Free Republic

Incentives drive all economic behavior. Taxes are a negative incentive. People do not work, invest, or engage in entrepreneurial activities in order to pay taxes. They engage in such economic activities in order to earn after-tax income. When the government increases its share of the income earned by its citizens, the incentive to engage in growth-enhancing economic activities falls; alternatively, the disincentive to these activities rises. The higher the tax on the next dollar earned (the marginal tax rate) the larger the disincentive. However, without taxes the government cannot operate. From an economic efficiency perspective, the appropriate goal for tax...

... "Let's fix the system we have rather than shifting the tax burden to lower-income Americans." I've heard this argument before. It doesn't hold water. I believe that junking the current tax system – in its entirety – would create a modestly graduated tax system with a very broad base, consumption. By replacing both the income tax and the employment tax (among others) with a single sales tax, we would accomplish these good things: •Eliminate the fastest-growing and most regressive tax in our lifetime – the employment tax. •Massively broaden the tax base from only some income to all consumption....

As specified in Congressional bill H.R. 25/S. 25, the FairTax is a proposal to replace the federal personal income tax, corporate income tax, payroll (FICA) tax, capital gains, alternative minimum, self-employment, and estate and gifts taxes with a single-rate federal retail sales tax. The FairTax also provides a prebate to each household based on its demographic composition. The prebate is set to ensure that households pay no taxes net on spending up to the poverty level. Bill Gale (2005) and the President’s Advisory Panel on Federal Tax Reform (2005) suggest that the effective (tax inclusive) tax rate needed to implement...

Many of the proposals that are being brought before you have merit. But they have merit in the same sense that treating the symptoms of a serious disease rather than the underlying cause of the disease has merit. If we have no means of treating the underlying disease, then we treat the symptoms in the hope the disease will run its course and the patient will improve. If we have not yet accurately diagnosed the disease, then we alleviate the symptoms until the tests are completed and we can attack the underlying problem. On the other hand, if we understand...

The Senate Finance Committee recently began its tax reform effort in earnest, holding a hearing called "Kick-Off for Tax Reform: Tackling the Tax Code." It certainly needs tackling. The number of pages of federal tax rules exploded to 66,498 in 2006 from 26,300 in 1984, according to a Cato Institute study. Compliance costs with this mass of rules topped $265 billion in 2005, according to the Tax Foundation. While the hearing went mostly unnoticed, it marks the opening of a rare opportunity to enact fundamental tax reform. The chairman of the finance committee, Senator Grassley, set the tone by signaling...

Prepared Remarks of Mr. David Burton Americans for Fair Taxation My name is David Burton. I am a partner in the Argus Group, a small public policy firm based in Virginia. I have a particular interest in, and awareness of, the problems of small businesses for a number of reasons. I worked for many years in my family’s furniture and pool table manufacturing business stopping only once I was well into law school. I worked as the CFO and general counsel of a small 80 employee multinational manufacturing company. I also regard small businesses and farmers as the greatest source...

We are grateful for the opportunity to expose some of the inequities in the U.S. tax laws. When we began this project, we thought we would highlight a few, mostly wellknown inequities, such as the seemingly interminable inequity between the deductibility of health insurance premiums for the self-employed versus C Corporations. Unfortunately, our investigation uncovered much more. What we found were dozens of sections of the Internal Revenue Code which, on their face, disadvantage small firms. There is little doubt that this is just the surface of the problem. The root causes of these disparities are several.

To be sure, more than most other groups, the real estate industry has had success at the national level in preserving incentives in the federal tax laws for real estate. For commercial residential real estate, like-kind exchange rules have allowed transfers of commercial property without taxation. Some commercial real estate companies and managers benefit from the low income housing credit and tax-exempt bond financing. Despite these spoils of the annual tax battles, a tax system based on income seriously disadvantages commercial real estate. The disadvantages far outweigh any advantages under current law. There are, of course, the problems germane to...

When members of the real estate industry first hear of the specter of a national sales tax plan to replace the current income tax system, their initial reaction is often mixed. On one hand, they are excited about the prospects of no income tax on sales commissions. But they also wonder about the consequences of the home mortgage interest deduction (MID), the taxation of tax real estate, and the impact on real estate prices and sales. Fortunately, many economists and industry leaders believe that the sales tax plan is a win-win for members of the industry, actually making homeownership more...

I consider myself to be fairly liberal on most issues. So some of you might be surprised that I am about to take a position that’s usually the providence of hardcore conservatives. I support HR25—the Fair Tax Act of 2005. Yeah. The one that would replace virtually the entire tax system with a 23% sales tax. I read about it most recently in an unnecessarily hostile editorial by Matthew Holmes. Truth be told, his article did nothing to convince me that the tax is a good thing. But it convinced me to wade through the full text of the legislation,...

A couple of points: The GAO (Congress's auditing branch) found that all of the exemptions, exclusions, and special favors in the current tax code drain federal receipts by $728 billion each year. That is almost as much as the nation spends on Medicare and Social Security combined and 60% more than the nation spends on national defense. The FairTax eliminates all deductions, credits, and carve-outs to ensure that everyone pays his or her fair share. and: The Department of Commerce reports in its most recent Economic Census that just 688 retailers (0.03%) in the U.S. make 48.6% of all the...

Ron Deval - boomer, ecologist, humanist, peacenik, political agnostic and unapologetically Canadian - has a surprise for fans of all causes liberal. Reliably left on most issues, Deval is nonetheless passionate about a tax revolution whose growing army is populated largely by conservatives and libertarians. Describing himself as an "advocate of things that favor humanity," Deval is, in short, a Fair Tax maniac. Encouragingly, the Land O' Lakes man is not just another guy with an opinion and a couple of Web sites. He can navigate a spread sheet. After about 20 years designing programs that helped wealthy clients of...

A modest proposal: Let’s dump the entire tax code. Let’s gather all the tax documents we can find, put them in a big heap, and have a nationally televised Tax Code Burning Day. If the tax lobbies protest, toss them on the fire, too. Good riddance. Tax Code Burning Day is possibly a bit extreme, but the idea of chucking our income tax system has been around for quite a while. When I suggested 10 years ago that we were all suffering from TDB - Tax Debate Burnout - 5,000 readers agreed. They sent in letters and postcards in support...

Illegal Immigrants and Others Working Off the Books Cost the U.S. Hundreds of Billions of Dollars in Unpaid TaxesAmerica has two economies: First, there's the legitimate economy, in which craftsmen are licensed and employers and employees pay taxes. Then there's the fast-growing underground economy, where millions of nannies, construction workers, landscapers and others are paid off the books, their incomes largely untaxed. The best guess as to the size of the output of this shadow economy is about $970 billion, or nearly 9% that of the real economy. It could soon pass $1 trillion. What is largely fueling the underground...

"The exorbitant power of the prince, and the extreme depression of the people, require that there should not be even a possibility of the least mistake between them. The taxes ought to be so easy to collect, and so clearly settled, as to leave no opportunity for the collectors to increase or diminish them. A portion of the fruits of the earth, a capitation, a duty of so much per cent on merchandise, are the only taxes suitable to that government."

If there's one thing we know about here in Muleshoe, it's "fairness". Folks around here are pretty much about the fairest that you'll ever find (at least in far-West Texas). When Fred and Frieda got to chewing the fat with me down at the new Civic Center (it usta' be the feed store, but we've upgraded), they kept asking me "What's so fair about a tax on income?". Now that's a real toughie once you think about it and I tried to get an answer from several congressmen so I could really write an informed editorial about it. The more...

[Page: H9439] GPO's PDF --- The SPEAKER pro tempore. Pursuant to the order of the House of January 4, 2005, the gentleman from Georgia (Mr. Linder) is recognized during morning hour debates for 5 minutes. Mr. LINDER. Mr. Speaker, the President's tax commission has completed its work and sent its report to the Treasury Department. When this started 8 or 9 months ago, I said as often as I could that I wish you would not appoint a commission because the only thing that I have seen commissions do in my lifetime is raise taxes. Only on the rich, of...

FairTax Strikes Back - Introduction On April 8, 2003 I wrote my first article on the FairTax proposal. The article FairTax - Income Taxes vs. Sales Taxes detailed the costs and benefits of moving from a system of income taxes to a system of sales taxes. In the article I concluded that "[the]FairTax is an interesting proposal which is unlikely to ever be implemented." The response I received to this article was overwhelming. I've gotten hundreds and hundreds of e-mails on the article, every last one of them from a FairTax supporter. While many of the supporters had something negative...

GE Files 24,000-Page Tax Return WASHINGTON -- Taxpayers who gripe about long returns have nothing on General Electric Co., which filed a 24,000-page tax return this month. The Internal Revenue Service said the company "stepped up and embraced" the new requirement for companies with more than $50 million in assets to file electronically. If GE had sent paper forms, the return would have stacked up eight feet high ...

The IRS gives April 15 special meaning, but a bill pending in Congress could make it just another beautiful spring day. The Fair Tax Act would repeal all federal income taxes, payroll taxes and estate/gift taxes, replacing them with a sales tax effective January 1, 2007. The Fair Tax would be paid on all purchases within the United States of any new goods or services for final consumption. The tax would be 23 cents of each dollar spent. That rate is calculated to be "revenue neutral" on a static basis to assure it will raise the same amount of funds...