tag:blogger.com,1999:blog-4492737693421611547.post5061817604490846095..comments2023-11-02T05:00:47.455-06:00Comments on The Liberty Sentinel: Fair Tax or Flat Tax? How Will Americans Benefit Most?Steven M Nielsonhttp://www.blogger.com/profile/08917953887136060455noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-4492737693421611547.post-82167636691943331662008-01-23T10:37:00.000-07:002008-01-23T10:37:00.000-07:00Great post. I was surprised to see the link inclu...Great post. I was surprised to see the link included in my AFP email ... nicely done.<BR/><BR/>Ian, good to see you're still stalking FairTax posts. ;-) I think your devotion to the FairTax may actually exceed Boortz.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4492737693421611547.post-80547477617114800182008-01-17T19:54:00.000-07:002008-01-17T19:54:00.000-07:00Mr. Huckabee's advocacy of the FairTax is the sing...Mr. Huckabee's advocacy of the <B><A HREF="http://snipr.com/irsgone" REL="nofollow">FairTax</A></B> is the single most important policy position in this election. Here's why:<BR/><BR/>The <B><A HREF="http://snipurl.com/whatratewks" REL="nofollow">FairTax rate</A></B> of 23 percent on a total taxable consumption base of $11.244 trillion will generate $2.586 trillion dollars – $358 billion more than the taxes it replaces. [BHKPT]<BR/><BR/>The FairTax has the <B><A HREF="http://snipurl.com/baserate" REL="nofollow">broadest base</A></B> and the lowest rate of any single-rate tax reform plan. [THBP]<BR/><BR/><B><A HREF="http://snipurl.com/realwages" REL="nofollow">Real wages</A></B> are 10.3 percent, 9.5 percent, and 9.2 percent higher in years 1, 10, and 25, respectively than would otherwise be the case. [THBNP] <BR/><BR/>The economy as measured by <B><A HREF="http://snipurl.com/econbenes" REL="nofollow">GDP</A></B> is 2.4 percent higher in the first year and 11.3 percent higher by the 10th year than it would otherwise be. [ALM]<BR/><BR/><B><A HREF="http://snipurl.com/econbenes" REL="nofollow">Consumption benefits</A></B> [ALM]:<BR/><BR/>• Disposable personal income is higher than if the current tax system remains in place: 1.7 percent in year 1, 8.7 percent in year 5, and 11.8 percent in year 10. <BR/><BR/>• Consumption increases by 2.4 percent more in the first year, which grows to 11.7 percent more by the tenth year than it would be if the current system were to remain in place. <BR/><BR/>• The increase in consumption is fueled by the 1.7 percent increase in disposable (after-tax) personal income that accompanies the rise in incomes from capital and labor once the FairTax is enacted.<BR/><BR/>• By the 10th year, consumption increases by 11.7 percent over what it would be if the current tax system remained in place, and disposable income is up by 11.8 percent. <BR/><BR/>Over time, the FairTax benefits all <B><A HREF="http://snipurl.com/kotcomparetaxrates" REL="nofollow">income groups</A></B>. Of 42 household types (classified by income, marital status, age), all have lower average remaining lifetime tax rates under the FairTax than they would experience under the current tax system. [KR]<BR/><BR/>Implementing the FairTax at a 23 percent rate gives the poorest members of the generation born in 1990 a 13.5 percent improvement in <B><A HREF="http://snipurl.com/kotftmacromicro" REL="nofollow">economic well-being</A></B>; their middle class and rich contemporaries experience a 5 percent and 2 percent improvement, respectively. [JK]<BR/><BR/>Based on standard measures of tax burden, the FairTax is <B><A HREF="http://snipurl.com/lessregress" REL="nofollow">more progressive</A></B> than the individual income tax, payroll tax, and the corporate income tax. [THBPN]<BR/><BR/><B><A HREF="http://snipurl.com/moregiving" REL="nofollow">Charitable giving</A></B> increases by $2.1 billion (about 1 percent) in the first year over what it would be if the current system remained in place, by 2.4 percent in year 10, and by 5 percent in year 20. [THPDB]<BR/><BR/>On average, states could cut their sales tax rates by more than half, or 3.2 percentage points from 5.4 to 2.2 percent, if they conformed their state sales <B><A HREF="http://snipurl.com/staterates" REL="nofollow">tax bases</A></B> to the FairTax base. [TBJ]<BR/><BR/>The FairTax provides the equivalent of a supercharged mortgage interest deduction, reducing the true cost of <B><A HREF="http://snipurl.com/homebenes" REL="nofollow">buying a home</A></B> by 19 percent. [WM]<BR/><BR/><I>ALERT</I>: Kotlikoff <B><A HREF="http://snipr.com/bbrebuke" REL="nofollow">refutes</A></B> Bruce Bartlett's shabby critiques of the FairTax.<BR/><BR/>--------<BR/><BR/>Now, a "flat" tax rebuttal gives perspective. <BR/><BR/><I>(Paraphrased)</I> <B>Reply by Dan R Mastromarco</B> (LL.M., Taxation, Georgetown, principal in the Argus Group, adjunct professor at the University of Maryland, International Management Program, and research consultant to Americans for Fair Taxation - FairTax.org) <B>to:</B><BR/><BR/><B>"A National Sales Tax Doesn’t Add Up" by Bruce Bartlett, December 29, 1999</B> <BR/><BR/>Many engaged in true tax reform find Bartlett-type attacks exasperating, if not embarrassing. I'd like to convey perspective of both flat taxers and sales taxers who believe that such attacks are counterproductive, but first provide some political history by which to frame said perspectives.<BR/><BR/>For years Conservatives have posited that a VAT is bad policy (when liberals were discussing it), fearing it would become additional to an income tax (it was called a "money machine"). Circa 1980, conservative intellectuals touted <B>Hall-Rabushka "subtraction method"</B>[ <B>H-R</B> ] <B>VAT</B> which taxed business value added at the business side and labor value added at the labor side. Unlike European VATs (identical in scope), H-R became favorite of Dick Armey and Steve Forbes. It eliminated steeply progressive tax rates and tax on savings. Because of the prior VAT criticisms, <B>H-R was packaged as the "flat tax" and is sold as an income tax to this day, rather than the VAT that its DNA characterizes it as being.</B> <BR/><BR/>Some conservative commentators have called for the repeal of the 16th Amendment and for the adoption of the flat tax, (despite the fact that it is styled as a direct tax and could not be adopted with such repeal). Mr. Bartlett has called the national sales tax [ie, the FairTax] a VAT (which it isn't), castigated VATs as evil, and has said that sales taxes have become VATs in Europe (which they didn't). In the next breath, he "throws his arms around" the flat tax (which is a VAT). He quotes Bill Gale that the [FairTax] would have to be imposed at 60 percent, but glaringly fails to recognize that if the two bases are the same, he would have to impose that rate for the flat tax to be revenue neutral. In truth, all economists know that the two plans differ NOT in economic effect or base, but in administration. <BR/><BR/>An income tax taxes savings and investment multiple times. Both flat tax and FairTax are neutral as to savings and investment, tax income only once, and are both consumption taxes. Both are single rate taxes, have nearly the same base, and would improve the U.S. standard of living. Neither redistributes wealth.<BR/><BR/>While some have even suggested that hey are the same plans under different names, the flat tax taxes value added at each stage in the production process, but <B>the FairTax prefers to tax it when it is added up at the end and eliminate the need to make everyone a taxpayer and collector</B>.<BR/><BR/>Substantive commonalities between the flat tax and FairTax doesn't mean that there are NO key political and policy distinctions that could be exploited in pitting one against the other. If FairTax supporters wanted to retaliate in response to the Bartlett-type critique, they would have <B>much</B> material with which to <B>honestly</B> do so:<BR/><BR/><I>• The flat tax will make small firms and farmers pay the tax <B>even if they have no profit</B> <BR/>• The flat tax is opposed by many small business groups <BR/>• The flat taxers implicitly support big government by disguising even more of the overall tax burden as the current law <BR/>• The flat tax has been kicking around for nearly 20 years <BR/>• The flat tax makes everyone a taxpayer and collector, while <B>the FairTax exempts 115 million filers</B> [2000 figure] from ever having to deal with the IRS <BR/>• The flat tax is regressive, but <B>the FairTax would enable everyone to keep his full paycheck</B>. <BR/>• The flat tax has not only stalled, it has lost public and Congressional support. <BR/>• The FairTax is instantly understood, while even some proponents of the flat tax don’t understand it <BR/>• There are no transition rules developed for the flat tax and they would be very difficult to craft <BR/>• The flat tax taxes exports and relieves imports from tax <BR/>• The flat tax confuses tax reform with temporary tax reduction and makes both twice as hard <BR/>• The flat tax <B>retains the entire income tax apparatus which erodes as quickly as you can say, “tax bill”</B></I><BR/><BR/>FairTaxers could advance these truthful points without resorting to bigotry associated with a cultic religious organization. However, for the most part, FairTax supporters have chosen not to attack the flat tax, but rather accentuate the commonalities between the plans - despite the above-noted differences. The reason is that, in the battle for tax reform, <B>the real enemy is our current system</B>.<BR/><BR/>Income tax advocates look down upon the articles of Bruce Bartlett with smug chortling, as Bruce is doing their work for them. The IRS and the liberals who want an income tax to ensure (1) taxes can be raised <B>without the American people knowing it</B>, and (2) wealth can be redistributed from the middle class to the poor, do not even need to fight us - we're killing ourselves!<BR/><BR/>Perhaps Mr. Bartlett believes that the flat tax will help elect Republicans, effect tax reform, and provide tax cuts; however, the real effect of his criticism is to divide conservatives, to delay serious national consideration of tax reform, and to fertilize the roots of the income tax.<BR/><BR/><I>( <B><A HREF="http://snipr.com/mastroflatvsfair" REL="nofollow">Source</A></B> - Addit'l at FairTax.org <B><A HREF="http://snipr.com/fairvsflat" REL="nofollow">Whitepaper</A></B> - May republish in whole or part. - Ian)</I>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4492737693421611547.post-20154921952855077352008-01-17T14:50:00.000-07:002008-01-17T14:50:00.000-07:00I don't know. You say that only the income in the...I don't know. You say that only the income in the other tax bracket is taxedx at that rate... I dont know that my paycheck has ever been broken into the $30,000 that is in the poverty tax bracket not being taxed, and then only being taxed on the other money in the higher tax brackets. Of course I am not fluent in economics...<BR/><BR/>When are you putting your blog online?Steven M Nielsonhttps://www.blogger.com/profile/08917953887136060455noreply@blogger.comtag:blogger.com,1999:blog-4492737693421611547.post-32299660944385595822008-01-17T13:23:00.000-07:002008-01-17T13:23:00.000-07:00One comment: I can't speak to how businesses are t...One comment: I can't speak to how businesses are taxed, but I'm going to assume that it's similar to how individuals are taxed. If you make $100 as an individual, and that puts you in a 15% tax bracket, you pay $15 in tax. If you make $101, and that puts you into a 20% tax bracket, you pay 15% on the part of your income that is within the 15% tax bracket, and 20% on the part of your income that is within the 20% tax bracket (20% of $1 = $0.20). So your total taxes paid at $101 of income would be $15.20. You don't end up with less money in your pocket at $101 of income than you do at $100 of income.Anonymousnoreply@blogger.com