Why 25%? Why not 24% or 28%? Is there some reason for that particular figure?
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Bar Stool Economics
- Thread starter picklesuit
- Start date
FairTax, thank goodness it will never happen in this country. A few arguments against the crazy idea:
http://online.wsj.com/article/SB118800635034508655.html
http://www.factcheck.org/taxes/unspinning_the_fairtax.html
http://taxprof.typepad.com/taxprof_blog/files/bartlett_fair_tax.pdf (PDF)
http://online.wsj.com/article/SB118800635034508655.html
http://www.factcheck.org/taxes/unspinning_the_fairtax.html
http://taxprof.typepad.com/taxprof_blog/files/bartlett_fair_tax.pdf (PDF)
Getting back to the original scenario, how is the bar owner's solution to the splitting up the $20 roughly equal? The percentages aren't the same and they obviously don't get the same amount knocked off their original tab. Cool post though and certainly is thought provoking, gives a different perspective on things.
:sleep_125
Ok, I am going to try crafting defense without simply citing other papers.
First, realize that two of the articles are written by the same person. Bruce Barttlett has seemed to spend a considerable amount of effort arguing against FairTax. He starts off his article in the WSJ by mentioning Scientology to discredit it on purely emotional terms. While the COS did promote its own sales taxed based system to avoid its legal troubles with the IRS, it evolved separately than FairTax. (1) No legitimate criticism would include such blatant smear tactics and exposes his bias. Later in the article, Bartlett states "The FairTax does this by sending monthly checks to every household based on income." He then continues this assertion later in the article. That is completely false. The FairTax plan sends out prebates regardless of income. With Bartlett being both biased and uninformed, I see no reason to debate him and will concentrate on the FactCheck article.
I have used FactCheck.org before and have no initial reason to raise any bias. They spend much of their article explaining the inclusive/exclusive rate. I very much agree with them that it is very easy to misinterpret. FairTax obviously choose the lower sounding rate while its detractors chose the higher sounding one. I also see no reason to get into a numbers game. While both attractors and detractors can cite academic papers to sway the numbers, FactCheck.org has seemed to try to find a balance.
The biggest problem I have with the paper is its last sentence, "It is possible that the FairTax would make most people better off, but much of that gain would be a direct result of making the tax code less fair." They seem to be stating that since the tax burden on those earning $15k-$200k (the vast majority of Americans) would raise, that this would be unfair. Are they trying to argue that those earning more than $200k should be taxed more than they are?
When developing these figures of the share of tax burden they rely on a Treasury Department study that never released how they came about the numbers. That hardly seams like a great source. Later the article goes on to state that the share of tax burden actually isn't that important and that you should look at tax rate. Why even bring up tax burden?
Looking at the article as a whole, it seems like most of the problem with it involves confusion with the tax rate and opposed to a debasing of the economic advantages. This is a great thing for FactCheck.org to do (help us see through some of the political rhetoric of campaign season), but does not represent a rigorous academic study of the effects of the plan.
At the end of the day, the fed must raise the same amount of money. The question is where to take it from. We must look at the incentives and constraints (yes, I have read/am reading Sowell's books) of any economic system before deciding on it. For example, The FairTax plan removes the incentive for companies to move jobs overseas to avoid paying income tax. It provides more incentive for people to save because there would be no more capital gains tax. Companies would no longer have to calculate the tax implications of its options and just make decisions on stakeholder value. Hundreds of millions of people would not have to hire tax prepares every year. The article article glances over these by mentioning an increase in the economy, but then tries to dismiss it by saying that it is not "fair."
The biggest challenge to overcome would be the transition and informing everyone of how the new system worked.
Remember, two large states (FL &TX) already derive their entire income from sales tax. If they can, why can't the federal government?
(1) The response is about half the way down the article. I wish I could find a more neutral source, but proving non-association is much harder than association. The burden must be on the one making the claim and Bartlett gives no sources.
Its late...I'm out. :icon_tong
First, realize that two of the articles are written by the same person. Bruce Barttlett has seemed to spend a considerable amount of effort arguing against FairTax. He starts off his article in the WSJ by mentioning Scientology to discredit it on purely emotional terms. While the COS did promote its own sales taxed based system to avoid its legal troubles with the IRS, it evolved separately than FairTax. (1) No legitimate criticism would include such blatant smear tactics and exposes his bias. Later in the article, Bartlett states "The FairTax does this by sending monthly checks to every household based on income." He then continues this assertion later in the article. That is completely false. The FairTax plan sends out prebates regardless of income. With Bartlett being both biased and uninformed, I see no reason to debate him and will concentrate on the FactCheck article.
I have used FactCheck.org before and have no initial reason to raise any bias. They spend much of their article explaining the inclusive/exclusive rate. I very much agree with them that it is very easy to misinterpret. FairTax obviously choose the lower sounding rate while its detractors chose the higher sounding one. I also see no reason to get into a numbers game. While both attractors and detractors can cite academic papers to sway the numbers, FactCheck.org has seemed to try to find a balance.
The biggest problem I have with the paper is its last sentence, "It is possible that the FairTax would make most people better off, but much of that gain would be a direct result of making the tax code less fair." They seem to be stating that since the tax burden on those earning $15k-$200k (the vast majority of Americans) would raise, that this would be unfair. Are they trying to argue that those earning more than $200k should be taxed more than they are?
When developing these figures of the share of tax burden they rely on a Treasury Department study that never released how they came about the numbers. That hardly seams like a great source. Later the article goes on to state that the share of tax burden actually isn't that important and that you should look at tax rate. Why even bring up tax burden?
Looking at the article as a whole, it seems like most of the problem with it involves confusion with the tax rate and opposed to a debasing of the economic advantages. This is a great thing for FactCheck.org to do (help us see through some of the political rhetoric of campaign season), but does not represent a rigorous academic study of the effects of the plan.
At the end of the day, the fed must raise the same amount of money. The question is where to take it from. We must look at the incentives and constraints (yes, I have read/am reading Sowell's books) of any economic system before deciding on it. For example, The FairTax plan removes the incentive for companies to move jobs overseas to avoid paying income tax. It provides more incentive for people to save because there would be no more capital gains tax. Companies would no longer have to calculate the tax implications of its options and just make decisions on stakeholder value. Hundreds of millions of people would not have to hire tax prepares every year. The article article glances over these by mentioning an increase in the economy, but then tries to dismiss it by saying that it is not "fair."
The biggest challenge to overcome would be the transition and informing everyone of how the new system worked.
Remember, two large states (FL &TX) already derive their entire income from sales tax. If they can, why can't the federal government?
(1) The response is about half the way down the article. I wish I could find a more neutral source, but proving non-association is much harder than association. The burden must be on the one making the claim and Bartlett gives no sources.
Its late...I'm out. :icon_tong
I think you just embodied the point of my post. The split-up of our tax burden is NOT fair, yet those with the least burden and the most benefits are usually the first to bitch about the 5% at the top of the tax bracket who shoulder the most tax burden. The politics in this country have devolved into a class warfare seemingly pitting those who drive the economy against those who benefit from it. Both parties are to blame and the idiot media feeds it every day...I think many people in this country would do well to read "Atlas Shrugged" by Ayn Rand...one of my favorite books...
We have a costly war as well as entitlements that have to be paid for. Taxes are one of the main ways we do this, yet our current administration is the first to cut taxes during war time. How would you fill the government coffers without that revenue stream? Cutting taxes on the wealthy will not make up for the loss of their taxes that go to Uncle Sam(and if you can find a study with actual data/graphs/charts that refute it, I would love to see it).
As for me, well if anyone is going to get tax relief it should be the poorer of this country as they are struggling. If that means taxing the upper bracket more to bring about that relief, I am fine with that. You may lose sleep, and bring up "class warfare".
Yet, here we are with a tax cut that gave people more money to spend and the tax revenues have gone up....
Cut spending, cut taxes and concentrate on the key function of the federal government..."Provide for the common defense" all else is rubbish.
Thank God I am not a product of a University of Georgia education.
I think I get it now. I've heard a lot brewing about FairTax but unfortunately haven't taken the time to read up on it. Once I'm syllabus complete I'll start looking more.
Craigslist items are normally 2nd hand and thus not subject to the FairTax plan. The FairTax only taxes items once, at the retail register for new goods/services. In addition, it will will pull people in who have historically been able to aviod income taxes, illegal alliens and criminals.
There is less of a way around a sales tax than an income tax.
Very true. For anyone who thinks they'll be able to buy more toys with all the coin they save from paying taxes- you're wrong. All your toys will cost WAY more. A consumption tax will only benefit those who don't consume...well, more or less.
Interestingly, military members receive a 'tax credit' as a result of not paying taxes on some of their wages, such as BAH (ie .mil folks will take home more $ than a civ guy making the same salary). Under this tax plan, military members would see a greater decrease in buying power than the average citizen as we would lose this tax advantage.
magnetfreezer
Well-Known Member
This would be partially offset by the BX/commissary - not being charged a 25% sales tax would save more money than not being charged the current 5-8% sales tax.