Posted on 09/17/2004 9:16:15 AM PDT by LincolnLover
WASHINGTON (Reuters) - President Bush (news - web sites)'s call for a simpler tax code could mark the next step in a gradual move toward a system that places more of a tax burden on consumption and less on savings, analysts say, a direction critics think would put a bigger burden on working Americans.
In his speech to the Republican convention two weeks ago, Bush said he would launch a bipartisan tax reform effort if he wins a second term but offered little direction to those who may wonder what types of changes he envisions.
"The American people deserve -- and our economic future demands -- a simpler, fairer, pro-growth system," Bush declared as he accepted his party's presidential nomination.
Bush has consistently sought to reduce the tax burden on capital, winning cuts in levies on investment gains and dividends and pushing for tax-free savings accounts, in addition to reducing marginal income-tax rates.
"You could characterize many of the steps that have been taken as moving us toward a progressive consumption tax," a tax on money spent rather then earned, said budget expert Rudolph Penner of the Urban Institute. "In other words, basically easing the burden on capital."
"I think they're rapidly reaching the end of where they can go in their current incremental approach," he added.
Pamela Olson, a former Treasury Department (news - web sites) official who had examined reform options for the Bush administration, agreed the president would look favorably on changes to spur savings, but said he was unlikely to fully scrap the current code.
"The president likes an income tax because he thinks an income tax is fair," she said. Olson suggested eliminating capital gains and dividend taxes would be a high priority, saying Bush disliked "double taxation" of corporate earnings.
BEARING THE BRUNT
Republicans argue that more incentives for savings would provide a greater pool of capital that could be tapped to expand the economy's productive potential.
Democrats counter that only wealthy Americans have the wherewithal to boost their savings (emphasis added) and worry a Bush reform effort would weigh heavily on middle-income workers.
"I guess you could call it, if you wanted to look at people rather than things, more tax cuts for the rich. But this time it's going to be revenue neutral, so we're going to raise taxes on the middle class," said Bob McIntyre, director of Citizens for Tax Justice.
Olson cautioned against drawing conclusions about where a Bush-led effort might lead and said easy labels stood in the way of fixing a muddled tax code.
"We keep using this as a political football," she said. "When you strip away the rhetoric you find there is a tremendous amount of agreement among people of all stripes."
Indeed, some past efforts to overhaul the tax code have drawn a measure of bipartisan support.
While Bush has shed little light on his reform views, he has offered kind words on the campaign trail for two broad reform ideas -- a flat tax and a national sales tax.
But former Treasury Secretary Paul O'Neill says Bush showed little appetite for fundamental reform while he was in the administration.
"I don't think he really understands what fundamental tax reform is about -- to him, it's just a line from a speech," O'Neill told author Ron Suskind after the president's latest call for reform. Suskind posted the comment and a November 2002 memo from Olson to O'Neill examining reform options on the Web site for his book, "The Price of Loyalty."
In any event, analysts said, political hurdles would likely prove too high for wholesale changes, particularly at a time the government is trying to rein in record budget gaps.
"I think the odds are strongly against it," Penner said.
"I'll reduce my income when you agree to reduce yours."
Geez, you haven't learned anything at all on these threads, have you, LL? When your costs go down .... oh, never mind. What's the use?
"You have to be FOR something, YN. What is your preferred alternative?"
What about Willie Green's proposal to eliminate corporate income taxes and substitute import tariffs (which would violate WTO provisions and precipitate a trade war)? would you like to argue THAT position? You could be the first FReeper that Willie has been able to recruit!
Of course, you would have to argue that keeping personal income taxes and payroll taxes is positive. I'm sure Willie would help you with that argument.
If my costs go down, won't your costs also go down?...As I said, when you agree to reduce your income, I'll do the same.
+30% tax.
Presently, a $100.00 gross sale would be minus any income taxes due, the balance is mine.
After a sales tax, the same $100.00 gross sale would be minus 23% with only $77.00 left to spend...
$77.00 minus 23% taxes yet to pay when I want to, or have to spend it.
My $100.00 gross sale after the sales tax would be taxed at 41%...The remaining $59.00 would have to include the cost of the goods sold, profit, wages etc.
Is that how everyone you know figures a sales tax?
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No of course not - we've had this discussion. when i think of overall tax burden, i (and anyone else i have EVER talked to) use inclusive rates. when i'm determining the price of an item, i use exclusive.
i think both rates are useful. my post was to point out intellectually dishonesty.
No, he only pays taxes on his profits. Even if he had a 20% profit margin and paid 33% total effective tax rate, the most he could drop his prices due to taxes is < 7%.
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you are forgetting two things that you yourself taught me-
compliance costs and taxes embedded in production goods...
so it is NOT true that he only pays taxes on profits... those are the only taxes recognized by the ingnorant masses though.
yn told me that he did not object to a consumption tax, just the fair tax.
i have asked him to explain why he would not object to a cnsumption tax - but haven't gotten info yet - but i'm willing to wait.
Presently, a $100.00 gross sale would be minus any income taxes due, the balance is mine.
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you have omitted other areas of savings in your operations - all of the stuff you buy in production will be cheaper.
So whatever profit margin you require (hence the $100 price) can still be obtained with a lower price.
i have asked him to explain why he would not object to a cnsumption tax - but haven't gotten info yet - but i'm willing to wait.I believe I have answered you.
you are forgetting two things that you yourself taught me- compliance costs and taxes embedded in production goods...You must have me mistaken for someone else. I'm the one who thinks the compliance cost is grossly overstated and that labor and capital holders pay most of the corporate income tax.
You must have been dozing off on these threads for the past several years. For the 10 millionth time, ALL taxes are paid by individuals.Governments don't pay the FairTax?
no- your estimate was 8% of prices was embedded tax...and you used lower than normal compliance costs.
regardless, that 8% (whether accurate or not) was omitted from the scenario
sorry if i missed it - i'm in and out- i will look again- apologies
Geez, you haven't learned anything at all on these threads, have you, LL? When your costs go down .... oh, never mind. What's the use?Ummm, Jorgenson's numbers are a fluke of his model. You are also ignoring what the central banks would more than likely do to protect the value of current assets.
goverments collect the tax in prices (like any other entity).
what are you getting at?
That 40% of the INCOME Tax revenues would be paid by governments and therefore "hidden" from the public. They would be "embedded" in your state and local sales, income, and property taxes.
just like they are now
The quote I posted shows, legally, a tax on income (contractors/employees) is not a tax on its source (government).
Which is totally irrelavant to the issue of Congress exempting federal contractors and suppliers from any federal tax it chooses to.
The quote you posted addressed the issues of intergovernmental immunity from taxation as regard employees of government contractors and government agencies, and not the express exemption of such contractors or employees from remitting taxes or receiving credits for federal taxes they remitt.
My statement: "Now if you can figure out how to credit back the embedded taxes of all government consumption purchases to government contractors and service providers for income/payroll taxes before the NRST is implemented, we can discuss providing equivalent exemption to the government on its consumption under the NRST as a viable option."
Your quote does not provide any basis for a constitutional prohibition or problem in Congress exempting contractors or suppliers, as you appear to be concerned with:
YN:" The basic reason for the tax on government consumption is that you can make the rate seem lower than it is (kinda like using the inclusive rate). You also need to read up on your constitutional law in regards to income/payroll taxes and government contractors."
with the federal government from exempting its contractors and suppliers from paying any federal tax Congress may allow thereby relieving contractors and service providers of the burdens of remitting federal taxes and remove the inefficient round robin payment of federal taxes that occures as a consequence of imposing taxes on federal contractors thereby providing the ability to negotiate lower contract payouts and consequent budgetary savings to the federal govenment.
Nor does it remove the alternative action of
AG: "exempt government from paying the NRST if you like, and reduce the target revenues by that amount. That way we can assure government wouldn't get a windfall in spendable funds with which to grow on and unecessarily raise tax rates."
Which totally removes the roundrobin payment you apparently object to as a trick:
YN: ""giving ourselves money equals revenue" trick?"
If it is a trick in the NRST it is equally a trick in the current income/payroll tax system for govenment to finance income/payroll taxes paid by its contracters and service providers indeed its employees, not to mention income taxes expressly imposed on beneficiaries of the Social Security system.
If it be a trick, it should be totally removed as regards any tax system, the current tax system as well as the NRST without the specter of windfall tax revenues accruing to government that could be applied to even greater growth of government programs.
Your logic, as usual, is a non-sequiter as regards the situation under discussion.
...Thus the government is required to pay(itself) the NRST which replaces those taxes paid via government consumption purchases and hiring practices....LOL!...Talk about a (oxy)moronic circle jerk....LOL!
That doesn't explain anything and it doesn't come close to why there's a 30% tax ON "any government" employee's wages, salaries and benefits.
Hey Geez. That reminds me of your e-mail telling me Clinton's pay'n you $1700 a month to post on the sales tax threads.
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