Effort to dump income tax gains steam

WorldNetDaily ^ | March 5, 2004 | Ron Strom

[Badray]

" And about this 20% to 25% in prices I really don?t think so. Yes, yes I understand the math but your not taking into account the human factor, GREED in effect your telling everyone from the small business owner to Exxon and GM that if this went through by just keeping prices as they are, or maybe just a small 5% or 6% drop for show, that they would see up to 20% in crease in profits!"

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.

[Badray]

I understand and agree that there will always be those who try to beat the system. And some will succeed. But, cheating becomes easier when the system is complex and convoluted. It is easy to hide income. Sales transactions are another matter. If the seller takes in inventory of 100 items and sells them for $1000.00, he pays tax on the $1000.00. Isn't that a lot easier to track? It's already being done in 45 States, isn't it?

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.

[RightWhale]

we are no longer an agricultural based economy essentiall isolated from the world

In terms of the outsourcing of jobs, if the trend continues, we might all be back on small farms in a few decades.

[Quix]

Would sure be a lot more sensible than what we have now.

It's a horrid nightmare currently. Of course, we'd have to find work for tons of atnys and accountants then! But there's surely lots more productive work they could do!!! Even if it was standing on a street corner trying hard to look intelligent and picking up litter.

[Badray]

lewislynn sez:

"No it isn't.

Simply saying it "should" be done doesn't make it part of the processs."

---

ancient_geezer's reply to me earlier to set me straight:

Two bills of necessity, proposed amendments go through a different process and require 2/3rds approval of both House and Senate, as well a 3/4th ratification by the states.

The first calls for the Constitution to be amended to prohibit all income taxes (merely repealing the 16th would be insufficient),

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.

Refer: http://www.fairtax.org & http://www.salestax.org

So the second, Sam Johnson's amendment to the constitution has a chance at enactment & ratification:

H.J.RES.61
Title: Proposing an amendment to the Constitution of the United States to abolish the Federal income tax.
Sponsor: Rep Johnson, Sam [TX-3] (introduced 6/24/2003) Cosponsors: 5
Latest Major Action: 9/4/2003 Referred to House subcommittee. Status: Referred to the Subcommittee on the Constitution.

45 posted on 03/05/2004 7:10:40 AM EST by ancient_geezer

[ancient_geezer]

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."

[RightWhale]

Simply saying it "should" be done doesn't make it part of the processs.

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.

[phil_will1]

"Sir I never said it doesn't I am not going to hold my breath until this idea of fair taxes grabs these morons in washington by the short hairs."

I think you missed my point totally. Many of them will support the idea when they believe its in their political interest to do so. That has little to do with the merit of the idea. We have to convince the American people of the proposal's merits. Some of our elected officials will seriously evaluate the merits when they feel enough constituent pressure. Others will support it when they feel it will move votes. Even if they are dumb as you suggest, they know how to count votes.

[ancient_geezer]

LOL, trying to start a food fight? Lewey & me go back years in our little go arounds.

He makes a good straigt man, he feeds the provocative lines, I bat em down ;O)

[r9etb]

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.

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....

[ancient_geezer]

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.

H.R.25 "The FairTax Act

Do you get a tax rate cut or not? Its up to you.

[phil_will1]

"Anyways, neutral non-selective , i.e., general import duties for revenues are permitted by the WTO. What China is doing is 'in-your face' trade war."

Perhaps I didn't make myself clear. Could we compensate, to some extent, for a tax system with major problems, not the least of which is that it handicaps our own producers by implementing more aggressive tariffs? Probably. It might help us sell more US products here, but it certainly would not help us export more and would probably have the opposite effect because of retaliation.

The real question, however, is why would we try to address one of the symptoms of our poorly designed tax system instead of reforming the system? I would prefer that we address the root cause of the problem, rather than adopt a band-aid solution.

[phil_will1]

"Of course, we'd have to find work for tons of atnys and accountants then!"

Even that objection is falling by the wayside. Tax preparation work is going to India where it can be done more cheaply. So now we have the spector of not only wasting hundreds of billions of dollars annually on compliance costs, but having much of that money going overseas. Its bad enough to pay Americans to do unnecessary work (at premium rates), but its even worse to pay that to foreignors.

[r9etb]

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?

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.

[kevkrom]

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....

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).

[kevkrom]

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.

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.

[ancient_geezer]

Hmmm, think we can outsource these other costs of compliance that get overlooked, and this is just looking back to how it was in beefore 2000:

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. 

[Quix]

FOR ABSOLUTELY SURE!!!

How to get all the special interest groups to fail at upholding the status quo is likely to be a challenge.

I have gotten to the place regarding churches, and other religious non profits, that I think there are two points that need to be given more weight.

1) God said regarding our giving to avoid letting our left hand knowing what our right hand was doing.

2) That if we gave to be seen of men, we'd already have our reward.

I've come to the place, that I believe both Scriptures indicate less than God's pleasure at our 'need' for the IRS to give us credit for our giving.

On top of that, is the whole element of government influence and control over the organizations because of the tax exemption.

I've just come to the place, that I think it's healthier spiritually to say SI GEN, GOOD BYE, GOOD RIDDANCE to the government. God is well able to bless us more when it is unto Him alone.

[ancient_geezer]

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.

H.R.25 "The FairTax Act

 

I ask you again, Do you get a tax rate cut or not?

Its up to you.

[r9etb]

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.

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.