Tom, I agree that it will "eventually" work itself out through competition; I was just trying to point out that until it does, consumers will actually be paying a 43% (or higher) "tax" on products already in the loop - the 23% "fair" tax + the 20% (or more) of the price of the product attributable to the former "business" taxes.
--- In [email protected], "Thomas L. Knapp" <[EMAIL PROTECTED]> wrote: > > Quoth kiddleddee: > > > Another problem that I see with the "fair" tax is this: According to > > even the "Fair Tax" people, since businesses pass their tax burden on > > to consumers in the form of higher prices, income taxes (directly or > > indirectly) make up more than 20% of the retail price of products - > > others say MUCH more! Does that mean that with the passage of > > the "fair" tax, retail prices will immediately come down 20% (or > > more)? Or does that mean that the "fair" tax will mean a 20%(or > > higher) government-mandated boondoggle for businesses at the expense > > of consumers? > > This would eventually iron itself out through competition. Businesses > never lower their prices more than they think they have to in order to > make sales (and why should they?), but competition will force price > decreases. Lower the cost of all products to all businesses by 20%, > and some of those businesses will cut prices in order to attract > customers, forcing others to do the same. > > However, there would either be a time lag, or else some businesses > would take it right on the chin: Their inventories of non-perishable > goods which were purchased at prices reflecting the old tax burden are > either going to have to be sold at the same old price PLUS the new > tax, or else they're going to have to lose money. > > Another problem which some people are beginning to notice: What about > people who earned money and saved it AFTER paying income taxes? They > were taxed once when they earned it, and now they're going to be taxed > 23% on it when they spend it. > > Remember how cool the Roth IRA was? You got to put after-tax dollars > into it and not be taxed on it when you withdrew it and its interest. > Well, guess what -- when those Roth IRA dollars come out of the > account and get spent, they're going to be taxed again after all. > > Got a savings account, CD, etc., that you paid taxes on the principal > of? 23% more tax when you spend it. > > Got a stock portfolio that you paid income tax on for your original > stake and capital gains tax every time you sold high? Well, when you > sell those stocks the next time after the "Fair" Tax goes in, and > spend the money, another 23% goes away. > > Worked hard, paid your taxes, bought a used "starter" house with what > was left and now you're ready to sell it and build your dream home? > Well, you may not get taxed on appreciated value, but that original > $50K of income that you paid taxes on before investing in the original > home? 23%, bubba. > > Anywhere that you've saved or stored money or value after paying taxes > on it, that money gets taxed AGAIN the instant you liquidate and spend it. > > Tom Knapp > ForumWebSiteAt http://groups.yahoo.com/group/Libertarian Yahoo! Groups Links <*> To visit your group on the web, go to: http://groups.yahoo.com/group/Libertarian/ <*> To unsubscribe from this group, send an email to: [EMAIL PROTECTED] <*> Your use of Yahoo! Groups is subject to: http://docs.yahoo.com/info/terms/
