Comments on: DAD – my react

By: Ian

Ian — Sun, 07 Oct 2007 19:08:21 +0000

By the way, because the FairTax removes the 22% tax/compliance costs embedded in products: Prices after FairTax passage would look similar to prices before FairTax - not "30% higher" as opponents contend - competition would see to it. So, the FairTax rate (figured as an income-tax-rate-non-comparative, sales tax) on new items would be 29.85% (on the new, reduced cost of items because business isn't taxed under FairTax - thus lowering retail prices by 20% to 30%), or 23% of the "tax inclusive" price tag - this is the way INCOME TAX is figured (parts of the total dollar). The effective tax rate percentages, that different income groups would pay under the FairTax, are calculated by crediting the monthly "prebate" (advance rebate of projected tax on necessities) against total monthly spending of citizen families (1 member and greater, Dept. of HHS poverty-level data; a single person receiving ~$200/mo, a family of four, ~$500/mo, in addition to working earners receiving paychecks with no Federal deductions) Prof.'s Kotlikoff and Rapson (10/06) concluded, "...the FairTax imposes much lower average taxes on working-age households than does the current system. The FairTax broadens the tax base from what is now primarily a system of labor income taxation to a system that taxes, albeit indirectly, both labor income and existing wealth. By including existing wealth in the effective tax base, much of which is owned by rich and middle-class elderly households, the FairTax is able to tax labor income at a lower effective rate and, thereby, lower the average lifetime tax rates facing working-age Americans. "Consider, as an example, a single household age 30 earning $50,000. The household's average tax rate under the current system is 21.1 percent. It's 13.5 percent under the FairTax. Since the FairTax would preserve the purchasing power of Social Security benefits and also provide a tax rebate, older low-income workers who will live primarily or exclusively on Social Security would be better off. As an example, the average remaining lifetime tax rate for an age 60 married couple with $20,000 of earnings falls from its current value of 7.2 percent to -11.0 percent under the FairTax. As another example, compare the current 24.0 percent remaining lifetime average tax rate of a married age 45 couple with $100,000 in earnings to the 14.7 percent rate that arises under the FairTax." Further, per Jokischa and Kotlikoff (circa 2006?) ... "...once one moves to generations postdating the baby boomers there are positive welfare gains for all income groups in each cohort. Under a 23 percent FairTax policy, the poorest members of the generation born in 1990 enjoy a 13.5 percent welfare gain. Their middle-class and rich contemporaries experience 5 and 2 percent welfare gains, respectively. The welfare gains are largest for future generations. Take the cohort born in 2030. The poorest members of this cohort enjoy a huge 26 percent improvement in their well-being. For middle class members of this birth group, there's a 12 percent welfare gain. And for the richest members of the group, the gain is 5 percent."

By: Ian

Ian — Sun, 07 Oct 2007 18:45:33 +0000

Differ away, steve. The primary problem with the income tax system is its socially-engineered tax code (which relies on taxing, and thereby using, businesses to hide consumer taxes in higher prices, while providing a "straw man" against which to pit "workers"), and its increasingly steepened progressivity, which work together, synergistically, being "nurtured by certain of those of the political class whose main interest seems to be to have one segment of society purchase and pay for a captive and dependent constituency." Indeed, it's time for radical surgery. If the "meltdown" spoken of by Dr. Kotlikoff is true, then scrapping the tax code and enacting a more visible national sales tax (a/k/a "FairTax") is something that must happen, and soon!

By: steveegg

steveegg — Sun, 07 Oct 2007 12:57:51 +0000

I beg to differ, Ian. It’s about the level of taxation, and FairTax does NOTHING to stop that. Indeed, at the level that is required to replace all the other taxes (~~23%~~ 30%), it would open up the black market like never before.

I don’t suppose you want the Detroit River militarized, do you? In order to keep the suddenly-cheap Canadian products from being smuggled across like they were during Prohibition, you’ll need a literal army there.

By: DAD my react — 2008 president candidates

DAD my react — 2008 president candidates — Sun, 07 Oct 2007 08:57:20 +0000

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By: Ian

Ian — Sun, 07 Oct 2007 06:06:10 +0000

“Too wedded to the national sales tax”? Brother, you’re missing the forest for the trees. It’s ALL about the system of taxation! The income tax system keeps the people divided and ensures continued manipulation through social engineering powered by tax favors and recissions. Wake up, Junior.

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