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Post by supposn on Oct 27, 2010 11:03:07 GMT -6
Payroll or sales tax base funding? Employees’ contribution to the FICA payroll tax is without a doubt the most regressive federal tax. Employees directly pay 7.65% of their wage and salary incomes and employers’ 7.65% taxes upon their payrolls are eventually paid by all purchasers of USA goods or services. Additionally employers’ contribution hinders hiring and thus drags upon our median wage. The rate of employers’ FICA contributions acting as sales taxes is dependent upon the aggregate portion of labor imbedded total sales’ prices. If 1/3 of sales are due to labor, employers’ FICA contributions currently act as a 2.55% sales tax; if it’s ½, FICA’s a 3.85% sales tax.
Historically lacking a federal retirement program, (despite historically shorter life spans) were severe hardships. If Social Security, (SS) is terminated, the extent of additional Americans’ driven into poverty would be economically and socially disastrous. Many SS retirees had physically demanding jobs and/or are unable to earn a living. State and county public assistance programs couldn’t replace SS. Those who contend that SS is detrimental to our economy do not appreciate the alternative, (our national economic detriment if SS were terminated).
There is absolutely no logical relationship between income and medical need. No portion of FICA payroll tax should used to fund any portion of Medicare. I advocate that all Medicare and half of 1/2 of Social Security Retirement’s costs, (i.e. a total of 9.1% of all payrolls) should be replaced by a 4.55% sales tax.
If total payrolls are 1/3 of sales subject to a sales tax, replacing a 9.1% of taxes upon payrolls with a 4.55% sales tax would increase both revenues and actual prices by less than 1.52% of payrolls. [3(1.517% of payroll) = 4.551% of sales]. If total payrolls are 1/2 of sales subject to a sales tax, replacing a 9.1% of taxes upon payrolls with a 4.55% sales tax would not increase revenues or actual prices. In both of these cases employees will not pay any additional net taxes, cash flow of employers’ benefit and we’ll be removing a hindrance to creation of jobs.
To any extent that taxes are waived upon sales that are a greater proportion of lesser earners’ incomes, [e.g. NY State waives sales tax for food other than restaurants and caterers], the families of wage and salary earners will in aggregate additionally benefit.
If the nation’s payrolls exceed half the total sales that would be subject to the proposed sales tax, this entire tax proposal is NOT recommended.
Respectfully, Supposn
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Post by graybeard on Oct 28, 2010 7:46:14 GMT -6
Would you tax real estate trads and sales?
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Post by unlawflcombatnt on Oct 28, 2010 12:54:39 GMT -6
I'm not sure that replacing any type of tax that is ultimately based on income with a sales tax is a good idea. A sales tax directly increases the after-tax price of goods, which will decrease sales, and thus demand for production of those goods and/or services.
Basically your suggestion is designed to reduce the cost of labor at the expense of demand for labor (if I'm following you correctly).
It's my assertion that the lack of hiring is due to lack of demand for workers, due to lack of demand for their production, due to lack of production/service sales. Reducing the cost of labor will do little to improve employment if there is an underlying lack of demand for employment. Reducing production demand--and thus employment demand--via an increased sales tax seems counterproductive to me.
However, reducing payroll employment taxes and offsetting them with higher taxes on higher income earners and/or higher taxes on investment income would be a great idea in my opinion.
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Post by jeffolie on Oct 28, 2010 16:04:22 GMT -6
I favor progressive taxation.
Taxes are politically unpopular and unlikely to be voted.
More likely, the FED will low interest rates and buy government and private assets increasingly more so than the FED does today with the soon to be announced QE2.
The voters do not want taxes. The governments at all levels are declining to raise taxes. Japan's Central Bank will be buying ETFs and our FED will expand buying assets.
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Post by agito on Nov 8, 2010 2:44:35 GMT -6
I agree that the single most effective way to increase employment oppurtunities in the US is to offset the costs of employment taxes (preferably by increasing investment taxes),
but to call employee tax contributions the most regressive tax possible is a huge stretch and shouldn't be presented as being otherwise.
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Post by supposn on Feb 22, 2011 5:07:51 GMT -6
I agree that the single most effective way to increase employment oppurtunities in the US is to offset the costs of employment taxes (preferably by increasing investment taxes), but to call employee tax contributions the most regressive tax possible is a huge stretch and shouldn't be presented as being otherwise. Agito, for our lowest paid wage earners it’s the only federal tax they pay. Their entire incomes are subject to FICA with no consideration for their total incomes’ being near or below the national poverty level. There’s no consideration for how many family members are supported by the wage earners’ incomes. It’s to income tax payers’ best interests that we do what we can for our working poor so they do not turn to public assistance for their entire existence. Those who believe that we should increase Social Security’s retirement age do not appreciate the number of people that are now on public assistance because they are now physically unable to earn their livelihood. Those who believe we cannot afford the cost of our present SS retirement system do not appreciate the cost to our economy if we were to terminate that entitlement. Those who advocate that rather than an entitlement, SS benefits be disbursed only to the less wealthy don’t appreciate the enforcement expense and the wide spread occurrences of fraud that such a policy would induce. Such a policy would further reduce our confidence in our government. Such a policy’s national harm would exceed any net financial benefit due to the policy. There’s no logical relationship between medical need and personal income. The federal government’s entire Medicare expenses should be funded by a general tax. The employers’ portion of FICA acts similar to a sales tax and additionally it creates a cash flow restriction and inhibits hiring which are particularly detrimental to smaller enterprises. Anything that inhibits hiring negatively affects median wage. How difficult would it be to devise a conventional sales tax or a VAT with a broad general tax base that would not be less than twice our nation’s total payrolls (which are now almost entirely subject to FICA)? Currently wage earners and employers each pay 1.45% for Medicare and 6.10% of payrolls devoted to SS Retirement. I advocate replacing Medicare’s entire 2.9% and half of SS retirement’s 12.4% of payrolls with a 4.55% general consumption tax. If imbedded labor accounted for 50% of wage earners’ purchases, replacing 4.55% of payroll with a 4.55%sales tax would actually reduce wage earners’ net Medicare plus SS retirement payments. If labor Accounts for 50% of sales, than wage are now paying (1/2)(0.04.55) =2.275% sales tax due to the employers’ contribution. Thus wage earners ACTUAL contribution would be reduced by 2.275% with no net loss of federal revenue. To express it another way, if labor is no more than 50% of prices subject to the sales tax and we replace both the employers’ and wage earners’ 4.55% contribution with a 6.825% sales tax, the working poor would be not be paying more taxes, we will have removed a portion of employers cash flow problems and a portion of the FICA’s detriment to our median wage. I did not describe FICA as the most regressive tax possible; it is our most regressive federal tax. Respectfully, Supposn
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Post by graybeard on Feb 22, 2011 6:35:32 GMT -6
The working poor spend all they take home, so whether it's withheld by SS, or paid as a sales tax, the result is almost the same.
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Post by supposn on Feb 22, 2011 20:41:35 GMT -6
The working poor spend all they take home, so whether it's withheld by SS, or paid as a sales tax, the result is almost the same. Graybeard, you entirely missed the point. General sales taxes can be devised that waive taxes upon items which are lesser portions of lower income earners’ spending and greater portion’s of upper income earners spending. [For example, NY State sales taxes are waived for food but are not waived for food provided by restaurants or caterers. We can waive taxes upon some determined initial monthly amount of kilowatt hours billed to each individual residence but the remaining power consumed within each residence will be taxable sales. That would also to some extent reduce USA’s power consumption. Similarly taxes upon public transportation can be waived for the first $3 per passenger/per vehicle/per trip but in that case the amount of dollars waived should be annually cost of living adjusted.)] You’re ignoring employers’ FICA expenses imbedded within all of our purchases which act as a sales tax and additionally inhibit job creation. Sales alone do not necessarily induce hiring. FICA’s an additional inducement to consider automation or importing foreign components rather than hiring more domestic labor. Respectfully, supposn
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Post by supposn on Feb 22, 2011 20:45:43 GMT -6
The working poor spend all they take home, so whether it's withheld by SS, or paid as a sales tax, the result is almost the same. Graybeard, if we replaced both employers' and wage earners' 4.55% of payroll with a 4.55% sales tax, and if wage earners ENTIRE incomers were subject that sales tax, wage earners would be actually paying 2.275% less of their incomes for federal taxes. To the extent that wage earners’ purchases were not subject to the sales tax, wage earners tax contributions would be further reduced. To any extent that USA’s sales subject to the sales tax exceeds twice the total of our aggregate payrolls, Federal revenue due to this shift of our tax method would be increased. The critical question is can we devise a sales tax that applicable to total transactions would not be less than twice our national payrolls? To any extent that the tax is applicable to transactions beyond twice our nation’s payrolls, this shift of taxes would increase net federal revenues. If purchases are now for example 50% of our prices, than we are all paying (1/2)(0.0765) = an equivalent of a 3.825% sales tax The critical question is what is the ratio between a proposed sales tax base and USA’s total payrolls? Respectfully, supposn
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twk
Contributor
Posts: 58
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Post by twk on Feb 23, 2011 17:29:07 GMT -6
I like the idea of "sales tax funding" instead of "payroll tax funding" for social security and medicare.
I know this is just a small fix for our many problems, but I think it moves us in the right direction.
Converting the payroll tax into a sales tax puts this tax burden on both foreign and domestic goods which helps to level the playing field for domestically produced goods. It is like a mini tariff because foreign goods are now also paying the former payroll tax. I know it is not a fix, but it helps.
The sales tax can be left off of certain goods like unprepared foods, to help low wage earners afford food.
Payroll taxes are a pain in the a**, when it comes to government paper work and compliance. If you are self employed, payroll taxes are roughly %15. That is a very heavy tax burden on a low wage earner. If you try to reduce this tax burden with an s-crop the situation is just as bad if not worse for a low wage earner.
I know, I am working part time for a small machine shop and also running a small (tiny) business. I have operated my business as both a sole proprietor and an s-corp. My combined income from both sources in 2010 was around $10,000. Thank goodness my wife has an OK job right now, while I try to get this business up and running.
I now understand why many poor people stay on government assistance instead of trying to start a small business like home repair, yard work, or auto mechanic work, and why many low wage earners that do have a business, operate their business on a cash basis.
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Post by supposn on Feb 23, 2011 23:08:55 GMT -6
I favor progressive taxation./quote] Jeffolie, due to the complexity of determining what is actual net incomes, enormous regulatory efforts have been constructed to shield some portions of incomes from taxation. Far too many regulations are beyond identifying and recouping actual risked wealth are tax loop holes. They are special strokes for special folks. What you believe to be our progressive income tax system ain’t all that progressive. The preferential tax treatment of long term capital gains is an example of a tax loop hole that grants special strokes for special folks. There is no reason to believe that entrepreneurs continuous striving and reinvesting into their enterprises are of less economic value than that of speculators divesting themselves of their investments. If waiting beyond a dozen months for a profit justifies greater profits, shouldn’t that be determined by the open public market? Should the government be intervening? I contend that preferential tax treatment of capital gains is unjustified and government should keep its fat thumb off of the scales! Respectfully, Supposn
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Post by supposn on Feb 24, 2011 0:53:00 GMT -6
I agree that the single most effective way to increase employment oppurtunities in the US is to offset the costs of employment taxes (preferably by increasing investment taxes). ............................. Agito, I’ve never encountered or thought of employers’ contribution to FICA as an explicit “employment tax” but that is a somewhat apt description. What did you mean by your reference to an “investment tax”? I'm not in principle opposed to taxing income or profits but we certainly do not want to deliberately or explicitly tax the actual investment of wealth or efforts. That's contraproductive. Respectfully, Supposn
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Post by supposn on Feb 24, 2011 2:55:34 GMT -6
Would you tax real estate trads and sales? Graybeard, I don’t understand how I overlooked this message for so long. Once I noticed it, I delayed answering because it’s a question that I too have been pondering over for a very long time. I believe that NY state sales taxes are not applicable to capital improvements which lead to very convoluted law and economic logic. If your company paints a house or waxes a floor no sales tax is levied because you’ve added a coat of paint or wax on the structure. If you mop the floor then sales tax is levied for the service you provided because theoretically you have not made a capital improvement? This of course is sophistry. Logically under a VAT system the sale or trade of real estate should be no problem but wouldn’t that grant great enterprises with no cash flow problem a significant advantage? Could you conceive a gas station owner recovering the entire cost of his building and property from qa few year's gasaline sales revenues? How can it be practical to collect consumption taxes upon any transfers of wealth such as real estate, stocks and bonds? If we waive such transfers from the consumption tax, how do we prevent the broker’s services from being imbedded within the prices of the wealth transfers? I’m not comfortable with exempting the services of any profession or industry from a general consumption tax but I’d rather accept that than endure a law that will be commonly evaded. Is it reasonable to waive the consumption tax upon real estate sales but not upon real estate leasing? If we waive the consumption tax upon sales of bonds, shouldn’t we also waive the tax upon charges of interest? If we waive the tax upon all interest charges, then wouldn’t all sorts of sales be drafted so as to under-price all goods and services and greater portions of the transactions’ total prices will be attributed to untaxed interest? Possibly the answer is to waive the taxes upon interest which are legally secured only by tangibles and which themselves within a transaction could not be subject to the consumption tax and that loan must be for a finite duration of time; a factory owner or a homeowner should not suffer lender’s demand for additional collateral because they’re loan is subject to a “margin call”. I’m hoping some members of this group can provide information or ideas regarding this question? Respectfully, Supposn
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Post by supposn on Feb 24, 2011 4:42:08 GMT -6
........... Basically your suggestion is designed to reduce the cost of labor at the expense of demand for labor (if I'm following you correctly). Unlawflcombatnt, why would you believe that reducing the cost of labor to employers would in itself decrease demands for labor? It’s true that I’m advocating a 4.55% tax upon all taxable products but if as much as 50% of sales prices are now due to labor, we’re currently paying the equivalent of a 2.275% sales tax due to that sub-portion of employers’ FICA contributions. This is only proposed only if USA’s total payroll amounts do not exceed 50% of the transactions subject to any proposed sales tax. In such cases there will be no net loss of federal revenue. I’m advocating a reduction of 4.55% of all employers’ payroll expenses and additionally all wage earners’ net incomes will be increased by 4.55% of payrolls. If wage earners and their families spend every penny of their earnings on products subject to the sales tax, they will experience a 2.275% increase of their net wages’ purchasing power. To the extent that their purchases are for items not subject to the sales tax, the purchasing powers of their wages are further increased. To the extent that USA’s payrolls are less than ½ of the sales transactions subject to the sales tax, federal revenues will be increased. Additionally the domestic purchases due to incomes not now subject to FICA, (including all of those working in our nation “off the books”), will then contribute something to our federal revenue. The production of imported products now contribute nothing to our economy. Import’s complete value upon entering into the USA will be subject to the sales tax. All of these factors would more than compensate for the increased prices due to the sales tax. If payrolls do not exceed 1/2 of the transactions subject to the sales tax, there is no reason to believe that the sales tax will reduce sales volumes. Respectfully, supposn
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Post by unlawflcombatnt on Feb 24, 2011 8:42:41 GMT -6
........... Basically your suggestion is designed to reduce the cost of labor at the expense of demand for labor (if I'm following you correctly). Unlawflcombatnt, why would you believe that reducing the cost of labor to employers would in itself decrease demands for labor? If you reduce the cost of labor, you reduce wages. If you reduce wages, you're reduce worker/consumer buying power. If you reduce worker/consumer buying power, you reduce production demand. If you reduce demand for production, you reduce the demand for labor to provide that production.
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Post by jeffolie on Feb 24, 2011 11:16:35 GMT -6
Unlawflcombatnt, why would you believe that reducing the cost of labor to employers would in itself decrease demands for labor? If you reduce the cost of labor, you reduce wages. If you reduce wages, you're reduce worker/consumer buying power. If you reduce worker/consumer buying power, you reduce production demand. If you reduce demand for production, you reduce the demand for labor to provide that production.
Unlawflcombatnt is absolutely correct. Driving down wages reduces the average American's standard of living. I side with average Americans every time over profits and management payouts.
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Post by supposn on Feb 24, 2011 22:30:53 GMT -6
Unlawflcombatnt, why would you believe that reducing the cost of labor to employers would in itself decrease demands for labor? If you reduce the cost of labor, you reduce wages. If you reduce wages, you're reduce worker/consumer buying power. If you reduce worker/consumer buying power, you reduce production demand. If you reduce demand for production, you reduce the demand for labor to provide that production.Unlawflcombatnt & Jeffolie, This proposal DOES NOT reduce wage earners’ gross incomes; it reduces employers’ and wage earners’ direct FICA contributions. This proposal increases rather than reduces the buying power of wage earners’ net incomes; thus induces increased rather than decreased production of goods and services; thus increasing rather than decreasing the demand for labor. It accomplishes all of this with no decrease of federal revenues. This proposal is dependent upon a consumption tax with a tax base that’s not less than twice USA’s total payrolls. I’m not a statistician and do not know if such a tax is financially feasible. If such a tax could be drafted, this proposal would certainly not reduce federal net revenues or be of additional net financial detriment to lower and middle income wage earners. This proposal would reduce employers’ FICA contributions by 4.55% of their payrolls; it DOES NOT reduce wage earners’ gross wages. This proposal reduces wage earners’ FICA contributions by 4.55% of their gross wages; it actually INCREASES wage earners’ net, (i.e. “take home”) pay. These reductions of FICA payroll taxes would be replaced by a 4.55% general consumption tax. If imbedded labor is now attributable for 50% of prices paid by wage earners and their families, then the employers 4.55% FICA contribution is an equivalent of a 2.275% sales tax. This proposal reduces wage earners’ FICA contributions by 4.55% of their wages and increased their net purchase prices. (4.55 – 2.275) = net price increases of 2.275 %. Due to the increase of wage earners’ net incomes, we’ve ACTUALLY increased their incomes’ purchasing powers with no net reduction of federal revenues. Additionally by reducing the employers’ FICA contribution we’ve decrease a factor that inhibits job creation and thus is to some extent detrimental to the median wage. Of course if USA’s total payrolls are less than 50% of sales applicable to the consumption tax, we will have actually increased federal revenues by enacting this proposal. To the extent that the sales taxes are waived for items purchased by wage earners and their families, wage earners’ total tax contributions are further reduced. Respectfully, Supposn
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Post by unlawflcombatnt on Feb 25, 2011 1:29:31 GMT -6
If you reduce the cost of labor, you reduce wages. If you reduce wages, you're reduce worker/consumer buying power. If you reduce worker/consumer buying power, you reduce production demand. If you reduce demand for production, you reduce the demand for labor to provide that production. Unlawflcombatnt & Jeffolie, This proposal DOES NOT reduce wage earners’ gross incomes; it reduces employers’ and wage earners’ direct FICA contributions. Supposn, You asked a question, and I answered it. But you failed to even pay me the courtesy of acknowledging that answer. If you want to be taken seriously, you need to at least acknowledge that your question was answered. But since you don't feel the need to even acknowledge that your question WAS fully and completely answered, I assume you have some kind of a pro-Corporate, pro-Plutocrat agenda that keeps you from doing so. If you want someone to address what you've written, you need to at least address what they've written--especially when it addresses a question that you, yourself asked.
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Post by supposn on Feb 25, 2011 7:27:30 GMT -6
Unlawflcombatnt, I inquired why you would you believe that reducing the cost of labor to employers would in itself decrease demands for labor?
I fully considered and responded to your answer within your message #14. Within my responding message #16 I pointed out that reducing employers’ FICA contributions does not reduce wage earners’ gross wages. Additionally since wage earners’ FICA contributions are decreased by the same amounts as that of employers, wage earners’ net wages are actually increased.
It is you rather than I who has, (I assume inadvertently) failed to consider posted responses to messages. What fault do you find within my responding message #16?
(As always) respectfully, Supposn
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Post by unlawflcombatnt on Feb 26, 2011 16:00:11 GMT -6
Unlawflcombatnt, I inquired why you would you believe that reducing the cost of labor to employers would in itself decrease demands for labor? I fully considered and responded to your answer within your message #14. Within my responding message #16 I pointed out that reducing employers’ FICA contributions does not reduce wage earners’ gross wages. Additionally since wage earners’ FICA contributions are decreased by the same amounts as that of employers, wage earners’ net wages are actually increased. It is you rather than I who has, (I assume inadvertently) failed to consider posted responses to messages. What fault do you find within my responding message #16? (As always) respectfully, Supposn My only problem was that you failed to acknowledge that I'd answered your question. It was a simple question that had a simple answer. To restate--all other things being equal--reducing labor costs means reducing wages, thus reducing wage-financed buying power, thus reducing production demand, which then reduces labor demand. Yes, I do see your point about how reducing the taxes employers must pay on behalf of labor would reduce labor costs. But again, when you ask simply: " why would reducing labor costs, in itself, cause a reduction in labor demand?", it sounds as if you don't see the connection between the two. So that's the question I answered. (I'm still not sure if you see the connection or not.) I think we have a different view of why employers aren't hiring, which contributed to this difference. My view is that employers aren't hiring because there's no new demand for labor, due to decreased employment and decreased wages. Since there is a 15-30-fold difference in Chinese wages vs. American wages, I don't believe small differences in labor "costs"--on the order of 10-20%--will make any difference at all on the hiring of Chinese workers over American workers. If you reduce the cost of that that American worker by -20%, the cost will be reduced to 12-24-fold that of Chinese workers. Your view, as it appears to me, is that if we reduce labor costs 10-20% through employer tax cuts, a significantly larger number of Americans will be hired. And on that I disagree. Though employers would undoubtedly hire somewhat more workers as a result of these tax-related, labor-cost reductions--I think that amount would be insignificant.
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Post by jeffolie on Feb 27, 2011 11:34:04 GMT -6
unlawflcombatnt correctly pointed out writing this in part: '....If you reduce the cost of that that American worker by -20%, the cost will be reduced to 12-24-fold that of Chinese workers....Your view, as it appears to me, is that if we reduce labor costs 10-20% through employer tax cuts, a significantly larger number of Americans will be hired....And on that I disagree. Though employers would undoubtedly hire somewhat more workers as a result of these tax-related, labor-cost reductions--I think that amount would be insignificant....'
India, Indonesia, Phillipines, and other countries are racing to the bottom to undercut labor costs that are even cheaper than currently being paid in China...
America and all of the West can not win by reducing labor costs just 10-20% below China when other even 'cheaper ass labor' abounds.
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Post by supposn on Feb 27, 2011 13:58:11 GMT -6
Unlawflcombatnt & Jeffolier, you both continue writing of this proposal reducing employers' labor expenses by the method of reducing gross or net wages. This proposal does not reduce gross wages and does INCREASE wage earners’ net (take home) pay.
This is a proposal to reduced FICA revenues by 9.1% of USA’s total payrolls. It would reduce each wage earners and employers FICA contribution by 4.55% of payrolls. (Unlawflcombatnt, employers do not contribute to FICA on their employees’ behalf; they are required to do so by federal law and I doubt if they would do so otherwise). This proposal increases wage earners and employers net revenues and enacts a 4.55% general consumption tax. It is only feasible if the transactions applicable to the consumption tax are not less than twice the total of all USA payrolls.
To the extent that the proposed consumption tax is applicable to total transactions exceeding twice the nation’s total payrolls, this proposal would increase government’s revenues. If wage earners spent their entire incomes for items that are applicable to the consumption tax, their total taxes would still be decreased. That due to the fact that employers' FICA contributions now behave as a sales tax. To the extent that wage earners and their families purchase items that are not applicable to the consumption tax, their total taxes would be further reduced due to this proposal.
Respectfully, Supposn
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Post by unlawflcombatnt on Feb 27, 2011 18:13:36 GMT -6
Unlawflcombatnt & Jeffolier, you both continue writing of this proposal reducing employers' labor expenses by the method of reducing gross or net wages. This proposal does not reduce gross wages and does INCREASE wage earners’ net (take home) pay. Supposn, that point was already acknowledged in my previous post, which you apparently missed. And you continue to not even acknowledge that you asked a particular question in post 13, which was quite adequately answered in post 14 by myself. You need to go back and read the question you asked, instead of trying respond to a response to a different version of that question. This is a proposal to reduced FICA revenues by 9.1% of USA’s total payrolls. It would reduce each wage earners and employers FICA contribution by 4.55% of payrolls. (Unlawflcombatnt, employers do not contribute to FICA on their employees’ behalf; they are required to do so by federal law and I doubt if they would do so otherwise) . Are you serious? You didn't understand what I meant when I said "on their employees' behalf?" I meant that they are "required to do so by federal law"-- on their employees' behalf. If the Government tells me, as an employer, that I have to pay a 4.55% tax for each of my employees, that is a tax I am paying on my employees' behalf. This proposal increases wage earners and employers net revenues and enacts a 4.55% general consumption tax. Yes, it increases their take-home pay by +4.55%, while putting a 4.55% tax on the goods they purchase. The current FICA is less regressive, since it is based on a percentage of income--which means the dollar amount paid increases with employee income. Your proposal puts a flat tax on consumption, so that regardless of income, one pays the same dollar-amount of taxes per amount of goods purchased. Thus a rich person is paying a smaller % of their income per amount of goods purchased, while the poor person is paying a higher % of their income per amount of goods purchased. What you're really advocating is a Regressive tax--one to let those unfortunate high earners keep more of their money, at the expense of those who earn less. Let me reword this. You're advocating a flat tax of 4.55% on consumption on everyone, regardless of how much they earn. And this is replacing FICA--a % tax on income--which now causes people earning less money to pay less in actual dollars those earning more money--with a different tax that takes causes poor people and rich people to pay an equal amount of dollars in tax per amount of consumption. In effect, your proposed FICA handout to the rich will reduce the actual tax rate rich people will pay versus poor people, since the dollar amount of the tax will be exactly the same for rich people and poor people who consume the same amount. Once again, that's what most people would call a REGRESSIVE tax--one where the rich pay a smaller % of their income than the poor. And that's just what we really need now--a way to allow rich people and high earners to keep more of their money, at the expense of everyone else. What a great idea!
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Post by waltc on Feb 27, 2011 19:10:49 GMT -6
Altering sales or payroll taxes are a red herring.
They take away the discussion from what happened to the millions of high wage jobs that have disappeared from the country over the last 20 years.
If those jobs still existed the above discussion would be moot.
Since we're on the subject of taxes, why not tax all stock trades and options granted company insiders as regular income and put a 10 cent tax on all stock trades. I mean here's a sector of our economy that has become purely speculative and parasitical to boot.
Or how about removing the tax favors for those companies who HQ in the Bahamas or Europe yet do most of their business here?
Or removing the tax deduction for a second home and having more than 3 children.
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Post by supposn on Feb 28, 2011 9:02:58 GMT -6
Unlawflcombatnt, due to employers’ FICA contributions, we are now effectively paying a sales tax upon the entire price of everything we purchase.
If employers’ FICA contributions are 1/3 of USA’s total sales transactions, then employers’ 7.65% of payroll is effectively a 2.85% sales tax. If their contributions are ½ of USA’s entire sales, then we are now effectively paying a 3.825% federal sales tax.
Lower income wage earners are now directly paying 7.65% of their wages for FICA. They and their families are indirectly but effectively paying somewhat between 2.85 – 3.825% federal sales tax.
Lower income wage earners and their families are now effectively paying a total somewhat between 10.5% to 11.475% of their entire incomes for FICA.
Before we go any further, is there anything thus far within this message that you question? I await your reply.
Respectfully, Supposn
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Post by supposn on Feb 28, 2011 10:06:45 GMT -6
Walt C, altering FICA and enacting a sales tax are NOT red herrings but they and our income tax regulations and our trade policies are all different economic and political issues.
The problems of FICA and funding of Medicare the Social Security retirement program are both smaller and simpler than that of our income tax policy and our entire federal budget. If we can’t handle these smaller portions of our problems, there’s no hope of getting a handle upon the entire problem.
I’m particularly interested in significantly reducing USA’s trade deficit because:
I’m fully confident that the policy which I’m a proponent of is a solution to the problem; it would create many more jobs and higher paying jobs, it’s market rather than government driven; requires no additional taxes, government debt or net government spending; it’s little appreciated because it’s little known, (few are aware of it).
This is not an era of political good will within our nation but USA’s trade deficit is an issue that has a better chance of finding support within both the Republican and Democratic Parties.
Refer to the discussion topics: “Global trade’s affect upon GDP is understated”, “Trade balance’s leverage within the GDP”, ”A remedy for USA's trade deficit of goods” and ”Solutions to Trade Deficit”.
Respectfully, Supposn
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Post by unlawflcombatnt on Mar 1, 2011 1:52:30 GMT -6
Unlawflcombatnt, due to employers’ FICA contributions, we are now effectively paying a sales tax upon the entire price of everything we purchase. If employers’ FICA contributions are 1/3 of USA’s total sales transactions, then employers’ 7.65% of payroll is effectively a 2.85% sales tax. NO, it is not an "effective sales tax." It is money employers' pay in taxes. And it is not passed on to consumers, unless consumers are willing to pay for it. You're making the false Corporatist argument that because the cost of production goes up, the price must go up. The price does NOT go up any, unless consumers are willing to pay more and buy the same amount of goods. In fact, the employers' contribution to FICA has little to do with raising prices, unlike a sales tax which is added directly to the after-tax price that consumers pay. It's pretty clear you're a chearleader and an advocate for the rich and for those with capital, and care little about workers and consumers. Your whole spiel is how poor businessmen can take home more money without producing or selling any more goods. And that's the real underlying motivation for your advocacy of import certificates--because it would help your rich business-owner friends, by reducing their taxes. In contrast, Tariffs (which you hate) will not help your Corporate and business buddies directly. Instead--assuming your buddies are not just a bunch of free-traitor outsourcers--they'd receive no immediate benefit from Tariffs on foreign imports. Instead, they'd have to wait until the effects of higher import prices increased demand for their production. So they wouldn't be able to get their poor little greedy hands on any extra money for months--maybe even years. Poor babies! That just won't do. :'( What a disgusting and convenient falsehood. Consumers won't necessarily have to pay any more in sales tax--just because producers have to pay more. Producers would certainly like to pass that tax on to the poor consumers that they currently exploit. But they won't pass a single cent on to consumers if aggregate profits go down if they do so. Instead, producers and retailers will eat the entire FICA contribution if sales, demand, and net profit are higher when they don't pass it on to consumers. It's consumer demand that determines price--not production costs. If production costs are not approaching a profit-eliminating level for producers/retailers, then the optimal price for goods will not increase a penny if FICA contributions rise, and it won't decrease a penny if they fall. You're preaching long-since disproven supply-side economics here.
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Post by supposn on Mar 1, 2011 5:32:32 GMT -6
Unlawflcombatnt, it's contended that purchasers pay for the selling enterprises’ expenses. I do not consider income taxes as enterprise’s “expenses” because they’re a tax collected prior to net profits being passed on to owners of enterprises. They are not a direct income tax upon owners of enterprises’ net profits derived from the enterprise but they EFFECTIVELY act in such a manner. [ www.merriam-webster.com/dictionary/effectively1: in effect : VIRTUALLY <by withholding further funds they effectively killed the project> 2: in an effective manner <dealt with the problem effectively> ] There are instances when individual enterprises are unable or choose not pass on all of their expenses. I GENERALLY do accept the contention that purchasers eventually pay for the selling enterprises’ expenses. Am I to suppose that we disagree upon any of this? Respectfully, Supposn
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Post by graybeard on Mar 1, 2011 8:39:54 GMT -6
The price a company can get for its product is limited by what the competition charges, not own costs. Manufacturers have had to outsource to stay in business, because their competition has.
GB
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Post by supposn on Mar 1, 2011 10:41:19 GMT -6
The price a company can get for its product is limited by what the competition charges, not own costs. Manufacturers have had to outsource to stay in business, because their competition has. GB Gray Beard, my question was do employers GENERALLY pass their portions of FICA contributions onto their customers? I agree (and stated) they on occasions cannot and/or choose not to do so. Respectfully, Supposn
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