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FairTax

 

 

From: Alf Temme
Sent: Saturday, April 14, 2007 11:25 AM
To: 'jeffg@ privacy .com'
Subject: RE: RE: RE: RealTaxReform.com

 

 

Jeff,

 

Indeed you have not read it all and fortunately you are still reading. You will find it amazingly complete in its scope and coverage of most of the concerns people have about taxation, including some but not all of your concerns. Many of the concerns that people have are based on myths that have been created through politics and the media by people that know just about enough about tax related economics to get it wrong. I will explain.

 

Let me address your concerns below:

 

"Some concerns I would have with an excise tax is that it is hidden from the consumer". This excise tax is completely transparent and documented and very visible to each bank account holder. The monthly bank statement shows exactly how much taxes were deducted from your deposits and if you do not deposit your check and cash them at the bank then the 5% is deducted right there because only 95% is paid out. So this tax is not visible at the point of purchase but it is visible at the point of deposit or cashing of the check. With our current sales tax system and the flat tax the majority of the tax is not visible at the point of purchase either because the vast majority of tax is already embedded in the price of the product or service. How that? Because anybody that sells goods or services has embedded in their price an amount of profit that will allow them to pay for all their expenses and an income for themselves that allows them to consume products and services at a level of consumption that takes into account the taxes added to the products and services they desire to consume. This consideration is also made by wage earners that will sell their labor at a price that takes the cost of their tax inflated consumption into account as well. And this price consideration is made at all levels in the process of manufacturing and service provision. That is exactly the "pyramid effect" or also variably called "cascading taxes" by those who have created these buzzwords. The unavoidable fact is that there is not and there cannot be a tax system that does not have this pyramid or cascading effect in it because every merchant in the chain of steps that lead to the final consumption of a product or a service will add to their price an amount that they feel will compensate for the eventual tax they will have to pay as a consumer at the final point of consumption.

 

“So the true tax burden may not be visible and may make it easier for legislators to raise taxes and grow government without downward pressure from the citizens.” This myth of exposing the tax to the consumer and thereby keeping the politicians in check by public outcry, is very well established, but it is complete nonsense. First of all in our current socialist tax system the burden of tax has been shifted away from the far more numerous “poor” to the far fewer “upper middle class” and any tax increase the politicians want is always advertised as being a lowering of the tax on the “poor” by “soaking” the “rich” some more. There are far more votes to be had from the poor than from the “rich”. The “rich” do not get “soaked” either because they pay the politicians to buy themselves tax loopholes. The middle class cannot afford the amounts of bribes it takes to “buy” the politicians. That middle class is shrinking and drifting toward the “poor” side so that politicians will get more and more support from all the vastly more numerous low income people to raise taxes on the “rich” while lowering taxes on the “poor”. If my tax system were to be adopted you would have 100% of the people against tax increases because all of them would be subject to tax (of course 100% of the people are indirectly subject to tax revenue increases at the present as well, but they are not educated enough to understand that. They are constantly subjected to the shell-games of politicians.

 

“I'd expect this system would also not be border adjustable in global trade, which (like the current system) may put the U.S. at a competitive disadvantage”. First of all, my system does collect tax as soon as money crosses borders (electronically as well as otherwise) with tax refunds in special cases. Large international corporations could settle their accounts abroad and thereby avoid the 5% tax but as soon as they repatriate money or fund their foreign accounts for the purpose of settling their accounts, they will incur the 5% tax. Under the current system transfer payments are a problem where large corporations inflate the price of goods they ship from their foreign subsidiaries in low tax countries so as to maximize their profits there and to minimize the income tax they pay in the United States. All of these schemes are eliminated with my 5% transaction tax.

 

“I would also be worried about tax avoidance by companies moving their banking offshore.” This point of settling account offshore has been discussed above, but under my transaction tax there will be less avoidance and off-shoring than there is today or will be under flat tax. The reason is that the incentive is much lower when two conspiring parties in the avoidance scheme have to share 5%. That is 2.5% each and that is a pittance in comparison with the rewards that can be had under our current system and under flat tax. In addition some legislation can be drafted (I would advise against extra legislation to close loopholes) that will additionally discourage tax avoidance.

 

“You may want to try presenting it to organizations such as Citizens for an Alternative Tax System.” There currently are no citizen groups that have sufficient understanding of economics. Most of them are proposing to lower the taxes that are paid to Governments at all levels of jurisdiction. They do not grasp that the real issue is not the amount collected but the way in which it is spent. The focus of citizens should be on monitoring and criticizing on what money is spent and that it is spent in a very cost conscious manner such as most successful business people would spend competitively for their own company expenses. The amount of money that is collected under my 5% transaction tax is vastly more than is needed to equal the total amount collected under our current system (only 3.9% would be needed to equal current total revenue collected). If the money were to be spent prudently with vigilant citizen volunteer auditing and supervision then my transaction tax my tax that would meet all budget needs would have to be only slightly more than 2.5%. Instead we get today vastly inflated costs for infrastructure building and maintenance through all sorts of graft and through governments that undertake these tasks themselves instead of putting them out for bid.

 

So far my response. It helps me to find ways of concentrating on items that create the most questions in people’s minds.

 

Respectfully,

 

Alf Temme

=========

 

 

-----Original Message-----
From: jeffg@ privacy .com]
Sent: Saturday, April 14, 2007 5:18 AM
To: Alf Temme
Subject: Re: RE: RE: RealTaxReform.com

 

I quickly read through some of the information.. still reading.  There

are some very positive aspects to this plan.  The simplicity and

administrative cost is great.  Some concerns I would have with an excise

tax is that it is hidden from the consumer.  They would have a pyramid

effect (allowing for such a low rate).  So the true tax burden may not

be visible and may make it easier for legislators to raise taxes and

grow government without downward pressure from the citizens.  I'd expect

this system would also not be border adjustable in global trade, which

(like the current system) may put the U.S. at a competitive

disadvantage.  However, the U.S. acts as a world banking system and

taxing these transactions may push a nice piece of the burden to foreign

companies.  I would also be worried about tax avoidance by companies

moving their banking offshore.  Interesting idea though - I'd like to

see some third party research done.  I hope it makes some headway.  You

may want to try presenting it to organizations such as Citizens for an

Alternative Tax System.  Support from such organizations would go a long

way.

 

- Jeff

 

----- Original Message -----

From: Alf Temme <Alf@fastexercise.com

Date: Friday, April 13, 2007 11:06 pm

Subject: RE: RE: RealTaxReform.com

To: jeffg@ privacy .com

 

 

 Your letter was in the March 2007 issue.

 

 My tax is so very much different than all other proposals and since it

 is an excise tax it is fully authorized and complying with the

 Constitution which also solves the problem of our current income tax

 that is not authorized by the Constitution. An excise tax is an "event

 tax" rather than an arbitrary one dreamt up by legislators in need of

 revenue.

 

 Alf Temme

 =========

 

 -----Original Message-----

 From: jeffg@ privacy .com]

 Sent: Friday, April 13, 2007 6:08 PM

 To: Alf Temme

 Subject: Re: RE: RealTaxReform.com

 

 Sounds interesting

 I'll try to check it out this week.  What issue was my letter in?  I'd

 like to get reorder a copy.  Thanks,

 Jeff

 

 ----- Original Message -----

 From: Alf Temme <Alf@fastexercise.com

 Date: Friday, April 13, 2007 6:05 pm

 Subject: RE: RealTaxReform.com

 To: jeffg@privacy .com

 

  

  

  Jeff,

  

  Looking forward to some feedback or questions you might have about

  www.RealTaxReform.com  That way I can learn what tax issues are not

  explained clearly in my proposal and I will be able to improve on

 the explanations.

  

  The problem with most tax reform proposals is that they would create

  very serious economic damage during transition from the current

 system to a new system when millions of tax related jobs will be

 eliminated, creating an immediate negative impact on the economy.

 My proposal

  provides for a 20 year transition period, making for a very

 gradual

  andsmooth transition. If after a few years it were to be

 determined

  by the

  legislature that the transition period could be shortened without

  majorill effects then the total transition period may be fewer

 years.

  

  Respectfully,

  

  Alf Temme

  =========

  

  

  

  -----Original Message-----

  From: :jeffg@privacy .com]

  Sent: Friday, April 13, 2007 7:09 AM

  To: Alf Temme

  Subject: Re: RealTaxReform.com

  

  Thanks Alf - I'll take a look.

  I didn't even know they published my letter.  What issue was

 that?

  We're in the middle of moving and my last two issues got tossed

 during the cleaning process without having read them yet.  I wrote

 a couple

  replies to Callahan (one being quite long) so I'm wondering what

  and how

  much they printed.  I'll have to try and order it off the site.

  

  - Jeff

  

  ----- Original Message -----

  From: Alf Temme <Alf@fastexercise.com

  Date: Thursday, April 12, 2007 9:58 pm

  Subject: RealTaxReform.com

  To: jeffg@hidden.com

  

   

   

   

   

   Jeff,

   

   

   

   I read your letter in FREEMAN about taxation in the United States.

   

   

   

   Both Callahan and you would benefit from reading

  www.RealTaxReform.com <http://www.realtaxreform.com/ 

   

   

   

   I know that it is a big pill to read it all, but it most likely

  is the

   only sensible tax replacement proposal and it is applicable in

   every of

   the 193 countries Worldwide.

   

   

   

   At first glace it sounds way to good to be true or possible.

   

   

   

   Currently it has been assigned to a US Patent office examiner

 for a

   Utility Patent. I did not apply for a Patent because I think

 that

   therecould be any money in it for me, but I wanted to prevent

  that

   anybodycould play around with its wording.

   

   

   

   Have a look and I hope you have the time to read this tax reform

   proposal that would save the United States $900 billion BILLION

  per

   year(2002 dollars).

   

   

   

   Send me some feedback or questions if you have any.

   

   

   

   Alf Temme

   

   ========