Posted on 08/14/2004 10:58:52 AM PDT by forest
Last week, Juliet Eilperin reported in the Washington Post(1) that "House Speaker J. Dennis Hastert (R-Ill.) would like to abolish the Internal Revenue Service and replace the current tax system with either a flat tax, a national sales tax or a value-added tax." As reported, Hastert suggests that a new tax system would increase productivity and "double the economy" over the next 15 years. "All of a sudden, the problem of what future generations owe in Social Security and Medicare won't seem so daunting anymore," The Post reports Hastert wrote.
"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," Hastert said.
Hastert is, of course, quite correct. We should abolish that overbearing IRS and all of the unruly tax code. Federal tax law is so complicated, no person in the IRS (or Congress) understands all of it. Yet, every citizen is expected to obey 100%. Truly, it is a corrupt system.
But, before we begin looking for any new "flat tax" proposal, perhaps we should take a quick look at a little history -- see what has already been on the table.
Back in June of 1998, the House actually passed a bill to abolish the income tax code by the year 2003. Albeit, there was one damning caveat: that Congress approves a simplified replacement tax system before then.(2)
That, of course, did not happen. Because, then Treasury Secretary Bobby Rubin -- who is a millionaire hundreds of times over -- immediately jumped on the bill, saying the bill should never became law. "If enacted, it would create enormous uncertainty which could well have a severe adverse impact on our economy, our workers, our businesses, our people. Families, for example, would not know what to pay for a house because they wouldn't know if their mortgage interest would be deductible."
Pete Stark (D-CA) did a good job of representing the whining of the tax and spend Social-Democrats: "With the Republicans in leadership having no understanding of the basic tenets of economics and leading this house in the most amateurish, asinine way, we will destroy this economy, destroy the values upon which the families are based."
Then House Minority Leader Dick Gephardt, (D-MO), said the bill "is yet another irresponsible Republican idea masquerading as a solution. They refuse to have a real debate on tax reform because they know what we know: That the average taxpayer would be worse off under the Republican plans."
That just goes to prove how far out of touch the Democrats really are with the American people. Also, they fear losing the control they wield over the American people via the tax code.
In March of 1999, then House Majority Leader Dick Armey (R-TX) announced that he was reintroducing H.R. 1040, a bill to scrap the current tax system and replace it with a flat 17 percent tax on all income.(3)
"Filling out an IRS tax form can be a frightening experience," Armey said. "The forms and instructions we must deal with are complicated and confusing. Millions would rather pay someone else to deal with their returns than face this frustration. But there's no reason that our system needs to be so complex. My flat tax proposal offers a simple, fair alternative. It allows everyone to file their returns on a simple, postcard-sized form." . . .
"The flat tax offers relief to an America that is overtaxed, and burdened by the current tax system," said Armey. "Millions would find their tax burden reduced -- or eliminated entirely -- under the flat tax. But the flat tax offers no breaks for special interests. No loopholes for powerful lobbies. Just a simple tax system that treats everyone the same."
Armey also reported that the U.S. income tax code is a monument to unnecessary waste. The income tax system is so complex, the IRS publishes 480 tax forms and another 280 forms to explain the 480 forms. The IRS sends out eight billion pages of forms and instructions each year which, if laid end to end, would circle the earth 28 times. Nearly 300,000 trees are cut down each year to produce the paper on which IRS forms and instructions are printed. The tax code does more than complicate people's lives during tax season and reduce living standards. It pollutes Washington's political culture.
As special-interest provisions have been added to the tax code, Washington's lobbying industry has flourished. Washington's lobbying industry, which is the largest private employer in the nation's capital, generates $8.4 billion in revenue each year. If the lobbying industry were its own economy, it would be larger than the economies of 57 countries. While the thousands of lobbyists in Washington have prospered in an environment of tax favoritism, the typical taxpayer has not.
And remember a bean counter named Steve Forbes with a very interesting flat tax plan? His table is still available.(4) Forbes said: "Start by scrapping the tax code. Don't fiddle with it. Junk it. Throw it out. Bury it. Replace it with a pro-growth, pro-family tax cut that lowers tax rates to 17% across the board and expands exemptions for individuals and children so that a family of four would pay no taxes on the first $36,000 of income.
Not one cent to the IRS on the first $36,000. Anything over that would be taxed at a flat, fair 17%. The flat tax would be simple. You could fill it out on a postcard. It would be honest. It would eliminate the principal source of political corruption in Washington. It would be fair. Millions of people would be off the federal income tax rolls. There would be no tax on Social Security. No tax on pensions. No tax on personal savings. It would zero out capital gains taxes. It would set off a boom by letting people keep more of what they earn and by lowering barriers to risk taking. "(5)
Let's not discount any of the above mentioned people. Dick Armey is now at FreedomWorks(6) and still fighting for lower taxes, less government, and more freedom at the grassroots level. Steve Forbes is also still available to lend a hand. Many other "flat taxers" are, too. They may all be quiet at the moment, but that could be for a very good reason.
It appears that House Speaker Dennis Hastert sent up a trial balloon in an election year for a reason. George W. Bush has also mentioned abolishing the IRS as we know it and replacing those many thousands of pages of federal tax law, rules and regulations with a flat tax. This may be the time for President Bush to formally announce that publicly.
As this article was being written, President Bush was addressing an "Ask President Bush" campaign forum in Florida. The flat tax was mentioned and President Bush called it "an interesting idea." Then, Bush came back with: "You know, I'm not exactly sure how big the national sales tax is going to have to be, but it's the kind of interesting idea that we ought to explore seriously."
Was that also a trial balloon? Sure; of sorts. Unfortunately, the media didn't pick up on it and so few Americans know of the statement. In truth, President Bush knows exactly how high any of the flat taxes would need to be. People in the White House and on Capitol Hill have been quietly running the numbers for a couple years. Now is the time for our input -- before the Social-Democrats start whining about the program.
Let's face it, President (candidate) Bush likes to play his cards close to the vest. His campaign committee knows very well that, if President Bush were to formally make such a flat tax proposal within the next few weeks, there just ain't enough Prozac available in the nation to calm down the Social-Democrats and their liberal media cheerleaders enough to be understood properly by the electorate before November.
1. <http://www.washingtonpost.com/wp-dyn/articles/A37806-2004Aug3.html>
3. <http://www.uhuh.com/reports/headsup/hu90.htm>
2. <http://www.uhuh.com/reports/headsup/hu126.htm>
4. <http://www.ctj.org/html/forbedis.htm>
5. <http://www.pbs.org/newshour/bb/congress/forbes_flat_tax.html>
6. <http://www.cse.org/armey/index.php>
The article about the "True flat tax" seems to say that anything that doesn't transfer tax burden onto lower-income earners isnt worth doing. I don't get this mentality. Getting rid of taxes on capital gains and dividends would help the wealthy enough. I don't see the what's wrong with simplifying the tax code but not doing it in a way that would raise taxes on lower-income families.
I mispoke. What I was trying to say is:
Institute a national sales tax, and congress will raise it.
17% Flat Tax!!!!
You speak as though the Flat Tax and social security reform are mutually exclusive.
No just separate issues as far as any current proposals for a flat tax are concerned. The only legislation that proposes repeal of SS/Medicare taxes the HR25 NRST.
But even HR25, being a revenue bill, does not address SS reform, just the mechanism of how to fund it using retail sales taxes instead of payroll taxes, and establish a true "trust fund" in statute to pay monies into it.
I think they go hand in hand. They are both pro-growth. Letting workers invest their retirement money would be a huge boost to all of us, and it is extremely popular.
True, just as reducing growth of government and taxes go hand in hand however it is accomplished
I don't get why Bush hasnt touched this issue.
I suspect it has something to do with to much on the plate at one time, tax reform is extremely open to demogoguery, especially in an election year.
I think our economy would be somewhat stronger today if he had.
I'm not going to disagree there.
don't we have to get rid of the amendment that allows for the income tax first?
Actually .006 is six tenths of one percent or six one-hundredths of one. Per cent means per 100.
I don't see the what's wrong with simplifying the tax code but not doing it in a way that would raise taxes on lower-income families.
It can be done, but not with an graduated income tax. The problem with exemption is that it divides us into two artificial voting constituencies. Those participating in the tax system funding the government and paying the bills for they other half looking for more from government without perception of the burden imposed.
Think about it:
Walter Williams, World Net Daily, 10-25-2000
- So many Americans paying little or no federal taxes makes for a natural spending constituency. It's like me in the restaurant: What do I care about extravagance if you're footing the bill?
The Honorable James DeMint (R-SC)
United States House of Representatives
APRIL 5, 2001
- "There has been a shift in the relationship between individuals and government, he argues, such that fewer and fewer are paying taxes at the same time that more and more are receiving increasingly generous benefits. If it becomes the case that most voters do not bear a financial burden for this largess, then there will be little to restrain--and significant political incentives to encourage--the continued growth of government.
A retail sales tax on the other hand can be structured such that everyone must participate in paying the tax thus are sensitive to the burden that excess government lays upon us all, while at the same time assure that tax on expenditure up to the povertyline is covered by a demogrant paid to all households regardless of income or wealth.
Don't get my hopes up. The taxes in Hawaii are already too freaking high.
HI doesn't stand for Hawaii... It stands for:
HI taxes
HI cost of living
HI property values
And LOW pay... Damned liberals ran this state for too long.
Not a chance. Not under this president or this Republican party, and certainly not under the Democrats.
Institute a national sales tax, and congress will raise it.
When every voter pays that increase laid out in black and white for them on their grocery receipts? Think about it, state legislatures pay all kinds of h'll to get a retail sale tax hike and put their jobs at risk everytime they do, especially where if are no products exempt from the tax.
That is one of the problems with the current system. Half the tax bill is hidden from sight embedded into consumer prices. Exemptions and EITC makes a joke of the other half for lower income levels.
You have half the citizenry voting for more government on the backs of the other half. While complaining that high prices are all due to those nasty ole corportation paying income and payroll taxes.
| "As a matter of fact, what the income tax does — and this is the debate that I think we always try to get into in order to let you and him fight, see — and the people of this country are led down a path where the actual control of their resources, which in the end is the control over their will, is handed off to the government." . . . "The government then manipulates that will in order to destroy the freedom of our electoral system through the income tax structure, and we call the resulting slavery a free system." "In point of fact, it is not as the founders understood, and the only way to restore real freedom is to give people back control over the income that they earn so that they won‘t, at the voting booth and in other phony issues, be subject to that manipulation." |
The income tax on corporations should be abolished. The most logical approach would be to replace it with a value added tax.
Consider two companies, one which is successful and makes 10% profit on revenues of $10 million, and the other which is unsuccessful and breaks even on revenues of $10 million.
We penalize the successful company by taxing away part of its profit of $1 million, and we reward the unsuccessful company by not taxing it at all (and we would give it a tax loss carryforward, if it had lost money!).
A direct tax on the revenue would be more equitable. Both companies dis $100 M of business, and both should pay the same taxes.
The usual argument that the successful should pay more in taxes does not apply to corporations, since they are not people and they are just a legal mechanism for collectively doing business. When they pay dividends to their stockholders, or when their stockholders sell shares at a profit, those dividends and profits should be taxed in a way that reflects our political judgement regarding the ethics of wealth distribution in society.
By taxing corporations the same based on revenues, we would not weaken the successful companies and we would not prop up the unsuccessful companies.
More unprofitable companies might go bankrupt sooner, but that would generally be a good thing since the profitable companies would fill their markets and become still more profitable.
If you would like to be added to this ping list let me know.
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 retail sales 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.Refer for additional information: http://www.fairtax.org & http://www.salestax.org
Hillary Rodham Clinton
(July 3, 2004)
I've been waiting to hear more about this since I heard Hastert on the tube last week mentioning it. If it does not happen it is OUR fault. I ,for one, am going to get the word out on this. Whatever you believe about politics, there is ONE truth. These people want elected. Let them know it will take a change in the tax structure of this country and MEAN it.
If this happens, you become a Democrat?
We won't let that happen!
When you were a child, you were a deduction for your parents. You enjoyed the additional monetary resources to make your life comfortable. Now, as an adult, you would deny the same benefits to other children. Self-centered attitude.
A similar argument can be made about property taxes to support schools. Why should people without school age children be assessed taxes to run the schools.
You have to understand this would be on every transaction but so what, its very very low. There are trillions and trillions of dollars in transactions every year. You can do away with the sales taxes and also the state income taxes. Its a very low tax rate but would generate massive revenue for the government.
Hey AG, how the hell are they supposed to eliminate the IRS while keeping the Income tax, even if it is flat?
There's only two ways to get rid of the IRS:
1. A NRST administered by the states
2. Re-institute apportionment among the states, just like it was for 125 years.
I'm a huge backer of #1, as we all are, but #2 is NEVER talked about.
However, and I've been thinking about this for quite some time, is simply passing a constitutional amendment stating that the federal government cannot tax, only states can? The federal government would retain control over federal spending and funding would be required from the states based upon their representation in Congress.
California has 54 congressmen, so they pay 12% of the tax burden. They say raise it however the hell they want!
This would encourage sooo many great things:
1. States would tend to elect fiscal conservatives to look after their own wallet.
2. representatives will oppose pork programs going to OTHER states.
3. (this is the really cool one) States would strive to find the most efficient way of collecting taxes in their state. That would probably be some sort of sales tax, which is good, but maybe states figure something even better out. What if a state found out that the most efficient way to tax was to apportion their OWN tax burden to the county level, of soem other idea we haven't even thought about???
Does anybody have thoughts on such a proposal?
I know you know this already....but let me remind you that not just the "wealthy" have cap gains/dividends. Many dollars get tied up in investment vehicles..that would have been freed..if it wasn't for capital gains taxes.
I've even seen people take losses in investments....that they once had short-term cap gains....but wouldn't take them because they didn't want to pay the tax. But in the end they ended up with principle losses........Idiotic, but true.
FRegards,
You are wrong about people having to pay their tax on April 15th. Those who have to pay estimated taxes have to pay every quarter, or face stiff interest and penalty charges, so it is each quarter that the sheeple would have to fork over the dough. But you are right, in that insurrection would result. Since many wouldn't have the amount on deposit in their checking accounts to pay the taxman each quarter, there would be lots of bounced checks, non-compliance, and a burdgoning tax criminal class. But your "Get rid of withholding" is a pipe-dream. We are a divided country - the power elite, and the paycheck to paycheck drones. The power elite hold the drones in thrall. A change in tax code would open the opportunity for the haves to reduce their taxes, and impose more burden on the drones.
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