Writer Wants ‘Fair Tax’ Calculation
In another development highlighting the need for the Fair Tax, Congressman Dennis Kucinich, a Democrat from Ohio, excoriated the Treasury Department last week for failing to adequately trace banks’ use of taxpayer bailout money. The criticism included a $8 billion Citigroup Inc. loan to Dubai, a $7 billion Bank of America investment in China Construction Bank Corp., and a $1 billion investment in India by J.P. Morgan. Although the transactions are not illegal, Kucinich criticized the channeling of taxpayer money to foreign governments rather than the domestic economy.
If we had the Fair Tax, Kucinich could stop complaining, and it would be unnecessary to hit the banks over the head with a federal billy club.
The Fair Tax is a bill in Congress – H.R. 25 – to replace payroll, estate, gift and generation-skipping taxes, as well as corporate and individual income taxes. The Fair Tax replaces these taxes with a progressive national retail consumption tax. By un-taxing business and investment in a way that remains fair to low-income individuals, the Fair Tax, overnight, makes the United States the tax haven of the world.
Employed Americans are stimulated to spend their immediate increases in income (cash) and some several trillions of cash offshore returns to be invested in our economy. This beats all to hell the idea of borrowing and printing trillions to stimulate the economy and laying the burden of debt and inflation on generations that follow us.
The American way has always been to sacrifice now for the future of our children. Congress would have us avoid present sacrifice and let our children suffer for it later.
John Hanson
Bristol, Va.
Advertisement
Reader Reactions
‘Whatever’ seems to believe that all business managers think about is how they can hurt their customers the most. In fact, most businesses work very hard to provide their customers with a good product at a fair price. Most also realize that charging a bit less, and gaining market share, is a far more profitable business model then charging the most the market will bear.
And this is the model under which the FairTax functions the best. As companies see their production costs decrease (from cheaper raw materials and reduced business taxes), they have a choice; Try and hold the price up to increase profits, or try to capture a greater share of the market by dropping the price and increasing volume. As most experienced businessmen will tell you, the latter is the winning formula in a free market environment.
Where the FairTax is weak is when the market is controlled, either by the government, by one company having a monopoly, or by a cartel that sets prices. The latter two are illegal, so it is really on those business entities controlled by government that are a problem, and they are susceptible to political pressure, such as can be brought to bear by the public if the entity tries to keep prices high after costs have dropped (Think PUCA!!)
As to companies avoiding taxes, they are simply playing by the rules as set by the Federal government. In fact, CEOs have a fiduciary responsibility to maximize company profits for the stockholders, and this is one, legal way they do it. Don’t blame them for playing the game well. Instead, change the rules so we all can win, not just the few picked by Congress.
About Companies not paying taxes, I find it crazy that both arguments have been used by both sides. Ok in order for me to believe that we need the fairtax because Companies are getting out of paying then I have to believe most are not paying, so Fairtax placed on their site almost the exact thing that Fedup posted below, can see it here on the fairtax site-
http://www.fairtax.org/site/News2?news_iv_ctrl=-1&page=NewsArticle&id=10031
Then after fairtax had this on their site the ones against the fairtax made statements similar to kicker’s.
But now us who see the fairtax as a big optical allusion trick who see if companies really are doing all they can to get out of paying, keeping it for their salves or just don’t have to pay for someother reason and prices still have not dropped due to that fact. If what the Fairtax had on their site is true then you can not expect prices to drop because
1- if they are not making a profit now then they can’t past down the extra saving after the fairtax and for some magical reason they could then they still would not be making a profit.
2- If they are that money greedy in which they would go through all the trouble getting out of paying taxes so they can have more, then why in the world would someone think they going to now pass it down under the fairtax.
Its another one of them you can’t have it both ways, kind of things,.
Just remember, Neutral means “the same” and if someone gains it means someone else has to lose.
Some time ago, Fed_Up maintained that during the 1998-2005 period, 2/3s of the businesses didn’t pay any income taxes. Using this, he attempted to argue that, because a significant price drop wasn’t noticed, the FairTax claim of offsetting the new retail sales tax with the removal of embedded taxes was false.
What Fed_Up failed to realize is that the income taxes paid by companies are only one facet of the embedded taxes included in products. In addition, you have the employer portion of the FICA taxes, not only for the business, but also for all their suppliers.
In addition, the study cited by Fed_Up also includes information conveniently left out of his post, namely that the composite number of 66% was made up of 75% of foreign companies doing business in the US, and only 57% of US companies. It also “counted” any company that had failed to pay any taxes for a single year in the study period as “not paying”.
So, if a company failed to make a profit in one year, or had legitimate deductions that allowed it to “write off” their tax liability for a single year, they are counted as a non-payer for the entire period.
A somewhat different perspective on whether a permanent change in the tax structure would influence product prices, nes pas???
Now wasn’t this fun? Lets do it again.
Points 3, 4 and 5, no argument there, and nothing to add at the moment.
Point #2…While I agree that landlords might initially try to hang onto the “extra profit,“ rents will be forced to settle to a fair level because we are in a free market. This example is just as bad as the gasoline argument, but it gives me the opportunity to present what Fair Tax opponents REFUSE to acknowledge.
Purchasing power will be the ultimate final judge and will enforce a balance between wages and prices.
In short, businesses might raise or lower their prices, wages may go up or down, but when all is said and done, purchasing power will be AT LEAST what it is today.
Consumer choice in a free market and employer competition for customers and employees will combine to enforce a FAIR and acceptable balance between wages and prices.
This principle is inviolable in a free market and stands in defiance of Fair Tax opponents and all others who choose to deceive themselves.
So, rents may go up or down, BUT in the intervening months while purchasing power is readjusting BACK DOWN to its normal level, renters will enjoy an overall INCREASE in purchasing power.
Well, looks like he took the opportunity to duck the conversation altogether, which is just as well, since he won’t answer the question. As for the points you made David, well spoken on point #1.
Opponents try to confuse this issue of the prebate and conveniently overlook the fact that we already are paying out a huge amount in entitlements - which has NOTHING to do with the Fair Tax anyway. The Fair Tax is simply designed to collect the funds to cover all Government expenditures while neither cutting or adding to entitlements. It is a simpler, fairer way to collect the same amount of revenue that we currently take in. The prebate stands-in for exemptions (which are not entitlements, but even if they were, the Fair Tax would simply be replacing them) and when they are all paid out, the remaining revenue is equal to about 18.8% of out GDP, which is about what revenues represent now.
As I said, the conversation cannot move forward until he answers the question. I’ll leave it to you to accommodate his continual changing and deflection of the conversation. The floor is yours boss.
Actually, HadEnough, I sorta tuned out on that post when you called FedUp a socialist moron living in his dorm room and missed the question about gas prices. I don’t mean to tick off a fellow FairTaxer, but the way such factors as federal gas taxes and oil stock speculators affect gas prices, I usually use the production of a bicycle instead of gasoline as an example when trying to point out that lower costs of production will lower end product prices. Wow, is that a run-on sentence or what?
Anyway, I support FedUp’s efforts to stay on topic re: FairTax.
What are your thoughts on his five specific objections.
Did I do OK?
david, I appreciate that you have read fed_up’s last post. My last post is based responding to a post he made some time ago. After he made THAT post, I challenged him to answer a simple question, and he has been dodging it ever since. The conversation cannot move forward until he answers the question. Scroll back and read the history, and you’ll see he’s been dogding this question for quite some time. So, in light of that, and Fed_up’s desire to change the subject and move on to other things, I can appreciate how it looks like I’m not responding to a post made two entries ago
Advertisement