. Like I said, the "true" workable rate likely lies somewhere in between.
This is a bad thing how? Most states, 44 in fact, base their state taxes on the federal model. It would be a God-send to be able to stop worrying about April 15 for the rest of my life. As I have said before, all the states would get an Administrative Credit of 0.25% to cover the costs of collecting the FairTax. They could then dismantle the income tax structure and those costs would be gone, not increasing the budget for the state.
Um, he's not saying it's a bad thing. He's saying the states would need to raise revenues in other ways. He's not saying increasing budget for compliance or anything. And I don't see how this Adminstrative Credit of 0.25% will cover the lost revenue of it only covers the costs of collection.
Entroper already covered this one for me. Thanks.
I'll look into that.
Yes exports would be much better off in the world market, as they would have no taxes embedded in them at all. The FairTax is not applied to exports. Again I doubt the validity of these "independent studies." Some may have merit, but overall I do not trust their numbers.
Again, if you don't trust their numbers, why do you trust FairTax proponent's numbers?
I make more than $15,000 and less than $100,000, yet I know about all the "problems" and still support it very strongly. I doubt there will be a serious if any tax hike on the "middle class." If there is I think their income increases would offset it. Who is to say that the Middle class can't save more as well? They could invest a small amount and get dividends every month to supplement their income as well. This argument fails to convince me that the "FairTax is nonsense."
That made the most sense out of everything you've said so far, since you believe that FairTax would massively improve efficiencies. That's actually a reasonable economic belief.
The FairTax removes power from the government and puts it squarely back in the hands of the people. The congress can't jack with the rate like they can with an income tax. It is one of the
best ideas in a very long time.
Okay, they can still jack rates, or introduce new taxes, etc etc. Whatever society people live in, there's always ways to add taxes.
The FairTax is exactly what Dick Armey wants, Flat rate of 23%, Low enough to keep the economy moving, Simple enough that businesses don't have to screw with mountains of paperwork. The people don't have to worry about a thing for personal income or spending, only a business does (which it has to already).
Dick Armey wants a flat INCOME tax, not sales tax. I don't support a flat income tax rate anyway, so I won't push this point.
the Wii is an epidemic.
