IRS Scandals and Immigration Reform - ONE SOLUTION!

[CuteOldGuy]

[Chica Chaser]

I figured the lefties would be all over the FairTax.

All those wealthy people with no income paying no income tax, still have to buy products.

[Texas Contrarian]

Originally Posted by CuteOldGuy

Thank you for your attention.

In view of the obvious fact that you have offered none in return, it's nice of you to thank others for their attention. You haven't even made the most rudimentary attempt to understand this issue, and you clearly failed to understand anything I posted. There was nothing but ignorant prattle sandwiched in between your insults.

First of all, you still will not admit that the FairTax is a regressive tax.

Originally Posted by CuteOldGuy

It's actually a fairly progressive tax, if you read about it.

Well, I have read about it, professor, and it's quite regressive. Earlier I mentioned the concepts of "marginal propensity to consume" and "average propensity to consume." (MPC and APC.) It's clear that you are completely ignorant of these concepts, or the FairTax's regressivity would be quite obvious to you. But if you had taken any college courses in economics, you would no doubt have seen all those graphs showing the lines and curves depicting income, APC, and MPC in bright colors. Ring a bell somewhere?

But it looks like I might need to explain this to you in 4th-grade-style terms that even the most ignorant simpleton could not possibly fail to grasp: As a household's income rises, the percentage of it devoted to consumption begins to fall, and it tends to keep falling as income rises to higher and higher levels. Got it?

So you can easily see that as a household income rises within the distribution, its marginal and effective tax rates would steadily decline under the FairTax. That's the generally accepted definition of a regressive tax.

These are elementary concepts that have been taught to freshman-level students for generations. That you obviously are quite ignorant of them, yet claim to have taught economics at the university level, is simply astonishing. In fact, you should consider it deeply embarrassing. You don't have the knowledge base to even pass a university level economic course, let alone teach one.

But speaking of ignorance, there's more!

Check this exchange (your interjected mid-sentence comment in red):

There are fair points to be made about what we call "tax incidence" I'm assuming you mean "incidents" since you are SO smart, compared to me. [sarcasm] concerning the corporate income tax.

That little jewel just backfired on you, professor.

Apparently you thought you were getting in a clever little dig, mocking what you obviously thought was a nonsensical statement concerning "tax incidents." In fact, it appears obvious that you thought I meant to type the word incidents.

But I did not. I was referring to tax incidence, yet another concept of which you are obviously quite ignorant. If you have never even heard of tax incidence, you know nothing about corporate taxation in the U.S., and are completely ignorant of the theoretical debate over just exactly who bears the burden of corporate taxation. Thus it is not surprising that you have no understanding of the "embedded taxes" issue, and blindly buy into the B.S. that the imposition of the 30% FairTax on final sales would somehow be canceled out by the elimination of "embedded taxes." This is patent nonsense designed to appeal to people who fail to engage in critical thinking and suffer from severe cases of innumeracy. In that regard, it's somewhat like many of the claims made a few years ago by supporters of the new health care plan. Free lunch, anyone?

If you want to learn just a little bit about corporate "tax incidence," you can start here:

http://ntj.tax.org/wwtax/ntjrec.nsf/...7_Gravelle.pdf

Can you see why I don't believe for a minute that you've ever taught economics at the university level?

As regards matters concerning economics and taxation, you are clearly an uneducated and quite ignorant individual. I always figured that you're just another ignoramus with a penchant for shooting off your mouth and hurling insults at anyone who dares to challenge any of your drivel, or any of the crap proffered by the fringe websites to which you sometimes link.

But when I read that you claimed to have actually taught economics at the university level, I realized that you're far more of an embarrassment than I had previously thought.

[CuteOldGuy]

Ok, let's change this up a bit, Cap'nMidBright. You obviously have some issues with the FairTax. You've also claimed that you do not support our current income tax system.

What tax plan do you support?

[CuteOldGuy]

For those of you still interested in real facts about the FairTax, check this out from Forbes magazine:

The Founders saw the dangers in direct taxation, and that’s why they prohibited it when they wrote the Constitution. The latest IRS scandal is a wakeup call. The 16th Amendment was a mistake. The income tax gives the federal government more information about, and power over, citizens than is compatible with freedom. The only permanent solution to the problem of IRS abuse is to abolish the IRS and institute the FairTax.

The FairTax is a simple national retail sales tax. Administering it would not involve collecting any information regarding individual citizens. The FairTax would be easily capable of collecting sufficient revenue to replace our current individual and corporate income taxes, payroll taxes, and death tax.

The benefits of the FairTax go far beyond restoring and safeguarding our liberty. The FairTax would also produce a rapid, perhaps even violent, expansion of real GDP (RGDP) and employment. (One caveat: to enable fast growth, the Federal Reserve would have to stop trying to manage the economy, and simply provide a stable dollar.)

The FairTax plan also includes a “Prebate” feature, under which every American individual (or family) would receive a monthly check equal to the FairTax that they would pay if they earned an income at the poverty line and spent all of it on items subject to the FairTax. Right now, the Prebate would amount to $335.38/month for a family of four.

The Prebates could be capitalized to provide every American with a line of credit, with no repayment risk to the federal government. This credit line could replace all of the federal “social safety net” programs targeted at working-age adults and their children. It could also provide every American turning 18 with a “grubstake”, access to sufficient capital to get a reasonable start in life.

Because the FairTax would not tax savings and investment at all, and because its compliance costs would be nil, the FairTax would deliver the highest rate of economic growth of any tax system. Here’s why.

Both GDP and jobs are driven by capital investment. Each incremental $210,000 of investment in nonresidential fixed assets would yield about $100,000 of GDP and create one real, self-sustaining, average job. The FairTax would maximize RGDP growth because it would maximize private sector savings and investment.

Under the FairTax, every large corporation in the world would move its headquarters to the U.S. to avoid the corporate taxes imposed by other nations. America would become multinational corporations’ preferred platform for export manufacturing. Illegal alien billionaires would be running their yachts aground on our shores and begging for asylum.

This is from a much longer article. For the whole thing, click here: http://www.forbes.com/sites/louiswoo...ed-a-fair-tax/

[Randy4Candy]

gritsboy, you are still going to persist on keeping after it, eh?

Day-yum! I guess you'll eventually get the entire blog cut'n'pasted.

[CuteOldGuy]

RaggedyAndy, do you support our current income tax system, or would you favor an alternative? If you favor an alternative, which one?

[Randy4Candy]

I favor the viewpoint that you are an idiot.

[Texas Contrarian]

Originally Posted by CuteOldGuy

For those of you still interested in real facts about the FairTax, check this out from Forbes magazine:

Facts? You're kidding, right? Did you actually read the whole thing, or just the drivel you cut & pasted? That article is so filled with fanciful nonsense one scarcely knows where to begin.

So I'll just point out the most obviously glaring piece of folly. First of all, Woodhill says that the FairTax with a 30% rate is "revenue-neutral" -- a statement that strains credulity, to say the least (as I mentioned earlier). But he prefers a drastically lower rate roughly one-half that, apparently believing such a gigantic tax cut would juice the economy so much it would more than pay for itself over time. If you've seen many of his other articles, you should be aware that this sort of "supply-side" nostrum is a commonly expressed meme for him. There are rarely tax-cutting plans too large or bold for his tastes, irrespective of the size of the current level of spending or structural deficit. But he's outdone himself with this one!

Try to think this through for just a moment. The FairTax with a 15% rate would probably produce net revenue, after paying for the "prebate," of somewhere around 4% of GDP. That's about one-sixth of the level of current federal government spending.

This means that we would suddenly be running fiscal deficits of approximately $3 trillion annually. Do you not see how something could go very badly wrong, and very quickly?

But, hey, if this is such a great idea, why stop there? Since Woodhill's plan would drop federal taxes to a fairly small fraction of what they are now, why not really go for the gusto and eliminate taxation altogether?

Imagine how much that would stimulate the economy!

[CuteOldGuy]

Cap'n MidBright, my question to you was, which alternative tax system do you support?

[Texas Contrarian]

What "MidBright" or former economics "professor" OldGuy might support matters not.

Far more important is the question of what sort of tax system is politically viable, effective, and workable. The FairTax, in the form promoted by its supporters, is none of those things.

For one thing, it would struggle to collect much more than half the level of current federal spending. For another, it's a regressive tax, as we discussed earlier. Try as you may, there's no way you're going to get away politically with greatly reducing the tax burden on high income earners. The nexus of voters and politicians decided long ago in favor of a progressive tax system. That's not about to change, especially since income disparity has been growing for almost 40 years.

But since you have argued to the contrary in multiple posts, you're still struggling with the concept that the FairTax is a regressive tax plan.

Isn't that right, professor?

[CuteOldGuy]

Again, the question was, Cap'n MidBright, what alternative tax system do you support? We all know what you think of the FairTax, and what I think of the FairTax. All I'm asking is what alternative do you support? Or do you support the current system?

[Chica Chaser]

Yes Cappy, what changes should be made in your opinion?

[gnadfly]

I've got a couple of questions for you COG.

Didn't read your entire article so I might have missed something. Seems though the FairTax is basically a flat national sales tax.

Generally though, lets say the FT is implemented, so what is to keep lobbyists from starting to chip away at it so we don't eventually revert to the system we have now PLUS a FT? I liked Caine's 999 until the final 9 was a 9% national sales tax.

The lobbyists and the politician's current jobs are to hand out favors. How do the FT reign that in? First you don't tax food, then meds; then cars and real estate over a certain amount get more taxes...or less; And "clean" cars get less taxes.

See, the reason the Fair Tax isn't approved is because of the political unreality of the situ. I'm not criticizing you for pipe dreaming. But its like illegal immigration issue - we can't make illegals new citizens without some type of border security and employment reform...otherwise next year we are going to have a LOT more new citizens AND illegal immigrants. Same with FT, say we miraculously got it passed, how is it safeguarded?

BTW, the IRS would likely need to be kept to collect the national sales tax and pursue any violators.

[CuteOldGuy]

There would be no IRS, and there would be no income tax. Part of the FairTax legislation requires the repeal of the 16th amendment prior to the effective date. Treasury could pick up the collection of the FairTax. It won't require the massive bureaucracy we have now.