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

[mo]

They will....they got what they need with the Patriot Act-as soon as certain provisions that are "temporary" become "fully enhanced" we'll get rid of the IRS. Had we gotten Hillarycare in '94 we'd have been rid of the IRS by now for the same reasons. Basically what the Feds got with the PA they tried for with Hillarycare.

[ancient_geezer]

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.

Lets see, 20-25% fall in prices + a 23% tax == OMG the same as now.

The total price of any item is set by supply and demand, the supply and demand payment for anything with the NRST will be exactly the same as it today with all federal and income payroll taxes embedded.

Or do you figure that the laws of supply and demand are magically repealed just by changing how we are taxed. If so, I suggest you show us any economic textbook that tells us how that can happen.

[tm22721]

This will never pass because of fear that a consumption tax would destroy consumption.

Consumerism is the basis of our modern (<20 years) economy and conservatives especially would be afraid to tamper with success even at the prospect of eliminating the income tax.

BUMP

[Tuscaloosa Goldfinch]

I didn't notice any representatives from my state in the list of sponsors. Time to contact them.

On the subject of tax loopholes:

The way the whole system is structured just invites people to explore loopholes. For instance, we operated under the "sole proprietorship" heading and got hammered year after year. Since changing to a sub-s "corporation", we've saved a good bit. Instead of sending half our income, we're sending a third. I guess that makes us one of those "EEEE-vil" corporations. With two employees. Sheesh.

[ancient_geezer]

Part of the process of implementing the Fair Tax is the revocation of the 16th Amendment killing the Federal Income tax.

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.

[TN4Liberty]

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.

I'll grant you that argument for the moment. However, I have a $130,000 investment in my house that I bought prior to this proposed tax plan. If I decide to sell it, after such a tax is inacted, I will have to discount it 20% or more just to be competitive with a NEW house that was built under the new tax rules.

What about land? Land will not benefit from lower imbedded taxes because land is not manufactured. In essence, land prices will go up 23% to cover the new taxes, but there will be no offsetting decrease in production costs.

This policy will depreciate every real asset an indivudual has prior to passage of this tax. That is an issue I haven't seen any plan try to deal with.

I think the concept is fine, but the transition will hurt some people a lot, and will play havoc on the economy for several years while it settles out.

[ancient_geezer]

Ahhh! Yah, they sleep until the dog jumps on their belly to wake em up at the break of dawn anyway. LOL

[ovrtaxt]

This will never pass because of fear that a consumption tax would destroy consumption.

So an income tax has prevented people from making income?

This would encourage savings, no doubt, or investment. This is good. A nation of investors. Not a bad position to take in the world.

[WhiteGuy]

Fair Tax Bump

[ancient_geezer]

but The clowns in DC (no matter what side of the isle they are on) are never going to limit their power and the IRS will be unabated in their ability to destroy.

So you are satifisfied to keep things as they are without trying to change?

It's a good thing that not every one thinks the same way, for an ever-increasing number of members of Congress are actually trying to make it happen because some folks are willing to make it an issue in elections.

Congress Critter's In the News

(43) HR25 Co-Sponsors and

FairTax - Congressional Score Card

Has modified his stand to favoring the NRST over the "Armey/Shelby" Flat Tax which he promoted in the Senate for many years.

Primary races for Senate

Steve Rauschenberger (Illinois)

Herman Cain for United States Senate, state of Georgia 2004

 

and in the House races

Dennis Umphress, libertarian (California 16th District)

Dr. Paul DeWeese, (Michigan 7th District)

Vernon Robinson, (North Carolina's 5th District)

Ben Streusand, (Texas 10th District)

Michael McCaul, (Texas 10th District)

Dave Phillips, (Texas 10th District)

John Devine, (Texas 10th District)

Pat Elliot, (Texas 10th District)

Bill Lester (Texas 11th Congressional District)

 

[Badray]

"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)"

Thanks for the clarification. I'm still learning, but I'm on board. In fact, here in Western Pa we are just kicking off an effort to get this moving. I'd appreciate any info that you have. I know that you've done a ton of work on this subject.

[Badray]

Frank, you are so nice to say that. Or is it that I owe you some money or a beer or two? ;-)

[ancient_geezer]

Oops one like didn't quite work :O|

'We know it's not perfect' (Shelby on the Stump in Alabama)
Has modified his stand to favoring the NRST over the "Armey/Shelby" Flat Tax which he promoted in the Senate for many years.

[Core_Conservative]

But income taxes buying a car?

There are many thousands of people involved in developing and manufacturing a vehicle - they all pay income taxes!

[ancient_geezer]

This will never pass because of fear that a consumption tax would destroy consumption.

Lets see, 20-25% fall in prices + a 23% tax == OMG the same as now.

The individual receives his full GROSS pay, no withholding, and no FICA under an retail sales tax,

And receive the FCA, based on size of household:

All legal residents will receive a FCA equivalent to the FairTax paid on essential goods and services. The FCA will be paid in advance, in equal installments each month. The size of the monthly FCA will be determined by the government's Poverty Level for a particular family size, multiplied by the tax rate.

Every year, the Department of Health and Human Services [HHS] determine the "poverty level" for each family size.

The 2001 "FairTax" Family Consumption Allowance Figures
Family Size	HHS Poverty Level	Annual FCA	Monthly FCA
One	$8,590	$1,976	$165
Two	$17,180	$3,951	$329
Three	$20,200	$4,646	$387
Four	$23,220	$5,341	$445
Five	$26,240	$6,035	$503
Six	$29,260	$6,730	$561
Seven	$32,280	$7,424	$619
Eight	$35,300	$8,119	$677

1) Federal Register: February 16, 2001, Pages 10695-10697).

[ The monthly FCA for each adult is .23 * (HSS poverty level for a single person)/12 to assure no marriage penalty due to the manner in which the poverty level is dependant on family size. The monthly FCA for each child is .23 * (the incremental increase of HSS poverty level for a family with one child over no child) ] A. Geezer

A family of four, for example, could spend $23,220 per year free of tax because they will have received over the course of the year rebates totaling $5,341. $5,341 is the amount of sales tax paid on $23,220 in expenditures. A family spending double the "poverty level" or $46,440 per year will effectively pay tax on only half of their spending and, therefore, have an effective tax rate of 11 ½ percent or half the FairTax rate.

The beauty of the FairTax is that you can control how much you pay in taxes. If you happen to save, invest or spend a portion on used [previously taxed] items, you can get your effective tax rate below 9%.

[71] To illustrate the plan's progressive nature we can examine the tax burden that a family of four will have at various annual income levels (or in this case, annual spending levels).

H.R.2525 "The FairTax Act

Not only does every family receive a FCA based on family size, not income, but they will also receive 100% of their paycheck:

Fedup Smith makes $39K per year...once the FairTax is the law of the land he will receive an instant increase in pay of $200.00 per week. Since he has a family of four, he will receive a FCA of $445 per month, for a total of $1,305.00 additional income per month that he can do with as he sees fit

 

---

"a consumption tax would destroy consumption."

Only in your hallucinations.

[ovrtaxt]

Could you imagine what would happen if Bush came out in support of this at the convention? Instant political immortality.

[ancient_geezer]

However, I have a $130,000 investment in my house that I bought prior to this proposed tax plan. If I decide to sell it, after such a tax is inacted, I will have to discount it 20% or more just to be competitive with a NEW house that was built under the new tax rules.

No because you don't collect the NRST on resale of your home.

The new home price + NRST is the market price, just as newhome price with income/payroll taxes embedded are now.

All the NRST does is change how taxes are collected, and assure that things are only taxed once.

The market value with taxfactors include will be precisely the same with the NRST as they are today with income/payroll taxes embedded in prices.

What about land? Land will not benefit from lower imbedded taxes because land is not manufactured. In essence, land prices will go up 23% to cover the new taxes, but there will be no offsetting decrease in production costs.

Residential land on which a house is built is grandfathered, presumed that taxes on it have already been paid via the income/payroll tax system. Tax once but only once is the express rule in the legislation. With clauses to grandfather property and products prior to implementation of the legislation.

[ancient_geezer]

I'd appreciate any info that you have. I know that you've done a ton of work on this subject.

Start here:

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

Then go to my profile and link pages on FR, to find older threads covering the topic. I and others have been at this since 1998, so FR is a treasure trove of info on the subject.

http://www.freerepublic.com/~ancientgeezer/

[ovrtaxt]

Thanks for the clarification. I thought that was the case, but I wasn't sure. Bump.

[ancient_geezer]

I thought that was the case, but I wasn't sure.

Let me give you a clue about HR25, use two rules,

tax once but only once,

and if its logical for a retail sales tax, it's probably in there.

And you won't be far off from what the legislation does.

Those are the main rules I use in explaining the tax, and verification in reading the legislation has never proven them wrong.