[Benny Hicks]

I definitely plan on continuing this conversation with you in the future, but I'm getting married tomorrow and don't have the time to spare right now. I'm really interested in this though and I'm really looking forward to hearing more of what you have to say on the topic.

[darfaz]

The person living at or below the poverty line is generally spending the bulk of their income on food, clothing, elecetricity, etc... generally public sales. They are not spening their money buying paintings, collectable coins, houses and other private-sale items.

There is an advance monthly rebate given to everyone to cover food, clothing, shelter, etc. to alleviate the costs of necessities and to lower the tax burden on the poor. Point #3 at http://www.fairtaxvolunteer.org/smart/faq-main.html#1

As for private sale items. It's all about market factors. Because everyone (especially the rich) will have more income, the demand for things like paintings, coins, and houses will increase, thus increasing their price. The higher price will make such purchases less attractive, and there is really only so much people can spend on used goods because there is a limited supply.

Please explain to me how a US sales tax will affect the consumer in Germany buying a Ford.

I can certainly explain to you how a corporate income tax on the Ford motor corporation effects that buyer.

Well, since Ford would not have to pay any payroll taxes, sales taxes for anything it purchases throughout its US based operations, and corporate taxes, they would save perhaps billions annually. Therefore, the company would be able to sell their products on the foreign market at a much reduced price.

You would have to establish that a 20% decrease would occur accross-the-board to even begin to discuss making up the difference. I guarentee you that would not happen when this went into effect.

I don't have the economics background to prove that a 20% decrease in the price of products would occur. I really don't think anyone can prove this. Again it comes down to market factors. Companies will be able to produce goods at a much cheaper price, and they will have to pass this on to consumers if they want to sell their product. However, because of the rebate givenand the current sales tax that exists, the reduction in the price of consumer goods would not have to be 20% to make up the difference.

But that's just mentioning the difficulties involved in such a complete change in where tax occurs. The far bigger issue is the move of burden. Every industry with no produce would cease to generate tax revenue (banks for example). Do you really thing they would get rid of their fees? Nope. But our taxes would go up to make up for the money not being made in taxing them.

Again, market factors. The overhead costs for running a bank will be drastically reduced. They would be forced to reduce fees, lower loan rates, etc. to be competitive. If a specific bank refuses to do so, they would be run out of business because someone else will.

Let's imagine that everyone actually did spend all their money on public purchase (which we know is not true). The guy making $12k per year would loose 23% to taxes (right now he looses none), and the guy making $500m per year would loose 23% to taxes (right now he looses more like 30%). You are raising taxes on the poor to lower them on the rich.

From http://www.fairtaxvolunteer.org/smart/faq-main.html#1 again, question 14:
"Let’s look at a billionaire under the FairTax – if he spends $10,000,000 dollars he pays a tax of $2,300,000 and gets a rebate of $4,508 (assuming he is married and has no children). His effective tax rate as a percent of spending is 22.95 percent.

Now, let’s look at a middle-income married couple with no children under the FairTax – if they spend $40,000, they pay $4,692 net of their rebate for an effective tax rate of 11.7 percent. The effective tax rate increases as spending increases, but never exceeds 23 percent!

In contrast, if this same couple earns $40,000 in wages today under the current tax system, they pay $2,810 in income taxes and $3,060 in payroll taxes for a total of $5,870 in taxes (14.7 percent). In addition, their employer pays another $3,060 in payroll taxes. Most economists agree that the employer payroll tax is actually borne by employees in the form of lower wages. Looked at this way, this couple is paying $8,930 (22.3 percent) in taxes today, which doesn’t even include the hidden taxes they pay every time they make a purchase.

Finally, let’s look at a low-income couple under the FairTax – they pay no net FairTax at all. Today, under the income tax system, they not only pay 15 percent in payroll taxes, but they also pay hidden taxes – arising from corporate taxes, private sector compliance costs, and payroll taxes passed on to consumers and embedded in the price of everything they buy."

I am not. You simply keep assuming that there's no shipf in burden.

Heck, if you were right about the "embedded tax" then you've defeated your own argument. Your proposed change does nothing but change the paperwork.

There is no shift in tax burden. The American worker/consumer presently carries the burden and will do so if the sales tax is enacted. The difference is that a national sales tax gives the American worker/consumer more freedom as to how they spend/invest their money. If one wants to purchase more wants they will pay a higher tax. That is fairness. Additionally, I think the problems with the current tax system dwarf the potential problems with the sales tax system. That is the real issue.

[JerryLove]

There is an advance monthly rebate given to everyone to cover food, clothing, shelter, etc. to alleviate the costs of necessities and to lower the tax burden on the poor. Point #3 at http://www.fairtaxvolunteer.org/smart/faq-main.html#1

Rebate? This conversation continues to be humerous. There's someone who thinks that a "monthly rebate" sounds like it could possibly be a good idea?

As for private sale items. It's all about market factors. Because everyone (especially the rich) will have more income, the demand for things like paintings, coins, and houses will increase, thus increasing their price. The higher price will make such purchases less attractive, and there is really only so much people can spend on used goods because there is a limited supply.

It has never worked that way in the history of the world. Next idea?

Well, since Ford would not have to pay any payroll taxes, sales taxes for anything it purchases throughout its US based operations, and corporate taxes, they would save perhaps billions annually. Therefore, the company would be able to sell their products on the foreign market at a much reduced price.

You are contradicting yourself again. For the government to collect taxes, taxes must be colleted. To be collected from the workers they must be given to the workers. Workers, therefore, can only get cheaper if someone else gets more expensive.

Your suggestion moves more of the burden down to the working class and poor. This means that the working class and poor must become more expensive or have less money. As a result, there will be added cost, not added savings, in regards to hiring someone in these classes (the rich will, however, become cheaper).

So we know that the car won't cost less. Under the current system, some of the money the German guy spends on Ford goes to the US economy. Under your system, there is no tax on his expenditure (at least not in the US), meaning none goes to the US economy.

Where will the short-fall be made up? Once again, it will come fro the backs of the American worker, making him more expensive still.

I don't have the economics background to prove that a 20% decrease in the price of products would occur. I really don't think anyone can prove this. Again it comes down to market factors. Companies will be able to produce goods at a much cheaper price, and they will have to pass this on to consumers if they want to sell their product. However, because of the rebate givenand the current sales tax that exists, the reduction in the price of consumer goods would not have to be 20% to make up the difference.

For most workers in the US their taxes will go up; 23% being higher than the income tax paid by most now.
Either this will mean an effective reduction in pay to the workers, or it means that the costs of the workers will go up.
More expensive workers in the US means that US made goods will be more expensive.

Of course, few goods are made in the US. They are made overseas, so manufacturers will not be effected by the savings on worker pay (which doesn't exist).

Here's what will happen. Ford and Nikie will stop paying taxes. Their tax burden will be shifetd onto their workers. Only Nikie doesn't have workers in the US, so Ford's workers will have to carry the load for both companies. Since Ford is now paying Nikie's taxes, their costs will go up... unless they move offshore.

Again, market factors. The overhead costs for running a bank will be drastically reduced. They would be forced to reduce fees, lower loan rates, etc. to be competitive. If a specific bank refuses to do so, they would be run out of business because someone else will.

You are living in a dream world.

Tell me. Where's the homeowner's insurance company that's selling policies inexpensively to well-built houses or driving out of the market those who don't?

Where's the auto-insurance company who doesn't charge more to people who haven't had insurance in the previous 6-months?

Where's the music label selling successfully below the inflated prices of the industry?

Where's the company driving ticket-master out of business for inflated prices?

With record profits to oil companies, where's the market force driving their prices down?

How about unregulated energy? That didn't work out.

You imagine something that simply doesn't occur. The closest I can think of to this was the Japanese car market in the 70s, and WalMart forcing offshoring this decade.

Now, let’s look at a middle-income married couple with no children under the FairTax – if they spend $40,000, they pay $4,692 net of their rebate for an effective tax rate of 11.7 percent. The effective tax rate increases as spending increases, but never exceeds 23 percent!

What if they spend thier money offshore? Or from priavte individuals?

They give nothing in taxes.

BTW, what do you think a couple would spend $40,000 per year on? Once we remove a used car (private sale, and not neccessairily this year) and housing payments (private sale, and not likely this year), a middle-income family doesn't spend that much.

In contrast, if this same couple earns $40,000 in wages today under the current tax system, they pay $2,810 in income taxes and $3,060 in payroll taxes for a total of $5,870 in taxes (14.7 percent). In addition, their employer pays another $3,060 in payroll taxes. Most economists agree that the employer payroll tax is actually borne by employees in the form of lower wages. Looked at this way, this couple is paying $8,930 (22.3 percent) in taxes today, which doesn’t even include the hidden taxes they pay every time they make a purchase.

What? This is redundant.

Employee payroll taxes are... well... any witholdings from a payroll for taxes. These are basically FICA and Income Tax.

Essentially FICA is Social Security. It's supposed to be funded by itself (it's essentially a government pension plan); so treating it like income tax would be a mistake. It's 6.2%.

With no deductions, I would pay 21% in total taxes. Of course, I'm above the bell curve on income.

Finally, let’s look at a low-income couple under the FairTax – they pay no net FairTax at all. Today, under the income tax system, they not only pay 15 percent in payroll taxes, but they also pay hidden taxes – arising from corporate taxes, private sector compliance costs, and payroll taxes passed on to consumers and embedded in the price of everything they buy."

Depends on what you mean in "low income". Under the current system, someeone working for McDonalds will pay only Social Security. Under your system he will pay 23% (maybe he gets some back in a rebate).

Also: "hidden taxes" is just prejudicary (and annoying) language. When I buy a McDonalds hamburger I have to include paying for the taxes McDonald's pays? Duh! If I cahnge the tax system to charge sales tax, then my burger costs include the "hidden" tax that I have to pay to give the tax money to the worker that made it. Sure, McD's doesn't have to pay 6% on him, but they have to pay him 23% more... and those savings get passed on to me.

We can posit scenerios all day. You'll find that generally, there's an upward movement or no movement... but that's not the problem: the problem is where the burden falls.

Tell me, are groups reprenting the poor in favor of this idea? Why do you think that they are not? After all, according to you it makes life better for absolutely everyone; no one would oppose it.

There is no shift in tax burden. The American worker/consumer presently carries the burden and will do so if the sales tax is enacted. The difference is that a national sales tax gives the American worker/consumer more freedom as to how they spend/invest their money. If one wants to purchase more wants they will pay a higher tax. That is fairness. Additionally, I think the problems with the current tax system dwarf the potential problems with the sales tax system. That is the real issue.

The income tax system takes a greater percentage from the rich than from the poor.

A sales tax, functionally, will not.

More to the point: corporate taxes take money from companies that do business in import and export. Your system would essentially stop collecting income on exported goods. Who will make up the difference?

Also, the current system essentially charges for doing business in America. If you don't want to do business here, you can't access the market. Yours creates a situation where American labor is overpriced more than it currently is.

[darfaz]

Rebate? This conversation continues to be humerous. There's someone who thinks that a "monthly rebate" sounds like it could possibly be a good idea?

You stated that the poor would be taxed at the same percentage as the rich. The rebate idea reduces the tax burden on the poor. The very poorest paying zero tax. The idea of a rebate is not any more humorous than the current system of income tax refunds (esentially annual no interest loans we give to the government).

It has never worked that way in the history of the world. Next idea?

If all the rich are going to do is to spend money on used goods to avoid paying taxes, then the price of used goods will increase. This has never happened before as you claim because there has never been a system where one is taxed only on purchasing new goods, and essentially untaxed on the purchase of used goods.

You are contradicting yourself again. For the government to collect taxes, taxes must be colleted. To be collected from the workers they must be given to the workers. Workers, therefore, can only get cheaper if someone else gets more expensive.

Your suggestion moves more of the burden down to the working class and poor. This means that the working class and poor must become more expensive or have less money. As a result, there will be added cost, not added savings, in regards to hiring someone in these classes (the rich will, however, become cheaper).

Please show me where I contradicted myself (again). That was my first post on this thread.

Workers are instantly cheaper because the company doesn't have to pay payroll taxes like social security (it is covered in the national sales tax). Additionally, companies can afford more employees because they will have more money to work with that is not going towards paying operating expenses and corporate taxes.

The tax burden is already on workers. Anytime we buy a product we are paying for the taxes in the price of the product that the corporation had to pay.

So we know that the car won't cost less. Under the current system, some of the money the German guy spends on Ford goes to the US economy. Under your system, there is no tax on his expenditure (at least not in the US), meaning none goes to the US economy.

This is wrong. Under the revised system, the profit Ford makes by selling the German guy the car actually goes to Ford Motor Company and into the United States economy. Ford then has higher revenue, higher earnings, and can reinvest into the United States economy, which produces more jobs. More jobs would mean more consumers.

Of course, few goods are made in the US. They are made overseas, so manufacturers will not be effected by the savings on worker pay (which doesn't exist).

Here's what will happen. Ford and Nikie will stop paying taxes. Their tax burden will be shifetd onto their workers. Only Nikie doesn't have workers in the US, so Ford's workers will have to carry the load for both companies. Since Ford is now paying Nikie's taxes, their costs will go up... unless they move offshore.

Companies don't pay taxes as it stands. They pass their taxes on to the consumer in the form of higher prices. How can Ford pay Nike's taxes when corporations are not paying taxes as it stands (by passing their costs on)or under the reform (which doesn't tax at all)?

For most workers in the US their taxes will go up; 23% being higher than the income tax paid by most now.
Either this will mean an effective reduction in pay to the workers, or it means that the costs of the workers will go up.
More expensive workers in the US means that US made goods will be more expensive.

According to the Fairtax.org site (I know it is biased, I am too lazy to double check the information elsewhere) most Americans fall into the 15% income tax bracket. However, they are also paying an average of 7.65% of their income for FICA/Medicare taxes (and the employer matches on top of that, which they recoup in lowering worker's wages). The tax on workers will not go up, also because of the rebate given.

You are living in a dream world.

Tell me. Where's the homeowner's insurance company that's selling policies inexpensively to well-built houses or driving out of the market those who don't?

Where's the auto-insurance company who doesn't charge more to people who haven't had insurance in the previous 6-months?

Where's the music label selling successfully below the inflated prices of the industry?

Where's the company driving ticket-master out of business for inflated prices?

With record profits to oil companies, where's the market force driving their prices down?

How about unregulated energy? That didn't work out.

You imagine something that simply doesn't occur. The closest I can think of to this was the Japanese car market in the 70s, and WalMart forcing offshoring this decade.

The problem with your points is that people are still willing to pay top dollar for everything you mention. The companies have no need to lower prices.
Lower prices happen with level competition. I have seen banks in my area drastically reduce and eliminate teller fees and ATM withdrawl fees and raise the savings account interest rate (even above what the Fed has done in the last 13 months) to compete. Its not an isolated incident like you claim.

What if they spend thier money offshore? Or from priavte individuals?

They give nothing in taxes.

Tax evasion is a serious problem as it stands. Buying new from private individuals would require a tax. There would be technicalities for 'new' goods, but not any more complex than the current tax code.

BTW, what do you think a couple would spend $40,000 per year on? Once we remove a used car (private sale, and not neccessairily this year) and housing payments (private sale, and not likely this year), a middle-income family doesn't spend that much.

The $40K was the number the site used. I just quoted it.

Depends on what you mean in "low income". Under the current system, someeone working for McDonalds will pay only Social Security. Under your system he will pay 23% (maybe he gets some back in a rebate).

Again, someone working at McDonalds making $5.15 an hour working 40 hours a week would earn $10712 annually. Under the fair tax breakdown, a single, childless worker would only be taxed on $912 of that income (with a $9800 allowance). That means the worker (assuming he/she spent all $912) would pay $209.76 in taxes. That is a total of about 1.96% of their income in taxes. A lot lower than 23%, and lower than the percent they currently pay for social security. (If my arithemetic is wrong, I apologize. I am not stellar at mathematics)

Also: "hidden taxes" is just prejudicary (and annoying) language. When I buy a McDonalds hamburger I have to include paying for the taxes McDonald's pays? Duh! If I cahnge the tax system to charge sales tax, then my burger costs include the "hidden" tax that I have to pay to give the tax money to the worker that made it. Sure, McD's doesn't have to pay 6% on him, but they have to pay him 23% more... and those savings get passed on to me.

We can posit scenerios all day. You'll find that generally, there's an upward movement or no movement... but that's not the problem: the problem is where the burden falls.

Maybe, but McDonalds is also saving money by not having to pay tax on any business to business transactions, and not having to pay the corporate tax. Those are the savings that get passed on.

The income tax system takes a greater percentage from the rich than from the poor.

A sales tax, functionally, will not.

As shown above, this is not the case. One working a minimum wage job would pay around 2%.

More to the point: corporate taxes take money from companies that do business in import and export. Your system would essentially stop collecting income on exported goods. Who will make up the difference?

Income is collected by the company making more money and hiring more American workers who buy new products, and the owners of the companies will also have more money, with which they can spend.

[JerryLove]

You stated that the poor would be taxed at the same percentage as the rich. The rebate idea reduces the tax burden on the poor. The very poorest paying zero tax. The idea of a rebate is not any more humorous than the current system of income tax refunds (esentially annual no interest loans we give to the government).

Only if you misestimate your taxes.

If all the rich are going to do is to spend money on used goods to avoid paying taxes, then the price of used goods will increase. This has never happened before as you claim because there has never been a system where one is taxed only on purchasing new goods, and essentially untaxed on the purchase of used goods.

The painting issue isn't a used goods issue. And no, there's any of a hundred ways to bring used goods onto the market.

Again, your problem is you are relying on an entirely unprescedented event happening when it never has before.

Please show me where I contradicted myself (again). That was my first post on this thread.

Don't keep track of who posts. You responded to my response; I responded to that.

Never mind then. Start your own discussion with me and I'll make sure I don't misattribute.