To illustrate the plan's progressive nature we can examine the tax burden that a family of four (with FCA for 4 persons) will have at various annual expenditure levels.
Posted on 03/02/2004 10:23:45 PM PST by esarlls3
Congress Must Pass the Fair Tax Act
By U.S. Rep. Mac Collins
CNSNews.com Commentary
February 27, 2004
Past Congresses have moved in the wrong direction by making our tax laws more complex and expensive for business and individuals to comply with. To keep our economy growing, Congress needs to take action now.
My colleague, Georgia Republican Congressman John Linder, has sponsored the "Fair Tax Act" (H.R. 25), a national retail sales tax on new goods and services. It would replace all individual and corporate income taxes, payroll taxes as well as capital gains taxes, estate taxes and gift taxes.
The Fair Tax replaces the way we are currently taxed, which is based on our annual income, with a tax on goods and services. The Fair Tax, basically, is a voluntary "consumption" tax. The more you buy, the more you pay in taxes. The less you buy, the less you pay in taxes.
The federal government will continue to be fully funded, including Social Security and Medicare.
The Fair Tax will reduce the costs of goods and services by 20 to 30 percent. It will allow workers to keep 100 percent of their paycheck, pension and Social Security payments with the exception being state or local withholding
The Gross Domestic Product will increase by almost 10.5 percent in the first year after its enactment because real wages would increase and tax compliance costs for business would decrease by 90 percent.
The fair tax would also be good news for investors. Real investment will initially increase by 76 percent relative to investments that would be made under our present tax laws. While this increase will gradually decline, it remains 15 percent higher than under the existing tax structure.
American exports will increase by 26 percent initially and would remain more than 13 percent above present levels under the current tax system.
Studies of the Fair Tax have shown that many U.S. companies will choose expansion here in the United States versus abroad, and in turn the United States will become more attractive to many foreign owned companies looking for expansion possibilities.
President Bush, during his State of the Union address in January, said the economy is turning around because the American people are using their money far better than government would have. The Republican majority in Congress was right to return it to the American people and not keep it in Washington.
A fresh and a fairer approach to a Federal tax system is needed. Therefore, it is time for Congress to pass the Fair Tax (H.R. 25).
As a cosponsor of the Fair Tax Act, I have asked Chairman Thomas of the Ways and Means Committee to hold hearings on this vital legislation. I am hoping those hearings will get under way in the near future.
(Congressman Mac Collins is a Republican representing Georgia's 8th Congressional District. He serves on the House Ways and Means Committee and the House Select Committee on Intelligence.)
If you think the income tax code is long and complex, just wait until politicians get a hold of a national sales tax code!
Try reading the legislation before hyperventilatiing.
All goods and services are taxed at a single rate, no exceptions.
H.R.25, S.1493
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.
Believe me, you don't want 435 members of Congress making policy on this. It would make the income tax code look lame in comparison.
The NRST is enacted with single rate and all retail products taxed.
Any change to exempt items increases the rate for everyone (not very popular among voters and added complexity will be fought by business tooth and nail), or with no change in rate gives everyone a taxbreak.
Unlike the sliding scales of today based on income, there can be no practical means to implement such scale as regards retail sales taxes.
- It is fairer to tax people on what they extract from the economy, as roughly measured by their consumption, than to tax them on what they produce for the economy, as roughly measured by their income.
I can live with that.
What I can't abide by is the government's continued intrusions into my family fincancial privacy, nor the continued legal jeopardies of the income tax system as lovingly administered by the IRS.
That is what the NRST, with repeal of all income and payroll taxes mean in the ultimate analysis.
[Montesquieu wrote in Spirit of the Laws, XIII,c.14:]
- "A capitation is more natural to slavery; a duty on merchandise is more natural to liberty, by reason it has not so direct a relation to the person."
--Thomas Jefferson: copied into his Commonplace Book.
Slavery under the minions of Congress, (i.e IRS), or the chance to live as we should in a free society.
Patrick Henry, Virginia Ratifying Convention June 12, 1788:
- "the oppression arising from taxation, is not from the amount but, from the mode -- a thorough acquaintance with the condition of the people, is necessary to a just distribution of taxes. The whole wisdom of the science of Government, with respect to taxation, consists in selecting the mode of collection which will best accommodate to the convenience of the people."
To illustrate the plan's progressive nature we can examine the tax burden that a family of four (with FCA for 4 persons) will have at various annual expenditure levels.
Sorry, I don't live in or believe in Utopia. Nice try but totally irrelevant since the plan will never, ever see the light of day.
Do you always live in such a gloom? See reply #11 above. It will pass ultimately because it must.
Baby diapers. Baby food. All food except for prepared food...oops ...
Sorry to disappoint you, but no exceptions, necessity level expenditure is covered by the FCA See reply #17.
. So they'll create a tiered system called "progressive" and charge higher rates for more expensive cars.
No need for a tiered system already covered by FCA, See reply #17.
Then they'll demand a rebate based on income level so you'll still have to report your income level to get the rebate.
No need for rebate by income, already covered by FCA based on household size, See reply #17.
I wish I could be as confident as you, but I live in reality
No you live in utter fear in what you believe can't be done.
and I know from the sales tax codes in each state that there is NO WAY the Federal Congress won't get involved in changing the system you propose. NO WAY!
Sorry the NRST is totally unlike any state retail sales tax you have ever seen. Interesingly once in place, States moving towards the NRST methodology in encourage by incentive in the bill as well as how it would allow a lowering of State retail sales tax rates by broadening the tax base.
Let's get real and pracital. It's no different than the flat tax proposals.
Certainly the NRST is different. The flat tax proposals are all subtraction method VATs with a wage tax component. They require calculating and reporting income based on arbitrary rules, the NRST does not.
A national sales tax also opens up more social engineering with higher taxes on "fatty foods" or "potato chips" or "soft drinks" and you know the liberals and socialists will fight for those inclusions.
No more so than the current system, and there is not one single thing from their implementing such piecewise excises right now, on top of the income/payroll tax system in place. Your objection is without substance on that account alone. Not to mention that a retail sales tax already in place that taxes those things inhibits the addition of more excises on top.
The one thing the NRST does do definitively, and that is to repeal all income and payroll taxes, so we will be dealing with sales taxes alone, unlike the situation facing us today.
"For the Children", I'm sure.
Indeed, I want the NRST for my children and their children and everyone else as well.
You just can't understand the consequences which you don't want to see and you can't understand it would never, ever, ever, ever, ever, ever, ever, ever, pass.
LOL, you live in your world I live in mine.
Personally, I like a simple flat tax with exemptions only for each individual equally...adult or children.
Hmmmm! and who makes the rules for calculating that income on which the tax is based? I note your "flat tax" has two tiers to it, a 0% rate and some other rate. Just like the current income tax started out, and didn't last much more than one session of Congress.
And no other exemptions. Thus, a family of four will pay NOTHING in income taxes on their first $40-45K earned a year and then about 17% on every dollar after with no rate tables.
LOL, as I said two rates before even starting, now how do you determine what is income on which you pay that tax, who makes the rule. Is the money received from a loan considered as taxable in your consideration, no exemption remember. How about money being paid back to you after you loan it to someone, is that taxable as income in your plan? ...
Or are you just going to use the Armey/Shelby flat income tax, which purports to do what you claim.
Here's how tax rates come out for the Armey/Shelby Flat Tax, a flat individual/corporate income tax, leaving all SS/Medicare, Federal Unemployment, excise taxes and tariffs in place and unchanged.
http://www.library.unt.edu/govinfo/subject/vital.html
- "The chart below shows a hypothetical set of flat tax rates and allowances that would result in revenue neutrality. This model, produced by the Congressional Budget Office shows that all federal income tax revenues could be fully replaced by a system with a flat tax rate of 13.1 percent and no deductions. Allowing total deductions for a family of four to reach $36,800 (more than double the amount allowed in 1995) would require a 19.9 percent rate."
Joint Economic Committee
Revenue Neutral Tax Rates for Alternative Allowances and Exemptions Under a Flat Tax Standard Allowances Option 1 Option 2 Option 3 Option 4 Option 5 Single $13,100 $13,100 $ 6,550 $ 6,550 $0 Joint $26,200 $26,200 $13,100 $13,100 $0 Head of Household $17,200 $17,200 $ 8,600 $ 8,600 $0 Dependent Exemption $ 5,300 $ 2,650 $ 5,300 $ 2,650 $0 Revenue Neutral Tax Rate 19.9% 19.4% 16.8% 16.3% 13.1% Source: Congressional Budget Office, 1995.
Under the Armey "flat" tax, as it is currently proposed,(HR1040 introduced 3/15/2001) a single person would pay:
7.65% ---- 7.65%(SS/Medicare) tax on wages/salary income below $13,600,
26.65% --- 19% + 7.65%(SS/Medicare) tax on wages/salary and other taxable income from $13,600-$75,000
20.45% --- 19% + 1.45% Medicare tax on wages/salaries and other taxable income from $75,001 up.
0% -------- on savings & bond income and stock dividends.
And that single person's business/employer pays,
19% ------ on earnings (Gross Receipts less allowed business deductions, exemptions and credits)
13.65% ---- 7.65% on SS/Medicare employment excises + 6% federally mandated unemployement excises levied on each employee's on wages up to $75,000.
7.45% ----- 1.45% on Medicare employment excises + 6% federally mandated unemployement excises levied on each employee's wages greater than $75,000.
Plus additional selective excises and tariffs dependant upon the nature of business engaged in.
Note: The base "Flat Tax Rate" is subject to meet revenue neutrality requirements under the Budget Enforcement act. The 19% rate stated in the Armey/Shelby Flat Tax proposal does not meet these requirements and would of necessity be adjusted upwards, and/or personal exemptions and business deductions be reduced to meet revenue neutrality criteria for enactment.
Further the Flat Tax is a VAT in the manner in which it transfers tax onto the consumer from business which is taxed at all stages of production and passed on to the consumer hidden in price of retail goods an services.
http://waysandmeans.house.gov/fullcomm/106cong/4-11-00/4-11kotl.htm
"Robert Hall, one of the originators of the proposal(Flat Tax), who describes his Flat Tax as, effectively, a Value Added Tax. A value added tax taxes output less investment (because firms get to deduct their investment.)"
"The Flat Tax differs from a VAT in only two respects. First, it asks workers, rather than firm managers, to mail in the check for the tax payment on that portion of output paid to them as wages. Second, it provides a subsidy to workers with low wages."
The Flat Income Tax (FIT) proposal, H.R. 1040, has two elements: a Flat Income Tax on an individual's earned income, and a VAT on businesses. The Flat Income Tax on businesses, is, by admission of Professors Robert E. Hall and Alvin Rabushka, who "wrote the book" on the FIT, a subtraction method Value Added Tax.
Quoting Hall and Rabushka ("The Flat Tax," Hoover Institution Press, 1995, pp55,56):
"To measure the total amount of income generated at a business, the best approach is to take the total receipts of the firm over the year and subtract the payments the firm has made to its workers and suppliers. This approach guarantees a comprehensive tax base. The successful value-added taxes in Europe work this way. The base for the business tax is the following:
Total revenue from sales of goods and services
less
purchases of inputs from other firms
less
wages, salaries, and pensions paid to workers
less
purchases of plant and equipment."
Fair, simple, easily planned for.
Better read:
Flat Tax as Seen by a Tax Preparer
by Vern Hoven
and disabuse yourself of those notions.
Income is defined with much smaller rules than consumption.
Sure. that is why there are so few pages in the income tax code.
Consumption is retail sales my friend. Price you pay for products, nothing more nothing less.
If you think you can seriously pass a NRST bill that doesn't have incremental rates to "tax the rich" and at the same time wipe out "targeted taxes" like Soc Sec, Medicare, fuel, etc. then I wish you luck over the rainbow.
One thing is for sure, it won't happen with folks like you helping it along.
No incremental are rates required, just needs one rate & an allowance paid to all households based solely on household size.
Refer reply #17 The tax burden that a family of four (with FCA for 4 persons) will have at various annual expenditure levels.
living in a republic is a double edged sword. on the one hand, I'm glad we don't always get what the majority wants.
on the other hand, we don't get the things we need either...
although my hubby had an interesting point. If we were to implement a national sales tax, how would we phase out people that owe back taxes, settle tax evasion cases and the like?? The logistics of implementing such a system would really be a major upheaval of business as usual.
This would take decades to do, but I for one am ready for a change. Even though I have never had a tax liability yet, I know it's coming... can't be a college student forever. But I'm all for simplicifation and streamlining, especially when it comes to governmental process.
How in the h#ll can outsourcing be a good thing?? Exactly what is his rationale in this??
Just as they will argue what "taxable sales" are.
What argument? When all retail sales are taxable, there is nothing left to add.
If they decide then to remove something, then that is a tax cut for everyone. For if they offset with a rate increase they must deal with every voter getting upset instead of just the top 40% the economic ladder they do now. It's that bottom 60% that allows them to get away with the graduate income tax and its rate structure.
I also will never believe your plan will eliminate the FICA taxes you used in your argument to attack my plan.
You don't have to agree, it in the legislation. 14.91% for general revenues, 9.01% for SS/Medicare for a total of 23%.
Both income and payroll taxes are repealed, and replaced by one retail sales tax of 23%.
Unfortunately, we don't have enough voters to even have these discussions with that can shape the future for the better.
Actually in takes very few to get the job done just a few percent swinging the election of candidates. That is how liberals have been so effective. A few loud voices, squeaking for a long time.
That by the way is the plan to usher in the repeal of the income tax, a few candidates each election cycle until we reach critical mass, then force the issue with a discharge petition. Take time and persistence, but can be done with a committed group to get it done.
My flat tax would not count income on savings on investment and work to eliminate that double taxation.
That is nothing more than the Armey flat tax.
The NRST does not tax any income, or expenditure on investement for that matter. Only retail sales of consumer products and services. Investment is not taxed at any level, individual or business.
Bad idea. One of the major problem of income taxes is that a large percentage of the population believes they don't pay any income taxes, even though they really are through the phoney FICA "insurance" tax and again embedded in the costs of goods and services. When a large enough group of people believe that "someone else" is footing the bill, they don't have any incentive to reign in government -- indeed it is just the opposite a demand for more "goodies".
With the NRST, on the other hand, even though some people will pay little to no net taxes, thanks to the FCA, everyone will have a fixed marginal rate. The cost of government would be an explicit reminder on every receipt.
Of course, income taxes of any stripe have other problems. The other truly huge problem is that there has to be some definition of "income", with the appropriate reporting and enforcement methods.
I really don't understand the complaint of "the system has the potential to get complicated" -- that's true for any system if the electorate doesn't keep on top of the legislature. Just how long do you think that flat tax idea is going to remain so flat -- history proves that it won't. The advantage that the NRST has in this regard is that any such meddling immediately effects every single consumer at the register.
... which maintains the FICA taxes. So do you elimiate the earned income tax credit (EITC) under your flat tax plan? Because that will tick off a large number of low-wage earners.
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