kevkrom wrote:Well, we haven't done a very good job of it with the income tax system. There's no reason to believe that it will be any better with a sales tax system.
Nope, it's up to all of us outside the Beltway to make sure that it stays that way. The NRST provides a blank slate to start from -- but there's no point introducing problems now just because Congress may be able to do so later.
Perhaps you Fair Tax supporters would do better if you proposed a major simplification of the existing income tax code and a 5 year freeze on changes to that code. If we could hold the current system unchanged for that period, I might believe that an alternative system could also be held relatively stable for the long term.
Perhaps it's time to pass the entire 1986 tax simplification act again, this time with a committment to holding the system stable like that for at least 5 to 10 years.
In the absense of a real demonstration of a committment by the Congress to resist the temptation of the lobbyists and social engineers, I don't see any hope that a sales tax system would be any better.
The fact that the "fair tax" proposal doesn't repeal any current "social engineering" excise taxes is also a bad sign to me. We have lots of excise taxes on the sale or manufacture of a wide variety of things. Many of these taxes are more about social engineering than they are about revenue. If "fair tax" supporters are serious about doing away with social engineering in the tax system, they should also be calling for a repeal of the "gas guzzler" tax, tobacco taxes, taxes on alcohol, federal taxes on fuel, etc. The fact that the "fair tax" doesn't repeal these taxes is further indication that there is not enough committment to doing away with "social engineering" in the tax system.
kevkrom wrote:The way for the Congress and the lobbyists to get around that is to make changes that affect relatively few "tax collection points." A higher tax on luxury automobiles and trucks would only affect a few businesses. A higher tax on boats and boat supplies would only affect a few businesses. After severa dozen of these relatively harmless tax system adjustments, we would have a big mess that resembles the current income tax system.
That would make business owners a natural constituency to fight any such tinkering. Congress loves to tinker, but they also like their own jobs better.
Again, a real demonstration to keeping the tax code stable for a reasonably long period would go a long way toward winning my support for this. Without such a demonstration, I'll take a system that I (somewhat) know and understand that will be tinkered with ad infinitum over a system that I don't know and don't fully understand the ramifications of that will also be tinkered with ad infinitum.
We need a committment to long term tax system stability much worse than we need a fundamental change in the type of tax system we have. We also need some committment to reducing the absolute size and influence of the federal government, but there isn't any support for that from either of the two parties currently sharing power in our government.
Actually, the so called "Fair Tax" will give the federal government a one time windfall/growth spurt. As the cost of goods and services falls by the estimated 30% or more that "Fair Tax" supporters claim, federal budget dollars will buy that much more goods and services. Since the "fair tax" is revenue neutral, that windfall won't be refunded to the taxpayers, but rather, it will be spent on more goods and services for the government. That doesn't sound like a positive thing for conservatives who support smaller government. Actually, for Republicans who like big government solutions, it's probably a good thing, but I'm more conservative than Republican.
kevkrom wrote:You still haven't explained how you plan to deal with the political ramifications of sending checks to everyone every month. You haven't even acknowledged that you understand the fundamental problem with this.
Easy -- by holding to the fact that the essentials of life are not subject to taxation by the government. But rather than have a one-size-fits-all draconion set of rules and regulations, give an across-the-board credit for what would be spent of subsistence spending and let people decide for themselves how to use it.Sounds pretty conservative to me.
For many families, that check is going to be a significant portion of their monthly budget. The pressure from "progressive" politicians to deliver more dollars to "working families" and to screw "the rich" will be applied to those checks. If we assume for a moment that you are correct and there won't be any playing with tax rates for social engineering purposes (a long shot, but I'll give it to you for this paragraph), then manipulating the refund checks is really the only outlet for social engineering types. There are two problems with this.
First, the calculations are based on figures and statistics from various executive branch bureacracies. So, a "progressive" administration could arrange to cook the books, or maybe fundamentally change the way those figures are calculated, and as a result change the amounts (and possibly even the distribution) of those checks.
The other problem is that there will always be political hay to be made by altering the formulae and directing more money toward your constituencies and away from your oponents constituencies. So, there will undoubtedly be proposals to increase the ammount of the checks for people below a certain income level, and eliminate them for people above a certain income level. Or proposals to increase the "child credit" so that families with children get more. Or proposals to add 10% to your refund if you don't buy any tobacco products. Or proposals to take away your refunds for a year if you buy an SUV. There is no end to the mischief that can be conceived here.
Because I don't have any fundamental problems with this.
For many families, that check is going to be a significant portion of their monthly budget. The pressure from "progressive" politicians to deliver more dollars to "working families" and to screw "the rich" will be applied to those checks.
Ah... but who are the rich and who are the poor? Without people filing 1040s on themselves, how's the government going to tell one from the other? While wage information is reported for Soical Security benefits, who's to say the person making $10,000 a year in wages isn't getting much, much more from non-wage income (property rentals, investment income, self-employment, etc.) -- there's no workable way to "screw the rich" and give to the poor without the IRS, which goes away.
Increasing the size of the checks would do two things: 1) raise the at-the-register (marginal) rate on everybody, rich and poor alike, and 2) increase the poverty line, which would give political opponents the opportunity to point out that the number of people in poverty increased under so-and-so's watch.