Andir said: Final-Fan said: one of my concerns about the FairTax is that is completely untested on any size and scope remotely close to what is proposed. There are 6 states(?) according to the above post about 44 without income taxes. Would you feel more comfortable if all the states went to a percentage tax before the feds?

I believe that the highest state sales tax is California with 7.25% price-exclusive. The proposal is 30% price-exclusive which would be in California a total of 37.25% PLUS whatever it would take to compensate for all other California taxes.

In other words: what you suggest would provide good information but not be conclusive, as the federal taxes are much bigger than the state taxes. There is no large government I am aware of that gets virtually all its revenue from sales taxes or has a sales tax rate as high as what is proposed.

[edit:  Actually, if California went all-sales-tax, that would probably be the best example in the world to date.  California is a very large state with a large economy and large state government, so yes, if California did that and everything went swimmingly for a number of years I would feel much better about the FairTax.]

Eomund said: Entroper it sounds good to have a gradual transition, but if you think about it this is not a good idea. If we have at any time a federal tax on both income and consumption, the politicians will not give either of them up and the tax burden will increase to the point of economic collapse of America. The only way we can switch to the FairTax is cold turkey. Anything else is far too dangerous. I do not trust our politicians to make the right decision if both an income tax and the FairTax are working at the same time. That is too big a risk to take and if we don't go cold turkey we cannot take the risk of adding a consumption tax.

They would never be able to do what you're talking about. If the overall tax burden continued to increase, the next wave of elections would have everyone running on a platform of getting rid of the unfair taxes.

I would love to be able to post my entire thought processes about the FairTax, and many other things to be honest, in a clear and concise manner. This isn't possible because everything in my thought process is filtered through my frame of reference which most people would not share or be able to understand properly. /sigh

Some research papers for thought: Comparing the FairTax Base and Rate with Other Tax Proposals and FairTax Reduces Complexity and Noncompliance.

 

Eomund said: I would love to be able to post my entire thought processes about the FairTax, and many other things to be honest, in a clear and concise manner. This isn't possible because everything in my thought process is filtered through my frame of reference which most people would not share or be able to understand properly. /sigh Some research papers for thought: Comparing the FairTax Base and Rate with Other Tax Proposals and FairTax Reduces Complexity and Noncompliance.

 sure.  i have a friend who constantly have trouble expressing himself too, and he says it takes him way too much effeort to put express things the right way.

 i tend to do the same thing, but i think i'm slowly improving in that regard.  or maybe i've just decided to leave out all the non-essential points, like the process of how conclusions are arrived.  not to say thought processes aren't interesting to learn about, but since everybody thinks in different manners, it's just way too much information.  for someone thinking on the same level, the "bottom line" is all that needs to be said.  if he wants elaboration because he disagrees, he'll ask you about it.

 anyway, would love to see what you have to say.

 

right now i simply have "combat-liberalitis of the brain" and do not care to dispute much more today. i need a day or two off... other people can pick up the slack. i just see far too much ignorance of the fairtax among other things to correct while staying sane. i will try to keep up with the thread, but no promises... as proof of combat-liberalitis of the brain i present the fatigue that has caused me to type without proper caps and such which i always attempt to fully comply with for ease of reading.

Final-Fan said: Andir said: Final-Fan said: one of my concerns about the FairTax is that is completely untested on any size and scope remotely close to what is proposed. There are 6 states(?) according to the above post about 44 without income taxes. Would you feel more comfortable if all the states went to a percentage tax before the feds? I believe that the highest state sales tax is California with 7.25% price-exclusive. The proposal is 30% price-exclusive which would be in California a total of 37.25% PLUS whatever it would take to compensate for all other California taxes. In other words: what you suggest would provide good information but not be conclusive, as the federal taxes are much bigger than the state taxes. There is no large government I am aware of that gets virtually all its revenue from sales taxes or has a sales tax rate as high as what is proposed. [edit: Actually, if California went all-sales-tax, that would probably be the best example in the world to date. California is a very large state with a large economy and large state government, so yes, if California did that and everything went swimmingly for a number of years I would feel much better about the FairTax.]

 you figured this wrong. Right now CA has 7.25% price-exclusive state tax on goods and a 22% price-inclusive cooperate tax. Under the fair tax CA will continue to have a 7.25% price-exclusive state tax and a new 23% federal Fair Tax. The net change in price would be +1% on goods, but that one percent would be offset by the monetary savings the company will benefit from cheaper compliance, savings that will be passed to the consumers thanks to competition. 

Also HR 25 has implementation as follows:

Repeal of:

Income Tax, Coorperate Tax, Estate Tax, Gift Tax, etc

Then, Enforcement of 23% price-inclusive consumption tax.

 

Also a note to some people. The price-inclusive quotes are not designed to mislead. It's a necessity for built in compliance. Its a tactic that reduces the number of players. Right now under the income tax their are well over 150 Million individuals and then the Corps are added. This requires enforcement on that whole base which cost an obscene amount of money and manpower. It also makes non-compliance easier. Under the Fair Tax (from the federal level), tax money is only collected from the Corps and Business, collection compliance loses the other 150 million individuals and non-compliance is harder. 

Here's an example. 

Under Income Tax: You buy something for 100 dollars. 22% goes to Cooperate Tax, or 22 dollars. In addition you are paying the price it cost for cooperate compiance and that 100 dollars was after taxes, so you were already taxed on that income and now have more taxes to pay.

Under the Fair Tax: You buy the same Item. It is priced at 100 dollars since the Fair Tax is price neutral. 23% or 23 dollars go to the federal government and the rest is net revenue. Compliance cost is nothing since the formula would be "23% of gross revenue." Easy math.  In addition, the consumer will recieve a reciept that shows 77 dollars for the product and 23 dollars for tax. So an individual can track how much tax they are paying but can never chose to not pay the tax and dodge taxation. It also removes that infuriating aspect of retail, you know what I mean, grabing an item from the shelf with a sticker price and going to the register and being told the price is higher. Price-Exclusive tax is easily the most annoying thing in the world, inclusive is easy and customer friendly.

 

Don't allow anyone to fool you into thinking that prices will go up 30% under the fair tax. This is an outright lie. Fair Tax is only added after all other taxes have been repealed and are no longer apart of the price structure. Vice Versa, dont let someone tell you that you will make loads of money because of the fair tax, this again is a lie. The fair tax is designed to brng in the same amount of money in taxes, it just does at the other end of the chain. Instead of taxing income or what you earn (a style of taxation that removes money from the economy and punishes achievment), it takes what you spend (a style of taxation that circulates more money into the economy and awards achievement). So the only argument that can be made about the fair tax making someone money is in the realm of saving and investing.    

 

@senseinobaka: I followed your example perfectly. However, I find it extremely difficult to believe that you can replace a 22% inclusive corporate tax with a 23% inclusive FairTax, completely eliminate the income tax and payroll taxes, and remain revenue-neutral. Please explain.

Entroper said: @senseinobaka: I followed your example perfectly. However, I find it extremely difficult to believe that you can replace a 22% inclusive corporate tax with a 23% inclusive FairTax, completely eliminate the income tax and payroll taxes, and remain revenue-neutral. Please explain.

That's apparently because the 22% figure DOES include things like the income taxes and payroll taxes of the companies' employees. I had this exact same conversation with Eomund earlier in the thread.




If you (senseinobaka) are not using the same study (Jorgenson's) that Eomund was, then you still need to answer my question from back then.

ALSO:
On Jan. 7 / page 5, Eomund and I came to the conclusion together that either (1) wages would rise and prices would rise (if companies just kept salaries the same but the employees didn't pay taxes on it); (2) wages would stay the same and prices not rise much (if companies dropped salaries to (today's salary - today's taxes) and prices would go up only a little because of the estate tax, gift tax, etc. being factored into the FairTax); or (3) something in between (1) and (2).

So it's clearly possible that prices could go up 30% (but in that case people would also have similarly larger paychecks to compensate). In any case, it doesn't even matter to my post that you responded to; that post concerned the level of sales tax, not overall ticket price.

Also: It's "corporate" (not "coorperate"). If it was a simple typo, then never mind, but you misspelled it twice so I thought you might not know it was a misspelling.

Final-Fan said: Entroper said: @senseinobaka: I followed your example perfectly. However, I find it extremely difficult to believe that you can replace a 22% inclusive corporate tax with a 23% inclusive FairTax, completely eliminate the income tax and payroll taxes, and remain revenue-neutral. Please explain. That's apparently because the 22% figure DOES include things like the income taxes and payroll taxes of the companies' employees. I had this exact same conversation with Eomund earlier in the thread.

OK, so then wages will go down correspondingly with the amount you would be paying in income tax (roughly).  What about the minimum wage?  The minimum wage is set to increase quite a bit over the next couple years, and moving to the FairTax will essentially give all minimum wage earners a hefty raise on top of that.  That's going to cause the price of goods to increase, no question.