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Re: Taxing the Nation

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  • wvquest4edm
    Jeff, I m not sure how current taxation breaks down by State, but the blue States have the big population centers. Where you find more people, you d expect
    Message 1 of 7 , Feb 1, 2005
      Jeff,

      I'm not sure how current taxation breaks down by State, but the blue
      States have the big population centers. Where you find more people,
      you'd expect more total taxes to be collected. The cost of living
      is also higher in and surrounding most of those centers along with
      the wages. That shouldn't be surprising, but doesn't reflect
      anything except a greater number of people and higher general
      wages.

      I first heard this statement from a guest on MSNBC right after the
      election in which he seemed to be inferring the blue States should
      get some kind of special appreciation. This was right after the
      election and the guest was upset that President Bush won reelection.

      Those type of sentiments reflect why we have two senators and a
      number of representatives based on population...to give small states
      equal rights with the large ones offset by representation according
      to population.

      The FairTax probably has no net effect. While it won't be based on
      income, being based on consumption, a higher cost of living MIGHT
      mean a higher tax burden based on the buying choices each person
      makes, but not higher than what they are paying today.

      It is offset by the fact that wages are generally higher. More
      people paying into the system, including illegal aliens and tourists
      in those population centers might mean more revenue from there as
      well, but none of that reflects unequal treatment. It only reflects
      personal choice and freedom of where and how to live.

      Of course, economic growth brought about by the FairTax will
      probably benefit those population centers as much as any other place
      in America.

      Bill




      --- In njfairtax@yahoogroups.com, "Jerry Duffey" <duffey@z...> wrote:
      >
      > Here is a tax claim that I am having difficulty proving or
      disproving.
      > Perhaps the FairTax would address the claim better.
      >
      > Liberal Claim: All of the "red" states are funded by the "blue"
      states, NY -
      > NJ - CA, meaning that the liberal bent states send more tax money
      to D.C.
      > than they get back, while the more conservative states receive far
      more from
      > D.C. than they send.
      >
      > True or False?
      >
      > Thank you.
      > -Jerry
    • Henry Stock
      I also don t have details on per state tax revenues. That information can mostly likely be obtained from the IRS. I agree with Bill that cost of living in the
      Message 2 of 7 , Feb 1, 2005
        I also don't have details on per state tax revenues. That information can
        mostly likely be obtained from the IRS. I agree with Bill that cost of
        living in the high population areas is higher. More over I contend that
        increasing the tax rate causes wage and price inflation to a greater extent
        than opponents would be willing to admit.

        My basis for saying this is a modification of a theory I learned in
        economics regarding interest rates. The basic theory maintained that real
        interest rates ( the rate of return that is required to make one willing to
        loan money) have not varied that much over time. While the actual rate
        varies, it is because of the ebb and flow of inflation. The real rate does
        not change.

        My theory is that the same thing happens with regard to taxes. The
        producers in society demand a certain real return on their investment of
        time, labor, and capital. If anything happens to reduce that real
        return,(such as increased taxes), they will adjust the rates they charge
        others for their services and products in order to reestablish the real rate
        of return.

        This causes a cascading effect moving down the production/food chain where
        lesser producers also raise their rates to compensate for their increased
        costs. People demand higher wages because the cost of living has gone up
        and the people that hurt the most by this are the ones that don't have the
        market power to effectively increase their wages, e.g. the poor.

        I created a simple table where I show a series of people's incomes with an
        initial rate of taxation. Then I increase that rate and show both in dollar
        terms and as a percentage of income how much the costs would have to go up
        to reestablish equilibrium. I think my formulas are correct. Please give me
        feedback...

        You will notice at a small percentage increase on a high income person
        requires a massive increase of income to offset the additional taxes. I
        adjusted tax rates to lower levels as income went down. I also had more low
        wage samples than high wage sample.

        A weakness of the model is that I have not figured out how to incorporate
        the percentages of people in each tax bracket and how to determine a cutoff
        for those that are able to negotiate a higher salary to compensate.

        But in my small sample you will notice that the general rate of inflation,
        which by logic would be passed on in higher prices for all products, exceeds
        the percentage increase in taxes raised. Thus, from my point of view, it
        appears that higher taxes are counter productive.

        Let me know what you think.

        Henry Stock,


        -----Original Message-----
        From: wvquest4edm [mailto:wvquest@...]
        Sent: Tuesday, February 01, 2005 6:55 AM
        To: njfairtax@yahoogroups.com
        Subject: [njfairtax] Re: Taxing the Nation




        Jeff,

        I'm not sure how current taxation breaks down by State, but the blue
        States have the big population centers. Where you find more people,
        you'd expect more total taxes to be collected. The cost of living
        is also higher in and surrounding most of those centers along with
        the wages. That shouldn't be surprising, but doesn't reflect
        anything except a greater number of people and higher general
        wages.

        I first heard this statement from a guest on MSNBC right after the
        election in which he seemed to be inferring the blue States should
        get some kind of special appreciation. This was right after the
        election and the guest was upset that President Bush won reelection.

        Those type of sentiments reflect why we have two senators and a
        number of representatives based on population...to give small states
        equal rights with the large ones offset by representation according
        to population.

        The FairTax probably has no net effect. While it won't be based on
        income, being based on consumption, a higher cost of living MIGHT
        mean a higher tax burden based on the buying choices each person
        makes, but not higher than what they are paying today.

        It is offset by the fact that wages are generally higher. More
        people paying into the system, including illegal aliens and tourists
        in those population centers might mean more revenue from there as
        well, but none of that reflects unequal treatment. It only reflects
        personal choice and freedom of where and how to live.

        Of course, economic growth brought about by the FairTax will
        probably benefit those population centers as much as any other place
        in America.

        Bill




        --- In njfairtax@yahoogroups.com, "Jerry Duffey" <duffey@z...> wrote:
        >
        > Here is a tax claim that I am having difficulty proving or
        disproving.
        > Perhaps the FairTax would address the claim better.
        >
        > Liberal Claim: All of the "red" states are funded by the "blue"
        states, NY -
        > NJ - CA, meaning that the liberal bent states send more tax money
        to D.C.
        > than they get back, while the more conservative states receive far
        more from
        > D.C. than they send.
        >
        > True or False?
        >
        > Thank you.
        > -Jerry










        Yahoo! Groups Links
      • quartermars@aol.com
        Let me weigh in this from the Blue State of NJ... I am constantly reminded that for every dollar going to Washington DC, only 60% comes back to NJ. THe rest
        Message 3 of 7 , Feb 1, 2005
          Let me weigh in this from the Blue State of NJ...

          I am constantly reminded that for every dollar going to Washington DC, only 60% comes back to NJ. THe rest gets distributed to New Mexico and other states that for every dollar they put in get greater than a dollar back.

          My humble thoughts..

          N. Hrynenko
        • wvquest4edm
          That is an issue of how the federal government uses the revenue it collects and not one of funding government. The federal tax code is uniformly applied
          Message 4 of 7 , Feb 1, 2005
            That is an issue of how the federal government uses the revenue it
            collects and not one of funding government. The federal tax code is
            uniformly applied geographically. Assuming you and I are from
            different parts of the country with equal earnings, and file for the
            same deductions, filing the same forms, we will pay the same taxes.
            That doesn't mean it is applied evenly based to each person of
            course since there are hundreds of special interest in the tax code.

            Getting back to the FairTax, it is also applied uniformly. One rate
            across the country. A common prebate paid at the beginning of each
            month to every family based on on family size. All the special
            interest of the tax code are removed. The cost of government is
            equally visible to all at the register even though the net effective
            tax rate is zero or less to the poverty level. This unites all
            Americans in holding government accountable. Each person will then
            choose the amount of their effective burden above the poverty level
            by their buying choices.

            Every thing else under the FairTax will be treated no worse or
            better than today. For example, state and local taxes will not be
            subject to the FairTax. (same as their deductibility today).
            Mortgage interest will be made with tax free dollars on every
            residence (better than today where only 27% of Americans have
            interest payments high enough to deduct interest payments.) A tax-
            free payment equals tax deductible without the paperwork.

            In general, I hate the division of states by color or any other
            statistic with regards to the FairTax. The FairTax is non-
            partisan. It simply raises the same revenue government collects
            today in a manner much more consistent with a free society and ends
            the division of Americans into hundreds of special interest groups.

            I think this was Sam's point when stating he didn't know and didn't
            care. The FairTax deals with funding government, not how it uses it
            once it gets it. Once the divisions are ended, perhaps we can work
            towards more accountability.

            Kind Regards,

            Bill

            --- In njfairtax@yahoogroups.com, quartermars@a... wrote:
            >
            > Let me weigh in this from the Blue State of NJ...
            >
            > I am constantly reminded that for every dollar going to Washington
            DC, only 60% comes back to NJ. THe rest gets distributed to New
            Mexico and other states that for every dollar they put in get
            greater than a dollar back.
            >
            > My humble thoughts..
            >
            > N. Hrynenko
          • wvquest4edm
            Henry, Interest points. I ll look at the table later today. I agree that the real rate of return remains fairly consistent. In addition to adjusted final
            Message 5 of 7 , Feb 1, 2005
              Henry,

              Interest points. I'll look at the table later today. I agree that
              the real rate of return remains fairly consistent. In addition to
              adjusted final costs to accomplish that end, producers can also
              adjust their expenses by controlling/cutting benefits or pay for
              their workers. If competitive pressures do not allow that, they may
              chose to reduce costs by moving to another locale, either in the
              country or outside of it. Both of these also hurt the average local
              worker.

              The US is already the most productive country in the world. The
              FairTax makes it the most attractive from a cost perstective as
              well. One informal study from 1996 showed that 80% of businesses in
              Europe and Japan would build their next plant in America, while 20%
              would move their headquarters here. Studies by Professor Kotlikoff
              and Professor Jorgenson showed initial GDP growing by 10 to 14%
              gradually declining to about 5 to 6% over 25 years.

              Jorgenson's study showed exports the first year would expand by 26%
              and capital investment by 76%. All of this leads to greater
              prosperity for citizens in and around population centers as well as
              across the country.

              Thanks,

              Bill


              --- In njfairtax@yahoogroups.com, "Henry Stock" <henry.stock@v...>
              wrote:
              > I also don't have details on per state tax revenues. That
              information can
              > mostly likely be obtained from the IRS. I agree with Bill that
              cost of
              > living in the high population areas is higher. More over I contend
              that
              > increasing the tax rate causes wage and price inflation to a
              greater extent
              > than opponents would be willing to admit.
              >
              > My basis for saying this is a modification of a theory I learned in
              > economics regarding interest rates. The basic theory maintained
              that real
              > interest rates ( the rate of return that is required to make one
              willing to
              > loan money) have not varied that much over time. While the actual
              rate
              > varies, it is because of the ebb and flow of inflation. The real
              rate does
              > not change.
              >
              > My theory is that the same thing happens with regard to taxes. The
              > producers in society demand a certain real return on their
              investment of
              > time, labor, and capital. If anything happens to reduce that real
              > return,(such as increased taxes), they will adjust the rates they
              charge
              > others for their services and products in order to reestablish the
              real rate
              > of return.
              >
              > This causes a cascading effect moving down the production/food
              chain where
              > lesser producers also raise their rates to compensate for their
              increased
              > costs. People demand higher wages because the cost of living has
              gone up
              > and the people that hurt the most by this are the ones that don't
              have the
              > market power to effectively increase their wages, e.g. the poor.
              >
              > I created a simple table where I show a series of people's incomes
              with an
              > initial rate of taxation. Then I increase that rate and show both
              in dollar
              > terms and as a percentage of income how much the costs would have
              to go up
              > to reestablish equilibrium. I think my formulas are correct.
              Please give me
              > feedback...
              >
              > You will notice at a small percentage increase on a high income
              person
              > requires a massive increase of income to offset the additional
              taxes. I
              > adjusted tax rates to lower levels as income went down. I also
              had more low
              > wage samples than high wage sample.
              >
              > A weakness of the model is that I have not figured out how to
              incorporate
              > the percentages of people in each tax bracket and how to determine
              a cutoff
              > for those that are able to negotiate a higher salary to
              compensate.
              >
              > But in my small sample you will notice that the general rate of
              inflation,
              > which by logic would be passed on in higher prices for all
              products, exceeds
              > the percentage increase in taxes raised. Thus, from my point of
              view, it
              > appears that higher taxes are counter productive.
              >
              > Let me know what you think.
              >
              > Henry Stock,
              >
              >
              > -----Original Message-----
              > From: wvquest4edm [mailto:wvquest@m...]
              > Sent: Tuesday, February 01, 2005 6:55 AM
              > To: njfairtax@yahoogroups.com
              > Subject: [njfairtax] Re: Taxing the Nation
              >
              >
              >
              >
              > Jeff,
              >
              > I'm not sure how current taxation breaks down by State, but the
              blue
              > States have the big population centers. Where you find more
              people,
              > you'd expect more total taxes to be collected. The cost of living
              > is also higher in and surrounding most of those centers along with
              > the wages. That shouldn't be surprising, but doesn't reflect
              > anything except a greater number of people and higher general
              > wages.
              >
              > I first heard this statement from a guest on MSNBC right after the
              > election in which he seemed to be inferring the blue States should
              > get some kind of special appreciation. This was right after the
              > election and the guest was upset that President Bush won
              reelection.
              >
              > Those type of sentiments reflect why we have two senators and a
              > number of representatives based on population...to give small
              states
              > equal rights with the large ones offset by representation
              according
              > to population.
              >
              > The FairTax probably has no net effect. While it won't be based
              on
              > income, being based on consumption, a higher cost of living MIGHT
              > mean a higher tax burden based on the buying choices each person
              > makes, but not higher than what they are paying today.
              >
              > It is offset by the fact that wages are generally higher. More
              > people paying into the system, including illegal aliens and
              tourists
              > in those population centers might mean more revenue from there as
              > well, but none of that reflects unequal treatment. It only
              reflects
              > personal choice and freedom of where and how to live.
              >
              > Of course, economic growth brought about by the FairTax will
              > probably benefit those population centers as much as any other
              place
              > in America.
              >
              > Bill
              >
              >
              >
              >
              > --- In njfairtax@yahoogroups.com, "Jerry Duffey" <duffey@z...>
              wrote:
              > >
              > > Here is a tax claim that I am having difficulty proving or
              > disproving.
              > > Perhaps the FairTax would address the claim better.
              > >
              > > Liberal Claim: All of the "red" states are funded by the "blue"
              > states, NY -
              > > NJ - CA, meaning that the liberal bent states send more tax
              money
              > to D.C.
              > > than they get back, while the more conservative states receive
              far
              > more from
              > > D.C. than they send.
              > >
              > > True or False?
              > >
              > > Thank you.
              > > -Jerry
              >
              >
              >
              >
              >
              >
              >
              >
              >
              >
              > Yahoo! Groups Links
            • Jerry Duffey
              N. Hrynenko, You ve restated the observation, but made no comment upon it. You say you are constantly reminded , but give no information about how you are
              Message 6 of 7 , Feb 1, 2005
                N. Hrynenko,
                You've restated the observation, but made no comment upon it. You say you are 'constantly reminded', but give no information about how you are reminded. I was wondering if you ran out of time to finish what you were saying?
                 
                Bill & Henry,
                Thanks for your input. What you said about collection and distriubtion vs. population and money centers makes sense.
                 
                -Jerry

                 
                ----- Original Message -----
                Sent: Tuesday, February 01, 2005 9:58 AM
                Subject: Re: [njfairtax] Re: Taxing the Nation


                Let me weigh in this from the Blue State of NJ...

                I am constantly reminded that for every dollar going to Washington DC, only 60% comes back to NJ.  THe rest gets distributed to New Mexico and other states that for every dollar they put in get greater than a dollar back.

                My humble thoughts..

                N. Hrynenko



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