Effort to dump income tax gains steam

WorldNetDaily ^ | March 5, 2004 | Ron Strom

[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'

Tax reform drive builds steam

[scripter]

One time ping.

[Paul C. Jesup]

If Bush got rid of the IRS, he could open the borders wide open and grant amensty to ALL illegal immigrants and he would still WIN by a land slide.

I wonder if anyone in the Federal Republican Party realizes that.

[FairOpinion]

The sooner, the better.

[scott7278]

I'm in.

[sixmil]

Good news, but don't be surprised if the compromise that makes this pass is that overall, the federal government will end up siphoning more money off the economy than it already does.

[Hostage]

I have supported an NST and abolishment of Income Tax for years now but I just saw a piece on Frontline that made me very angry at those who evade taxes and helped me to understand how and why the IRS and Congress have gone bonkers with the tax code .

One example is KPMG. KPMG was/is involved in selling bogus tax shelters to corporations and wealthy individuals that enable them to pay very little if not zero tax. The shelter schemes are so dubious and blatant that it is easy to see that they are criminal.

It opened my eyes as to why the tax code has become more and more complex. It is the result of chasing after these criminals who change their schemes from one year to the next. When they get caught, the penalties are miniscule compared to the fees KPMG takes in with the bogus shelters. The schemes become more and more byzantine and the tax code complexity increases in an effort to stop the abuses.

It's a losing battle from the IRS perspective because Congress will not simplify laws to crackdown on the tax deadbeats. Why? Because there are powerful lobbyists who tie up such legislation to ensure it never gets passed.

If these large tax evaders paid their fair share, the federal deficit would be wiped out. It is feasible to quantify the amount of tax evasion by examining the records of the big accounting firms. They are e.g. KPMG the ones that are designing and selling the schemes. It is truly shameful what the big audit accounting firms like KPMG are doing. There appears to be a complete abandonment of ethics in the once of honorable profession of corporate auditing.

All that said, I still think the NST would be preferable as it would be easier to interpret and enforce than the current system.

[scripter]

The sooner, the better.

Indeed. I wish we could make it retroactive to 2001 - when I was making a lot more money!

[scripter]

I'm in.

I like it.

[scott7278]

A 23% tax on a major purchase like a new car or home could be a major burden, BUT they say that prices will also drop 20 - 30% because of the hidden income taxes that are already built into the products.

[Fledermaus]

What "hidden income taxes" are in automobiles? No income taxes are "hidden". Excise taxes, sales taxes, VAT taxes, etc., they are sometimes hidden.

But income taxes buying a car?

[scott7278]

What "hidden income taxes" are in automobiles? No income taxes are "hidden". Excise taxes, sales taxes, VAT taxes, etc., they are sometimes hidden.

But income taxes buying a car?

Don't shoot the messenger!  I'm simply relaying the information provided by the Thumbnail Sketch of the FairTax page.

 

I'm assuming they mean that the income taxes that the producer pays is added into the cost of the product.  So if there is an elimination of the Federal Income Tax, prices are predicted to drop 20 - 30% (according to the site).

 

I would need to see more evidence than one Harvard professor, because if prices did not drop as they say, the 23% would be very costly -- indeed, crippling.

[Fledermaus]

Wasn't shooting at you, just asking. Thanks for the info.

[scott7278]

I was just joking. I have trouble with the argument, to tell you the truth, because even if the automakers do add extra costs to an automobile, they just wind up paying more in taxes, do they not?

I would need to know exactly what they mean by "hidden income taxes" and how guaranteed prices are to drop. Could you imagine having a 23% tax added to the present cost of everything?

[scott7278]

I sent an e-mail to the FairTax people asking for clarification about the "hidden tax." I'm concerned about that 23% being added to products that don't drop in price as they predicted.

[goldstategop]

Bump! It was no less than Jimmy Carter who described the tax code as a disgrace to the human race. He's been wrong about many things but correct about the income tax. The sooner its dumped, the better off America will be as a nation.

[Fledermaus]

I figured you were joking.

Another thing the FairTax people don't bother to think about is that it's a Utopian idea that's just as good as any other if it was a perfect world, but we are Americans and have freedom and thus trillions of decisions a day happening.

Let's go back to the idea of cars. How exactly will that extra tax be marketed? Car sellers will NOT want to slap that tax on TOP of the price and all the other crap they sell you. So they'll play the game again...higher trade in, longer payment, lower interest rate, etc. All the tricks they use to keep the price the same.

So most Americans are now going to be financing a sales tax on automobiles. That puts them more in debt and they are now paying interest on a tax.

Bet the FairTax folks never thought of that one. So, of course, automobile purchases will have to be exempt or curtailed. The Michigan Congressional delegation will see to that.

As a matter of fact, most states with sales taxes cap the purchase of an automobile to keep their own state tax from keeping sales down. Car dealerships are everywhere and pay taxes too.

Now, I've just wasted cyberspace on just the concept of the NRST on cars. Want to start a thread to discuss the gazillion other products and services that every Congressman isn't going to want to influence?

The reply I get from that argument is usually, "read the Act...it's Iron Clad...it's Set in Stone...It has no deviations, etc." Right. Like that would make it out of a sub-committee much less get onto the floor for a vote.

I'd love a perfect world too. And I wish I could beam myself to the Enterprise and tell Mr. Scott to hit warp 9!

[Fenris6]

I still can't figure out why the Dems think that people who don't pay taxes should get a refund when the governemnt takes in too much money.

From now on, whenever my liberal friends pay for dinner (ahem!) I will demand half the change :)

[scott7278]

Everything you said is true, and I'll add this -- I don't trust the Federal Government to not slap an income tax on top of the NRST if it were to ever pass. They wouldn't do it at first, but I could easily see double taxation down the pike.

I am for the elimination of the income tax -- I just want to make sure that the alternative makes good economic sense and it's good for the people, not the government.

[CWOJackson]

I'm sure a President Kerry would make eliminating the income tax his first priority.