At What Price?

Forbes.com ^ | April 30, 2009 | Steve Forbes

[Scanian]

On Tax Day, Apr. 15, President Obama declared his belief in simplifying the tax code. His Economic Recovery Advisory Board, chaired by Paul Volcker, has been tasked with presenting recommendations by Dec. 4.

Is the flat tax coming? No. Simpler code? Yes. Lower tax rates (plural)? Yes. The catch: The improved income tax code will come with a European-style value-added tax. Choke!

Politicians love the VAT. First, because the levy applies to every transaction phase and includes services as well as products, it is difficult to avoid. It's no surprise, therefore, that the VAT was invented by the French. Second, consumers don't see it. By the time a product hits the shelf, the VAT is embedded in the retail price, unlike a sales tax, which is added at the checkout counter. Thus, in Europe, a $50 item actually includes upward of $10 in value-added taxes. The White House figures this will be a revenue bonanza that will finance not only the socialized health care system it wants to impose on us but also President Obama's second-term (if he's reelected, of course) big initiative: providing free college to everyone.

[wastoute]

Zero and his minions are idiots (or downright evil). One could hardly imagine a surer way to throw molasses in the gears of the economy than to tax everything under the sun.

[Gorzaloon]

Politicians love the VAT. First, because the levy applies to every transaction phase and includes services as well as products, it is difficult to avoid.

I want to make and sell an eightpenny common nail.

Mine limestone.

VAT

Mine Iron Ore

VAT

Mine coal

VAT

Smelt Iron

VAT

Convert to steel

VAT

Cast blank

VAT

Draw wire

VAT

Spool and ship

VAT

Cut and upset head.

VAT

Package and wholesale

VAT

Sell to consumer

VAT

Of course politicians love it. Every step under control, and taxed.

[DB]

It is about time for a good old fashion revolution.

[napscoordinator]

I will take the VAT if they do away with Federal Income Taxes. Over here where I am stationed in Italy, we are hit with the VAT anytime we buy anything, but I still have to pay Federal Income Taxes. If the U.S. would bring the VAT and do away with the income tax that would be Paradise.

[Mr. K]

I hate the ‘Fair Tax’ or any VAT (go to Canada and ask them how they like adding almost 30% at the cash register)

I would love to see a FLAT INCOME TAX - 10% across the board for every person.

One-line tax code. No exemptions - no nothing. No ‘pre-bate’ for anyone earnign less than X amount- period.

And a constitutional ammendment that the budget MUS BE BALANCED excet in time of war or national emergency (and I am hesitant to add the last one)

The would eliminate the poitics in the tax code

Yes I know I am dreaming

[Hostage]

Nope; never works, never has worked.

FIVE major tax reforms since 1913 when the Income tax without apportionment was amended to the Constitution.

EACH of these five major reforms made the tax code flatter and simpler. AND the original 14 page tax code in 1913 was a flat tax.

AFTER every major tax reform the tax code gets amended to a monster because the 16th is a DE FACTO BUSINESS LICENSE for tax lobbying firms to write the tax code in concert with their surrogates in Congress and the IRS, to write the code in any way they want.

The last major tax reform was in 1986 under Ronaldus Maximus. Since then, the number of Beltway tax lobbysists has more than quadrupled and the number of tax code amendments is more than 17,000.

NOW understand that your ranting about 10% this and one-line that is a REPEAT of past American voices from previous generations. What you are saying is not new at all, BUT IT NEVER WORKS, IT ALWAYS FAILS!

Why?

Because the US Tax Code under the 16th Amendment is a cancer. Cut it out, burn it up and eventually it will come back with a vengeance. Within 10 years or sooner your ‘Flat Tax’ cancer will be in full blown metastasis. BECAUSE THE 16TH IS THE ROOT OF THE CANCER.

Many tax lobbyists will cheer you on with your flat tax rant because they know that corporations and wealthy individuals will show up in droves in their lobbies to get relief or favors. Your flat tax is their new business opportunity, a chance to sell more tax amendments.

NOW HEAR THIS! The FairTax (no space between r and T) IS NOT A VAT!!!!

Read the above again and again and again.

The FairTax is legislation (H.R. 25 and S. 25) that includes enforcement, a progressive rebate, a National RETAIL Sales Tax (NRST), collection authorities, eligibilities, jurisdiction and so forth.

Under the FairTax, business to business (B2B) transactions are NEVER taxed by the federal government. What is taxed is RETAIL using the NRST rate, meaning products and services to the END-USERS.

All of the present federal taxes that are levied on all supply and production chains will be abolished, they will be REPLACED at the end of those chains by RETAIL TAXES.

The above paragraph means costs will fall for B2B activity but prices will not fall for consumers because the NRST is added in at the end of the chains, the retail level.

AGAIN THE FAIRTAX ***REPLACES***

REPEAT ***REPLACES***

replaces all federal taxation by moving taxation to the end-user transactions.

Now there is a lot more, much much more but you will need to study (http://www.fairtax.org).

The FLAT TAX has less than a smidgeon of support in Congress. The FairTax is the largest supported tax reform in Congress today and is larger in support than existed for Ronald Reagan’s 1986 tax reform.

There is really only ONE flaw in the FairTax, IT DOES NOT AMEND THE CONSTITUTION TO REPEAL THE CANCER, THE 16TH!

As to the previous sentence, the leaders of the FairTax are aware they need to repeal the 16th and they are working on a ‘trigger’ mechanism to get it done.

BECAUSE AS LONG AS THE 16TH IS LEFT IN PLACE, WE WILL HAVE THE TAX CANCER BACK WITHIN A DECADE.

AND GET THIS FINAL POINT:

The ‘Flat Tax’ is an INCOME tax without apportionment, it cannot exist without the 16th in place, understand?

But the FairTax CAN EXIST WITHOUT THE 16th! Understand?

There’s much much more. Read and study the link above.

And thanks for having interest in tax reform. You are not alone with getting caught up in the ‘Flat Tax’ diversion. Before I became a tax wise guy, I was in favor of the ‘Flat Tax’. And Governor Mike Huckabee was also a flat taxer until someone sat him down and smartened him up.

The Flat Tax is seductive to those that don’t understand the real enemy, the 16th!

And one more point. The FairTax NRST starts at a rate that will keep federal spending at its present level, why?

Because if it tried to cut spending it would get bogged down in fights over spending and never get passed. BUT...

BUT each and every year the NRST rate gets adjusted by Congress voting on what it shall be. Than means every Congress member will have the blaring light of the transparent FairTax shining down on them and their vote to increase or decrease will be in the news for everyone to see. NO MORE SMOKE AND MIRRORS! That means our Congress members can begin to make real cuts in the out-of-control federal spending. But under a Flat Tax tax increases can be hidden in back door amendments that are favors to political special interests. In other words again, the 16th allows the cancer to grow quietly back and spread all over.