Talk:FairTax

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Contents

[edit] Sections that need sources

I'm moving some information to the talk page that requires sources. Normally, we would just add a cite needed tag but I wanted a clean article for WP:GA. Once sourced, we can move them back into the article. Morphh 14:41, 24 June 2006 (UTC)

[edit] Financial markets

In general, FairTax would exert upward pressure on the value of most financial securities. Since a security's present value is based on all future cash flows adjusted for time, falling interest rates raise the present value of future cash flows. The effect on specific securities is indeterminate, however, because FairTax represents sweeping changes to the economy. The current pricing of financial securities includes assumptions that the basic rules of the tax code will remain largely unchanged. For example, FairTax will end corporate taxation. This eliminates the tax benefit which partially offsets many corporate expenses. In the case of non-cash expenses, they will reduce corporate earnings by their full amount rather than by the ~70% of their amount under the current tax regime. In another example, FairTax will cause investors to favor certain types of securities over others. Such cases illustrate that it is difficult to predict how the FairTax will affect the value of a single security or an asset class.

[edit] Effect on law enforcement and crime

Additionally, under the FairTax the relative profitability of collecting illicit income through illegal means such as extortion would decrease significantly, as doing so would no longer carry a tax advantage when illicit income is spent on most consumption goods. This effect could reduce the incentive to violate the law in these ways and reduce the rate of certain kinds of crime.

[edit] Implementation

The ability for the state to collect these heretofore-uncollected taxes would be a major incentive for states to conform their sales tax to the federal sales tax base. Retailers suffering from tax-free direct mail competition or from tax-free sales from out-of-state retailers would see a major competitive disadvantage removed. However, this would have the effect of discouraging consumers from purchasing items through the thriving mail-order and online industry, potentially hurting a multi-billion-dollar segment of the American economy.

[edit] Income tax industry (completed)

During the transition, many or most of the employees of the IRS (105,978 in 2005)[1] would face loss of employment.[2] In addition, income tax preparers (many seasonal), tax lawyers, CPAs, tax compliance staff in medium-to-large businesses, and software companies which sell tax preparation software (such as Drake Software, TaxCut, and TurboTax), could face significant drops, changes, or loss of employment.[3] Proponents state the income tax industry often provides year round services for financial planning and investment, which is expected to increase under the FairTax proposal and could offset some of these changes.[4] New technologies used by the IRS, such as e-filing, are simplifying the process and is already threatening a portion of this industry as goals set by Congress call for at least 80 percent of federal returns to be submitted electronically by 2007.[5] According to IRS testimony from 2004, 45% of revenue agents and officers would become eligible for retirement in the preceding 5 years and there is concern about the loss of their work force as their hiring efforts struggle to keep pace with attrition.[6] In addition, the IRS would not go completely out of commission until 3 years after the FairTax was enacted, providing employees time to find other employment.[7] Proponents claim the projected 10.5% growth in the economy during the first year of the FairTax would provide plenty of new jobs to these workers that are typically well educated and well equipped with transferable skills.[3]

[edit] Predicted effects

It is also suggested that because new goods would be taxed and used goods not taxed, that consuming trends could shift significantly enough that a cultural shift would occur transforming the U.S. mass consumer culture from desire for disposable everything to re-useable everything; from consumer preference for disposable goods to more durable, re-usable goods. The significant monetary incentive to re-use things, avoid disposable things, and to care much better for the things consumers already own and fix things rather than scrap them for new could shift the U.S. consumer culture from one of a "disposable society" to one of reuse. This would consequently have an impact on environmental consumerism trends, encouraging growth in sustainable living practices.


I didn't have in mind TurboTax (which is from Intuit, which has other products, and can absorb some of their personnel elsewhere), but rather companies like Drake Software (the one that I'm familiar with), which, as far as I know, deals entirely with tax preparers, not consumers, and thus would probably fail completely if FairTax passes. The numbers of people involved may be relatively small, but they still add towards the disruption. --Scott McNay 05:21, 18 October 2006 (UTC)
True - Intuit's Quickbooks does sales tax stuff, so they would invest their resources there if needed. The income tax industry described make their living off of the complexity of the tax code. In that sense, any reform to simplify the tax system is a threat to there business. This raises the counterpoint - Is anyone arguing for a complex tax system? While sympathetic to employee transitions, these businesses live off the pain, complexity, and compliance of the system. Any reform designed to reduce complexity, pain, and compliance is therefor going to effect the income tax industry. Meaning that while currently productive, their efforts are (respectfully) wasteful use of the country's resources and would be better served elsewhere in the economy. So whatever we put in this section will need to be offset for POV with such content as just about everyone wants to simplify the system. The more you simplify, the more people in the current industry will be affected. These changes and loss of employment are the natural process of competitive business and can be historically shown that resources are reallocated to other productive endeavors. I do think it is good that we include this section though. I've heard the criticism from my own Congressmen (though he was probably thinking of his tax lobbyist friends or his job after retirement ;-p). We didn't stop the creation of the car because we were worried about the buggy makers. haha Such are valid counter-points that could probably be included if we can find references. Morphh (talk) 14:38, 18 October 2006 (UTC)
I view this as a transition effect only. Realistically, with free preparation of certain types of forms via the internet, and the increasing pervasiveness of the internet, I think the income tax prep business is headed downhill anyway. No need to reply, just wanted to clarify my point. --Scott McNay 23:06, 18 October 2006 (UTC)

Some additional info... Acc to IRS testimony more than 25% of its workers are eligible for retirement now. They were worried about losing their work force because so many will be retiring soon. And the IRS doesn’t go completely out of commission until 3 years after the Fairtax is enacted. Morphh (talk) 21:00, 26 October 2006 (UTC)

I added the "Income tax industry" section as it was ready to be included in my view. I had forgoten about it with all the recent activity and was reminded by the anon post. Removing it from above. Morphh (talk) 05:19, 8 December 2006 (UTC)

[edit] Removing government's personal behavior alteration via taxation

Complicated subject that should be included? Politicians, via the tax code, appear to attempt to alter human behavior. Must be many examples besides the obvious...... taxes on one class of goods and not another, able to deduct property taxes from federal taxes but... renters who pay the property tax for their abode but don't receive a tax break, thus encouraging home ownership vice renting. A Fair Tax would reduce or eliminate politician's ability to encourage or discourage behaviors. 209.50.1.49 17:08, 1 August 2006 (UTC)

Yes - Social Engineering... It is lightly discussed put could probably receive it's own section under the predicted effects article. I'll need to gather information from both points of view and try and make an addition. Some think Government social engineer is good and some think it is bad. Government could still use excise taxes for this but it would make an good paragraph. Morphh 17:41, 1 August 2006 (UTC)
The "Fair Tax" would "reduce or eliminate" the opportunity to encourage or discourage behavior through the tax code?! If imposing "taxes on one class of goods and not another" is an example of social engineering, than that can be done (and is done) through a consumption tax—many states, for example, exempt "staples" from the sales tax. As for encouraging home ownership over renting, if the article's description of the "FairTax" proposal is accurate, than the proposal would do exactly that. One sentence says that "Personal services . . . would be subject to the FairTax, as would renting apartments and other real property.", while another sentence says that "FairTax is tax free on mortgage interest up to the basic interest rate as determined by the Federal Reserve . . ."
The "FairTax" might reduce the opportunity for social engineering, but it would certainly not eliminate it. If you're planning to add statements asserting that the proposed tax reduces the opportunity for social engineering, you're going to need to find some sources that support that argument. — Mateo SA (talk | contribs) 17:42, 19 November 2006 (UTC)
The FairTax does not tax goods like a state sales tax - it does not exclude retail sales of one good and not another. Interest above the basic interest rate is a service applied by the lender and is therefor taxed as all services are tax (again, not one service or another). Renting is a service as and purchasing a new home is a good and both are tax. The other statement about reducing or eliminating is mentioned in Predicted_effects_of_the_FairTax#Tax_burden_visibility and would be sourced to the FairTax book. Morphh (talk) 22:23, 19 November 2006 (UTC)
Whether the current proposal for the tax taxes all goods (or services) equally is irrelevant. At some point, Congress could amend the law to do just that. There is nothing inherent to a consumption tax that prevents Congress from using it for social engineering—just as there is nothing inherent to an income tax that prevents Congress from using it for social engineering. The FairTax proponents are not proposing that Congress pass a constitutional amendment to implement the FairTax concept (which would prevent future Congresses from altering the form of the tax)—they are proposing that Congress pass a law, which it could modify at any time. The point is we are talking about whether the consumption tax concept in itself eliminates the opportunity for social engineering—and it does not. — Mateo SA (talk | contribs) 23:10, 19 November 2006 (UTC)
I think "change" would be a better fit.
The problem with exempting staples from the FairTax is that the rebate covers this already, and does it in a way that forces rich folks to pay tax on most of the staples that they buy, unless they buy frugally.
We already have excise tax on certain items, and I see no reason that the government can't expand that.
And, I agree that there's no reason that exemptions couldn't be piled onto FairTax itself, unless it were reworded to make such difficult. --Scott McNay 23:23, 19 November 2006 (UTC)
I agree with Mateo SA that the FairTax does not limit future changes to the legilation and this would be a good note to include - we could reference the bill itself. However, Wikipedia is not a crystal ball. This point of view is express in the FairTax book and more recently in publications. The reason for this view is then discussed. While there is nothing inherent to prevent changes, it is inherently different than an income tax as it requires the government to change the rate for everyone – even for a seemingly insignificant loophole and such a change is very visable to all. It is not our place to say if a consumption tax does or does not achive this goal - it hasn't happend yet. We can only express published points of view on the topic which include the one presented. Morphh (talk) 01:09, 20 November 2006 (UTC)

[edit] Lead-In / Featured Article

A lot of the concerns that were brought up during the last featured article review have been addressed, but this article still does not meet criterion 2 (a), which requires "a concise lead section" (it now stands at around 400 words, but 100 would be closer to the mark). Let's fix that, and then resubmit this for FA consideration. Vectro 05:46, 9 October 2006 (UTC)

How about this change?

The FairTax (H.R.25/S.25) is a proposed change to United States tax law, which would replace all federal personal income taxes, payroll taxes, corporate taxes, capital gains taxes, self-employment taxes, gift taxes and inheritance taxes with a national retail sales tax and monthly tax rebate to households of citizens and legal resident aliens. The FairTax would be levied once at the point of purchase on new goods and services. The plan would abolish the Internal Revenue Service (IRS) and create a federal "Sales Tax Bureau" to oversee collection of the tax by existing state sales tax administrations.[7] While the FairTax replaces taxes like FICA, it does not remove or change government funded programs such as Social Security, Medicare, and Medicaid.

Summary of proposed law

The legislation would apply a 23% federal sales tax on the total transaction value of new retail goods and services; in other words, consumers pay to the government 23 cents of every dollar spent (sometimes called tax-inclusive). The assessed tax rate would be 30% if the FairTax were added to the pre-tax price of a good like traditional sales taxes (sometimes called tax-exclusive).[8] The effective tax rate for any household would be variable due to the fixed monthly tax rebate. Monthly payments would compensate for taxation on purchases up to the poverty level.[9] This is intended to "untax" necessities and could reduce the effective rate to zero or a negative value.[8]

In the United States, the income tax structure introduces embedded tax costs in goods and services. Under the FairTax, production costs are expected to decrease after tax and compliance costs are removed, thus offsetting a portion of the FairTax and its increase in retail prices.[10] The FairTax is designed to be revenue-neutral — that is, it would not result in an increase or reduction in overall federal tax revenues. However, the tax rate required for revenue-neutrality is disputed. The FairTax's allocation of the tax burden is a point of significant dispute.[11] The plan's supporters argue that it would broaden the tax base, be progressive and start taxing wealth, while opponents argue that a national sales tax would be inherently regressive and would decrease tax burdens paid by high-income individuals.[9] The FairTax is expected to have positive ramifications for tax burden visibility, tax compliance cost (efficiency), economic growth, international business locality, U.S. international competitiveness, and could have challenges with an underground economy and the permanent repeal of income taxation.

Vectro 05:58, 9 October 2006 (UTC)

The intro has been decreased since the FA review. Prior to GA review, it use to be about the size you mention (1 paragraph). It was stated that the intro was too small for the article size and that it should summarize the article. So, I then expanded it to about 5 paragraphs summarizing the article. This was too large for the FA review so I then scaled it back to 3 paragraphs. I think this is about the correct size and lines up with the FA criteria of lead length Wikipedia:Lead_section#Length that recommends (based on article size) our intro be three to four paragraphs. I think our challenges to FA will be with prose 1(a) and neutrality 1(d). I've done my best with 1(a) and perhaps it is sufficent but I'm not a brilliant writer and I'm sure this could be improved. While I think we've done a very good job on 1(d) (even included studies and criticism that are not based on the legislation), some still feel this area needs a little work. On another note, FairTax.org is about to release a lot of new research this month, I suggest we wait to include this before we submit. Morphh (talk) 14:41, 9 October 2006 (UTC)


[edit] Lead section

When I worked on this some, it jumps out at me that the lead section is far too long for any decent Wikipedia article. I propose that the second and fourth paragraphs be removed from the introduction, and merged, as appropriate, with the rest of the article.

They read as follows:

The FairTax would be levied once at the point of purchase on new goods and services. The plan would replace the Internal Revenue Service (IRS) with a federal "Sales Tax Bureau" to oversee collection of the tax by existing state sales tax administrations.

and

Because the current income tax structure of the United States introduces embedded tax costs in goods and services, the FairTax is expected to decrease production costs after business taxes and compliance costs are removed. This is predicted to offset a portion of the FairTax amount.

Although these are improtant parts, there are many important parts to the FairTax plan, and they can't all be included. I propose these two because they seem to me to be the leas important of the most important parts.

--71.113.5.174 03:43, 23 October 2006 (UTC)

I merged the highlights of para 2 and 3 into para 1, merged paras 4 and 6, and tossed para 5. I'll let you review to see what needs to be added back in further below, if anything. --Scott McNay 05:21, 23 October 2006 (UTC)

Hold on there... I disagree with many of these changes / suggestions of the anon (71.113.5.174). Just becasue he makes a recommendation or has a template for quotes does not make it the standards for wikipedia. Slow down and take a look at Wikipedia recommendations - we need to follow these if we're going to be a FA. The intro was the at the correct size (3 paragraphs and could be expanded to 4) as specified for the FA criteria of lead length that recommends (based on article size) our intro be three to four paragraphs. Prior to GA review, it use to be about 1 paragraph. It was stated that the intro was too small for the article size and that it should summarize the article. So, I then expanded it to about 5 paragraphs summarizing the article. This was too large for the FA review, so I then scaled it back to 3 paragraphs. With the recent changes, the current size of the intro can no longer summarize the article and is too short per FA specification. Keep in mind that most viewers ONLY read the intro. For the quotation templates used, this is not the recommended or even an acknoledged format for Wikipedia Manual of Style. I've had similar discussions in the MOS talk on quotation / cquotes / blockquote / etc templates used and it is not recommended by the group. They are even discussing deleteing these templates. I've tried to push them to specify on the MOS page the alternate quotation methods but they have not done so. Point is.. we should not use it as it is not the recommended formating for quotes. I really hate to revert such contributions as I know you have both put in some time and with good faith but this just doesn't help us get to FA and is oposite of the standards. Morphh (talk) 13:50, 23 October 2006 (UTC)
I just reviewed the MOS and it looks like they have recently certified "Blockquote" tag use for long quotations. The quotation template is based on the Blockquote tag but includes boxes / background. Let me submit the question on the talk if this tag is the recommendation for long quotations. In addition, I'm not sure what makes a long quotation. Even if they certify it, that does not mean it is recommended - personally, I don't like the look of it. The word "Cheezy" comes to mind. I also think it adds POV as particular statements / ideas have emphasis if directly quoted. Morphh (talk) 14:04, 23 October 2006 (UTC)
The stuff that I pruned was stuff that was, for the most part, extra detail and irrelevant to an introduction, which was why I went ahead and did it; if I hadn't agreed, I wouldn't have done it, and might have said something. When I looked at it after pruning, I was thinking to myself "now we can add some more stuff that probably OUGHT to be in the introduction, instead of long paragraphs describing what an effective tax rate is". The first paragraph summarizes up the important parts of the entire bill, and the second paragraph generally summarizes the reason for the bill (although it could use some more tweaking, I think).
I suspect that the guidelines are just that, guidelines, not hard and fast rules. I'm sure that you could find, if you hunted around a bit, subjects which could be summarized quite well with a single sentence. If you write an introduction with a specific number of paragraphs in mind, you may end up with prose that sounds forced. You may not have noticed, but 71.113.5.174 broke up the existing paragraphs into 6 paragraphs, so by your guideline, it WAS too long. Now, by your guideline, it's too short, but that means we can add in some other stuff, such as some details about predicted consequences, etc. I thought the effective tax rate discussion was rather long for a section that's supposed to be a summary.
I'm not going to get involved in the quote argument, although if you think it affects the POV-ness of the article, then perhaps some quotes that affect it the other way would be appropriate. --Scott McNay 23:26, 23 October 2006 (UTC)
BTW, notice that I kept both of the items that 71.113.5.174 suggested tossing (although not in exactly the original forms), and tossed other stuff. --Scott McNay 23:38, 23 October 2006 (UTC)
I'm not sure I would call his two - three sentence splits a paragraph :-p. I have to say that your prose is quite good for a computer geek, so I'm not knocking all the changes per say but the length of the intro. I do think the length of this article would be better summarized in three paragraghs. While the effective rate aspect may have been long, it is a section in the article and I think an important aspect to mention in the intro. We also have to consider POV in the intro. As far as the quotes, I don't think adding more quotes to try and balance POV of blockquote emphasis would make the article better. I'm going to remove them. I'll leave the intro for you to fill in, though I might make some minor changes. Morphh (talk) 00:17, 24 October 2006 (UTC)
While it doesn't matter because I removed them for POV reasons, I figured I'd let you know that long quotations (where blockquote can be used) are "more than four lines". Perhaps it may be useful in another article. Morphh (talk) 16:45, 24 October 2006 (UTC)

[edit] Thoughts

I have in mind noting in the introduction that existing tax credits, deductions, and the like, based as they are on the income tax, would go away. This may be worth a paragraph or two of discussion in the body, maybe an entire section, since this could have some surprising results. Is there any reference showing all such credits and deductions, and their amounts, and how much they affect the governmental coffers? I'm sure that examples can be found of some products and/or services which would probably change price very significantly once the embedded taxes and credits are removed. --Scott McNay 03:06, 25 October 2006 (UTC)

  • We discuss the common deductions on the "Predicted effects of the FairTax" article under Home mortgage interest deduction and Charitable giving. I'm not sure we want to address this in detail here - perhaps under the Income tax in the United States article and then reference such deductions and credits. I'm hesitant on discussing deductions and such in the intro as people immediately think of this as a bad thing. My thought is that we don't have enough room in the intro to explain why deductions are irrelevant and the POV of not having credits is a good thing. Morphh (talk) 00:41, 26 October 2006 (UTC)
    • The rebate basically does what the deductions currently do, correct? --Scott McNay 03:06, 26 October 2006 (UTC)
      • Not really - The deductions are a return on taxes paid to a particular item (mortgage interest, donations,..). Under the FairTax, there is nothing to deduct as you haven't paid any taxes. Under the income tax, you give money to the government and then they give it back and call it a deduction - Under the FairTax, you never give the money to the government in the first place. It's sort of like people being upset that that can't use a coupon at the store anymore.. "but sir.. the item is now free.." - yes but I like the coupon. :-) The FairTax has the additional benifit of what would be considered a payroll tax deduction, since under the current system you can only deduct from income taxes paid. Morphh (talk) 04:08, 26 October 2006 (UTC)

I have in mind adding a para to the intro to describe the intended purpose of the FairTax -- to show people exactly how much tax they're actually paying, to drastically reduce the overhead (1/3rd or something like that, wasn't it?), to strip off all of the current loopholes, and so forth. --Scott McNay 03:06, 25 October 2006 (UTC)

  • We have statements in the intro about transparency (tax burden visibility), efficiency, and ease of compliance with the tax code. I think this succinctly states what you've described. Keep in mind that we need to keep an neutral language NPOV intro but expand if you think it needs it. Morphh (talk) 00:41, 26 October 2006 (UTC)
    • I think it may be too succinct. Perhaps a VERY short (5 words or so) description or example of each. --Scott McNay 03:06, 26 October 2006 (UTC)

Might want to note somewhere that whatever the revenue-neutral rate is, it will show people what they truly have been paying all along. If it ends up being 99% (for example), then that is how much we're paying in taxes now, but don't realize it because it's been hidden. As a result, the criticisms of the revenue-neutral rate being way too low is effectively a statement that we have been taxed more than we thought. The actual revenue-neutral rate is just a detail. --Scott McNay 03:06, 25 October 2006 (UTC)

  • I'd suggest putting this under the "Revenue Neutrality" section. Morphh (talk) 00:41, 26 October 2006 (UTC)

Note that just because tax credits, deductions, and the like are going away does not mean that they cannot come back in another form. A tax credit could be applied at the cash register to sales of certain types of products, or mail-in rebates, or direct grants, etc. Perhaps such things should be required to be renewed by the end of the next Congress -- a separate bill for each. --Scott McNay 03:06, 25 October 2006 (UTC)

  • I certainly hope not. Anyway, such discussion would be OR. Morphh (talk) 00:41, 26 October 2006 (UTC)
    • That was mostly just a commentary. :) I didn't mean to imply saying such in the article. In any event, look who we're talking about: politicians. We already have excise taxes. --Scott McNay 03:06, 26 October 2006 (UTC)
      • True - but once the FairTax goes into effect - any change to the system will be reflected in a tax rate change. So, for them to add an exemption, they have to raise the rate. Since the FairTax is so transparent and flat, the politicians will have to explain to everyone why it is their best interest to raise the tax to provide the exemption. Congressmen Michael Conaway mentions this briefly in his testimony before the Subcommittee on Select Revenue Measures of the House Committee on Ways and Means.[1] Morphh (talk) 18:59, 27 October 2006 (UTC)

Morphh, I thought I saw you (or someone) mention somewhere how much the prices would drop if payroll taxes (the employer half of FICA is a separate issue) were NOT given to the employer; can you find a source for that? I think that should be mentioned along with the 22%, to cover both bases. --Scott McNay 03:06, 25 October 2006 (UTC)

Also, in reference to this...

"...your employer is going to have to make a decision. He will either take some or the entire amount he had been withholding for federal income and payroll taxes and add it to your weekly check, or he will readjust your pay figures so that your entire paycheck will be equal to what you used to call "take home pay" before the FairTax."

...I still think that they didnt't think this through before saying it ("Hmm, looks like the FairTax bill will is going to pass next month; I think I need to go to 0 exemptions"), but it makes me wonder if there would be any real difference between the two after prices have stabilized. --Scott McNay 03:06, 25 October 2006 (UTC)

  • Should be covered in the Arduin, Laffer & Moore study - we should use it to expand this topic. Morphh (talk) 00:41, 26 October 2006 (UTC)

Might also want a statement describing what parts of the Internal Revenue code will remain, and what they control. --Scott McNay 03:06, 25 October 2006 (UTC)

  • Perhaps - I'm not sure it would be needed or encyclopedic in regard to explaining the FairTax. There are plenty of sites we're people and find nit pick stuff - not sure it helps the article. I guess you could make a statement like it doesn't remove excise taxes or something but I'm not sure we should discuss what the FairTax does not do. It's not a big point that people are making and listing - we should stick to what is studied, reported, & debated. Morphh (talk) 00:41, 26 October 2006 (UTC)

Can someone cobble together a table approximately comparing the tax burdens between income tax and FairTax on a family at different levels of income? --Scott McNay 03:06, 25 October 2006 (UTC)

  • Our graph on effective tax rate shows this a little bit. We should have some good information when Kotlikoff releases his new study that studies tax burdens. Well - It looks like he just released it![2] :-) Morphh (talk) 02:02, 26 October 2006 (UTC)

I don't mean to come off combative - just giving my thoughts. I think our intro should try and stick with explaining the basics of the FairTax and summarize the article. In doing so, I expect we should have at least one sentence that summarizes each section header. Morphh (talk) 00:41, 26 October 2006 (UTC)

  • For most of the thoughts above, I wasn't thinking of having much, mostly an extra sentence here and there, and in the intro, mostly just rewording what's there already. --Scott McNay 03:06, 26 October 2006 (UTC)

[edit] 2nd para

My complaint with the second paragraph is that the short terms don't really tell the readers anything concrete; "international business locality" was a biggie for me; I took a stab at what it meant, and either I got it right or you took a stab at agreeing. :) Some of those terms, you might consider just tossing entirely. Some of the other items, such as for savings and investment, I added because they could be summarized in a small handful of words. The second paragraph also tended to read more like it's intended for someone familiar with technical tax/economy terms. I'd like to have as much of the technical stuff as possible reworded, without losing any info or making any economists throw up. Some of the terms like "marginal" I had to look up; might want to add "long-term" or something like that in parentheses at the beginning of each main section where it's used. While it may be the correct technical term in the field, "marginal" just doesn't feel (to me) like a word that means "the effective tax rate over the entire year". "Marginal" usually tends to have a connotation of "unimportant" for me. Sounds more like a term that a politician would use in legislation, and create a custom meaning for in the definitions section. :) --Scott McNay 12:35, 30 October 2006 (UTC)

I understand what you're saying - I think we used those terms as they reflected the section headers that use to be in this article but were split to "Predicted effects of the FairTax". While we could toss the terms, we probably still need to include the idea as it is part of the summarization aspect of the intro. I also agree with "marginal" and have avoided using it - the marginal FairTax rate is 23% with a 0% marginal rate on savings. Morphh (talk) 15:21, 30 October 2006 (UTC)

[edit] External links & fan sites

There have been recent additions to the external links section. At one point we had links to sites like FairTaxgroups.com, FairTaxblog.com, FairTax Revolution, FairTax Foundation, Yahoo groups, etc. and from time to time they get added back in. I think that I've been the main editor removing these links and I wanted to discuss this and make sure we have consensus on this issue. We could put a comment tag in the article (in the code) that states to discuss any exteranl link additions on the talk page. Reviewing wikipedia recommendations for external links...

Reasons to keep

  • If there are many fansites for the topic covered by the article, then providing a link to one major fansite (and marking the link as such) may be appropriate.
  • A page which only provides information not already in the article, or which provides a unique resource beyond what the article here would have once it becomes a Wikipedia:Featured article.

Reasons to remove

  • A page that contains factually inaccurate material or unverified original research, as detailed in Wikipedia:Reliable sources. -- (Forums can often contain OR or inaccurte material)
  • Links to blogs, social networking sites (such as MySpace), or discussion forums unless mandated by the article itself.
  • The number of links dedicated to one point of view should not overwhelm the number dedicated to any other.
On the POV concern, I don't consider most of the prior links to be POV. The legislation, scorecard, and calculator, I think, are common ground links. The associations fall outside as they do not link to content but to support / opposition organizations. The link to FairTax.org is absolutely necessary - adding large value as they created the FairTax and maintain research. Linder's FairTax site - sponsor of the legislation - has some useful information. So while I think the last two might be considered POV, they are such a large factor with the FairTax, their importance as links in this article fall outside of the balance concern.

In the past, I've moved Grassroots links like this to the Americans for Fair Taxation article. Since this article is essentially about the organization and the grassroots, I think it is the topic of that article and such is appropriate to include Grassroots links without most of the remove concerns listed above since their link is about thier Grassroots FairTax efforts and not about their FairTax content.

Overall, I am in favor of removing the recent link additions and external links to such fansites. Although, I don't mind so much the addition to the Grassroots section that includes a sentence about FairTaxGroups.com. Thoughts... Morphh (talk) 14:06, 10 November 2006 (UTC)

Posting on my talk page by the Anon IP for these external links Morphh (talk) 20:42, 13 November 2006 (UTC)
Someone asserted previously that FairTaxGroups.com deletes their anit-fairtax posts. First of all, I can tell you from experience that FairTaxGroups does not just delete posts that dont agree with the FairTax. So long as a post makes a clear argument that is factually accurate and does not consist of pure speculation, as many of the anti-fairtax posts on there do, they let them be and encourage discussion on the topic. The basic rule is, if someone finds a real fault of the fairtax, and no tax plan is perfect, and discussion of that fault is constructive, as in, it provokes real consideration and a logical exchange, then the post discussion is welcome. Discussions like that are productive, are often brought to the attention of AFFT people, and could ultimately lead to improvements in the plan or to solve previously un-recognized issues with the FairTax and its possible implimentation. What they do not allow on the site, is for anti-fairtax people to use the site as soap box to hijack conversations, troll, and pick fights. On many occasions anti-fairtaxers with an ax to grind, start threads in sections such as the Newcomer Questions and Answers section, which is supposed to be a help section and then rant about some topic and follow it up with what ammounts to a rhetorical question just to get a rise out of people. Its a violation of the site rules to post that kind of discussion in the newcomer help section. It would be like going on a car thread, finding the section on how to soup up your honda, and then posting about how nissans are better all over the place. Those posts get deleted.
Furthermore, the fairtax movement is a grassroots movement. there were over 500,000 signed supporters of the movement long before neal boortz even wrote his book or made the topic an notable issue on his radio show. its been growing for more than 20 years. The site FairTaxGroups.com is arguably the second most visited FairTax website on the internet next to fairtax.org and is an undeniable part of the grassroots movement as it is used by littlerally thousands of fairtaxers and visitors that wish to read about the fairtax and learn for themselves. As an integral part of the grassroots movement, it more than warrants a place on the external links section. Remember, john linder is an obvious supporter of the fairtax, and you would never consider leaving his website off the list. The fairtax is a grassroots movement and fairtaxgroups.com is part of that movement, part of the story of the fairtax. to leave it off the list does the readers of this article a disservice. 70.119.179.113

[edit] POV Issues

I have noticed that in general, the article, especially the predicted effects section, does not include sufficient criticism of the FairTax. I removed this sentence, as its validity is dubious and needs to be sourced. Feel free to return it to the article if you find a source, but please remove the POV.

"The significant discrepancy is due to the fact that the NRF study does not take into account the drop in production costs that would occur when corporate income taxes are removed."

In the future, don't state such things as fact. There seem to be several statements which assert their factuality, but are in reality disputed by economists. The criticism needs to be addressed (if I knew more about economics, I'd do it myself). -- Cielomobile talk / contribs 18:13, 12 November 2006 (UTC)

Thanks - That sentence should be reworded and I'll find a source for it. We do need double check the predicted effects article. However, most of the predicted effects are not something that is really disputed. If you can find information then lets add it. I don't think we should just add a POV tag just because it seems to be mostly positive. That section was split for summary style and it just so happens that most of that information was of a pro-nature. Morphh (talk) 18:20, 12 November 2006 (UTC)
Upon further review of the article, I found that it really does lack any criticism whatsover. Until this is addressed, I have tagged it with {{POV}}. -- Cielomobile talk / contribs 18:23, 12 November 2006 (UTC)
The article is filled with criticism - discuss your points and we can address them - the POV tag was removed Morphh (talk) 18:34, 12 November 2006 (UTC)
Filled with criticism? Please, do tell, because I have found absolutely none. The whole article is basically literature for supporters of the FairTax. As I said in the other article (Predicted effects of the FairTax), only 60 out of 535 US members of Congress supported the FairTax bills, HR25 and S25, so criticism definitely exists, and is not adequately represented here. Thus, I'm adding back in the POV tag. -- Cielomobile talk / contribs 18:43, 12 November 2006 (UTC)
The criticism is presented in each section along with the other view. Read a particlular section and if there is an opposing viewpoint then it is presented. This is the most balanced piece on the FairTax that is presented on the web. Present a section that does not contain valid criticism to the plan and we will include it. Morphh (talk) 18:51, 12 November 2006 (UTC)
All I see is "advocates claim," "proponents argue," etc., but nothing from opponents of the tax. For example, the whole Predicted effects section has no criticism. -- Cielomobile talk / contribs 05:27, 13 November 2006 (UTC)
Not every aspect of the plan is criticized. Hence some sections do not have criticism. This is not a POV issue. If there is no published criticism for the topic, then there is nothing to include. Like I said, if there is criticism - we'll included it. How can we include something that doesn't exist! You state this section has no criticism - we'll, what is the criticism?! In the section you point out as having "no criticism", it has criticism in the last sentence in the second paragraph and in the first, fourth, fifth, & sixth sentence of the fourth paragraph. Looking at the predicted effects section: Is the FairTax not transparent and the current system not - Yes.. What is your criticism - that a transparent tax system is bad (find some sources). Is the FairTax not border adjustable which currently puts american business at a disadvantage - Yes. What is your criticism - that it is good to have a tax system that can not be removed at the border (find some sources). Almost every section has criticism in it - you can go down the list and read each one and you'll find criticism if any exists for the topic... The rate should be quoted at 30%, the rebate is too expensive, the revenue neutral rate is too low, the tax is regressive, complaince would decrease, larger underground economy, 16 amendment would be a problem, etc. In addition, most of the sections first describe the plan and then go into what proponents or opponents believe. You have no justification for putting a banner that the entire article is POV. You have not provided any example of other "significant views that have been published by a reliable source" as required for the tag. I'm not saying there is not room for improvement but the tag and your position is way out of line and not accurate. See Predicted effects talk for other comments. Morphh (talk) 13:53, 13 November 2006 (UTC)
Seriously now, I've proven that considerable opposition to the tax exists. One critique I've heard of the tax is that it leaves the working class out of the picture, as it gives more preference to the wealthy than the current income tax does. The POV tag will remain until you address this. -- Cielomobile talk / contribs 17:15, 18 November 2006 (UTC)
It is addressed!!!!! Distribution of the FairTax burden and the section "Distribution of tax burden". "Seriously now", why don't you read the entire article - if you find something that is not address that you can find a published reliable criticism for then bring it up - otherwise, you haven't shown anything. I'm removing the tag because I really think this is just a matter of you being confused and not reading the article. I've also posted prior to today on the sub-article with a more detailed discussion. Morphh (talk) 17:33, 18 November 2006 (UTC)
I have read the Distribution section, and I find it to be lacking (especially in the main article). A lot of the proponents' rebuttals are unsourced and completely unfounded in truth (one might say they are "truthy"). Moreover, one small section of criticism is not sufficient to address the whole tax. There are other critiques of the tax, such as the difficulty of collecting the tax (see the source from William Gale). -- Cielomobile talk / contribs 17:50, 18 November 2006 (UTC)
The criticism on difficulty is also addressed in "Tax compliance" and "Underground economy" and such. It is not just one section - the entire article has criticism. In the main article it is a summary style. Morphh (talk) 18:08, 18 November 2006 (UTC)
I believe this dispute to be a misunderstanding on your part in not reading through the article and extreme use of the tag where a discussion in the talk to work out your concerns would work better. However, if you continue to push the issue - I think we should bring in an external party. I recommend User:Famspear. He has never edited this article that I know of and makes his living off the current system (so he will probably be against it). However, I've always seen him remain NPOV, honest, and polite. He's an attorney and a Certified Public Accountant with a great deal of knowledge on taxation and has provided major contributions to wikipedia taxation articles. Morphh (talk) 18:30, 18 November 2006 (UTC)
I've posted to Famspear's talk page about external assistance and he is reading through the material. I wanted to describe my main concern with the tag and wiki-etiquette. This greatly applies to viewers new to an article. A {{POV}} tag for the article would signify that the entire article does not represent significant viewpoints that have been published by a reliable source. The {{POV-body}} would mean the same other then the intro. {{POV-section}} would describe a section that does not include significant viewpoints. {{POV-statement}}, {{lopsided}}, and {{POVassertion}} could be used at a line level. In most cases, editing the article or just posting in the talk about the concern is enough to correct the problem. All tags should include comments in the talk that justify the addition of and the level of the tag placed. In addition, each level requires reading to that level - if you put a an article POV tag then you have read the entire article. The section tag would likewise require reading of that section but would help if the entire article was read to make sure you are not missing the criticism in another section of the article. I believe Cielomobile jumped right to the top (most extreme) without the justification specified by the level of tag placed. He has not produced a significant view that is missing from the article (and that would be a {{POV-section}} tag) - and he certainly has not shown that the entire article lacks significant views. The tag should not be included. I'm sure we'll work to address concerns but we need to back up a bit and take appropriate action. Such includes removing the article tag and working through the level appropriate. Morphh (talk) 14:46, 19 November 2006 (UTC)
I've read the whole article. You can stop asserting that I am ill-informed; it is bordering on a personal attack. Perhaps I should have used a more specific tag, but I did not. I admit that I am not very experienced in POV issues, but I definitely see a disproportionate amount of views from advocates of the tax in this article. I'm glad that you've brought a third party into the discussion, and hopefully this will solve the problem. If he finds that the article does not have POV issues, I will concede this and leave the article without the tag (assuming the editor is not obviously biased in favor of the tax, which I doubt will be a problem). -- Cielomobile talk / contribs 00:50, 20 November 2006 (UTC)

While I like the idea of the tax, I think it extremely foolish for this article to be left biased; it may be (and probably is) used as a public reference by people wanting to know more about it, and if the bill passes due to incorrect or biased information in the article, and we suffer as a result, then the people editing the article have failed their job. --Scott McNay 01:33, 20 November 2006 (UTC)

[edit] Corporate Tax Criticism?

One thing I noticed that seemingly evidences bias is that there is no criticism of the plan to abolish corporate taxes as well. Though I personally don't have the background to fully articulate a reason why it's not a good idea, I suspect someone else could. What of the anti-globalization folks? They would seem to be the least likely to support the Fair Tax. Has anyone respresenting that perspective weighed in on the issue?

Perhaps this isn't an issue quite on their radar yet and maybe that's why there isn't as much criticism as you might expect. The people who would be critical of it aren't as interested in discussing it as the proponents, so there's a lot more sourcable material on the pro side. In that case, it's not really the fault of anyone here, but it does leave the reader with the impression of bias. – Anþony  talk  13:16, 30 November 2006 (UTC)

I haven't seen much criticism on this. If you find some, we can add it in. I expect I haven't seen it mainly because economists and tax experts see it as a smoke screen to hide tax burden from the citizens as businesses don't pay taxes. I do know of many that push for reduced corporate taxes. The Tax Foundation is one that I read often. The anti-globalization folks might support the FairTax due to the Effect on international business locality and Border adjustability. Morphh (talk) 14:27, 30 November 2006 (UTC)
The anti-globalization folks, using rational logic or not, are typically of the opinion that large corporations are bad by their very nature and anything that seems to help them is therefore bad as well. This article in support of abolishing corporate taxes says "most people abhor the idea of removing taxes on corporations", specifically mentioning "anti-globalization leftists". So the mere fact that there is no criticism of abolishing corporate taxes is huge indication of bias to me.
However, I don't think that's anyone's fault here. I can't find any anti-globalization people talking about the FairTax proposal. It doesn't appear that there's been any serious criticism of abolishing the corporate tax, so we couldn't possibly include such criticism here. It's clear that most of the independent discussion on this topic is clearly in favor of the FairTax proposal. As I see it, there are two possible explanations for that:
  1. The FairTax proposal is so good that most people who study it are convinced of its correctness.
  2. The FairTax proposal fails the real-world equivalent of WP:SNOWBALL, so the people capable of leveling serious and damaging criticism don't care to.
In the general case, it's really hard to distinguish between them. If it's #1, then we have no problem at all: the perceived bias is the bias of truth. If it's #2, then we have a real problem and no apparent way to correct it, beyond actively soliciting biased views from critics. I don't know how to fix it, but if you want an explanation of why someone might think there's a POV problem here, that's it. – Anþony  talk  02:56, 1 December 2006 (UTC)
It's definitely more along the lines of WP:SNOWBALL, Anthony. It hasn't been taken very seriously in the real world (as has been the case with any proposals for a national sales tax), so documented criticism is hard to find, because frankly, there are more immediate concerns for opponents of the FairTax. I can tell you that in my study of the tax for the purpose of improving this article, my opinion of the tax has deteriorated, so #1 certainly isn't the case.
But as I think you hinted at, most people contributing to this article are in favor of the tax and probably wouldn't know so much about criticism of the plan, making it all the more difficult to fix the POV issues. I can tell you, though, that Morphh and Scott have been very diligent towards removing POV from the article, and have thus far done a good job. I've tried to help, but I know comparitively little about economics, so I can only be of so much help. If only someone who know more about the criticism of the tax could come to our rescue. Like you said, a lot of people have qualms with the removal of coporate taxes, so it should be mentioned in the article. Unfortunately, it also needs to be cited. -- Cielomobile talk / contribs 06:02, 1 December 2006 (UTC)
If you think that it is significant, then perhaps a comment explicitly stating that there seems to be no opposition to killing the corporate tax.
Morphh, I don't recall, but would corporations need to pay FairTax tax on items not purchased for resale?
I agree, any taxes on corporations are just going to get passed on to consumers; the chances of stockholders getting paid less is about a snowball's chance. If the anti-corporates want to level the playing field with smaller businesses (and there are good points both ways), then there should be little trouble finding another way to do it. Perhaps this is another reason for not finding much opposition.
--Scott McNay 06:29, 1 December 2006 (UTC)
Even a simple comment like that is completely unverifiable. You can't cite the absence of something. Perhaps you could do a Lexis-Nexis search, but that would be original research. I want to reiterate that I don't think that it's anyone's fault. I am certainly not accusing anyone of deliberately introducing bias into the article. However, I do think it's there and I just don't know what to do about it. There may not be a solution. – Anþony  talk  07:08, 1 December 2006 (UTC)
Using LN to look up opposition info is ok, but reporting the failure to find such info is not ok? I think that's too small a distinction to be concerned about. Just post the date and the search criteria, and someone else who has LN access can verify it, same as with a more normal reference. --Scott McNay 10:05, 2 December 2006 (UTC)
You can use a search engine to find arguments which can be properly attributed to the person who made them. On the other hand, search engines themselves do not make arguments. If you claim that the search results are somehow meaningful, you have made an argument using the search as evidence of the argument, not as the source of it. WP:OR is clear that such arguments must be attributed to a reputable source. Keep in mind as well that absence of evidence is not evidence of absence. – Anþony  talk  02:16, 3 December 2006 (UTC)
WP:IAR would seem to apply here; you want to at least mention that there is no known opposition, and I agree and my suggestion is that you do so by documenting your search criteria, so that if someone else with LN access sees the reference, they can double-check and try to think of alternate search terms that might provide the desired information. IMO, documenting SOMETHING is the lesser of two evils here. Just add a comment in the text referring to WP:IAR and say that it's the best information available at present. The page explicity says that it is an official WP policy. As for Argument from ignorance, that is not WP policy, and you are not making an argument, but rather, are explicitly saying that you made a reasonable effort to find the info. --Scott McNay 04:10, 4 December 2006 (UTC)
If the note could be worded in a neutral way to simply mark the difficulty in finding criticism, then no, you're not making an argument, you're just citing a fact. That being said, I certainly would not want the article to imply or leave it open to inference that the lack of criticism is somehow meaningful, because that would be the argument from ignorance fallacy and original research. On the other hand, if we word it neutrally and don't claim it's meaningful, why bother including it? – Anþony  talk  04:57, 4 December 2006 (UTC)
I don't think the difficulty in finding opposition needs to be mentioned, following Anþony's reasoning. Like he said, to say it is meaningful would be POV, and to simply state it would not be meaningful. -- Cielomobile talk / contribs 06:02, 4 December 2006 (UTC)
Corporations do have to pay FairTax on items that are not purchased as part of their business / supply / resale. "Personal vs Business Purchases" describes this topic. I have to disagree with Cielomobile on the #1 vs #2 thing. The FairTax is the largest tax movement in America with 10 times the support in congress then any other flat tax proposal. Just about everyone feels the system is broken and they're looking at ways to fix it. This is not off the radar to tax experts and economists. However, even though the FairTax book was a New York Times bestseller, many Americans are unaware of the FairTax (though most Americans are oblivious to any tax reforms and politics in general). Regardless, I don't see how the #1 tax reform plan with a NYT bestselling book could not be enough to have major interest to critics. I've been studying the FairTax for several years and I also study the criticism. The major opponents modify the plan and then criticize their version of the bill. There has been over $20 million in research done on the legislation and it has been positive. In one letter, the FairTax has 75 economists including a Nobel Laureate. A second letter is due out soon with new endorsements. Critics have William Gale and Washington DC. So it has gathered enough to get huge support but for some reason it can't gather sufficent critics...? As far as corporate taxes, you may have someone here or there complain about this in a blog but I don't remember seeing a reliable source publish this criticism. I expect most economists see corporate taxes as more of a public / political tactic. People like seeing big business taxed and they believe it relieves them of a tax burden. "The task of the taxing authorities is to "so pluck the goose as to obtain the largest amount of feathers with the least amount of hissing." We the taxpayers, of course, are the geese. -- Murray Rothbard" Corporate taxes are a nice way to pluck the goose with little public hiss. Anti-corporates may find value in that the FairTax also removes corporate welfare used in the tax system. Anyway - I'm fine with including such a critique (even a section) if from a reliable source so long as we add the other viewpoint. Morphh (talk) 14:56, 1 December 2006 (UTC)
"The FairTax is the largest tax movement in America with 10 times the support in congress then any other flat tax proposal. Just about everyone feels the system is broken and they're looking at ways to fix it. This is not off the radar to tax experts and economists. However, even though the FairTax book was a New York Times bestseller, many Americans are unaware of the FairTax..."
First, just because a lot of fiscal conservatives support the bill does not mean it will ever take effect. I don't even need to check the source to tell you that few, if any, Democrats support it, and a number of Republicans don't support it. It won't be passed anytime soon, especially with Democrats having congressional control. Second, its position as a NYT bestseller means very little. Dianetics was a NYT bestseller, but do people take Scientology seriously? Hardly. The case is similar with the FairTax, although not to that extent of course. Don't fool yourself into thinking it will become a reality anytime soon. Most Americans are not up in arms about the tax system, and neither are most politicians. Honestly, I don't ever see the current system being scrapped in favor of something like the FairTax, and I think most political scientists would agree. I can't back that up with evidence of course, because political scientists have more important things to do than predict whether the FairTax would be implemented in our political climate. -- Cielomobile talk / contribs 22:46, 1 December 2006 (UTC)
"Corporations do have to pay FairTax on items that are not purchased as part of their business / supply / resale". Might be clearer to indicate what's left that they can pay FairTax on. I guess they'd have to pay FairTax when they hire strippers; what else?
I'd suggest that when "government" is mentioned, it be modified to clarify whether federal government or other.
--Scott McNay 10:05, 2 December 2006 (UTC)

[edit] Failed verification

(Can we put new stuff at the BOTTOM next time? I added a comment on the India issue without reallizing that there was already a section on it, since it was hidden --Scott McNay 23:58, 26 November 2006 (UTC))

I checked the sources about "most economists" asserting that a national sales tax would boost the economy. I see this claim in neither source cited. There are many economists who believe such a thing, and many others who do not. Wikipedia should not assert consensus where it does not exist, and should not cite sources to support claims not in them. Robert A.West (Talk) 19:23, 26 November 2006 (UTC)

Similarly, the statement that "The FairTax avoids exemptions and loopholes which were responsible for many of India's evasion issues." is not supported by the source cited for the statement [3]. The source article talks only about the VAT in India; it never mentions the United States. The source gives some support to the claim that exemptions and loopholes caused tax evasion problems in India, but not the other part of the argument that the U.S. tax will be different. — Mateo SA (talk | contribs) 20:24, 26 November 2006 (UTC)
I think we should consider getting rid of this phrase entirely, since there's no provision to prevent Congress from adding loopholes and exemptions in the future. I know that such exemptions would supposedly affect the tax rate, but, well, let's be realistic; it's going to happen anyway, and it would just be a matter of how they figure out how to hide it. For instance, they could pass an exemption that doesn't take effect until after the next election, by which time it's too late and people will have time to forget about it before the following election.
In any event, we don't know that the exemptions and loopholes really were responsible for India's evasion issues, until someone shows some post-VAT figures.
There may be one significant difference between the India system and the US system; the US system currently has no significant loopholes or exemptions in it that I can see so far (I haven't read all of it yet), without good logical reason. --Scott McNay 23:58, 26 November 2006 (UTC)
I reworded and added another ref for the "most economists" statement. Changed it to say "many economists" and added the money magazine ref that states "the superiority of consumption taxes is almost conventional wisdom these days." I don't think the India evasion thing is a problem. The FairTax does not have exemptions and loopholes and you can't phrase it for what congress "might" do in the future. The article is about the current legislation. I added the ref of the legislation itself as for the second part of this statement. Morphh (talk) 02:04, 27 November 2006 (UTC)


[edit] Original research

Synthesis of sources to produce a conclusion in neither of them is original research as defined by policy, and for good reason. The claim that the bill avoids evasion problems that India's VAT had is an intepretive and speculative claim that requries specialized knowledge of both Indian law and American law. This is for trained experts: don't try this at home. We should cite the opinions of experts, and name them on occasion as well. Robert A.West (Talk) 03:25, 27 November 2006 (UTC)

If there were exemptions and loopholes in both then I would say you are correct. The Fairtax has no exemptions and loopholes so there is nothing to compare. I understand your thought though on creating a conclusion. You could break them into two sentences if you think it helps but I think it is the same thing. India had exemption and loophole problems.(source) The FairTax does not contain exemption and loopholes.(source) We are doing the same thing but with tighter prose. For POV, I think it is important to state that the main reason the Indian sales tax failed is exemptions and loopholes and the FairTax does not contain exemptions and loopholes. This is nothing that requires experts to state - it is clear in the legislation. Morphh (talk) 03:42, 27 November 2006 (UTC)
Drat!!! Lost my edit!!! I'll save in stages.
There are three non-trivial assertions. (1) the Indian tax failed. (2) The reason was exemptions and loopholes. (3) The text of the bill does not contain loopholes that are not obvious to you. I can think of a couple possibilities involving leases and interest rate swaps. We should have expert analysis for all three assertions. Robert A.West (Talk) 04:12, 27 November 2006 (UTC)
As another example, from another section, there is an OR analysis that estate taxes constitute a double taxation on savings. While that seems an obvious conclusion, it is dubious: around 80% of the value taxed by the Estate Tax was unrealized capital gains. Since the US does not (with few exceptions) use mark-to-market taxation, gains are taxed only upon sale. Since the taxable basis of inherited property, or propery sold by the estate, is the value on date of death, the effect is to avoid capital gains taxation. There is a strong argument that the estate tax served in large measure to redress this. Now, you may not agree with the analysis on philosophical grounds, but this illustrates the need for professional, careful analysis of even seemingly-obvious things. Robert A.West (Talk) 04:22, 27 November 2006 (UTC)
And now, back to work, or my estate will be significantly smaller, and possibly earlier, whether taxed or no.  ;-) See you tomorrow. Robert A.West (Talk) 04:27, 27 November 2006 (UTC)
Your correct on some of my assertions though they are not stated in the article (1) & (2). I guess I concluded (1) since they are switching. I concluded (2) as they stated they were swiching due to non-compliance and evasion issues were generally due to exemptions and loopholes. However, I don't think we need to draw such conclusions. We're just stating the fact and the user is drawing the conclusion. We could find another source for (3) that states such - I think you're correct that perhaps the bill is not the best choice for this. I have no debate with your second example - this should be corrected or a source found. Morphh (talk) 04:29, 27 November 2006 (UTC)
Robert, if you lost your edit due to loss of session data, what I do is hit the back button, which takes me back to the text that I just finished typing; I can then mark and copy it. Then I restart the edit, and paste the copied text.
I feel that letting the reader draw a conclusion is improper; either say it outright or ensure that such a conclusion cannot be readily drawn. In short, leave out any mention, at this point, of FairTax not having exemptions and loopholes.
In fact, I would prefer to drop ALL mention of FairTax not having E&Ls, since one could probably argue that the original Income Tax law didn't have much of that at the beginning either (and look what we have now); saying "no!" in such a firm way strikes me as being much the same as saying that it can't. If E&Ls are going to be mentioned, it should be expressed as saying that all current L&Es are being dropped. --Scott McNay 06:35, 27 November 2006 (UTC)
When I got the error message, I hit back, just as your suggested. It normally works, but the edit was gone. First time I have seen that happen in a while! Less speculative analysis is probably better. I'll look in again tonight. Robert A.West (Talk) 06:39, 27 November 2006 (UTC)
It is not proper for Wikipedia to do "what if" on the legislation and what "might" change in the future. It should be written as to what the legislation states today unless it is part of a significant viewpoint which would be included as its own criticism. As far as drawing conclusions, the entire India inclusion is the reader drawing conclusions. There is no direct relationship or mention in the article about the FairTax. The editor that added it was trying to show possible problems with a sales tax by using India as an example. I don't see how it is appropriate to draw this conclusion but not to show that the conclusion is potentially flawed. Perhaps both sentences need to go.. I'll look at this further after I've had some coffee. Morphh (talk) 13:51, 27 November 2006 (UTC)
Cleaned up the stuff on India - If a comparison can not be drawn to show the difference, then a comparison can not be drawn to show the problem. Both provide conclusions with no relationship. So, I've removed it in hope that it will resolve the point. Morphh (talk) 04:40, 28 November 2006 (UTC)

[edit] Thoughts on rewriting introduction

I think that the main points of the FairTax (whether in favor or not) should be listed in the introduction. The points that I can think of offhand are:

  • Income/payroll and corporate taxes are replaced with sales tax (instead of being mixed into prices here and there).
  • Households can optionally register to receive a flat monthly rebate for the sales tax paid on items up to the poverty level.
  • When income/payroll taxes go away, workers will immediately have approximately 23%/30%/whatever more take-home pay. (Morphh, I know that the book suggests that employers might keep the money, thus causeing prices to drop by about 23%/30%, but that's the only place that I can clearly recall seeing such a suggestion).
  • This is balanced by the 23%/30% sales tax.
  • As a significant side-effect, all current exemptions and loopholes go away with the payroll and corporate taxes.
  • Replacing several income/payroll and corporate taxes with a single sales tax has some side effects, such as lower overhead and fewer people need to file.
  • The disappearance of the current exemptions and loopholes has some side effects, such as no more (or greatly reduced) need for tax planning.
  • The most obvious effect is that We The People can more readily see how much we're paying the government (and it'll no doubt become customary to vigorously cuss out our legislators every time we buy something :) ).

Comments? --Scott McNay 06:44, 27 November 2006 (UTC)

I don't know your sources for each statement, so I will just react point by point. Unless sourced, all of this would be OR, as is the above.
  • The 23% raise is doubtful, since around 40% of all adults have incomes so low that they pay little or no income tax. We need to carefully compare and use sources. There is less of an increase for retirees whose pensions are not subject to FICA now.
  • Most employees would see nominal wages stay the same, so the employer keeps his half of the FICA. That works out to an immediate 6.9% pay cut on average, since Social Security would still be funded.
  • We would certainly see an end to the current set of loopholes. Whether others exist is an interesting question. Anyone who purchases a lot of cash-based services would see a net increase in purchasing power.
  • April 15th would change character for certain.
  • Among side effects, we might well see bankruptcies from people who had made plans based on the deductability of mortgage interest, etc.
  • The last point is highly doubtful. Most people can already see most of what they are paying the government every paycheck now, and get a W-2 summing it up, so I don't see that as much of an argument. I doubt that many will keep track of sales tax throughout the year. Is this really cited by advocates?
The universal approbation of consumption taxes among economists is contrary to my reading. Of course, the Van Mises of the world claim to be the whole world, but that is not NPOV. Since wealthy people can save a greater percentage of their income than can the middle class and below, the net result is unavoidably regressive, and will tend to concentrate wealth. Many economists see that as negative. The poverty rebate only mitigates, not eliminates the problem, that much is elementary arithmetic. There would be incentive for the middle class to spend less, which could be good or bad, depending on whose model you use. Both sides of that need to be presented. There is a lot of work to do on this article. Robert A.West (Talk) 07:23, 27 November 2006 (UTC)
Most is based directly on the article itself. I left the figures relatively vague on purpose.
I'd like to see more detail on the 40% and the effects of that, if it's not already in the article or one of the increasingly-many sub-articles.
Please explain the 6.9% pay cut? I don't recall seeing mention of that.
By "cash-based", do you mean "under the counter"?
On the last point, I (and presumably other people) don't "feel" the money leaving when it's deducted before I ever see it.
I suspect that things would be "unavoidably regressive" no matter what plan one comes up with, unless the plan involves "disposing of" anyone who has or makes more than a certain amount. :) Rich folks may be better at saving money, but they're probably better at raking it in, too.
--Scott McNay 13:20, 27 November 2006 (UTC)
Well, I am engaged in thought about what arguments I have seen. As I said, nothing I mentioned could go into the article without source, but a lead should IMO include plusses and minuses. Getting good sources for the doubters will require work, but that is the fun of being here. I am just catching up on the topic on WP, so it may all be in the sub-articles. BTW, why so many? The concept is simple -- that is one of its great virtues -- its explanation should not require volumes.
I am recalling the 40% who pay little or no FIT from the last Presidential campaign -- I could recall wrongly, but the figure is substantial. That may be the percent that pay more FICA than FIT.
The 6.9% is a standard computation. Economically, the employer's half of FICA is considered wages, since the employer pays them and the proceeds go into the SS Trust Fund. That is about 7.5%, with no upper limit, meaning that an employee who makes $100 in stated income is actually earning $107.5. Reducing that to $100 (on the assumption that the employer just pockets the FICA savings) is a 6.9% reduction. Since the SS trust fund has to be funded from somewhere, FICA taxes end and and the scheme is revenue-neutral, the sales tax collections must equal the old FIT collections plus both halves of the old FICA rate. That will not fall equally, but the average wage earner will end up paying the employer's half somehow.
The "Cash based economy" is a combination of non-reporters and under-reporters. Its conventional wisdom that most small businesses that do a lot of cash receipts keep two sets of books.
Regressive refers to percentage of income taken in taxes, so an income tax tends to be progressive to income-neutral. FICA is hugely regressive, since the employee's half tops out at around $100K, and income on capital is not taxed at all, but that is offset by the cap on benefits. Consumption taxes are regressive, because marginal propensity to spend drops with wealth. Economists are split on whether regressive is a bad thing, and the division has changed in the past thirty years. Robert A.West (Talk) 13:51, 27 November 2006 (UTC)
The lead section should briefly summarize the most important points covered in an article in such a way that it could stand on its own as a concise version of the article. It should be a summary of the article.
I need to get to bed, so I'll just reply to this one point for now. If I'm looking up something, I'd like to see a summary of the topic, not a summary of the article. If I want a summary of the article, I'll look at the TOC. The article may be skewed towards the need to describe some point in detail. For example, an article on x may have a == History == section, but you're unlikely to see any mention of the history in the introduction. --Scott McNay 05:52, 28 November 2006 (UTC)
I'm not going to respond to all of this at the moment but I did want to comment on the FICA. The employer half is not shown as part of gross pay so I'm not sure that you could call it a pay cut. While many Americans do not pay any income taxes, they do pay their half of FICA. So getting gross pay would amount to an increase of their half of FICA. The employer will face a reduction in cost based on the removal of their half of FICA and corporate taxes. The U.S. term of regressive is one of semantics from an income base system. When including the rebate, the FairTax is progressive on consumption. The FairTax falls by definition under a worldly view of a progressive tax and has been deemed so by economists such as Kotlikof - however, others such as Gale state that it is regressive on income. I think they're both correct and that it is more a matter of definition then actual effect. Marginal tax rates or effective tax rates, percentage of income taxed or effective rate on consumption, year timeframe or lifetime. Morphh (talk) 14:33, 27 November 2006 (UTC)
I find the idea of "progressive on consumption" quite novel, and (unless there is some intention of imposing other and incomparable taxes on savings) rather odd. Let's not use it; this is difficult enough. Septentrionalis 22:38, 27 November 2006 (UTC)
You can't leave it out - it is a major point of proponents and how the tax is generally described - "Progressive National Sales Tax". Savings are taxed when spent. This debate is discussed in the section "Distribution of tax burden". Dr. Kotlikoff states the FairTax would be more progressive then the current system. Morphh (talk) 00:49, 28 November 2006 (UTC)
That's quite the euphemism there, Morphh. The tax is definitely not progressive—that is pure spin by people like Kotlikoff. It can be mentioned that proponents assert that it is a progressive national sales tax, but it should be made crystal clear that the tax is indeed regressive on income and widens the gap between the rich and poor. This is by far the largest critique of the tax and is not even mentioned in the lead. -- Cielomobile talk / contribs 07:09, 28 November 2006 (UTC)
It was in the lead until about a month ago - the lead was cut down and this information was removed. I agree that it should be expanded to include this information - Scott has been working on this. While I agree that in U.S. terminology (using income tax definitions) the FairTax is regressive on income, the point and idea of regressive / progressive is opinion. The idea is that the rich pay more as a percentage. A progressive tax is a tax imposed so that the tax rate increases as the amount to which the rate is applied increases. The term "progressive tax" can be applied to any type of tax. It is frequently applied in reference to income taxes, where people with more disposable income pay a higher percentage of that income in tax than do those with less income. The term progressive refers to the way the rate progresses from low to high. Progressive terminology can be applied to any tax system that fits this concept as it does with the FairTax. When discussed in Congress, the FairTax is stated to be progressive. Your thought that it widens the gap between the rich and poor is not supported by the research of the actual legislation which shows the opposite (not made up tax plans). However, I agree that it should be mentioned since critics pass off their mystery fun house as the FairTax and make this charge. Morphh (talk) 13:58, 28 November 2006 (UTC)
I just don't see how anyone could call the tax progressive after seeing Image:Fairtax-dollars.png. It's cleary a regressive tax and favors the wealthy, and that needs to be perfectly clear to any reader of the article (most people won't read the whole article, so this notion definitely needs to be mentioned in the lead). -- Cielomobile talk / contribs 17:09, 28 November 2006 (UTC)
Can you explain to me how this image represents the FairTax legislation? It might as well be a chart of a VAT tax or Flat tax plan. Stating that this chart shows such and such means nothing as it is not the FairTax. I should remove it from the article as it has no comparison to the FairTax but to confuse people. It leaves the largest burdens on the poor and middle from the current system, creates a sales tax with a modified base and then compares it to the income tax - no payroll tax, no corporate tax, no estate tax, etc. Your free to believe the "honest" tax lobbiests and Bush administration but don't say it represents the FairTax when it does not. Also consider these charts do not show all the loopholes that the wealthy use to avoid taxes under the current system. To be neutral, you could say that the tax panel and Gale evaluated alternate sales tax plans and found... Morphh (talk) 21:15, 28 November 2006 (UTC)
The FairTax is a national sales tax. The graph may not fit perfectly, but it shows the general idea well enough. As for neutrality, I don't have to be neutral here on the talk page: NPOV only applies to articles. If you're referring to the edits I made to the lead, I did not state it as fact; I wrote something along the lines of "opponents assert that blah blah blah." -- Cielomobile talk / contribs 23:19, 28 November 2006 (UTC)
They are not even close to the same thing. They did a graph on less then half the taxes and left out the beneficial changes. Perhaps a table may help. Note that the Tax panel does not compare the regressive payroll tax which is the largest tax burden for the poor and middle class. Also note that it does not add in the other tax burdens when comparing to an income tax but does include it on the sales tax side. They also modify the tax base to exclude Government which puts a larger tax burden on the people as they raise the rate. While they may look similar (being a National Sales Tax), it does not take significant changes to really modify the effects of the tax burden. Morphh (talk) 14:54, 29 November 2006 (UTC)
Tax Panel NRST Chart
Compares		 FairTax
Compares
Income Tax
(Excludes Payroll Tax)		 Sales Tax
(Replaces Corporate Taxes, Estate Taxes,
Captial Gains, & Gift)
(Excludes Payroll Tax)

Tax base excludes Government		 Income Tax, Payroll Tax, Corporate Taxes,
Estate Taxes, Captial Gains, & Gift		 Sales Tax
(Replaces Payroll Tax, Corporate Taxes,
Estate Taxes, Captial Gains, & Gift)
Gale does something similar by changing the legislation. Note the date on the reference you added in the intro (1998) - he has since made major changes to his rates over the years based on how he modifies the plan (decreasing the rate as it closer follows the legislation). The article referenced in the lead is referring to a 1996 study on some other plan - the FairTax wasn't even a bill until 1999. Since this information is not based on the legislation, is it proper or appropriate to claim it as such. I say absolutely not. For POV, I do think it is appropriate to include the information. However, such information should be treated based on its accuracy and with the appropriate distinction. This is particularly important in the lead as there is little room for clarification. Morphh (talk) 14:54, 29 November 2006 (UTC)

Morphh, we just had a discussion, up above, about the effect of taxing government, and my impression was that we agreed that it cancels out so that it has no effect on the tax rate, and that the primary purpose is to level the playing field with commercial entities. --Scott McNay 06:38, 1 December 2006 (UTC).

Yes this is true, however, the Tax Panal (under their extended base) concluded that state and local government would bear a burden to the FairTax and would require reimbursement from the Fed (untaxing them). This raises the funding required for the Federal Government (and the tax rate) as it has to pay local and state government for the burden. Beacon Hill addressed this and stated it to be incorrect as the loss to the local and state government was a gain to their citizens. Local and state governments should adjust their collection to collect the same amount of revenue. I probably should not have added that line to the table as this aspect is a debatable POV (who is correct), however, the plan was modified to make this adjustment which results in a higher tax rate. Morphh (talk) 16:31, 1 December 2006 (UTC)

[edit] Thoughts on rewriting introduction, part 2

I made some changes to the lead (diff), trying to include critics' views into the lead. -- Cielomobile talk / contribs 17:36, 28 November 2006 (UTC)

Morphh, I added the "however" back into the sentence because it makes the paragraph flow more nicely. Before, it was a little choppy. As for the edits in the first paragraph, I simply put it more bluntly. "Relieving the rich of the tax burden" or however you had it made it sound like a positive thing. If you provide a source for the statement to which I added the {{cn}}, I would ask that you provide a quote from that source on the talk page here, because honestly, I've never even heard anyone claim that it would "start taxing wealth," implying that it is progressive on income. -- Cielomobile talk / contribs 23:38, 28 November 2006 (UTC)
> "The FairTax is a national sales tax. The graph may not fit perfectly, but it shows the general idea well enough."
I think that we should not be lumping them together like this. Would you lump Swiss with Limburger? You can describe it as a sales tax, but stating/implying that it's exactly the same as any other sales tax should be verboten, except when you can source it. --Scott McNay 03:57, 29 November 2006 (UTC)
There are other sources showing that the tax is regressive, though. The graph is simply a visual representation of it, and it helps ordinary people who might find visuals easier to comprehend than a bunch of confusing words (most people are definitely not as competent as Wikipedia editors). The graphic isn't even featured in the lead anyway, so I don't really think it's a problem. It's featured in the Distribution article, but it gives context. -- Cielomobile talk / contribs 04:10, 29 November 2006 (UTC)

I added {{verify source}} to this statement in the lead after reading the source that supposedly supported the statement, seeing as the source didn't really support the statement:

"Due to the rebate, the effective tax rate is progressive on consumption and could result in a tax burden of zero or less."

If another source can't be found to support the statement, I will remove it from the article. If you can find a source for it, a source that isn't the FairTax Book would be best. If the source isn't availible online, I'd like to see a quote from it for verification (you can put the quote on the talk page, of course, not in the actual article). -- Cielomobile talk / contribs 04:33, 29 November 2006 (UTC)

Which part do you want a source for? For the progressive part, see here: [4].
I don't know of any source for the "zero or negative" part. Some people who grow their own food could probably get more in prebate than they spend on taxable items and services. Morphh can probably find a good source. However, I must say that this would probably be a theoretical issue for most people who don't live in the boondocks.
--Scott McNay 06:18, 29 November 2006 (UTC)
I meant the last part of the statement, "tax burden of zero or less." If it's really a theoretical issue and wouldn't actually happen, it should probably be removed from the article.
Also, I would like a quotation for the statement that it would "start taxing wealth." That claim is dubious, at best...since the tax is regressive on income, it would not start taxing wealth in that way, so I'd assume that the claim is referring to tax loopholes and such, but taxes are taxes, and people would find loopholes with the FairTax just as they do with the current system (see the Money source). -- Cielomobile talk / contribs 20:48, 29 November 2006 (UTC)
I've added a source for the wealth statement. According to Kotlikoff, "Their view that taxing sales is regressive is just plain wrong. Taxing consumption is effectively the same as taxing wages plus taxing wealth." He goes on to discuss both. As far as the "zero or negative" part, if you spend at or below the poverty line you will have a zero or negative effective rate. So for a married couple with 2 children - spend at (zero) or below (negative) $26,400. The "Effective rate" and "Monthly rebate" section describe this. Morphh (talk) 21:24, 29 November 2006 (UTC)
I read the Kotlikoff source, and he doesn't really provide any real explanation for that reasoning (that it taxes wealth). He just says that it does, really. Either way, the way you phrased it implies that the current system doesn't tax wealth, so I'm going to rephrase it a little. -- Cielomobile talk / contribs 04:09, 30 November 2006 (UTC)
One other question. What supports the claim that it removes tax burdens? Unless you mean that it removes the tax burden from the wealthy...I think that claim needs to be reworded and clarified (I would do so, but I'm not quite sure what you mean). -- Cielomobile talk / contribs 04:11, 30 November 2006 (UTC)
Also, what exactly do you mean by "broaden the tax base?" Does that mean that more people would be taxed? How so? -- Cielomobile talk / contribs 04:17, 30 November 2006 (UTC)
The current system does not tax wealth - it taxes wages. "Over the years, we've moved pretty darn close to just taxing wages by reducing capital gains and dividend taxes and expanding tax advantaged retirement accounts." The rich could effectively pay no taxes if they borrow against their assets as loans are not taxed (mainly why the rich have so much debt). "When people spend their wages or their assets on goods and services, they pay sales taxes, meaning they end up with less to consume. This is no different from having the wages and wealth directly taxed, but facing no sales tax. But what about saving one's wages and wealth and spending these funds plus accumulated interest in the future? Doesn't this avoid the consumption tax? No. You end up paying consumption taxes not just on the original sums, but also on the accumulated interest. The same holds if you save your wages and wealth and give it to your kids. When they spend it, they pay consumption taxes on both P&I. In present value it's the same as taxing the wages and wealth immediately. Thus a retail sales tax, with its effective wealth tax component, is highly progressive compared, for example, to taxing just wages." Morphh (talk) 14:17, 30 November 2006 (UTC)
Many of the studies that actually study the legislation show that it would decrease tax burdens. For a quick view - See the Average remaining federal lifetime tax rates - Every income bracket shows a reduced tax burden. I think it is POV to include a chart of the critics in the main article but nothing from these studies (particularly since the chart is not even of the FairTax legislation when the others are). See also:
The FairTax would dramatically broaden the tax base to include all 300 million Americans and an estimated 30 million to 40 million foreign tourists and visitors. The income tax base is about half this size. Morphh (talk) 14:17, 30 November 2006 (UTC)

[edit] Speenhamland

The compensation for low-income workers is certainly not approved by all economists; see Speenhamland for the reasons (the historical doubts on the Old Poor Law do not affect the theoretical point.) Septentrionalis 21:15, 27 November 2006 (UTC)

? - Sorry, what are you talking about? Morphh (talk) 22:21, 27 November 2006 (UTC)

[edit] Associations supporting and opposing the FairTax

There is a far greater number of associations supporting the tax listed than associations opposing the tax, in the external links section. A little problem, in my opinion. -- Cielomobile talk / contribs 20:59, 29 November 2006 (UTC)

[edit] Distribution of tax burden

I reworded the statement in question to "a National Sales Tax similar to the FairTax (though also different in several aspects)." I realize that the FairTax has significant differences from the plan that the President's board evaluated, but the FairTax is a National Sales Tax, and the plans are similar in nature (and practice). Both views that the two plans are similar and that they are different are expressed in the sentence, so I think it's pretty balanced, regardless of what you and I may think ourselves.

As for the chart (you expressed that you thought it was POV to include it?), there are a number of charts supporting the proposal, but none in opposition, so it's only fair to include it. -- Cielomobile talk / contribs 17:37, 30 November 2006 (UTC)

In my weird view, including a chart specific to a plan that is "similar" (though also different in several aspects) may not be the best image for an article specific to the FairTax legislation. In my mind, it is like including a picture of an owl when describing the appearance of the bald eagle - they're both birds but it's probably not the best fit. A chart that is based on the legislation seems like it would be the preferred choice. However, your statements are true and I'll concede. Morphh (talk) 18:41, 30 November 2006 (UTC)
I agree that it would be better to include a chart that actually evaluates the FairTax itself, but unless such a chart exists, this will have to do. It's the best we've got that doesn't support the tax. -- Cielomobile talk / contribs 00:04, 1 December 2006 (UTC)
I'd like to quibble about the "different in several aspects" phrase. I feel certain that any professional economist would say that each and every plan really needs to be evaluated on its' own merits, with no assumptions that it is similar to another.
Here in Texas, we have sales tax, which covers most new goods, but not un-prepared food and dairy goods (something new to some out-of-staters, and I used to find myself educating virtually every new clerk at the corner store that I used to buy my daily fix at, before I got fed up and started going to another corner store further away, which uses bar codes instead of generic price stickers), and not most services (a few services are taxable). The FairTax covers ALL new goods and services, which I think is a significant difference; you'd have people, who've never charged tax for their services, suddenly collecting and remitting tax under FairTax, and ditto for food items. And, chances are that the state would change the state tax to correspond with the FairTax, although that's not relevant here.
Basically, I think that there should be stronger language when providing data geared for a different plan; WE do not know how significant the difference is, pending availablility of FairTax-specific data, so we should ensure that the readers are aware that the data might not correspond at all. It appears to me that the changed wording weakens that warning. Perhaps something like "opponents to the FairTax believe that the chart is close enough to a correct chart for the FairTax, while proponents of the FairTax believe that this chart will bear little resemblance to a correct FairTax chart".
--Scott McNay 06:03, 1 December 2006 (UTC)
It would be fairly easy to take the data from the tables presented in "Comparing Average and Marginal Tax Rates under the FairTax and the Current System of Federal Taxation" and turn it into a chart. Example: FairTax single middleage.png. This is a study of the FairTax. However, to Cielomobiles point - it is positive toward the FairTax. I guess we have to consider what is more important to Wikipedia, Accuracy or POV. Morphh (talk) 16:14, 1 December 2006 (UTC)
No, that chart is nonsense, and the data for it was created by people like Kotlikoff who are under the wallet of Americans for Fair Taxation, no doubt. The President's Panel was a bipartisan group, and I'd trust them in a heartbeat over people controlled by FairTax lobbyists, even if the tax plan they studied differed significantly from the FairTax. -- Cielomobile talk / contribs 22:52, 1 December 2006 (UTC)
That chart would seem to indicate that everybody pays less. If true, the FairTax is not revenue neutral, but is a (further) deficit, which is not brought out. If not, because single tax-payers are unrepresentative (unlikely, dependent deductions aren't that large) it is unfair. Septentrionalis 20:50, 1 December 2006 (UTC)
The FairTax is revenue neutral. I don't quite understand your second sentence. See the table that was used as a reference for the chart - it provides other age groups and single / married burdens. "Everybody" that you describe is the income tax base. The FairTax would dramatically broaden the tax base using consumption to include all 300 million Americans and an estimated 30 million to 40 million foreign tourists and visitors. This would more than double the federal government's tax base. Illegal economic activity is largely untaxed under the current tax system. Economists estimate the underground economy in the United States at approximately $1 trillion annually. By imposing a sales tax, black market activity would be significantly taxed when proceeds from such activity are spent on legal consumption. For example, the sale of illegal narcotics would remain untaxed, but drug dealers would face taxation when they used drug proceeds to buy consumer goods such as food, clothing, and cars. By taxing this previously untaxed money, the black market would be paying part of their share of what would otherwise be uncollected income and payroll taxes. It is also estimated that approximately 5 million illegal immigrants are paid off the books ("under the table") in cash allowing employee and employer to avoid paying federal taxes estimated at $35 billion a year. The broader the tax base, the lower the tax burden.
The FairTax also taxes wealth that is relatively untax today. The current system shifted the tax burden from the elderly, who receive most of the capital income, to the young, who earn most of the labor income. The FairTax redistributes from rich older spenders to younger savers. While it's not widely known, America's biggest spenders are actually the elderly, and for good reason. They know they have fewer years left to spend their resources and, consequently, are consuming their resources at more than twice the rate of the young. The FairTax would also relieve the tax burden on middle-class workers. Since the FairTax generates a goodly portion of its revenues by effectively taxing wealth, it can afford to have a lower effective tax on wages. This is particularly important as the baby boomers retire. With these aspects and the expected economic growth, the FairTax would go a long way to fully funding Social Security and Medicare in the future (which is all but imposible under the current system). Morphh (talk) 21:48, 1 December 2006 (UTC)
The FairTax is not revenue neutral. You can't have it both ways: less taxes and enough revenue. Your own chart would even prove that, although it's definitely flawed. -- Cielomobile talk / contribs 22:52, 1 December 2006 (UTC)
Currently, most taxes are paid by people who work; those who are retired or who get money from sources other than work or taxable investments (black market, tax shelters, inheritances, etc) pay little or no tax. However, EVERYONE buys goods and services. This is what he means when he talks about broadening the tax base.
There is also a section in the article about the overhead of the current tax system; much money which is currently spent on filing required forms, or finding loopholes/exemptions, would no longer need to be spent. This does not affect the tax, but the article indicates that it is figured into the expected changes in prices.
--Scott McNay 10:05, 2 December 2006 (UTC)
This is not my "flawed" data or chart - I only took what was provided in the research paper table and put it into a chart. So take your gripe up with Kotlikoff and David Rapson if you disagree with the results, however, they provide a 27 page document discussing the research (that is just in this one paper). What do you have in this regard? Nothing - a chart with no methodology, no authors, no background data of a hybrid system - Nice. It can be had both ways as it taxes those that are not taxed today (or not taxed enough for their wealth level). This is part of the point of broad based consumption taxes. Morphh (talk) 12:21, 2 December 2006 (UTC)
Sorry if it sounded like my gripe was with you—it's with Kotlikoff and the others under the payroll of FairTax advocates. This isn't the greatest analogy, but have you seen Thank You for Smoking? To me, Kotlikoff is Nick Naylor, and the National Bureau of Economic Research is the Academy for Tobacco Studies. I think his research should be avoided at all costs. -- Cielomobile talk / contribs 18:23, 2 December 2006 (UTC)
I've seen the movie and thought it was good. I'm not quite sure of your comparison though as Kotlikoff often publishes though the National Bureau of Economic Research. I don't see where they oppose the FairTax. Oddly - I feel exactly the opposite with the opponent information and who is playing Nick Naylor. I think AFFT, Kotlikoff (lifelong Democrat since you bring up party) and all the other economists publishing are trying to provide correct data and the tax lobbyists (extremely well paid and powerful group in Washington) and those that greatly benefit from the current system (politicians) create false plans to confuse the debate. One side publishes data and methodology for other researchers to review (even using different methodologies and getting similar results) - the other side provides no such data. You stated that the tax panel was bi-partisan but the data was created by some unnamed person (using unknown data and methodologies) at the Treasury Department (note that the IRS is part of the Treasury Department). You can also see that Connie Mack (the Chair) was actually in favor of such a plan. Read the first report from the Tax Panel in comparison of the second - The first report was a scathing review of the current system and described all the things wrong and what the people wanted (sounded a lot like the FairTax). Then in the second report they did the exact opposite of what they stated in the first report (hmm sounds fishy). You should e-mail Kotlikoff (available on his website) - he is pretty friendly, though I'm not sure what your going to use to tell the leading economist on consumption taxes that his data is flawed and his years of research is a fraud. Morphh (talk) 13:11, 3 December 2006 (UTC)
No, the National Bureau of Economic Research supports the FairTax. The comparison I was drawing was between them and Nick Naylor's company, the Academy for Tobacco Studies (which, if you remember, never found any health issues with tobacco). All the research I've seen from the NBER has supported the FairTax, and I'm not inclined to believe that it has absolutely no flaws. I think there are definitely a lot of good things about it, but there are most certainly flaws, which Kotlikoff does not expose. As for his party affiliation, that matters little—there are people on both sides that cross traditional party boundaries on certain issues, and there are corrupt people on both sides. One's party affiliation does not validate one's research. -- Cielomobile talk / contribs 17:21, 3 December 2006 (UTC)
Oh ya.. I was thinking of the other group in the movie with the skull & crossbones thing. We'll, I'm not sure how you get that he is corrupt out of it but I guess that's your view. You may not agree with his conclusions on some emotional level (since there is little to no in depth and accurate research to debate it) but it is quite a charge to call such a respected economist corrupt and that his research is flawed. I don't agree with Gale but he has at least published his data and put his reputation on the line - I respect Gale but find the rebuttal research convincing. I don't hold the same opinion of the tax panel. I'm not sure what makes you choose one side over the other since this argument can be made about either side. I think you have to look past these aspects to the research. It seems we've gone off topic though... :-) Morphh (talk) 20:19, 3 December 2006 (UTC)

[edit] Removing the POV tag

I think we've improved the article significantly in terms of NPOV, so I'm going to read through the article once more to check for POV issues, and if I find none, I'll remove the tag. -- Cielomobile talk / contribs 17:39, 30 November 2006 (UTC)

If your at this point, you should probably remove it. Not having the tag does not mean absence of POV issues. Articles like this are sure to be in constant debate. We'll still work on them and I'm sure we'll find some. The point of the tag is that the entire article is missing significant points of view from reliable sources. Morphh (talk) 14:15, 5 December 2006 (UTC)
I still see too many issues with POV. There's more work to be done. -- Cielomobile talk / contribs 06:10, 6 December 2006 (UTC)
Why don't you share so we can work on these together... While I don't think the tag reflects the article state or justification for use, reducing/correcting/removing all POV disputes is certainly a goal of every editor here, which we'll continue to do after the tags removal. What is your definition of the tags use and criteria for removal? Please expand on the issues that you're describing. Thanks Morphh (talk) 15:55, 10 December 2006 (UTC)

[edit] Social Security privatization and FairTax

It is possible to create the FairTax and allow privatized Social Security with FairTax. Just create a system of tamper-proof Social Security Investment Account Cards that you either sweep/enter a PIN when you perform a monetary transaction. It would be insignifigant if someone discovered it because the only way they could use it would be to put more money in your account. They could try to use it to withdraw money from the account, but that would fail because you would likely be required to have some sort of biometric scan to withdraw funds for extra protection. This is an extremely viable opportunity and the combination of the two would economically revitalize America for several decades. Mikiro (talk • contribs)

Interesting thought though I don't think we could put this in the article unless you know of a reliable source for the reference that discusses this concept. Morphh (talk) 14:37, 5 December 2006 (UTC)

[edit] Lead section

I have several problems with the changes recently made to the second sentence in the lead. I thought I had described it in the summary but I'll outline it here. "According to the House bill, the FairTax would not change government funded programs such as Social Security, Medicare, and Medicaid, although opponents contend that it would not yield enough revenue for the government to maintain these programs."

  • "According to the House bill," - What is the purpose of this? Is the House bill different then "The legislation" or "The FairTax"? Is their a difference between the House bill and the Senate bill? It is repetitive and adds nothing. The sentence describes what the legislation changes and what it doesn't (as there is confusion on this).
  • "although opponents contend that it would not yield enough revenue for the government to maintain these programs." - We're in the second sentence. Can we get through actually describing the plan before we hit the user with Critics say this and Proponents say that. I mean come on... we haven't even stated the dang rate at this point. According to the perfect article guideline, a lead "begins with a clear description of the subject at hand."
  • "although opponents contend that it would not yield enough revenue for the government to maintain these programs." - Duplication of the second paragraph that states "and that it may not yield enough money for the government, resulting in cuts to governmental programs." (which is more accurate in my view - see next point). The lead should be concise and not have duplication such as this.
  • "although opponents contend that it would not yield enough revenue for the government to maintain these programs." - Original Research as the sentence implies that these government programs would be cut. It is much more likely that funding would be cut from discretionary spending or other areas and not these programs if such a shortfall occurred. This statement is not supported by the reference - the reference only states that the FairTax might not raise enough money according to critics.

For any and all of these reasons, I am reverting the recent changes. Morphh (talk) 14:16, 6 December 2006 (UTC)

Perhaps some rewording is in order, but the way you had worded it implied that the FairTax would not change government-funded social programs at all, which, according to several critics, is not true in the slightest. It is not original research—although "such programs" may be more accurate—and and I'm going to change it back. It is POV only to describe the advantages of the tax first. -- Cielomobile talk / contribs 06:22, 7 December 2006 (UTC)
You didn't address any of the points above. You're exactly correct with the way it was worded - it would not change government-funded social programs at all. What critics are saying is that it could change the funding for government funded programs. These are two very different statements. One requires legislative changes to alter the program. The other happens every day with the collection of taxes, market swings, etc. You're misreading the statement. What your saying is that it could change the funding for such programs (which itself is fairly untrue as these are mandatory funded programs - shortfalls in government revenue would be a loss to descretionary spending or an increase in the deficit). What the statement says is that the legislation does not modify the programs (the legislation for the programs). Since we change the funding for SS - does this change SS? This is what is answered - no. Even if the FairTax changed funding, it still would not change programs like SS. We're at a huge shortfall now with these programs but it does not change the program (only legislation can change the program such as increasing the age of collection or something). Morphh (talk) 15:18, 7 December 2006 (UTC)
  • According to the legislation, the legislation says... ??????
  • Still in second sentence.. again, not the place for this.
  • Duplication.. again, no need for duplication.. second instance is more accurate and appropriately placed
  • OR - again, the "such programs" that your referring are mandatory funded programs and not supported by the ref.
I'm reverting it again but I'll try to clarify the sentence. I also expanded the second instance to include the other options to shortfalls (increased deficit, increased tax rate). Morphh (talk) 15:18, 7 December 2006 (UTC)

[edit] Summary split "Transition effects"

Since adding the section "Income tax industry", the "Transition effects" section is now a decent size. The thought just occurred to me that we could summary style this and include it into the Predicted effects of the FairTax article. This may help address Cielomobile's concern with regard to that article not having enough criticism of the FairTax. Since most of the Transition effects section is criticism and part of the "Other indirect effects" in that article are criticism, this should provide the needed balance that Cielomobile suggests. The criticisms would still remain in this article, just in a summarized format with reference to the other article. It would help this article by reducing size. Thoughts... Morphh (talk) 18:49, 10 December 2006 (UTC)

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