Re: Fairtax: how does this math work out?


AllYou! wrote:
"Navillus" <cwsullivan@xxxxxxxxxxx> wrote in message
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AllYou! wrote:
"Navillus" <cwsullivan@xxxxxxxxxxx> wrote in message
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AllYou! wrote:
As to your point, I answered it quite clearly, but you just don't like the
answer. The answer is that it would appear that the wealthy would pay
less
than
they do now in taxes. Also, the poor would pay less than they do now in
taxes.
Moreover, I agree that it would appear that those people who are somewhere
in
between will pay more in taxes. There's no mystery to that.

You've said it several times, but never shown it. Show me one example.

Why should I show you an example of where the NRST is NOT perfect? What the
hell is your point, anyway? If you're arguing that the NRST would impose
exactly the same tax on every individual that the sales tax appears to impose
now, then you're a fool to believe that, and I've given you the logic as to
why
that won't happen. But if it's your point that people in certain income
levels
will be hurt more than others, then I'm conceding that it will certainly
appear
that way. What else do you want?

You're the first person I've ever encountered on Usenet who makes a certain
argument, but then wants his opponent to not only concede the point, but make
his case for him.

You're misunderstanding what I'm asking. I do not want you to make my
case for me. I can handle that. What I'm asking you to do is provide
some meat to your assertion that the middle class will be making up the
difference, since we both agree that the upper and lower class will be
paying less. Where we disagree is when I say that I don't think the
middle class makes up the difference. I've shown a couple of examples
backing my assertion. Remember, in order for the middle class to really
make up for the million of dollars each millionaire saves, they're
going to have to be paying a good deal more under NRST.

If the top and the bottom will appear to pay less, and the overall revenue will
be the same, how the hell can the middle pay less too? Do the math.

I did the math. It didn't work. I did it again with another example. It
still didn't work. I've tried probably 8-10 different middle class
families, and cannot find a single example to support your assertion.
You're making an assumption. Someone told you it worked out, and you
believed them. But when dealing with real life statistics (because
someone actually has to figure out who would be paying what), there's
always the very real probability that the numbers don't actually work
out. I challenged the idea that the middle class pays more in income to
cover for the upper class. I showed my work.

Again, there are two assumptions being made: #1 the overall revenue is
the same, and #2 the middle must be making up the difference. #2 is
only nessisary if #1 is actually correct. If it turns out that the NRST
system does NOT bring in the same revenue, then it isn't nessisarily
true that the middle class needs to pay more. They could all be paying
much less, which I am asserting is true. Everyone pays less, horay, and
then we don't have any tax revenue to pay the bills with. Unless
someone can show me an example suggesting the contrary, I'm going to
believe that this system is falsly claiming to bring in the same
revenue to the government.



Please include the embedded taxes you claim make up the difference. You
can't just say something over and over again and think that makes it
true. Show me how a family making middle class wages will be paying
more in taxes.

I can if you fail to understand it. Are you even reading my replies, or just
skimming them? Pay attention now, and read very carefully.........

There are two issues at stake here. Got that? First, I'll explain my
argument
in terms of appearances. If you assume that incomes are actually taxed, and
that it's employees who actually pay income taxes, then by the math that
flows
from that assumption, the rich will get a break. I'm not going to get into
all
the tax tables in order to get exact rates and assume certain exemptions just
to
let this debate deteriorate into the minutia of whether or not that math was
correct for a very narrowly constructed example. In the grand scheme of
things,
if someone (rich) is paying 40% of their income in taxes now, and under the
NRST, even if they spend all that they make, they only pay 30% sales tax,
then
they'll save money under the NRST.

If the poor pay nothing in income tax now (again with the caveat that you
assume
that incomes are actually taxed), then they still wouldn't pay anything under
the NRST because of the rebate program wich exempts basic necessitties.. So,
for the goverment to take in exactly the same revenue it does now, the amount
which the rich save has to be made up somewhere, and if it's not the poor,
then
it must be the middle class.

Good deductive reasoning, but does it hold? There are two
possibilities. Either the middle class DOES pay substantially more
under NRST, in which case example families should be easy to come up
with (this is what I'm asking you to do),

And I won't because it's a stupid excercise..........

I believed you the first time you said it. But at this point you've
spent more time arguing the case on general principle than it would
have taken you to show me a simple counter-example. Some of your posts
are so long that it looks silly when you say you won't provide an
example because it takes too long. At this point I begin to think you
actually have tried to look for a counter-example, and upon realizing
that none actually exist, say it would take too long to show an
example. A "stupid exercise", in your words. That reminds me of "fuzzy
math" in a funny way.



OR this is a flaw in NRST
logic. You're making the assumption that since the other two are
saving, the one MUST be making up the difference. I've posed the
question of whether or not that really would happen. When I crunch the
numbers for middleclass families, I don't see them paying more in
taxes, as youve claimed, to make up the difference. I'm asking for you
to show me an example to back your argument.


You're going to have to find your own flaw in your numbers. I've repeatedly
told you that you can't take an isolated example of what would happen to one
hypothetical family and extrapolate it across a whole economy.

#1 I haven't taken an isolated sample. I've pretty much drawn all the
blood out of the argument. The needle broke somewhere in the arm and
I'm trying to pull it out now.

I've also told
you that you're ignoring the fact of spending from savings made in prior years.

#2 I'm simply saying that even millionaires don't spend more than a
certain amount each year. It doesn't matter how much they've saved in
previous years. $10 million is still a lot of money to spend in a year,
no matter how much you've saved in previous years. Remember "Brewster's
Millions"?. Where does it all go? Family bank, where it stays for the
next 4 generations and gets lost in inheritance loopholes.

I've also told you that you're too fixated on the projected tax rate under the
NRST. Somewhere in each of these is your flaw.

I'm not sure what other numbers to be fixated with. This is the only
real data NRST supporters provide for analysis. Everything else is
speculation and economic theory that people can argue about till the
cows come home. None of that is definative without a real world test.
And even then people will argue how to interpret the results. It's like
trying to determine whether or not the economy improved because of tax
cuts or interest rates or new business laws. No one knows, everyone has
an opinion.




Got all of that? However, now let's remove that assumption that there is
actually an income tax and do the math on that basis, OK? This premise is
based
upon the fact that people don't work for a number printed on a pay stub, but
rather, for what they actually get from working. IOW, if you're faced with a
decision to take a promotion for more pay, but there are downsides to it like
more stress, traveling, hours, effort, etc.........would you make that choice
in
the basis of gross pay, or net pay? Your employer would tell you the gross
pay
increase because he's got no way of exactly what the pay increase would mean
in
terms of net pay, but in the end, as you consult with yourself, or your wife,
your the financial aspect of your decision as to whether to take the
promotion
would be made on the basis of the change in lifestyle the added pay brings to
you, and you material lifestlye would be affected not by the gross pay
amount,
but by the net pay.

And this same concept applies to those who work overtime, or the decision for
a
spouse to take a job, or to take a second job, or any other career decision.
IOW, we don't make our financial decisions based upon gross pay, but based
upon
net pay. Got it so far?

But the employer has to entice you with enough pay for you to accept that
promotion. He's got to make sure that he's providing you with enough real
change in income to entice you to take the promotion, and so he'll set the
gross
pay number high enough to assure that the net benefit to you makes it worth
your
while.

Now this is a very subtle process. Because we automatically and very quickly
do
the *rough* math in our heads, it sometimes seems as though we are making
that
decision based upon gross pay. If someone offers you a job at $20K more than
you're making now (gross pay), then you have an intuitive idea of what that
kind
of raise will mean to your lifestyle. Intellectually, you know you won't be
taking home $20K, but that's the number you can use relative to your current
pay
to get an idea of the relative difference it'll make to you.

We can go into this in greater detail if you wish, but that's the summary of
it.
Therefore, because the employer is stuck with paying you the gross amount,
that's a cost of labor that he's got to build into his prices, and as such,
all
of your pay, including income taxes, is passed onto the consumer. The amount
of
the income tax is embedded in all goods and services we buy. As such, that's
what hits the poor the hardest. It's a cruel joke to claim that the poor are
exempt from taxes, when all of their money is spent on necessities, and those
necessitates contain the cost of all income taxes.

This is not a simple concept, but if you want to pursue it in a seriuos way,
I'll gladly do so.

Thank you. This is one of our core misunderstandings. I understand what
you are saying, as a metaphor. If my boss offers me 20k more, but I
have to spend half the year in Europe away from my family, I don't take
the offer. But I'm still not seeing what this has to do with NRST, in
particular, my claim that the middle class will not be paying enough to
make up for the upper class.

My point is that your basing your math on the assumption that just because the
law says that the wage earner pays the tax, that that's what actually happens.
My point is that people can't change natural phenomena, and that no matter what
we say, human nature dictates that all taxes are paid by the consumer. You work
for your net pay, not the gross pay, and therefore, because the your gross pay
is included in the cost of doing business, it's passed along to the consumer.



But before I get into why I say *appear*, I'll state the following:

It's also my position that if we need a wealth redistribution system, and
if
we
need a welfare system, that none of the aspects of either of those should
be
woven into a revenue collection system. Rather, they should stand on
their
own,
right out there in the open where there's no mystery, and no place for
politicians to hide. If politicians believe that there should be a safety
net
for those who can't provide for themselves, then let them implement such a
system to the extent that there's public support for it, and not hide it
of
have
it duplicated in the tax code. Moreover, if politicians want to take
money
from
some to give to others for no other reason than that they feel it's the
right
thing to do, then again, they shouldn't hide it in the tax code, but have
it
right out there in the open for everyone to see.

I don't have any argument with the notion that the tax policy needs
reform, or pretty much anything you've said here. I just want to see
one single example of a middle wage earner paying more in taxes. I want
to see some numbers.

Why? I'm not saying it's a good thing, so why? What the hell is your point?
do you not think they would? You've already shown that they would.



Now as to appearances, what's important to remember here is that
appearances
are
based upon what the politicians want to be true. IOW, just because they
say
they're taxing income, doesn't make it true. As I've said, virtually all
of
us
work for our net pay, not our gross pay. As such, all income taxes are
really
embedded in the cost of all purchases, and so the poor get hit the hardest
as
a
percentage of their wealth, and the rich get hit the least. All the NST
does
is
bring this out into the open.

You seem to think that I'm completely opposed to some sort of NST
system. I'm not. I just want to prove that it can actually work.

Fine with me.


This is almost half of the amount of tax he would have paid last
year with the income tax. Who makes up for this 5.1 million dollar
deficit? The middle class? I don't know.

Yes, the middle class makes up the difference. While there's
absolutely
no
question that replacing all current taxes with a sales tax is not only
the
only
logical way to tax, but that it's a lie to think that there's really
any
other
kind of tax, there's also no question that the fair tax folks have
overplayed
their hand in trying to imply that everyone pays less tax. But that
doesn't
mean that the notion of NRST isn't a great idea.

The middle class makes up the difference? Let's see:

Family of four making 100k per year. Using a simple income tax
calculator, we see that this family owes about 20.8k in income taxes.
Now, let's make this realistic, and assume this family saves about 5k
of their money (since we want all of our citizens to be smart,
savings-oriented individuals). This leaves them with 95k that the spend
on the economy. According to FairTax.org, the family would get a rebate
to counter the first 25.66k of spendings. This leaves them with 69.34k
of taxable spendings. The Fairtax revenue generated would then be
15.9k. So this middle-class family is short $4,900 of what their income
tax would have paid. How does this show that the middle class makes up
the difference, as you just said they will? More importantly, can you
SHOW how they will make up the difference, step by step with
calculations, instead of simply making vague statements?

Just for fun, let's make a vague statement and see how it still won't
solve the problem. Let's pretend this family somehow ends up paying 25k
in sales taxes instead of 21k in income taxes. This way they would help
solve the deficit issue, just like you said they need to. 4k extra from
each middle class family. It would only take 1,325 of these families to
cover for the 5.3 million less in taxes that Arnold pays. Let's say by
some miracle they actually pay 10k more in taxes. It still takes 530
middle income families to make up for one multi-millionare. This won't
add up. I don't even want to imagine how many middle income families it
would take to make up for the guy who made 70 million last year and
only spent 10 million of it. (Hint, it'll be between 4,000-6,000
families by my last example)

If you think my example is flawed, don't just say so and cut out. Give
us a better example, and show your work so we can verify that you're
not just making crap up.


See the above that shows that you're arguing against someone else, not me.
Even
if you don't buy my argument that all income taxes are embedded in the
cost
of
all purchases, I'm still not disputing that it appears that the middle
class
would be the most adversely affected in terms of the revenue (tax)
program,
and
that if politicians want to implement a wealth redistribution program,
they
should do so separately and honestly.

And so don't try to imply that I've ever cut and run from anything. Read
before
you stick your foot in your mouth.

Maybe you need to reread what I wrote. I just showed that the middle
class benefits greatly from FairTax. They are not in any way adversely
affected, by the calculation I showed. If you think they are, I want to
see how. I still don't see any numbers, you're just TELLING me that it
works out the way you say it does, and I should just trust what you
say. That's cutting out.

You took one micro example, and you're extrapolating that over the entire
economy. I'll summarize what I said above. If you assume that income taxes
are
not embedded in prices (which they are), then the rich would benefit because
the
NST rate is less than their income tax rate, and the poor won't pay more
because
they don't pay taxes under either system, and so if the government is gonna
raise the same amount of money, someone has to pay more. If it's not the
rich,
and not the poor, you do the math. Not everyone is gonna pay less, and not
everyone is gonna pay more.

See what I said above about this deduction. When I followed it out, it
didn't hold true. I can't come up with an example to convince myself
that the middle class would pay more, as you say they do. I'm trying to
agree with you, but none of my example families ever pay substantially
more under NRST. Maybe 2k more than they would under income taxation,
for a family making 200k per year. I just don't see that making up the
difference one millionaire saves.

Then increase the tax rate and rerun your numbers. But when you do, you'll
likely find that the tax rate you have to use is more than what's needed for
revenue neutrality. The tax rate needed to replace all other taxes is
determined by taking all government revenues and dividing it by all non B2B
purchases. That'll be the rate. Once you have that rate, if the poor appear to
pay less, and the rich appear to pay less, then who do you think will? I'm
simply not willing to engage in a debate about how that works because in the
end, I really don't care who appears to pay more or less.

This is a good point and I'm not in the least bit concerned about
conceeding it. I'm not here to slap penises. It makes perfect sense
that if the purchases remain constant (which of course they do, or,
usually, increase) and the government revenue needed is known, the tax
rate is easy to find. I don't know why it won't add up individually,
unless the rebate is the problem. That's my suspicion. The rebate
totally destroys what the lower class and middle class would pay in
NRST. And the upper class CLEARLY pays less.

Perhaps the answer is that the rebate is a poltical tool used to pass
the idea, because without the rebate, the lower and middle class (in
particular the lower class) would share a much heavier burden,
percentage wise, compared with what they pay now. You can't sell a 23%
tax to a group of people paying nothing currently. That applies all the
way up through the middle class for the most part. I wouldn't be the
least bit surprised to learn that the rebate is a poltical ploy to move
an agenda that is good intentioned, but gets screwed when you mess with
the rebate.

In your initial calculation, you'd have to add a term that takes into
account the amount of revenue lost due to the rebate. But the problem
there is that would mean a bigger tax rate, which would need a bigger
rebate. And around and around we go!




Let's go back to the income tax scenario, and this time let's pretend
that Arnold has a great tax guy who ends up getting his 40% income
tax
down to 15%. Not a bad job. Arnold now pays:

30 million * 0.15 = 4.5 million dollars in taxes, leaving him with
25.5
million.

In order for Arnold to generate 4.5 million dollars with the FairTax
system, he would have to spend:

4.5 million / 0.23 = 19.6 million dollars. This crazy man would have
to
spend about 20 of the 30 million dollars he made last year just to
equal the amount of tax he would have paid with an amazing tax guy.

All of the money which he makes will eventually be spent, and so it'll
all
be
taxed. In the meantime, it's in the economy making money not only for
him,
but
providing capital to the economy.

Sure, eventually, but you're still losing out on the income to the
government every year. This dodges the question by claiming "well it
will eventually work itself out". Show me some numbers, no insults.
Show me that you're not just talking crap and then running before
anyone makes you stand by your statements.

I didn't say it would eventually work itself out, so don't put quotes
around
comment as though I said something I didn't. Don't blame me for your
inability
to comprehend. What I said was that all of the money which people derive
as
income will eventually be taxed when it's inevitably spent, and your math
ignores that point. As to the lag time that the government will incur in
getting that money, there's also no doubt that the transition to an income
tax
will have to account for the initial lag. But if you could understand
numbers,
and fast forward to a time after the transition is complete, you'd see
that
you
numbers are faulty in that in any given year, while less than 100% of all
income
derived in that year will be spent because some will be saved, it's also
true
that in that year money that was previously saved will be spent. Your
numbers
ignore that.

And while we could quibble over how much is saved vs. how much is spent in
any
given year, the fact remains that all money will eventually be spent, and
so
it'll all even out, except for the lag time for the initial transition.
you
may
not like that reality, but don't tell me to ignore it simply because you
don't
like it. As you said, instead of simply rejecting it and cutting and
running,
deal with it.

Quote around the comment was to illustrate a faulty logic statement,
whether you agree that it was faulty or not. When I actually quote you,
it's with >>. But let's discuss whether or not what you're saying is
true.

Arnold makes 30 million.

Oh, God........not with the Arnold again. Did you not read what I wrote?
Your
math fails because you fail to take into account the amount spent which was
earned in prior years!

And yours fails to take into account the amount of money the
megawealthy spend overseas. If you have a man whose making tens of
millions of dollars, but spends his summers in Australia where he
pisses money like MCHammer, he essentially is paying no taxes to the
American system that made him a millionaire.

So, what? How much of the American economy do you think that is? And BTW, the
American economy didn't make him a millionaire, he did. But the other thing you
don't get is that whatever small percentage of revenues which might be lost in
that situation will be made up by the fact that American producers will not have
a 30% price advantage over foreign producers. Which would you rather have?



Also, the problem of importing from Europe in pieces comes around.
Millionaires already do this to avoid import taxes. They buy mercedes
in Germany, have someone break it down into enough parts that it no
longer qualifies as a "car", have it shipped t America, put back
together, and they save tens of thousands of dollars on the car. Under
NRST, you're going to be seeing a lot more of that. 23% taxation on a
20 million dollar yact is expensive. It would entise a lot of
millionaires to buy their yacts overseas, and either build them in
America, or just drive them over and save 3 million dollars in taxes.
The American boating industry would go nuts under NRST. Why not buy
your boat in Canada or Mexico, and boat up to an American harbor? It's
like what you see with seniors buying their drugs in Canada and Mexico
(illegally) to save money. Would we make it illegal for boaters to buy
their boats in Canada and drive them over here, to save on taxes?


I really mean no offense, but I think this is gonna go over your head. In
summary, either of two things (or a combination of them) will happen with a
switch to the NST.

1) Net pays (in the aggregate) will not change and the income tax will be
squeezed out of the cost of all purchases so that when it's added back at the
register, prices (in the aggregate) will remain unchanged.

2) Gross pays (in the aggregate) will not change giving workers more money so
that when the NST is added at the register, prices (in the aggregate) will
increase.

In all probability, I'll speculate that it'll be somewhere in between, but
closer to #2. But in either case, the overall parity between prices and wages
will remain unchanged, and so even if it's number 2, all that means is that
there's been a slide in the currency scale. IOW, it'll take more dollars to buy
the same stuff than it does now. But the currency scale shift will also mean
that it'll take more dollars to buy foreign goods as well, and so in the end,
the pre-tax price of foreign goods will equate to the after tax price of
domestic goods, and that gives domestic producers a huge price advantage because
the NST will apply to all goods no matter where produced.

So not only will there be no incentive to buy foriegn, but just the opposite.

Yeah over my head, except for that last part. It just doesn't make
sense that every example shows the government losing money. There has
to be examples (and a lot of them) to prove the contrary, or the idea
is bogus. Maybe the rebate is the problem. But without the rebate,
you're essentially just suggesting a shift in the tax system away from
the rich and back towards the poor. It doesn't look like NRST gets to
eat its own cake. It can bring in neutral revenue, but it has to screw
the lower class to do it. If it brings in the rebate, the neutral
revenue goes out the door.



He spends 10 million of it each year. The
government makes 2.3 million in taxes from his spendings instead of
roughly 11 million from his income tax. That's about a $8.7 million
dollar deficit for every guy like Arnold. Hundreds of men who save
their money wisely end up creating an enormous gap in the revenue
collected. The next year he does the same thing, makes 30 million more,
maybe spends 20 of it. Maybe, if we're lucky. Still running an enormous
gap. You let this go on for a decade and the system will collapse on
itself.

You take one extreme example, the not only extrapolate that to all Americans,
but across a number of years, and you think you've shown something. That's
nonsense. Have you understood nothing of what I wrote? Let me try this way,
instead of the silly Arnold example. Look at the aggregate, for Chiss sakes.
In the aggregate, Americans make X amount in income, and pay X amount in
income
taxes. Of the amount that's left, Y is spent, and Z is saved. But the part
you're not getting, is that of the Z amount saved, it'll all be spent in
subsequent years. IOW, in any given year, not only is Y spent, but W (the
amount that was Z in prior years) is also spent. You keep forgetting that.

Therefore, the amount spent in any one year will be Y plus W. So, is that a
problem? Well, over the long term, no. All money will eventually be spent.
It
has to. If it wasn't, there'd be no reason to save it. But, it's true that
in
any given year, Y plus W may be less than X, but all that means is that is
another year, Y plus W will be more than X. Otherwise, saving would grow at
exponential rates, and they do not.

Now, as the economy grows and there are simply more people in it, then a case
can be made that savings over the long haul do increase. But on a per capita
basis, saving may go through swings, but it's generally the same. The only
way
in which this is a problem will be through the transition. During the
transition, the money needed to fund the lag time between when people earn
the
saved money and when the spend it will have to be funded.




But what you're ignoring is that even if he spends every single penny
ever single year, the gap widens anyways. Pretend he spends all 30
million. That's 6.9 million in FairTax, around 4 million short of what
he'd be paying in income taxes. Let's pretend every single millionaire
spends every single dime every single year, they are still contributing
to a larger and larger revenue gap.


And there's the math that you keep insisting I provide! You've just shown
that
the gap between what the rich appear to pay now and what they'll appear to
pay
under the NST must be closed by someone, and that will appear to be the
middle
class. Got it now?

Appear? Might appear so. Convinced that it would actually happen that
way? Not at all.

If you were paying attention, I use the term *appear* because in fact, no one
pays income taxes at all. It only appears that way. See the above.

More realistically, a guy like Arnold is going to spend, what, 5-10
MILLION dollars each year? That's only 1.15-2.3 million dollars in
taxes!

Now I'm not particularly interested in hearing about how the upper
class is overtaxed as it is. I want to see where the beef is in this
proposal. Where does the money come from? Let's look at another
example:

Guy makes $40,000 a year. This puts him in the 15% income tax
bracket,
if I'm not mistaken:

40,000 * 0.15 = $6,000 in taxes. In order to generate that much money
in the FairTax system, he would have to spend:

6,000 / 0.23 = $26,100 of the $40,000 he makes.

But wait!!! The Fairtax system doesn't start charging taxes until you
spend ABOVE the poverty level! Since the average poverty level is
around $25,000, the man would have to spend:

26,100 + 25,000 = $51,100 which is more money than he earned!

Exactly. You've just made the case for why this guy will pay less
taxes,
not
more.

I've shown that it is impossible for him to balance what he would have
owed in income taxes with a FairTax system. I want to know where the
beef is. If you agree that he pays less, great, one less thing to argue
about, but show me a good example of who is paying more to make up for
it and make it a "neutral" system that's just as good as the income
system.

I've answerd that numerous times now, once right in this post. See the
above.


Now let's pretend this same guy gets his $6,000 in income taxes cut
down to $3,000 by his tax guy:


Let's say pigs fly.

Pigs fly and hell freezes over before someone refutes my examples with
another family that pays enough in taxes to make up for Arnold's 5.3
million dollar gap. Hell, show me how MC Hammer can make it up by
spending retarded amounts of money (remember: he has to spend enough to
cover what HIS income tax would have been, plus extra to help cover for
the cautious spender, Arnold.)

See the above.

3,000 / 0.23 = $13,000 he must spend + $25,000 (poverty spending
minimum) = $38,000 of the $40,000 he earned. So much for saving your
nest egg!

What? You're actually running your math by showing that in order to
pay
the
same tax as he does now, he's got to spend more. That's one hell of a
novel
way
at looking at saving tax dollars. who the hell says that this guy
should
have
paying taxes up to a certain amount as a goal?

Well, if the system is going to replace the income tax system, it has
to bring in at least the same amount of money. I'm showing how at every
level, low-income, middle-income, and high-income, EVERYONE is paying
less, the upper class so much so that it's creating a huge gap. Where
on Earth does the money come from to counter-balance this? Show me
numbers.

See the above.


Here's the only thing I see going for this system, from the
government's perspective:

Let's say the guy earning $40,000 per year spends $24,300 normally.
How
did I get to this number? I'll assume an out-of-college guy who pays
$1,200 a month in rent, $220 a month in his car payment, spends $400
each month on food+utilities, and throws in an extra $200 a month to
buy girlfriends presents, christmas time, etc. (yes I'm basically
describing myself)

After his $6,000 in taxes, he's left with 40 - 24.3 - 6 = $9,400 net
for the year.

Now let's pretend FairTax is in place: $40,000 - $24,300 in
spending -
zero in taxes since I didn't spend above the poverty line = $15,700
net
for the year. So because of this wonderful system, I end up with
$6,300
more dollars in my pocket. Let's say I spend every penny of that
extra
money I've saved:

6,300 * 0.23 = $1,450 taxes to the government.

So even with all this extra money, going right back into the economy
(a
good thing, I know) I still don't generate anything in taxes compared
to what I was generating before. Same thing goes for Arnold:

30 million - 15 million spent because he's crazy - (15 million * 0.23
=
3.45 million in taxes) = 11.55 million dollars net, instead of:
30 million - 15 million spent because he's crazy - (30 million *0.4
income tax = 12 million in taxes) = 3 million dollars net.

So the fairtax system saves arnold 11.55 - 3 = 8.55 million dollars.
He
pumps it all back into the economy:

8.55 million * 0.23 = $1.9665 taxes to the government. So Uncle Sam
really ends up with 3 + 1.9665 = roughly $5 million from Arnold. I
still don't see where the other 7 million dollars comes from, to make
up for what he would have paid in income taxes.

Can someone a little more tax-savvy explain how this system will in
infact generate MORE tax revenue for the government, or just show how
it can break even? I DO understand how it will dramatically boost the
economy, but unless it makes us all multi-millionaires, we still
won't
be spending enough, by my math.

As I've said, there's no doubt that some people will pay more, and
others
less.

Whose paying more? I'd love to see an example of someone paying
significantly more (since most people are paying significantly less).


If you would realize the reality of embedded taxes, you'd see that all but
the
very poor would pay a little more. But I do not for one minute dispute
that
if
you don't believe (yet) that the math shows that the middle class would
pay
seem
to pay more. It's a zero sum game.

I'd love to believe you, if you'd just show me an example of an average
family, their spendings, the embedded taxes they pay, and how it all
adds up. You can keep saying it until you're blue in the face and I
still won't just take your word for it.



But the fact that you're missing is that all taxes are embedded in the
price
of
goods and services now. When you work for an employer, do you work for
the
net
pay, or the gross pay? If you think you work for the gross pay, then
you're
the
lucky winner. You just won $1,000,000 in the contest I'm conducting.
Send
me
$1,000 with a self-addressed stamped envelope, and I'll send you your
winnings.
The only thing is that as a newfound millionaire, I've decided that
you're
rich
enough to contribute to a cause which is near and dear to my heart. So
send
me
the envelope, and I'll return it with a check in the net amount of your
winnings, along with a check stub which shows your gross winnings, less
the
deductions for the contribution you made. But don't let the net fool
you.
After all, it's the gross amount that matters, right?

Explain what you mean here. Everyone is paying less. The rich would be
paying WAY less. If it's made up for by import taxes, then show me how!
Show me anything that can be verified and/or argued mathematically!

Who said anything about import taxes. Why don't you spend less time on
your
high horse and more time actually reading what I post?

I put the import tax out there as a possible explaination of how the
revenue gap I'm explaining could potentially be explained. I don't know
if it's the solution, I just thought perhaps it might be, and perhaps
you'd know about it.

I'm reading what you're saying (but not proving), I'm not buying it,
and I'll keep asking for clarification until you actually do the math,
or until you stop posting. I'm not interested in throwing insults back
and forth with you.



.