Why Ron Paul Will Own Tuesday's Debate

[walt]

It's simple:
“This debate will focus on issues that are at the heart of every Presidential election, namely the economy, taxes, fiscal discipline and government regulation,” said Mark Hoffman, CNBC President. “This will mark the first time in the 2008 presidential campaign that all declared Republican candidates will be asked to provide voters with specific plans for the American economy and American workers in an increasingly global marketplace.”

http://www.cnbc.com/id/20623950/site/14081545/?site=14081545

Reminder...CNBC live at 4PM ET and rerun on MSNBC at 9PM ET

Get Millions to Watch

[nullvalu]

Summarized answer from some of the other candidates:

Fred Thompson: We need to stop doing what doesn't work, and do more of what works.. m'kay?

Julie Annie: We need to prevent another 9/11. Attacks like those cost the american people too much money!

Tancredo: Round up all the illegals, put them in a huge pile, and burn them! That'll save us a bunch of money..

Keyes: We must stop our HEATHEN ways and PRAY to GOD so that HE may send us an ANSWER to our FISCAL problems! God is the best money manager EVAR!

[itsnobody]

I don't know if they'll let Ron Paul speak that much, it'll probably be all focused on Fred Thompson

[stones88]

it'll be interesting to see the reactions ron gets when he proposes getting rid of the fed.

[Qiu]

I don't know if they'll let Ron Paul speak that much, it'll probably be all focused on Fred Thompson
Fred'll have more chances to make a fool of himself then

[austin356]

Ron Paul is the most economically learned candidate in my lifetime.

There was another who had an Economics degree and still was inferior in economic knowledge (not looking at whether right or wrong knowledge) to da Paul.

[Cindy]

Fred'll have more chances to make a fool of himself then

.....and bore the audience.

Someone could sell DVDs of his speeches and interviews to insominiacs and make a fortune.

[quickmike]

I don't know if they'll let Ron Paul speak that much, it'll probably be all focused on Fred Thompson

Everyone knows Fred Thompson puts people to sleep. Thats ok though, the cheers for Ron Paul should wake them up again.

[ClampIt]

Try this out for Ron Paul's plan...

Constitutional Limit on the Amount and Method of Internal Taxation

Synopsis: Amends the United States constitution to limit both the total amount and type of taxes that may be levied on any citizen. Restricts the form of taxation to only a singly applied, fixed percentage of the value of goods, services, or property acquired. Establishes a maximum rate of taxation from all government authorities combined of ten percent of the value of each transaction. Requires the tax rate to be uniform for all citizens throughout the United States. Repeals the 16th Constitutional Amendment.
[edit] LIMITS OF TAXING POWER

LIMIT of the TAXING METHOD: The power of all government authorities to tax is hereby rescinded except as provided by this amendment. Henceforth, only one tax may be levied in the United States and that shall be limited to a percentage of the value of goods, property or services whenever sold and shall be included in the selling price. The revenue thus derived shall be equally and directly distributed (one fifth each) to the federal, state and local government treasuries; to the individual social security/health entitlement fund defined herein; and to the declared charities of the buyer and seller. Henceforth, a citizen may not be taxed again for any property thus acquired.

LIMIT of the AMOUNT of TAXATION: Congress alone shall have authority to declare any class of product or service in one and only one of eleven tax rates, which may vary from zero to a maximum of ten percent of the selling price. A progressive majority, equal to two percent additional votes of each member of Congress for each percentage point of tax difference, shall be required to approve any tax rate other than five percent; such difference shall decrease by one percent per year unless again approved by Congress. The tax rate shall be the same for the same product or service throughout the United States. Congress shall pass no law that exempts or favors any individual, organization, government or other entity from any such tax so declared.

EXCLUSIVE SOURCE OF FUNDS: Any funds obtained by any government other than that provided herein shall be be assigned national distribution as a supplement to every charity fund to be distributed as the citizenry sees fit.

The sixteenth amendment is hereby repealed. Congress shall have authority to implement this amendment by Statute.

What do you think?

[Jordan]

This rocks, Ron Paul is going to destroy his opponents.

His poll numbers should get quite a boost this Tuesday.

[constituent]

I don't know if they'll let Ron Paul speak that much, it'll probably be all focused on Fred Thompson

depends on if they are for or against...

if they're against, expect the spot light to shine on our
ol' number 2, fred the head himself.

if they're for him, expect a never ending string of attack
questions aimed at the good dr.

[TheEvilDetector]

Try this out for Ron Paul's plan...

Constitutional Limit on the Amount and Method of Internal Taxation

Synopsis: Amends the United States constitution to limit both the total amount and type of taxes that may be levied on any citizen. Restricts the form of taxation to only a singly applied, fixed percentage of the value of goods, services, or property acquired. Establishes a maximum rate of taxation from all government authorities combined of ten percent of the value of each transaction. Requires the tax rate to be uniform for all citizens throughout the United States. Repeals the 16th Constitutional Amendment.
[edit] LIMITS OF TAXING POWER

LIMIT of the TAXING METHOD: The power of all government authorities to tax is hereby rescinded except as provided by this amendment. Henceforth, only one tax may be levied in the United States and that shall be limited to a percentage of the value of goods, property or services whenever sold and shall be included in the selling price. The revenue thus derived shall be equally and directly distributed (one fifth each) to the federal, state and local government treasuries; to the individual social security/health entitlement fund defined herein; and to the declared charities of the buyer and seller. Henceforth, a citizen may not be taxed again for any property thus acquired.

LIMIT of the AMOUNT of TAXATION: Congress alone shall have authority to declare any class of product or service in one and only one of eleven tax rates, which may vary from zero to a maximum of ten percent of the selling price. A progressive majority, equal to two percent additional votes of each member of Congress for each percentage point of tax difference, shall be required to approve any tax rate other than five percent; such difference shall decrease by one percent per year unless again approved by Congress. The tax rate shall be the same for the same product or service throughout the United States. Congress shall pass no law that exempts or favors any individual, organization, government or other entity from any such tax so declared.

EXCLUSIVE SOURCE OF FUNDS: Any funds obtained by any government other than that provided herein shall be be assigned national distribution as a supplement to every charity fund to be distributed as the citizenry sees fit.

The sixteenth amendment is hereby repealed. Congress shall have authority to implement this amendment by Statute.

What do you think?

genius.

you came up with this?

also, I believe there NEEDS to be a constitutional amendment that governs the ability to borrow money....

POWER to BORROW FUNDS: Congress shall not borrow funds from any entity for government expenditure or for foreign aid unless a super-majority vote (75%) of both senate and house of representatives is obtained and any such borrowing shall not be higher than 5% of the previous financial year's total federal tax receipts and is to be paid back during the next financial year in full, before any further attempts at borrowing are permitted.

--
I think that this type of amendment encourages congress to be financially responsible.

[Triton]

It's simple:
“This debate will focus on issues that are at the heart of every Presidential election, namely the economy, taxes, fiscal discipline and government regulation,” said Mark Hoffman, CNBC President. “This will mark the first time in the 2008 presidential campaign that all declared Republican candidates will be asked to provide voters with specific plans for the American economy and American workers in an increasingly global marketplace.”

http://www.cnbc.com/id/20623950/site/14081545/?site=14081545

Reminder...CNBC live at 4PM ET and rerun on MSNBC at 9PM ET

Get Millions to WatchI don't agree. The moderator will focus on the more controversial of Paul's beliefs - like his belief that the Federal Reserve needs to be abolished. As true as that may be, the Clones will quickly pounce on that and label him as "fringe" or "kook". The media do not want him to win, and they are not above throwing such a brick at him.

[richard1984]

Ron Paul is the most economically learned candidate in my lifetime.

There was another who had an Economics degree and still was inferior in economic knowledge (not looking at whether right or wrong knowledge) to da Paul.

Economics degree? Ha! School isn't really the best place to actually learn about things...the "degree" is the focus and purpose--not education.
Ron Paul is awesome on economics because he's an awesome person and he taught himself--he controlled his own curriculum. Self-management is the best way to get a good education.


I just hope they give Dr. Paul enough time to adequately answer questions. I wish there weren't so many candidates attending.
If nothing else, hopefully people (especially the conservative Republican base) will realize that Dr. Paul really knows what he's talking about, he'll garner a lot of interest, and he'll get more media attention on his economic positions as a result.

[ClampIt]

With quite a few others...

But there is lots of background information, including economic arguments for optimal growth and standard of living.

I think it is consistent with Ron Paul's views and is a plan that is worked out in detail.

Ron Paul seems to be the guy to implement it.

[Spirit of '76]

They probably won't even ask Ron about any of that, and only give him questions about the war.

[TheEvilDetector]

They probably won't even ask Ron about any of that, and only give him questions about the war.

Moderator: "Hi Congressman Paul, welcome to the debate. You do not want the military to fight the islamofascists over there, so they can come here?"

Paul "No, you misun....."

Moderator: "Thank you Congressman, we're out of time. Thank you to all the candidates who participated. Good Luck to all.".

[JosephTheLibertarian]

Ron Paul is the only one qualified to speak.

[ClampIt]

genius.

you came up with this?

also, I believe there NEEDS to be a constitutional amendment that governs the ability to borrow money....

POWER to BORROW FUNDS: Congress shall not borrow funds from any entity for government expenditure or for foreign aid unless a super-majority vote (75%) of both senate and house of representatives is obtained and any such borrowing shall not be higher than 5% of the previous financial year's total federal tax receipts and is to be paid back during the next financial year in full, before any further attempts at borrowing are permitted.

--
I think that this type of amendment encourages congress to be financially responsible.


Borrowing is addressed in the amendment and there is argument for how it is done (since the tax rate is constitutionally limited, it takes precedence over debt), but I would really appreciate every one's help to whip this together as a positive plan to implement Ron Paul's message.

Here are the major points:

* Eliminates all other taxation in the United States.
o Repeals the sixteenth amendment of the federal income tax.
o Eliminates tax on ownership.
o Eliminates tax on what you buy.
* Replaces it with one tax on what you sell.
* Limits the maximum tax rate to ten percent of what you sell
* Sets the average tax rate is five percent of what you sell
* Levels the playing field - Everyone selling the same product pays the same tax rate
* Distributes revenue directly to your federal, state and local governments, charity and individual entitlements.
* Fully funds social security on the total economy, not just salaries.
* Provides for essential health care for every citizen.
* Controls the size of government to an ideal ratio that will produce the highest standard of living (21.9% of GNP)
* Reduces the ratio of government taxation from 40% of GDP down to 20-25% of GDP
* Controls tax creep
o Requires a progressive super majority to approve and annually to sustain any tax rate that differs from five percent
o Provides a sunset provision that automatically normalizes to five percent any different tax rate that is not approved.
* Requires foreign aid to be confirmed by each and every citizen through their Charity account.
* Provides for lower tax on necessaries to protect the poor using natural market checks and balances.
* Provides for retirement of public debt.

This has not been made public as yet so we may need some help from our friends here.

Anyway, go to http://wiki.clampit.us

We're setting up a forum for a wiki edit, but it is latched down for now.

[nullvalu]

I don't agree. The moderator will focus on the more controversial of Paul's beliefs - like his belief that the Federal Reserve needs to be abolished. As true as that may be, the Clones will quickly pounce on that and label him as "fringe" or "kook". The media do not want him to win, and they are not above throwing such a brick at him.

Ehh.. We'll see.. People were also saying "they" were going to make Ron Paul out to be a "racist" at the PBS debate.. it didn't happen..

[dude58677]

This is going to be a classic.:) :)

[Giuliani was there on 911]

Summarized answer from some of the other candidates:

Fred Thompson: We need to stop doing what doesn't work, and do more of what works.. m'kay?

Julie Annie: We need to prevent another 9/11. Attacks like those cost the american people too much money!

Tancredo: Round up all the illegals, put them in a huge pile, and burn them! That'll save us a bunch of money..

Keyes: We must stop our HEATHEN ways and PRAY to GOD so that HE may send us an ANSWER to our FISCAL problems! God is the best money manager EVAR!


lmao




but I think Paul will get completely ignored or he'll be given a question like this.

Moderator : Congressman Paul, you recently said that you would raise taxes by over 85% if elected president, why are you running as a republican if your fiscal policy is that of one that resembles a democrat's ?

Ron Paul : :confused:

[jrich4rpaul]

I can already see the talk clock for this debate...

Moderator- 31 minutes
Thompson- 27 minutes
Romney- 24 minutes
Giuliani- 22 minutes
McCain- 19 minutes
Paul- 3 minutes

:-\

[JosephTheLibertarian]

But who will be attending? ??

[RobotJaxxon]

Try this out for Ron Paul's plan...

Constitutional Limit on the Amount and Method of Internal Taxation

Synopsis: Amends the United States constitution to limit both the total amount and type of taxes that may be levied on any citizen. Restricts the form of taxation to only a singly applied, fixed percentage of the value of goods, services, or property acquired. Establishes a maximum rate of taxation from all government authorities combined of ten percent of the value of each transaction. Requires the tax rate to be uniform for all citizens throughout the United States. Repeals the 16th Constitutional Amendment.
[edit] LIMITS OF TAXING POWER

LIMIT of the TAXING METHOD: The power of all government authorities to tax is hereby rescinded except as provided by this amendment. Henceforth, only one tax may be levied in the United States and that shall be limited to a percentage of the value of goods, property or services whenever sold and shall be included in the selling price. The revenue thus derived shall be equally and directly distributed (one fifth each) to the federal, state and local government treasuries; to the individual social security/health entitlement fund defined herein; and to the declared charities of the buyer and seller. Henceforth, a citizen may not be taxed again for any property thus acquired.

LIMIT of the AMOUNT of TAXATION: Congress alone shall have authority to declare any class of product or service in one and only one of eleven tax rates, which may vary from zero to a maximum of ten percent of the selling price. A progressive majority, equal to two percent additional votes of each member of Congress for each percentage point of tax difference, shall be required to approve any tax rate other than five percent; such difference shall decrease by one percent per year unless again approved by Congress. The tax rate shall be the same for the same product or service throughout the United States. Congress shall pass no law that exempts or favors any individual, organization, government or other entity from any such tax so declared.

EXCLUSIVE SOURCE OF FUNDS: Any funds obtained by any government other than that provided herein shall be be assigned national distribution as a supplement to every charity fund to be distributed as the citizenry sees fit.

The sixteenth amendment is hereby repealed. Congress shall have authority to implement this amendment by Statute.

What do you think?


First, let me say I like the general idea of what you're trying to do, and its very worthwhile to have specific ideas for RP (or at least his supporters) to point to instead of just saying "Repeal this" or "Repeal that" all the time.

However, I see a few problems with your plan here.

1) Ron Paul is on the record saying he does not want to replace the income tax with anything. He thinks the fair tax is OK, but he's not an advocate of it. I don't think he would jump on board an amendment that creates a new tax.

2) This amendment would remove the ability of the federal government to raise money from other taxes, just as tariffs and import duties, etc. Maybe just focus on removing taxes on individual income?

3) If I understand what you're proposing--taxing goods every time they're sold as opposed to just the last sale--it would be very bad for poor and middle class people. Taxing every transaction will be an incentive to have fewer transactions, which would probably give advantages to big conglomerations that don't have to pay extra transaction taxes that smaller, more efficient businesses focused on "one part of the supply chain" would be crushed by. The final consumer will be paying much higher taxes because the tax is compounded every time that product changes hands. Take apples, for example. If the grower sells apples to a distributer, there's 10%. Distributer sells it to a grocery store chain, there's 10%. Chain sells it to a store franchise, there's 10%. Store sells it to customer, there's 10%. Compounding that, you end up with a 46.4% tax on the apple. That is why state sales taxes only apply to sales to end consumers, and if you are buying raw materials for something you will re-sell later, you are exempt from paying sales tax. This is similar to RP's argument on inflation...even though inflation is kept at 2-3%, by the time products reach the shelves it can be upwards of a 10% increase in price.

Of course, that may not be the case if I'm not fully understanding your proposal.

[jrich4rpaul]

But who will be attending? ??

According to wikipedia...

"Sam Brownback, Rudy Giuliani, Mike Huckabee, John McCain, Ron Paul, Mitt Romney, and Fred Thompson have said they will attend.[38] At the September 27 debate, Alan Keyes said he wanted to, but had been barred from participating."

[aravoth]

They probably won't even ask Ron about any of that, and only give him questions about the war.

yep

[TheEvilDetector]

First, let me say I like the general idea of what you're trying to do, and its very worthwhile to have specific ideas for RP (or at least his supporters) to point to instead of just saying "Repeal this" or "Repeal that" all the time.

However, I see a few problems with your plan here.

1) Ron Paul is on the record saying he does not want to replace the income tax with anything. He thinks the fair tax is OK, but he's not an advocate of it. I don't think he would jump on board an amendment that creates a new tax.

2) This amendment would remove the ability of the federal government to raise money from other taxes, just as tariffs and import duties, etc. Maybe just focus on removing taxes on individual income?

3) If I understand what you're proposing--taxing goods every time they're sold as opposed to just the last sale--it would be very bad for poor and middle class people. Taxing every transaction will be an incentive to have fewer transactions, which would probably give advantages to big conglomerations that don't have to pay extra transaction taxes that smaller, more efficient businesses focused on "one part of the supply chain" would be crushed by. The final consumer will be paying much higher taxes because the tax is compounded every time that product changes hands. Take apples, for example. If the grower sells apples to a distributer, there's 10%. Distributer sells it to a grocery store chain, there's 10%. Chain sells it to a store franchise, there's 10%. Store sells it to customer, there's 10%. Compounding that, you end up with a 46.4% tax on the apple. That is why state sales taxes only apply to sales to end consumers, and if you are buying raw materials for something you will re-sell later, you are exempt from paying sales tax. This is similar to RP's argument on inflation...even though inflation is kept at 2-3%, by the time products reach the shelves it can be upwards of a 10% increase in price.

Of course, that may not be the case if I'm not fully understanding your proposal.

In Australia they do this (page 6): http://www.ato.gov.au/content/downloads/N3014072007.pdf

applying this system to your example:

grower sells to distributor for $1 + 10c tax = grower sends 10c to tax office (collected 10c, already paid 0c)
distributor sells to chain for $2 + 20c tax = distributor sends 10c to tax office (collected 20c, already paid 10c)
chain sells to store for $3 + 30c tax = chain sends 10c to tax office (collected 30c, already paid 20c)
store sells to consumer for $4 + 40c tax = store sends 10c to tax office (collected 40c, already paid 30c)

consumer can not receive tax credits so ultimately pays the whole tax

I do not understand your example, because it assumes the intermediate links do not have any profit margins.

[Tuck]

I think the moderators are Chris Mathews and Maria Bartiromo. Bartiromo has talked to Paul twice and I think Mathews is a closet supporter. He is one of the few guys in the media that refers to people in the Bush administration as neocons, others still think we are in the Reagan era so we will see.

[RP4ME]

it'll be interesting to see the reactions ron gets when he proposes getting rid of the fed.

I hope he can trylly get acorss the WHY and edumacate teh sheeple - otherwise he will look crzy....

[RP4ME]

I think the moderators are Chris Mathews and Maria Bartiromo. Bartiromo has talked to Paul twice and I think Mathews is a closet supporter. He is one of the few guys in the media that refers to people in the Bush administration as neocons, others still think we are in the Reagan era so we will see.

Maria is a establishmnet syncophant!

Is Mattheews a closet RPr? I figure him for a solcialist and a Clintonfile

[ClampIt]

First, let me say I like the general idea of what you're trying to do, and its very worthwhile to have specific ideas for RP (or at least his supporters) to point to instead of just saying "Repeal this" or "Repeal that" all the time.

However, I see a few problems with your plan here.

1) Ron Paul is on the record saying he does not want to replace the income tax with anything. He thinks the fair tax is OK, but he's not an advocate of it. I don't think he would jump on board an amendment that creates a new tax.

2) This amendment would remove the ability of the federal government to raise money from other taxes, just as tariffs and import duties, etc. Maybe just focus on removing taxes on individual income?

3) If I understand what you're proposing--taxing goods every time they're sold as opposed to just the last sale--it would be very bad for poor and middle class people. Taxing every transaction will be an incentive to have fewer transactions, which would probably give advantages to big conglomerations that don't have to pay extra transaction taxes that smaller, more efficient businesses focused on "one part of the supply chain" would be crushed by. The final consumer will be paying much higher taxes because the tax is compounded every time that product changes hands. Take apples, for example. If the grower sells apples to a distributer, there's 10%. Distributer sells it to a grocery store chain, there's 10%. Chain sells it to a store franchise, there's 10%. Store sells it to customer, there's 10%. Compounding that, you end up with a 46.4% tax on the apple. That is why state sales taxes only apply to sales to end consumers, and if you are buying raw materials for something you will re-sell later, you are exempt from paying sales tax. This is similar to RP's argument on inflation...even though inflation is kept at 2-3%, by the time products reach the shelves it can be upwards of a 10% increase in price.

Of course, that may not be the case if I'm not fully understanding your proposal.

Let me see if I can answer your concerns:

1. I heard Ron Paul's point that he wanted to do away with the income tax and "replace it with nothing" and I agree. This amendment does the former (abolishes the income tax) and reforms the latter such that the total ratio of state, federal and local taxes is reduced from above 40% to 21.9% of GDP. Thus, it agrees with the intent, if not the method, that Ron Paul stated. To do so, it wanted to comply with economist Adam Smith's admonition that no tax should be more than ten percent (else it would be difficult to enforce and encourage bootlegging).

2. It does eliminate all other taxes period. So there is no other tax that the federal, state or local government can levy at all.

3. Taxing goods every time they are sold is done now. But it is not accounted that way. In fact, the tax computation now has a complexity that would try the patience of Job. When a farmer sells milk, does he not include a portion of his income tax, his property tax, his excise tax, and his social security tax for himself and his labor in his selling price? Sure he does. So does the distributor, the jobber and the retailer. Every selling price always includes some tax, so it is sheer fiction to think it is not compounded each time it changes hands and is multiplied by a markup ratio. We know, empirically that his tax load is 40% of the economy now.

What this amendment does is eliminate all the other taxes and in its place substitute only one tax that is strictly limited, that can only vary by product or service. Unlike the current system, it is the same every other citizen pays. The average corporation now pays about 4 to 6 percent of gross revenues in tax (property, income, etc.) so this won't be much change for producers and distributors. What will change is the tax on individuals, which is cut just like Ron Paul says, to no income tax. This eliminates all other taxes and the accounting that goes with it.

So it reduces prices on the poor. Your "apple" example is flawed because 1) it assumes that the purchase price is the same as the selling price, 2) it assumes there is no markup by any intermediate, and 3) it assumes the maximum tax rate rather than the typical tax rate for an apple. The amendment permits the tax to vary by product, thus it allows necessaries (which include food such as apples) to have a very low tax rate, thereby reducing the price throughout the chain. Food would be 2 or 3%, not 10%.

Since you were right to ask this question and it was anticipated, a comparison was done for milk and liquor tax. The price of milk would go down.

Assuming a beginning cost of $1.00, a markup of 1.20 and a tax of 2%, the price of milk would go down to $1.84. The "FAIR" tax price of milk (supposedly revenue neutral) would be $2.15; Contrastingly, if the tax on liquor was 8% and the markup typically 2.00. liquor, the limited tax on liquor would be $10.31 and the "FAIR" tax on liquor $9.92. Thus a consumer only, retail sales tax would price milk more and liquor less, exactly the opposite that you might suppose.

You can see the details of this computation here. [url]http://wiki.clampit.us/index.php/ClampIt_vs_%22Fair_Tax%22_-_Boortz[url].

[RobotJaxxon]

In Australia they do this (page 6): http://www.ato.gov.au/content/downloads/N3014072007.pdf

applying this system to your example:

grower sells to distributor for $1 + 10c tax = grower sends 10c to tax office (collected 10c, already paid 0c)
distributor sells to chain for $2 + 20c tax = distributor sends 10c to tax office (collected 20c, already paid 10c)
chain sells to store for $3 + 30c tax = chain sends 10c to tax office (collected 30c, already paid 20c)
store sells to consumer for $4 + 40c tax = store sends 10c to tax office (collected 40c, already paid 30c)

consumer can not receive tax credits so ultimately pays the whole tax

I do not understand your example, because it assumes the intermediate links do not have any profit margins.

Well....the proposed amendment calls for the taxation on the value of the goods at each transaction, not the value ADDED to the goods. If you look at http://wiki.clampit.us/index.php/ClampIt_vs_%22Fair_Tax%22_-_Boortz and scroll down to the charts, he is not suggesting a valued added tax.

Applying this to the case you gave above, with just a retail sales tax of 10%:


Step Buy Price Sell Price Profit Tax
1 $0 $1 $1
2 $1 $2 $1
3 $2 $3 $1
4 $3 $4.40 $1 $0.40
(sorry...not sure how to get the numbers to line up nicely...hopefully its kinda readable)


Applying this to the case you gave above, but with a tax of 10% on the sale prices, and assuming no one is willing to take a hit to their profit:


Step Buy Price Sell Price Profit Tax Sale+Tax Price
1 $0 $1 $1 $0.10 $1.10
2 $1.10 $2.10 $1 $0.21 $2.31
3 $2.31 $3.31 $1 $0.33 $3.64
4 $3.64 $4.64 $1 $0.46 $5.10


Doing once again, but with a 10% tax and assuming everyone wants to continue making the same price markups (assuming their sale volume may decrease due the higher retail price):


Step Buy Price Sell Price Markup Tax Sale+Tax Price
1 $0 $1 N/A $0.10 $1.10
2 $1.10 $2.20 100% $0.22 $2.42
3 $2.42 $3.62 50% $0.36 $3.98
4 $3.98 $5.28 33% $0.53 $5.81

In the first case, the end consumer would see a 10% increase due to the tax. The second case is a 27.5% increase, and the 3rd case is just over a 45% increase in the sale price.

The price grows exponentially (I believe) with the number of links in the supply chain.

[ClampIt]

You are correct that it is not value added, but on gross receipts. However, it is sensitive to the markup ratio and can vary (from zero to 10 percent) by product.

The chief reason is to make sure the tax rate could be under ten percent (Adam Smith's rule) and to permit the tax to be deliberately decreased for necessaries (milk, etc.) and permit application of externalities to "sin" products such as alcohol, tobacco, or dry cleaning fluid.

The other intent was to have the tax to be stroboscopic and not rely on record keeping. For simplicity, all selling prices included tax (thus reducing computation substantially), though it is recognized that the consumer pays for everything.

It doesn't address Ron Paul's issue on the Federal Reserve as yet and I have read his writing on this along with Jack Kemp's.

To the extent that most economists are correct that the ideal ratio of tax to gross national consumption would be around 22 percent, this should idealize the tax rate as simply as possible.

Let me have your comments.

[daviddee]

...

[RobotJaxxon]

3. Taxing goods every time they are sold is done now. But it is not accounted that way. In fact, the tax computation now has a complexity that would try the patience of Job. When a farmer sells milk, does he not include a portion of his income tax, his property tax, his excise tax, and his social security tax for himself and his labor in his selling price? Sure he does. So does the distributor, the jobber and the retailer. Every selling price always includes some tax, so it is sheer fiction to think it is not compounded each time it changes hands and is multiplied by a markup ratio. We know, empirically that his tax load is 40% of the economy now.


There is a difference. Current income taxes would appear (indirectly as you correctly assert) as a percentage of PROFIT at each stage in the supplier chain. So if everyone makes $1 at each stage, a percentage of $1 is factored in at each stage. This leads to a linear growth in prices (as a function of links in the supply chain).

What you are proposing levies taxes based on a percentage of the FULL COST of the good at the particular stage, which includes all the taxes from prior stages. The tax builds upon itself (taxes on taxes on taxes, etc). This leads to an exponential growth in prices (as a function of links in the supply chain).

[Shellshock1918]

This debate will definitely be Ron Paul territory. My only fear is lack of time.

[fourameuphoria]

I heard Tancredo's not going to be there; can anyone verify this?

[constituent]

it'd be awesome if he flaked out on 'em.

[inibo]

I'd love to see it done like the PBS debate in Baltimore: The same question asked to each candidate with an equal fixed time to answer starting with a different candidate with each new question. Believe it or not that format actually changed my mind a little about some of the also-rans. While not in the least diminishing my support for Ron Paul I was actually impressed a bit with some of the other candidates on a few of the issues. I'm actually beginning to feel like a Republican. :eek:

[ClampIt]

There is a difference. Current income taxes would appear (indirectly as you correctly assert) as a percentage of PROFIT at each stage in the supplier chain. So if everyone makes $1 at each stage, a percentage of $1 is factored in at each stage. This leads to a linear growth in prices (as a function of links in the supply chain).

What you are proposing levies taxes based on a percentage of the FULL COST of the good at the particular stage, which includes all the taxes from prior stages. The tax builds upon itself (taxes on taxes on taxes, etc). This leads to an exponential growth in prices (as a function of links in the supply chain).

Thanks for your post.

If 30% income withholding taxes for labor are reduced to 5%, will not the incremental labor expense of a company manufacturing a particular product go down?

If a manufacturer no longer has to pay recurring property tax, excise tax, utility taxes and the like, with not the overhead expense go down?

If every previous vendor experiences like reductions in taxes, will not raw material costs go down?

If the manufacturer no longer has any income tax, will the requirement for profit also go down?

In the status quo system, these are buried as EXPENSES, not PROFITS. Regardless, this argument is moot to the instant proposal. The fact is, with aggregate taxes reduced, aggregate costs are also reduced, and prices go down because the ratio of tax load, at every stage of distribution, is reduced.

So a Congressional decision to reduce tax on milk to make it more affordable to the poor and the middle class results in a tax reduction that is compounded at every stage of production. The tax is less on the farmer, on the dairy, on the distributor and on the retail grocer, thus is the price is lower.

It does not matter that the tax is compounded (which I admit it is) and it does not follow that, despite mathematics, prices will go up. This has long been touted as a "reason" to have sales tax exemption to avoid "tax on tax"; the latter has always occurred and is an accounting fiction.

Did you understand that the average tax would be five percent of the selling price? Did you further understand that the tax on food (necessaries) would be set to a total tax per stage of around 2%, thus lowering the tax load and the price?

[johngr]

Try this out for Ron Paul's plan...

Constitutional Limit on the Amount and Method of Internal Taxation

Synopsis: Amends the United States constitution to limit both the total amount and type of taxes that may be levied on any citizen. Restricts the form of taxation to only a singly applied, fixed percentage of the value of goods, services, or property acquired. Establishes a maximum rate of taxation from all government authorities combined of ten percent of the value of each transaction. Requires the tax rate to be uniform for all citizens throughout the United States. Repeals the 16th Constitutional Amendment.
[edit] LIMITS OF TAXING POWER

LIMIT of the TAXING METHOD: The power of all government authorities to tax is hereby rescinded except as provided by this amendment. Henceforth, only one tax may be levied in the United States and that shall be limited to a percentage of the value of goods, property or services whenever sold and shall be included in the selling price. The revenue thus derived shall be equally and directly distributed (one fifth each) to the federal, state and local government treasuries; to the individual social security/health entitlement fund defined herein; and to the declared charities of the buyer and seller. Henceforth, a citizen may not be taxed again for any property thus acquired.

LIMIT of the AMOUNT of TAXATION: Congress alone shall have authority to declare any class of product or service in one and only one of eleven tax rates, which may vary from zero to a maximum of ten percent of the selling price. A progressive majority, equal to two percent additional votes of each member of Congress for each percentage point of tax difference, shall be required to approve any tax rate other than five percent; such difference shall decrease by one percent per year unless again approved by Congress. The tax rate shall be the same for the same product or service throughout the United States. Congress shall pass no law that exempts or favors any individual, organization, government or other entity from any such tax so declared.

EXCLUSIVE SOURCE OF FUNDS: Any funds obtained by any government other than that provided herein shall be be assigned national distribution as a supplement to every charity fund to be distributed as the citizenry sees fit.

The sixteenth amendment is hereby repealed. Congress shall have authority to implement this amendment by Statute.

What do you think?

Your proposed amendment is substantially different from what Dr. Paul proposes but I don't remember how. I know he wants to replace the income tax with something but I don't remember what. Can anyone here help me out?

[RobotJaxxon]

I believe what you are proposing is called a turnover tax, or more specifically, a cascade tax. It was used in eastern European countries before the EU came along and converted them to the VAT.

Unfortunately, wikipedia has little to say: http://en.wikipedia.org/wiki/Cascade_tax

Look around, do some research, see what you can find on it. Someone, somewhere, must have done some research on what you're proposing. I think you need to have strong theoretical standing from well-respected economists to suggest a different/new approach to taxation before offering it as a viable option for enacting.

Ron Paul's economic policies --which are different from what you're suggesting-- are based on work by many well respected researchers such as Milton Friedman and Ludwig von Mises. Perhaps they have said something regarding what you are proposing?

[Pete]

Your proposed amendment is substantially different from what Dr. Paul proposes but I don't remember how. I know he wants to replace the income tax with something but I don't remember what. Can anyone here help me out?




Nothing?

[steph3n]

actually he wants to replace it with smaller government :)

[Suzu]

I heard Tancredo's not going to be there; can anyone verify this?

I can't. And I don't see Duncan Hunter or John Cox on the list either.

I wish Huckabee would just give the hell up and go back to his church or write books or something.

[ClampIt]

[QUOTE=RobotJaxxon;250750]There is a difference. Current income taxes would appear (indirectly as you correctly assert) as a percentage of PROFIT at each stage in the supplier chain.

It is immaterial how current taxes appear or how they are computed. Even if the time honored method of dividing by your social security number and multiplying by your shoe size was used, it is moot since all current taxes are rescinded by the ClampIt amendment.

Your statement that prices would go up is due to errors in your assumptions, not in your arithmetic. Make these corrections to your assumptions:
1. Profit and taxes are reflected in the markup ratio.
2. As the amendment states, ClampIt tax is a simple percentage of the selling price and is included in the selling price (not added on as you assumed).
3. Use the default tax rate of five percent; Using the maximum tax rate of ten percent is known to be too high (to provide elasticity for externalities) and should not be used for the typical case.

The only way this could cause prices to go up would be if a particular business was paying less than five percent of gross receipts in taxes. Even then, if such was systemic for an industry, that tax rate could be lowered by Congress.

But we dance on the head of a pin.

[Primbs]

Lets not get over confident. Al Gore got over confident in 2000 because he had advisors who only praised him and never gave Al Gore any constructive criticism.

Voters tend to be economically illiterate, especially austrian economics illiterate. Paul is going to have to create some good sound bites to explain his policies.

Otherwise, to try and convince voters that the FED has to go is going to be difficult. It will be tough to educate the voters in two minute sound bits. It may take time to build support for his positions in the electorate no matter how good the merits of the case are.

[ClampIt]

I believe what you are proposing is called a turnover tax, or more specifically, a cascade tax. It was used in eastern European countries before the EU came along and converted them to the VAT.

Unfortunately, wikipedia has little to say: http://en.wikipedia.org/wiki/Cascade_tax

Look around, do some research, see what you can find on it. Someone, somewhere, must have done some research on what you're proposing. I think you need to have strong theoretical standing from well-respected economists to suggest a different/new approach to taxation before offering it as a viable option for enacting.

Ron Paul's economic policies --which are different from what you're suggesting-- are based on work by many well respected researchers such as Milton Friedman and Ludwig von Mises. Perhaps they have said something regarding what you are proposing?

Isn't a bit condescending of you to assume this wasn't researched?

Rarely, if ever, does a new idea come from credentialed sources. More often, credentialed sources often resist new ideas as "Not Invented Here" (where they are supposed to be). A new idea also has a rough time of getting the status quo to buy into risk, thus it is unlikely to get approval. As Senator Alan Simpson said, "There are some people that the only thing they like better than how things are, is how they were." Typifying the fate of new ideas is Doctor Lister's famous quote, "Gentlemen, the disease is on your hands" shows at least one example of running this gauntlet.

Qualitative analysis is merely a judgment by a credentialed source. It must deal with the fact that the status quo will resist change, so it is very unlikely that any new idea will see the light of day from credentialed sources. The use of credentialed sources is also unscientific in that it is only opinion, not fact, and is only properly applied when an idea introduced as "new" really isn't, which a disciplined examination is able to recognize it as something already tried. A new idea (if it truly is a new idea) has no history, thus an experienced source adds nothing to the analysis, save an honest conclusion that "we don't know." Qualitative analysis often involves an intellectual lazy practice of placing blind trust in others to render opinion for what we do not yet understand.

* Quantitative analysis (statistical sampling) does greatly improve one's confidence in adopting a new idea, but it again rarely can be used because those data required as evidence most often depend on having the product or idea in force to collect any proof that is required. Moreover, any future event that is not causal always has a probability of less than unity, i. e., there is always some probability that any assumption suggested by quantitative analysis is entirely wrong. It also suffers from confirmation bias, because those data used are often "cherry picked" to prove the idea.

* Causal analysis is the only mechanism that concretely dispels doubt and invites adoption. This is the struggle of the every inventor, to actual produce a working model of what is claimed. It is the "if and only if" of mathematical proof. But even with a working model, others will have to be made aware of the problem, persuaded as to why it is better than alternatives, and finally motivated to adopt the solution.

Thus, there is a trichotomy that all decisions about new ideas must obey:

* One can decide for,
* one can decide against, or
* one can not decide.

The risk-averse will not decide. The larger the organization, the more it has to risk and the more likely it is not to decide. The more the organization has to risk, the more reticent it will be to deciding anything, because much more proof and persuasion must be done before anything is attempted. You can see this behavior throughout history: Texas Instruments turning down the microcomputer, Western Union dismissing the telephone, etc.

I thought RP would be a bit more decisive on the merits.

[USPatriot36]

Try this out for Ron Paul's plan...

Constitutional Limit on the Amount and Method of Internal Taxation

Synopsis: Amends the United States constitution to limit both the total amount and type of taxes that may be levied on any citizen. Restricts the form of taxation to only a singly applied, fixed percentage of the value of goods, services, or property acquired. Establishes a maximum rate of taxation from all government authorities combined of ten percent of the value of each transaction. Requires the tax rate to be uniform for all citizens throughout the United States. Repeals the 16th Constitutional Amendment.
[edit] LIMITS OF TAXING POWER

LIMIT of the TAXING METHOD: The power of all government authorities to tax is hereby rescinded except as provided by this amendment. Henceforth, only one tax may be levied in the United States and that shall be limited to a percentage of the value of goods, property or services whenever sold and shall be included in the selling price. The revenue thus derived shall be equally and directly distributed (one fifth each) to the federal, state and local government treasuries; to the individual social security/health entitlement fund defined herein; and to the declared charities of the buyer and seller. Henceforth, a citizen may not be taxed again for any property thus acquired.

LIMIT of the AMOUNT of TAXATION: Congress alone shall have authority to declare any class of product or service in one and only one of eleven tax rates, which may vary from zero to a maximum of ten percent of the selling price. A progressive majority, equal to two percent additional votes of each member of Congress for each percentage point of tax difference, shall be required to approve any tax rate other than five percent; such difference shall decrease by one percent per year unless again approved by Congress. The tax rate shall be the same for the same product or service throughout the United States. Congress shall pass no law that exempts or favors any individual, organization, government or other entity from any such tax so declared.

EXCLUSIVE SOURCE OF FUNDS: Any funds obtained by any government other than that provided herein shall be be assigned national distribution as a supplement to every charity fund to be distributed as the citizenry sees fit.

The sixteenth amendment is hereby repealed. Congress shall have authority to implement this amendment by Statute.

What do you think?
The problem is not the Constitution. How will amending the Constitution help when they ignore it all the time? The problem is the people. We don't throw out rascals who violate the Constitution. Many people want the government to provide them with cradle to grave welfare.

[ClampIt]

The problem is not the Constitution. How will amending the Constitution help when they ignore it all the time? The problem is the people. We don't throw out rascals who violate the Constitution. Many people want the government to provide them with cradle to grave welfare.
Very good point. The idea of amending the Constitution is not to educate the courts or the legislature, but the people themselves and to bring it fresh on their mind. But you might very well be right, they might ignore it.

We have to get rid of the 16th amendment, which was very bad because it expanded the power of the federal government. Not until California's Proposition 13 was there any serious effort to restrict the power of any government to tax and even then that was a public initiative, and did not come from a sitting legislature.

What has happened since the 16th amendment was approved in 1913, is that state, federal and local governments now consume over 40 percent of every dollar that is spent by its citizens, up from less than two percent in the year 1900. Thus freedom has been constantly eroded in the United States and embezzled by its governments. It is dying the death of a thousand cuts. Innovation is turning the economy to foreign, developing countries. The government can no longer think and spends its time justifying its mediocre performance by looking for opportunities to prove itself wise.

So we need to just look at this analytically and put a stop to it. The first step is controlling how much the beast eats and put it on a diet.

Had the optimal tax rate as proposed of 21.9% been in effect since 1949, government could have funded all actual spending programs with no public debt. (See "Optimal Size of Government" wiki.clampit.us).

[Hook]

The states should have their own means of taxation. Relying on the Feds to collect for the states guarantees that the Feds will withold funds to states that don't tow the line on policy, such as speed limit laws and minium drinking age laws.
We just need to return to the taxation system of before where there were no direct taxes on citizens or business. Only excise, import, and duty taxes were levied, along with charges to the states to help fund the Federal gov., but in apportionment to the number of citizens of each state. That only works if the Senators are elected by the state legislatures as they used to be, because the money charged to the states by the Feds takes directly out of the coffers of the state. This makes a natural competition between the states and the Fed to keep taxes under control.

[ClampIt]

The states should have their own means of taxation. Relying on the Feds to collect for the states guarantees that the Feds will withold funds to states that don't tow the line on policy, such as speed limit laws and minium drinking age laws.
We just need to return to the taxation system of before where there were no direct taxes on citizens or business. Only excise, import, and duty taxes were levied, along with charges to the states to help fund the Federal gov., but in apportionment to the number of citizens of each state. That only works if the Senators are elected by the state legislatures as they used to be, because the money charged to the states by the Feds takes directly out of the coffers of the state. This makes a natural competition between the states and the Fed to keep taxes under control.

Freedom is not what we do, it is what we allow others to do

In looking at this, a ratio as the first objective of government budget would peg all government to consume no more than one fifth of the economy (Gross National Product). Studies have shown (see Optimum Size of Government) empirically that a ratio of around 21 to 23 percent in fact have produced the most real growth of the standard of living in the United States.

Currently, as mentioned before, taxation is exactly twice as large as it should be (40 to 45 percent of the economy). This, in turn, stifles the economy and quashes competitive innovation. That, in turn, reduces tax revenue. Though many would argue that 20 percent is still too much, it is a safe start and can always be lowered. If, due to some unforeseen circumstance, it needs to be larger, means are provided to make it so with suitable public safeguards.

Controlling the Taxing Authority

To control government by limiting taxation necessitates eliminating multiple, uncontrolled sources of taxation. Currently, the federal, state and local governments may all levy taxes without regard to those imposed by each other. As Robert Townsend observed in his book Up the Organization, when you have two people in control, you have no one in control. Thus to control taxes, the taxing authority needs to reside in only one entity. The 1USATax accomplishes this by giving the power to set tax rates only to the federal government.

That by itself, however, would be a disaster.

It is also what practically exists now, in that state and local governments are treated like the bishops, sheriffs and mayors of the Middle Ages: they are permitted to glean for their own pockets trivial amounts provided that the King (the federal government) gets the lion's share. The chief taxation by the federal government is income and excise taxes (fuel, power, etc.) and the chief revenue of state and local governments is local sales taxes, with a minor amount coming from state income and property taxes. There is a reason for this, in that sales taxes come off the top of the deck, whereby income and property taxes (due to various and numerous exclusions) come from the bottom of the deck. A rule of thumb from Dartmouth city planners is that a one percent sales tax will collect the same amount of money as a five percent payroll income tax. It is this principle that dictates that a five percent transaction tax can replace all taxes and result in a twenty-five percent budget for all government.

But the evil in centralized taxation is that it is currently married to centralized decisions of distribution and therefore leaves all power in the federal government. This was not the intent of the framers of the original Constitution, who knew a little something about it. Some power should be in the federal government, but most should reside in the state and local governments. Thus the 1USATax (which is a name I came up with to describe the new method), in exchange for the loss of the power to tax by the local and state governments, fixes the ratio of distribution of the revenues. It gives the federal government only the power to set the class and amount of the tax, and only one fifth of any revenues collected. The state and local governments each receive the same share of revenues that the federal government receives and it is apportioned based on economic activity, very close to what you have stated. Thus, the local county commission (or city board of alderman) gets the same percent of the tax revenues as the federal government.

It left two-fifths of the tax revenue to allocate to individual entitlements (preventing the grasshopper and ant mentality of youth) and a ballast to correct temporal inequity through charity. This is explained elsewhere on the site and is not material to the discussion on maximum tax rate and promotion of innovation.

Tax collection "piggybacks" on commercial clearings, exactly like credit/debit card transactions do now, so there is nothing to invent. Only the product code need be added because the parties to the transaction are already known. This function shunts "sending the money to Washington" and pays state and local treasuries directly.