Disqus - Latest Comments for Wayne

Re: Handouts in disguise

Wayne — Tue, 05 Jun 2007 12:26:43 -0000

Rogel,

Based on your comments, it appears there is a fundamental flaw in your concept of "corporate taxes". I own a business. If the government raises taxes on my company here's who it affects:

a) Consumers - I have to raise my prices to pay for the new tax.
b) Shareholders - Shareholders (myself included) now recieve less return for the money and time we've invested.
c) Employees - I will have less capital to attract and retain the top talent in my industry.

As you can see, taxes on corporations are simply passed on to one of these three entitites.   The practice of taxing businesses is favored by politicians because the cost to the people it affects is hidden. This makes it possible for politicians to make promises to voters and say they are going to tax businesses to pay for those promises.

Keeping taxes hidden from voters is very important to politicians. That's why money is taken out of an employee's paycheck to pay for Federal & State Income Tax, FICA, etc. If you recieved your full paycheck and recieved a bill each month from the government for each of these taxes, their would be public outrage. Other types of embedded taxes drive up the cost of our good and services. There are heavy taxes on gasoline that are embedded in the price you see at the pump. If it was widely know how much of the cost of a gallon of gas was paid in taxes, people would be demanding the government lower gas taxes.   Overall, the cost of embedded taxes raises the price of everything we purchase by twenty two percent. That means when anyone, rich or poor, goes to the store and buys a gallon of milk for $2.50, $0.55 cents of the price of the gallon of milk is used by "corporations" to pay taxes. Jack up the taxes on companies that make milk, sell milk, ship milk, market milk, or use milk in their products and the cost of a gallon of milk will go up.

I hope this simplified example makes it clear to you that taxes on businesses are always passed on to individuals.

I strongly encourage you to read the Fairtax book. I think you'll change your mind once you have an understanding of what the Fairtax is truly about.   Another good read is Basic Economics by Thomas Sowell.

Good Luck!

Re: Handouts in disguise

Wayne — Wed, 06 Jun 2007 03:02:24 -0000

Rogel,

Your wrote "The question is, is it fair to eliminate tax from one, major, segment of the society while many other individuals will keep pay(ing)".

By your logic, the current tax system unfairly taxes the wealthy. The top 50% of income earners in the US pay over 95% of all federal income tax revenues. The top 33% pay over 85% of federal income taxes. I'm not making this up - check out IRS.gov. Only "rich" people pay any significant amount of federal income taxes. This is why liberals are able to call any tax cut a "tax cut for the rich".

The Fair Tax proposal has a prebate provision that provides every person with a monthly check to cover the tax he/she would pay on basic living expenses. It basically removes the federal tax burden from millions of americans. This too is "unfair" by your logic.

One of the most important benefits of the Fair Tax is that it exposes the cost of taxes to the general public. This would create a tremendous amount of political pressure to keep goverment small and lower taxes. And, it would make it much more difficult for to lobby for special tax breaks.

One last thought, companies cannot simply lower their profit margins. Lower margins mean less money to pay out to shareholders, less money for employees, less money to advertise, less money to invest in equipment, less money for research and development, etc. Lower margins means thousands, perhaps millions of people who invested money in your company with the hope (but not guarantee) of a return will be penalized. Many of them will invest their money elsewhere; in other companies that have more favorable tax burden. Many global companies choose to locate their offices outside america to avoid paying taxes that make their products and services less competitive.

I get the impression that you feel taxing businesses is a "free lunch". Nothing could be further from the truth. The tax is ALWAYS passed on to one of the three groups I previously mentioned.

It's fantastic that you post your opinions online and encourage others to respond. I hope you do it in the spirit that you might learn something from the comments of others. It's clear that you'd benefit from a better understanding of economics before you can have an educated discussion about these issues. If you're truly interested, start by reading Basic Economics by Thomas Sowell before you pickup a copy of the Fairtax book.

Re: The silver bullet tax

Wayne — Thu, 07 Jun 2007 23:47:01 -0000

Life ain't fair. We should adopt the tax system that makes the most economic sense, not the system that is most "fair".

Keep in mind that the Fairtax does not eliminate state and local taxes. We can't solve every problem with government by enacting the Fairtax, but it would be a HUGE step in the right direction.

Enacting the Fairtax would expose to all americans just how much we are taxed. This visibility will cause a tremendous amount of pressure to reduce government spending and lower the tax rates.