Talk:FairTax/Archive 4

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Distinction between Fair Tax & National Sales Tax

It should be noted that the national sales tax should not redirect to the Fair Tax as the "Fair Tax" is just one very specific proposal created by a specific group of people and is only a type of national sales tax. Stevenmitchell 09:30, 15 June 2006 (UTC)

I agree. It should be a disambiguation page. I'll try to find a description and look to see if we have any other National sales tax plans on wikipedia. Morphh 13:08, 15 June 2006 (UTC)

For the moment, I've redirected this to the Sales tax page as it was more appropriate. This page lightly discusses a National sales tax and includes information about the FairTax in the last paragraph. Morphh 18:39, 15 June 2006 (UTC)

Other Effects Not Yet Discussed

How about the effect on the accounting and tax advisory industries? (From individual CPAs up through the big four firms) They would obviously be affected by a dramatic simplification of the tax structure. GRBerry 13:45, 14 June 2006 (UTC)

True - they would also be impacted by the additional savings and investment business. I'll see what I can dig up. Some may just be looking for new positions - highly educated people like them should be able do well though. We'll have to put tax lobbyists on suicide watch. Morphh 13:59, 14 June 2006 (UTC)

Also - I know many CPAs, current and future, and they all tell me that they would gladly welcome a simplification of the tax code. A true CPA is not someone who enjoys spending his/her time doing tedious tax returns. True accounting comes in when one can apply advanced statistics and managerial techniques to improve the chances of success and wealth for the business to which he/she is responsible. CPAs are not just calculators, but highly trained experts on how to improve the financial situations of a business. Without the burden of a crippling tax system on their shoulders, they will be free to invest their company's cash in other, more productive, ventures... A much more fun and exciting career choice for the accounting-minded individual. —The preceding unsigned comment was added by 68.101.74.28 (talk) 05:08, 8 December 2006 (UTC).

Grassroots stub

In the past, I've been removing links to Grassroots sites such as "Hoosiers for the FairTax" and "FairTax Foundation". While they provide good information and applicable, it might be seen as POV. Some links that I've left are discussion groups which post questions for and against the FairTax in order to gain knowledge. The other links are NPOV as they link to the bill, author's site, scorecards, etc. I started thinking that perhaps we could create a FairTax Grassroots stub that discusses the history of AFFT, links to Grassroot sites, and large FairTax initiatives. Thoughts? Morphh 12:48, 13 May 2006 (UTC)

I just created a new article for Americans for Fair Taxation. Have a look and update as needed. Perhaps we can remove some of the links the FairTax article if this AFFT article looks ok. Thoughts? Morphh 03:29, 28 May 2006 (UTC)

It's really misleading to claim that the FairTax movement is a "grassroots" movement when, in fact, it was created, funded and organized by a small group of multi-millionaires who spent over $20 million promoting the idea and retained Patton Boggs to lead its lobbying efforts in Congress. The definition of grassroots in Wikipedia implies that it is from the "ground-up", when in this case it was from the top-bottom. This is more of an "astro-turf" movement.

GeorgiaTex, 21 September 2006

It was initially created and funded and organized by the group who each pledged $1.5 million as seed money to hire tax experts to identify what they perceived as faults with the current system, to determine what American citizens would like to see in tax reform, and then to design the best system of taxation. The three went on to raise an additional $17 million to fund focus groups with citizens around the country and tax policy studies. This is not the Grassroots part. The Grassroots is what has become of AFFT when 600,000+ people get on board and provide donations to make the $100 mil for promoting, lobbying, and the salary of the people in Houston. The Grassroots is that driven by the constituents of a community getting together to contact their representatives and promote the plan to other citizens. The Grassroots movement is 10,000 people showing up to a rally in Orlando. BTW - do you have a source we can use for the $100 million number? - I can't find anything on it. Also, I couldn't find anything on patents. If you have a reference for this, we can include it in the AFFT article. Morphh 14:20, 21 September 2006 (UTC)

Morph --

Re the $100 million and Patton Boggs issues, they are from Leo Linbeck's recent conference call that is on the fairtax.org website.

As guess you and I disagree (in good faith) on the definition of "grass roots." Although I agree that the FairTax has a substantial amount of support of ordinary citizens, and hundreds of thousands have emailed AFFT or whatever, I think of grass roots organizations as more or less springing up spontaneously from the ground up. The FairTax movement very much sprung up from the top-down. The Houston multi-millionaires founded AFFT, funded the studies and focus group surveys, hired the lobbyists, set up the web-site, etc. There would not have been any push for the FairTax (as opposed to general tax-reform) without those well-heeled donors, who, incidentally, would save millions if we shifted to the FairTax.

And then of course the fact that Boortz promoted the FairTax and his book day after day on his show certainly helped things along. Regarding their failure to debate the measure, you cannot honestly claim that Boortz or Linder have ever publicly debated the merits of the FairTax (other than one sparcely-attended "debate" with Graetz, who was really promoting his alternative tax plan rather than focusing solely on the problems with the FairTax.) It is difficult to "prove" that they have refused to debate the FairTax, because they are never going to publicly state that. But Leo Linbeck has admitted in emails to me that he is unaware of any public debates on the FairTax. If you look at the blog of John Sugg, an Atlanta reporter, he challenges Boortz to a debate several times. The Libertarian candidate for US Senate challenged Boortz to a debate, which Boortz declined. I have challenged him to a debate. He declined. If Wikipedia is going to say that Boortz and Linder promote the FairTax, I believe it is fair to point out that they promote it only to "truebelievers" but won't debate it with knowledgeable skeptics.

Finally, regarding the opinions of Gale and Poterba on the revenue neutral rate. I am not at liberty to forward you private emails, but I'm fairly certain that they would respond to emails sent on behalf of Wikipedia to see if Wikipedia has accurately reported their "studies" and their current opinions of the plan. I can state categorically that neither of them agree with the 23% rate.

I do believe that the Wikipedia article has gotten much better and more balanced over the last few months, but these issues have always bugged me.

GeorgiaTex 17:23, 21 September 2006 (UTC)GeorgiaTex

http://www.journalstar.com/articles/2006/09/18/local/doc450df0841fa32768509180.txt I think the new study is going to indicate 25% based on comments by Tom Wright in this article. Also, I'd love to e-mail Jorgenson (I think this is who you ment as we have Gale's analysis) and Poterba on behalf of Wikipedia, however, this would not be something I could use in the article as it is not an external published source. It would fall under the No orginal research policy. They would have to publish something or perhaps an interview with them published by the media that states that they disagree and hopefully explaining why. Even if I had an e-mail in front of me from Porterba stating that he thinks the rate should be 33%, I could not use it in the article as it is not published information. Morphh 18:13, 21 September 2006 (UTC)

Book cover

Posting this from Tabacco's talk page:

Your alleged "Fairness" is disingenuous. The "Fair Tax" is the 3rd generation of "The Flat Tax" and "The National Sales Tax". The "Fair Tax" is a distinction without a difference. It has been dressed up to appear to be something it is not! It is a complete falsity, intended to dupe the public. Publicizing Neal Boortz is tantamount to extolling the virtues of Scientology. Both are merely for personal aggrandizement and profiteering of the facilitators. I take extreme umbrage at the promotion of Boortz's book here. This is nothing more than crass commercialism and disinformation. Tabacco

http://tabacco.blog-city.com/the_fair_tax_morphh_advocates_in_the_affirmative__tabacco_re.htm Tabacco

Note: I sent a post addressing many of the inaccurate statements but it was never posted by Tabacco. Morphh 00:32, 11 June 2006 (UTC)

Certainly "Fairness" is relative, however, the plan was named by the people and not politicians. Most consider it much more "fair" then the current system. However, I don't believe you'll find anything in the article that claims it to be "fair". It is just the name of the bill. I'd like to see you defend the current system. The FairTax is the most transparent plan out there. I think your duping yourself making it some plot / conspiracy theory. Our current system is built on hiding the burden and deceiving the people. The FairTax is an alternative. It's not trying to dupe anyone - it is what it is. As for Boortz's book - what picture would you suggest for the article? The book doesn't need any promotion - it's a NYT bestseller. It is the most known media "image" of the FairTax plan. Nothing more nothing less. I've copied this to the aricle talk page in case others share your opinion or care to disagree. Morphh 00:32, 11 June 2006 (UTC)

This has escalated into an edit war over the inclusion of the book cover as the primary picture for the article. Please voice your thoughts on the issue for consensus.

Support book cover

To vote, please use the format: #~~~~ - <comments>

1. Morphh 12:55, 11 June 2006 (UTC) - The book was a NYT bestseller for several weeks and still in the top 15 of Non-fiction paperback. The book is co-authored by the bill author, Congressmen John Linder. It is the most known image of the FairTax plan and appropriate for the article.
2. Trevdna - Added the image to the article on 7 November 2005. ^{(support entry added by morphh)}
3. El Cubano 04:05, 12 June 2006 (UTC) - Tabacco's argument seems to be based on: 1) the idea that the Fair Tax is a deception; and 2) an ad hominem attack on Boortz. At best, that makes his argument very weak.
4. skeeJay 21:33, 12 June 2006 (UTC) - As an NYT bestseller, the cover of the book is easily associated with the legislation in popular culture, at least more than placing a photograph of H.R. 25 would be. I think it makes sense to consider the book to be representative of the movement at this point in time. If not in the summary, the picture should be somewhere on the page.
5. Ddeakin 17:01, 4 October 2006 (UTC) - The book is certainly the most visually known item to represent the Fair Tax; and as Boortz would probably agree, it beats a picture of him.

Oppose book cover

To vote, please use the format: #~~~~ - <comments>

1. Tabacco - Publicizing Neal Boortz is tantamount to extolling the virtues of Scientology. Both are merely for personal aggrandizement and profiteering of the facilitators. I take extreme umbrage at the promotion of Boortz's book here. This is nothing more than crass commercialism and disinformation.

1. 63.25.9.50 13:25, 10 December 2006 (UTC) - It's fine to make numerous references to the book, but including the picture really does come across as an advertisement. It probably wasn't intended that way, but rather done out of anxiety that the article should have an image. An article about a tax proposal doesn't need images, IMO.

Note: I have submitted Tabacco for violation of the 3RR. On his talk page, I've been charged with turning Wikipedia into a Propagandist website and that this entire Post is complete and utter disinformation. Interesting since he claimed on his blog that only the poor got the rebate and we would need receipts to collect it yearly. Talk about disinformation. Morphh 18:51, 11 June 2006 (UTC)

not only that, isn't Boortz's wife donating all the proceeds of the fairtax book that are his to charity? Kinda ruins the "profiteering of the facilitators" and "commercialism" of the book.RCHM 01:36, 25 July 2006 (UTC)

Yep - Good point Morphh 04:26, 25 July 2006 (UTC)

Arrgh! Just because Boortz has claimed at various times that he'd donate the profits to charity, doesn't mean that he would actually do so. At other times, he said he would keep the profits. At other times, he said he would donate the profits after expenses (which could mean almost whatever he wants "expenses" to mean). In any event, since Boortz would be the LAST person to release his income tax returns to the public, how can this be a verifiable statement? At best, it is unverifiable, self-serving garbage.

And, even if it were true, he would still benefit from the charitable tax deduction he would get (which could easily be worth several hundreds of thousands of dollars)as well as all the publicity his radion show gets (which translates into better ratings, increased market exposure, and thus more money.)

Hey, this is America. More power to him if he benefits financially from writing and promoting a book, but Wikipedia should not be implying from his self-serving statements that he is doing this for altruistic purposes.

GeorgiaTex 19:56, 21 September 2006 (UTC)GeorgiaTex

I don't think we have implied anything. All that is said in the article is that he said that he is donating all procedes to charity to help promote the book. People can take what they want from it... The can beleive his statement or like you, consider it nothing. The statement is varifiable and is relavent to the movement in how he presented it. The references is there if people choose to investigate further. He initially said that he would keep the profits but his wife convinced him to donate it. The comment on expenses were related to costs with the book tour so he was not out of pocket. Someone might be able to verify via the charity organization. He has stated that he would give it to his wifes charity. However, we're getting to far into this. We're just stating a fact here. I think to describe it any further would be to add a point of view to it. It does not say that this shows his motives or anything. It also should not bash him for possibly not donating being that we have no evidence of such. Morphh 20:38, 21 September 2006 (UTC)

Morph -- I tried to email you, but I'm not sure it went through. Or it may be in some "talk" sections somewhere.

Re your comments above. It sort of goes back to my earlier suggestion that you delete the whole bit about Boortz stating he's donating his profits to charity. His actions are not verifiable and his statement, which is basically just self-serving, doesn't really add anything to the contention tht this is a grassroots movement, particularly given the fact that he personally benefits either way. I concede that volunteers like you toil away thanklessly for no personal benefit (misguided though you may be.)  : )

Price drops

I would like some evidence of a non-monopoly market where prices did not approach the cost of production. Sorry, but instances of price fixing and government "regulation" don't count. I am talking about markets like the consumer PC market, the automobile market, etc. El Cubano 02:24, 4 June 2006 (UTC)

I agree and have deleted the sentence. Such logic doesn't even make sense. I'd like to see a serious economist that makes such a claim. This is the basics of a capitalistic economy. Morphh 02:37, 4 June 2006 (UTC)

Even if prices were a certain level higher then the cost of production, the markets of supply and demand would drive the price to maximize profit. Price maximization is not profit maximization. Profit margins should be maintained as they are set for profit maximization. Morphh 02:49, 4 June 2006 (UTC)

Revenue-neutral rate studies

Modified recent entry to this section - The addition that AFFT has not released the studies is a good edit. However, much of the other information was POV and not applicable. The economists were members of the research team that studied the FairTax and the rate. The rates are presented in a number of publications. I have never heard of any of the economists refuting the figures. I've read several articles where some of these economists discuss the FairTax and they have not said anything about their rate being incorrect. In fact I just read a message from Laurence Kotlikoff that said a new study was going to be released and published that will show the bill rate to be more or less the correct figure. It is said to be a really well done study that should satisfy most critics. In the other section, the 1995 tax reform panel did not review the FairTax. The FairTax wasn't even a bill until 4 years later. Their review was far from the FairTax plan and is not an accurate or appropriate comparison. Morphh 17:31, 8 June 2006 (UTC)

It is really, really misleading to claim in the article that there are numerous studies showing that the 23% rate is revenue neutral when, in fact, no such studies have ever been published. The ecoonomists themselves (particularly Jorgenson and Poterba) dispute these studies. The alleged source of Jorgenson's analysis (Give Yourself a 25% Raise) does not in fact state that Jorgenson found a 23% rate to be revenue neutral. Moreover, over the last year, AFFT has been promising new studies will come out, but hasn't released any yet.

Moreover, the President's Tax Reform Commission specifically states that they conformed there analysis to the FairTax as written (that is, it did not exempt food, medicine, housing, etc.), yet the revenue generated would not even cover the revenue lost from the income tax alone. Moreover, the article does not provide any evidence that the Joint Committee on Taxation altered the FairTax in its analysis.

All of the pro-FairTax cites in this section are simply misleading and unverifiable. In order to be consistent with Wikipedia standards, the article should state that while AFFT claims the 23% rate is revenue neutral, it has not produced a single verifiable study showing this to be true.

GeorgiaTex 21 September 2006 {UTC}

The 23% statements and claims (and Jorgenson's and Poterba) are listed with verifiable sources that make these statements. This does not need to be a source to the work itself, just a good quality source that verifies the statement. If you have a statement from Poterba stateing that he disputes these studies then please provide the source and we'll include it. The article clearly states that these studies have not been published. However, part of the study can be seen in the JCT rebuttal paper (40 pages by the Argus Group). Dr. Karen Walaby is the person reviewing the new studies and has stated that she would release them soon. As far as the President's tax pannel - you are correct that they did not exempt food, medicine, and housing but they did exempt all government purchases - 18% of the FairTax base. They also did not review Payroll taxes as they were not allowed too - this greatly changes the tax burden effect as payroll taxes are the most regressive and largest tax burden to low income families. So how can you make the statement that this conforms to the legislation. It is very far from the legislation. The JCT rebuttal discusses the JCT tax base. We can look at wording this better. Morphh 15:29, 21 September 2006 (UTC)

Naming problems

For economists, the FairTax proposal is explicitly the opposite - it is a regressive tax, which is also called an unfair tax (while progressive taxes are called fair taxes). Can this misnomer be reflected in the article?

The name FairTax is the name of the bill HR25. The article does not address "fairness" as this is a relative term. However, the plan itself was named by the people before it became a bill. As far as regressive / progressive, it is addressed in the section "Distribution of tax burden". The FairTax is regressive on income but progressive on consumption due to the rebate which is provided to all citizens. This creates a progressive effective tax rate the more you consume. We let the reader determine what they think is fair or unfair. Both points of view are presented. Morphh 02:39, 12 June 2006 (UTC)

Deficit

Morph -- I knew I'd get your gander up by pointing out that the latest Beacon Hill study assumes a deficit of $476 billion in 2007. The point is that this is NOT truly revenue neutral, as the current deficit is only $248 billion. Thus, unless we are to assume that the deficit will nearly double next year, the 23.85% rate is grossly misleading. GeorgiaTex 14:49, 13 October 2006 (UTC)GeorgiaTex

I expect the numbers were accurate at the time the study was done. You're picking out one number and saying... look, this has decreased from the time you did the study so now your numbers are off. What about all the other metrics that go into figuring the rate? You would have to refactored using the latest consumption, GDP and economic growth numbers. I expect that since the deficit has decreased from projections, it is because of economic growth which is the base for the consumption tax. Revenue neutral is compared to income collected under the current income tax system. Budget and deficit is irrelevent as it should be applied evenly to both the income tax and FairTax. Since they generally both rise and fall together (income and consumption), the rate would hold for revenue neutraility. Unless you can show that income has increased at a much greater rate then consumption, your point is baseless. Morphh ^(talk) 15:30, 13 October 2006 (UTC)

In fact, the opposite seems to be true - With today's negative savings rates, recent studies have shown that in 2005 average spending outpaced earnings. Even earlier we've seen this trend - “Negative Saving: In July, Spending Outpaced Earning,” The Wall Street Journal, September 2, 2004, pg. A2. Your examination might actually show the oposite of what you claim - the rate would decrease from the projected 23.85% as consumption outpaces earning. Morphh ^(talk) 01:11, 15 October 2006 (UTC)

Pros/Cons Section?

There are criticisms littered throughout the article. I say they should get their own section. I don't know what to make of the whole thing (good/bad?) but being able to see pros/cons easily would be nice.Angrynight 23:04, 21 June 2006 (UTC)

This was discussed in Talk Archive2. I understand what your saying. It would be nice to look at a simple good/bad, however, the topics require enough explanation on each side to do justice. This is why each topic is broken down into sections where both pro and con are provided. For example, one side may say a con is that it is regressive with the other side saying a pro is that it is progressive. Pros and cons are dependent on the point of view and without any context or explanation it makes little sense. I think this format is better suited for this article. It provides each topic in a complete format with the debated points / effects. Morphh 00:46, 22 June 2006 (UTC)

GA Review

Note to GA reviewer: Most of the recent edits were cosmetic - copyedits, references, moving sections for better article flow, etc. We did have a slight problem with the book cover (reverts), however, I think we resolved this through the wiki process. Morphh 15:57, 24 June 2006 (UTC)

Money Magazine Article

first, my apologies if im not posting this talk topic correctly, im new. I think a critical turning point in the FairTax debate has been overlooked byt his article, and ask for it's inclusion. an article in Money Magazine's October 2005 issue http://news.bbc.co.uk/1/hi/world/americas/country_profiles/1229345.stm pointed out a logistical flaw in the plan, the double-counting of the benefit of removing embedded taxes towards both results of 1. lowering prices of goods and 2. allowing workers to recieve their entire paycheck (gross pay). This flaw has been exposed to the point that Boortz even addressed it in his Nealz Nuze on Sept. 15th 2005. http://boortz.com/nuze/200509/09152005.html i think this really needs to be addressed, as many supporters of the plan are falsly claiming that prices will remain the same AND they will receive all of their pay (Dr. Dale Jorgenson, the Harvard professor who did the mebedded tax study, is mentioned in the article stating this is not the case)

since i am unfamliar with the editing process i'd ask for someone else to create the section or mention. thanks JamieDangerously 20:08, 7 July 2006 (UTC)

You are posting correctly in the talk and I offer my welcome to Wikipedia. I don't believe this point is overlooked in this article. It is covered in the section Supporting theories of effect. The only reference to embedded cost figures is in this section and whenever embedded taxes are discussed, this section is referenced. So this article does not reproduce that misconception and accurately discusses the topic that you presented. Morphh 21:19, 7 July 2006 (UTC)

GA passed

This article is a nice one to read and is fully detailed with a bit of math here and there, well-balanced and has a nice prose. I would suggest working on the Lead section just to match every aspect of the article's content. Lincher 03:28, 10 July 2006 (UTC)

I'd also like to try and redo the sources to utilize the WP:CITET templates. Once we get these two things completed, I think we should try and nominate for FA. Morphh 13:12, 12 July 2006 (UTC)

I expanded the lead section to try and match the articles content. It may be a bit long and probably requires further refinement. Morphh 01:54, 1 August 2006 (UTC)

Distribution of tax burden

It appears to me that the Tax Pannel only compared Income Tax rates when using this comparison. It does not appear that they calculated in payroll taxes. 3/4 of Americans pay more in payroll taxes then income taxes. Morphh 02:58, 13 July 2006 (UTC)

According to the panel's report, the Treasury Department concluded that a 25-percent FairTax rate would not produce enough revenue to be revenue-neutral if all federal taxes were abolished. Thus, the panel considered only the effects of abolishing the income tax. If the payroll tax was included, the FairTax rate would have to be increased commensurately. It's all in the report. FCYTravis 06:23, 13 July 2006 (UTC)

Since this article is getting very long (55k), using WP:SS should be a consideration. Until now, I didn't think we had any good sections that would fit this well. However, with the new additions to this section, we may be able to split this into its own article. Thoughts Morphh 03:32, 13 July 2006 (UTC)

I think it would make sense too to split the details of the "predicted benefits" and "indirect effects" sections into a separate article about "Predicted effects of the FairTax." FCYTravis 06:27, 13 July 2006 (UTC)

AFFT have said that their definitive study on the FairTax base and rate calculation by Beacon Hill Institute will be completed by July 31st, 2006. It addresses all the issues that have been raised about the FairTax rate and whether it is revenue neutral. In addition, Dr Laurence Kotlokoff did two studies; they will be published by the National Bureau of economic research. One is on the marginal and average tax rate under the FairTax compared to other alternatives. The overall effect on the economy is studied in much more depth than in prior studies. There were three macro studies done by 3 different economic research groups: Dr Kotlikoff's, Beacon Hill Institute (using a general equilibrium model) and Arduan, Lapher & Moore (using a supply side equilibrium model). IOW, three different economic models were used in order to diffuse criticisms that the results achieved were driven by the model. Beacon Hill also did a detailed study of the FT revenue base. That study indicated that the FT had the broadest base (which means it can have the lowest rate). That study also shows the tax distribution across all income groups. Another study is being done on evasion and enforcement. It is being done by Young & Associates (Dr. Nancy Young). It identifies certain key variables which influence the level of compliance (marginal tax rates, likelihood of audit, severity of penalties, etc) and concludes the FairTax is superior on most/all of these and would therefore have lower rates of evasion than alternatives.[1] Should be interesting... Guess we'll be busy in August. Morphh 14:39, 15 July 2006 (UTC)

Featured Article checklist

It exemplifies our very best work.

It is well written, comprehensive, factually accurate, neutral, and stable. In this respect:

(a) "well written" means that the prose is compelling, even brilliant;

(b) "comprehensive" means that an article covers the topic in its entirety, and does not neglect any major facts or details;

(c) "factually accurate" includes supporting of facts with specific evidence and external citations (see Wikipedia:Verifiability); these include a "References" section where the references are set out, complemented where appropriate by inline citations (see Wikipedia:Citing sources). For articles with footnotes or endnotes, the meta:cite format is strongly encouraged;

(d) "neutral" means that an article is uncontroversial in its neutrality and factual accuracy (see Wikipedia:Neutral point of view); and

(e) "stable" means that an article does not change significantly from day to day and is not the subject of ongoing edit wars.

It complies with the standards set out in the style manual and relevant WikiProjects. These include having:

(a) a concise lead section that summarizes the entire topic and prepares the reader for the higher level of detail in the subsequent sections;

(b) a proper system of hierarchical headings; and

(c) a substantial but not overwhelming table of contents (see Wikipedia:Section).

It has images where appropriate, with succinct captions and acceptable copyright status; however, including images is not a prerequisite for a featured article.

It is of appropriate length, staying tightly focused on the main topic without going into unnecessary detail; it uses summary style to cover sub-topics that are treated in greater detail in any 'daughter' articles.

Here's my thoughts: Once we get this little POV point-counterpoint hashed out, this article is not far away from FA. We need a good photo of a rally, or something, to illustrate the popular/political support section, I think it would make strong secondary art. We should consolidate some of the "effects" sections into a daughter article, Potential impacts of the FairTax or something - which will help us get the length and table of contents under control. Perhaps create a (doesn't have to be huge) section on the online groundswell of support for the proposal - how it's spread through the blogosphere, etc. Other than that, it looks good to go. FCYTravis 23:58, 13 July 2006 (UTC)

I created an article Predicted effects of the FairTax. I figured we would call the headline here "Predicted effects". I also created the one you specified above but I thought this one might fit better. I put Potential impacts of the FairTax in for speedy deletion as I was the only one that did anything. Morphh 00:46, 18 July 2006 (UTC)

Ok - I moved all the Predicted benefits and Other indirect effects into the new article. I then created a rough draft summary of the contents, renamed the headline, added the summary and removed the main body. So, we have some clean up work to do but most of the heavy lifting is done. Morphh 19:37, 18 July 2006 (UTC)

I've added a Grassroots section per your suggestion and added a picture of a rally. I'll try to clean it up a bit this week. I think we've completed just about everything on our list. We're getting pretty close to FA nomination. :-) Morphh 03:36, 3 August 2006 (UTC)

Inclusive/Exclusive terms

This was a debated point in the early history of the article (Talk:FairTax/Archive#.2811-August-05.29Tax_Exclusive.2FTax_Inclusive). I think I was for Inclusive / Exclusive but I was overruled. The main point was that the terms are a neologism. It was agreed to use common terms. I've now come to think it explains it better. Morphh 01:05, 14 July 2006 (UTC)

Well, we have to have something that quickly explains the difference in layman's terms, and I think "inclusive" vs. "exclusive" comes the closest. What else would you call each system? I'm open to ideas... FCYTravis 01:10, 14 July 2006 (UTC)

Those terms seem the easiest to me, however, I'm familar with the material. If I ask someone else what they ment, they would probably be clueless. At one point, we had a section that described inclusive and exclusive (I think this became Comparison of tax rates section). Even if we don't use those terms to describe the rate, I think we should have something in the Comparison of tax rates section that states these terms are often used to explain the concepts. ..., often called an "inclusive" rate, ... I'm not sure how to best explain it in layman's terms - perhaps we need to grab someone that is unfamilar with the concepts. I'll try to think of some ideas this weekend. Morphh 18:19, 14 July 2006 (UTC)

Photos

Does anyone have any photos of a book signing, a pro-FairTax rally, etc.? I think they would be highly helpful in illustrating the groundswell of grassroots support for the proposal. FCYTravis 21:51, 15 July 2006 (UTC)

I know some websites that have some. I'll make a request for copyright release. Morphh 12:07, 16 July 2006 (UTC)

I've received permission from the photographer to use any of the pictures on this site. Morphh 20:28, 31 July 2006 (UTC)

Changeover -- new goods carried over

There should be some mention of how to handle goods made during the income tax era but sold during the FairTax era. There will be many goods at intermediate stages of manufacture, and actually tracking each and every part of each item, to determine its' tax/nontaxed status would be massive overkill. I presume that the proposed legislation covers this? The easiest thing to do would be to have a one-week or one-month "neutral zone", between dropping the old federal taxes and beginnging to charge the new FairTax. Otherwise, the changeover period would be a tremendous burden for many people. --Scott McNay 05:29, 10 October 2006 (UTC)

Most states already have a sales tax and do much of what the FairTax requires. The legislation states that current inventory is not taxable under the FairTax. So while the sale of the retail item will contain the FairTax, the company does not have to remit the tax to the government if the good was already in inventory before the FairTax went into affect (since taxes were already paid on it under the current system). This allows for the transistion and a quick reduction in production prices. All a company needs to know is what the current inventory cost. If I have $1,000,000 worth of widgets in inventory, then I don't have to remit taxes on the sale of $1,000,000 worth of widgets. States already require companies to keep track of their sales for the state taxes so this is not a big issue. Morphh ^(talk) 13:53, 10 October 2006 (UTC)

Technocracy

What does Technocracy have to do with FairTax? Well, I was interested in Technocracy for a while, and it sounded quite good, and studying it makes clear some of the problems with the current economic system. However, I eventually came to notice that it has many significant similarities to Communism (which has risen and collapsed in the time since the original study was done) and the like, and the Technocracy-pushers did little to demonstrate the difference between the two, mostly claiming loudly that they were quite different, without providing any qualitative evidence. Like FairTax, Technocracy was created as a result of (unpublished) research by "noted" scientists, mainly economists and psychologists (as I recall), and this article, interesting as it looks, reminds me greatly of Technocracy.

What's the point of this? I think that the FairTax Organization needs to get off its' butt and publish the studies, instead of merely providing second-hand claims. I think the FairTax Organization should be told to put up, or else any material based on their hearsay will be removed from the Wikipedia FairTax article -- which will, of course, change it significatly.

I like FairTax, but it would be a gross disservice to all of us if FairTax gets voted in and turns out to be a disaster because they deliberately failed to provide the original studies. The fact that rich folks commisioned the alleged studies should be a red flag until the evidence demonstrates their good faith. If they commissioned the studies, then it should merely take minutes for them to put the studies online, since they are presumably already in electronic format. Taking MONTHS to get them online seems suspicious to me. --Scott McNay 05:29, 10 October 2006 (UTC)

Well this is your lucky month - they're going to "put up". FairTax.org has stated that they have been working on a new website and with the October change they will release a ton of new studies. It has been said that they will release studies on the Tax rate, FairTax base, tax distribution, evasion and enforcement, marginal and average tax rate, and the overall effect on the economy. From your comment - I expect your talking about the rate required to be revenue neutral. Here is some material that is currently available: Morphh ^(talk) 13:41, 10 October 2006 (UTC)

• A detailed study published in 2006 by Beacon Hill Institute found the FairTax rate to be 23.82%. Taxing Sales under the FairTax – What Rate Works?
• The Argus Group published an analysis that defended the 23% rate. Rebuttal of the William Gale papers, Rebuttal of the Joint Committee on Taxation (JCT) letter

Yes, I did see the "we're going to" messages... some things I believe in when I see them. :)

I'd suggest that any studies being referred to be clearly marked (if not already) to indicate whether they studied FairTax itself, or a completely different (i.e., non-FairTax) proposal. My (minimally-experienced) observation is that trivial changes can have significant effects.

On a side note, I'd like to see a SIMS-like simulator for playing with economic modelling.

In the revenue neutrality section, we've split the studies in two. The first two paragraphs discuss studies based on the legislation and the last three discuss studies that are not. The sentence that identifies this is the first sentence in the third paragraph: "Additional studies have been performed on National Retail Sales Tax plans that do not necessarily conform to the tax base as defined in the FairTax legislation but are often considered when discussing FairTax rates. ..." It then goes on to discuss these studies and then proponent rebuttal. Give it a read through and see if you feel it is clear enough. Though, I had to fight just to get that one sentence in there and to have them grouped together. Morphh ^(talk) 11:32, 11 October 2006 (UTC)

Income tax industry

I wanted to post here as I'm going to make changes to this section and I thought I might need more room then the edit summary provided. The statement currently reads "During the transition, many or most of the employees of the IRS, income tax preparers (many seasonal), CPAs, payroll tax compliance staff in medium-to-large businesses, and software companies which sell tax preparation software, would all face significant drops, changes, or losses of their current jobs."

While I don't know where we would get source information for this, some of it is common sense and I don't think it would be disputed. However, there are some that I do dispute. Income tax preparers could be corrected to say "small seasonal income tax preparers". CPA's would also fall under my argument on this and should not be included. The southeast director for AFFT (volenteer) is a CPA and I have spoken to him about this. He has stated that many of the tax organizations and CPA's that he has spoken with would support the FairTax. Reason is that they do most of their business on finacial plannning and the FairTax would increase personal savings / investment and thus their year round (money making) business. CPA's are very educated people that perform many valuable services to an organization and indivduals. This leads into the second dispute which is the medium-to-large businesses. It is more likely that a business will utilize these resources elsewhere in the company instead of firing them. I also wonder if this along with Time arbitrage would be better suited under the Predicted effects of the FairTax article. We need a little more balance on that article. Morphh ^(talk) 14:19, 10 October 2006 (UTC)

After reading this again, I think the prior language was more accurate. I missed the word "changes" in the sentence which would address my dispute. However, I think further expansion of this section to address these changes is appropriate. Morphh ^(talk) 15:03, 10 October 2006 (UTC)

That section was my addition. Note that I also used the word "could" in the same sentence, which makes it all suitably vague. :) I have no idea how large the seasonal business is, but I'm fairly certain that the number of full-time employees (or equivalent) among walk-in income tax preparers is significantly more than the number of IRS employees (I think I saw 144,000 IRS employees mentioned). Total, that's a significant number of people to find alternate employment for, although migrating to sales tax collection and compliance would probably take care of a good chunk of them. I don't know if the bill has provision to minimize the disruption, but it shouldn't be too difficult to do so; perhaps hire them temporarily, and let standard attrition run for a few months until the level is down to the preferred point.

You suggest that this might be more appropriate for "Predicted effects", and I considered that also, but I decided that it fit better under "Transition effects"; any people who end up out of work will presumably find new jobs, so in the long term, this would just be a blip. To the people in question, this would be a very personal and significant problem.

Depending upon the business, the business may be too financially strapped to do much other than lay off (not fire) the affected personnel. Also, in some organizations, the affected employees would need to apply for any new positions (instead of simply being assigned); their own reputation in the company would speak for (or against) itself for the new position.

--Scott McNay 03:49, 11 October 2006 (UTC)

From the wording of the post above this material appears to be original research. Wikipedia:No original research. Unless there is a reliable source for this information it isn't verifiable. Outr job is just to summarize reliable sources, not make original dedcutions or surmizes. -Will Beback 04:17, 11 October 2006 (UTC)

We could probably find source info on the IRS employees as rate studies and articles discuss removal of the IRS budget and the huge decrease in size from the IRS to the "Sales tax bureau". We'd have a much harder time finding sources on the other areas and thier predicted effects. Morphh ^(talk) 14:05, 11 October 2006 (UTC)

If there are no sources for a topic then it's best not to discuss that topic. Otherwise, from where are you getting the information and how can it be verified? -Will Beback 16:24, 11 October 2006 (UTC)

For now, I've moved this section to the talk page under the area "Sections that need sources". Scott, I hope this doesn't deter you from editing. Your contributions are greatly appreciated. Perhaps we can find some information to make this point but for now I think it is best if we move it to the talk page while we figure it out. Morphh ^(talk) 00:35, 12 October 2006 (UTC)

At [2] you can see the efficiency of the IRS; 44 cents spent per $100, in 2005. On that page is a link to IRS Data Book: 2005. On that page is a link to a PDF about the labor force, [3], and it gives a value of 105,978 employees in 2005. --Scott McNay 05:22, 12 October 2006 (UTC)

FairTax and Capital Gains/Estate Tax

I was hoping that the article could go into more detail about the effects on the FairTax proposal and investments. In particular in the "Effect on Savers" section, it suggests savers would experience a double-taxation, I would suggest to rewrite to "..FairTax would result in unfair double taxation for savers since it it does not address the transition effect..." The article states that it would end the "double taxation on savings that is currently part of estate taxes". While true - I think a link to Estate tax (United States) would be appropriate - since the statement doesn't reflect exceptions due to tax-deferred (401k) savings and the lifetime deduction. Furthermore, it may mislead some readers to think that the current estate taxes represents a double-taxation on capital-gains, which it is not. Also, as I read it - under the FairTax, all investment gains would be tax free, and estates could be passed without hindrance, and current incentives for charitable giving in estate planning would be eliminated. So - why even mention double taxation - maybe "end all taxation on assets passed through estates?" - it's much more succinct. (Also, how would purchases of foreign property be handled? Quite cynically, I am thinking that under this plan rich CEOs could cash-out assets and live offshore to avoid all taxes paid to the US Government, e.g. capital flight) Zipf 22:29, 19 October 2006 (UTC) Zipf 10/19/2006

Thanks for the suggestions. I'll look over this and see how we can expand and reword it. I'll add the wikilink right now. Since they were wikilinked in a prior section, I guess it didn't get done here but it sounds like a good idea. I believe your first suggestion may be considered POV as proponents would dispute this. I think it reads better as having the critics suggest that it does not address transition effects then stating it as a fact. A new study by Kotlikoff should help expand this section. He stated that low and medium income retirees make out really well (tax cuts) under the FairTax model and wealthy retirees get a tax increase. As far as capital flight, I don't know of anything in the FairTax that would restrict this. If you wish to spend all your money offshore, then you would be subject to their tax laws. If you purchased something overseas and brought it back, then you would be subject to the FairTax. Morphh ^(talk) 02:08, 20 October 2006 (UTC)

24.167.219.211

FYI, someone at 24.167.219.211 made some changes which looked ok on the surface, but when I looked more closely, I realized that they were misleading, so I reverted them. Here's the text, according to the diff:

24.167.219.211 #1

This legislation would do nothing to eliminate the income tax in the 16th amendment,
so the impact would be debilitating to virtually all citizens. While fairtax.org
acknowledges the need to repeal the 16th, there has been no action to make it happen.

Misleading: implies that FairTax does not include provision to eliminate current income tax laws and the IRS. --Scott McNay 05:00, 22 October 2006 (UTC)

The statement that "the impact would be debilitating to virtually all citizens" has no basis. Morphh ^(talk) 14:22, 22 October 2006 (UTC)

24.167.219.211 #2

While it would make sence to repeal the 16th before inacting a new tax, anti-IRS
fever has over taken common sence.

Can't be done; you'd then be in the position of having NO revenue for the US Gov't until a new tax law is voted in. I know that there's been mention that income tax is legal even without the 16th (so why was the 16th needed???), but the court cases would presumably be filed as soon as the 16th went away and the income tax didn't; an unnecessary waste of money. --Scott McNay 05:00, 22 October 2006 (UTC)

24.167.219.211 #3

Yet in an interview given to Money magazine, Neal Boortz admited that the entire
premisis of the fairtax was based on a 20% paycut for all. While he promised to
make this more clear, he has failed to do so one year later.

I've seen no indication that there is to be any changes to the paycheck, except that taxes are no longer withheld. I'd want to see a reference for this before it goes back in. --Scott McNay 05:00, 22 October 2006 (UTC)

Actually, Neal did discuss on this in a Nealz Nuze. Morphh ^(talk) 14:22, 22 October 2006 (UTC)

I honestly can't understand why he's saying this:

"...your employer is going to have to make a decision. He will either take some or the entire amount he had been withholding for federal income and payroll taxes and add it to your weekly check, or he will readjust your pay figures so that your entire paycheck will be equal to what you used to call "take home pay" before the FairTax."

In most cases, adjusting pay figures is not an option; people get hired at a specific hourly wage or salary; my salary (including pay raises and cost-of-living changes), is like that. Furthermore, you'd have the FairTax appearing almost immediately on certain items, before the prices get a chance to adjust, and people would not be getting a corresponding increase in their take-home to acocunt for it; that kind of transition would be painful for people whose finances are already tight.

I see the clarification (which helps explain the apparent discrepancy), but prices will still come down, at least a little bit, due to removal of the compliance overhead, etc. --Scott McNay 17:00, 22 October 2006 (UTC)

I don't think it is correct to say that prices will come. "Production cost" is a better term as the retial price will go up. You are correct about people getting gross vs. net. Employees have a contract with there employer for gross. So, it is expected that people will take home their gross and production cost will decrease by about 10 - 15% and prices will increase by the un-offset amount. A new study that is due out by, I believe, "Arduin, Laffer & Moore Econometrics" goes into depth on this. This is also echoed by Kotlikoff. I don't really like how Neal presented this topic in his book. Morphh ^(talk) 18:04, 22 October 2006 (UTC)

You're right about price vs cost; I made a booboo there. However, you also seem to be introducing a conflation of sales price and cash register amount (sales price plus tax). The way that they put it in the book doesn't help, as it adds to the confusion. --Scott McNay 18:11, 22 October 2006 (UTC)

I guess I tend to do that as Linder and others have stated the intent is to have the tax included in the price. This further justifies the inclusive tax presentation. So a $100 coat is $100 with the reciept showing $23 dollars worth of tax. This is how sales taxes are presented in parts of Europe. However, this is not required or specified in the bill - it would be done afterward by those setting up the system. I guess I still think of the price including the tax as it is the final price of the good but I see what you mean.  :-) Morphh ^(talk) 19:38, 22 October 2006 (UTC)

If this is not specified in the bill, then I think that the article should present it the way that it's used now; I can tell you right now that retailers are not going to change it unless required to. If the combined price is shown, it will first look a LOT less competitive compared to used prices and to prior prices (only during the transition, granted), and second, they'd have to do some major re-programming of their cash registers or Point Of Sale systems (I'd strongly suspect that the vendor would have to upgrade the software in some cases), whereas simply changing the tax rate is dead simple. It seems fairly obvious that the rate was presented this way to help minimize shock, but as this is an encyclopedia, that is not our concern; our concern is presenting it clearly, to show how it would be viewed by "the man in the street". --Scott McNay 21:37, 22 October 2006 (UTC)

We haven't made this statement in the article. The article just discusses the presentation of the rate as a matter of calculation. We have not provided an example of how it would be viewed at the register. I think the used / new thing would be the opposite of what you discribe. As the section "Value of used goods" described, the cost of used goods will include the price of the FairTax as an embedded cost. Therefor, if prices are not presented to include the tax - new goods will have a large advantage in advertising. Consider two homes that are identical but one is new and one is used - same value. One is advertised for $100,000 and the other for $130,000. The used house being $130,000 as it already contains the value of taxes paid. The new house would be $130,000 after the FairTax was applied. So the price in the end is the same but the used good will look a LOT less competitive compared to the new price if they don't require the FairTax to be included in the price. In addition, the value of used goods is based on the value of new goods. If the new good is $10 today and your selling the used good for $8, tomorrow the FairTax goes into effect and everyone gets a huge raise as they no longer pay income taxes - the price of the new good goes up to $12. What will you sell the used good for... $8? probably not as the value has just increased and you want to keep the margin the same between the new and used to maximize your profit - It is now worth $10. In the short term, retailers can claim all inventory as non-taxable, so the transistion of price should be reduced. Morphh ^(talk) 23:04, 22 October 2006 (UTC)

I really really don't think the vendors of new stuff will complain about that too much. :) First, the NEW retailers will just leave the PRE-tax prices on the shelves, unless forced to do otherwise, since it makes them look much better than used items -- which will only benefit the thrify buyers. Second, any type of mail-order business MUST do this, since the "cash register price" will vary with where the product or service is delivered.

I agree with you that immediately ater the transition period, used item dealers would have a huge advantage, as they'd still be working on the old prices, but would be able to mark them up a bundle; houses would be in this position for many years, and I suspect that the new housing market will be depressed for a while, whereas the real estate market (for used homes) will boom like crazy. I think you'll see a huge buying boom during the transition period, as people rush to buy up old stock.

Rephrase

Let me rephrase what I'm saying and thinking:

• I really don't think that most companies will be keeping the employee share of taxes for themselves (most would not be able to), and those that do may find themselves with both a lot fewer employees than they expected and a lot more business, so that they'd have raise the pay scale again anyway to get new employees. The result is that I doubt that the cost to retailers of items will dip by more than the difference of business taxes and tax compliance (including any tax consequence planning, tax lobbying, etc.) costs.

• I also really don't think that the current method of quoting shelf prices, taxes, and cash register prices will change, since the total tax would vary with location (this would especially affect "mail-order" retailers, and businesses who deal with on-site service), due to variations in state and local sales taxes. I think that any change that occurs will be on the part of used item dealers, who may want to show two prices; the shelf/cash register price (these are the same in this case) and the effective approximate pre-tax price, so that people can see approximately how much they'd be saving compared to a new item.

I think that the article should be adjusted accordingly, with the alternatives mentioned but deprecated. In short, I think that the article should discuss things from the viewpoint of the gross pay not changing, and the shelf price continuing to not have tax included. I think that this would bring the article more in line with how things will actually work out if the bill passes. I think that much of the talk about FairTax may be making false assumptions due to not clarifying these things. --Scott McNay 01:08, 23 October 2006 (UTC)

I was planning to include the first when we have the sources and research to back the statements - the study I mentioned above. Otherwise, the rest of the article is written with this in mind. I think we only make the statement once that AFFT says that prices could drop by 22% on average if all embedded taxes were removed. This is required for completeness and POV. As far as writing to the aspect of how the rate will be presented at the register, I expect you're correct but I'm not sure we have the sources to make that statement. I guess, via non-specification, it could be implied by the function of state taxes. However, I believe all federal taxes are inclusive (including excise taxes which are somewhat similar). We also have sources that make the statement that it is to be included in the total cost. I guess I'm not sure I see the whole point - if you include one, you should include the other as there is supporting statements from FairTax leadership - in the end, you're left without knowing anything. I'm just not sure it adds anything to the article until we have something more solid. Morphh [[U

Section 28

If there is sufficient disagreement about it being progressive, might want to reword this...

Due to the rebate, the effective tax rate is progressive and could result in a tax burden of zero or a negative value.

...maybe to something like this:

Due to the rebate, the effective tax rate meets the definition of a progressive tax and could result in a tax burden of zero or a negative value.

...the problem there is that it doesn't sound quite right, and someone is likely to "fix" it. How about this?

The rebate causes the FairTax to meet the definition of a progressive tax and could result in an effective tax rate of zero or a negative value.

...by wording it that way, instead of merely claiming that it is progressive, we're explcitly stating that it IS progressive. --Scott McNay 04:30, 26 October 2006 (UTC)

• I added the word consumption - this along with the specification of the effective tax rate, I believe, should remove the debated points. Morphh ^(talk) 04:49, 26 October 2006 (UTC)

Money needs grounding in the real physical world

Government A has a currency of gold coins. Gold has some nice physical properties and is scarce so you have some real value.

Government B has a currency of paper bills which it treats as coupons for certain amounts of gold. Again the currency has real value because it is grounded in reality.

Government C has a currency of paper bills. Each citizen has to give the government 100 points in that currency at the end of each year. Those who do not pay get their nose cut off. That currency is also connected with the real physical world -- through real physical noses. The important part here is not that even the oddest things can be used as connection with reality but that a citizen of that country can not go to his government and give it 500 points to receive 5 noses (or give 5 noses to receive 500 points).

Government D has a currency of paper bills that is connected with reality in no way aside from the fact that government D guarantees an amount that is fixed based on how much stuff is produced and traded. So that currency serves as a reliable tool for measurement and storage of value. But government D wants some goods, too. It decides to pay for these goods with its own money. It can print its currency, but given that government D wants stable money the amount printed is fixed by how much the economy is expected to grow. Government D can get the needed money through taxation. It decides to tax ownership of money. (Which works only slightly different from inflation). How high could that tax be? People do not need the currency for business, because they can directly trade goods, which is somewhat awkward, or use another currency printed by some folks who also take a tax on ownership of their currency to be paid in their currency. Those other currency printers only need to cover the production and administration costs of their currency system so if government D wants to cover some costs beyond their own money system they can not do this through that sort of tax. So government D changes its model to tax ownership time of physical goods like noses or soil which creates pressure to get their money.

You can tax different things with a different sales tax, like 5% for books, 20% on beer etc. So, the sales tax is a tax on things, right? No, ownership time of books or beer is not taxed and exchanging books for beer is not taxed either. Only exchanging goods for the currency gets taxed, so this works like a tax on the currency. This devalues the currency so people will use another one or exchange goods directly. Taxing money well above its own cost can only work if the money is grounded in reality.

This is why the sales tax only idea can not work, ever. --R.H. 01:29, 29 October 2006 (UTC)

Companies can not directly trade new goods (not charging the sales tax) without violating the law. I think your whole argument needs grounding in reality. I'll trust the leading economists in this country, including a Nobel Laureate, that say otherwise. Some of the largest state economies in the country are run by only a sales tax. Morphh ^(talk) 12:59, 29 October 2006 (UTC)

Do you agree that the sales tax (above administration costs of the money itself) can not work if it is not against the law for the companies to directly trade goods or use some own made-up currency? If you agree with that, I ask you to consider that doing something against the law and getting punished for doing something against the law are two different things. My point is that checking for lawful behaviour when it comes to the sales tax is too hard to do, especially compared with checking whether somebody owns a part of land (or whether somebody owns a nose), so it is almost like that law did not exist. Well, maybe secretly making an own currency on big scale is not that easy, so the government has that one covered. But detecting the trading of good against good? Hardly. In that case, the government can charge so much on sales as long as the people still see a benefit in the comfort of using money with the sales tax burden instead of directly trading good for good without the sales tax burden. Again, the possible maximum level of the sales tax is quite limited. Maybe I am a bit too paranoid. --R.H. 13:56, 29 October 2006 (UTC)

I would assume that companies can trade goods all they want, without paying the sales tax, as long as they are going to turn around and sell the goods (legally) to an end-user.

I don't know what the proposed penalty is for failing to pay (or remit) sales tax, but if it's significant enough, companies will immediately fire and report any personnel who attempt it.

Private currency is EASY; this IS the electronic age, you know. That's the whole idea behind the "proverbial" second set of books.

I think the idea is that by having a single tax, people who witness cheating will easily see that such cheating causes their own taxes to go up, and will report it.

As for different tax rates, we have that already and it won't go away with FairTax: excise taxes, such as on gasoline, tobacco, and alcohol. Much as I cringe to say it, I think the tax on gasoline (and other energy sources which add carbon to the carbon cycle and/or add pollution to the environment) should be higher than it is now, to strongly encourage people to use better sources of energy.

--Scott McNay 17:24, 29 October 2006 (UTC)

I suggest reading the section "Effects on tax code compliance" - it might clear up some thoughts. Keep in mind that the overwhelming majority of purchases of goods and services occur in major retail outlets. They are not going to start bartering goods of a public company. It is not that difficult to check for lawful behavior when it comes to a sales tax - 45 states do it very successfully today. As far as Scott's ideas on gas excise taxes go, I'm going to bite my tongue on using the tax code for government social engineering and who these taxes hurt the most. Morphh ^(talk) 23:36, 29 October 2006 (UTC)

You're right, gas prices hurt the little people the most. :( I'm cringing at the pump prices, and I'm not a welfare case. Yes, that's probably better encouraged in a manner which won't significantly effect poorer people. --Scott.

Hey everybody, please remember that this page exists to discuss our article on Fairtax, not Fairtax itself. We're not here to debate the pros and cons, just to describe it in a neutral fashion. I'm sure there are forums and groups devoted to the topic that'd be an appropriate place for general discussions. -Will Beback 07:28, 30 October 2006 (UTC)

Notes from reading the bill

• Section 505:
  • Penalty for not collecting tax or not paying tax or requesting an invalid exemption: greater of $500 or 20% of the uncollected tax and/or imprisoned up to a year.
  • Penalty for not remitting collected tax: greater of $1000 or 50% of the unremitted tax and/or imprisoned up to 2 years.
  • Penalty for late remittance: 1%/month, not to exceed 24%.
  • "Reasonable cause" should be taken into account for failure to pay or late payment.
  • Bounce-check penalty (in addition to other laws concerning bounced checks): greater of $25 or 2% of the face amount.
• Section 301 uses the term "Qualified Family", not "Household".

--Scott McNay 19:54, 29 October 2006 (UTC)

I like the thoughts around section 505. Perhaps we can include them in section "Effects on tax code compliance" - maybe subsection "Personal vs. business purchases". As far as Section 301, I don't like using the term "Qualified Family". While it works for the bill, I don't think it works here. In the bill, you have people that are hard core reading it for details and understating what a qualified family is. There is a big misconception out there that the "prebate" only goes to low income families. Using terms like "qualified families" furthers this thought as it makes it seem like you have to be qualified (most think by income level as that is what they are familiar with in a taxation systems). In reality, everyone is pretty much qualified if your a legal resident, of legal age, not in jail or going to jail within x months. So I think the term is confusing and should not be a replacement for the term household. I expect this is also why the term household is used in most publications that discuss the rebate. If you want to briefly define what a "Qualified Family / Household" is under the monthly rebate section, I would be fine with that but I don't support a substitution throughout the article. We might also want to include the thought that it is not a requirement that you file - some may choose not too for personal reasons. Morphh ^(talk) 23:58, 29 October 2006 (UTC)

I agree; I saw the term and I thought, whoa, is it limited? And I saw later that it is limited, but in a reasonable way -- if your fam member is in prison, then the gov't is paying for their essentials. I also notice that there doesn't seem to be an age limit on supporting an adult child who is a student. I see that kids who leave home to live by themselve don't get to collect, although they might be able to collect the back amount when they reason 18. It doesn't look like adult non-relative dependents count, and it looks like adult relative dependents who live elsewhere also don't count.

Did you see S. 1921? It's similar, but has an 8.4% sales tax on both individuals AND businesses.

Yes, the monthly rebate amount isn't chickenfeed for a middle-class family, but they could do without it if they really wanted to. It's the poverty-level people who will buy used stuff as much as possible AND file for the refund; it's an option only in theory, for them.

--Scott McNay 04:07, 30 October 2006 (UTC)

If you're a dependent adult non-relative or relative that lives elsewhere, I don't think you would be called a dependent. They would get the full check of a non-dependent - $188. A dependent only gets $65. The adult child who is a student would also probably want to claim as non-dependent when of age. I suspect the kid who leaves home before the legal age would have to have some type of guardian that would claim them.

Yes - I have seen DeMint's bill but haven't studied it in detail. He was and still is a supporter of the FairTax. He thought the rate was too much for people to swallow, so he dropped the "transparency" part of the FairTax and substituted a VAT style tax for part of the collection. He believes this makes the bill more feasible.

The rebate could also be turned away for religious (Amish or something), privacy (Fed in my business), criminal (on the run), or as you said - wealthy (don't need it).. probably a few others we're not thinking of - point is.. it's not a requirement. Morphh ^(talk) 04:29, 30 October 2006 (UTC)

It appears to me that the same argument would apply to adult student children; have them apply for their own rebate. The problem would be that they're at a transient address, which might be a problem for many migrants also. --Scott McNay 12:42, 30 October 2006 (UTC)

The rebate does not have to go to an address. It can be directly depositied into a bank account, where they can access it from anywhere. We might want to mention the other methods of rebate payment since "checks" are stated in the Tax panel quote but we do not specify any other form of payment. Morphh ^(talk) 13:18, 30 October 2006 (UTC)

ser talk:Morphh|^(talk)]] 02:36, 23 October 2006 (UTC)

Is this the same as requiring a source in order to be able to say that the sky is blue or that 1+1=2? :) --Scott McNay 03:12, 23 October 2006 (UTC)

Since you seem to be more involved in the subject, perhaps you could drop a note to FairTax.org or whatever asking for a public statement on the issues, given my thoughts about them? If you don't want to do it, perhaps I can. --Scott McNay 03:21, 23 October 2006 (UTC)

I've already written them in the past with regard to the two above mentioned topics. Dr. Karen Walby, Director of Research at AFFT, has stated that "the bill does not specify that the tax be included in the price or how a retailer advertises his/her prices. It does say that businesses shall compute their sales tax liability by multiplying their gross payments (which includes the tax collected) times the tax rate of 23%. The bill further requires that the retail price and the tax be separately stated on the retail receipt. I think it is mentioned somewhere in the FairTax book that retailers would post the price including tax on the price tag so that customers would know how much they will have to pay at the checkout counter. Once the FairTax is passed, the Dept. of Treasury is given authority to promulgate rules and reporting forms, etc. These regulations will have to be published in the federal register and there will have to be hearings on them before they can be implemented." I've also spoken to her about gross / net / purchasing power. Much of this will be addressed in the Arduin, Laffer & Moore Econometrics, “A Macroeconomic Analysis of the FairTax Proposal" study. I don't want to state the contents of the discussion or the study as it has not been released yet but we should see it here very very soon. Morphh ^(talk) 14:34, 23 October 2006 (UTC)

I don't see either happening, even if Treasury does have the authority to do it. --Scott McNay 23:35, 23 October 2006 (UTC)

Clarify?

Morphh, can you clarify this? "Since government is taxed today...". It seems to disagree with the rest of the paragraph. --Scott McNay 04:15, 3 November 2006 (UTC)

It is trying to refer to the sentence prior. Will do on the clarification. Morphh ^(talk) 04:39, 3 November 2006 (UTC)

Distribution of the FairTax burden

I created a new article called Distribution of the FairTax burden. I thought that the new information in the Kotlikoff articles in the todo would require expantion of this section and a summary split. So I went ahead and set it all up so everyone can get to it.  :-) Morphh ^(talk) 05:01, 3 November 2006 (UTC)

FairTax and a cultural shift toward Sustainable Living

I wanted to comment on your recent post to the FairTax article under predicted effects. You added a well written argument about the FairTax promoting used goods and a movement to a re-usable society. However, I did not see any references or sources to support the statement. I've been studying the FairTax for several years and while hearing this suggestion before, I've never seen any research or economic data to suggest this would occur. I've always thought it to be orginal research and not appropriate for the article. While very utopian, it seems to go against the principals of the Free Market and the forces discussed under the section "Value of used goods". I'm going to add a {{fact}} tag for the moment but it will probably be removed soon if there are no sources added to support the theory. Sorry - I don't mean to bite the newcomers and I thank you for your contributions. Morphh ^(talk) 02:50, 4 November 2006 (UTC)

I've moved this entry to the talk page of the article under the section titled "Sections that need sources" under "Predicted effects". We can address it on the talk and then move it into the article Predicted effects of the FairTax if found to be valid. Thanks Morphh ^(talk) 05:22, 4 November 2006 (UTC)

Morphh, I understand what you are saying about support for the statement I had added and you put on the discussion page. Huh. I'm kind of stumped as I searched and I can find no real research that supports the suggestion, but I believe it deeply. Though I believe it not only is logical, I know I personally would be strongly influenced toward considering used stuff rather than new when I needed to purchase something. Currently, though I claim to support sustainable living and re-use, the unfortunate reality is I don't think about it - with a monetary incentive, I would always think about it. What's the answer here? How do we speak this possiblity and belief into the article? It should be there for people to consider. How about saying "Though no research has been found to support this, many believe... ... and on the other hand ... suggests it would not be so."? Or something like that? Pbgiv 23:16, 5 November 2006 (UTC)

While I think this effect (as you describe) may take place for a very short period of time, the markets of supply and demand will force used prices up (since used goods are valued more) to a point where they are at the same margin as today. Why don't people buy more used goods today - they are certainly cheaper. People will increase the price of a used good to that in which the supply / demand is met in competition with the supply / demand of new goods. I'd also look at the economist projections that show the economy doubling within 10 - 15 years. How could such economic growth take place if everyone was buying used goods - we'd go into a recession. I could see a perception change where people do just naturally buy more used goods but I can't see the cultural shift that you describe. In either instance, since it is all orginal research, I don't think including it as you describe would be appropriate unless we could find sources that show this viewpoint. However, even if we found a article somewhere that describes this thought - we'd have to look at the quality of the source and consider the accuracy of the information. We might be able to say "John Smith suggests... (source)". Others.. please comment on your thoughts. Morphh ^(talk) 01:03, 6 November 2006 (UTC)

I think that this is unlikely to occur. Used prices are tied to new prices. If I buy something for $66 plus $33 tax, I'm paying $100. The fact that some is tax and some is not is irrelevant to my wallet. The fact that I'm getting a (p)rebate is also irrelevant; that's just more money for me to spend on something. I could sell the item to a used-item dealer, who would offer me $100/4=$25 for it, and the used-item dealer would turn around and sell it for $25*3=$75, which is still higher than the untaxed $66. I'm all in favor of stuff that lasts longer (I find that it saves me effort and money in the long run), but if it's going to happen, it's likely to be because government-sponsored incentives have changed for businesses, and/or a paradigm shift has occurred in the minds of the general population, sufficient to overcome current marketing/advertising schemes.

Some items, such as name-brand computers (automobiles are another example) are almost exclusively short-lifetime items, which are generally good for maybe 3 years; the problem is that the state of technology changes significantly in that time, for a number of reasons (for example, in the mid 80's, antispyware was unheard of; now it's virtually mandatory, and computers which have been retrofitted with an antispyware program are often noticeably slower, for that and other reasons). Automobiles are similar, except that I'd guess that they become technologically obsolete in about 10-15 years time; newer automobiles have greatly improved safety features, anti-pollution features, better fuel efficiency (which seems to be generally taken advantage of and therefore cancelled out by new features), and so forth.

I agrgee with Morphh; the effect, if it occurs, is likely to only last during the changeover period, and even then, only until the used-item vendors adjust their prices to be comparable to whatever the new new-item prices are. --Scott McNay 04:46, 6 November 2006 (UTC)

Government paying taxes

I fail to understand why the government paying taxes to itself is an issue either way. When the government pays taxes, the taxes go straight into its' own hopper; as far as I can see, it simply cancels out. Why does doing so reduce the FairTax tax rate, and why does govt think that paying taxes to itself would result in a need to raise taxes? I think this needs to be explained for people who are feeling dense (like me). --Scott McNay 04:54, 6 November 2006 (UTC)

It's quite simple - there's no actual revenue raised by a government taxing itself. No new money actually goes into the treasury. It's just taking money out of the treasury and putting it back in. Thus, those transactions generate no new money for the government - and so must be discounted from any calculations related to total revenues generated by sales taxes. FCYTravis 08:29, 6 November 2006 (UTC)

If this revenue is to be discounted from any calculations related to total revenues generated by sales taxes. It should also be discounted from any calculations related to total revenues generated by current system. Here lies the problem - they discount it from one but not the other. It is logical to state that we should not count taxes the government pays to itself as revenue, however, we do so under the current system. You can't do it under the current system and not do it under the FairTax for the reason of "revenue neutrality". For example, If the govt. collects $100 today including $20 it pays to itself (via income / payroll taxes paid to employees, contractors, embedded costs, etc.), the FairTax has to collect $100 to be "revenue neutral". The FairTax will collect $100 which includes taxing the government $20. So part of the criticism is that $20 shouldn't be included under the FairTax calulation as it is revenue paid to itself. So, the FairTax should only collect $80. Fine.. but then they say.. we need to raise the rate to make it collect $100... whoo there - hold on... The $80 makes sense but you have to do the same to the current system. If the government operates on $80, they we should take $20 off the revenue neutral figure - so now revenue neutral is $80 since $20 under the current system is renvue paid to itself. However, they don't do that and it is then a debated point. What they do is actually change the tax base as to not tax the Government (18% of the base). This is not how the bill is written - it does tax government for the reason that it is important to tax government so they are not at a tax advantage to private industry for the cost of doing business. This is intentional. So even if they made the correct changes to discount calculations related to total revenues generated by current system, it would not be the correct thing to do, as that is not how the bill or current system operates. Morphh ^(talk) 15:10, 6 November 2006 (UTC)

The other aspect of this argument is state and local governments and the FairTax they would have to pay. Critics have argued that the government would have to provide them with a subsity to makeup of taxes paid under this system. Any loss to local / state government is a gain to the poeple of that area, so these losses should be offset by the local government. See Beacon Hill Study section 5. Morphh ^(talk) 15:28, 6 November 2006 (UTC)

I must be missing something... just to be sure that we're all on the same sheet of dissonance, why don't you walk me through an example or two of how govt is currently paying taxes to itself. My understanding is that sales to govt agencies is exempt from sales tax, and I don't think that that you're talking about sales taxes.

And then, after I agree that you've given a good example, you can go update the article. ;) --Scott McNay 04:33, 7 November 2006 (UTC)

An example of the government paying taxes to itself under the current system would be: The Government has employee A and pays them $40,000 - $10,000 of which is collected in taxes which is used to pay the $10,000 to the employee - that gets collected. Government has collected $10,000 in taxes from this government employee which is added to the total revenue calculation even though it was money it paid to itself. The government is both the receiver and the spender. If we're going to provide an example, we should find one from a third party - I don't want to include my own (potentially flawed / POV / OR) analysis. It is a complex topic and I'm probably oversimplifying it. Perhaps something can be found in the A FairTax Rebuttal - Excerpts from the FairTax response to the Mack/Breaux tax panel report and recommendations Morphh ^(talk) 18:19, 7 November 2006 (UTC)

I don't think that that is a good example, for much the same reasons that I don't think it will be possible for employers under FairTax to keep the income taxes and thereby save that amount of money on the cost of goods sold -- it's not the company's money, it's the employee's money. If the employee is able to manipulate the system well enough and has enough income, the employee could keep all or nearly all of that money. I take your point, though. --Scott McNay 05:31, 8 November 2006 (UTC)

True - Perhaps a better example would be when the government must match payroll taxes, and cover all corporate and payroll tax expenses of its contractors and all of their suppliers. I need to do a little more research on this topic. Morphh ^(talk) 19:01, 10 November 2006 (UTC)

That sounds much better, although I'd leave contractors out of it, since contractors rarely only work for a single employer. That would force the contractor to keep two payroll systems -- at best. So, the government may be paying itself, indirectly, but as a practical issue, it would seem to be far simpler than the alternative. --Scott McNay 05:47, 12 November 2006 (UTC)

Hmm, are you SURE that government agencies pay the employer half of payroll taxes?? --Scott McNay 05:49, 12 November 2006 (UTC)

I am not sure in regard to this subject... I expect indirectly, just like any embedded tax cost - it is paid by the consumer of the good or service. That blurp was pulled from the Tax panel rebuttal paper. It is also describe in te JCT rebuttal paper. It included what we had mentioned in the first example. We currently have the sentence "Other studies point out that the current system is also counting taxes the government would pay to itself as revenues from income and payroll taxes that are paid to government employees/contractors and counted as part of the total government revenue." This doesn't include mention of corporate taxes paid by contractors. However, it appears most of the offset was due to the inclusion of taxes that state and local governments would pay on retail sales tax along with the a tax equal to the retail sales tax rate on the total value of the salaries that state and local governments pay their employees. The inclusion of this factor in the base and the subsequent addition of revenue to fund this created a higher rate. However, Beacon Hill concluded that no additional revenue was required, as this loss of local government revenue was a gain to the local taxpayer and thus should be offset by local tax changes to raise the same amount of revenue. Morphh ^(talk) 13:28, 12 November 2006 (UTC)

Reworded article to clarify Morphh ^(talk) 16:34, 12 November 2006 (UTC)

Clarification

Someone wrote "The Argus Group and Arduin, Laffer & Moore Econometrics both published an analysis"; if this is two different reports, then "analysis" should be plural to make this clear. --Scott McNay 03:44, 9 November 2006 (UTC)

They are separate studies. Changed to plural - However, please double check that I used the correct grammar / spelling for this. This one sounded a little tricky. Morphh ^(talk) 14:05, 9 November 2006 (UTC)

Looks ok to me. --Scott McNay 01:27, 10 November 2006 (UTC)

Please review

Please review my change; the text may not longer be correct. --Scott McNay 05:30, 14 November 2006 (UTC)

I took a poke to clarify :-) Morphh ^(talk) 15:39, 14 November 2006 (UTC)

Text added by 69.87.171.220

This strikes me as being slightly irrelevant. Opinion? "His good friend, fellow talk radio host Sean Hannity is also an avid supporter and so is Herman Cain, a former Senatorial candidate from Georgia." --Scott McNay 00:43, 15 November 2006 (UTC)

Sean Hannity and Herman Cain are both big supporters that promote it on their shows and have attended FairTax rallies. Larry Elder is another. So I'm not sure it is irrelevant though I'm not sure it is substantially notable either. It could be acceptable in the context of Grassroots support and radio talk personalities that have assisted in the Grassroots movement. Doesn't bother me if it is included or not. If it is kept, I would probably reword it. Morphh ^(talk) 01:16, 15 November 2006 (UTC)

So reword it and see if my whine level goes down. :)

I had trouble thinking of a good word to express what I thought of it; "notable" is better. --Scott McNay 04:30, 16 November 2006 (UTC)

I gave a shot at rewording.. see what you think. Morphh ^(talk) 04:38, 17 November 2006 (UTC)

The article discusses pending legislation

How can this not be classed as a current event? Unless there is more specific tag? Robert A.West (Talk) 01:56, 27 November 2006 (UTC)

Legislation can sit in congress for years and years with little or no change. With your deffintion of a current event, everything that is not dead or historical would be classified as such. That is not the intent of the tag - the tag is for something that is on the news today, that is undergoing many changes as the event unfolds. Nothing of the FairTax is live or happening in the moment to be changed so often. We may get a new study here and there but this is not the idea of a "current event". Look at the Current events portal and see the types of articles. They classify them by "Headlines", "November 26", "November 25"... this is the idea of a current event. Morphh ^(talk) 02:16, 27 November 2006 (UTC)

Actually, no legislation can sit in Congress for years -- all pending legislation expires at the end of each annual session. If reintroduced, it is nearly certain to get a new number. There is accordingly a 100% likelihood that the status will change within the next few weeks. That is a lot more than merely "not dead or historical." Robert A.West (Talk) 02:33, 27 November 2006 (UTC)

We'll I'm sure we'll see that on the evening news and the Current events web portal. Just because something is current does not make it appropriate for the current event tag. Morphh ^(talk) 03:23, 27 November 2006 (UTC)

Point taken. We'll probably hear about some star's latest affair instead. Robert A.West (Talk) 03:27, 27 November 2006 (UTC)