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Posted on 04/05/2004 11:51:25 AM PDT by KriegerGeist
Chambliss and Linder Lead Effort To Overhaul Tax System
April 05,2004
Washington - U.S. Senator Saxby Chambliss (R-GA) and U.S. Representative John Linder (R-GA) are leading a bi-partisan and bicameral effort to provide much needed tax relief to all Americans. Senator Chambliss and Representative Linder discussed their legislation at a news conference today at the state Capitol in Atlanta.
Referred to as the FairTax (S. 1493 and H.R. 25), this legislation would shift the federal government’s method of funding operations from income-based taxes to a personal consumption tax. It would repeal all federal personal income taxes, corporate income taxes, payroll taxes, self-employment taxes, capital gains taxes, and gift and estate taxes and replace these taxes with a revenue-neutral 23 percent sales tax on all retail sales of new goods and services.
“The current tax code is ridiculously complex and desperately needs a major overhaul,” said Chambliss. “As April 15th approaches, it’s painfully clear that simply tinkering with the current system is no longer an option. The FairTax is a fairer, simpler tax code that allows every American the freedom to determine his or her own priorities and opportunities.”
Representative Linder thanked Senator Chambliss for introducing a companion bill in the Senate saying that this marked “a major step toward reforming our broken tax system.”
“I’ve introduced the FairTax in the last three Congresses and I am more encouraged than ever that we are even closer to making it a reality,” Linder said. “There is a desire to get rid of the intrusive IRS and implement a system that will generate economic growth and help create new jobs.”
Senator Chambliss and Representative Linder outlined eight principles that they believe should be considered when debating tax reform, all of which the FairTax addresses:
1. Fairness: It must protect the poor and treat everyone else the same. No exemptions – no exclusions – no advantages.
2. Simplicity: It must be easy to understand for all Americans – no matter one’s education, occupation, or station in life.
3. Voluntary: It must not be coercive or intrusive.
4. Transparency: We should all know what the government costs. There must be no “hidden” taxes.
5. Border-Neutral: Our exports must be unburdened by any tax component in the price system, while imports carry the same tax burden at retail as our domestic competition.
6. Industry-Neutral: It must be neutral between businesses and industries.
7. Strengthens Social Security: Fundamental reform must address the long-term solvency of Social Security.
8. Manageable Transition Costs: It must not be costly or difficult to implement.
Only the ground-swell of grass-roots can make it happen.
Can't do both - to "protect the poor" is to give them an advantage, thus does not treat everyone the same.
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John Linder in the House & Saxby Chambliss Senate, offer a comprehensive bill to kill all income and payroll taxes outright, and provide a IRS free replacement in the form of a pure consumption tax:
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.
Too quickly, legislation would be passed exempting certain industries/goods facing hardships, an exemption for the roof over your head and food to the kiddies mouths.
Not to mention those big hospital bills, prescription drugs, college tuition, new automobiles, etc....would be items nobody would purchase if there was a 23% tax.
When the income tax witholding scam was pushed, the explanation was that the exemption tables made it fair. Those same tables indexed for inflation today would mean that a family of four making $48,000 would pay no witholding. The fact that those tables were not indexed to inflation is the problem.
Talk about your population growth axe..........
I knew there was a reason why I voted for this guy.
Let me get this straight, you don't want to change the tax code because it is the worst possible one imaginable. Are you dumb or just plain insane.
Why would you say that? People are already paying that much in taxes on those items -- they just don't realize it. An NRST (national retail sales tax) is a replacement for existing taxes, not an addition to them. Economic studies show that post-tax prices should be relatively the same under an NRST as they are today, but the with added benefit of making all of your purchases with pre-tax dollars.
Besides, the "sticker shock" is a good thing -- it forces people to recognize the true cost of government. As far as the regressiveness claims -- rather than exempting certain items (which would then require the rate on everything else to be raised), the NRST proposal includes a family consumption allowance (FCA) which is essentially a fixed-size "rebate" of taxes paid up to the poverty line that is available to every citizen and legal resident.
But I do disagree about a sudden jump in prices. There have been calculation that payroll taxes and corporate tax burdens in general contribute roughly 39% to the price of goods under our current system. If it were phased in in such away that that difference was captured in the sales tax the impact on sales prices would be considerably less than 23%. It would depend on how it was implemented. Remember as well that people would no longer get FICA money withheld. If it was timed properly the effect would be about the same. It is true that lower income people would actually be paying some tax but the really should be happening anyway.
This is actually a effective way to combat outsourcing and manufacture flight if coupled with other incentives. There would be a rush of the Global Corporate 2000 to establish their world headquarters here and incorporate as US companies. If other incentives were offered (and perhaps a teeny weeny disincentive or two) the would problem of outsourcing and manufacture flight would just go away. It could be the greatest US expansion since the 19th century.
I am not going to hold my breath, however. It is much too intelligent and elegant of a solution to get by the gnomes on the Hill.
Got a mortgage? You'll lose the home interest deduction, but that's because you won't need it -- both interest and principal will be paid with pre-tax dollars. Also, your interest rate will be about 25% less -- ditto for car loans, college loans, etc.
What would congress do? They would want their power back. They're grifters you know.......
And I stand by my assertion about the effect outsourcing.
But once this gets put into place, they're stuck -- if they exempt item X, then the rate has to go up on everything else to compensate for it. Not that I expect they won't try, but it would be an uphill battle -- eternal vigilance is always required to keep congresscritters in check.
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