Replace the Income Tax

self ^ | Oct 26th 2010 | Taxcontrol

[taxcontrol]

I would like to start a discussion about tax systems and propose an alternative to the current tax system. But before I go into the proposal, allow me to state that the current mess we are in is NOT a result of the tax system or the amount of tax we collect. Rather the problem is spending but this thread is not designed to address that issue.

Proposal-

Ammend the Constitution to abolish the income tax and authorize Congress to raise monies by one of the following:

Useage fees - such as entrance fees for national parks

Inport taxes

Export taxes

Representative apportionment - A system where a dollar amount is assigned to a per Senate seat and Per congressional district and the cost is passed to each State. The state is then allowed to use their own tax authority to collect from it's citizens the monies to pay their federal obligation.

Congress will each year during the passage of the budget be required to identify how much the total amount of taxes to be collected in that year. If that amount is less than the total expendature, the difference will have to be borrowed.

The formula on a per million dollar basis would be, 1 million / 2 to split the amount between the to houses. The 500,000 for the Senate seats would then be divided by 100 to give an amount of 5,000 per senate seat.

The 500,000 for the house portion would then be divided by 435 to obtain a per house seat of about 1,150 per seat.

So lets assume a state has 7 congressional districts and each state has 2 Senators. So for that state, their per $1 Million in tax revenue would be: 2 x (5,000) + 7 x (1,150) = 18,050

Thus, if Congress wanted to raise 750 Billion it taxes, the tax bill for that state would be 750,000 times 18,050 or 13,537,500,000 (1,128,125,000 monthly)

The reason I mention monthly is the enforcement mechanism. Namely, that I State that has not paid to the treasury the full amount due in the month prior to the 1st of the next month, would not be current. Any state not current for a period of more than 45 days, would automaticly halt the payments of salaries to their Congressional Delegation. Any State not current for a period of more than 90 days would automaticly halt the payment of salaries to their State Legislator. Any State not current for a period of more than 135 days would lose the ability to vote on any commitee by their congressional delegation. Any State not current for a perior of mor than 175 days would lose their floor votes as well.

This would allow the federal government to abolish the income tax, medicare, social security, and even the IRS. It would further allow states to raise money as they best see fit. If a state wanted to tax income, they could, if they wanted a flat tax, or the fair tax, that could be implemented as well. Some states may even opt for mining/minerals taxes or others may want to go with some other tax means.

[taxcontrol]

What say you?

[al baby]

I never send money to the Inland Revenue service I live on the coast

[sten]

new tax structures have been proposed.. but will never be enacted, as those that would make the call benefit from the existing structure far too much.

[The Comedian]

The only way that Karl Marx's graduated income tax will be abandoned by the plantation masters who wield it over us is for us to burn the plantation's treasury to the ground on our way to tarring and feathering the masters themselves.

And then the punishment will begin.

Frowning takes 68 muscles.
Smiling takes 6.
Pulling this trigger takes 2.
I'm lazy.

[mandaladon]

I find your ideas very interesting, but I will analyze them carefully in order to make a more educated decision. I think this discussion should be ongoing. I’m not an economist but it would be nice to have as many people with a background on economics to participate.

[Huck]

Representative apportionment - A system where a dollar amount is assigned to a per Senate seat and Per congressional district and the cost is passed to each State. The state is then allowed to use their own tax authority to collect from it's citizens the monies to pay their federal obligation.

This is the best option.

[Leftism is Mentally Deranged]

Sure but it will never happen. The IRS is one big gigantic welfare service - giving jobs to people who are guaranteed to vote democrat.

[Darth Reardon]

Absolutely. Even if this change made no difference whatsoever in the total amount collected by state and fed, it would still look to the state like the fed was taking money from it. Combine that with a repeal of the direct election of Senators, and I think the Senate just might become extremely fiscally conservative. Of course I’m assuming something would restrain spending.

[Hostage]

The research and efforts are complete. What remains is to educate our family, friends and neighbors.

Here’s the cure to both taxes and spending:

http://www.fairtax.org

It acts as a weight scale to spending and requires an annual vote on the one transparent rate. If overweight (spend too much), then get on a diet (cut spending). No pain, no gain.

Any fights over spending will be ongoing neverending. But transparency of a tax rate (H.R. 25) linked directly to spending will at least get all Americans on the same page. As it is now, spending and taxes are two shell games.

[taxcontrol]

Sorry, the Fairtax does NOT cure or even address spending. The “starve the beast” advocated by so many fairtax proponents is simply not applicable as long as Congress can borrow money.

[Hostage]

I disagree. The FairTax mostly certainly addresses spending by having one single tax rate tied to government spending.

Congress will always have the power to borrow but they won't always have the power to engage in profligate spending unless they appropriate in a manner that calls for controlled deficits or better yet, surpluses. And any appropriation will consider first revenue before debt, ergo the specifics of taxation are made paramount.

Recall the Balanced Budget Movement of the 1990s failed because the entitlements would call eventually for a max 85% tax bracket, with all other brackets ratcheting up to follow suit.

And therein lies the heart of the problem, entitlements. But yet entitlement reform is always defeated. The nation would rather inflate their way out of the problem than cut entitlements. However, entitlements are funded by revenue and not debt, although that may have changed of recent.

Any reform on spending ‘specifics’ will end up being bogged down in committees, and will accomplish little if anything worth the effort. Whereas, tax reform can catch a wave as it has in the 5 major tax reforms since 1913. We are due for reform. The FairTax movement chose not to engage in spending reforms as they correctly foresaw that spending reforms would lead to compromises that solved nothing structurally; spending fights would be intractable whereas tax fights were seen as winnable.

I'll stick to my analogy: an overweight condition is analogous to overspending. Using a scale to measure the overweight condition is analogous to using the single tax rate provided for in H.R. 25, the legislation for the FairTax. If the scale (FairTax) is used and the result is an increase in weight, then the focus will be on debt creation (sale of US Treasuries).