Posted on 03/04/2004 10:31:36 PM PST by scripter
An effort to do away with federal income tax and replace it with a national consumption tax is gaining steam, as activists strive to get at least 100 members of the House of Representatives on board by Independence Day.
"We think we'll be at 100 co-sponsors by July 4," Tom Wright, executive director of Americans for Fair Taxation, told WND.
Wright noted the House bill, H.R. 25, added its latest co-sponsor this week Republican Rep. Barbara Cubin of Wyoming bringing the total to 44.
"We're working with our grass-roots people across the country" to get to the goal, Wright said. H.R. 25, the Fair Tax Act, is sponsored by Rep. John Linder, R-Ga., who has sponsored similar legislation for the last several years. The latest version of the bill was introduced Jan. 7, 2003.
"The current federal income tax system is broken. Patching up the existing code is pointless. It's time for a fresh approach, a fair approach. It's time for the FairTax," says the group's website.
"From its humble beginnings, the income tax has grown like a cancer by taxing our hard work and discouraging savings and investment."
H.R. 25 would eliminate the federal income tax and replace it with a 23 percent consumption tax paid by the end user. That means business-to-business purchases for the production of goods and services would not be taxed. The organization estimates consumer prices will drop by an estimated 20-30 percent as a result of the change.
The group's website describes how the bill's rebate function works. It assures that those living in poverty would not pay any tax.
"Under the FairTax, no American will pay taxes on necessities. The rebate will be equivalent to the tax paid on essential goods and services. The rebate will be mailed before the tax is actually paid [and] will be paid in equal installments at the beginning of the month. The size of the monthly rebate will be determined by the federal poverty level for a particular household size."
Wright touted the support of the American Farm Bureau. The organization has been educating its membership on the bill, and many state chapters have given the bill legislative priority.
Dumping the income tax has become a campaign issue in many political races this year, Wright says.
"All over Texas, House candidates are supporting it," he said, mentioning races in other states as well.
Wright noted the bill's cause is helped every time Social Security reform is discussed, since, under the plan, the entitlement program would be supported by the consumption tax instead of what he calls the "regressive" Social Security tax.
Americans for Fair Taxation says the first year the plan goes into effect, revenue to the federal government would remain the same. From there, the group claims, revenue will grow due to increased economic activity.
H.R. 25 is pending in the House Ways and Means Committee and has not had a hearing. Once the sponsorship level grows to 100, however, Wright thinks Chairman Bill Thomas, R-Calif., will take action on the bill.
The bill's Senate version is S.1493, sponsored by Sen. Saxby Chambliss, R-Ga., which was introduced in July.
WND columnist Neal Boortz is a supporter of the plan. In an August column, he addressed the issue of why the idea hasn't been enacted already.
"And just why hasn't it passed?" he wrote. "Because the idea is so bold that many politicians, while personally praising the concept, just assume it can't pass.
"It can pass, my friends. It can pass if the people of America learn the details and then let their elected officials know that they want some action."
Previous stories:
Income tax to end within few years?
National sales tax gains momentum
Group plans 'fair tax' convention
Congress to consider 'fair tax'
You're forgetting something very important. COMPETITION.
If a business does not drop prices in relation to lower costs, others will move into the market and take their share by offering lower prices. The same with an employer who doesn't increase pay for his employers, if there is a demand for that worker, another employer will hire them away. Competition in the marketplace will address all of your worries.
Trust the market, not government.
All I'm asking is that we not let 'perfect' become the enemy of 'a hell of a lot better than we have now.' We'll never be perfect. Someone will always claim to be getting screwed. Look at the objective of this plan and help us achieve it.
Your children and grandchildren will thank you.
In terms of the outsourcing of jobs, if the trend continues, we might all be back on small farms in a few decades.
In terms of the outsourcing of jobs, if the trend continues, we might all be back on small farms in a few decades.
Then reversing the trend to bring jobs back into the country makes sense:
Rep. Bill Archer, Chairman, House Ways and Means Committee:
- "A recent survey was done, in Europe and Japan, of the major corporations and I was astounded at the results. They were asked, 'If the US abolished its income tax and went to a sales tax, would that have any impact on your decisions?' Eighty percent of the corporations said they would build their factories in the United States of America. Twenty percent said they would move their international headquarters to the United States of America."
Anti-theorists such as Barbra Streisand may try to pressure the norm, but the real post-deconstruction force is coming from American grassroots. We'll fix it the American way.
Suppose it's to the low end of the scale, as I'd predict it to be. Doesn't that mean I'd get a tax increase? Oooops....
Doesn't that mean I'd get a tax increase? Oooops....
Income/Payroll tax system:
Effective Total Federal Tax Rate (Percent of gross income) | |||||||||||
Income Category | 1977 | 1979 | 1981 | 1983 | 1985 | 1987 | 1989 | 1991 | 1993 | 1995 | Projected 1999 |
All Families | 22.8 | 23.4 | 23.5 | 21.4 | 21.8 | 22.6 | 22.5 | 22.6 | 23.5 | 24.7 | 24.2 |
Data from IRS collections statistics and The Bureau of Economic Analysis as compiled in tabular form by the Congressional Budget Office.
http://www.cbo.gov/showdoc.cfm?index=1545&from=4&sequence=0
NRST:
23% of consumption expenditure less FCA.
Consumption expenditure = (gross income - savings) ;
The tax burden that a family of four will have at various annual expenditure levels.
Do you get a tax rate cut or not? Its up to you.
And one begins to wonder about local and state sales taxes... If consumer prices drop by 20%, then sales tax revenues are going to drop by the same amount, right? So what do you suppose local and state governments are going to do to make up for the shortfall? Yup ... they'll probably raise the sales tax rate.
I distrust tax panaceas, because there's a lot more to the equation than the activists let on.
Um... no. Let's do say it's only a 20% savings. That means the net price increase after tax would be $3.90 on a $100 item (3.9%).
But you'll have more money in your pocket to spend for the same amount of work. Let's assume an effective income tax rate of 10% (a fairly low figure) plus 7.65% FICA taxes. That puts $1.21 back in your pocket for every $1.00 you currently have in your take-home pay.
So, instead of making $100 to pay for that $100 item, you make $121.43 in the same amount of time, of which you pay $103.90 for the item and keep $17.53 for yourself (which, given the 3.9% increase in prices would have the purchasing power of $16.87 in today's dollars).
Actually, no again. By eliminating exceptions to the tax code and adding services, the base broadens to the point where state sales taxes could be cut in half and still raise the same revenue.
And before the usual suspects try to tell you otherwise, the federal and state sales taxes would both be applied on the pre-tax price -- they would not tax each other.
American General Contractor's Association
http://www.agc.org/Legislative_Info/Members_Testify/testimony_04-10-00.asp
Adding to the costs and to unfairness, our tax laws are so complicated not even the common tax lawyer can understand them. There are a number of ways of measuring complexity; one of which is the number of penalties issued and then abated for reasonable cause. There are more than 34 million civil penalties issued each year; more than a third of all small firms receive payroll tax-related penalties alone. More than 50 percent are abated.
The tax system is now so monstrously complex that it is beyond the ability of any one person to understand it. Understanding the system is certainly beyond the reach of most mere tax lawyers, accountants and tax administrators. A system that is so complex must be administered in an arbitrary and unfair way. If no one really understands what the law is, it is impossible to administer fairly and uniformly - and of course, it is not so administered.Our government embroiled its citizens in more than 35,000 litigation actions. Taxpayers sustained more than 3 million levies. As long as we insist upon an income tax system, the system needs to be complex. The system needs to be enforced with a heavy hand. The system needs to have all of the 34 million in civil penalties. The system needs to be intrusive. It is the price we have to pay for an income tax system.
Perhaps most troublesome, we have gotten little in return for this payment because our current tax system has inspired an increasingly lower level of compliance. Despite the costs of enforcing and maintaining our system, tax evasion is at an all time high. Today's income tax system has invited massive noncompliance. According to the IRS own statistics, only about 80 percent of taxes owed are voluntarily paid -- $200 billion are not. In 1992, the tax gap was estimated to be $127 billion. Taxes evaded continue to be in the range of 22 to 23% of income taxes collected. These IRS figures did not include taxes lost on illegal sources of income. Evaded taxes increased by 67% in the decade between 1982 and 1992. As a percentage of Gross Domestic Product (GDP), tax evasion has reached 2.0% compared to 1.6 % in 1991.
Put it a different way: if I see a 20% drop in the price of what I buy, and am paying a 23% consumption tax on it, I end up paying 3% more, right?
You seem to want to forget you receive your full gross pay, no withholding or FICA.
You are not taxed on any earnings, dividend, interest or other income received
You are not taxed on funds saved or invested,
You are not taxed on education as an investment,
You are not taxed on interest paid,
You are not taxed on used products or resale residential homes
You are not taxed on any business purchase used in the production or sale of other products;
You receive a essentials tax allowence for each member of your household equal to 23% of povertyline/12.
23% of consumption expenditure less FCA.
Consumption expenditure = (gross income - savings) ;
The tax burden that a family of four will have at various annual expenditure levels.
I ask you again, Do you get a tax rate cut or not?
Its up to you.
Not according to the story, which is telling me that I'll see a 23% federal tax added on to my checkout price, which probably won't be matched by a 23% drop in prices (despite what the advocates say...).
The tax revenue picture is therefore a bit more murky, for the reasons I noted above, and pays no attention to what cities and states will do with regard to their tax revenues.
federal and state sales taxes would both be applied on the pre-tax price -- they would not tax each other.
Fine -- but again: if pre-tax prices drop 20%, cities and states are going to see a 20% drop in their sales tax revenues. Do you think they'll let that happen? Nope -- they can't.
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