The following is an editorial written by State Senator John Douglas on the Georgia FairTax.
The “Georgia Fair Tax” & Illegal Immigration
During the course of the 2006 Georgia legislative session, your state House and Senate passed a strong anti illegal immigration measure in Senate Bill (SB) 529. The bill puts the burden on not only those here illegally, but also those who employ them. I was pleased to vote for the bill and enthusiastically support it.
However, illegal immigration continues to be primarily a federal problem. We cannot round up illegals in Georgia and deport them do another state or country. We can also not afford to shut down our state economy by forcing these people out overnight. We didn’t get into this situation overnight and wont get out of it in that time period. Homebuilding, agriculture, chicken processing and carpet production are four areas that would suffer greatly if there was a sudden outflow of Hispanic labor. All of those industries are vital to the economy of our state.
So with that in mind, what are we to do? First, the US government must get control of the border. A continual flood of illegal immigrants negates everything we are trying to do here in Georgia. Secondly, there can be no amnesty for those breaking the law. “Illegal” means just that. No fuzzy areas, no doubt, no waffling on the law. Enforce it.
At the state level, while these illegal immigrants are still here, they continue to use public facilities just as honest taxpayers do. Roads, schools, hospital emergency rooms, parks and other areas suffer wear and tear from everyone, not just American citizens. Unfortunately, under our current tax laws, its only honest American paying for the benefits of our society. That has to change. Those being paid in cash to avoid government scrutiny and income taxes must be brought into the system.
As a result, I am proposing the “Georgia Fair Tax” which would eliminate the state income tax and replace it with a 4-5 cents sales tax. There are two great reasons for the proposal. First, it brings everyone in Georgia into the equation for paying their share of the upkeep of our state. No longer would working for cash exempt you from the taxes honest citizens are paying. No longer would those living within the law carry the financial burden for those outside the law. Everyone, from the illegals to drug dealers to the most honest citizens would immediately begin paying their fair share.
The second reason a Georgia Fair Tax would be important is because it coincides with what Congressman John Linder is doing in Washington. For several years, Linder has worked to eliminate the federal income tax in favor of a national sales tax. What better example for us to set than for him to be able to point to Georgia and tell the country, even my own state has now gone to a fair tax.
The time has come to make this change. Ten states currently have no income tax. Georgia has to become number 11.
However, being a Senator means I can’t introduce the legislation myself. Our Constitution requires all revenue bills begin in the House of Representatives. As a result, what I intend to do is use my Senate position as a “bully pulpit” to push this idea and work to see it implemented. Just as John Linder has encountered steadfast, entrenched bureaucrats in Washington, so too will I in Atlanta. But I intend to keep working and get the idea across to my colleagues at the capitol that the time has come for this and the burden of paying for Georgia has to be shared by all.
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So.. we should overhaul the entire tax system due to a few people who get paid “under the table.” And we should do that regardless of the consequences (rich people paying less in taxes, the rest of us paying more, no one knowing how much we really pay).
That seems totally fair to a grandstanding politician.
Finally, a proposal that is fair and just. Its about time we bring in everyone who uses our facilities and let them start paying for that priveledge. Honest Americans have about had enough. And seeing these law breakers marching in the streets demanding this and that has backfired on them. I would remind you they had to be told to carry American flags after their first marches were covered in Mexican flags.
I for one support this proposal and wish Douglas and John Linder in Washington well on their efforts.
Of course, the Dims might squeel, but hey, what else is new. The sky might indeed fall one day…..
(rich people paying less in taxes, the rest of us paying more, no one knowing how much we really pay).
The idea is based up the the FairTax proposed by John Linder. Read The FairTax Book. Unless you’ve made an real effort to understand it, then don’t criticize it.
This benefits everyone, not just a specific class.
Joeventures,
Are you honestly saying that our current tax system DOESN’T need an overhaul?
Unless you can point out to me a specific example of why our current tax plan doesn’t need overhauling, and how this tax plan isn’t effective…then I would suggest you stop whining.
And “rich people paying less”…Sales tax is sales tax Joe. When you walk into a convenient store to buy a coke, the cashier isn’t going to ask what income bracket your in. Now, I haven’t read the Fair Tax Book–but I do believe in Common Sense.
Sounds like Senator Douglas, and Representative Steve Davis (who proposed this plan at the end of the 2006 session) actually have their heads in the game…instead of up in the clouds, where is the only place the current tax plan seems logical.
All in all, the fair tax plan is awesome!
Actually, as someone who sells items to an end-user, and is therefore responsible for collecting sales tax, I can tell you that not everyone plays fair in this market.
While you folks “think” you would reap huge benefits by not having to pay income tax, I’ll bet if you added-up the stuff you buy in a year that is currently a sales taxable item, and you go back and apply the “fair tax” percent sales tax to it, you will find that you will be paying a WHOLE lot more via the sales tax than you would have paid via the income tax.
To my comment of everyone not playing fair, there are loads of companies outside of Georgia who sell stuff to people inside Georgia that are my competition. Only the big national companies go to the trouble of setting-up sales tax departments to make sure they comply with state laws, and collect the sales tax to submit to the government.
You enact an increase of 5% sales tax, and BUYERS (i.e., you folks) will increasingly shop outside the state of Georgia to avoid paying the extra sales tax.
I have read the Fair Tax, and, while I first agreed with John Linder, I was not in this business where I am responsible for collecting sales tax at the time. Now that I am, I know it would cause more of my customers to shop outside the state to avoid paying the sales tax, and this, in turn, would cause businesses like mine to likely close.
Bill,
People that go out of state to avoid the sales tax will only have two places to go…Alabama and South Carolina. Tennessee and Florida have a comsumption tax and no income taxes.
Just a thought.
Jase,
Ever heard of the Internet? You increase the tax burden enough, and more people will decide to go online to shop for a variety of things, and the merchant, as I said before, may or may not abide by the reciprocity laws requiring them to collect Georgia sales taxes from the purchaser and sending that money back here.
Wow, this is a great idea that needs to be looked at and discussed. I think there would be a lot of positive results from switching to a sales tax. I also think that it should coincide with a taxpayer’s bill of rights (TABOR).
Buyers can already shop on the internet to avoid paying sales tax in Georgia and yet it hasn’t caused mass dissolution of retail businesses in the state. If modeled like Linder’s federal Fair Tax, there would be provisions (prebataes) to compensate for essential items. The measue needs to be debated because there is no doubt the current system has many flaws both on the state and federal level. I applaud Senator Douglas for getting the issue out front, here’s hoping it gets a fair hearing.
I know that Fair Tax proponents don’t care that sales tax are much more regressive than income taxes. According to the Georgia Budget & Policy Institute, Georgians in the lowest 20% pay approximately 12% of their income in state taxes while Georgians in the highest pay 6%. 8% of what Georgians in the lowest 20% pay is attributed to state sales taxes, while the top pays 1%. The Georgia BUdget & Policy Institute says that sales taxes are the most regressive compared to property and income taxes. This all seems pretty common sense. You can argue all you want about whether or not Georgians highest earners need a tax cut that would shift their tax burden onto lower income workers, but you can’t argue that that’s not what will happen by getting rid of the state income tax and increasing the sales tax.
First of all, I believe a huge switch to sales taxes instead of income taxes runs counter to the GOP mantra of attracting retirees to our low tax state. What good is cutting income taxes for the 65+ set if they have to pay increased sales taxes at the register?
Are you going to tell me that every store in Georgia will set up a tiered sales tax collection scheme to collect one amount from 65- and one from 65+ Georgians? And what if these people move to rural Georgia (where many choose to live). Are country shops, some who don’t even use a computerized cash register, going to be able to comply?
On another note, I think it is hysterical that people say “read the Fair Tax Book”. The Fair Tax Book is premised on the fact that the tax rate will be 23%. HOWEVER, you and I would call this a 30% tax. So the whole book is premised on a tax rate that is only 3/4 the actual rate, and even that number is looked upon with a lot of skepticism by tax experts who think the real number would be closer to 45%.
Since I know overreaction is a typical response on this site, I will give you a simple example. If the sales tax rate were currently 30%, and I bought something that cost $100, my total cost would be $130.
$100 x 30% = $30.
$100 + $30 = $130.
However, in the Fair Tax world, they call that 23%.
What? How’s that possible.
$100 x 30% = $30
$130 x 23% = $30
Every single person I have ever met calculates sales tax, tips at restaurants, and the like by taking the pre-tax total and multiply it by the sales tax rate. Only Linder and the fair tax crowd take the post tax number and calculate backwards to get the tax as a percentage of the post-tax amount instead of the pre-tax total. And they do this because they are being deceitful. 23% sounds better than 30%. And my guess is that a lot of people don’t know how much taxes they pay and think it is north of 30% on their income. So they here 23% and it sounds like a deal.
The truth is, the average Georgian who makes about $25,000 a year probably pays (state and federal, including social security and medicare taxes) about 23% of his total income in taxes.
Since the average American saves no money each year, under the fair tax, they would now be paying at the very least the same amount JUST to the federal government, plus the 6% they’d have to pay to Georgia. But that’s just if they spend what they earn. If they go into debt, they’d also now be paying income level taxes on money they never earned in the first place. Sounds like a great idea — lets tax debt like income! Was this fair tax thing written by the title pawn industry?
This Republican fair tax mindset — people cheat the current system so we have to completely replace it — is so wrongheaded I don’t even know where to begin. The bottom line is that replacing income taxes with a fair tax would make my total tax haul (because I am not in the top 10%) increase enormously.
That’s great, I can just see the political calculus of the poor, who already are angry about immigration — the Republican plan was to increase your taxes as a way to try and penalize illegals instead of actually doing something about them being here in the first place. If that is really your message to Georgians, then go right ahead.
In summary:
Businesses hire illegal labor.
Republican proposal: Cut taxes on those businesses, and raise taxes on everyone else through a fair tax to penalize the illegals, instead of the businesses who hire them.
Result: illegal immigrants still here, still working for businesses.
Illegals pay slightly more in taxes than they previously did, 90% of Georgians pay more in taxes than they previously did, businesses, who would be exempt from taxes on their transactions in the fair tax world, get a huge tax break.
Go for it guys.
There has not been developed a better way to bring the underground economy above ground than a Fair Tax. Law abiding Georgians are sick and tired of paying for those who choose not to live within the laws. I agree with them and hope Sen Douglas is successful.
I will give you a simple example. If the sales tax rate were currently 30%, and I bought something that cost $100, my total cost would be $130.
If the FairTax were passed the all taxes that come along with each stage of production would be eliminated. If you spend $100 on groceries today and the FairTax is passed tomorrow you’d still be paying $100. The FairTax is an inclusive tax. The price of goods and services would stay at about the same level. While you get 100% of your paycheck.
Forgive me for being “hysterical” but…read the book because you don’t understand the idea.
I don’t know what you learned at UGA, but why do you think an underground economy that operates illegally will all of a sudden comply with a new *law*? They will merely find new ways to close that gap (assuming they pay anything in the first place).
The Fair Tax is a tax cut for businesses. Since the Fair Tax authors promise us that it will be revenue neutral, that means if one sector is paying less than another sector of the economy will be paying more to make up for the short fall.
I am not an incorporated entity, are you? If not, then your taxes (just like mine) would go up. Your solution to illegal immigration and the underground economy is to raise your own taxes. That makes you about as Republican as Gary Black.
Um, Jase. How is it possible that my income taxes would be eliminated, my income would stay the same, and yet $100 of groceries would still cost $100?
Basically, Jase, without me needing to read a book, please explain to me how my income taxes go to 0%, my income stays at 100% same level, goods and services (which would be taxed instead of income) stay at the same price, and the government continues to collect the same revenue?
How is it possible that my income taxes would be eliminated, my income would stay the same, and yet $100 of groceries would still cost $100?
At every stage of production there is taxes. With the passage of the FairTax, that taxes would be eliminated. Not only would those taxes be eliminated but payroll taxes, corporate income taxes and so on would be eliminated as well.
The price of goods and services would drop anywhere from 22% to 30%. The FairTax would be put in the place of those taxes, therefore the price would be about the same as before…with you keeping 100% of your paycheck (medicare tax, social[ist] [in]security, and so on would be eliminated).
Here is an article by Boortz to get you started, but you need to read the book to get an understanding of it.
You have to remember Corporations that provide goods and services don’t really pay taxes. Any “tax” they have to pay such as social security, income, etc.. is simply built into the price of the goods and services you buy. So when you buy say a Chevy, that car has GM’s taxes, overhead, etc.. built into the price. Increase the amount of SS that GM has to pay and the price of the car goes up – decrease the SS and the car becomes more affordable. Now if you buy one of those new KIA’s there is no hidden tax built into it since KIA is a Korean company and does not have to pay SS, etc… KIA receives a competitve advantage in the USA from our tax code.
This post doesn’t even begin to explain the devasting effect our tax code has on manufacturers that actually still try to export goods around the world.
The fair tax would place companies like KIA and Sony on equal footing with what few American manufacturers still produce in the USA. Our current tax system gives huge breaks to foreign manufacturers. With the amount of jobs that are going overseas, shouldn’t we have a tax code that incentivizes companies to make capital investments in the USA?
Senator Douglas needs to answer the question of how a Fair Tax, whether for Georgia or the U.S., will fix the illegal immigration problems.
Besides that, let’s say, for argument’s sake, if an illegal spends $5000 total per year here, and pays an average of 6% in sales tax, that means he actually spends $4717 on goods and services. ($5000/1.06).
Increase the tax burden an additional 6%, and the illegal will still have only $5000 to spend, but his contribution to buying goods and services (which, by the way, is what makes this economy run…the buying of goods and services, not the paying of sales tax), but now his net purchase of goods and services is only $4464 ($5000/1.12)
SO, while the state will collect more in taxes under this plan, there will be less purchasing power available for everyone.
That last statement should have read “less purchasing power for the illegals who currently live here and do spend money here.”
Ang, again I ask, for those who pay income tax right now, please compare the average amount of state income tax you pay, compared to what MORE you will pay in sales taxes on all of your purchases of goods and services that you currently buy. Betcha that, on the average, you will pay more in a new sales tax than you will pay in income tax.
OK, good conversation. I’m here now.
Chris Hardcore: “I don’t know what you learned at UGA, but why do you think an underground economy that operates illegally will all of a sudden comply with a new *law*?”
Unless there is some way to stop paying sales tax that I dont know about, everyone will pay. Everywhere I go, people want these immigrants sent home, but they know that wont happen any time soon. The next best thing is for them to begin to help pay for the services they are getting here. Thats where this sales tax comes in. Unless there is a better way to finance their stay here, the sales tax is the way to go.
I believe it is likely that some of you Democrats understand that eliminating the federal and/or state income tax would lock in Republican control for the foreseeable future. I also understand that many of your constituents dont pay income tax now and a sales tax would indeed be a tax increase for them. But its not just income tax payers using public facilities in Georgia, its everyone. Therefore, everyone should help pay.
Bill Simon: The new sales tax would be as nearly equal to the current income tax as it could be made. In no way would this be a tax increase. Unless as I said earlier, you arent currently paying income tax. And I didnt say it would “fix the illegal immigration problem.” I said until the problem is fixed, they should pay the same taxes American citizens are paying. I would remind you that legal residents are paying the 7% sales tax now AND income tax.
Good to have you here, Sen. Douglas. Two things:
1) What about my point that if you increase the sales tax burden on fixed income people (i.e., illegals, seniors, people who work for Delta Airlines, lots of other companies who are struggling to just maintain wages right now, etc.) who are unable to automatically raise their income, you reduce the available amount of purchasing power of goods and services?
2) This concept of changing the entire system to (perhaps) solve one problem sounds suspiciously like the line of thinking that went into Governor Perdue’s decision to increase the tax on tobacco products sold in Georgia.
Hear me out, please: According to the Governor back then, we needed more tax revenue. In order to increase tax revenue, Perdue decided to raise the tax on tobacco products, and in the same breath, he spoke about wishing to reduce the consumption of tobacco products. Yet, the only true solution to stopping the consumption of tobacco was to ban the sale of it entirely.
He didn’t do that because…why? He needed the increase in tax revenue from selling the tobacco products, and he had to be hoping that, not only would people continue to buy tobacco, but there might actually be enough of an increase in the number of buyers to offset the number of people who would reduce their purchases.
So, to your column, Senator: You discuss the fact that illegals don’t pay income tax and until we can get rid of them, we should tax them in some way, right? What happens if you (as a member of the government bureaucracy) get so hooked on the sales tax revenue from everyone (illegals, legals, tourists) that you won’t mind illegals being here at all?
In fact, with your scenario, the state will want to encourage more illegals to come here and pay for goods and services to contribute more to the state tax coffers, right? All you care about is collecting more sales tax to pad the budget, so, the state will want more and more users to come here and buy to their heart’s content.
In short, just like Perdue not really wanting tobacco users to reduce or stop their consumption for their “health” because he needed that extra revenue, YOU, as someone responsible for figuring out how to spend a state budget, will want the illegals to continue to reside here because they will continue to feed the state sales tax coffers.
Kinda like a massive circular formula on a spreadsheet, isn’t it Senator?
Senator,
Under Linder’s scheme, corporations would not be taxed for B2B transactions. Sophisticated citizens, like those who are executives, would choose to be compensated in part by goods and services they would otherwise purchase. So if I am the CEO of a company (or I incorporate my own dummy company) and want to get a new car, I will have the business purchase it from another business (no taxes will be paid) and give me $XXX money less that year in salary in exchange for getting paid by a car that costs $XXX.
In order for the system to stay revenue neutral, if large consumers and businesses are essentially opting out, the tax rate will have to be higher than advertised (30%/23% whatever you prefer). And unsophisticated citizens who can’t afford to incorporate themselves will be stuck with the bill.
Let’s think about what kind of underground economic activity there is. Let’s group it into illegal immigrants, drug trade and illegitimate businesses that are trying to avoid paying taxes.
Well, under the fair taxes, businesses don’t pay taxes on B2B transactions so there is no longer a need to operate in an underground economy AND the government won’t be getting any increased revenue because they won’t collect taxes on those transactions. Drug dealers and illegal immigrants will be paying higher sales taxes on the transactions they make that are legitimate, but research indicates that most drug dealers don’t actually make that much money and even if there are 1,000,000 illegals in Georgia spending $10,000 a year that would only come out to between $400-$500 million a year, or about $60 for ever legal Georgian.
Finally, its true that a lot of poorer Georgians (my “constitutents”) don’t pay much in income taxes. They pay 7.625% on all of their income in FICA (social security + medicare) taxes (and another 7% if they are self employed) and then they might pay some state income tax and federal income tax. Let’s say they pay a total of 10%. Since they don’t save anything, they also pay sales tax on 100% of their income. I’d say in total they are facing a tax rate of 15% on their income.
The well off who live mostly on investment income might pay a slightly higher total share of their annual income in taxes, lets say 20%. The people in the middle really get squeezed. They may be looking at paying somewhere in the low 30′s over the course of a year.
Businesses don’t pay that much taxes to operate anywhere in the US, unless they are a small business and that lumps them in with the middle class.
So your/Linder’s proposal:
Eliminates what little taxes large coporations already pay.
Reduces some of the tax burden for small businesses.
Keeps middle class tax burden about the same.
Doubles the tax burden for poor Georgians.
Increases the tax burden for immigrants and drug dealers.
Sounds like a great deal for “your constituents” in Newton County who are raking in a millionaire like per capita income of $19K/year as of the 2000 census. I look forward to you explaining to them why they have to pay higher taxes so that illegal immigrants can stay in this country and compete with them for their jobs.
As for Republican dominance via the Fair Tax, ask Max Burns how that went. He was up 20 points a month before the election last year and Barrow started hammering him for the “Burns Tax” (Linder’s Fair Tax) and the voters were smart enough to know that it was not a good deal for them. I look forward to Georgia Republicans replicating this winning strategy on a statewide basis instead of just isolating it to one Congressional District
Chris,
Here’s a hypothetical question for you in response to your “the tax burden on poor Georgians would be doubled”…
Do you think it is MY responsibility to pay the way of poor Georgians?
Because it seems to me like you assume that the middle class (and everyone else) should look out for the po’ folks. Last time I checked, my middle class family was struggling to make ends meet as it is…paying a shit load in taxes that go to other people! Is it my father’s fault that he has a higher paying job than a “poor Georgian”? Should be punish him by making him pay taxes that go to programs for poor Georgians?
If we are going to pay taxes, why not pay taxes for what we buy? Why should I be punished for getting a well-paying job (as a result of a hard-earned college education), by having to give up more of my money in taxes?
Believe me, I am sorry that there are poor people out there…
If you’re worried about the poor, why not suggest raising the minimum wage, or forcing companies that hire illegals to pay them the minimum wage so they’ll stop depressing the wages of the “poor Georgians?” Heck, even the ultra-liberals should agree with that. Raise the minimum wage…but don’t punish the middle class because they make a little more…Hell, that’s socialist. (some would say minimum wage is too, but I don’t)
It’s funny. I hear a lot of dems bitching about taxes, but none who are willing to actually solve the problem by paying people a little more.
To clarify what I meant, punsihing people for making more is socialist. Not minimum wage.
Atlantaman,
Do you really think the that corporations will pass on their tax savings to the consumer. A little, probably, all, not a chance in hell.
Just look at the profits that the oil companies are reaping now. Have their prices come down to reflect this, NO. Also, ask any doctor here in Georgia if their malpractice insurance rates have gone down that much. My guess, and i know it is right, is very little.
And I cannot believe i am on the same side as Bill. The end is nigh, the end is nigh.
Jace,
I do not think Chris needs anyone to stick up for him, he is hardcore you know, but he has advocated for raising the minimum wage on this very website before.
Do you really think the that corporations will pass on their tax savings to the consumer. A little, probably, all, not a chance in hell.
Why not? The free market will handle this, I have confidence in that, especially if it’s explained ahead of time to the taxpayers. They’ll know that these embedded taxes are going away that the FairTax will take the place and they should expect to pay about the same thing.
It’s not being done in secret. But…dear God, those corporations are evil!
Just look at the profits that the oil companies are reaping now. Have their prices come down to reflect this, NO.
These so-called record profits are still in line with the profit margins from previous years. Simple economics…if the cost of business or making the product goes up then the cost of the product goes up and more money will be collected and profits will increase. This probably applies even more with oil/gas because it’s in such high demand and the market is ever changing.
Then maybe he should concentrate on that then. Because if he gets the minimum wage up, and Senator Douglas gets the fair tax plan in place, we might just have one hell of a system going for us here. But, I think both are necessary.
A rise in the minimum wage will:
(1) Give poor people more spending power
(2) Put more money into the economy (believe me, if you don’t have a lot of money, any extra you get goes straight back into the economy in the form of purchases)
(3) Take away the incentive to hire illegal immigrants over American citizens (but only if employers are forced to pay the minimum to illegals)
I know a lot of people out there think that minimum wage is socialist…It is anything but. Minium wage laws are a direct result of capitalism–Supply and Demand. You want us to work–we’ll supply you with the work for a minimum amount of money.
So, if you pump up the minimum wage AND begin the fair tax plan, you have a recipe for economic success.
And stephanie, I agree with your comment earlier about corporations not sharing their profits–although, I never really thought it was much of a secret to begin with.
Jace,
Would you be kind enough to tell me where you stand on abortion?
And, this is the relevance of the answer to that question: If you are a pro-life person (like, I imagine John Douglas is), then if you are up for forcing all pregnancies to come to term, then YES, you (and anyone else who is pro-life) is, by default, responsible for the po’ folks who are brought into this world and who cannot, (or, are not taught to) fend for themselves.
If you are pro-choice, welcome aboard to my side of the Republican Party. However, just because we are pro-choice, we still are outnumbered by a bunch of meddling people who think that every pregnancy should come to term, and after that, that “life” can go to hell for all they care, as long as that life doesn’t interfere with their lives.
Jason my friend, on this point I must disagree with you.
Here’s a scenario:
I am Ford Motor Company…I’m only going to make a certain amount of cars per year, based on the demand for those cars. If I get some unexpected profit, am I going to use it to produce extra cars? No…simply because I have already made the amount that I expect people to buy. To put more money into making cars would be a waste of money. Where does that extra profit go? Certainly not to consumers. Possibly to my employees, but most likely it goes into the bank–and sits.
I know I’m writing this with the risk of sounding socialist to you, but hear me out…
If instead, that unexpected money goes to low to middle class families in the form of higher minimum wage (I want to make it clear that I do not support income tax, only a higher minimum wage), I gaurantee you that money will be back into the economy the next day. People with less money tend to spend more of what they have.
I’m not saying that corporations are evil, I’m just saying that we have labor laws in this country for a reason…If we let our capitalistic nature go too far, we’ll have kids in sweatshops again (although that might teach them some damn discipline).
Believe me….I’m not socialist. I just think that checks and balances are important in every aspect of society–even economics. So there it is.
Bill,
I am pro-choice. I think a woman’s body is her own business.
And Bill, thanks for the warm welcome.
JaseLP:
Your theory as it applies to oil companies is inapplicable. Perhaps you missed the day in your economics class where they discussed the concept of an “oligopoly.”
The oil companies operate in an oligopoly market. While gasoline is a “commodity,” it is sold in a highly specialized marketplace.
The price for gasoline will not “plummet” if the FairTax is implemented because that will cut their own throats. There is no need for them to reduce prices as long as every company is sharing in the wealth generation.
The price for gasoline will not “plummet
Jace,
Your understanding of capitalism is…well…not capitalism.
http://www.capitalism.org
Jace,
While I warmly welcome you to my side of the Republican Party, I cannot form a good caucus if you walk in wishing to raise the minimum wage as your first act.
Now, I might be in the mood for a minimum wage tinkering IF the following were to happen at the same time: 1) all subsidies paid to farmers to not grow crops is immediately eliminated (note to Senator Chambliss: this means you stop fighting for such crap in the budget);
2) all public companies/corporations are required to disclose to their shareholders all monies contributed to elected officials, and none of that money is allowed to be deducted from the revenue…it all must come out of Net Income dollars (let’s see if the shareholders will appreciate their dividends being paid to politicians first…) ;
3) Any and all subsidies currently paid out of the Congressional Budget, or via any Executive Order from the President, that are buried in “good-sounding” pork-barrel projects.
I went through the calculations before on another thread, I’ll keep just the summary.
4 to 5 percent is insufficient to replace individual income tax. The minimum is 6 percent. That’s ten percent state, plus the various local taxes of anywhere from 3 to 6 percent (including splosts and municipal sales taxes).
If – in a nod to liberal stances that we’ve an obligation to at least care about the poor – we exempt certain items such as food or medicines, then the rate’s got to go even higher.
Are we going to keep the revenues about the same and see folk on the borders go to other states, or are we going to slash our revenues and cut more government services?
Related question is what plan is in existance for years of weak economies, when sales drop significantly?
JaseLP:
My apology. I leaped to a conclusion based on the inverse of what you were saying rather than what you actually said.
Bill,
No big deal.
Oh…and, to my above comment on the pork-barrel stuff, that sentence should be appended to read “are all eliminated.”
Bill,
I agree completely with you premises for minimum wage increases. Now we can talk about tinkering with it… I’m not saying bump it up to 7, 8, 9, or 10 dollars an hour…just a modest increase.
Jace,
There is a problem with “tinkering” with the minimum wage. If we go back to your Ford Motor company example, the thing is, nobody knows at the beginning of a sales cycle exactly how many cars (or, widgets, or whatever) will be sold.
But, if you raise the minimum wage, all of a sudden, you have an increase in fixed costs that you might not be able to cover if sales don’t workout the way you think they will. If that happens, two bad things may occur: layoffs or closing-up shop. Both are detrimental outcomes and no government is going to come in and save you.
See, it is sometimes very easy to look at the end point of a company’s sales cycle and declare “Hey, you made a ton of money! You can afford to pay your folks more money! And, we’re going to make you share that wealth!”
This is, I’m sure, how people like Hard Core Chris think. They look at the endpoints and have no idea of how the endpoints will change from year-to-year, and just ASSUME every year will be like the last, if not better. (Chris is dead wrong in his thinking. He needs to get out of politics and go into the REAL world and see how REAL companies work to make their revenue and balance their growth with personnel.)
If companies were really smart, they would figure out better bonus schemes for all employees to share in the better times and everyone get their base pay if the company breaks-even or loses money in a fiscal year.
Minimum wage is like those damn subsidies that farmers are paid to not grow crops; it is a fixed cost and whatever happens during the year, we always have to pay the fixed costs. You increase fixed costs, and more companies go under, faster.
Back….Easter weekend is one of those rare events that gives me some family time.
Bill, when did we develop the philosophy that its good for some to pay income tax and not good for others? Why should one group have to carry the weight for everyone? Is that penalizing success?
In no way am I advocating keeping illegals here to pad the tax rolls. I am anti income tax regardless of who is here. One of the first bills I introduced in the House in 2003 was to eliminate the state income tax. (The first bill I introduced was a 10% salary cut for the legislature when Gov Perdue announced his proposed tax increases…..which I voted against.) This however is an opportunity for us to actually do something about the most unfair of all taxes….the income tax.
Chris, you forget that no business pays taxes now….unless they arent aware of how business works. They all pass it to their customers. Businesses are only conduits passing tax money back to the government. So to say that businesses wont pay taxes would put them exactly where they are right now.
Finally let me compliment Jace and Jason for seeming to grasp this concept well. Jason hits the nail on the head by saying market forces would dictate prices. Government has no business telling business what prices to charge. As an example of market factors, watch what happens when the new Walmart Banking system comes on line and see if the other banks dont become more efficient and less costly to consumers.
Great conversation here folks. Its a great idea whose time has come. I look forward to working with the House and Governor’s office to try and make it happen.
Happy Easter!
Bill,
I am pro life. But to say the babies born to those who might have had an abortion become my responsibility because I am opposed to killing them is a unique stretch of the abortion/pro life argument.
Personal responsibility goes to the heart of many of the problems society has today. Downloading babies, each from a different man, the breakdown of the family, being here illegally, not paying taxes so long as taxes are the law, demanding producers pay for non producers are all signs of the terrible society problems we have in this country.
And btw, abortion is still very legal…..for now.
Excellent comment.
FYI- There is a debate on C-SPAN 2 tomorrow morning at 10:30am on the FairTax featuring Neal Boortz.
John D.,
Let me ask you this: Did you vote for the $6,000,000 in pork-barrel projects in this year’s budget?
If you did, then ask/answer yourself this question: As the number of illegals, under your plan, start throwing money into the state’s coffers and the coffers grow, are the pork projects going to increase OR will we all get a refund for that year OR is the sales tax percentage levied on us all going to decrease as a result of the increase in collections?
A couple of points to some questions that were asked:
Do I really think that Wal-Mart would pass the savings on?
Yes I do. I used to work in the manufacturing sector and had many clients that dealt with Wal-Mart. It was a love/hate realationship for them. Wal-Mart was brutal in getting its suppliers to lower their prices so it could then in-turn offer lower prices to its customers. Many economists believe Wal-Mart is more responsible for keeping inflation in check then the Federal Reserve.
If all retailers were given an income tax cut each one would have to lower their prices to maintain their competitive advantage. For instance, if Wal-Mart kept the profits and did not lower their prices, then it would give K-Mart an opportunity to lower their prices and stop their declining market share. In short, its all about the free market.
What would Ford do with the extra profits it received from the tax cut?
Well this business about whether Ford would use the extra profits to needlessly manufacturer extra cars or just keep it for executive bonuses and shareholder dividends is the wrong way to look at it. Ford would be able to take the tax savings and reduce the retail cost of it’s cars (making it more competitive against foreign made cars that don’t have the hidden costs of SS, etc.). This would make Ford cars more affordable to the “working man” and “poor people” who the Democrats supposedly care so much for – it would then increase demand for Ford cars and Ford would have to increase its production. If you don’t think Ford would pass the cost savings on to the consumer in such a hyper-competitive world market where they’ve been losing market share, then you’re crazy.
I’m constantly amazed when liberals call for increased costs of everyday items such as goods at Wal-Mart or cars at Chevy, by vilifying them for not increasing hourly wages or paying extra benefits. There are two sides to that equation and when a company has to pay more wages or benefits it has to increase the price for the items it sells, making the items futher out of reach to the “working stiff” just trying to get by.
I guess it’s a victory when Charmin is guilted into raises it’s wages, but now the working stiff punching the clock at McDonald’s can no longer afford to wipe his ass with the extra-fluffy 2-ply.
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