A tax analogy, who's really paying their fair share?
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I'm not suggesting they would exceed new cars in value. I'm suggesting people would find them much more desirable given the artificial incentive to buy used goods over new ones, which would mean more used car sales and more repairs of used cars, to avoid paying a high tax rate on a new car. The shift to used goods would be universal (aside from food and similar products) because it would be the only form of tax evasion, and no one wants to pay taxes if they can get stuff otherwise and keep more money.
This general shift to a preference for tax-advantaged used goods would be problematic because the economy is based on production. If output of new goods decreases, wouldn't prices for new goods necessarily rise? Or might the decrease you hope for be canceled out by a volume-related price increase?
Obviously. My point was that the corporate tax Ford pays is a tiny part of the price they charge for cars.
Again, if the tax is revenue neutral, there are no tax savings in aggregate. Whoever is paying the tax demands more compensation in order to pay it, which cancels out any seeming gains from the elimination of tax. You cannot have tax savings if no money is actually saved on tax, in the end.
That expense is significant but not probably not that significant. Even if Ford spends $1 billion a year on tax preparation, that's still a tiny part of the price of a car.
I'm not convinced of that last assumption either. You're telling us the tax burden isn't actually going to fall on anyone, which cannot be true. Lots of people have to lose if the consumption tax is revenue neutral, because the massive prebated group is now paying almost nothing. The losers will demand more compensation, because they want to be at least as well off as they were under the old system. They're not going to care about how fair it is that they're paying more for their consumption, they're going to demand more money.
I'm probably closest to the second choice. You earn more, you pay more. I would argue people who earn more benefit more from government services than people who pay less.
Without a government to quiet the masses and protect property rights, the masses have a tendency to rise up and take what they want. If you have a lot to lose, order is awfully valuable.
Pragmatism being more of a driving force in my life lately, I too am for the second choice. I like a flat tax, but something about your average guy paying the same percentage as someone who makes 10 times more than he does just rubs me the wrong way. I cant say there is anything wrong with it, I just dont feel right about it.
But idealistically, Im a FairTax guy.
Dr Kynes
Well-Known Member
repeatedly and insistently calling it "The Fair Tax" doesnt make it fair.
it is in fact noteably UNFAIR, and confiscatory. it serves the desires of a few well heeled investor-class robber barons, and places the tax burden squarely on the shoulders of those who have no ability to shift their taxes to others.
you can tax people directly, or you can tax people by taxing production, doing both simply taxes the people on the bottom over and over again, no matter how complex your scheme may be.
UncleBuck
Well-Known Member
i've never heard of a subway employee who camps out in the store all summer, or one who works for 30 consecutive 12-hour days come october.
if i hated myself, i would make ridiculous statements along the lines of "forest fires cause global warming", or "we need that pipeline from alberta to increase our domestic oil" or "show me iran's route to the sea!".
you get the idea.
UncleBuck
Well-Known Member
but a 32% national sales tax is so goddamn fair.
That sounds like jobs to me. More mechanics, more production for car parts and the like. Right now a lot of folks just throw shit away when it breaks, there might develop a good niche for someone to start a business to fix shit that we often just throw away now, like clothing, furniture, and various other things.
But it wouldnt be like taxes on a car now. Right now you reach a deal with the salesman in his office, then you are hit with the taxes in the finance office where many people already feel committed because they get you to sign something with a price quoted and next to it they write "+ Tax."
More good news for the economy, over all in my opinion.
Plus, think how much money you lose. I got a closet right now at my parents house full of old clothes that Ive had since I was in highschool. My mom cant bring herself to throw anything away. If we had the FairTax, I might be able to load them all up and get a couple hundred bucks at a second hand clothing store. Your "junk" laying everywhere wouldnt be junk anymore.
As to the question there at the end, I think the United States could lead the world in exports again. The only way for us to compete with the ultra low labor costs of third world countries is to make the cost of doing business in the United States zero. We have a very educated and high quality work force as compared to such places, we can take advantage of it.
Yep, but I could easily see the cost of all of Fords suppliers cost of taxes, and cost of payroll taxes for all the entities involved in getting that car on the lot reaching 10% without much problem. Just Ford's tax expense alone is 1.5% by your numbers. Not counting their supply chain and employee taxes. That doesn't fully off-set the 23%, but I think the car market more than any other is adversely affected by the high cost of labor and ex-labor benefits... Those auto-unions had some pretty sweet contracts and the Big Three pay out a massive amount to retirees. I think a lot of that got restructured in the bail-outs, so we're fortunate. New trucks are cheaper now than they were 5 years ago. Went looking with dad this week.
I think something a lot fail to consider is right now all taxes are currently paid by consumers. Sure, the government collects some from corporations, but corporations pass their tax bill on to the consumer. The FairTax acknowledges that reality and streamlines it.
But if every corporation in America has to spend so much, how much is tied up in the price of goods and services in tax compliance costs alone? Not even the tax, just the cost of calculating and complying with it. Its a terribly inefficient way to demand business to operate under.
In Tennessee we dont have income tax, just sales tax. It really doesnt feel like we have a tax at all. Even though we do. It is taken little by little, you dont even notice it. Yet the average Tennessean pays a comparable amount to his state as the residents of states with income taxes do. We also feel like we have a choice. If you dont want to pay tax, dont buy anything. Try not working and see how far you get, do you really want to be like UncleBuck?
It might be form over substance, but it just feels different. It gives you a different state of mind. Right now states with sales tax only have a nice competitive edge over states that have income taxes.
It is something you GIVE, instead of something that is TAKEN from you.
Besides, right now we talk about things in terms of "families in this income category" and if we had the FairTax it would be "families who spend this much money."
The FairTax would change everything.
How is it more CONFISCATORY than our current tax which just helps itself to whatever portion the government decides to part of your paycheck?
How is it less FAIR than our current tax that demands a 15% tax on everyone on the first (roughly) 100K of their income, which is again taken directly out of their paycheck?
Note that if one has no ordinary income, one does not pay those FICA taxes on any capital gains they might have.
The FairTax may be slightly regressive, but it is less regressive than our current tax structure, and therefore better.
UncleBuck
Well-Known Member
i'd mistake you for an englishman with such a penchant for understatement, but i already know you are a 30 year old from tennessee who makes sandwiches at subway instead.
Wow, you have to work one month out of the year.
You really dont get how a forest fire, that can put a massive amount of smoke into the atmosphere could block sunlight from the surface of the earth resulting in cooling temperatures?
You dont understand how getting oil pipped from Alberta to Texas could have a positive affect on our Domestic oil supply given NAFTA? Canadian oil and USA oil are treated the same in all terms because of NAFTA, so it is the same as domestic.
And I would be willing to bet the Irans rout to the sea has a fairly reasonable context that you will not provide. They do not have a harbor worth a shit. The port of Basra was a big reason for the conflict. They are as good as land locked as you can get with a coast line. Marginally better. off than Turkminastan.
If human brains were horse power, you would be a Geo Metro. They usually only run one month out of the year also.
And I know your a similar age, living in Oregon, and have a wife that is probably getting fed the weiner from someone else because her husband spends all his time on an internet forum.
She is a lucky woman.
UncleBuck
Well-Known Member
no, i work every month. the summer and early autumn are non stop. winter feels like off time even though it's not. when i get back home tomorrow, i will be trimming 8-10 hour days for 4 days before replanting, cloning, pruning, re-organizing and more.
it's fun though, so it doesn't feel like work, unlike making sandwiches for strangers all day every day.
global cooling?
wow.
the geo metro is basically a toyota corrolla with a slightly different body, they run like champions with minimal maintenance costs for hundreds of thousands of miles.
jesus christ, talk about unremitting failure.
UncleBuck
Well-Known Member
i have lots of free time.
if i had to endure a life of drudgery at the behest of the subway machine, i would probably spend more time figuring out how to steal jewelry from my own mother and staving off suicidal ideation.
I'm sure your brain will last for a while, it just doesn't preform very well, like the metro. College drop out.
UncleBuck
Well-Known Member
*perform
it depends on which metric you judge performance by.
based on my metrics of reliability, efficiency, ease of maintenance, and cost effectiveness, the geo metro is a champ. same parts inside as a toyota corrolla, and i had no problem motoring that old gal down the highway at 85 all day long.
why do i need to go any faster? that's a criminal moving violation in a lot of states.
i have gotten the toyota up to 110 before though.
I agree that used goods would create some new value, I just don't think it would come anywhere close to offsetting the losses of production in an economy presently based on consumption. Repairing a car or selling a used car has much less economic impact than producing a new one. And the government gets nothing from the transactions.
Third world manufacturing isn't about tax advantage. Apple needs 500,000 people to make iPhones for 12 hours a day for barely any pay, relative to what Americans would demand for the work. The tax burden is nothing compared to the cost of an equivalent amount of American labor. Erasing taxes wouldn't change the equation there.
Still the same problem. Someone is paying the tax. Someone is demanding more money to pay the tax. The tax burden doesn't disappear, it merely shifts. Whoever is holding the potato is going to want more money to do it. This chains in the same way that you're talking about Ford and its suppliers chaining.
If corporations didn't spend money on tax departments and instead paid the taxes, we would have to pay more for goods. Tax evasion is in the consumer's interest, since they would otherwise pass the cost along. They still pass the tax cost along under this consumption tax scheme because someone is paying the tax and someone is demanding more compensation to reflect that fact!
There might not be an income tax, but the sales tax rate is almost 10%, the highest in the country. Earn and spend $50,000 a year in Tennessee and you pay almost $5,000 in sales tax; earn and spend $50,000 in Virginia and you pay $2,600 in income tax and $2,800 in income tax. Tennessee is 40th of 50 states in GDP per capita. The lack of an income tax doesn't seem to be much of an advantage.
People who buy new cars will pretty much only buy new cars. I've sold cars. Not one time in my 16 months on the car lot did I ever show anyone new and used cars. New car buyers think buying a used car is buying someone's problem. Used car buyers think that you buy a late model used and let the other guy take the deprecation hit.
I think production would stay about the same, if not increase. Used cars are already SO MUCH cheaper than new, yet folks still buy new. Once we had a used 2011 Subaru Outback, it had 7k miles. The guy bought it and just a few months later traded it in, he didn't like it. The 2012 model had not came out yet, we were still selling new 2011s.
The used one sold the second time for $8k less than it did the first time. Several times I was showing people Outbacks, and we got to the end of the outback row and I would mention that one. This probably happened 6 times or so. Every time, the new car buyer did not even want to look at it. Even though they knew they could save some money.
New car buyers are not as concerned as you would think with a few thousand dollars, when they are, they look at a cheaper new car, not a used one. Its psychology or something.
People feel the same way about clothes.
So many of the things folks buy they buy not for utility, but for how it makes them feel. Very often, buying a used good couldn't make them feel the same way.
You're right, it wont make up all the difference. But it would make the US a more friendly to business nation. I probably did over speak about a lot of manufacturing coming back home. I think that manufacturing jobs that could be automated would come back. But you're right, no amount of tax relief can offset the use of damn near slave labor.
The FairTax leaves open the possibility of tariffs. I think we should use tariffs for goods produced by such means regardless of if we have the FairTax or not. As it turns out, free trade is unfair trade, and it has destroyed the american blue collar work force. Im for free trade with like minded countries that actually have an educated and fairly compensated work force.
I lol at how the labor unions are big Democrats, but Democrats passed NAFTA and other things that opened the door to free trade with third world countries resulting in the evaporation of jobs here.
Fair point, Ill address it this way.
A few pages back I posted a chart that showed the comparative effective tax for folks making 50k a year. The FairTax, assuming that such person spent all of their money on taxable goods and services, had an effective tax rate a couple points lower than they currently do. This does not consider that they could purchase used goods and save money.
So, realistically, under the FairTax, they are better off. They get 100% of their pay check, a monthly prebate, their effective tax rate is a point or two lower. Whats to complain about?
For the person making 100k, their effective tax rate is a point or two higher. But they get 100% of their checks, and with the prebate, they probably have about the same purchasing power. Also, folks at the 100k mark tend to put back some of their money for savings. This also lowers their effective tax rate, where now it does not.
This, in my mind is the biggest criticism of the FairTax, the upper part of the middle class seems to be the most heavily burdened, I think though, with all things considered, the middle class would be better off under the FairTax than at present, because right now the middle class is shrinking, and I think at least the FairTax would protect the middle class by preserving it. There would be more middle class jobs available because of all the business opportunity that would be created. One of the sources I had was a survey done that consulted dozens of companies who were headquartered overseas. Most said they would be very likely to relocate their headquarters to the United States if they passed the FairTax. Furthermore, the 100k + crowd are in a position to be able to bear the burden.
Tennessee is a poor example because it has always been a very poor state. Even during the old days (ante bellum) Tennessee was one of the poorer southern states. Tennessee cant grow tobacco as well as VA, NC, and SC, and we couldnt grow cotton as well as MS, AL, and GA. Tennessee never developed industry very much. And our mountains dont have coal like the ones in KY, VA and PA.
Basically, Tennessee has very poor natural resources, has a poor population, and there is really not much here to attract anyone to anything.
If you're looking for an economic comparison of income vs sales tax, look at Florida and Texas for states with sales taxes; they are doing very well.
But I will address one thing you mentioned. You compared the state tax burden of TN and VA. You point out that a $50k TN resident will pay more to the state than a $50k VA resident. Yet if you ask them, invariably, the TN resident will feel less taxed than the VA resident.
It all has to do with psychology and the effects of having your tax TAKEN from you versus GIVING your tax to the state.
Again, your experience relates to a market without a substantial artificial constraint. How would you know how consumers would react when you've never seen the situation? Adding $5,000+ to the price of a car (if it costs $15,000) while subtracting some portion of the price you otherwise would have paid on a used car (sales tax that is no longer owed) would undoubtedly change the pattern you observed. If the new car costs $15,000 and the great used car costs $8,000, paying a $7,000 premium might be palatable. If the new costs are $20,000 and $7,500, the premium rises to $12,500. The premium increases almost 100%. Now imagine that for every item. New Macbook Pro for $2,000 or used Macbook Pro for $1,550? What if it's $2,650 versus $1,500? The $450 premium might have been acceptable, but is the $1,150 premium acceptable?
Let's say it this way: in your regime taxation is voluntary. I can buy a car and pay $5,000 in tax or I can buy a car and save $12,500 on the purchase price. Even if my car fucks up, I can buy another used car and still have the $5,000 I didn't pay in tax. That's not the way it is now if you buy a used car! Don't you think increasing your purchasing power by not paying tax is an incredibly attractive lure? Don't you think rational consumers would be drawn to maximizing their consumption rather than losing their hard-earned money to avoidable taxation?
I think you underestimate the harm because you're convinced prices on new goods would decrease. I'd love to see a research paper on the subject and see how they got to their conclusion about prices decreasing. I'm certain many of the assumptions must be problematic, and as I already suggested, reductions in sales of non-tax-advantaged goods would presumably raise their prices, countering any positive effect anyway, because lower sales volume would have to cover existing fixed costs and yield demands.
I think rich Chinese people are the future hope of American manufacturing. When they demand too much money, considering all the other costs of being in China versus being in the United States, this country becomes far more attractive. And when they get rich enough they'll be able to afford buying our crap. Imagine, what if just 300 million Chinese people were earning $40,000 a year? It would be fantastic for this country.
The development of the rest of the world sucked a lot of life out of our country in the past couple decades, but the dividend will be paid in upcoming decades when once upstart economies are developed, wealthy, and importing more goods. In the meantime, the cheaper stuff we got from free trade definitely outweighs the economic impact of job exports.
So who's going to lose purchasing power because they're paying substantially more tax, with all of these winners? Whoever it is, they're going to demand more compensation because they have to pay the tax! If it's revenue neutral, for all those people to be better off other people are going to be worse off. They'll want more money! No one is ever content to lose! It's just like corporations wanting more of our money now to pay all the taxes they have to pay. Your whole response here seems to be talking around this point.
I actually said the VA resident paid more tax. It doesn't matter though, I don't think the psychology matters. At the end of the day you have $x. If you have $x, it doesn't matter how you lost the rest. People make economic decisions based on the fact that they have $x, not because of how they got there.
My conclusion is that people like paying less tax. It doesn't matter how they pay the tax so long as they pay less. The point in Florida and Texas is that people pay less tax--that's why they've been economic engines. In other fast growing states with income and sales taxes people likewise pay less, and they're economic engines too. People are fleeing taxes generally when they leave states like New York and New Jersey, not fleeing particular forms of tax.
kelly4
Well-Known Member
So, when UB makes a claim, it is on us to prove him wrong? That is what you are saying right?
That is why I started talking about the moon. Admit you are wrong and move on...or never ask for a citing or proof again.
I have a 15" cock...prove me wrong, Fin4.