Posted on 08/01/2004 6:08:53 PM PDT by NeoCaveman
A domestic centerpiece of the Bush/GOP agenda for a second Bush term is getting rid of the Internal Revenue Service, the DRUDGE REPORT has learned.
The Speaker of the House will push for replacing the nation's current tax system with a national sales tax or a value added tax, Hill sources tell DRUDGE.
"People ask me if I’m really calling for the elimination of the IRS, and I say I think that’s a great thing to do for future generations of Americans," Speaker of the House Dennis Hastert explains in his new book, to be released on Wednesday.
"Pushing reform legislation will be difficult. Change of any sort seldom comes easy. But these changes are critical to our economic vitality and our economic security abroad," Hastert declares in SPEAKER: LESSONS FROM FORTY YEARS IN COACHING AND POLITICS.
"“If you own property, stock, or, say, one hundred acres of farmland and tax time is approaching, you don’t want to make a mistake, so you’re almost obliged to go to a certified public accountant, tax preparer, or tax attorney to help you file a correct return. That costs a lot of money. Now multiply the amount you have to pay by the total number of people who are in the same boat. You can’t. No one can because precise numbers don’t exist. But we can stipulate that we’re talking about a huge amount. Now consider that a flat tax, national sales tax, or VAT would not only eliminate the need to do this, it could also eliminate the Internal Revenue Service (IRS) itself and make the process of paying taxes much easier."
"By adopting a VAT, sales tax, or some other alternative, we could begin to change productivity. If you can do that, you can change gross national product and start growing the economy. You could double the economy over the next fifteen years. All of a sudden, the problem of what future generations owe in Social Security and Medicare won’t be so daunting anymore. The answer is to grow the economy, and the key to doing that is making sure we have a tax system that attracts capital and builds incentives to keep it here instead of forcing it out to other nations."
Sounds like a certain Presiential candidate, doesn't it?
I think the President can sell this if he wishes to. It is a BOLD plan, one that would bring infinite good to the people. It needs to be spoken of in an equally bold and visionary way. It needs to be presented in the same tone of liberation G.W. speaks in when refering to the Middle East.
If they get caught up in the economics of the plan the people will turn their ear away. If explained that this will concentrate power back to US, as well as the practical gains of keeping more of our own money, it's a huge win.
"Interest rates are determined by supply-demand forces and it is not clear that the assumption holds. In fact, it is not easy to say precisely what would happen, but I personally doubt that taxable rates will drop to nontaxable rates. I believe that previously taxable rates will drop substantially when they become non-taxable, but to a level higher than current non-taxable rates. And current non-taxable rates will rise slightly until they meet.
Actually, they won't meet, because if you could choose between a AAA insured municipal and a federal bond at the same rate, you would always choose the federal for liquidity reasons."
-- A taxable bond with the same risk rating as a non-taxable bond WILL meet. If not, explain to me why a corporate bond issuer would pay out more in interest than he had to? If they were callable, he would drop his rates in a heartbeat.
How about a state? There are plenty, including Florida.
There will be fraud and abuse with any tax system.
Because Drudge is not a journalist and makes his money from hits to his website and thus writes headlines designed to appeal to a certain long suffering segment of Republicans who tend to eat this stuff up.
I'll see yer tax simplification and raise ya an elimination of the IRS... ping!!! (ha ha ha)
I brought up municipal bonds before and I will refer to them again. No wise investor will invest in municipal bonds in a tax-exempt pension. We know that the municipal bond market is about 2 trillion dollars, so right away we know that there is at a minimum 2 trillion dollars in savings by people who have as you put it, "unforunately stashed their savings under the matress." 2 trillion dollars is not insignificant.
We know that many seniors have a lot of money held in CDs, all this money falls in the same category. What about capital tied up in investment assets, such as real estate, etc. At some point, that money will be spent and taxed and once that happens it has been double taxed, because without switching to the NRST, no federal sales tax would have been paid and no additional income tax is required.
I never understood this one point. At least to me, it is obvious that a lot of wealth will be double taxed. Many people who fall into this category will absolutely be opposed to switching to the NRST. Why will freepers not at least recognize the obvious? My goal is not to bash the NRST, I have stated many times that I strongly prefer the NRST. I just do not believe that with the problems I have discussed it will ever have the support required for passage and am trying to bring about a discussion that could lead to at least a partial solution to the problem.
Yes they do. They pay the taxes of the companies from whom they buy their goods and services. The hidden tax.
Well said - we are being plucked like suckers by Drudge and his "news".
In reference to your example, a corporate bond issuer will pay out more interest, because he has no choice - people charge a premium for illiquidity, and corporate and municipal bonds are simply less liquid then federal bonds.
"I never understood this one point. At least to me, it is obvious that a lot of wealth will be double taxed. Many people who fall into this category will absolutely be opposed to switching to the NRST. Why will freepers not at least recognize the obvious? My goal is not to bash the NRST, I have stated many times that I strongly prefer the NRST. I just do not believe that with the problems I have discussed it will ever have the support required for passage and am trying to bring about a discussion that could lead to at least a partial solution to the problem."
Suppose I said to you "Undeniable Logic, I have a plan which will double the value of your investments over 24 months. That's the good news. The bad news is you will have to pay taxes on a small portion of that increase."
And your answer would be?
Those with substantial savings, which are appropriately invested, will be huge WINNERS, not losers, under the FairTax.
When are you going to pay fines for cheating on taxes?
You will still need to inform the government how much you are making...still have to file forms....still have a IRS to keep track of it....
Businesses already have the accounting systems in place as they collect state taxes already....no real additional expense for them to change their computers from collecting 7% to 20% or whatever the rate becomes.
It's be very easy to people to make income "off the books" and not have it show up on a W2 - but much harder to go buy your groceries/toys/whatever without paying the tax.
And with this sales tax you can control your tax by controlling your spending...
And with Flat income tax, the business still has to file income forms on employees - and who is going to do that -- yep, accountants!!
If a national sales tax was used how do you acount for the heinz's,kennedy's, and gates of the world who already have their considerable nest eggs? How do you account for interest on their billions? I would be real scared about the possiblity of them turning into a new breed of emperor and would insist on the elimination of all these trust funds and would also insist on a severe death tax for these billionaires and some sort of limitation on before death transfers. A sales tax structure could be the underpinnings of a new rulling class, far worse than anything we have now if such money is allowed to accumulate. Just some things which would have to be taken into account in my view. I'm imagining Little George Soros the VIII in 2050 and its causing me chills.
Hard to believe that Russia has a more conservative tax policy than the USA. But it does.
And your answer would be?
Those with substantial savings, which are appropriately invested, will be huge WINNERS, not losers, under the FairTax.
No question, under your scenario, those with substantial savings would be winners. But you are assuming that huge gains are guaranteed - they aren't. They may be 99% likely, but not guaranteed. The double taxation is guaranteed. So the real question is, for someone who has substantial savings (this is not me, I am a student), are you willing to risk the guaranteed double taxation for a likely event of substantial capital appreciation?
This is an excellent question, and one that should be asked to people like my father. If their answer is NO, even if it is illogical, it should be respected.
I do want to state for the record that I believe that under the NRST, the economy will surge, markets will go up, and almost everyone will be better off - I am just bringing up some of the reasonable concerns that I know many people have that should be addressed, and it may very well be the case that your argument, as modified by me, fairly addressed the issue. I don't know, because I am not one of those that has to decide, because I don't have any wealth yet.
This was bandied about 10 years ago during the Gingrich Revolution. Nothing new here. [Yawn]
I'm really disappointed to see so many Freepers getting excited over this. Rather than wasting our efforts trying changing the way taxes are collected, I'd much rather see Bush and the GOP put their efforts into actually REDUCING the size of the bloated federal budget...shrink government down first, then start making real tax reductions.
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