That war on greed video is painful.

$1,300,000,000 per day! wow!

$51,369 per hour! wow!

KKR

A second language? Woah... what's that? I have discovered that most anglophones, be they Candian, Australian, from the United States, or British, just don't speak other languages because English is the language that most people in the world speak. This is a decided disadvantage for those who only speak one language fluently.

Ya, Cmmmm... depressing... for some people. The thing about life here is that as long as nothing goes wrong, life is exquisite.

But we live in the land of greed.. materialism... dog eat dog... I really don't know how this will ever change...

And for all of those Canadians and Australians and Brits who are rolling their eyes at this point.. yes, compared to the United States, you should be rolling your eyes. But if you compare yourselves to other European nations, you're ever bit as materialistic and selfish as the U.S. is...

The War on Greed video is indeed appalling. Greenwald didn't even have to get particularly Dickensian either; the superposition of Kravis with people earning something near the median income, rather than those at the bottom, is particularly jarring.

And yet, you'll get middle class posters here (yes, I'm thinking about you, Syngas) who'll defend a tax structure in which the marginal tax rates on Kravis are substantially lower than those on median income earners. Pass the Kool-aid, please.

Thanks for thinking of me Tim ;-}

Couldn't all that have been said about Buffet, Soros, Turner or Gates? Yet I never hear anyone from the left take a shot at them.

I particularly liked the part where they asked what they would do if they could live in one of the mansions for the holidays. They may not have much material wealth, but they do seem to be rich with the spirit of life. I would wager when they aren't around someone telling them how poor they are, they are likely much happier than Mr. Kravis.

This shouldn't come as a shock to you Tim, but I think we have a horrible tax system. I would love to see the income tax, payroll taxes and all the tax breaks politicians have put in there to buy elections thrown out. Replace it with a sales tax with refunds (or prefunds) for the first 20-30k of spending. That way, the poorest people wouldn't pay any federal tax (not even the regressive FICA and medicare taxes). No more write-offs, no more tax credits, no more deductions, no more complicated depreciation strategies, no more death taxes etc...

Read more about the Fair Tax

I should have proof read that one! Oh well.

Syngas, you are talking about a flat tax, and that is a horrible idea for one very simple reason. The very rich make so much money that their consumption would never in a million years out-pace the amount of money they make from interest on their investments alone. So you would be guaranteeing that America have a very permanent upper class. Thats a very destructive thing for democracy and representative government. Representative government simply starts breaking down when you have a permanent aristocracy running the show. This is an issue that goes beyond the idea of fairness and social justice, its really an issue of what kind of government and society you really want to have. A flat tax, even with generous refunds for the poor, would create a very static society.

I can see how you might view this as a flat tax but I think this particular variety avoids some of the problems you describe. The case you make would be the same whether we used the Fair Tax or the current income tax system - I think you'll agree the Kennedys and Rockefellers to name a few got rich under the income tax system and have had no trouble staying rich because of all the loopholes they get for backing (or being) politicians.

First, very wealthy people don't put much of their money in bank CDs. They usually put their money in hard assets (real estate, stocks, commodities etc) but when they do invest in interest bearing securities, it is usually the tax-free kind - which always has a lower yield than the taxed variety. Eliminating tax on interest would lower the rate investors demand from the credit market. The only change would be that all interest bearing investments would be tax free. No real change for the rich man in that respect, but if you need to borrow money, it will be cheaper.

Second, this tax system introduces some new risk for the wealthy. Our current system now allows people who lose money in the stock market, real estate, commodities etc... to carry forward any losses they may have to offset the gains they may have in subsequent years. Grooming your portfolio in December and January to maximize tax deductions will no longer be fruitful with the Fair Tax.

Third, rich people die too! While some of their kids make wise decisions with their inheritance, most (like Paris Hilton) find incredible ways to blow it all very fast and under the Fair Tax, nearly all of their spending would be taxed at 23% or 30% depending on if you are using the inclusive or exclusive methods.

I hope that helps.

The fair tax as proposed on that website has a few major flaws:

1) "Poverty" level people don't pay any tax, that's good. However, anyone that makes up to 25-30% more than poverty then falls to Poverty levels (due to 30% of their income being taxed on goods they buy, assuming the worst case scenario that they buy mostly goods that don't fall in the "exclusion" category). These people would be effectivly living at poverty level, but would be unable to recieve any of the government help for those who do live in poverty (since the takehome is more than poverty), removing any sort of safety net for these inbetweeners. Using Utah numbers, that effectively increases poverty levels from about $22,000 to almost $30,000.

Second, comes the fact that all of your taxes don't go straight to one big federal pot. You pay state taxes, property taxes, etc etc which all go to pay different funds, i.e. property taxes for school funds. How do you reconsile if a local community wants to raise the "fair tax" to get better schools? All the sudden you have to have an agency dividing up the money

The fair tax as proposed on that website has a few major flaws:

First, "Poverty" level people don't pay any tax, that's good. However, anyone that makes up to 25-30% more than poverty then falls to Poverty levels (due to 30% of their income being taxed on goods they buy, assuming the worst case scenario that they buy mostly goods that don't fall in the "exclusion" category). These people would be effectivly living at poverty level, but would be unable to recieve any of the government help for those who do live in poverty (since the takehome is more than poverty), removing any sort of safety net for these inbetweeners. Using Utah numbers, that effectively increases poverty levels from about $22,000 to almost $30,000.

Second, comes the fact that all of your taxes don't go straight to one big federal pot. You pay state taxes, property taxes, etc etc which all go to pay different funds, i.e. property taxes for school funds. How do you reconsile if a local community wants to raise the "fair tax" to get better schools? All the sudden you have to have an agency dividing up the money, voila, you've got a (smaller) irs.

Third, what do you do about international purchases? You tax american goods at 30%, and all of the sudden the enchange rate in canada doesn't look so bad anymore. Online sales will go through the roof and american businesses will suffer, unless you want to also put a 30% increase on the terriff for all foreign goods.

There is a lot of problems with "fair tax" that i've never heard real answers to. Care to help me out here?

*sorry for the double post, smacked the "post" button on accident.

Absolutely! Thanks for asking ;-)

First, the prebate goes to everyone - not just the low income housholds. Income has nothing to do with this tax. Earning over poverty level would have zero effect on your tax.

Second, the Fair Tax is only proposed to replace the FEDERAL income tax. What local communities decide to do to collect tax is up to them - just like it is today. No change.

Third, the sales tax is only collected at the consumer level. If a product is exported to Canada, it's up to the Canadians how to tax it. Products imported to the US from Canada will be taxed when they are sold to the consumer. If anything, this will make US manufacturers more competitive (no built in tax on their products). As far as the internet, sales tax would have to be paid on consumer level items there as well. It wouldn't be that hard to set up a clearing house for such purchases. If you decided to avoid the tax, you would be a tax cheat and subject to prosecution (not unlike today).

Any more concerns?

How do you enforce the prebate? Give $7,000 to every family at the beginning of the year?

Is the prebate per family? Income Earner?

What about the impact this will have on our ability to compete in the global economy: Here's an example---

Say a Design program is made in France, everyone in the world gets it for $1,000. Here, we pay $1,000 + 30%, which when you buy for 150 licenses adds up to the point where an american company (the consumer) already has a 30% cost increase from it's foreign counterpart buying the same program. Doesn't this hurt us globally?

The prebate is paid out monthly to each household. The prebate is determined by how many adults and children live in the household. Chart it's about the third answer on the page.

Business to business purchases for the production of product or services are not taxed. (first answer from previous link). I'd say that gives us an edge globally.

World is flat, tax is flat...hey, what about the kooky philosophers? Here's Eric Alterman, yesterday, on Kant: "Immanuel Kant was a real piss-ant who was very rarely stable."

I've been re-reading one of the great philosophy texts of our era, Pirsig's Zen and the Art of Motorcycle Maintenance. Check it out -- he's got the perfect perspective on the disconnect between Kant's metaphysics and his aesthetics, and there's a terrific review of Poincare in there as well. Excellent stuff, especially if (like me) you haven't read it in 30 years!

Since I lit the fuse on this subject, I feel obligated to comment on the “Fair Tax” and the “death tax”.

(1) As a general rule, the label given to any scheme proposed by a bunch of right wing assholes these days is almost guaranteed to actually describe something which is the opposite of what the label means. Like Bush’s “clear skies”, “enhanced interrogations”, and “humane bombing”. “Death taxes” are actually inheritance taxes – like them or not, dead people don’t own anything, so only people who stand to inherit the wealth of people who have died are paying the tax. I know the wingnuts love the term, but it is still bullshit. Income taxes are levied on incomes, sales taxes are levied items to be purchased – the “Fair Tax” is a huge sales tax and labeling it “fair” should only ring alarm bells – any tax that requires a propagandistic label is probably a scheme to enrich those proposing it and impoverish those to whom it is being marketed. (2) Another huge alarm bell: virtually every sponsor of the GST (“Fair Tax”, henceforth to be more accurately labeled as the Giant Sales Tax) is a Republican – and among such Republicans are some of the biggest assholes in Congress. (Yeah, I know – entirely subjective, but I doubt that many readers on OGM will disagree.) (3) Any 21-year old who thinks the GST is a good idea either stands to inherit a lot of money, or is a typical 21-year old – idealistic, but STUPID. Want to buy a house? Get ready to pay a $36,000 tax on your $120,000 starter home. You’ll have to roll that $36,000 on top the loan and none of the interest you pay on the loan - or the interest on the tax – will be deductible from the GST. But don’t feel bad, a 62 year old millionaire who already owns his home, several cars, and who will not have to worry about paying income tax on the earnings his portfolio is churning out will thank you. Of course, you can probably dodge some of the GST in what will probably become massive black market underreported sales. Reported prices of individual-to-individual used cars will fall as under-the-table cash payments rise (bet the car dealers will love that!) (4) The same GOP assholes who are largely responsible for government that accumulated the debt from which a big bite of your GST contributions will be taken (the National debt) are thrilled to have you bite on this intergenerational bait-and-switch scheme. Old rich people don’t consume much, and they have saddled young people with huge interest payments – and the GST helps make sure that those young people are indeed the people who will pay for just about all of it.

You can thank Ronald Reagan for people like this Kravis dude. Before Reagan's tax cuts in the 1980s for America's wealthiest, these kinds of personal fortunes were all but impossible to amass since the age before income taxes. Even if lowering taxes were a boost to the economy (and they aren't), the income disparities they create undermine democracy and our notion that all men are created equal.

Nice rant Tim,

Since you did very little to actually address the facts (red flag that you really don't know anything about it), I'll just knock down the few facts you tried to present.

1) Used products (yes, even cars and houses) are not taxed.

2) With very few exceptions, the people who buy $120,000 starter homes do not itemize their deductions - they take the standard deduction.

3) The net price of new goods will not necessarily go up with a sales tax if you eliminate the income and payroll taxes currently being built into the cost of production. The products would become cheaper to manufacture.

4) That 62 year old millionaire you described will probably be dead in 14 years and his kids and grandkids will go on a massive spending spree. The 75 year old millionaire you aren't thinking about will probably die next year he/she has kids and grandkids too.

Are you really worried the Fair Tax might let the public find out how much government really costs every time they buy something?

America had a more fair tax system until is was dismantled, starting with Reagan and has been under assault ever since. Fair Tax, it sounds pretty ridiculous. I think Tim´s assesment (rant?) was spot on. And where do you live where you can buy a house for $120,000? That buys a decent parking spot in Seattle. I also agree that just the name, Fair Tax, is enough to avoid it. Show me a country where this has worked. The progressive income tax worked well when it was-is properly administered.

I called it a rant because Tim's primary points were fallacy. I'll paraphrase a few of them: Republicans like it and Republicans are assholes so I don't like it. 21 year olds are stupid and I think some 21 year old somewhere likes it so I don't like it. I don't like the name Fair Tax so I don't need to actaully find out what it is and neither should you!

I could never get away with that crap here.

Tim doesn't keep his educational credentials a secret. He knows these are all fallacious arguments, but because he is in friendly territory here, or because he thinks you all are too stupid to see through his fallacy, he uses them anyway. Whether you like the ideas contained in the Fair Tax bill or not, you should feel insulted by anyone who knowingly uses fallacy to sway your opinion.

Not that it matters much, but you can buy a decent starter house in Kansas City for under 120K. To be clear, Tim said 'home' - not 'house'. I don't know that much about coastal real estate prices but I'd bet you can find a condo, townhouse or other home in a multi-family building for under 120K in Seattle.

Ok, Business to Business goods are not taxed huh? Who is going to enforce that? Who decides? What stops me from being an "independant contractor" and calling everything but my house a "business expense"? Who is going to stop me if there is no IRS? Even better, what constitutes an "end item" product?

I can ramble off a whole LIST of things that can be used for production by one business or another: Very few things in society would constitute an end item. For example: Video Cameras, Cameras, Computers, Software, Cars, Trucks, Airplanes, Fuel for those vehicles, Business buildings, building materials to build those buildings, stoves, microwaves, appliances etc... ALL of these things can be used to create something else, or be used in business to provide a service, all would be UNTAXABLE without some sort of government entity watching who buys what and what they consider a business expense, Therefore, You still have an IRS and deductions. I only listed items that I use on a regular basis, and every single one of them I use would have been tax free. The computer I use at work, the food I eat, the bus i ride on, the computer at home I use for work, the infrastructure I use every day would be untaxed, I would essentially STOP paying taxes under a "fair tax" system until I went to the store to buy "luxury" items. I wonder how many people would fall under this same category.

Good point MEC,

While the Fair Tax bill would abolish the IRS, it would not entirely eliminate the ability of government to audit tax cheats. While I'm sure there will be tax cheats just like there are today, you will need a 'registered seller certificate' in order to make purchases tax free. With only 20 million 'registered sellers' as opposed to 140 million filers under today's system, enforcement would be a much smaller task for the government.

I'd quote them, but because the explanation is so long, I'll link you to the applicable answer: Link

"fair tax" is Reganomics in a skirt - From the Fair tax site --

If, however, they use their money to build job-creating factories, finance research and development to create new products, or fund charitable activities (all of which help improve the standard of living of others), then those activities are not taxed.

How is this any different from our current tax system? Sounds like deductions to me, since there cannot be a boiler plate "chairitable activity", and taking my Blackwater friends out to dinner could be seen as "charity", as it is now under our tax system. It doesn't fix the problem, it changes what it's called.

Under the federal income tax, slow economic growth and recessions have a disproportionately adverse impact on lower-income families. Breadwinners in these families are more likely to lose their jobs, are less likely to have the resources to weather bad economic times, and are more in need of the initial employment opportunities that a dynamic, growing economy provides.

This doesn't make much sense in the real world. If it's a recession, people will be laid off, lowest income first. If a company's products aren't selling because a recession, Low income people will still be laid off! I don't understand how Fair tax fixes this. The fair tax automatically removes recession and makes us a growing economy? I highly doubt it for some reason.

and this garbage...

When the FairTax removes income, capital gains, payroll, and estate and gift taxes, the pre-FairTax prices...

Another red flag

In addition, U.S. companies with investments or plants abroad bring home overseas profits without the penalty of paying income taxes, thus resulting in more U.S. capital investment.

Also, i'm still not convinced

As far as the internet, sales tax would have to be paid on consumer level items there as well. It wouldn't be that hard to set up a clearing house for such purchases.

Sorry for the long posts, this just smells off to me.

With only 20 million 'registered sellers' as opposed to 140 million filers under today's system,

WTF!? So only the first 20 million companies to apply get "sellers certificates"? I can only guess what companies would be getting those certs! 120 million businesses all of the sudden get an production cost increase up to 23%, and 20 million lucky companies get to drop any sort of taxes? And this is called "fair tax" WTF?

One more thing - The fair tax site keeps calling it a progressive tax, which is a bold face lie. Just because there is a rebate check every month for everyone doesn't mean it's progressive. Just because The richest man in the world spends more money than me (and therefore, more taxes), doesn't mean he pays HIGHER taxes. To be progressive, Millionaires would be taxed at 40% and I would be taxed at 5%, that's a progressive tax, Not whatever that website keeps calling progressive.

20 million is an estimate MEC. If you prefer a tax system that includes regressive payroll taxes and endless deductions for people like yourself, good for you. Don't look for solutions, you might actually find one.

20 million may be an estimate, but the actual MEC isn't going to go up to 140M, i gurantee you that. Now, getting rid of corporate personhood and therefore corporate taxation, is a good idea (as long as their lobbying goes out the window too), Fair Tax just isn't the answer.

Dude!

If you make 30K, and spend all of it on taxed items (not likely!), your tax would be:

30000 * .30 = $9000 $9000 - $2348= $6,652 $6652/30000 = 22%

If you make 200K and spend all of it an taxed items, you tax would be:

200000 * .30 = 60000 $60000 - $2348 = $57652 $57652/200000 = 28%

That is progressive by definition!

Now if you factor in the fact that most people who make 30K do not buy new cars, new houses and don't hire people to do tasks they can do themselves, the tax become even more progressive.

MEC was an acronym for Magnolia Electric Company.

You don't like it. I get it. Your objections seem weak to me.

Sorry Syn: not falling for that math. Look we can do the same thing with different numbers to show that our tax system now is MORE progressive than the so called "fair" tax.

$1,000,000 *.30 = 300,000-2348= 297,652 297,652/1000000= 29.7%

$5,000,000 *.30 1,500,000-2348=1,497,652 1497652/5000000=29.9%

and so on logarithmically (is that a word?) up to 30% at $infinity.

Here is almost the exact same example you provide on Wikipedia, with today's taxes..

Wage income $40,000 200,000

Allowable deductions 8,450 51,430

Taxable income 31,550 148,570

Income tax 4,445 46,725

Social security tax $3,060 $8,740

Total tax 7,505 55,465

Rate paid on gross income 19% 28%

Fair tax rates (according to fair tax math) is 24% and 28%

Ah, look at that, the rich pay the same/less taxes under fair tax (since someone at $200,000 is almost at the tax ceiling)and the middle/lower class pay a higher tax. Surprise surprise. No wonder Republicans want it.

Did you watch the video that sparked this whole thing? I'm guessing not, because it basically contradicts everything you just said. Either that or you think the video was bogus to begin with in which case you should have said so from the start.

Well, i'm trying to work this crap out. Fair tax isn't going to solve the problem as far as I can see. The guy in the video is a slimy criminal in my book, and he would still find a way to evade taxes. He'd just stop living in the US. He'd run his company from overseas, keeping his businesses here (since no taxes for his businesses) but live somewhere else where he doesn't have to pay 30% on everything he buys. Italy and England would be the CEO capitals of the world.

Dude!

If you make 30K, and spend all of it on taxed items (not likely!), your tax would be:

30000 * .30 = $9000 $9000 - $2348= $6,652 $6652/30000 = 22%

If you make 200K and spend all of it an taxed items, you tax would be:

200000 * .30 = 60000 $60000 - $2348 = $57652 $57652/200000 = 28%

That is progressive by definition!

Dude! ?? LOL! What are you, a wittle highschool kid or something?

If not for the $2348 deduction, then everyone's tax rate would be 30%. The more that someone earns, the more inconsequential that the $2348 deduction is and so the percentage increases at a decreasing rate and is, therefore, not at all progressive.

Note that someone who earns one million dollars a year would pay 29.7% if we follow along with Syngas' little scenario.((1000000)(.3)-$2348)/1000000 = .297

But then we don't expect someone earning $200,000 a year to spend the entire $200,000 on taxable goods, now do we? And of course we don't expect someone who earns a million dollars a year to spend all of that.

So of course this Consumption Tax is not progressive.

Snyngas, you fail to address MEC's points in any detail. You say, "Your objections seem weak to me"? Oh yeah? Please go into some detail on each and every point and why the point made was weak.

Also, please explain how the video contradicts the points made.

Thanks for finally coming to the table JoAnn!

Not many high school kids could put the smack-down on Tim like I did, but if it makes you feel good, sure, I'm just a wittle high school kid ;-)

I don't think you disproved the Fair Tax is progressive. It may not be as progessive as you would like but it is progressive. There would be nothing to stop the government from increasing the prebate - which would make it more progressive.

This is a tax that rewards people for saving money instead of penalizing them. It completely eliminates federal taxes for the lowest income earners, and discouragaes the conspicuous consupmtion I hear you whine about on a regular basis. Yet, you are against it.

Go figure.

Pick a few of MEC's questions you would like answered and I'll gladly answer them.(Got a date tonight so it might not be till tomorrow!)

Oh the video the claim was made that "Mr. Kravis borrows millions of dollars and gets rewarded with huge tax breaks that make it so he pays less money percentage wise than his maid."

JoAnn, Thanks for stating my point more clearly.

Syn, I'm confused: First, Fair tax supposedly boosts the economy by increasing spending, but you also claim that "and discouragaes the conspicuous consupmtion "

SO, which is it, Good for the economy by boosting sales of goods, or decrease consumption?

but if it makes you feel good, sure, I'm just a wittle high school kid ;-)

Well, dude, u act like a wittle high school kid.

I don't think you disproved the Fair Tax is progressive. It may not be as progessive as you would like but it is progressive

Care to address specifically the points that I made rather than this blanket statement which means nothing?

Pick a few of MEC's questions you would like answered and I'll gladly answer them

I pick each and every one of them. Address each and every one of them instead of doing what you accussed Tim of doing.

Are you actually attempting to state, Syngas, that people spend all of their income on taxable goods in this system? Because it is only with this ridiculous assumption that the Consumption Tax (otherwise disingenuously referred to as the "fair tax") even approaches being progressive. Also, did you notice the little teeny tiny difference in the rate that someone earning $200,000/yr pays as compared to someone earning $1,000,000/year? Are you a millionaire or just a toady?

It's clear that this proposed Consumption Tax is fair to the poor and to the rich... but all of those in between get screwed.

Oh the video the claim was made that "Mr. Kravis borrows millions of dollars and gets rewarded with huge tax breaks that make it so he pays less money percentage wise than his maid."

MEC already debunked this facile statement, but you didn't address her/his well-thought-analysis now did you?

What I meant by "this facile statement" (I realize I have to spell this out) is "this facile conclusion" of yours..

You guys (and gal) have changed my mind! Lets keep our current system of regressive payroll taxes, endless tax breaks for the rich, hundreds of billions of dollars to accountants, lawyers and software companies just to find out how much we owe and millions of stressed out people pulling their hair out the first couple weeks of April. That has worked so well! If it ain't broke, don't fix it. Right? Hey, I'm conservative, I don't want change, what the hell was I thinking?

Kudos to you JoAnn for sticking up for those downtrodden folks who only spend $200,000/ year. You're a real champion of social justice!

You guys (and gal) have changed my mind!

How disingenuous. You know or should know that no one here thinks the current system ideal. You are quick to point out the hyperbole of others, but then engage in it yourself. Hypocrisy, Syngas makes you proud.

They seem to be doing a fantastic job of defending the current system, Norm. Don't believe me? Check MEC's post on Dec.13 at 12:21pm.

Yeah, sure we all know he was ignoring the social security tax the employer was paying on behalf of the employee which would have boosted the 40K earners tax to 24% (same as the Fair Tax), but that wasn't his point was it? The point was that Syngas is wrong because, well, he's Syngas! Good people just don't agree with Syngas, dammit!

(7505+3060)/(40000+3060)=.2453

note: FICA is not collected on wages over 94K.

I pointed out other's fallacy. Correct me if I am wrong, but as far as I know, hyperbole is not a fallacy. You're charge of hypocrisy does not stick.

The fallacy is a straw man fallacy.

That has worked so well! If it ain't broke, don't fix it. Right?

You create an argument that you attribute to Liberals that they don't hold and then attack it.

Shame shame.

You're stretching Norm.

As you know, that entire post was clearly hyperbole (exageration). The only fallacy you can find in my arguments are within the context of hyperbole. Weak, very weak.

Good job of changing the subject though! I'm sure Tim and MEC are grateful.

I can't remember JoAnn,

Did you graduate from that MBA program? Thoughtful analysis indeed!

Sygas,

What part of my analysis do you not find thoughtful? Specifics please.

Remember what you told Tim?

Nice rant Tim,

Since you did very little to actually address the facts (red flag that you really don't know anything about it

And yes, I graduated with Honors Syngas. I also have a degree in economics and a degree in accounting and I worked most of my life as an accountant/financial adviser in various corporations.

I'll admit, though, that i spend very little of my time thinking about these kinds of things these days as I now immerse my mind in the arts and literature and philosophy.

But go ahead and bring up some specifics since you seem to think that you're an expert in this field.

I was referring to your calling MEC's analysis 'well thought' - specifically referring to his 'debunking'. Which omitted over $3000 tax on $43000 in earnings. You know, the one he copied from Wikipedia - the online encyclopedia by laymen, for laymen.

I would expect someone who graduated with 'Honors' from an accredited MBA program to have caught that glaring omission, not praise it as 'well thought'.

Now, to my amazement, you tell me you also have a degree in economics and accounting and have actually used those degrees to advise people with their finances! Gasp!

I could get more specific, but I don't want to hurt your feelings.

I don't claim to be an expert in anything - I'm a 'widdle highschool kid' remember dude?

Syngas,

The well-thought-out analysis from MEC that I was referring to was this (And you know it. Your little games don't fool me):

He'd just stop living in the US. He'd run his company from overseas, keeping his businesses here (since no taxes for his businesses) but live somewhere else where he doesn't have to pay 30% on everything he buys. Italy and England would be the CEO capitals of the world.

You never addressed this comment from MEC.

Which omitted over $3000 tax on $43000 in earnings.

Where did MEC mention $43000 in earnings? Anyway, MEC's calculations were so summarized, I really didn't know what he was talking about. But I've worked out the numbers myself. If I've made a mistake, please tell me. You won't hurt my feelings, I promise.

2007 figures assuming both people are single, under 65 and not blind (and assuming a lot of other things, but since we're giving simplistic examples here..)

Standard Deduction = $5350

Exemption = $3,400 for the guy earning $40,000 Exemption = $2,629 for the guy earning $200,000

Taxable income for federal income tax: $31250 $192021

Federal Income tax $782.50 + (.15)(31250-7825) = $4296.25 $39148.75 + (.33)(192021-160850) = $49435.18

Social Security Tax (.062)(40000) = $2480 (.062)(97,500) = $6045

Medicare Tax (.0145)(40000) = $580 (.0145)(200000) = $2900

Total taxes for the guy making $40000 = $7356.25

$7356.25/$40000 = 18%

Total taxes for the guy making $200000 = $58380

$48380/$200000 = 29%

Since this thread isn't dead (perhaps it deserves to be☺), and since I’ve been too busy and couldn’t respond, I’ll give it a try now.

Syngas, As you correctly pointed out, I didn’t know much about the specifics of the GST, and you properly attacked the weakness of my ‘rant’ – the clearly inappropriate house purchase example I gave. I know a now know little more, though undoubtedly less than you about the specifics of the GST.

As to the other points in my 'rant' – let’s start with your caricature: “Republicans like it and Republicans are assholes so I don't like it.” To a small extent – I’m guilty as charged. But what I meant to say was, ‘Asshole Republicans like it, so beware.’ Seemingly a small change, but significant. Among Senate Republicans, for example, supporting the GST are some major league assholes: Saxby Chambliss (sponsor), Tom Coburn, and James Inhofe (co-sponsors). I could expound on the reasons I think these particular guys are assholes, but let’s not digress too far. To be fair, however, Richard Lugar is listed as ‘For’ and he is one of most decent Republicans in the Senate – an exception which illustrates the significance of my wording: not all Republicans are assholes (you, for example ☺), but the congressional supporters of the GST are heavily weighted with those who are. In my opinion, anything they support deserves suspicion - more on that below.

I stand by my attack on the name, ‘FairTax’, because I raised my objection in a general sense – be suspicious of anything with a feel-good name. (Like ‘Patriot Act’ - How could I have left that out!) If a neutral descriptor like “consumption tax” or “sales tax” isn’t adequate, it seems likely that its proponents don’t want you to think too hard about what it really is.

But enough about reasons to be merely distrustful of the GST. Two major specific reasons to oppose it:

(1) William Gale (http://www.brookings.edu/experts/g/galew.aspx) has argued, the rates being pushed by the GST’s proponents are not close to realistic. His articles on the subject suggest that rather than 30%, the GST rate would have to be closer to 38%. I’ve read his stuff in the past few days and find it convincing – though I’m sure he has his detractors as well. (See my digression below.)

(2) When it comes to marginal tax rates, the GST offers the lowest rates to those with the highest incomes – period. Sure, the GST proponents have thrown in a poverty-line rebate, but I’m unimpressed. So what if conservatives acknowledge that the serfs should be allowed enough money that they eat and sleep and come to work. Even Arthur Laffer’s supply-side hocus-pocus emphasizes marginal tax rates. No matter how you slice it, people with high incomes have the easiest time lowering their marginal tax rate under the GST – they can choose to not spend with the least negative consequences. Saving is much easier when your making a choice between a house with a tennis court and one without, than when your choosing between a houses where the schools are decent and one where they aren’t, isn’t it? In my opinion, the FairTax just isn’t fair. As has been pointed out above, the inadequacies of the current tax system do not justify putting in a new bad system in its place.

Two related side-issues:

(1) Some silly arguments. Paris Hilton's spendthrift ways are bizarre argument for relying on trickle-down of inheritances - that wasn't even a little bit serious was it? And "Are you really worried the Fair Tax might let the public find out how much government really costs every time they buy something?" - No, I'm not worried. What I'm worried about is that the real agenda of some GST proponents is to starve the government of the funds needed to carry out important functions. If Gale is right, and the GST were enacted, the pressure on worthwhile programs could well lead to it being dismantled. If the medicare portion of 'hidden costs' is, say, 4-5% on things I purchase, I'm fine with that and I'm fine with the public knowing that. You see, medicare paid for my grandmother's bladder cancer surgery and allowed her to live 25 more years - so I and my six brothers and my cousins all got to know her. Medicare paid for my mother's eye surgeries that allowed her to continue working in a center that disburses funds for homeless shelters and other charitable organizations. Medicare paid for her colorectal cancer treatment and her open-heart surgeries and have allowed her grandchildren to know her for the years since those happened. And I'm fine with the fact that workers' medicare payments are raising the cost of my purchases at Target so they can enjoy the same kind of advantages - in fact, its kind of an honor to be a part of that.

(2) I’m not an economist, and merely citing the opinion of an expert like Gale raises the problem of referring to battling experts – how do non-experts know which expert to believe? This is why credibility is important – in my opinion, conservatives like Chambliss, Coburn, and Inhofe have absolutely no credibility on so many issues that it is legitimate to question their position on any issue. Lugar I would listen to and would genuinely like to hear him defend this lousy idea.

As for you, Syngas, notice how this thread degenerated into a series of claims and counter-claims about whether you and your opponents were being equitable in considering your points and mine? Perhaps you could enhance your credibility by acknowledging when you have lost a debate. How about an acknowledgement that in the last debate we had, that I was right – real hourly wages, after accounting the effect of age, for people at the 10% and 50% positions in the US economy have stagnated. While you’re at it – how about conceding my point about the superior relative economic policy performance of the Clinton administration vs. the Reagan-Bush-Bush administrations? C’mon now, if Bruce Bartlett and Alan Greenspan can do it, so can you. Look at my first point in this post: I concede your point – it’s good for the ‘soul’ and for your credibility.

Also, in comparing the tax rates, one must take into consideration that we get back some of what we put into the system with retirement benefits and Medicare. So the 18% tax rate on someone making $40,000 is actually less considering that we get back later in life some of what we put in.

Under the "Fair tax", in order to be taxed at 18%, a person making $40,000/year would have to spend less than $9548/year to be taxed at 18%, and they wouldn't even have social security or Medicade to back them up in their golden years.

$9458/year works out to $183/week. Anything spent over that, and the tax rate increases.

would have to spend less than $9548/year

That should have been spend less than $9548/year in taxable goods.

$183/week barely covers groceries. Forget buying clothes, taking vacations, etc etc

Okay JoAnn, it's now officially time for you to send all three of your degrees back to the university. Not only did you not notice MEC's omission, you actually repeated it!

I would expect that from most Democrats, but you know (or should know) that Social Security and Medicare is not only paid by the employee, but also by the employer in equal amounts. Therefore, according to your numbers, the $40000 earner really earned $43060 (40000+2480+580) and paid $6120 in Social Security and Medicare taxes, not $3060. (7356+3060)/43060 = .2418 or 24%. Not 18%. Do you really believe the worker does not 'earn' that second half of his/her social security credit?

I'm beginning to think the reason you changed professions was because you were sent a 'cease and desist' order from the state and/or the IRS. Now you know why they sent it!

Check your post dated Dec 13, at 4:28. You were not referring to MEC's claim rich people would flee overseas.

Hey Tim, good to hear from you again!

Thanks for keeping the rhetoric to a minimum this time. I'll concede when anything I have said (sans hyperbole Norm!) is proven to be wrong. So far all you all have offered is speculation and ignorance.

The FairTax bill does not propose to cut any government benefits. Could it happen? Sure, but it could happen with today's system too.

As for the Paris Hilton reference, sure she is an extreme example, but I have known several young adults who inherited what I consider to be considerable amounts of money and without fail, all of them blew it in under five years. So no, that was not a joke.

Call it anecdotal if you want, but I'm confident if you ask an experienced financial planner (Not JoAnn!), they will tell you most beneficiaries blow their inheritance quickly and on dumb stuff.

What I said on December 13, at 4:28

Here, quoting MEC

Oh the video the claim was made that "Mr. Kravis borrows millions of dollars and gets rewarded with huge tax breaks that make it so he pays less money percentage wise than his maid."

Then I said:

MEC already debunked this facile statement, but you didn't address her/his well-thought-analysis now did you?

Syngas, you suffer from a reading comprehension disability.

Do you really believe the worker does not 'earn' that second half of his/her social security credit?

By this I suppose you mean that the employer takes out of the worker's salary what he has to pay in matching payroll taxes and that when the "Fair Tax" is passed, all employees will receive a hike in their salary commensurate with amount that the employer no longer has to contribute to Social Security and Medicare. Is this what you're attempting to say?

Anyway, I noticed that you are still avoiding addressing any of the other points that were made. Are you afraid to address them?

Also, health care would be taxed. Hell, millions of Americans can't afford health care as it is. If you just crunch the numbers on the extra 30% that would be paid for health care... ouch!

Your childish attacks on my abilities as an accountant and my knowledge of finance are pathetic.

So far all you all have offered is speculation and ignorance.

No - you have just evaded all the points which are not speculative. For example: Would you concede that, because high-income individuals have merely to forgo luxuries, under the GST, high income earners have an easier time securing a lower marginal tax rate?

I'll concede when anything I have said (sans hyperbole Norm!) is proven to be wrong

Bullshit. You've only answered about 10% of the points made, and most of your answers have been 100% personal attacks and no substance at all.

The FairTax bill does not propose to cut any government benefits.

Without collecting for Medicare and Social Security, these programs will end. Okay, so tell me that they are not benefits, which just proves what I've been attempting to explain to you (alas, to no avail)..

The effective tax rate under the current system as compared to the effective tax rate under the "Fair Tax" must take into consideration that Social Security Taxes and Medicare taxes go towards... Social Security and Medicade, something we get back later in life, in our golden years, when we might need these services. How carefully and simply do I have to spell this concept out for you?

Call it anecdotal if you want, but I'm confident if you ask an experienced financial planner (Not JoAnn!), they will tell you most beneficiaries blow their inheritance quickly and on dumb stuff.

Ah, so now you're down to relying on anecdotal evidence. Do you have any real data on how much people of different incomes will spend on taxable income? No? I didn't think so.

Wittle high-school boy mentality has you responding like a small child and making you think that you're a financial whiz.

Call it anecdotal if you want, but I'm confident if you ask an experienced financial planner (Not JoAnn!) [sic], they will tell you most beneficiaries blow their inheritance quickly and on dumb stuff.

Like I said, a bizarre argument if you are arguing to supplant inheritance taxes (among others) with the GST. Since no one likes to pay taxes, and people who have money handed to them - rather than earning it themselves - are just going to blow it anyway - what tax would be least objectionable, the income tax, or even your GST, or an inheritance tax?

Oops, a few brainfart corrections:

Here, quoting MEC Should have been, "Here, quoting Syngas".

that Social Security Taxes and Medicare taxes go towards... Social Security and Medicade

Should have been, "towards... Social Security and Medicare".

Absolutely, I'll concede that. I've never said otherwise!

My point is that it doesn't really matter if they spend it or not. If they put it in the bank, it will be lent out to people who will spend it (look up money multiplier). If they put it in the stock market, they have to buy stock from someone who is selling it - they will either spend it or invest it. If they give it to their kids as a gift or an inheritance, well we've covered that already.

I hope you'll concede that multi-millioinaires rarely drive used cars (yes, I know Mr. Cabella drives an 84' suburban and Walden drove an old Ford pickup but they are exceptions) or furnish their houses with used furniture. Also, because services are taxed under the FairTax bill, tax would be collected for their lawn care, nannies, maids, manicures, pedicures, financial advisors (yes, even if JoAnn does it), home repairs, yacht maintenance, boob jobs, personal trainers etc...

Could they pass on all that stuff? Many will, but then who ever borrows it from them will spend it anyway. Get it now?

Sorry I can't answer every point everyone ever makes, JoAnn, I'm only one boy afterall ;-)

You said I wouldn't hurt your feelings but it appears I have. I'll stop.

Social Security and Medicare would be funded by the sales tax. FICA goes right into the General Fund JoAnn, it doesn't really matter where it comes from.

If you don't wan't to believe most inheritance beneficiaries blow most of the money quickly and on dumb stuff, more power to you. I really don't care.

Okay, so all of these people are going to be avoiding taxes by not spending their money on taxable goods, meaning that they'll be investing this same amount for others to borrow. No consideration Syngas, that they might just spend it instead in used cars and used furniture instead. How about a nice antique chair instead of something new? Pay no tax on the antique? Pay 30% on the new one? hmmmmm.... Tough decision.

And assuming that your prediction that what they don't spend on "taxable goods", they'll invest, and then someone else will borrow this money and spend it all on "taxable good"..

Oh, my, the ridiculous assumptions made by Syngas (and spoon-fed to his simplisitic little brain) are neverending..

Social Security and Medicare would be funded by the sales tax.

Okay, that's good. Now, do you think that employers will raise employee's taxes comensurate with the decrease in the amount that they have to pay in payroll taxes.

And no, Syngas, you are not hurting my feelings. I would have to respect you a lot more for you to hurt my feelings.

Sorry I can't answer every point everyone ever makes, JoAnn, I'm only one boy afterall ;-)

Cop out. You seem to have plenty of time to make meaningless comments.

If you don't wan't to believe most inheritance beneficiaries blow most of the money quickly and on dumb stuff, more power to you. I really don't care.

I have no idea. I'd be interested in seeing a study. What do you mean you don't care? It has everything to do with this "Fair Tax" which you seem to care a lot about!

I don't remember who objected to medical services being taxed but I submit to you that they already are being taxed. The hospital is taxed on any profits they make and everyone who works in a hospital pays income and payroll taxes. They are all looking for a specific bottom line. They won't work if it won't bring home the bacon. Prices just go up to compensate for all these taxes. The medical patient is the one that pays for all of it.

With the FairTax, all those expenses go away so the price for medical services would likely go down as well. I believe (speculation, I know) this will offset the sales tax.

"Okay, that's good. Now, do you think that employers will raise employee's taxes comensurate with the decrease in the amount that they have to pay in payroll taxes."

I assume you mean wages, not taxes. I don't know if they will or not. If they do, that's great! If they don't, they will likely have a short term very profitable period. When others see how much they are making, they will get in the same business (competition) which will create a shortage of workers skilled in that business and they will be able to demand a better wage. Supply and demand JoAnn, basic stuff.

OK all, it took a while, but I'm convinced I'm pissing in the wind here.

Keep on if you want, I'm done ;-)

Tim: Would you concede that, because high-income individuals have merely to forgo luxuries, under the GST, high income earners have an easier time securing a lower marginal tax rate?

Syngas: Absolutely, I'll concede that. I've never said otherwise!

Well, good - we agree on something. We have radically differing views on whether that is "fair" ("Fair"Tax - right?), but at least we agree on what the GST does. Let me suggest that you send an e-mail to the GST website folks (I guess it's the FairTax website :)) and tell 'em to put that in as a leading feature.

As for the rest of your trickle-down argument: it only deals with what inheritors will do with their unearned money. The problem with your reply is that is all the ways that inherited money might be used apply equally to money that people have to work for. So, my question (What tax would be least objectionable, the income tax, or even your GST, or an inheritance tax?) is not addressed in the least by your reply. Get it now?

Supply and demand JoAnn, basic stuff.

LOL! What is this, the Father Guido Sarducci school of economics?

I don't know if they will or not. If they do, that's great!

Whoa there young buck. You're changing the subject of what we were debating. If the employer does't increase the salary commensurate with the decrease in payroll taxes, then your analysis that "employer taxes" should be included with "employee taxes" in the equation is bullshit, right?

OK all, it took a while, but I'm convinced I'm pissing in the wind here.

Keep on if you want, I'm done ;-)

Translation:

This conversation is over my head. All I know is what I've been spoon fed by the "Fair Tax" people. I don't want to be embarrassed, so I'll pretend that I'm no longer discussing this because I don't want to hurt anyone's feelings.

LOL!

I'm convinced I'm pissing in the wind

Actually, pissing is an apt metaphor, considering the content of what we were receiving.

Interesting isn't it. This flame war began with my baiting Syngas,

The War on Greed video is indeed appalling. Greenwald didn't even have to get particularly Dickensian either; the superposition of Kravis with people earning something near the median income, rather than those at the bottom, is particularly jarring. And yet, you'll get middle class posters here (yes, I'm thinking about you, Syngas) who'll defend a tax structure in which the marginal tax rates on Kravis are substantially lower than those on median income earners.

And what does Syngas offer? A new tax structure in which the marginal tax rates on Kravis are substantially lower than those on median income earners.

Therefore, according to your numbers, the $40000 earner really earned $43060 (40000+2480+580) and paid $6120 in Social Security and Medicare taxes, not $3060.

Oh, Syngas, poor boy. You can't add the $3060 to both income and taxes.

The employer is paying more in taxes or more for the salary. Either way, it amounts to the same thing - pay $3060 in taxes or pay $3060 extra for wages. Get it?

Actually, pissing is an apt metaphor, considering the content of what we were receiving.

LOL!

And what does Syngas offer? A new tax structure in which the marginal tax rates on Kravis are substantially lower than those on median income earners.

Oh, shit, so I've wasted my time, yet again, attempting to have a rational discussion with Syngas? Syngas, is right (but for all the wrong reasons).. I'm nuts!

Taxes are on a percentage basis. To say that the $3060 paid by the employer equates to a 100% tax rate is mixing wages with salary...

Ouf! How to explain this to a layman? I'll try to do better tomorrow..

I've had enough of wasting my time, once again!, with someone as disengous as Synagas. I hope that he just doesn't understand, but I don't know... sad... :(

disengous

disingenuous

Forgive my impetuous fingers.. and impetousness... :)

Actually, looking back at all of this, it just keeps getting more and more ridiculous.

Take for example this comment

Dude!

If you make 30K, and spend all of it on taxed items (not likely!), your tax would be:

30000 * .30 = $9000 $9000 - $2348= $6,652 >$6652/30000 = 22%

Well, that's ridiculous. This has the person spending $39000 (goods plus taxes), but they only had $30000.

The amount of goods they'd be able to purchase would be $23077, and the sales tax they'd pay would be $6923. Less the rebate, the taxes paid would be $6923-2348 = $4575 $4575/30000 = 15%.

Wow! Now the person's calculated rate is only 15% instead of 22%, but they only get to purchase $23077 worth of goods at the 15% rate. Give me the 22% rate and allow me to purchase $30000 worth of goods.

Now see how deceptive using percentages can be? We can play around with these numbers all that we want, and it won't really mean much.

Also the more goods that you purchase, the higher your tax rate. So you want a low tax rate? Well, just don't purchase much. Oh great! Isn't the point in having lower taxes is that you'll have more to spend?

Anyway, since percentages can be so tricky, let's just take a look at the bottom line. Our guy who earns $40,000/year under the old system has a take-home pay of $32,644 (Whether or not you call it being taxed at 18% or 24%, doesn't matter. He still takes home $32,644) and he can purchase $32,644 worth of taxable goods.

Under the "fair tax", this person takes their $42,348 and can now purchase $32,575 (42348/1.3) worth of goods + the 30% consumption tax of $9773.

So under the "fair tax", the guy is able to purchase fewer goods, but hey, his "tax rate" is lower! Youpee!

Great discussion! Thank you all for your time. Till we meet again,

Merry Giftmas

Synas,

I like the Jon Lajoie utube link, and Im just an everyday kinda gal'... I think!

Still, I would have enjoyed continuing to discss this issue as I enjoy dicussing a topic to its logical conclusion.

Peace

Advice from Dad

Well, Snygas, if this thread hasn't cured me of engaging you in conversation, then I need my head examined.

We won't be meeting again, but good luck buddy.

Adieu

;-{