Posted on 03/01/2004 2:29:32 AM PST by The Raven
Edited on 04/22/2004 11:51:10 PM PDT by Jim Robinson. [history]
In the Kafka-esque world of tax law, sometimes a second wrong can produce a right. At least that's the hope as the European Union today decides whether to impose sanctions on the U.S. for giving tax preferences to exporters after the World Trade Organization repeatedly ruled this out of bounds. In resolving this old dispute, Congress has a chance to reform tax laws to make U.S. companies more competitive.
(Excerpt) Read more at online.wsj.com ...
The best revenge would be a reform that enhances American competitiveness.
John Linder in the House & Saxby Chambliss Senate, offer a comprehensive bill to kill all income and payroll taxes outright, and provide a IRS free replacement in the form of a pure consumption tax at retail level only:
H.R.25, S.1493
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
Exports would leave this country without tax embedded into price as they are today,
DO YOU PAY YOUR INCOME TAX
AT THE SUPERMARKET?
by D. Sherman Cox J.D. L.L.M. Taxation
The full impact of the federal tax system(taxes in gross wage/salaries & other compensation + business income/payroll taxes) added onto the base(taxfree) price of retail consumption goods and services is 36% for federal taxes alone.
Imports would be sold fully taxed, which they are not now.
The consequence?
Rep. Bill Archer, Chairman, House Ways and Means Committee:
- "A recent survey was done, in Europe and Japan, of the major corporations and I was astounded at the results. They were asked, 'If the US abolished its income tax and went to a sales tax, would that have any impact on your decisions?' Eighty percent of the corporations said they would build their factories in the United States of America. Twenty percent said they would move their international headquarters to the United States of America."
Unfortunately, it's too much to expect Congress to make such a giant leap all at once, especially when a large budget deficit makes it difficult to forego revenue in the name of longer-term gains.
Only true if one merely messes around the edges of the the current tax system.
Replace the tax system in it's entirety, repeal all income and payroll taxes and institute a single stage, single rate, retail only, visible sales tax.
Congress is already working its way to that end, a push from the public is all that is required to tip the balance.
The picture of support in Congress broadening each session. As of last November, there are 48 total House Critters that have publically committed to supporting H.R.25, and 42 that lean in favor of it over other tax reform measures. In the Senate, 2 committed, and 7 leaning in favor of the Senate version S.1493.
That's not even counting new folks out there running with the NRST as a part of their campaign and others coming on board all the time:
Dennis Umphress, libertarian (California 16th District)
Even Senator Richard Shelby (R-Ala), of flat tax fame, has gone so far as to state his preference to a national retail sale tax over the flat tax he has supported for many years.
'We know it's not perfect' (Shelby on the Stump in Alabama)
Shelby said he was in favor of a national sales tax, as long as the national income tax was also abolished. He said no income tax existed until 1913, when supporters said they would only tax the top 1 percent. However, he said tax brackets eventually got as high as 90 percent, which he said prompted former President Ronald Reagan to leave the Democratic Party. "If we didn't have an income tax and had a national sales tax, we could be a nation of savers," Shelby said. His preference for a sales tax is even greater than the flat tax he has promoted for years, although he said the bracket would be no greater than 19 percent. If Americans could pass referendums like they do constitutional amendments in Alabama, Shelby said voters would probably adopt either the sales tax or the flat tax.
ABSOLUTELY, and there is NO more effective reform proposal out here than H.R. 25, the FAIRTAX bill. If we truly want our manufacturing base back we should pass it immediately!
It truly is non-partisan. It truly would be a solution to so many of our worst problems...
And the best way to do that is to replace the income tax with a National Retail Sales Tax and abolish the IRS!
First, The best way to handle this problem is to cut government spending to such a small percentage that the tax percentage is irrelevant.
Why doesn't anyone here want to cut spending?
Have you tried it lately? The lack of incentive is a little problem:
Walter Williams, World Net Daily, 10-25-2000
So many Americans paying little or no federal taxes makes for a natural spending constituency. It's like me in the restaurant: What do I care about extravagance if you're footing the bill?
Right now the bottom 60% perceive little to no "Individual Income Tax" burden,(in many cases even a handout) and 70% of the voting public clamor for more from government looking for the top 40% of income earners/producers to foot the bill. That perception continues to grow ever stronger by eliminating even more participants from the Federal Individual Income Tax rolls as proposed in the tax reduction proposals through changes in personal exemption limits and other mechanisms such as the EITC.
Those who perceive little burden play the role of Poor little Paul:
| Effective Individual Federal Income Tax Rate (Percent of gross income) | |||||||||||
| Income Category | 1977 | 1979 | 1981 | 1983 | 1985 | 1987 | 1989 | 1991 | 1993 | 1995 | Projected 1999 |
| Lowest Quintile | -0.6 | -0.8 | -0.2 | -0.5 | -0.2 | -1.3 | -1.9 | -2.9 | -3.4 | -5.6 | -6.8 |
| Second Quintile | 3.6 | 3.9 | 4.6 | 3.5 | 3.9 | 3.2 | 3.3 | 2.7 | 1.8 | 1.8 | 0.9 |
| Middle Quintile | 7.1 | 7.5 | 8.3 | 6.8 | 6.8 | 6.1 | 6.5 | 6.3 | 5.9 | 6.1 | 5.4 |
Those that readily perceive some of the burden.
| Effective Individual Federal Income Tax Rate (Percent of gross income) | |||||||||||
| Income Category | 1977 | 1979 | 1981 | 1983 | 1985 | 1987 | 1989 | 1991 | 1993 | 1995 | Projected 1999 |
| Fourth Quintile | 9.7 | 10.4 | 11.3 | 9.5 | 9.3 | 8.7 | 8.9 | 8.7 | 8.5 | 8.7 | 8.4 |
| Highest Quintile | 15.8 | 16.3 | 17.1 | 14.5 | 14.3 | 15.1 | 15.1 | 14.8 | 15.5 | 16.2 | 16.1 |
Data from IRS collections statistics and The Bureau of Economic Analysis as compiled in tabular form by the Congressional Budget Office.
http://www.cbo.gov/showdoc.cfm?index=1545&from=4&sequence=0
To play the role of mean ole Rich Peter.
While Congress plays both ends against the middle; hiding the real burden in inflation, higher prices on all goods and services, lower takehome pay, lower return on investment, and higher interest rates. All keeping the poor right where they are and pushing for more freebees.
Right now the bottom 60% perceive little to no "Individual Income Tax" burden,(in many cases even a handout) and 70% of the voting public clamor for more from government looking for the top 40% of income earners/producers to foot the bill. That perception continues to grow ever stronger by eliminating even more participants from the Federal Individual Income Tax rolls as proposed in the tax reduction proposals through changes in personal exemption limits and other mechanisms such as the EITC.
Are taxes OK as long as they're "fair."
As long as they are collected to pay the bills,
Constitution for the United States of America:
- Article I Section 8: "The Congress shall have power to lay and collect taxes, duties, imposts and excises,
to pay the debts and provide for the common defense and general welfare of the United States;
and if properly imposed they make sure the electorate is fully aware of the cost of government.
To remove taxation of the individual, is to remove the goad which assures accountability of government to the electorate. Federal tax rates are high because a majority of the electorate do not share proportionately in the burden their demand for largesse imposes on the minority of citizens.
The siren call for representation without taxation is the formula that got us where we are at today. The ability to hide or disguise taxation from the view of large sectors of the electorate allows the Congress to get away with the creation of the evergrowing monster that it fosters.
Liberty and freedom have a price, responsibility. If that price is avoided there are no brakes on the growth of government, the ultimate result is the end of freedom through creeping socialism.
Second, we should eliminate corporate taxes as its the individuals that pay the real taxes anyway. Corporate taxes are just added into prices so they get the required "after tax" return. Who's kidding who?
So why should we have income or payroll taxes at all? Put taxes where they are most visible, and everyone must knowingly participate in them, a retail sales tax collected from the consumer fits the bill precisely.
If the electorate decides the cost is too much, they are encouraged to do something about it.
23%........... Effective total federal tax rate as percentage of consumption expenditure
14.91% ..... rate if Social Security and Medicare were eliminated
14% .......... rate if Nat'l Endowment for the Arts were eliminated
11.9%........ rate if Dept. of Education were eliminated
10% .......... rate if welfare were eliminated
9.8%.......... rate if foreign aid were eliminated
etc.
So lets look at what the maximum it would take to fund those functions clearly authorized under Article I Section 8 of the Constitution, in current dollars:
http://w3.access.gpo.gov/usbudget/fy2001/guide02.html#Spending
- $334 Billion --- Defense & Military related expenditure
- $ 31 Billion ---- Administration of Justice
- $ 16 Billion ---- General Government
- $199 Billion ---- Interest on the Debt
=========================
$580 Billion ---- Total
Institute an across the board, Flat rate, single stage National Retail Sales Tax, which taxes all imports and domestic products with the same rate.
Replacing present all current federal tax law with a retail sales tax would be 23% on new goods and services paid and receipted at the retail register. No hidden tax, no exceptions, exemptions everyone participates.
Such a tax acts in a natural manner to encourage the elimination of excess government functions through visibility of burden among all constituencies of the electorate.
The total federal government budget would move from $2,000 billions towards something less than $580 billions calculated.
The across the board federal tax rate on new goods and services would decline towards less than 6.7%.
As tax rate on sales decreases the economic burden on retail items, the sales volumes and growth in the economy would be tremendous allowing even further reductions in tax rates below that less than 6.7% theoretic level.
That is what I perceive as the ultimate achievements possible under a National Retail Sales Tax structured in the manner of the revenue bill H.R.25. Simple common sense applied to the principal of TANSTAFFEL,( no free lunch, everyone participates in paying there way in proportion to the benefit the extract from their consumption.) encourages the natural change in attitudes required of the electorate as regards the burden of government largess in their lives.
- It is fairer to tax people on what they extract from the economy, as roughly measured by their consumption, than to tax them on what they produce for the economy, as roughly measured by their income
Hmmmmmm....... It's do able, with time and effort, once the blinders are removed from the electorate.
The NRST is an excise tax, and excise taxes are specifically authorized in the first sentence of Article 1, Section 8 of the Constitution:
"The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, . . . ; but all duties, Imposts and Excises shall be uniform throughout the United States."
Is a national retail sales tax any more constitutional than the income tax?
You might want to read this old thread where the issue was covered quite thoroughly:
It's been on solid Constitutional ground from the first exise tax case the Supreme Court ever ruled on:
Basically that first landmark tax case was about Congress levying duties on personal carriages. Anyone who owned personal carriages, had to pay a tax on each one similar to vehicle license fees today, only national in scope. The carriages did not have to be even used in commerce, those merely for personal use paid the same as those for hire.
The idea of such a national tax having to be related to interstate commerce, or even commerce at all for that matter, was something that was not even a consideration.
Hylton v. United States(1796), 3 U.S. 171
"A general power is given to Congress, to lay and collect taxes, of every kind or nature, without any restraint, except only on exports; but two rules are prescribed for their government, namely, uniformity and apportionment: Three kinds of taxes, to wit, duties, imposts, and excises by the first rule, and capitation, or other direct taxes, by the second rule. " The power, in the eighth section of the first article, to lay and collect taxes, included a power to lay direct taxes, (whether capitation, or any other) and also duties, imposts, and excises; and every other species or kind of tax whatsoever, and called by any other name. "the present Constitution was particularly intended to affect individuals, and not states, except in particular cases specified: And this is the leading distinction between the articles of Confederation and the present Constitution." "Uniformity is an instant operation on individuals, without the intervention of assessments, or any regard to states,"
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