The specific cost to be reduced is the cost of income tax for the labor required to produce the goods or service. The manufacturer/distributer/retailer all have to pay their staff a gross amount, out of which income tax is then paid. If the workers no longer pay income tax, the salary costs go down and hence the price of the goods/services goes down correspondingly. Then at the retail level the Fair Tax gets added back on. According to the Fair Tax folk, these effects balance each other out so the end price will be much the same as it is now.
Can you explain what you mean? Presumably the Fair Tax will be added to all purchases on the Internet, but that is a Federal tax and does not affect state taxes.
No, the salary cost remains the same (employees still need to pay taxes via purchases). The cost of taxes for the business go down as do the accounting costs associated with it.
products are sold tax free on the internet where they are not in a brick and mortar store. This represents an ever growing loss of tax revenue for states and IMO a federal tax would require a more structured mechanism for tracking and paying taxes.
The Fair Tax proponents theory is that the costs of goods will go down because of the removal of embedded taxes that the businesses have to pay. And that this reduction is almost exactly the same as the level of the Fair Tax (23% additive, 30% inclusive). Hence prices will stay the same (they say). I think we agree on that.
So the difference between you and me is that I said that the embedded taxes include the income taxes of the workers, whereas you say that it is only the corporate taxes. I confess that I could not find this explained in the Fair Tax book - it may be there; I didn’t reread the whole thing in the last 15 minutes.
If the Fair Tax on an item is only balancing out the corporate taxes, how does the government get paid the equivalent of the personal income tax that is no longer being withheld from the employee? I don’t see how that would work unless prices went up by 30%, although the Fair Tax people say that will not happen.
In fact, they are not. Sales taxes are collected by internet vendors who have a brick and mortar presence in the state to which they are shipping the purchase.
In states where the tax has not been collected and passed to the state by the vendor, sales taxes are still due, and need to be reported and paid to their state by the purchaser. Such purchases are by no means tax free, and people who do not pay the taxes on those purchases are tax evaders.
After posting this, I ran across an article in Maclean’s mentioning the Conservative deficit. Turns out I should check my cites; my source was a vaguely remembered post by Sam Stone, who apparently is as unreliable in describing his own country as in describing mine.
That’s horrifying. If this is in the wind, I need to get my plans for a nationalsocialist revolution ready to exploit the resultant widespread misery. Maybe read up on Hitler & Robespierre.
Can we consider that we are in special circumstance now?
I often wonder how stupid top level conservatives are, and I don’t mean that in a snarky way, but as to question their understanding of history. Surely they are aware of what happens when the poor get truly destitute, and when the income gap gets too wide. Historically at least, there is very little incentive for aiming to achieve that sort of society where the rich get exceedingly wealthy at the expense of the poor. If my stated goal was to avoid socialism, providing the fuel for a socialist revolution would not be on the list.
Which should then cause us to look at the capitalist revolution the Tea Party is trying to foster. A ground swell of people trying to get away from government oppression. It would then be in a liberal’s best interest to avoid feeding such a fire.
Unless you believe that the corporate tax is carrying the entire tax burden in this country, corporations will not be saving enough money (in the form of elimination of the corporate tax) to cut costs 23%, I doubt corporate profit margins at even a small percentage of corporations is at high as 23%.
A 23% consumption tax seems to be certain to increase price levels. On the other hand, after tax wage levels will increase as income taxes are abolished. The effect of abolishing those income taxes is HIGHLY regressive. Perhaps the really rich will step up to the plate and start consuming a LOT more to make up for th drop in consumption by the poor through upper middle class but even then, unless they consume ALL their income, 23% is probably not revenue neutral.
And don’t forget, one of the advertised outcomes is that people will save more, IOW spend less.
I think you mean increassing taxes or cutting spending.
A responsible legislator right now has to do both. They don’t get to pick one poison, they have to drink a poison cocktail, we are THAT deep in the hole. Cutting spending simply can’t do it alone and increasing taxes alone won’t do it either.
Well, the period following WWII was a “special circumstance” when we had to pay off war debt and the deficit spending that pulled us out of the Great Depression.
I don’t think it’s stupidity, I think they actually believe their rhetoric about the rich being benefactors of society because of all the jobs they selflessly create. And the richer they are, the more good they must be doing.
The problem being, of course, that they’re not selfless at all. Nobody needs extra encouragement to go out and become rich.
Looking again at federal revenue sources, cutting corporate taxes entirely really wouldn’t do much to the deficit. On the grand scheme of things, it’s almost small enough to be insignificant one way or another. As far as stimulus goes, if what employers claim is true, for $140billion would could completely eliminate corporate taxes, and then I assume unemployment goes to zero.
I’ve lived in Jamaica. I could see you from my front yard!
I think living in a country that is experiencing low taxes and a non-existent government should be a requirement for any one espousing a Libertarian philosophy.
