FairTax Summit in Florida

August 20th, 2004 | AFFT

[Remember_Salamis]

Hello!

With the recent national media attention on tax reform alternatives we believe we are quite close to the tipping point on fundamental tax replacement. Our website has taken thousands of hits. Our 800 number is ringing off the wall. There is no question the time for positive action is now. We are working with both Presidential candidates staff and expect to get a senior surrogate speaker from both Bush and Kerry. The American people demand a fair and simple federal income and Social Security tax system. Come to Florida and make your views known.

We intend to keep this fire alive.
So we are having a conference, in Florida, in September, when the press will be crawling all over the state due to the hotly contested presidential and senatorial elections. And we'd like you there with us.

2004 Tax Policy & Jobs National Leadership Conference
September 17 through 19, 2004
Orlando, Florida
An invitation to attend

Why? Grassroots leadership is the key to actually moving reform forward. This conference brings together the top national, regional, and state leaders in tax policy, job growth, and economic development. We will examine the current alternatives to educate the grassroots and Congress in tax systems that make our country's goods more competitive at home and abroad, and provide sufficient funding for the reform and assurance of our Social Security system, while ensuring economic opportunities and stability for, and the welfare of, low-, lower middle-, and fixed-income Americans.

Our current tax system exports American jobs rather than American products.

The current income tax system drives up the cost of American manufactured goods and agricultural commodities, to say nothing of its complex, intrusive, inefficient, special-interest-driven nature. Not only does the current system decrease our competitiveness overseas, it increases domestic prices for those who can least afford to pay. Funding Social Security reform is almost as daunting as reform itself. The Social Security system is supported by a narrow, regressive payroll tax, levied heavily on low- and lower middle-income Americans. While Social Security system reform is clearly necessary, this is not the purpose of this conference. Determining a responsible, long-term funding solution for Social Security reform is a purpose for this conference.

Result? Bring job creation and Social Security reform-friendly tax policy to the forefront of our national economic debate.

Who? The Tax Policy & Jobs Conference is sponsored by National Tax Research Committee.

When? September 17 through 19, 2004

Where? Gaylord Palms Resort & Visitors Center, Interstate 4 @ Osceola Parkway East (Exit 65), Kissimmee (Orlando), Florida, right across the freeway from Disney World

Data for attendees

• Registration is $100.
• This conference is a summit. It is intended for leaders who move federal and state income and payroll tax policy and these tax systems' effects on job creation/competitiveness in the United States.
• This event is educational, nonpartisan, and will offer all viewpoints on tax reform where supporters are willing to present in person.
• Due to the media attention focused on Florida from both the presidential and the Florida senate race, it will be held there to heighten interest in the policy of these issues.
• There will be individual speakers and panels to educate attendees during general sessions.
• There will be booths available where attendees will learn more between general sessions.
• Register on line at https://secure.fairtaxvolunteer.org/registration/.

Very best regards,
Tom


Thomas A. Wright
Executive Director
FairTax.org
tom@fairtax.org
www.fairtax.org
1-800-FAIRTAX




Contributions to Americans For Fair Taxation are not tax deductible because we lobby for you in Washington, D.C.

[ancient_geezer]

BTW, Where did the $800 Billion compliance cost number bandied about come from?

I Notice you didn't bother to check the foot note on your excerpt from Mastomarco's paper lewislynn.

 

[62] In addition to disguising the economic incidence of the upstream taxes, our still photograph of the income tax system has also conveniently covered up the costs of compliance with the system. These are not negligible. According to most estimates, compliance costs are approximately $220 billion per year. /33/ Although some estimates at the low end are about half that. There are also estimates that are twice that high. If the compliance costs are upwards of $220 billion, they amount to about $850 per man, woman, and child for paperwork, filing requirements, interpretation of the law, contesting penalties, and the other unnecessary chores associated with a protean system that makes every taxpayer a collector and accountant.

/33/ See http://www.taxfoundation.org. According to an Office of Management and Budget report to Congress on the costs and benefits of federal regulations complying with the federal tax code cost the nation about $140 billion in fiscal 1997. The OMB estimated the cost by multiplying the cumulative hours needed to prepare tax forms (5.3 billion) by an estimated opportunity cost of $26.50 per hour. (Doc 98-25927 (66 pages)).

 

The costs in Mastromarco's "cost of compliance" estimate is just for processing the IRS paperwork and record keeping. It does not include costs of research, tax planning, legal fees & litigation of IRS suits and dealing with IRS inquiries, imposed fines fees etc by the IRS & courts, and a wide range of indirect costs imposed on business as a consequence of dealing with the tax code that the figures of James L. Payne addresses in his studies.

Going onto TaxFoundation to look at what is stated there:

http://www.taxfoundation.org/compliance2002.html

Overhead Compliance Costs

The complexity generated by the growth and constant change of the tax code creates two general types of economic cost: overhead and opportunity cost. Overhead can be divided into three principal activities: the economically sterile exercises of tax planning, compliance, and litigation, all of which act like tax surcharges on taxpayers.

• The first type of overhead is tax planning, which in this context refers to all the economic decisions that individuals and firms make to maximize their benefits in the tax code.

• The second type of overhead, tax compliance, refers here to the basic actions required to file the federal income tax, including record keeping, education, form preparation and packaging/sending.

• The third type of overhead is tax audits and litigation, referring to the cost of the IRS and the Tax Court, as well as all the legal costs that taxpayers incur while dealing with these two government institutions.

Of these three costs, the second, tax compliance, is the only one estimated in this report. It is for this reason that the data presented here should be viewed as extremely cautious estimates of the federal income tax compliance burden on taxpayers.

*** snip ***

 

The Burden of Compliance Costs

As shown in Table 3, Table 4 and Table 5, the Tax Foundation estimates that in 2002 individuals, businesses and non-profits spent over 5.7 billion hours complying with the federal income tax. Using an hourly cost of $29.98 for individuals and $37.26 for businesses and non-profits, the estimated cost of compliance in 2002 is $194 billion (See Methodology section for details about how the hours and wages were determined)—Individuals bear a cost of $86.1 billion, businesses bear a cost of $102.5 billion and non-profits bear a cost of $5.4 billion. Therefore, the overall compliance cost surcharge alone amounts to nearly 20.4 cents for every $1 collected by the federal income tax.

 

As compared to Dr. James L. Payne's [Costly Returns: The Burdens of the U.S. Tax System] with a much more comprehensive evaluation used in my number representing the costs of the Federal tax system to business establishing 65 cents for every dollar of total tax revenue collected, assessing record keeping & forms processing, as well as tax planning, computers and software purchased to fulfill IRS requirements, Enforcement costs, Disincentive costs to production, Disincentive costs of tax uncertainty, Evasion and avoidance costs, Government costs etc.

[lewislynn]

BUT the compliance cost guesstimates from whatever source are for ALL taxpayers including individuals who's "compliance costs" have NO AFFECT on retail prices.

[ancient_geezer]

BUT the compliance cost guesstimates from whatever source are for ALL taxpayers including individuals who's "compliance costs" have NO AFFECT on retail prices.

And that is why you remove the portion attributable to individuals, coming out with more than $800 billion for business alone instead of $1.3 Trillion of total tax related overhead costs in 2000.

[lewislynn]

And that is why you remove the portion attributable to individuals,

Nice try. By their own admission they don't know exactly how much it is let alone what is attributed to who. Aside from that it's not like businesses wouldn't ever have to comply with tax laws or never do accounting again is it?

Still can't make those 20% reductions real though can you?...You can't even fake them to make them look real.

[lewislynn]

According to most estimates, compliance costs are approximately $220 billion per year. /33/ Although some estimates at the low end are about half that. There are also estimates that are twice that high.

The OMB estimated the cost by multiplying the cumulative hours needed to prepare tax forms (5.3 billion)...For ALL taxpayers, including millions of individuals whose "compliance costs" have no affect on retail prices...

And that is why you remove the portion attributable to individuals, coming out with more than $800 billion for business alone instead of $1.3 Trillion of total tax related overhead costs in 2000.

Not only is there no reference to YOUR $800 Billion there's no way you can twist it to $1.3 Trillion

If you can do that, why can't you demonstrate how you would be able to reduce your rent 2O% and not lose money?

[ancient_geezer]

there's no way you can twist it to $1.3 Trillion

 

http://fms.treas.gov/mts/mts0901.pdf

• Total revenues collected by Feds in '00 = $2,025 billion
  

Flatten the Tax Code before it Flattens Us, Lawrence W. Reed; Makinac Center April 1, '97

The work of economist James L. Payne is perhaps the most authoritative and exhaustive available on the cost of today’s federal income tax code. He has demonstrated that most of the expense of compliance does not show up on the government’s books because businesses and individuals in the private sector are paying it—in time and bills from tax preparers. In his 1993 book, Costly Returns: The Burdens of the U.S. Tax System, Payne assembled data from the IRS and other sources—public and private—and arrived at a startling conclusion: For every tax dollar collected and spent, Americans pay an additional 65 cents in collection and compliance costs!

http://www.ncpa.org/ea/easo93/easo93f.html

The Internal Revenue Service claims that it runs an efficient system that costs the country less than 1 percent of revenues collected. But the IRS does not take into account the additional costs borne by taxpayers because of the complex tax system.

• In order to comply with the tax code, taxpayers incur costs (equal to about 24 percent of net taxes collected) for record keeping, data processing, learning the tax code and filling out forms and supporting documents.
• Because the tax system discourages work, saving and investment, the nation loses real ouput equal to about 35 percent of net tax revenues.
• The costs of enforcement and of tax avoidance and evasion total another 6 percent of net tax revenues.

When these are considered, the total cost of operating the U.S. tax system is more than $500 billion in 1990 terms, or 65 percent of net tax revenues. This means for every dollar the IRS collects, it actually costs taxpayers $1.65.

 

Buy the book lewey you might actually learn something from it.

 

0.65 * $2,025 billion = 1.316 Trillion. in 2000.

And get a refresher course in arithmetic. Concentrate real hard on percentages and factions.

[Your Nightmare]

Payne's book was based on studies in the 80's before computers had cut down the processing time. It's interesting that you ignore much more recent studies and go with one that is over a decade old (based on studies almost two decades old).

I guess this outdated study fit's your needs.

[Your Nightmare]

0.65 * $2,025 billion = 1.316 Trillion. in 2000.

There were $529.01 billion in corporate taxes last year.

0.65 * $529.01 billion = $343.85 in corporate compliance costs

Embedded Tax Calclulation Using the "Old Person" Method

• Total revenues collected by Feds in '03 = $1,782 billion (17.71% of prices)

Those tax components which will not change prices as a consequence of enactment of HR25

• Individual Income Tax (Labor) = $793.70 billion
• Employee half of Social Insurance = $674.98/2 = $337.49 billion
• Excises = $67.52 billion
• Customs Duties = $19.86 Billion
• Miscellaneous = $34.42 Billion

============================

• Total constant price factors = $1252.99 billion
• Remainder federal tax components affecting price = ($1,782-$1,252.99) = $529.01 billion

Adjust for a conservative $343.85 billion cost of tax compliance, (The Flat Tax; Hall & Rabushka, '95, What the Income Tax Costs the American People: quoting James L. Payne estimates 65 cents for each dollar of revenue collected).

• Total tax related factors affecting consumption price = ($343.85 + $529.01) = $872.86 billion

Estimated change in consumption prices as consequence of enactment of a National Retail Sales Tax, repealing all business income and payroll taxes:

17.71%*($872.86/$1,782) = 8.67% reduction in consumption prices

[ancient_geezer]

I guess this outdated study fit's your needs.

Certainly for it is supportable in later years as well

There was Pilla '95

Killing the IRS, By Daniel J. Pilla, Reason Magazine July 1995

"There is little about a flat-tax system that will trim the staggering cost of tax law compliance. At present, this burden is estimated at $700 billion annually. Much of the cost is associated with recordkeeping and tax law enforcement, neither of which is reduced by a flat tax. A flat tax certainly involves a simpler tax return, but return preparation is the smallest component of tax law compliance.

The solution to our tax problem is to adopt a national retail sales tax in place of the personal and corporate income tax. Only a sales tax can eliminate the invasiveness of the IRS, since one's income and lifestyle are irrelevant."

 

---

Ernest Christian 1Trillion & Gravelle :

Chief Executive, The New directions in tax reform -
May 1995.

Tax expert Ernest Christian Jr., a partner with Washington's Patton, Boggs & Blow, reckons these are low estimates or at best incomplete. Citing a U.S. Treasury study which indicates that 6 billion man-hours are consumed each year just in the record keeping for income and payroll tax returns alone, Christian says the true burden on the U.S. economy is probably closer to $1 trillion. For example, Jane Gravelle of the Congressional Research Service estimates that economic loss from the corporate income tax is equal to about 97 percent of the corporate tax revenue collected.

 

---

And Gayvelle again with more of just the corporate income tax portion '97:

 

STATEMENT OF REPRESENTATIVE DICK ARMEY
HEARING ON THE IMPACT ON
INDIVIDUALS AND FAMILIES OF REPLACING THE FEDERAL INCOME TAX
Committee on Ways and Means, Full Committee, 4-15-97 Testimony

Hinders Economic Opportunity

According to a study by Jane Gravelle, an economist with the Congressional Research Service, and Larry Kotlikoff, an economist at Boston University, the corporate income tax costs the economy more in lost production than it raises in revenue for the Treasury. Dale Jorgenson, the chairman of the Economics Department at Harvard University, found that each extra dollar the government raises in revenue through the current system costs the economy $1.39.

Sorry not only is the federal burden on the economy much larger than you pretend it to be, every indication is that it is actually growing in proportion with time.

For total costs business and individual for all federal taxes (income & payroll)

0.65 * $2,025 billion = 1.316 Trillion. in 2000.

[ancient_geezer]

I refer you to the section of the following article about the Income/Payroll tax system and its impact on our economy "A. Hidden Upstream Taxes. " paragraph 39.

"[39] Dr. Dale Jorgenson, Chairman of Harvard University's Economics Department, believes that the price of goods and services are inflated by about 20 percent or more by upstream taxes consumers ultimately bear. In a recent paper Dr. Jorgenson estimated the built-in taxes contained in the price of goods and services. /22/ In the chart above, he quantified the hidden component of tax, estimating that producer prices would fall on repeal of upstream taxes an average of about 22 percent."

Looking at the accompanying chart, the range of values from industry to industry appears to be about 12-25%.

Economists Gary and Aldonna Robbins of the Texas-based Institute for Public Policy examined the case of dry cleaning a shirt, with a particular eye toward uncovering the hidden costs of taxes in price.

The Robbin's attributed over 33.6% of "consumer prices" to be due to federal taxation passed on to the customer.

http://fms.treas.gov/mts/mts0901.pdf

• Total revenues collected by Feds in '00 = $2,025 billion
  (33.6% of consumer price [per Robbin's 1999 federal tax contribution to prices] )

Those tax components which will not change prices as a consequence of enactment of HR2525

• Individual Income Tax (Labor) = $1,004.5 billions,
• Employee half of Social Insurance = 648/2 = 324.0 billions,
• Excises = $68.9 billion
• Customs Duties = $19.9 Billion
• Miscellaneous = $42.7 Billion
  ============================

• Total constant price factors = $1,460 billion
• Remainder federal tax components affecting price = (2,025 - 1,460) = $565 billions

Adjust for a conservative $800 billion cost of tax compliance,
    (The Flat Tax; Hall & Rabushka, '95,What the Income Tax Costs the American People: quoting James L. Payne estimates 65cents for each dollar of revenue collected)

• Total tax related factors affecting consumption price = (800 + 565) = $1365 billions

Estimated change in consumption prices as consequence of enactment of a National Retail Sales Tax, repealing all business income and payroll taxes:

33.6*(1,365/2,025) = 22.64% reduction in consumption prices

Which more than verifies the Jorgenson empirical study of a 22% fall in producer prices

The two sources are in reasonable agreement, Just using static analysis taking the repeal of SS/Medicare taxes as well as income taxes into account for HR25.

I see 20-25% a reasonable value to expect retail prices to fall, not only for customers here in the United States, but in our exports as well making them far more competitive on international markets.

 

Accounting for productivity enhancements and other economic growth factors would add to the potential for decline in consumer prices as can be determined from Jorgenson's studies! But would be beyond the scope of this validation.

[Your Nightmare]

I've already shown that Robbins number to be erroneous. Why do you insist on using it?

Oh, that's right. You're not worried about the truth...

[Your Nightmare]

Remainder federal tax components affecting price = (2,025 - 1,460) = $565 billions

Adjust for a conservative $800 billion cost of tax compliance, (The Flat Tax; Hall & Rabushka, '95,What the Income Tax Costs the American People: quoting James L. Payne estimates 65cents for each dollar of revenue collected)

In one line you're saying the corporate tax is $565 billion. In the next line you're saying compliance costs are 65% of every dollar collected and somehow conclude that equals $800 billion. Isn't 65% of $565 billion equal to $367 billion?

Try to stick with the truth, AG.

[Your Nightmare]

Total revenues collected by Feds in '00

2000? That doesn't take into account the Bush tax cuts. Why not use 2003 numbers? I provide them for you.

So you use numbers after the Bush tax cuts when they benefit you and don't when they go against your political agenda.

[ancient_geezer]

2000? That doesn't take into account the Bush tax cuts. Why not use 2003 numbers? I provide them for you.

To remain consistent with the original conditions the original rate was established under.

The NRST of HR25 was based on pre Bush tax law and economic conditions when calculations showed that the sales tax would have to be in the area of 23% and repeal of the tax law then in place would have and effect on the economy of a magnitude commensurate with that tax law.

A complete economic study by the congressional research staff of the Library of Congress is now under way updating for current tax law & economic conditions which indicates the NRST rate will come out in the 18-20% range. After that study is completed the bill will be updated and it will make sense to then work with the latest information consistent with Bush's tax cuts in light of the updated value of the NRST rate.

Just think you get to start all over again with a chance to snipe at a whole branny new set of numbers at that time.

Ain't life grand ;O)

So you use numbers after the Bush tax cuts when they benefit you

I only use the Bush tax cuts to point out that the NRST rate is head down before long. I don't use them with the current bill as they are not consistant with the economic and legal conditions existing at the time of the reviews for HR25 were done.

[Your Nightmare]

To remain consistent with the original conditions the original rate was established under.

The NRST of HR25 was based on pre Bush tax law and economic conditions when calculations showed that the sales tax would have to be in the area of 23% and repeal of the tax law then in place would have and effect on the economy of a magnitude commensurate with that tax law.

We are discussing the NRST rate. We're discussing how much of the prices we pay today are "embedded" taxes. Why are you bringing up the NRST rate?

[lewislynn]

A complete economic study by the congressional research staff of the Library of Congress is now under way updating for current tax law & economic conditions which indicates the NRST rate will come out in the 18-20% range

That's probably the one that used to be 15% without SS included, not your 23%.

There's nothing like a good honest big government study with predetermined conclusions.

[ancient_geezer]

In one line you're saying the corporate tax is $565 billion. In the next line you're saying compliance costs are 65% of every dollar collected and somehow conclude that equals $800 billion.

Business overhead is higher in proportion to tax revenues collected from them, than individual experience.

Data in Payne's book, and what you can find in The Flat Tax; Hall & Rabushka, '95, indicates that by far the greatest burden lay on businesses and a much lessor proportion of the total on individuals.

Isn't 65% of $565 billion equal to $367 billion?

The business portion is roughly 2/3rds of of the total burden individuals and non-profits making up the remainder. The $800 billion is nothing more than that 2/3rds of the total economic burden for both business & individual rounded down to a single digit of precision to provide a conservative value for impact on business costs.

Try to comprehend the material in the links provided instead of creating an adhoc argument sometime

[ancient_geezer]

We are discussing the NRST rate. We're discussing how much of the prices we pay today are "embedded" taxes.

The rate is related to the taxes law being replaced for the economic conditions in effect at the time of determination. 23% pre Bush tax cuts and pre-Bush economy. That is why one sticks with a consistent set of conditions by selecting 2000 as a base year, prior to the implementation of the Bush tax cuts and when the HR25 NRST rate was established.

why are you bring up the rate?

With tax cuts the embedded tax related factors change, the proposed NRST rate changes as well. That is why a new study is underway now.

[Your Nightmare]

The rate is related to the taxes law being replaced for the economic conditions in effect at the time of determination. 23% pre Bush tax cuts and pre-Bush economy.

You're just makin' stuff up now to try and sound like you know what you're talking about. The NRST rate has nothing to do with the taxes "embedded" in prices right now.

[William Terrell]

Whatever Terrel. I would suggest you have a personal problem.

Whatever?

Point 1: The socialist infrastructure in America depends on disbursing public funds to individuals on the basis of their situation in life rather than any goods or service they provide to the government.

Point 2: The only way to continue this system is for the government to maintain massive revenue sources.

Point 3: At present somewhere between 30% and 50% of Americans do not pay income tax, either directly or by rebate.

Point 4: The income tax only applies to the money an individual makes, and if that individual makes less, or his job goes overseas, the tax base shrinks even from even the 50% to 70% that do pay income taxes.

Point 5: The trend in Point 4 is accelerating.

Point 6: Also accelerating is the political strategy of promising more disbursements to get more votes, thereby establishing a system for self-perpetuating socialist programs.

Point 7: The NRST embeds the system in rebates to households.

Point 8: The NRST ties the perpetuation of the base of socialist programs, the social security system, to the amount of sales tax received with the caveat that the amount allocated to the SSS must remain constant, implicitly requiring that the sales tax base be increased if the amount falls below that constant.

Point 9: The NRST means more revenue for the Federal government, regardless of the increase or decrease of usable income available to individuals.

Pint 10: Points 1 through 9 are fact, obvious, and indisputable, refutable neither by out of context quotes from the Federalist Papers, off point court cases, or misinterpreted sayings from 18th and 19th century political analysts.

Personal problem? You're damn right I have a personal problem. It's called perpetuating a system guaranteed to fail, with me and mine, and the rest of America, in the middle of it.