So Fildel Castro calls it quits.

[aurik]

How about instead of inventing your own situation, you respond to the one I posed.

Alright. So I did the math with prebate calculated in and the effective tax rate for the person in your example was actually .101, if I did it right. If they have another person in the household, their tax rate drops well below the wealthy person in your example, if I did it right.

Try to address the example I posed instead of modifying it.

The prebate doesn't make a difference to the basic criticism that I am making, which you still don't understand.

[Charla]

You can call it "psychological", but it's a pretty big policy point that the basic tax structure is progressive. If you accept that those with greater income tend to spend less of their income, then a flat sales tax will ALWAYS be regressive on income. The prebate only changes that near the poverty line, when it's significant relative to the individual's income and spending.

[Saga]

say hello to el presidante nueve (i think that's "new" in spanish)

http://www.cnn.com/2008/WORLD/americas/ ... index.html

HAVANA, Cuba (CNN) -- Cuba's National Assembly chose Raul Castro, Fidel Castro's younger brother, as Cuba's new president on Sunday.
art.raul.castro.ap.jpg

Raul Castro was chosen Sunday to take over Cuba's presidency from his brother Fidel Castro.

Fidel Castro, 81, who has ruled the country since the 1950s, announced his resignation last week in a letter published on the online version of the state-run newspaper Granma.

He cited his "critical health condition" and said, "it would be a betrayal to my conscience to accept a responsibility requiring more mobility and dedication than I am physically able to offer."

Castro entered the hospital in 2006 for intestinal surgery and transferred some powers to his 76-year-old brother Raul, the country's longtime defense minister.

On Sunday, the National Assembly -- Cuba's 614-member legislature -- chose through secret ballot the 31-member Council of State, which acts on behalf of the Assembly when it is not in session.

The nominees for the Council of State -- there is only one for each post -- must receive support from at least 307 members of the National Assembly.

Fidel Castro's daughter, Alina Fernandez, who lives in Florida, told CNN that Sunday's events were unlikely to significantly affect the country.

[SwampdonkeyPLD]

Try to address the example I posed instead of modifying it.

The prebate doesn't make a difference to the basic criticism that I am making, which you still don't understand.

I did address your example. You have to consider the prebate in the tax rate because while someone who makes 28k a year may spend 80% of it, they aren't taxed on the first 10k they spend, if they have one person in the household, therefore they aren't taxed at .23x.8.

I'm not disagreeing with the idea that people who make more save a higher percentage of their income. I'm saying that that doesn't mean they consume less and will pay less in taxes. The rate might be less, barely, but they will still be paying more total. If it's regressive in this one instance because the rate is barely higher, even though the rich person still pays more, then so be it. As long as it's not regressive in the sense that those who make less pay more.

[Charla]

Well that's just great, but unfortunately, it's not what the term regressive means.

[aurik]

Try to address the example I posed instead of modifying it.

The prebate doesn't make a difference to the basic criticism that I am making, which you still don't understand.

I did address your example.

No, you modified it by "adding in a prebate" and "exempting the first xxx" and other mechanics that change the specific numbers but don't change the fact that FairTax is regressive on income.

[SwampdonkeyPLD]

No, you modified it by "adding in a prebate" and "exempting the first xxx" and other mechanics that change the specific numbers but don't change the fact that FairTax is regressive on income.

I didn't add in the prebate and exempt spending to the poverty level to change numbers. Both of those things are a part of the Fairtax. The Fairtax exempts spending up to the poverty level depending on the number of people in the household. It does that with a monthly prebate. That means the person in your example isn't taxed on the 80% of their income that they spend, and their effective tax rate is barely above the wealthy person in your example.

For the sake of argument, your right I'm wrong, it is regressive on income. I just looked at a paper that explained how it's not regressive on income, but it's not worth it to me to read it over and over to understand all the numbers to keep arguing that point with you. Call me a moron if you want, but all in all, I still say for any imperfections the Fairtax is better than what we have now.

[aurik]

No, you modified it by "adding in a prebate" and "exempting the first xxx" and other mechanics that change the specific numbers but don't change the fact that FairTax is regressive on income.

I didn't add in the prebate and exempt spending to the poverty level to change numbers. Both of those things are a part of the Fairtax. The Fairtax exempts spending up to the poverty level depending on the number of people in the household. It does that with a monthly prebate.

Particulars don't change the fact that consumption taxes are regressive due to the monotonically decreasing Average Propensity to Spend.

That means the person in your example isn't taxed on the 80% of their income that they spend, and their effective tax rate is barely above the wealthy person in your example.

Good, you've just come to the conclusion that Fairtax is regressive with respect to income.

I just looked at a paper that explained how it's not regressive on income

Uh, except, it is regressive on income, as I demonstrated and you agreed. Propaganda can't change that fact.

[SwampdonkeyPLD]

Good, you've just come to the conclusion that Fairtax is regressive with respect to income.

In this instance yes, but not in all instances. If that person has a son or daughter then the prebate succeeded in eliminating the regressiveness.

Edit: I'm not saying you couldn't come up with more scenarios, but there are times when it is not regressive.

The gist of the propaganda was that savings are eventually spent, therefore consumption taxes aren't regressive with respect to income over a lifetime (or long period.) I didn't feel like reading to the point of understanding it, because most people I come in contact with never get this in depth with the Fairtax, so just out of curiosity, what would you say to that?

[aurik]

Good, you've just come to the conclusion that Fairtax is regressive with respect to income.

In this instance yes, but not in all instances. If that person has a son or daughter then the prebate succeeded in eliminating the regressiveness.

Edit: I'm not saying you couldn't come up with more scenarios, but there are times when it is not regressive.

The gist of the propaganda was that savings are eventually spent, therefore consumption taxes aren't regressive with respect to income over a lifetime (or long period.) I didn't feel like reading to the point of understanding it, because most people I come in contact with never get this in depth with the Fairtax, so just out of curiosity, what would you say to that?

It doesn't matter where you set a prebate or "poverty-exemption", a consumption based tax like the so-called FairTax ends up shifting the tax burden away from the wealthy and onto the people closer to the "poverty line".

Essentially, if the tax is going to generate anywhere near the same amount of revenue, it will be coming out of the pockets of people who are most ill-equipped to afford the increase. At the same time, any revenue shortfalls will manifest in the way of cutting public services, which in turn hits the pockets of the same class of people. All so that the wealthy and mega-wealthy can save an extra 10% on their income.

The core idea of the propaganda ("savings are eventually spent") is false, because a vast majority of that missing income are going to end up being spent in a non-fairtax environment (foreign investment/expenditure) or not spent at all (endowments).

[Khamsin]

Let's tax unspent income instead. Make all expenditures tax deductible, and adjust the tax rate accordingly.

Or alternatively, make all expenditures related to food, housing, health care, or capital improvements (for businesses) tax deductible.

The tax rate would be higher, but those who spent all their income on food, housing and health care will essentially not have to pay taxes because their adjusted gross income will be too low after all the deductions.

What would be the problem in that?

[aurik]

Let's tax unspent income instead. Make all expenditures tax deductible, and adjust the tax rate accordingly.

Or alternatively, make all expenditures related to food, housing, health care, or capital improvements (for businesses) tax deductible.

The tax rate would be higher, but those who spent all their income on food, housing and health care will essentially not have to pay taxes because their adjusted gross income will be too low after all the deductions.

What would be the problem in that?

Now we're getting somewhere...
http://en.wikipedia.org/wiki/Goods_and_ ... 8Canada%29

It works rather well, but it doesn't replace a progressive income tax.

[SwampdonkeyPLD]

It doesn't matter where you set a prebate or "poverty-exemption", a consumption based tax like the so-called FairTax ends up shifting the tax burden away from the wealthy and onto the people closer to the "poverty line".

Not always. If the person in your example has a kid it's not even close to being regressive. The Fairtax certainly isn't as top heavy as the current system where the top 1% pay 40% of all income taxes, and the top 50% pay 97% of all income taxes, but it's not so dramatic that someone who makes 40k pays 30k in taxes and millionare pays 40k in taxes. Our current payroll taxes are regressive anyhow.

At the same time, any revenue shortfalls will manifest in the way of cutting public services

Or the government won't be able to spend $175 on those blue tarps that Wal-Mart sells for $20! Revenue shortfalls don't manifest that way now though. And again, it's designed to be revenue neutral.

vast majority of that missing income are going to end up being spent in a non-fairtax environment (foreign investment/expenditure) or not spent at all (endowments).

I don't think there are any countries in the world that allow their business's to produce a product without a tax component. Under the Fairtax the U.S. would be the only country that does. Why would people suddenly switch to foreign investment/expenditure? Bill Archer, an ex-member of the House Ways and Means Committee who wanted tax reform, but was not for/against the Fairtax, used to quote an informal survey that asked 500 Japanese and Europeans companies what they would do if the U.S. eliminated all taxes on capital and labor. 400 said they would build their next plants in the U.S. The other 100 said they would relocate to the U.S. all together.

And I bet less than 5%, more than likely less than 1% of Americans have the ability to set up endowments. Even if they did, the interest on those endowments is usually spent.

[Khamsin]

It doesn't matter where you set a prebate or "poverty-exemption", a consumption based tax like the so-called FairTax ends up shifting the tax burden away from the wealthy and onto the people closer to the "poverty line".

Not always. If the person in your example has a kid it's not even close to being regressive. The Fairtax certainly isn't as top heavy as the current system where the top 1% pay 40% of all income taxes, and the top 50% pay 97% of all income taxes, but it's not so dramatic that someone who makes 40k pays 30k in taxes and millionare pays 40k in taxes. Our current payroll taxes are regressive anyhow.

At the same time, any revenue shortfalls will manifest in the way of cutting public services

Or the government won't be able to spend $175 on those blue tarps that Wal-Mart sells for $20! Revenue shortfalls don't manifest that way now though. And again, it's designed to be revenue neutral.

vast majority of that missing income are going to end up being spent in a non-fairtax environment (foreign investment/expenditure) or not spent at all (endowments).

I don't think there are any countries in the world that allow their business's to produce a product without a tax component. Under the Fairtax the U.S. would be the only country that does. Why would people suddenly switch to foreign investment/expenditure? Bill Archer, an ex-member of the House Ways and Means Committee who wanted tax reform, but was not for/against the Fairtax, used to quote an informal survey that asked 500 Japanese and Europeans companies what they would do if the U.S. eliminated all taxes on capital and labor. 400 said they would build their next plants in the U.S. The other 100 said they would relocate to the U.S. all together.

And I bet less than 5%, more than likely less than 1% of Americans have the ability to set up endowments. Even if they did, the interest on those endowments is usually spent.

Where would the products of those 500 companies be sold?

[aurik]

It doesn't matter where you set a prebate or "poverty-exemption", a consumption based tax like the so-called FairTax ends up shifting the tax burden away from the wealthy and onto the people closer to the "poverty line".

Not always.

Yes always. Learn2math. If the top 20% pay 10% less taxes, and the same amount of revenue is achieved, guess who is paying significantly more?

At the same time, any revenue shortfalls will manifest in the way of cutting public services

Or the government won't be able to spend $175 on those blue tarps that Wal-Mart sells for $20! Revenue shortfalls don't manifest that way now though. And again, it's designed to be revenue neutral.

Hence the reason why it's mathematically inevitable that it will increase the tax burden on people in the middle class.

vast majority of that missing income are going to end up being spent in a non-fairtax environment (foreign investment/expenditure) or not spent at all (endowments).

I don't think there are any countries in the world that allow their business's to produce a product without a tax component. Under the Fairtax the U.S. would be the only country that does. Why would people suddenly switch to foreign investment/expenditure?

The only things that would be equal:
1) buying US product in US market
2) buying foreign product in foreign market
The other 2 permutations are subject to double-taxation.

However, due to cheaper labor costs, the cost to produce a good in many foreign markets is a fraction of a cost of the cost to produce it in the US. So people will still be attracted to buying foreign goods because they're cheaper. Except now they won't want to buy them in US markets because of the double-taxation issue.

Let me put it another way. Money would be taxed at the consumption point in the US. Money is taxed at the earning point virtually everywhere else. So if you earn your money in the US and consume it elsewhere, you are evading a lot of tax.

Bill Archer, an ex-member of the House Ways and Means Committee who wanted tax reform, but was not for/against the Fairtax, used to quote an informal survey that asked 500 Japanese and Europeans companies what they would do if the U.S. eliminated all taxes on capital and labor. 400 said they would build their next plants in the U.S. The other 100 said they would relocate to the U.S. all together.

Glad to know you're basing your arguments on informal surveys and not sound mathematics. I'm sure the question wasn't biased or misleading at all either!

And I bet less than 5%, more than likely less than 1% of Americans have the ability to set up endowments. Even if they did, the interest on those endowments is usually spent.

And yet the core money is not, guess what, that makes your propaganda useless.