Posted on 07/20/2005 12:51:23 PM PDT by Your Nightmare
Members of President Bush's advisory panel on tax reform largely agree that the individual alternative minimum tax, or AMT, should be fully repealed the committee's chairman said Wednesday.
"I think the obvious consensus was on the AMT on the individual side. We didn't end up with a consensus on the corporate side, even though I think it's fair to say that I think all panel members felt the corporate AMT was really not an effective way to tax," Chairman Connie Mack, a former Republican senator from Florida, told reporters after a public meeting of the committee.
The AMT is a parallel tax system created in 1969; it was enacted after it was revealed that a handful of extremely wealthy Americans paid no income tax. But thresholds for the AMT were never indexed for inflation. As a result, it has encompassed or threatened a growing number of middle-income taxpayers over the years. Lawmakers and administrations have responded by temporarily pushing up the threshold, but have yet to come up with a complete fix.
It's also become a substantial revenue source. Full repeal would reduce revenues by more than a trillion dollars over 10 years.
During the panel discussion, committee member Bill Frenzel said he agreed that it was time to "bite the bullet" and press for full repeal, but warned that doing so will put a "huge burden" on the panel to find a way to make up the lost revenues.
The panel's vice chairman, former Democratic Sen. John Breaux, said that while he's not a fan of the AMT, the panel must examine whether the full repeal of the system would allow some of the nation's highest earners to get away with paying no tax at all.
Mack replied that if that were the case, the committee would have to make adjustments in order to maintain roughly the same tax burden on the upper quintile of earners that is now in place.
The panel members agreed that changes to the corporate AMT would best be tackled as part of a broad corporate tax reform, Mack noted.
The committee, formally known as the President's Advisory Panel on Federal Tax Reform, must present the Treasury Department with a set of tax-reform proposals in September.
Bush has set a number of ground rules for the panel, however. The proposals must be revenue-neutral. Also, future tax measures can't touch the code's most sacred cows -- mortgage interest deduction and charitable giving.
But you didn't say she was a Catholic. You said she was a Scientologist, in a derogatory statement to discredit her. If there's nothing wrong with it, would you like me to try to contact her and point her to your derogatory post?
The flat tax would be my second choice. Except I am still concerned that in 10 years it wouldn't be "flat" anymore.
What false accusations would those be?
You didn't know that? Yes, in some cases. I'm sure every business is different. I worked in a retail store many years ago and on some products the MSRP was 200% of product cost and on some it was 300% of product cost. We then adjusted the MSRP down a little to beat the competition.
It doesn't necessarily have to be a specific percentage markup, but in a lot of cases it is. It could be a certain dollar amount. Or the business owner could just pull a number out of thin air without any analysis whatsoever. I'm sure that is the method a lot of people use.
Does he know for a fact that the director of research at AFFT is a Scientologist?The Director of Research for the AFT is Karen Walby, Phd. and there is a Karen Walby, PhD personal website on the Scientology Online website.
We then adjusted the MSRP down a little to beat the competition.In other words, you adjusted to the market price.
It's funny. She has groups she belongs to listed on her website and links to a bunch of other groups. Nowhere on her Scientology site does she list that she is research director for Americans For Fair Taxation. At any rate, maybe we'll know soon because I emailed her and asked her if she was the same person.
I don't doubt prices are set this way. The market does set the prices, to a certain extent, but everybody in the market has the same tax problems to deal with. Did you ever think of that!
You just don't get it, do you? It's not just 7.65% of MY wages. It's 7.65% of everybody's wages in the supply chain for the product,Which still equals 7.65% of all wages subject to the tax.
MARKED UP to make a profit.So? What do you have against profit?
What makes you think eliminating the 7.65% payroll tax won't become 7.65% profit on your wage? (what happened to the 100% paycheck promise?)
If competition doesn't have any affect on profiting on wages now, what makes you think competition would be any different later?
The 100% paycheck promise is still there, thank you very much. The employer's portion is what I'm talking about. If payroll taxes are done away with, the employer has three choices.
1. Give the employees a raise.
2. Keep the 7.65% as additional profit.
3. Reduce prices.
That's the beauty of the Fair Tax. It gives you choices.
Now, the employer may decide to take option #2 above, but if all his competition decides to take #3, eventually he'll have to do #3, also.
In my own business, I'm sure we will take option #2, because we have no customers (we make oil and gas investments). Our prices are definitely set by the market and we have absolutely no control over the price.
I'm not sure what you mean by "profiting on wages". I'm not familiar with that term.
http://www.fairtaxvolunteer.org/smart/tax_system.html
http://www.jpfo.org/AFTdialog.htm
http://www.jpfo.org/AFTdialog.htm
http://www.fairtaxvolunteer.org/smart/tax_system.html
Thanks again.
I was so thankful I posted it twice. LOL
Yes, we adjusted to the market, but we also made sure that the price would cover our labor and overhead, which included taxes.In a competitive market, the market sets the price. What a business's costs are are irrelevant to the market price. Otherwise no business would ever lose money. A business can attempt to adjust their costs to try and make a profit if they aren't profitable or to make more profit if they are.
1. Give the employees a raise. 2. Keep the 7.65% as additional profit. 3. Reduce prices.Think about things in "real" terms. Your employees would be paying the FairTax on their purchases. If you don't give your employees a raise, their real wage is actually going down. If your competitor does raise wages, your good employees may leave your company for their's.
I think the car situation is temporary, especially the way the economy is coming back with a bang. The bottom line is, those cars have a window sticker on them. I'm sure a lot of analysis and thought went into the prices put on those stickers, INCLUDING their costs.
By the way, did you notice how Ford had to follow suit when GM did their "employee discount" marketing gimmick? THAT shows you how much competition plays a role, and is a very good indicator how prices can fall after enactment of the Fair Tax Act.
They are all cutting prices and they are all losing significant moneyI guess the automakers didn't read the matter of fact Fairtax guide book on gaining market share by lowering your prices.
An item is sold when a seller is willing to sell at a price which a buyer is willing to pay.
If a buyer cannot cover his costs as a rule, he will not be willing to sell at such a price. Costs include payroll, utililities, office supplies, and tax costs, among other things.
Saying tax costs don't affect pricing is like saying payroll doesn't affect prices. Absurd.
"It's a consumption tax."
Sorry, Nightie, it only PRETENDS to be a consumption tax. It is in no way a consumption tax in the sense of the FairTax which taxes consumption as a base while the flat tax taxes income as a base. Modifying an income tax to try to disguise it as a consumption is not realistic and accomplishes little since what we now have started as a flat tax and is now anything but.
Why would anyone believe that reverting to any sort of "flat tax" is going to cause it to stay that way. In addition, none of the income-based taxes - including the flat taxes and your Nightmare Flat - even begin to tax the underground economy or help lower prices on US exports.
"By removing the current system's bias against savings, it would lead to significant economic growth."
And you're the guy who's always harping on the detailed economic data on the FairTax website as some sort of fantasy. You merely throw out a general feel-good statement with nothing at all in the way of economic date to back it up ... and we're still talking about a plan that doesn't exist. Talk about fantasy!! It will leave components of income tax embedded in prices just like any other income tax - hardly a formula for "removing a bias against savings" since it helps things cost more thereby reducing savings.
"It's the most economically neutral (fewest distortions) plan proposed. "
By no means, since it is subject to the continual tinkering by Congress that we have seen with the present tax system and can easily be "hacked up" again to serve certain interests and "adjust" income tax rates to help some but not others just as with the present system. With the FairTax, there is only a single rate and it affects all taxpayers the same way. It (the flat tax) also leaves in place many of the distortions of the present system with respect to not taxing the underground economy and helping raise the prices of our export goods. Are you trying to claim that - since these things now exist - that they are "economically neutral" because they are there now??? In no way are those "neutral" despite your claims.
"It's simple. One basic form and you're done."
Nonsense. The present system started with "one basic form" with simple instructions as you can see here by cut-and-paste of this link into your browser:
http://www.salestax.org/library/1913form1040.html
In fact most people realize that even your "one simple form" is far more (even to start with) than is required with the FairTax - which requires NO forms and NO reporting of income to the government (or anyone else).
"It removes the economically distorting deductions (subsidies) of the current system."
Well that's certainly a bit problematic since you're not talking about any of the real proposed flat taxes before Congress but your own theoretical Nightmare Flat. One can't tell what it does (if anything at all) since you're free to make any claim unconstrained by reality. Hard to discuss something that doesn't exist, eh?? Certainly the FairTax eliminates Many of these distortions - if not all of them.
"It's unobtrusive, requiring no more personal information be submitted than the FairTax."
As we saw just above, that's not true at all in that it DOES require more information that the FairTax which requires no personal information at all. Talk about your Nightmare fantasy!!!
"The transition would be "shock"-free. It doesn't require an adjustment of wages or prices like a NRST. "
Shock free ... hardly since the changes involved with any flat tax are going to disrupt some good-sized seqment of the taxpaying public. It WOULD be "shock-free" though to the underground economy which would not be affected at all. Other than that there would be many shocks throughout the system as the tax burden is shuffled from what it now is onto others. And this burden-shifting would not be such that each taxpayers pays the same tax rate as is the case with the FairTax. "Shock-free"??? Not at all nor does the FairTax REQUIRE price or wage changes but these will most probably occur in a direction beneficial to almost all taxpayers - quite diffeent than the selective burden shifting of any change in income tax.
"It's difficult to evade or avoid."
On your Granny's beard, my man ... and that is amply shown by the statistics of the IRS itself which showthat an amount equal to 20% of tax receipts are never made available to the government as taxes due to non-compliance - and that is not even counting tax evasion or illegal income from sources such as the underground economy. Good joke, though, Nightie!
"It doesn't double tax existing wealth like a sales tax. "
Again - that's hard to say since you're not talking about a real flat tax plan but rather your own theoretical notion of one. However, existing wealth has already been taxed by the income tax or will be taxed when withdrawn from savings. It will also be taxed a second time when spent by the inflated prices occasioned by the tax costs embedded in prices. Once the FairTax is in effect, there is only a single taxing - when (and if) wealth is used for taxable consumption.
"It eliminates any marriage penalties. "
Once again, where does it say that in any existing flat tax bill??? Since we can't read your Nightmare Flat provisions, you can - and do - make any outlandish claim you like. I'd point out that there is no marriage penalty in the FairTax right from the start.
"The rate doesn't change every year like the FairTax and, unlike the FairTax, a rate change would require a vote from Congress."
More nonsense - and a misstatement of fact. The FairTax rate doesn't change every year also. The general tax rate (it's basic rate) remains the same. The only change is for the revenue to provide for S/S and M/C which are governed by laws other than the FairTax. These sorts of changes could also go down as well as up since the FairTax will probably generate more revenue than at present so that a smaller percentage to fund these non-FairTax entitlements would be required ... thereby dropping the tax rate.
"It's appropriately progressive using simple standard deductions which don't require a complex system to implement (like the FairTax's FCA). "
There's nothing complex about transferring money electronically to taxpayers' bank accounts (a refreshing change from the technique required now) or even sending them a check. The "progressive" deductions are in no way that (and offer an ultra-tempting target to the K-Street crowd and the pols themselves). There is MUCH complexity (and great expense) in policing, filing, handling, and checking all those "simple standard deductions" when they are not needed under the FairTax at all. And in fact, your choice of the term "appropriately" is worrisome since who is to decide that (or what is "income", etc.)??? That's part of the horror with the present system, isn't it now, Nightie???
"There are no negative tax rates like the current system and the FairTax. It's possible to pay no tax, but it's impossible to profit from negative taxes."
"Profit"??? Hardly. Those on the negative tax rate end of things are certainly not "profiting" - they are being kept from financial ruin by ameliorating the impact of taxes
"It's been implemented successfully in the real world."
Where is the flat tax presently in operation as the only tax system for a government with no other types of taxation? Has this given rise to lowered prices for the citizens or lowered export prices for exporters?? How have these countries (since there must be many) managed to tax the underground economy with this form of income taxation???
"I could go on."
By all means please do by using a REAL flat tax plan while you're at it and not some theoretical monstrosity such as your Nightmare Flat - which doesn't even exist. the FairTax is obvious the better tax plan and that's probably why the Panel will recommend it, don't you think??
By the way, did you notice how Ford had to follow suit when GM did their "employee discount" marketing gimmick? THAT shows you how much competition plays a role, and is a very good indicator how prices can fall after enactment of the Fair Tax Act.GM is a $200 billion company, large enough to affect the market. The vast majority of companies don't have this weight in the market.
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