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[OT] My Fellow Americans
Oct 19, 2005
Kyle Furlong
Oct 19, 2005
Sean Kelly
Oct 20, 2005
Kyle Furlong
Oct 20, 2005
Sean Kelly
Oct 20, 2005
Dave
Oct 20, 2005
Kyle Furlong
Oct 20, 2005
Trevor Parscal
Oct 20, 2005
Kyle Furlong
Oct 20, 2005
Sean Kelly
Oct 20, 2005
Kyle Furlong
Oct 20, 2005
Sean Kelly
Oct 21, 2005
Kyle Furlong
Oct 21, 2005
Sean Kelly
Oct 21, 2005
Kyle Furlong
Oct 20, 2005
Trevor Parscal
Oct 20, 2005
Sean Kelly
Oct 20, 2005
Dave
Oct 20, 2005
J C Calvarese
Oct 20, 2005
Ben Hinkle
Oct 20, 2005
Craig Black
Oct 20, 2005
Kyle Furlong
Oct 20, 2005
JT
Oct 20, 2005
Sean Kelly
Oct 20, 2005
JT
Oct 20, 2005
JT
Oct 20, 2005
Dave
October 19, 2005
So you think the IRS is stupid and should die a swift death? Have you heard of the FairTax? Just found out about it last night. Read up here: http://en.wikipedia.org/wiki/FairTax, and discuss!
October 19, 2005
In article <dj6hvd$e32$1@digitaldaemon.com>, Kyle Furlong says...
>
>So you think the IRS is stupid and should die a swift death? Have you heard of the FairTax? Just found out about it last night. Read up here: http://en.wikipedia.org/wiki/FairTax, and discuss!

It sounds like the proposal is an attempt to have individuals shoulder the corporate tax burden.  And with the elimination of capital gains and inheritance taxes (not to mention the replacement of a scaled income tax percentage with a fixed sales tax percentage), the wealthy would benefit far more than the average American.  That said, it's worth noting that, according to the Wiki, the FairTax proposal would not implicitly eliminate income tax--that would require repealing the 16th amendment to the Constitution.  So we may just end up with a bizarre hybrid system that's even more confusing than what we've already got (which is confusing enough, particularly considering the Alternate Minimum Tax many folks have to pay: http://en.wikipedia.org/wiki/Alternate_Minimum_Tax).

However this idea may fare in a hypothetical world, there's no way it will become law.  There's simply too much knowledge and infrastructure built around the existing tax system to make it a worthwhile venture--I can't even imagine the changes this would require in the investment market sector, not to mention its potentially substantial impact on national lending rates.  I would be interested to see the effect it would have on foreign investors however--imagine being able to trade US securities tax-free :-)


Sean


October 20, 2005
Sean Kelly wrote:
> In article <dj6hvd$e32$1@digitaldaemon.com>, Kyle Furlong says...
> 
>>So you think the IRS is stupid and should die a swift death? Have you heard of the FairTax? Just found out about it last night. Read up here: http://en.wikipedia.org/wiki/FairTax, and discuss!
> 
> 
> It sounds like the proposal is an attempt to have individuals shoulder the
> corporate tax burden.  And with the elimination of capital gains and inheritance
> taxes (not to mention the replacement of a scaled income tax percentage with a
> fixed sales tax percentage), the wealthy would benefit far more than the average
> American.  That said, it's worth noting that, according to the Wiki, the FairTax
> proposal would not implicitly eliminate income tax--that would require repealing
> the 16th amendment to the Constitution.  So we may just end up with a bizarre
> hybrid system that's even more confusing than what we've already got (which is
> confusing enough, particularly considering the Alternate Minimum Tax many folks
> have to pay: http://en.wikipedia.org/wiki/Alternate_Minimum_Tax).
> 
> However this idea may fare in a hypothetical world, there's no way it will
> become law.  There's simply too much knowledge and infrastructure built around
> the existing tax system to make it a worthwhile venture--I can't even imagine
> the changes this would require in the investment market sector, not to mention
> its potentially substantial impact on national lending rates.  I would be
> interested to see the effect it would have on foreign investors however--imagine
> being able to trade US securities tax-free :-)
> 
> 
> Sean
> 
> 

The Fair Tax Act specifically repeals Subtitles A, B, and C of the Internal Revenue Code of 1986. (Income, payroll, and estate and gift taxes respectively) So while it is true that Congress would still have the power to pass a bill to introduce new income taxes, after passing the FairTax, the current taxes listed above would cease to exist.

In regard to individuals "shouldering" the corporate tax burden, didn't you read that there is a monthly rebate associated with the bill? Every household receives a check from the government each month equal to the amount of taxes paid on necessities that month. That number is calculated by using the current poverty level income. So under this system, the poor do not pay ANY taxes, and every American gets their necessities tax-free. Also, how is lifting the tax burden on corporations a bad thing? The economists which were part of the $22 million research effort that went into the bill estimated that the retail prices in the US are 22-25% higher because of the taxes and compliance costs forced on corporations and small businesses. Companies would be able to produce things much cheaper than before, allowing them to offer products at much more competitive prices. The same economists estimate that prices would adjust down by the same amount or more that they are inflated due to current taxes.

Most of the dissenting opinions I have read have used a static argument to show discrepancies in the system. The problem with this approach is that it doesnt take into account the positive growth effect of allowing persons to keep their entire paycheck. It seems to me naive to base ones calculations on data projected forward as if still working under the same tax system.
October 20, 2005
on a related OT topic I'm still wishing for some serious calendar reform:
http://personal.ecu.edu/mccartyr/calendar-reform.html
and http://www.theworldcalendar.org/


"Kyle Furlong" <kylefurlong@gmail.com> wrote in message news:dj6hvd$e32$1@digitaldaemon.com...
> So you think the IRS is stupid and should die a swift death? Have you heard of the FairTax? Just found out about it last night. Read up here: http://en.wikipedia.org/wiki/FairTax, and discuss!


October 20, 2005
In article <dj6n99$1585$1@digitaldaemon.com>, Kyle Furlong says...
>
>Sean Kelly wrote:
>> In article <dj6hvd$e32$1@digitaldaemon.com>, Kyle Furlong says...
>> 
>>>So you think the IRS is stupid and should die a swift death? Have you heard of the FairTax? Just found out about it last night. Read up here: http://en.wikipedia.org/wiki/FairTax, and discuss!
>> 
>> 
>> It sounds like the proposal is an attempt to have individuals shoulder the corporate tax burden.  And with the elimination of capital gains and inheritance taxes (not to mention the replacement of a scaled income tax percentage with a fixed sales tax percentage), the wealthy would benefit far more than the average American.  That said, it's worth noting that, according to the Wiki, the FairTax proposal would not implicitly eliminate income tax--that would require repealing the 16th amendment to the Constitution.  So we may just end up with a bizarre hybrid system that's even more confusing than what we've already got (which is confusing enough, particularly considering the Alternate Minimum Tax many folks have to pay: http://en.wikipedia.org/wiki/Alternate_Minimum_Tax).
>> 
>> However this idea may fare in a hypothetical world, there's no way it will become law.  There's simply too much knowledge and infrastructure built around the existing tax system to make it a worthwhile venture--I can't even imagine the changes this would require in the investment market sector, not to mention its potentially substantial impact on national lending rates.  I would be interested to see the effect it would have on foreign investors however--imagine being able to trade US securities tax-free :-)
>> 
>> 
>> Sean
>> 
>> 
>
>The Fair Tax Act specifically repeals Subtitles A, B, and C of the Internal Revenue Code of 1986. (Income, payroll, and estate and gift taxes respectively) So while it is true that Congress would still have the power to pass a bill to introduce new income taxes, after passing the FairTax, the current taxes listed above would cease to exist.

Regarding this particular issue I was repeating a portion of the wiki you linked.  Perhaps it should be corrected.

>In regard to individuals "shouldering" the corporate tax burden, didn't you read that there is a monthly rebate associated with the bill? Every household receives a check from the government each month equal to the amount of taxes paid on necessities that month. That number is calculated by using the current poverty level income. So under this system, the poor do not pay ANY taxes, and every American gets their necessities tax-free.

The officially stated poverty level tends to be a good bit below the level required to live in most areas, particularly in regions with an abnormally high cost of living.  Minimum wage numbers should be a sufficient testament to this. Also, low income households tend to spend all of their income on consumable goods, simply by necessity.  Considering this, I am not convinced that the reimbursement amount will be sufficient to offset the increased living costs that a massive sales tax increase would create.  I also wonder what would happen to regional tax laws.  For example: some states tax food but not clothing, while others do the reverse.  Would this law change things such that everything is taxed everywhere?  If not, it might be substantially more affordable for poverty-level families to live in regions with favorable sales tax laws.

As for my comment about individuals shouldering the corporate tax burden...  If we assume that the government must receive the same dollar amount in tax revenues after the change as before the change then the impact on different sectors is simply a matter of determining how that obligation is distributed. Currently, corporations pay a substantial percentage of the national tax obligation through corporate and payroll taxes and through capital gains tax. Also, many corporations tend to spend relatively little on consumable goods. Since all of these taxes will be eliminated and replaced only by a fixed sales tax increase, it seems reasonable to conclude that this decreased corporate obligation will be made up for by revenue from individuals.

>Also, how is lifting the tax burden on corporations a bad thing? The economists which were part of the $22 million research effort that went into the bill estimated that the retail prices in the US are 22-25% higher because of the taxes and compliance costs forced on corporations and small businesses. Companies would be able to produce things much cheaper than before, allowing them to offer products at much more competitive prices. The same economists estimate that prices would adjust down by the same amount or more that they are inflated due to current taxes.

When was the last time you heard of a company lowering its prices simply because its expenses decreased?  So long as the price is competitive with other offerings and the public is willing to pay for the product, decreased costs will simply mean increased profits.  I am also skeptical that retail prices are 22-25% higher because of taxes--complaince costs shouldn't figure into the equation as they will remain with the new system (unless I'm misunderstanding what is meant by "compliance costs").  I do agree that prices would adjust down in the new system, but if so it would be no more than to keep post-tax prices constant.

All of this has me wondering about the impact on multinational corporations as well.  Under the new system, wouldn't it be more profitable to do all purchasing overseas where the tax per unit is typically far below 25%?  How would this impact the ability of domestic manufacturers to remain competitive?  I'll admit I know next to nothing about international business law so this question is not at all rhetorical.

>Most of the dissenting opinions I have read have used a static argument to show discrepancies in the system. The problem with this approach is that it doesnt take into account the positive growth effect of allowing persons to keep their entire paycheck. It seems to me naive to base ones calculations on data projected forward as if still working under the same tax system.

I firmly believe that this new tax system would be quite nice for individuals with a decent disposable income.  The elimination of capital gains tax alone is an incredible bonus--just look at how the wealthy profited from the slight capital gains tax decrease two years ago.  And having met people who pay 60% or more of their yearly income in taxes (all of whom invest and spend only a small portion of their income on consumable goods), I can say with confidence that to replace this with only a 25% sales tax would have many of them dancing in the streets.  But I have absolutely no confidence that such a change would be at all good for our currently horrendous national debt nor do I belive it would be good for those at the poverty-level.  I also have no faith in the "trickle down" theory of economics, and while I expect that such a system would make the rich richer, I do not expect that the poor would fare quite so well.

That said, I could easily be wrong.  This is my initial reaction to what I read on the Wiki rather than an informed response.  It's not a change that feels like it would work for the people.  That it may work for me is immaterial in my opinion.


Sean


October 20, 2005
In article <dj6tc2$1ut2$1@digitaldaemon.com>, Sean Kelly says...
>
>In article <dj6n99$1585$1@digitaldaemon.com>, Kyle Furlong says...
>>
>>Sean Kelly wrote:
>>> In article <dj6hvd$e32$1@digitaldaemon.com>, Kyle Furlong says...
>>> 
>>>>So you think the IRS is stupid and should die a swift death? Have you heard of the FairTax? Just found out about it last night. Read up here: http://en.wikipedia.org/wiki/FairTax, and discuss!
>>> 
>>> 
>>> It sounds like the proposal is an attempt to have individuals shoulder the corporate tax burden.  And with the elimination of capital gains and inheritance taxes (not to mention the replacement of a scaled income tax percentage with a fixed sales tax percentage), the wealthy would benefit far more than the average American.  That said, it's worth noting that, according to the Wiki, the FairTax proposal would not implicitly eliminate income tax--that would require repealing the 16th amendment to the Constitution.  So we may just end up with a bizarre hybrid system that's even more confusing than what we've already got (which is confusing enough, particularly considering the Alternate Minimum Tax many folks have to pay: http://en.wikipedia.org/wiki/Alternate_Minimum_Tax).
>>> 
>>> However this idea may fare in a hypothetical world, there's no way it will become law.  There's simply too much knowledge and infrastructure built around the existing tax system to make it a worthwhile venture--I can't even imagine the changes this would require in the investment market sector, not to mention its potentially substantial impact on national lending rates.  I would be interested to see the effect it would have on foreign investors however--imagine being able to trade US securities tax-free :-)
>>> 
>>> 
>>> Sean
>>> 
>>> 
>>
>>The Fair Tax Act specifically repeals Subtitles A, B, and C of the Internal Revenue Code of 1986. (Income, payroll, and estate and gift taxes respectively) So while it is true that Congress would still have the power to pass a bill to introduce new income taxes, after passing the FairTax, the current taxes listed above would cease to exist.
>
>Regarding this particular issue I was repeating a portion of the wiki you linked.  Perhaps it should be corrected.
>
>>In regard to individuals "shouldering" the corporate tax burden, didn't you read that there is a monthly rebate associated with the bill? Every household receives a check from the government each month equal to the amount of taxes paid on necessities that month. That number is calculated by using the current poverty level income. So under this system, the poor do not pay ANY taxes, and every American gets their necessities tax-free.
>
>The officially stated poverty level tends to be a good bit below the level required to live in most areas, particularly in regions with an abnormally high cost of living.  Minimum wage numbers should be a sufficient testament to this. Also, low income households tend to spend all of their income on consumable goods, simply by necessity.  Considering this, I am not convinced that the reimbursement amount will be sufficient to offset the increased living costs that a massive sales tax increase would create.  I also wonder what would happen to regional tax laws.  For example: some states tax food but not clothing, while others do the reverse.  Would this law change things such that everything is taxed everywhere?  If not, it might be substantially more affordable for poverty-level families to live in regions with favorable sales tax laws.
>
>As for my comment about individuals shouldering the corporate tax burden...  If we assume that the government must receive the same dollar amount in tax revenues after the change as before the change then the impact on different sectors is simply a matter of determining how that obligation is distributed. Currently, corporations pay a substantial percentage of the national tax obligation through corporate and payroll taxes and through capital gains tax. Also, many corporations tend to spend relatively little on consumable goods. Since all of these taxes will be eliminated and replaced only by a fixed sales tax increase, it seems reasonable to conclude that this decreased corporate obligation will be made up for by revenue from individuals.
>
>>Also, how is lifting the tax burden on corporations a bad thing? The economists which were part of the $22 million research effort that went into the bill estimated that the retail prices in the US are 22-25% higher because of the taxes and compliance costs forced on corporations and small businesses. Companies would be able to produce things much cheaper than before, allowing them to offer products at much more competitive prices. The same economists estimate that prices would adjust down by the same amount or more that they are inflated due to current taxes.
>
>When was the last time you heard of a company lowering its prices simply because its expenses decreased?  So long as the price is competitive with other offerings and the public is willing to pay for the product, decreased costs will simply mean increased profits.  I am also skeptical that retail prices are 22-25% higher because of taxes--complaince costs shouldn't figure into the equation as they will remain with the new system (unless I'm misunderstanding what is meant by "compliance costs").  I do agree that prices would adjust down in the new system, but if so it would be no more than to keep post-tax prices constant.
>
>All of this has me wondering about the impact on multinational corporations as well.  Under the new system, wouldn't it be more profitable to do all purchasing overseas where the tax per unit is typically far below 25%?  How would this impact the ability of domestic manufacturers to remain competitive?  I'll admit I know next to nothing about international business law so this question is not at all rhetorical.
>
>>Most of the dissenting opinions I have read have used a static argument to show discrepancies in the system. The problem with this approach is that it doesnt take into account the positive growth effect of allowing persons to keep their entire paycheck. It seems to me naive to base ones calculations on data projected forward as if still working under the same tax system.
>
>I firmly believe that this new tax system would be quite nice for individuals with a decent disposable income.  The elimination of capital gains tax alone is an incredible bonus--just look at how the wealthy profited from the slight capital gains tax decrease two years ago.  And having met people who pay 60% or more of their yearly income in taxes (all of whom invest and spend only a small portion of their income on consumable goods), I can say with confidence that to replace this with only a 25% sales tax would have many of them dancing in the streets.  But I have absolutely no confidence that such a change would be at all good for our currently horrendous national debt nor do I belive it would be good for those at the poverty-level.  I also have no faith in the "trickle down" theory of economics, and while I expect that such a system would make the rich richer, I do not expect that the poor would fare quite so well.
>
>That said, I could easily be wrong.  This is my initial reaction to what I read on the Wiki rather than an informed response.  It's not a change that feels like it would work for the people.  That it may work for me is immaterial in my opinion.
>
>
>Sean
>
>

I say let's go back to what the original framers of the constitution intended - raise all Federal revenue though indirect taxes (e.g.: tariffs) and get rid of the rest. Give all of the "responsibility" for welfare and the like back to the states and they can tax whatever they'd like to provide for that. That way we'd have 50 big experimental social science labs (one of the primary reasons behind having 'states' in the first place) and sooner or later they'd gravitate toward what works instead of continuing the failed Federal social policies initiated over the last century or so (most since that damned 16th Amendment was ratified - sponsored by a Republican no less!).

Hmmm - a nutball, you say? Well, a century ago, when the U.S. first became a major player on the international stage despite also being a very young country, what I describe above was basically the way things worked.

The authors or the U.S. Constitution got so much right that I find it hard to believe that they got the two most important issues - acceptable Federal tax policy on private citizens AND states rights and responsibilities - so wrong as to have needed so much change over the last 80 years of 230 years.

If we don't get control of people and organizations suckling on one Federal Gov't teet or another, we will soon be finished as a Republic I'm afraid.

It's funny - as other major economies (China, India) around the world move toward capitalism and decentralized Gov't to better provide for their citizens, the U.S. is moving more towards socialism and bigger Govt' (no matter which major party is in power). Seems kinda bass-ackward to me.


October 20, 2005
Dave wrote:
> In article <dj6tc2$1ut2$1@digitaldaemon.com>, Sean Kelly says...
> 
>>In article <dj6n99$1585$1@digitaldaemon.com>, Kyle Furlong says...
>>
>>>Sean Kelly wrote:
>>>
>>>>In article <dj6hvd$e32$1@digitaldaemon.com>, Kyle Furlong says...
>>>>
>>>>
>>>>>So you think the IRS is stupid and should die a swift death? Have you heard of the FairTax? Just found out about it last night. Read up here: http://en.wikipedia.org/wiki/FairTax, and discuss!
>>>>
>>>>
>>>>It sounds like the proposal is an attempt to have individuals shoulder the
>>>>corporate tax burden.  And with the elimination of capital gains and inheritance
>>>>taxes (not to mention the replacement of a scaled income tax percentage with a
>>>>fixed sales tax percentage), the wealthy would benefit far more than the average
>>>>American.  That said, it's worth noting that, according to the Wiki, the FairTax
>>>>proposal would not implicitly eliminate income tax--that would require repealing
>>>>the 16th amendment to the Constitution.  So we may just end up with a bizarre
>>>>hybrid system that's even more confusing than what we've already got (which is
>>>>confusing enough, particularly considering the Alternate Minimum Tax many folks
>>>>have to pay: http://en.wikipedia.org/wiki/Alternate_Minimum_Tax).
>>>>
>>>>However this idea may fare in a hypothetical world, there's no way it will
>>>>become law.  There's simply too much knowledge and infrastructure built around
>>>>the existing tax system to make it a worthwhile venture--I can't even imagine
>>>>the changes this would require in the investment market sector, not to mention
>>>>its potentially substantial impact on national lending rates.  I would be
>>>>interested to see the effect it would have on foreign investors however--imagine
>>>>being able to trade US securities tax-free :-)
>>>>
>>>>
>>>>Sean
>>>>
>>>>
>>>
>>>The Fair Tax Act specifically repeals Subtitles A, B, and C of the Internal Revenue Code of 1986. (Income, payroll, and estate and gift taxes respectively) So while it is true that Congress would still have the power to pass a bill to introduce new income taxes, after passing the FairTax, the current taxes listed above would cease to exist.
>>
>>Regarding this particular issue I was repeating a portion of the wiki you
>>linked.  Perhaps it should be corrected.
>>
>>
>>>In regard to individuals "shouldering" the corporate tax burden, didn't you read that there is a monthly rebate associated with the bill? Every household receives a check from the government each month equal to the amount of taxes paid on necessities that month. That number is calculated by using the current poverty level income. So under this system, the poor do not pay ANY taxes, and every American gets their necessities tax-free.
>>
>>The officially stated poverty level tends to be a good bit below the level
>>required to live in most areas, particularly in regions with an abnormally high
>>cost of living.  Minimum wage numbers should be a sufficient testament to this.
>>Also, low income households tend to spend all of their income on consumable
>>goods, simply by necessity.  Considering this, I am not convinced that the
>>reimbursement amount will be sufficient to offset the increased living costs
>>that a massive sales tax increase would create.  I also wonder what would happen
>>to regional tax laws.  For example: some states tax food but not clothing, while
>>others do the reverse.  Would this law change things such that everything is
>>taxed everywhere?  If not, it might be substantially more affordable for
>>poverty-level families to live in regions with favorable sales tax laws.
>>
>>As for my comment about individuals shouldering the corporate tax burden...  If
>>we assume that the government must receive the same dollar amount in tax
>>revenues after the change as before the change then the impact on different
>>sectors is simply a matter of determining how that obligation is distributed.
>>Currently, corporations pay a substantial percentage of the national tax
>>obligation through corporate and payroll taxes and through capital gains tax.
>>Also, many corporations tend to spend relatively little on consumable goods.
>>Since all of these taxes will be eliminated and replaced only by a fixed sales
>>tax increase, it seems reasonable to conclude that this decreased corporate
>>obligation will be made up for by revenue from individuals.
>>
>>
>>>Also, how is lifting the tax burden on corporations a bad thing? The economists which were part of the $22 million research effort that went into the bill estimated that the retail prices in the US are 22-25% higher because of the taxes and compliance costs forced on corporations and small businesses. Companies would be able to produce things much cheaper than before, allowing them to offer products at much more competitive prices. The same economists estimate that prices would adjust down by the same amount or more that they are inflated due to current taxes.
>>
>>When was the last time you heard of a company lowering its prices simply because
>>its expenses decreased?  So long as the price is competitive with other
>>offerings and the public is willing to pay for the product, decreased costs will
>>simply mean increased profits.  I am also skeptical that retail prices are
>>22-25% higher because of taxes--complaince costs shouldn't figure into the
>>equation as they will remain with the new system (unless I'm misunderstanding
>>what is meant by "compliance costs").  I do agree that prices would adjust down
>>in the new system, but if so it would be no more than to keep post-tax prices
>>constant.
>>
>>All of this has me wondering about the impact on multinational corporations as
>>well.  Under the new system, wouldn't it be more profitable to do all purchasing
>>overseas where the tax per unit is typically far below 25%?  How would this
>>impact the ability of domestic manufacturers to remain competitive?  I'll admit
>>I know next to nothing about international business law so this question is not
>>at all rhetorical.
>>
>>
>>>Most of the dissenting opinions I have read have used a static argument to show discrepancies in the system. The problem with this approach is that it doesnt take into account the positive growth effect of allowing persons to keep their entire paycheck. It seems to me naive to base ones calculations on data projected forward as if still working under the same tax system.
>>
>>I firmly believe that this new tax system would be quite nice for individuals
>>with a decent disposable income.  The elimination of capital gains tax alone is
>>an incredible bonus--just look at how the wealthy profited from the slight
>>capital gains tax decrease two years ago.  And having met people who pay 60% or
>>more of their yearly income in taxes (all of whom invest and spend only a small
>>portion of their income on consumable goods), I can say with confidence that to
>>replace this with only a 25% sales tax would have many of them dancing in the
>>streets.  But I have absolutely no confidence that such a change would be at all
>>good for our currently horrendous national debt nor do I belive it would be good
>>for those at the poverty-level.  I also have no faith in the "trickle down"
>>theory of economics, and while I expect that such a system would make the rich
>>richer, I do not expect that the poor would fare quite so well.
>>
>>That said, I could easily be wrong.  This is my initial reaction to what I read
>>on the Wiki rather than an informed response.  It's not a change that feels like
>>it would work for the people.  That it may work for me is immaterial in my
>>opinion.
>>
>>
>>Sean
>>
>>
> 
> 
> I say let's go back to what the original framers of the constitution intended -
> raise all Federal revenue though indirect taxes (e.g.: tariffs) and get rid of
> the rest. Give all of the "responsibility" for welfare and the like back to the
> states and they can tax whatever they'd like to provide for that. That way we'd
> have 50 big experimental social science labs (one of the primary reasons behind
> having 'states' in the first place) and sooner or later they'd gravitate toward
> what works instead of continuing the failed Federal social policies initiated
> over the last century or so (most since that damned 16th Amendment was ratified
> - sponsored by a Republican no less!).
> 
> Hmmm - a nutball, you say? Well, a century ago, when the U.S. first became a
> major player on the international stage despite also being a very young country,
> what I describe above was basically the way things worked.
> 
> The authors or the U.S. Constitution got so much right that I find it hard to
> believe that they got the two most important issues - acceptable Federal tax
> policy on private citizens AND states rights and responsibilities - so wrong as
> to have needed so much change over the last 80 years of 230 years.
> 
> If we don't get control of people and organizations suckling on one Federal
> Gov't teet or another, we will soon be finished as a Republic I'm afraid.
> 
> It's funny - as other major economies (China, India) around the world move
> toward capitalism and decentralized Gov't to better provide for their citizens,
> the U.S. is moving more towards socialism and bigger Govt' (no matter which
> major party is in power). Seems kinda bass-ackward to me.
> 
> 

I completely agree with your analysis. IMHO, the FairTax is a step in this direction. BTW, these sort of ideas which you are expounding are part of the Libertarian argument. (To which I am strongly sympathetic) Its no supprise that the Cato Institute, a Libertarian think-tank, strongly supports this bill.
October 20, 2005
This is an incredibly radical change to the tax code.  What are the chances of this actually passing?  I would guess its not likely at all.

-Craig


October 20, 2005
Sean Kelly wrote:
> In article <dj6n99$1585$1@digitaldaemon.com>, Kyle Furlong says...
> 
>>Sean Kelly wrote:
>>
>>>In article <dj6hvd$e32$1@digitaldaemon.com>, Kyle Furlong says...
>>>
>>>
>>>>So you think the IRS is stupid and should die a swift death? Have you heard of the FairTax? Just found out about it last night. Read up here: http://en.wikipedia.org/wiki/FairTax, and discuss!
>>>
>>>
>>>It sounds like the proposal is an attempt to have individuals shoulder the
>>>corporate tax burden.  And with the elimination of capital gains and inheritance
>>>taxes (not to mention the replacement of a scaled income tax percentage with a
>>>fixed sales tax percentage), the wealthy would benefit far more than the average
>>>American.  That said, it's worth noting that, according to the Wiki, the FairTax
>>>proposal would not implicitly eliminate income tax--that would require repealing
>>>the 16th amendment to the Constitution.  So we may just end up with a bizarre
>>>hybrid system that's even more confusing than what we've already got (which is
>>>confusing enough, particularly considering the Alternate Minimum Tax many folks
>>>have to pay: http://en.wikipedia.org/wiki/Alternate_Minimum_Tax).
>>>
>>>However this idea may fare in a hypothetical world, there's no way it will
>>>become law.  There's simply too much knowledge and infrastructure built around
>>>the existing tax system to make it a worthwhile venture--I can't even imagine
>>>the changes this would require in the investment market sector, not to mention
>>>its potentially substantial impact on national lending rates.  I would be
>>>interested to see the effect it would have on foreign investors however--imagine
>>>being able to trade US securities tax-free :-)
>>>
>>>
>>>Sean
>>>
>>>
>>
>>The Fair Tax Act specifically repeals Subtitles A, B, and C of the Internal Revenue Code of 1986. (Income, payroll, and estate and gift taxes respectively) So while it is true that Congress would still have the power to pass a bill to introduce new income taxes, after passing the FairTax, the current taxes listed above would cease to exist.
> 
> 
> Regarding this particular issue I was repeating a portion of the wiki you
> linked.  Perhaps it should be corrected.
> 

The wiki article I linked to I read as my first introduction to the bill, I have since read the bill itself in its entirety, and have found that the wiki contains a load of factual errors. :-P

> 
>>In regard to individuals "shouldering" the corporate tax burden, didn't you read that there is a monthly rebate associated with the bill? Every household receives a check from the government each month equal to the amount of taxes paid on necessities that month. That number is calculated by using the current poverty level income. So under this system, the poor do not pay ANY taxes, and every American gets their necessities tax-free.
> 
> 
> The officially stated poverty level tends to be a good bit below the level
> required to live in most areas, particularly in regions with an abnormally high
> cost of living.  Minimum wage numbers should be a sufficient testament to this.
> Also, low income households tend to spend all of their income on consumable
> goods, simply by necessity.  Considering this, I am not convinced that the
> reimbursement amount will be sufficient to offset the increased living costs
> that a massive sales tax increase would create.  I also wonder what would happen
> to regional tax laws.  For example: some states tax food but not clothing, while
> others do the reverse.  Would this law change things such that everything is
> taxed everywhere?  If not, it might be substantially more affordable for
> poverty-level families to live in regions with favorable sales tax laws.
>

Regarding the poor and the rebate. I believe the poverty level income figures published by the Department of Health and Human Services are basically the maximum of the incomes of the areas of the country considered to be poverty level. In addition to this the department publishes different figures for different states. That being the case, my assertion that the poor wont pay taxes stands.

The national sales tax would not affect any state taxes at all, it simply adds onto the base price of the good or service 23%. (30% exclusive)

> 
> As for my comment about individuals shouldering the corporate tax burden...  If
> we assume that the government must receive the same dollar amount in tax
> revenues after the change as before the change then the impact on different
> sectors is simply a matter of determining how that obligation is distributed.
> Currently, corporations pay a substantial percentage of the national tax
> obligation through corporate and payroll taxes and through capital gains tax.
> Also, many corporations tend to spend relatively little on consumable goods.
> Since all of these taxes will be eliminated and replaced only by a fixed sales
> tax increase, it seems reasonable to conclude that this decreased corporate
> obligation will be made up for by revenue from individuals.
> 
>

Yes, you are right, individuals would bear more of the tax burden.

>>Also, how is lifting the tax burden on corporations a bad thing? The economists which were part of the $22 million research effort that went into the bill estimated that the retail prices in the US are 22-25% higher because of the taxes and compliance costs forced on corporations and small businesses. Companies would be able to produce things much cheaper than before, allowing them to offer products at much more competitive prices. The same economists estimate that prices would adjust down by the same amount or more that they are inflated due to current taxes.
> 
> 
> When was the last time you heard of a company lowering its prices simply because
> its expenses decreased?  So long as the price is competitive with other
> offerings and the public is willing to pay for the product, decreased costs will
> simply mean increased profits.  I am also skeptical that retail prices are
> 22-25% higher because of taxes--complaince costs shouldn't figure into the
> equation as they will remain with the new system (unless I'm misunderstanding
> what is meant by "compliance costs").  I do agree that prices would adjust down
> in the new system, but if so it would be no more than to keep post-tax prices
> constant.
> 

Even if companies dont offer goods at lower prices, (which they would, in order to get an edge on the competition) think of stock options and dividends. With earnings sky rocketing, that money would find its way back into shareholder's pockets (read - your 401(k)). I think that by eliminating the built-in welfare of the income tax (lower incomes having a negative tax rate) the government even saves at least some money on the bargain.

>
> All of this has me wondering about the impact on multinational corporations as
> well.  Under the new system, wouldn't it be more profitable to do all purchasing
> overseas where the tax per unit is typically far below 25%?  How would this
> impact the ability of domestic manufacturers to remain competitive?  I'll admit
> I know next to nothing about international business law so this question is not
> at all rhetorical.
> 

In Title II, Section 905 of the bill, it states:
	
" (a)In General- All persons, in whatever capacity acting 			(including lessees or mortgagors or real or personal property, 	fiduciaries, employers, and all officers and employees of the 			United States) having control, receipt, custody, disposal, or 			payment of any income to the extent such income constitutes 			gross income from sources within the United States of any nonresident alien individual, foreign partnership, or foreign corporation shall deduct and withhold from that income a tax equal to 23 percent thereof.

(b) Exception- No tax shall be required to be deducted from interest on portfolio debt investments.

(c) Treaty Countries- In the case of payments to nonresident alien individuals, foreign partnerships, or foreign corporations that have a residence in (or the nationality of a country) that has entered into a tax treaty with the United States, then the rate of withholding tax prescribed by the treaty shall govern.'."

In Title II, Section 102(a):

"(a) In General- For purposes of this subtitle--

(1) BUSINESS AND EXPORT PURPOSES- No tax shall be imposed                                          under section 101 on any taxable property or service 				for--

(A) a business purpose in a trade or business, or

(B) export from the United States for use or consumption outside the United States, if, the purchaser provided the seller with a registration certificate, and the seller was a wholesale seller."


> 
>>Most of the dissenting opinions I have read have used a static argument to show discrepancies in the system. The problem with this approach is that it doesnt take into account the positive growth effect of allowing persons to keep their entire paycheck. It seems to me naive to base ones calculations on data projected forward as if still working under the same tax system.
> 
> 
> I firmly believe that this new tax system would be quite nice for individuals
> with a decent disposable income.  The elimination of capital gains tax alone is
> an incredible bonus--just look at how the wealthy profited from the slight
> capital gains tax decrease two years ago.  And having met people who pay 60% or
> more of their yearly income in taxes (all of whom invest and spend only a small
> portion of their income on consumable goods), I can say with confidence that to
> replace this with only a 25% sales tax would have many of them dancing in the
> streets.  But I have absolutely no confidence that such a change would be at all
> good for our currently horrendous national debt nor do I belive it would be good
> for those at the poverty-level.  I also have no faith in the "trickle down"
> theory of economics, and while I expect that such a system would make the rich
> richer, I do not expect that the poor would fare quite so well.
> 
> That said, I could easily be wrong.  This is my initial reaction to what I read
> on the Wiki rather than an informed response.  It's not a change that feels like
> it would work for the people.  That it may work for me is immaterial in my
> opinion.
> 
> 
> Sean
> 
> 

The sales tax is calculated to be revenue-neutral, i.e. would bring in the same amount as the income and other taxes.

If you dont believe in "trickle down" then this isnt for you. But it is proven to work.

Kyle

October 20, 2005
Craig Black wrote:
> This is an incredibly radical change to the tax code.  What are the chances of this actually passing?  I would guess its not likely at all.
> 
> -Craig 
> 
> 

www.fairtaxblog.com

The bill is now supported by almost 50 congressmen.

Detailed stats here:

http://www.fairtaxvolunteer.org/scorecards/
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