Channel 13 will have a forum to talk with the 7th district congressional candidates for the special election.
If you want to hear Sean Shepard talk about the issues, call the station immediately. As it stands right now Sean has not received an invitation to be in the forum even though he might be your favorite candidate if you got to know him more.
A Libertarian CAN win this office if he's the best man for the job. You deserve to learn for yourselves more about Sean so you can make an truly informed decision.
Call them now and tell them you want to learn the views of ALL the candidates.
Channel 13: 317-636-1313
Friday, February 15, 2008
Urgent Action Needed: Call Channel 13
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18 comments:
So you decide how much tax you pay under fair tax?
Well, for some things, sure. Yes. Like a shirt. Don't want to pay the tax? Simple, don't buy the shirt.
And you can save money - just buy used cars, used houses, used whatever.
And that's all fine.
But someone HAS to pay 2.3 trillion dollars for the Fairtax to be revenue neutral.
The biggest shift of taxes, ironically, under the fair tax, is 460 billion dollar tax on health care.
All health care is taxed at least 23% under fairtax. That means cancer surgery, bypass surgery, chemotherapy, dental costs, anything, pays the tax.
I know parents who spent nearly 500,000 dollars to keep their child alive -- then spend another half million in care for the child for the next 25 years.
Under the fairtax, those parents would be taxed 400,000 dollars. They didn't have any choice.
So you can't really decide how much taxes you pay. Thats simply not the case.
But is that atypical? Is that so infrequent an event, that we don't need to worry about it. Maybe a cap of 100,000 tax on medical car would take care of that.
But would that work? There are 20 million Americans fighting cancer in any one year. Two million people in nursing homes -- 70% of them getting federal aid.
But all of those people have expensive health care, and would get very high sales taxes.
How about an 80 year old woman that breaks a hip, and has to get surgery. She may get 25,000 in sales tax on just her nursing home.
How about rent? Did you know rent is taxed? Yes, all rent. Thats 30 -40 million people.
And all insurance premiums.
And all utilties.
Sure, there will be some who will save a small fortune in taxes. But fairtax is revenue neutral -- it HAS to bring in the same amount.
SOMEONE has to pay 2.3 trillion.
Supposedly -- people with cancer and other medical needs will pay 460 billion. I don't think they can - nor will.
Supposedly -- the government will pay 400 billion in taxes, to itself. I think thats silly.
So while Fairtax sure sounds wonderful, if you realize who gets slammed under the fairtax -- the elderly, the sick, renters -- then you realize its not magic after all.
And if you realize you can't really tax the government to pay the government -- then you start to realize Fairtax can't really work. The 23% tax rate would have to be much higher.
One study said 57%,and thats probably low, as one group after another get exemptions.
I'm sorry it can't work. I really am. We need tax reform big time. But this isn't reform.
Mark,
I appreciate you taking the time to think through what on the surface would seem to be a valid concern.
However, you fail to note that EVERYTHING is currently taxed already. You can operate with 70% or less of your paycheck paying up front with no choice on anything or 100% of your paycheck with you in charge of most purchase decisions.
It starts at 15.3% (FICA/MC) from dollar one. THEN you get your income tax taken out at 10, 15, 28, 33 and 35 percent.
So even at the 15% rate you (with the portion your employer pays on your behalf) are dropping 30.3% inclusively.
Make $100 keep $69.70 (BEFORE State, Local, Property taxes).
Under The FairTax.
Make $100, keep $100 (also before).
Save $100, save $100
And if you spent $100, $23 of it was tax (excluding the prebate impact).
Education would be tax free under the FairTax
Spend approximately $28,000 a year and you pay around .18% in tax (POINT 18 percent) after the prebate is considered.
Spend approximately $128,000 a year and you pay around 18% in tax if memory serves.
On that $100 example ...
$23 vs. $30.30 .. While short of full repeal, the FairTax plan would be slightly better.
And let's not forget the drop in prices when the embedded taxes come out. How much in those doctor and hospital bills are federal taxes (we can discuss regulations later) that are being paid by the patients?
How about the economic impact of finally de-taxing our exports so they can be competetive?
How about the $10 trillion or that would be repatriated to the United States and put to work here instead of sitting safely offshore?
Besides, we should never use "PERFECT" to be the enemy better.
The ultimate goal should be completely get rid of the need for taxation at this high level of any kind (like things were prior to 1913) but I have no delusions on that happening for some time.
The cost of medical care is a whole other topic that needs to be addressed with free market solutions, fewer barriers to entry, fewer regulations on the provision of care, greater options for specialization, and better decisions of juries on reward amounts. Lots of angles to go here.
Follow up note:
It occurred to me right as I hit submit, that medical expenses in excess of 7.5% (I believe) of a person's AGI are deductible.
This sets a high bar, but in the extreme cases you noted is of benefit but still doesn't affect the 15.3% FICA/MC impact.
So, on balance, after the embeds come out saving 11% to 22% depending on who you ask then add back in the 10% tax variance... people still come out 1 to 12% ahead.
Don't forget that the tax base gets spread to include illegal immigrants, drug dealers, prostitutes, tourists and others.
Many of my Libertarian friends are split on this plan, but most have acknowledged that it would be at least slightly better than what we have now. Oddly, I find Democrats and Republicans both fairly accepting of the idea once it is explained in detail without bias.
11% embedded? Here, do what I did. Go to a small business and ask. Not some theory that sells you pie in the sky.
Ask a businessman. A real business man. I did, but its easy, our family owns a business, and I just asked my brother, who eats, sleeps, and dreams about his business -- he has to, its his idea, and his lively hood.
Don't tell them the theory of fairtax, all the promises, blah blah. Just ask him, if he got rid of paying his employees FICA - how much would he save?
Cause after the smoke clears - thats the real embedded tax you can pass on, its the real business expense.
If/When he tells you his FICA cost, ask him if he could cut his prices 22% if he got rid of that cost.
You might have to wait a few minutes for him to laugh. Or he will ask you if you are serious.
I've chased this dog around this track before. The Fiartax people will say "But you have compliance costs too!"
Yes -- we have a bookkeeper. She does 1000 things. FICA is one. Great, get rid of that for her. She will have to take care of Fairtax paperwork too. We will need new sofware and training and more room for error. If anything, compliance cost will be more.
Then fairtax people say "But your employees don't pay income tax or FICA anymore!"
Thats right -- THEY DONT. We still have to pay THEM the money. They get to KEEP their whole paycheck.
So we don't save that.
Then the fairtax people say "But you don't pay income tax either."
Thats right, we wouldn't. But thats not a business expense. We would like to keep OUR whole paycheck too, if you don't mind. We will need it to pay our higher cost.
And if we gave all our "income tax" savings -- it would be 1% or so of the total sales prices anyway.
In short, the embedded tax is hyped up, puffed up, vague snake oil. FICA is the real embedded tax.
We COULD possibly cut our prices 1% or so, NOT 22.
Its a huge difference.
The presidential commission on taxation looked at consupmption tax -- and said it would have to be 57 percent.
The more that INDEPENDENT people look at this, who know economics and aren't fooled by the hucksterism that fair tax is, say the rate would have to be much much higher
Take a look around. Read about the "rest of the story" One good funny blog is fairtax absurdity at blogspot dot com. I admit, its mine. But its also, correct.
Mark,
I'm a small business owner myself.
But more importantly, you're trying to argue with me about this but these aren't my figures they are economists with PHDs. And, even though you are indeed raising reasonable concerns, these arguments have already been discussed and settled, so let's not reinvent the wheel.
I was encouraged by finding a report I'll reference below that states compliance costs alone are 2 to 5% of the current cost of goods (I calculated 2 to 4% based on estimated compliance costs divided by 2007 GDP). I think 5% is too high, but we shouldn't discount the effect of businesspeople making "tax decisions" not "business decisions".
In fact, two years ago "tax decisions" in acquiring my company doubled my legal fees in a transaction, tripled the complexity of the transaction and may still result in what is called "phantom income", that is the portion of technical income on paper that does not actually generate any cash or receipts (which may even be needed to pay such taxes).
Let me reference:
http://www.fairtax.org/PDF/MacroeconomicAnalysisofFairTax.pdf
I strongly encourage you to review that document as an independant analysis of The FairTax.
I use an 11% to 22% cost of goods reduction figure. 22% was a figure originally used based on the Jorgensen analysis, which I reject because it does not take into account the employee vs. employer paid taxes AND on the other end doesn't account for compliance costs. So, I believe it to be too high since I think many (most?) employers would pass the FICA portion down to their employees.
The research article uses an 11.55% figure which I think is probably closer to the right figure.
I also encourage you to read Federalist #21 where Hamilton discusses consumption taxes being the best method.
Lastly, it is worth noting that COMPLETELY ELIMINATING the personal income tax would reduce government revenues only back to year 2000 levels. Unfortunately, if you cut everything except defense, social security, medicare/medicaid and interest on the debt - you only save about 14-15% of the spending. Entitlements have grown a six times the pace of discretionary spending.
Hopefully, my opponents are reading my posts so they can be better educated on these topics. With a sub-20% approval rating in Congress I don't know why people don't wake up and say enough is enough.
Actually the more Phds and economists that look at this, the more its called everything from "fatally flawed" to "ludicrious" to "absurd".
The Presidental Commission on taxation -- pros, phds and economists - have looked at this, and said a sales tax would have to be 57%.
And that 57% is wildly optimistic, because it assumes no reduction in buying when the prices skyrocket.
Which is just silly.
A 57% sales tax on new homes will reduce drastically the sales of new houses -- so the revenue fairtax depended on from this segment, won't be there. so the rate would have to go up to be revenue neutral.
No one disagrees with this, by the way. No Phd will say if there is a 57% sales tax on new houses, that new house sales will stay the same. None.
Also - no Phd will say that the government can pay itself 500 billion dollars a year in sales taxes. Yet that is exactly what Fairtax does. Neal Boortz has said "the federal government itself would be a MAJOR taxpayer"
Sorry, but no, the federal government can write all the checks it wants, it CAN NOT be a major taxpayer. It has to WRITE the checks too.
No economist would disagree with that, either.
Even your own main economist, Jorgensen? , is quoted as saying prices would have to go UP with a consumption tax.
Why not just get 100 business men -- who never heard of the fairtax - and tell them what taxes they would save. FICA - Corporate taxes are the main ones, also, the "compliance" cost of the bookkeepr, record keeping.
See how much they will TELL YOU they would save.
I did this, with ONE business, so I know what this ONE business would save. Its less than 2%. Fine, 2% is a big cut in costs. But its nothing like 22%. And fair tax depends on an astonishing 22% cut in costs.
How do landords save 22%, when their FICA cost is less than 1/2 of 1 percent -- and they don't even PAY corporate taxes?
How do FORD and GM save 22% when they only pay 200 dollars or so per car on FICA -- and they DONT pay corporate taxes cause they lose money?
But Fairtax would RAISE car prices 23% (actually a lot more would be needed but lets say 23). Fairtax assumes Ford and GM can lower their prices -- when THEY LOSE MONEY ON EACH CAR ALREADY.
There is a huge difference between a sweet sounding theory -- and the real world.
I've talked to real business owners, and Ive talked to real economoist, and NONE of them say the fairtax would work ANYTHING like the proponents claim.
Mark,
That 57% figure you keep quoting IS NOT The FairTax. It's a consumption tax plan that panel made up on their own. AND, it should be a signal at just how out of control government spending is that anything from a 23% to a 57% would be necessary.
Hundreds of years ago there were warnings about any King who would take 1 day of 10 for the treasury, but today they take basically 4, 5 or 6 of 10.
You have so much invested in attacking this plan, that nothing I say is going to change your mind. A person convinced against their will, is of the same opinion still.
You're continuing to use figures that I have descredited myself and your arguments are overly simplistic. Your last post ventures on just being silly, fails to address the numerous levels of taxation in each stage of production. This goes far beyond just FICA and requires a bit of intellectual honesty from your end to have a fair discussion.
You keep failing to consider where the change would benefit (like de-taxing GM and Fords exports, reducing complicated tax compliance costs, allowing them to better utilize capital when they do post profits ... unfortunately, they made boring cars in the 80s and 90s, pay $1400 per car more in benefits to retirees than their competitors and now they, and other big corporations, are hoping to dump their health care costs onto the taxpyers by pushing for universal government healthcare).
The bottom line is that The FairTax has far reaching benefits and would be at minimum a slight improvement to our current system of confiscatory income taxation.
Under the CURRENT system, I would introduce or co-sponsor legislation that made all health care expenditures tax free while working to reduce government spending and voting against any earmarks (earmarks have gotten lots of attention but comprise only 1% of the spending).
We can bicker all we want over the method of collection to the extent such is necessary, but or country is going to bankrupt itself and I want to help stop it from happening first and foremost.
I'd love to engage in this discussion in real time (lots more efficient than typing) so let me know if you're up for it.
sure, come to Illinois anytime, we can have lunch/
Exempting medical bills from Fairtax burden would be a very good idea --
only one thing. You have to make up that 460 billion somewhere else.
The 57% is a math answer that the President Commmission on Taxation came up with, on how high a sales tax would have to be.
Fairtax isn't 23% -- contray to myth. Fairtax rate would have to be determined later -- when the bill passes.
Who came up with the 57%? THe presidental commision on taxes. http://www.house.gov/jct/
This isn't a group of people with some ax to grind. These are professionals who study any plan or idea congress or the president tell them to.
These guys are pros, Phds, and they work every day with the tax system.
57% is very optimistic itself -- it assumes everyone STILL buys new homes, new cars, ect, even though they cost 57% more. The commission didn't even try to anticipate the sales of things when 57% sales tax is added. It just figured math - how high would a sales tax have to be, to get 2.3 trillion. It was really a math question.
And the answer they got, was 57%.
You mention compliance cost, and I hear that a lot -- its always vague I notice that. Our business would keep the bookkeeper, cause she does 999 other things, than FICA. IN fact, her job would be harder, she would need new training, new software, and new training, and new duties with Fairtax no on TOP of everything else.
SO our compliance cost would be MORE under fairtax, at least for a while, till we got used to it.
57 percent is an OPTIMISTIC rate, its proably LOW since new home sales, and other big ticket items, would suffer.
SO the experts that looked at this DID NOT say 23%. The ONLY people who said 23% are the Fairtax people - ever notice that?
And the Fairtax people tax the GOVERNMENT -- do you understand the impossiblity of that? Or not?
Do you believe the government can pay a sales tax -- to itself?
I guarantee you, the Joint Commission on Taxation didn't count on collecting 500 billion from taxing the Army, the Navy, the Airforce, and NASA.
This is a nice theory that has fooled a lot of people who want to believe.
I got a theory that this NEVER comes CLOSE to getting a vote in the house -- BECAUSE the last thing Boortz and others want is for this to pass. It would be a nightmare, and they know it, they would be laughed at for 1000 years, and they know it.
They remind me of those people in the movie the Producers -- who come up with a play SO bad, they just want to collect the money from people, and have it close. They dont really expect it to get to Broadway.
I would love LOVE for this tax to become law. I really would.
The commission exclude all kinds of stuff that The FairTax doesn't if memory serves.
Please understand, I have some minor concerns and questions as well. But I also want the ability to vote with my wallet and close it if the rate gets too high. Put the people back in charge of things.
As Hamilton said using more eloquent words, this would provide a built in circuit breaker against government excess.
And a book keeper has nothing to do with taxes. Tax work just becomes an added duty. You have to have a book keeper just to, well, keep the books, regardless of taxes on the bottom line.
Just for the sake of pointing out how out of control our government is: IF the rate REALLY would have to be 57% ... think about that ... that means for every $100 a person earns, nearly $60 would have to go to pay for FEDERAL government (before state and local).
It has to stop. We can't afford it.
Yes I know the book keeper has lots to do, I SAID that.
The FAIR tax people say there is all this "compliance cost" as if its a huge cost in addition to FICA.
I've been in discussion, and showed on FICA wasn't NEAR 22% --- and they say "Oh but compliance cost" and thats why I said compliance cost of record keeping and so forth, would be the same.
Yes we need a real change in tax code - not this farce.
Its really a shame these hucksters are out there fooling people. Thats why I would like this PASSED and put into place. To show people this is a crock a mole.
Then maybe we can find a real solution.
My solution is to just tax all income types the same -- labor, stock profit, business profit, self employeed profit.
The big screwing in the tax code is to earned income -- work. A guy who works his butt off, six days a week, 10 hours a day, as a brick layer or doctor or whatever, and makes 100,000. HE could pay 38,000 in taxes -- FICA and income tax.
His brother makes 100,000 on a hedge fund. He would pay - if any - 15,000.
Yet the guy who makes 100,000 by work ALSO risks, and provides jobs and provides a service. Yet he pays up to 300% higher taxes.
Thats the big screwing going on.
We could have a very simple system, one page return, easy to figure. In fact, Ron Wyden, a senator from Oregon, has such a plan that has been vetted.
If Neal Boortz and his buddies REALLY wanted a fair simple tax system, they could go for that.
If you read Boortz book, AFTER you know they PRETEND to tax the government to pay the government -- you get a whole new view. You know he is trying to hide the fact the 23% is horse raddish.
They know if they admit its over 23%, they can't sell it. So they do sommersaults trying to keep everyone believe its 23%.
It would be 57% - and then get much worse, as the new house market collapsed, and the rate would have to get higher yet.
Its a house of cards, and they know it.
We just need to start paying down the debt, fund the obligations we've made to people dependent on them and eventually roll back the whole system.
Our politicians are selling us into financial slavery with the debt and failure to provide proper economic, business and personal finance education in the (unfortunately public) education system.
I say we get spending so much money overseas on wars against countries we have no business taking military action against, save hundreds of billions of dollars and pretty much eliminate the personal income tax.
We then could move to a reasonable, as if such exists, consumption tax arrangement, allow individuals to opt out of Social Security if they wanted to, change the system completely for younger workers (privatize it) and start getting our country back on sound economic footing.
I love how we're going to borrow money from foreign sources (federal debt spending) to give everyone a tax "rebate" so they can buy stuff from (likely) ... foreign manufacturers.
Maybe we should figure out how to get every family's $5,000 to $7,000 contribution to the Iraq War back?
Yes we need a lot of things in the country - better tax code, better fairness to those who actually do the work -- more openness so we know what our representitives are doing, better education, cleaner enviroment, energy independence.
Each of those things are hard enough -- when you work TOGETHER.
Thats one reason this Fairtax thing is a crock. We should go ahead and DO it, show people it was an absurd farce, and maybe find something that would work.
There is a lot of energy being spent by well meaning people who are supporting this lunatic farce of a plan. And they will never realize its a total crock, until we try it. So lets do it already. Lets move past this farce and find a real plan.
I wasn't aware the thread was a Fair Tax debate, but so be it.
Melyssa, honey, no I won't call Ch. 13 to ask them to add someone to the debate. Because Sean has not a bat's chance in hell of winning. And on a limited-time program, I don't want the views of Andre and Jon clouded with the views of another candidate who cannot possibly win. Sean's hyperbole ab out Fair Tax here demonstrates the point: he's monpoloized the blog with a fairly nice discussion about the tax plan, but he's all over the board and average voters would not be able to decipher the nonsense from the meat.
Please spare me, fellow bloggers, the patriotism jargon and "anyone can win" themes. In a short-campaign Special Election, a Libertarian cannot and will not win. I am not thrilled about that fact, but it's a fact nonetheless.
As far as fair tax goes, I've still got an open mind. The original bill, proposed by Rep. Lindner of Georgia, and trumpeted daily on radio by talkshow host Glenn Beck, has been through the ringer. I've read a lot of analyses of it.
The original bill cannot work. But a hybrid could, and it deserves discussion.
Just not in a Special Congressional Election 3-week timeframe.
For the record, I didn't bring up the issue and am not sure why Mark posted it under this heading and he is the one that started with the "all over the place" discussion.
There are some things that need to be looked at with The FairTax, but the current system is a total farce.
I understand the concern with the whole "lesser of two evils" approach, but that battle will be fought until the end of time until something really, really bad happens (like default on our Treasuries or 85% tax rates) to wake people up.
When someone like me is stopped from getting the message out regarding the vast financial troubles our country faces or potential solutions to reduce health care costs. It *IS* important that we influence the debate.
Influence away, Sean. Raise some money, get on TV/radio.
But just don't clog up a debate.
Cold, cruel politics. Nobody said it was pretty.
But it is frighteningly real sometimes.
Wow, someone on here actually thinks having money and party connections as a Dem or Rep is more important than being a person of integrity and the best person for the job?
No wonder Indiana and America is in just horrible financial shape.
Some of us are not happy with the status quo.
Libertarians worked hard to get ballot access and deserve to be in the debates.
Sean is working hard as a candidate and is the only candidate who hasn't been in the news for being naughty.
Citizens from 7th district deserve to hear what the best qualified man for the job has to say.
We do understand why Carson and Elrod are afraid to debate him, though.
We truly want to hear from the 3rd candidate.
Nice "naughty" line...thanks...I may steal it. It's clever.
And for not being naughty, Sean will gete no more than 10% of the votes, if that. In a poorly-voted Mar. 11 Special Election.
He cannot win, and his convoluted porse on this blog, and others, leads me to believe he cannot offer much to that debat.e
Now, if he's still on the May 6 ballot, and wants to find appropriate debates, that might be a different story.
I just need to sort out the differences between Jon and Andre. Without the extra noise.
Actually, I'm not sure why you think a Libertarian has a smaller chance of winning a special election. With the lack of straight-ticket voting, and the odd date of the election (mostly just idealists will vote), I wouldn't be surprised if Sean's percentages are higher than any other Libertarian we've run so far. Plus he's a great candidate.
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