Posted on 08/24/2005 8:27:44 PM PDT by Man50D
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John Linder in the House(HR25) & Saxby Chambliss Senate(S25) offer a comprehensive bill to kill all income and SS/Medicare payroll taxes outright and replace them with with a national retail sales tax administered by the states.
H.R.25,S.25
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.Refer for additional information:
Is there a country anywhere that has a similar system (Fair Tax) and if so, does it work?
State of Texas is bigger than most countries, and has a retail sales tax system with no income or payroll taxes. Works fine there and their Comptroller's office perceives no substantive problems in taking on administration of the national retail sales tax implemented by the FairTax legislation in parallel with their own systems.
House Ways & Means archives 106th Congress: Statement of Billy Hamilton, Deputy Comptroller,
Office of the Texas Comptroller of Public Accounts,
on behalf of Honorable Carole Keeton Rylander,
Texas State Comptroller of Public AccountsTestimony Before the House Committee on Ways and Means
Hearing on Fundamental Tax Reform
April 11, 2000
My name is Billy Hamilton, and I am the Deputy Comptroller for the State of Texas. Carole Keeton Rylander, the Texas Comptroller of Public Accounts, was delighted to receive an invitation to testify before this committee regarding the Fundamental Tax Reform measures under consideration today. Unfortunately, Comptroller Rylander's schedule did not permit her attendance, and she has asked me to testify here on her behalf.
My comments today are directed only to the feasibility of state administration of the Fair Tax proposed by H.R. 2525. I do not intend to comment on the economics or any other aspects of the proposal.
The Texas Comptroller's office has administered a sales and use tax since the 1960's, and I have been involved with administration of the tax since 1982. Last year, the Texas Comptroller collected $13 billion in sales tax revenue from more than 600,000 businesses. I offer my own experience with sales tax administration, as well as the size of Texas' sales tax program, as the basis of my qualification to speak to you about the administerability of H.R. 2525.
As you know, H.R. 2525 would permit states to collect and administer the Fair Tax on behalf of the federal government. In my opinion, Texas would be well-equipped to administer the Fair Tax based on our experience in administering our own sales tax. Even though the base, rate and other characteristics of the Fair Tax are significantly different from the Texas sales tax, it would be feasible for our office to collect the Fair Tax by expanding and enhancing the systems we currently have in place. For example, we would:
· Expand our current system for registering Texas retailers to include registration of sellers under the Fair Tax (615,000 businesses are currently registered as sellers in Texas; under the Fair Tax, 1.5 million Texas businesses would have to be registered);
· Expand our taxpayer assistance efforts to respond to a larger volume of telephone, letter and e-mail inquiries from sellers who collect the Fair Tax and individuals who pay it;
· Expand our Revenue Processing Division to process more returns and tax payments on a more frequent basis and to remit tax collections to the federal government on an almost-daily basis;
· Expand our current audit team and train all auditors to examine businesses for both the Fair Tax and the Texas sales tax; and
· Expand our information technology systems to collect and maintain the computerized records critical to effective administration of a consumption tax like the Fair Tax.
The expansion of our systems to administer the Fair Tax, in the manner I've just described, would be sizable. Under the Fair Tax, we would serve approximately 900,000 more filers than we do currently. We estimate that serving that many additional taxpayers would require 1,100 to 1,600 more full-time employees. The Texas Comptroller currently employs about 2,700 people on a full-time basis.
In spite of this large expansion, the compensation for collecting the Fair Tax that would be provided to states under H.R. 2525 would likely cover our projected costs. As a first approximation, we estimate that the cost to the Texas Comptroller's office for collecting the Fair Tax at full implementation would be $100 to $150 million per year. I emphasize, however, that there would be significant costs to begin collection, including the cost of facilities to house the additional processing facilities, the capital costs of information technology and revenue processing equipment, and the costs of notifying, registering and educating taxpayers on the new tax.
In closing, I believe that if the Fair Tax is to become a reality, the U.S. government would be well-served to make use of the existing expertise of the states. Many states have administered consumption taxes since the 1930s and have developed particular capabilities in this area. We also have extensive experience in dealing with the affected businesses. As long as the administrative fee paid to the state is adequate in relation to the costs of collection, I see no reason that the State of Texas could not effectively administer the Fair Tax.
Aren't the countries that have Flat Taxes doing well?
Well relative to what? Relative to the U.S. most are rather depressed for numerous reasons, not to mention that all of them that I know of have VATs as well.
Please note the AMT and medicare taxes are flat taxes. It's what goes in addition and the fact they are income taxes with all the problems inherent to an income taxes that's messes up a Flat Tax.
A point to keep in mind, the first income tax in this nation was a flat tax, didn't stay flat for even one session of Congress before it started growing worts.
If I buy a widget at Circus City and use the widget to make a do-dad that I sell at retail, do I pay the tax on the widget ?
No, purchases for business use are exempt from the FairTax. Only sales for final consumption are subject to the retail sales tax under the legislation.
If so, isn't this just a modified VAT ?
Since business purchases are not taxed in the NRST, it is not even a turnover tax such as the system the VAT modified by introducing tax credits to business for the purchases of products and services for use in business.
I am very wary of the "Fair Tax"
That's good to be wary of retail sales taxes is good and keeps government in check, that is why the national retail sales tax implemented under the FairTax legislation is a good thing to have in comparison to the current income/payroll tax system we now live under.
and the giant new agency that would have to distribute the rebates.
The Social Security Administration distributes the sales tax rebates which are a fixed amount for each legal citizen equivalent to the taxes paid on HHS povertylevel expenditure.
Countries with flat tax are doing great and generally running surpluses.
Is a government that has a taxsystem that is so strong as to be able to run perpetual surpluses good for an economy or for growing more government?
I know of now country with a flat tax that does not also implement a credit/voucher VAT right along with it.
You might want to think that one over abit and find out why.
That means they didn't read it, didn't look at it's background and didn't check out the related organization or it's volunteers.
That means it's a hit job and will continue to be such.
I checked out the website, too, and I agree with you. However, as any good salesman will tell you, each objection you overcome gets you closer to a sale. These hit jobs in a forum format give us a wonderful opportunity to present our side and get closer to the sale.
If the White House is really serious about the No Child Left Behind Act, the Fair Tax will have to happen. As long as 93% of the school revenues are based on property taxes in some localities, we know which children will continue to get left behind.
Nonetheless, for small-scale or hobby-type businesses, wholesale isn't always an option. In such a case, you would be allowed to receive a credit for taxes paid on inputs (such as the "widget" in question) to your business.
There is no Lidner, at least not involved with the fair tax. The dude's name is LINDER; he's a congressman from somewhere; I don't know which State.
The answer to your first question is no. No tax on a purchase by a business for further resale. Tax applies only to new goods and services for final consumption.
The typo is in the headline of the original (linked) article, however.
ping
thought you might be interested.
FairTax will encourage investor money back from the Cayman Islands, and other offshore tax shelters.
ping:
"After well over a month, Neil Boortz and Representative John Linder’s The Fair Tax Book still resides in the top 10 on Amazon.com’s best-seller list."
http://www.fairtax.org/
- It's an excellant book, well worth reading,. Until people read about the FairTax, most reject it. Once explained; most become *sold* on it.
It is such an excellant way of providing govt. revenue without being punitive to anyone.
This tax system would bring trillions of investment back into this country...we would be the tax haven...for the world!
Have you read this book yet? It alleviated any concerns I had about the FairTax.
Regards
...and who is Chris Fonzone and the Warren Report?? What interests do they represent?
Wasn't Fonzone the guy who lived in the Cunninghams' garage apartment?
This is merely another hitpiece. Must be a liberal website. You'd think they'd realize the FairTax helps low income folks (those that libs like to think they represent).
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