On Wednesday 07 Jul 2004 19:53, ken barber wrote:
> hey kendall, after reading this i even more want you
> to see http://www.fairtax.org it addresses most of
> what i read in the other link.
>

Ken,

Looking at fairtax.org made me feel like watching a Michael Moore movie!!
Undoubtedly every fact is "true", the problem is that the circumstance in
which a statement can be seen to be true are artificially created.

The way to combat "spin" is to exercise common sense. I read on the website
that the current fed tax bill is 1.2 trillion and that fairtax is designed to
collect the same amountl, so it is not a tax cut as such. I also understand
that the current fed income tax is "banded" (that is the tax rate is
dependant on which income band you fall into). This means that the higher
earners pay more tax. Now revenue from such a tax fits a bell curve, and the
tax rate banding slightly skews the curve towards the higher earners (not as
much as you might suppose) so in effect the vast burden of taxation falls on
the middle earners. The fairtax method has a remarkably similar revenue
profile, by providing rebates for the poorest the curve is slightly skewed
towards the richest.

Given that the revenue profile of both taxation methods will be broadly
similar who are the real winners and losers. The poorest and richest will
obviously gain - poor through receiving rebates, and rich through being free
to utilise increased  available capital (and make themselves richer), but
there are other winners as well who are not so obvious. Employers, for a
while,  will better be able to withstand pressure for wage inflation, since
employees will "feel" richer due to the increase in take home pay. B2B
businesses would love this since they are operating within a tax free zone
and not contributing to society (via taxation) just their shareholders.
Prices & the cost of services will increase not just by  the tax rate  but
also by the cost of collecting and administering the tax. The "price cut"
which Ken mentions is difficult to visualise, the only "saving" I can see is
a B2B employer no longer has the overhead of collecting tax from its
employees and has no "final consumers" so does not have to collect this sales
tax in its stead.

Finally, since this is the C-Palsy List lets look at the effects on our
members. Since this tax applies to ALL new goods and services the cost of
Attendants (and all other services) will go up 23%.

It is interesting to note the cost of utiising a prostitute should go down,
since the tax doesn't apply to "used goods"!! I also wonder how long it'll
take for car showrooms to offer "rent before you buy" deals,  rent you a car
for a month (on which you pay 23% tax) followed by purchasing a second-hand
(ex-rental) car with no tax on it!!

Not a good tax!!

Cheers

Deri