FT and Embedded Taxes (Econ Question) - Fair Tax Nation2024-03-28T11:21:24Zhttp://www.fairtaxnation.com/forum/topics/ft-and-embedded-taxes-econ?feed=yes&xn_auth=noYes, they are. If a company h…tag:www.fairtaxnation.com,2009-05-28:2636007:Comment:592782009-05-28T15:27:10.229ZRandy Stonehttp://www.fairtaxnation.com/profile/RandyStone
Yes, they are. If a company has any expense (taxes or otherwise) that will be recovered through income. If not, the company will go out of business. On the smaller profit margin, it is true that they take a hit there, but remember that as long as there IS a profit, ALL the expenses are passed on.<br />
<br />
One note for thought....If the profit margin minimzes, don't you think, that is when a company will move overseas to get away from the higher tax to bring the margin back up? Along with it also goes…
Yes, they are. If a company has any expense (taxes or otherwise) that will be recovered through income. If not, the company will go out of business. On the smaller profit margin, it is true that they take a hit there, but remember that as long as there IS a profit, ALL the expenses are passed on.<br />
<br />
One note for thought....If the profit margin minimzes, don't you think, that is when a company will move overseas to get away from the higher tax to bring the margin back up? Along with it also goes the jobs! Bring on the Fair Tax! Mr. McLaren, There was discus…tag:www.fairtaxnation.com,2009-05-28:2636007:Comment:592762009-05-28T15:18:36.959Zmichelekinghttp://www.fairtaxnation.com/profile/micheleking
Mr. McLaren, There was discussion on "forum Okay folks so..." Talking about the Fed Res $ authority. Perhaps you were already on there, saw a number of Mac's. I am not familiar w/ the term "accomodation" from Fed. The fella went on to explain the 3 types and I got that okay.<br />
<br />
The latin makes me think that this $ will have "to fit" somewhere suitable. How does the fed accomplish this? (Oh, 'eck! Plueeze don't send out greenspan! to lower/raise int. rate.) What about the monopoly $ they've been…
Mr. McLaren, There was discussion on "forum Okay folks so..." Talking about the Fed Res $ authority. Perhaps you were already on there, saw a number of Mac's. I am not familiar w/ the term "accomodation" from Fed. The fella went on to explain the 3 types and I got that okay.<br />
<br />
The latin makes me think that this $ will have "to fit" somewhere suitable. How does the fed accomplish this? (Oh, 'eck! Plueeze don't send out greenspan! to lower/raise int. rate.) What about the monopoly $ they've been printing as of late?<br />
<br />
W/ FairTax i also see mad cash out there fast. Perhaps for a few weeks folks will be too shocked to understand they are not in Wonderland and the $ is real, but that won't last long. Many of us po' folk will be making up for lost time. Where is the chart?tag:www.fairtaxnation.com,2009-05-11:2636007:Comment:551022009-05-11T21:45:38.411Zmichelekinghttp://www.fairtaxnation.com/profile/micheleking
Where is the chart?
Where is the chart? Thanks for this Ron. One of t…tag:www.fairtaxnation.com,2009-05-07:2636007:Comment:538152009-05-07T15:49:17.644ZTodd McLarenhttp://www.fairtaxnation.com/profile/ToddMcLaren
Thanks for this Ron. One of the arguments in the Hewitt book is that the 20-25% of embedded taxes includes labor rates that *can't* be taken out of the equation in order to lower prices.<br />
<br />
I'd sure like to see a detailed chart of what costs and taxes are charged in the production and manufacture of any specific real-world widget--in order to show to the number wonks who won't accept the 20-25% embedded tax figures.<br />
<br />
In any case, the increased purchasing power is what is important.<br />
<br />
****Another…
Thanks for this Ron. One of the arguments in the Hewitt book is that the 20-25% of embedded taxes includes labor rates that *can't* be taken out of the equation in order to lower prices.<br />
<br />
I'd sure like to see a detailed chart of what costs and taxes are charged in the production and manufacture of any specific real-world widget--in order to show to the number wonks who won't accept the 20-25% embedded tax figures.<br />
<br />
In any case, the increased purchasing power is what is important.<br />
<br />
****Another question, kids: I see one of the potential drawbacks of the FairTax a rapid increase in inflation due to an influx of so much cash into the economy. (Too much money. What a problem!) Does anyone have a reaction to that concern?*****<br />
<br />
Thanks. Pretty terrific, Matt. Withou…tag:www.fairtaxnation.com,2009-05-07:2636007:Comment:538132009-05-07T15:38:08.004ZTodd McLarenhttp://www.fairtaxnation.com/profile/ToddMcLaren
Pretty terrific, Matt. Without the comparisons I wouldn't have thought that after the FairTax, many things would actually cost LESS.<br />
<br />
In fact, your hypothetical dentist visit takes into account the Medical Deduction--something most healthy people (fortunately) don't even qualify for. Perhaps adding a different "service" would be helpful as well. (I was going to suggest an accountant--but after the FairTax passes I won't need him as much!)
Pretty terrific, Matt. Without the comparisons I wouldn't have thought that after the FairTax, many things would actually cost LESS.<br />
<br />
In fact, your hypothetical dentist visit takes into account the Medical Deduction--something most healthy people (fortunately) don't even qualify for. Perhaps adding a different "service" would be helpful as well. (I was going to suggest an accountant--but after the FairTax passes I won't need him as much!) True. Paying taxes on what we…tag:www.fairtaxnation.com,2009-05-07:2636007:Comment:538102009-05-07T15:27:03.401ZTodd McLarenhttp://www.fairtaxnation.com/profile/ToddMcLaren
True. Paying taxes on what we don't even OWE yet. ...hey, did I mention that was a *government* idea?
True. Paying taxes on what we don't even OWE yet. ...hey, did I mention that was a *government* idea? To me, it is very simply. Emb…tag:www.fairtaxnation.com,2009-05-05:2636007:Comment:534192009-05-05T20:48:53.943ZArt Villa - Global Perspectivehttp://www.fairtaxnation.com/profile/ArtVilla56
To me, it is very simply. Embedded taxes (mainly "Corporate" and "Payroll" taxes) and the cost of tax compliance add to the cost of doing business and, therefore, must be priced into the product/service offering. If competitive market conditions do not allow for higher prices (increased globalization as an example), one of the following will happen:<br />
<br />
1. The company will move U.S. taxable activity (jobs, subsidiaries, etc.) away from the U.S. to stay competitive which punishes the U.S.…
To me, it is very simply. Embedded taxes (mainly "Corporate" and "Payroll" taxes) and the cost of tax compliance add to the cost of doing business and, therefore, must be priced into the product/service offering. If competitive market conditions do not allow for higher prices (increased globalization as an example), one of the following will happen:<br />
<br />
1. The company will move U.S. taxable activity (jobs, subsidiaries, etc.) away from the U.S. to stay competitive which punishes the U.S. workforce.<br />
2. The company will lobby for special treatment from the Federal Gov't in order to regain lost competitiveness which rewards corrupt politics (special favors for campaign contributions) and punishes companies who do not lobby for special treatment.<br />
3. The company will ultimately get squeezed out of existence period which punishes company ownership and the U.S. workforce.<br />
<br />
Any way you go, it is bad for weath creation in the U.S. (unless, of course, you are a politician, a lobbyist, or a special interest).<br />
<br />
Thanks,<br />
<br />
Art I think the income tax part o…tag:www.fairtaxnation.com,2009-05-05:2636007:Comment:532112009-05-05T10:02:26.091ZRon Wenrichhttp://www.fairtaxnation.com/profile/RonWenrich
I think the income tax part of the equation is a rough thing for many people to understand. The business is paying for labor rates at a given rate. Their only obligation is to pay the 7.5% of their half of Social Security.<br />
<br />
Where the income tax comes into play is the reduction of purchasing power by the individual. In that respect, the taxes aren't embedded by the business, but by government on the consumer.<br />
<br />
The Fair Tax will relieve business of their Social Security obligation, as well as…
I think the income tax part of the equation is a rough thing for many people to understand. The business is paying for labor rates at a given rate. Their only obligation is to pay the 7.5% of their half of Social Security.<br />
<br />
Where the income tax comes into play is the reduction of purchasing power by the individual. In that respect, the taxes aren't embedded by the business, but by government on the consumer.<br />
<br />
The Fair Tax will relieve business of their Social Security obligation, as well as other taxes. Business can drop their prices, but it won't reflect the removal of the income tax unless they drop the labor rate to reflect that.<br />
<br />
My feeling is that most businesses won't be dropping the labor rate. It would pass on some of the savings by lowering the prices somewhat. But, those lower prices won't make up for the amount of the Fair Tax. That would be made up in the higher wages due to no tax withdrawals from the paycheck.<br />
<br />
I think this is an area that really needs to be explained and understood better by both sides. Its like the 23/30% argument. Yes Pat - in fact the 9% figu…tag:www.fairtaxnation.com,2009-05-04:2636007:Comment:531702009-05-04T21:59:43.668ZRC Woodworthhttp://www.fairtaxnation.com/profile/FairTaxman
Yes Pat - in fact the 9% figure for business embeds came from an opponent. I stipulated that I would allow him to define embeds and he did as only hard costs - total business taxes - ends up about 9% of prices. Like many opponents. I don't think I'll ever win the guy over - but his error was obvious then. He like so many omitted income tax costs in the price of a good.
Yes Pat - in fact the 9% figure for business embeds came from an opponent. I stipulated that I would allow him to define embeds and he did as only hard costs - total business taxes - ends up about 9% of prices. Like many opponents. I don't think I'll ever win the guy over - but his error was obvious then. He like so many omitted income tax costs in the price of a good. RC -- that's a great way to e…tag:www.fairtaxnation.com,2009-05-04:2636007:Comment:529372009-05-04T00:16:29.708ZPat Conroyhttp://www.fairtaxnation.com/profile/PatConroy
RC -- that's a great way to explain the FairTax and embedded taxes. I imagine it's easier for most people to comprehend how much they have to earn to buy something for X dollars. It also pegs the seller's embedded taxes at a lower rate that is easier to defend and harder for opponents to demagogue.
RC -- that's a great way to explain the FairTax and embedded taxes. I imagine it's easier for most people to comprehend how much they have to earn to buy something for X dollars. It also pegs the seller's embedded taxes at a lower rate that is easier to defend and harder for opponents to demagogue.