Re: My take on the flawed "Fair Tax" (repost)


AllYou! wrote:
> "js" <jonathansmith99@xxxxxxxxx> wrote in message
> news:1128542308.049477.82690@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
> >
> > AllYou! wrote:
>
> >> > I refuse to waste anymore time on this in the absence of any evidence
> >> > that you can actually do something other than run around in the same
> >> > damned circle over and over.
> >> >
> >> > I put the question to you - WHAT HAPPENS TO WAGES AND PRICES aftert
> >> > NST?
> >>
> >> I've answered that irrelevant question many times.
> >
> > Humor me, then. I'm sure you did it with your children whne they asked
> > Why?
>
> Real wages and prices (regardless of what happens to the currency scale) do not
> change.

Still evading it.

> >> The relationship will remain
> >> the same, and where the currency scale is pegged is irrelevant because it's
> >> just
> >> a number. We've been through this many times.
> >
> > We both agreed that there is parity at the end of the day, yes. But we
> > have not agreed to how this parity is achieved and if differntial
> > effects need to be accomodated as part of the transition. That's how
> > tis whole mess started, if you remember - your insistence that there is
> > NO NEED to accomodate the before and after tax status of pre-NST assets
> > when these assets are converted to consumption.
>
> I know we have not agreed, and we'll never agree as long as you keep claiming IT
> DOESN'T MATTER! Remember, that's your claim, not maine.

What doesn't matter is who we think pays the taxes.

> >> But that's not the question between us, and really never was. Focus. The
> >> question is why would a transition have to account of current *post-tax*
> >> equity
> >> when, because all taxes are embedded in the cost of all goods and service
> >> now,
> >> that equity would still be paying the taxes?
> >
> > And the answer to the question is - it depends on where prices end up.
>
> Prices, as expressed by relative values, will not change.

Evasion noted.

> >> Focus.
> >
> > Yes - please focus.
> >
> >>
>
> >> >> IT MATTERS TO THE CASE OF THE NST.
> >> >
> >> > Not to me - but fine. When it comes down to answering the question
> >> > regarding market reaction in terms of price and wage setting, argue it.
> >> > As far as I am concerned - and as far as you have agreed - taxes are
> >> > ultimately paid by the consumer.
> >> >
> >> > If it matters, then you'll need to explain it in that context - when
> >> > NST is implemented. It doesn't matter to me whether under PITAX the
> >> > man on the moon pays for it.
> >>
> >> In the context of the original question I asked of you. Focus.
> >
> > And the answer is - it depends where prices end up. In your scenario
> > that PITAX is a business cost and it is withholding due to wages, one
> > concludes that transaction prices stay constent after NST and after-tax
> > wage income (net) stays the same and thus retains is PPP.
> >
> > In my scenario where PITAX is a personal cost, prices go up equal to
> > the NST and income (all income - line 22) go up equal to the PITAX.
> >
> > Therefore, the purchase power of non-wage income is impacted by what
> > price level is achieved.
>
> I thought sure you were over this misconception when you said that you
> understood the whole notion of the irrelevance of the currency scale thing. I
> guess not. Anyway, prices and wages will stay the same notwithstanding any
> change in the currency scale.

OK - so prices and wages stay the same and since they physically do not
change, then parity is achieved. BRAVO!!!!!! People get the same
dollar amount in net and pay the same dollar amount at the pump.
YEH!!!!!!!!!!!!!!!

Now STICK TO THIS!

> >> >> > That is NOT what I said. I simply said that individual prefernces
> >> >> > drive individual purchase decisions and that we will NOT make any
> >> >> > assumptions what attributes, conditions, or situations are salient to
> >> >> > the determination of these purchase behaviors. We assume people buy
> >> >> > the stuff they want but we don't assume they buy the stuff they want
> >> >> > because it is pretty or it tastes good or that it just their color.
> >> >> > We'll assume that on aggregate, any attribute has the potential of
> >> >> > saliency for a specific individual.
> >> >>
> >> >> Forget the specific individual because there are as many motivations at
> >> >> that
> >> >> level, as there are individuals. My point then and my point now is that
> >> >> as a
> >> >> whole, the economy is subject to the foibles of human nature and the
> >> >> percepts
> >> >> that humans have about their circumstances. And if you agree, then my
> >> >> original
> >> >> statement stands, and there was no reason for you to disagree.
> >> >
> >> > As long as the foibles as you put them are based on sound economics and
> >> > they meet the criteria of utility maximization and self interest.
> >>
> >> Human foibles are human foibles. They're not based upon anything.
> >
> > The market does not like distortions.
>
> They're not market distortions, they're human ones, and the market is based upon
> human nature.

Sorry - the market does not like distortions - it will ALWAYS seek
equilibrium - ALWAYS. Its the first law of economics and it will not
be violated by you or Alan Greenspan.

> >> >> > I said that the market will respond in its own personal self-interest
> >> >> > and will follow the laws of supply and demand. The exent to which
> >> >> > "human nature" and "perceptions" influence this perspective of
> >> >> > self-interest is NOT up for discussion.
> >> >>
> >> >> LOL! So says you.
> >> >
> >> > And there you go - you are walking done a path that will result in a
> >> > conclusion that in the absence of my agreement that you know how people
> >> > feel or will feel or should feel is untenable.
> >>
> >> I don't know how people will react to the switch, but you claim that you do.
> >> How arrogant.
> >
> > I know how the market will react - I do not know how people will feel.
>
> LOL! the market always reacts to human nature. It's defined by it.

Nope - sorry - the market finds equilibrium. It has no feelings.

> >> >> > Remember, I agreed that
> >> >> > perceptions exist but we have no direct evidence of what the underlying
> >> >> > determinants of prefernce are. All we know is that it is driven by
> >> >> > self interest.
> >> >>
> >> >> Self interest as determined by perceptions of existing conditions, as well
> >> >> as
> >> >> of
> >> >> what affects them.
> >> >
> >> > As a market - not as individuals.
> >>
> >> there is no market without individuals.
> >
> > LOL
>
> So you think there is?

Do you understand the concept of aggregate? Just curious.


> >> >> LOL! Your posts get funnier every time you try to make up for your lack
> >> >> of
> >> >> logic and reason. Anyway, all I'm saying (which you're trying so hard to
> >> >> dispute) is that the workings of the economy are largely subject to the
> >> >> amalgam
> >> >> of the emotions which it's participants bring to it (i.e., human nature),
> >> >> and
> >> >> that these reactions are also based upon the amalgam of the perceptions of
> >> >> those
> >> >> participants. IOW, if most of the people in the economy have the
> >> >> perception
> >> >> that the sky is falling, then the economy will react as though it is
> >> >> because
> >> >> the
> >> >> people will react as though it is.
> >> >
> >> > But, it is up to you to prove that in fact the aggregate market has
> >> > that perception - prove, not assert.
> >>
> >> I never asserted anything about what people perceive. You;'re the one who
> >> claims to know exactly how they're react to the switch when that's
> >> impossible.
> >> A guess, maybe. A solid prediction, not likely. But known? Impossible.
> >
> > OK - when you GUESS how people will FEEL, you'd better support it.
>
> Why? It's anyone's guess, and we all have one. A guess is speculation, and
> although I have my reasons for a guess, the fact that I label it just a guess
> means that the support for it is not very solid at all. However, when you claim
> to know for certain, then it's you who must have rock solid support, and whereas
> this transition has never occurred before, and whereas human nature will dictate
> much of it, it's simply ridiculous to claim that your take on human nature is so
> complete as to know how it will go.

Individual human nature will dictate none of it. The market will act
to maximize utility and minimize complexity. Some folks may like it,
some may not. It is not germaine. You cannot suggest that because you
believe human nature to have a characteristic that the market will act
on that characteristic UNLESS you can prove that in aggregate that is
the position of the collective.

Again - strawman so going forward it will be ignored.

> > I certainly can support how the market will react - as simply and as
> > efficiently as possible (the fewest distortions) and with self interest
> > and utility maximization. That is what economics tells us markets do
> > when faced with change.
>
> What you just listed where some of the factors which will affect how it reacts,
> but nothing about the result. And to ignore human nature and the effects of
> perceptions is not only ignorant of economic theory, but it's arrogant belong
> all compare.
>
> >> > However, using economics, I am
> >> > not required to show WHY people perceive the sky to be falling but
> >> > rather what happens to the market IF the sky falls. I hope you can
> >> > appreciate the difference.
> >>
> >> LOL! But yet you refuse to acknowledge that they can perceive that it's
> >> falling
> >> even if it isn't. what more, you think your economic model can predict
> >> exactly
> >> what will happen given a radical situation which has never before occurred.
> >> And
> >> you claim to be able to achieve this precision using the same economics that
> >> the
> >> most respected and renown economists constantly debate? LOL! Good one.
> >> What
> >> are your credentials again? Did you really rest on the 7th day?
> >
> > Look - the chance of economics predicting direction and magnitude of
> > effects far exceeds your crystal ball.
>
> But that's just the point. I'm not predicting where the currency scale will end
> up, but you are. That's the difference between us.

No, you have predicted it. Twice now.

Shall I repost where you did it? You said that parity will be achieved
and such parity is described as net wages buying the same bundle of
consumption at current prices.

You have other choices. You made yours.

> >> > Answer - it is impossible to dissociate preferences and behavior based
> >> > on which hat a person is wearing that moment - the employee hat or the
> >> > consumer hat.
> >> >
> >> > There is no value in describing a person in the context.
> >> >
> >> > Good enough?
> >>
> >> So economists never describe people is such ways when discussing economics?
> >> to
> >> them, consumers and employees and the like are all the same?
> >
> > OK - in terms of a labor market, labor participation is described. In
> > terms of a consumer market, consumers are described.
> >
> > We are dealing with an interface between the consumer and labor markets
> > - that's why you cannot discern what hat is driving perception. Are
> > you just being argumentative or do you actually have a reason for these
> > continual strawmen?
>
> Sure you can. Just look at taxes and spending. Tax payers insist on lower
> taxes,

Democrats insist on higher taxes on the "wealthy" - that's why they
want to "repeal" the Republican tax reform of 2000.

> and consumers of government services insist on more expansive programs,
> and yet in most cases, they're the same person.

OK - so what's your point?

As an individual I want lower taxes and fewer programs.
As an individual I want lower taxes and the same programs
As an individual I want the same taxes and the same programs
As an individual I want higher taxes and bigger programs.

The world is made up of individuals. Currently, the aggregate tends to
support the lower and same.

> The amalgam of consumer
> sentiment will result from the amalgam of their perceptions about prices and
> what causes their rise and fall, and will also be factored by the degree to
> which each of the individuals participates as consumers. And this will be
> correspondingly true for employees.

Yes, you do understand the concept of aggregate. Good for you.

And the problem of hats is eliminated.

>
> >> >> > Still doesn't answer the question. In moving from PITAX to NST, what
> >> >> > happens to prices and wages and why.
> >> >>
> >> >> You're quite a piece of work. But then again, I knew it would all go over
> >> >> your
> >> >> head. Like I said before, you're so busy looking at the leaves that you
> >> >> can't
> >> >> see the forest. That's why you'll always be lost in the wilderness. But
> >> >> here,
> >> >> I'll spell it out more slowly for you.
> >> >>
> >> >> The relevance of that explanation is to provide you with a logical
> >> >> argument
> >> >> why
> >> >> it is that no matter how much you cite form 1040 this and credit that and
> >> >> liability the other thing, it all ends with consumption. That's where all
> >> >> taxes
> >> >> are paid now and where they'll always be paid, no matter how sophisticated
> >> >> the
> >> >> illusion. Therefore, when someone asks how fair it is that equity
> >> >> accumulated
> >> >> with after tax dollars in a PIT world would be taxed again in a NIT world,
> >> >> my
> >> >> answer is that whereas the illusionary income tax is actually embedded in
> >> >> the
> >> >> price of all goods now, then they'll be paying that tax with every
> >> >> purchase
> >> >> anyway.
> >> >
> >> > And this is because?
> >>
> >> See the above.
> >
> >
> > And this is wrong. And I've shown you the math elsewhere.
> >
> > Want to see the hamburger example again?
>
> I don't ever recall seeing it the first time.
>
> >> >> And where's my logical argument for that conclusion? See the above
> >> >> "beautiful
> >> >> expose".
> >> >
> >> > But that still doesn't answer the question, now does it.
> >>
> >> Yes it does.
> >
> > Hardly.
>
> I'm sure you feel that way.
>
> >
> >> > After NST what happens to prices and wages?
> >> >
> >> > If you can't anmswer this question - or won't, I'm done.
> >>
> >> That's not the question between us, and so it's no wonder you want out so
> >> badly.
> >> The question was why is it necessary to accommodate those who have so-called
> >> after tax equity.
> >
> > Because if transaction prices rise, after tax income is disadvantaged.
> > If prices stay the same, before-tax income is advantaged. That's why.
> >
> > There is no parity without consideration of wage and non-wage income
> > and the only way to do it easily is to let prices and wages move upward
> > so that ALL PITAX is offset and credit back the consumption tax from
> > previously earned and taxed income. There are still imperfections, but
> > they become minimal.
>
> Two words.......currency scale. See the above.

four words - same wage same price.


> >> > Because the "fairness" of NST and the proper treatment of prior to NST
> >> > accumulated after tax assets depends on the answer.
> >>
> >> The answer is that this equity will pay the tax anyway.
> >
> > In one scenario it pays it's equitalber share and in another it pays
> > twice. Nonetheless, in every case, non-wage income converted to
> > consumption faces a distortion in its purchase power that other parts
> > of the system need to accomodate - and that is philosophically wrong.
> >
> > Do the feakin math!
>
> LOL! I have. See the above.

OK - now show the work.

js

.

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