Posted on 02/01/2008 12:06:25 PM PST by Man50D
There has been much misunderstanding-deliberately promoted by income tax system defenders recently-about the effects of the FairTax on different income segments of the taxpaying public. Let's clear the air a bit.
The greatest benefits of tax reductions under the FairTax, according to respected economists, accrue to low income taxpayers (an average 14% reduction) then to the middle class taxpayers(an average 7% reduction) and then even to the wealthy (an average 5% reduction).
How can this be and still raise enough revenues to replace all taxes now collected under the income tax system? It's because the taxpayers base is dramatically broadened under a consumption tax by bringing in illegal immigrants, as consumers, and the $1.5 trillion annual underground economy. In addition, the very wealthy pay the full 23% rate on spending, which is an increase over the typical 15% capital gains tax now paid on dividends and stock gains when redeemed (Warren Buffet's recent complaint). In a nutshell, the more you spend under the FairTax, the more taxes you pay. Remember, too, that all the gimmicks that those with tax lobbyists and tax lawyers are able to exploit in the current 67,500 pages of income tax regulations also disappear (along with the role of tax lobbyists as there are no exemptions, loopholes or deductions).
The President's Advisory Panel on Tax Reform declared that taxes would go up on the middle class under a consumption tax when they ignored the definitions in the actual pending FairTax legislation and created their own flawed consumption tax. They quietly loaded it with exemptions they felt more "realistic", ignored the distributional effects of eliminating highly regressive FICA taxes (you know, the ones that represent the highest tax payments by low and moderate income taxpayers) and refused to examine the $22 million of FairTax research. They then declared a consumption tax (which many writers have wrongly assumed was the FairTax) as requiring a higher rate and punitive to the middle class.
The FairTax monthly prebate actually wipes out all federal taxes on the poor and a diminishing amount of taxes are reimbursed the further one is from the poverty line.
There is great resistance to the FairTax within the circles of those who profit from the complexities of the income tax code. Last year 53% of all lobby expenditures in Washington, DC were paid to tax lobbyists. It's big business that includes not only lobbyists and tax related think tanks and tax reforms groups (entirely devoted to tweaking the income tax code) but academicians who have built careers on understanding the arcane details of the code.
Add to that the center of resistance to a simple, transparent system without gimmicks-the Congressional tax writing committees themselves. In truth, Congressional Members from both parties are addicted to using the tax code to reward friends and contributors, punish opponents and inept attempts to manipulate citizen behavior through the code. In other words, our tax writing process is driven by all the wrong reasons.
This is the single biggest reason that our tax code is so complex that it costs taxpayers $265 billion a year just to complete tax returns. It is so complex that the IRS can't answer taxpayer questions right more than six of ten times. It is so complex, the IRS comes up $350 billion short of owed taxes every year (raising the average taxpayer bill by about $2,000 annually).
On the merits, the FairTax takes politics out of the tax code and the tax code out of business decisions. It is the politics that are tough because passage requires overcoming powerful institutional players. To this end, Mike Huckabee and a host of other candidates have joined 72 Congressional co-sponsors and a growing army of citizens who believe that the public can still drive public policy ( a novel idea first suggested by the Founding Fathers). Otherwise, we are stuck with a system that makes debt more favorable than wealth, puts the "Made in America" label at a severe competitive disadvantage and punishes labor and investment. It's a system driven by politics, power and profit instead of economics or fairness. It's a lucrative gig for those in Washington and a destructive torture for everyone else.
Instead of borrowing money from the Chinese to pay out rebates to American taxpayers (as welcome as they will be) maybe we should think about what happens to the American economy when we make the USA the most desirable "tax haven" in the world. We have lost at least $12 trillion in American capital to offshore locations in recent years. Economists who have studied the FairTax agree that this wealth and a lot more in foreign investment will rush to our shores once the FairTax is enacted.
As FairTaxers say, "Dare to Be Fair". The FairTax won't be perfect and the transition will require adjustments but compared to the badly broken income tax system that so bedevils taxpayers and damages our economy, it's well worth it.
The FairTax research-as well as a recent article on how the FairTax helps the middle class by brilliant Boston University economics chair, Larry Kotlikoff, can be found at FairTax.org
There is a lot of talk about the FT forcing illegals to pay taxes when they purchase items.Right, then after the Fairtax is passed all we would need is more illegals so we can lower the rate to 10%...Then 5%.
While I know (I should say believe) the illegals are a bigger drain through welfare, medicaid/care, etc.Would these be the same illegals you think would pay taxes after the Fairtax passed? I bet you think they wouldn't get a rebate check either.
By the way, Welcome to Free Republic.
Xcamel's "PROOF" for everything he posts.
No doubt about it. But which do we prefer? Illegals paying their fair share or illegals not paying their fair share and having a chance that they may be deported?
It is still illegal to be an illegal alien in this country. If we would only enforce the law then we wouldn't have to worry about the tax effect.
Speaking of New York and illegals in the same breath, are you surprised that New York would go that far? If you had told my father 50 years ago that half of what is legal (or ignored) now would be so he wouldn't have believed you.
You don't think that over 50% of lobbyists are there to garner tax favors?Why does it matter to you what I think? Does that include Fairtax lobbyists?
You're right, it isn't. Just ask the citizens of N. Korea. YOU asked what government policies brought us out of the dark ages.And you claim we're back. When did the discussion go off on the N. Korea tangent? I missed that one
In what way doesn't it work?
It is still illegal to be an illegal alien in this country. If we would only enforce the law then we wouldn't have to worry about the tax effect.Isn't that going against the (Fairtax) grain. According to the article that is the subject of this thread, the Fairtax bean counters are banking on the illegals for taxes to make the plan revenue neutral. It seems that without them the rate wouldn't be high enough
Don't take my word for it. Here are a couple of sentences from the Fairtax author of the piece posted on this thread."How can this be and still raise enough revenues to replace all taxes now collected under the income tax system? It's because the taxpayers base is dramatically broadened under a consumption tax by bringing in illegal immigrants, as consumers, and the $1.5 trillion annual underground economy...."
I didn't know illegals were used by the Fairtax economists in their calculations for revenue neutrality...and I read their papers.
BTW, I'm really walking on eggshells here so if I've offended you in any way be sure and "mash" the abuse button.
I don't. You answered my questions that I posted to another person. You butted in and now all you want to do is gripe about how I respond to you. Are you going to stick to the topic or are you going to tiptoe around it while disrupting? You were already spanked by the mods on this thread.
And you claim we're back. When did the discussion go off on the N. Korea tangent? I missed that one
Read back to post #62 which you responded to. I'm sure if you concentrate real hard it will come to you.
It taxes wealth creation instead of wealth consumption (spending). That doesn't work for those who need/want to create wealth because the same congress that turned the income tax into such a monstrosity has stolen the money American workers put aside for retirement.
Not only have they stolen everyone's retirement money they are preventing people from creating wealth by taxing the growth of capital.
Uncle Sam: "gimme some money to save for your retirement."
Man: "what happened to the money I gave you last week?"
Uncle Sam: "I spent it."
Man: "maybe I should put some of this money into the stock market."
Uncle Sam: "nah, too risky."
You must be. This is the most you have posted to me in two years. It's wunnerful to hear from you.
BTW, I don't usually mash abuse buttons but whoever did it last night or this AM I salute. You guys really do get out of hand at times. LOL.
As one poster put it: you guys seem to come on here and bash, trash and smash but never post any solution to any problem or any original ideas.
Oh and if I thought the FairTax depended upon illegal aliens to fund the government I wouldn't be cheering for it. Would you?
I’m not sure what kind of insult that is supposed to be but, unlike you, I will answer the question. No, it does not hurt to be me. I have good health, a healthy family, friends who, like me, tell the truth, admire others who do the same, and have nothing but utter contempt for those who don’t.
Now that we have taken care of your diversion from the issue, I will comment on your post #105:
“Who doesn’t like the FT”
The NTU
Heritage Foundation
CATO institute
FreedomWorks
The New Economist
All emerging democratic economies
The National Retail Federation
Just to name a couple
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
In 106 I asked you for links.
In 107 you very helpfully referred me to a blank Google search page.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
In post #117 I returned the courtesy as #107 deserved.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
As expected, you came back with the rude remark quoted above -- but you did finally come up with what I guess you call an answer to “Who doesn’t like the Fair Tax”, I -- by posting the following list of links:
http://www.heritage.org/Research/Taxes/bg1866.cfm
http://www.cato.org/pub_display.php?pub_id=8217
http://www.freedomworks.org/informed/key_template.php?issue_it=17
http://neweconomist.blogs.com/new_economist/flat_tax/index.html
http://www.allbusiness.com/retail-trade/food-stores/4485528-1.html
Countries with flat taxes: (recent)
Which gave quite a bit of information, almost all of which I already knew, about the Flat Tax idea -- but which contained a dearth of convincing information about “Who doesn’t like the Fair Tax” -- except The National Retail Federation’s lawyer who obviously knows more about protecting his lucrative job than he does about the Fair Tax proposal, and who gives no substantiation for his statements; a reference to Rich Lowry’s long since completely debunked misinformation masterpiece, -- and this, which can hardly be said to be anti-Fair Tax:
The difference between a flat tax and a national sales tax is where the tax is collected. A flat tax is levied on income—but only once and at one low rate—as it is earned. A sales tax is levied on income—but only once and at one low rate—as it is spent. Both the flat tax and the sales tax differ dramatically from the U.S. Internal Revenue Code. Pausing for a brief countdown until the "none of that says anything" comments.. Sorry to disappoint you. They all say a lot -- about the Flat Tax, but NOTHING to back up you twisted rants against the Fair Tax.
H.J.RES.16
Title: Proposing an amendment to the Constitution of the United States to repeal the sixteenth article of amendment.
Sponsor: Rep King, Steve [IA-5] (introduced 1/17/2007) Cosponsors (6)
Latest Major Action: 2/2/2007 Referred to House subcommittee. Status: Referred to the Subcommittee on the Constitution, Civil Rights, and Civil Liberties.
HjR 16 is not HR25 (aka unfairtax)
I am in favor of the Fair Tax plan but unfortunately because the huckster has adopted it we may never see any reform.
Sorry, I didn’t have time yesterday to expound on the repeal of the 16th Amendment.
I’ve been an advocate of fundamental tax reform for well over a decade. Probably 15 years ago there was a bill floated in the House to sunset the Internal Revenue Code as of a date certain. I implored my representative to support it, he responded by saying that it was irresponsible to repeal the existing tax collection system before we had a replacement in place. Distasteful as that is, there is some truth to that.
The different paths that a constitutional amendment and a statute must take make it impossible to link the passage of the Fair Tax to the repeal of the 16th. The best that we can hope for is to repeal the Internal Revenue Code, defund the agency and require the destruction of the records. During the period that the 16th Amendment lies dormant, we will have to by hypervigilant, as we were with the shamnesty bill. After we pass the Fair Tax and deconstruct the IRS, we will turn our attention to the repeal of the 16th Amendment.
While it would be my preference to repeal it before implementing the Fair Tax, I do not believe it is possible to link one with the other. I’m willing to take the chance and fight for the repeal of the 16th Amendment to free my children and grandchildren from the slavery of the income tax.
BTW, How long did it take for your buddies to formulate that response for you? I looks an awful lot like some FT/TP freepmailed it to you for posting
And your post is demonstrably incorrect with respect to HR 25. From thomas.loc.gov:
H.R.25
Title: To promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national sales tax to be administered primarily by the States.
Sponsor: Rep Linder, John [GA-7] (introduced 1/4/2007) Cosponsors (68)
Related Bills: S.1025
Latest Major Action: 1/4/2007 Referred to House committee. Status: Referred to the House Committee on Ways and Means.
As you can see, the Bill has been referred to the House Ways and Means Committee and 15% of 435 is 65. With 68 co-sponsors, The FAIR TAX has MORE than 15% support in the House.
I forget, only supporters can post gross generalities, and talk about their plan like it was already the law.
what was I thinking.
LOVE YOUR TAGLINE!!!!
If memory serves, Dr. Alan Keyes called the income tax a “slave tax.”
I operate under no illusion that the drug dealer or prostitute will collect tax. But when they take the profits of their ill-gotten gain to Wal-mart, it will be taxed.
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