U.S. Tax Code May Be Facing a Full Rewrite

LA Times ^ | Nov. 7, 2004 | Warren Vieth

[FairOpinion]

An official says all provisions will be examined by a reform panel. Many experts think Bush will favor a piecemeal approach.

As the White House prepares to name a blue-ribbon panel on tax reform, the labyrinthine U.S. revenue code could face the first top-to-bottom rewrite since President Reagan closed loopholes and slashed income tax rates on a historic scale in 1986.

"This is a fundamental look at the entire code, every component of the code," a senior administration official said late last week. "Nothing is off the table."

"Simplification would be the goal," Bush said Thursday during his first postelection news conference. "The main thing is that it would be viewed as fair … that it wouldn't be complicated."

"They'll be looking at the whole thing with three principles in mind: The fundamental reform should be more fair, more simple and more growth-oriented," the official said. "That's their marching orders."

[FreedomCalls]

What is so difficult about this?

[Hank Rearden]

I hope this isn't just pretend like so many Republicans in office do......

Did you see Hastert on Fox News Sunday this morning?

Of course it's going to be pretend! They'll "look at" and "examine" this crap for 4 years, then use the issue to bludgeon money and support out of Republicans in 2008. Meanwhile, nothing at all happens to the tax code and policies.

Count on it.

[FreedomCalls]

Scrap the entire income tax code, abolish the IRS.

Who will enforce collection of the NRST?

[Walkingfeather]

yeah I was for that HOWEVER, did you see how terezas army of CPA's were able to determain that she had to pay less tax on her billions than most lower middle income tax rates?\
You keep all the beurocracy in place if you keep the flat tax. National sales tax has the infrastructure already in place with state sales tax, (except in smaller states that will have to impliment it ie oregon)

The effects would be immediate, you would see like a 40% increase in your pay check. Yes prices would rise because of the tax but the people would recognize the fact that it is thier decision how much they are taxed.

I would incourage you to look at the cato institute work on the subject.

[Walkingfeather]

most likely yes, however the wood material and labor would not be on the front end. only at point of consumer purchase.

[ancient_geezer]

Under the current National Retail Sales Tax proposal, an additional $30 in taxes would be levied against every $100 in goods and services. That means southeast Texans would pay $130 for $100 in groceries. Where I come from that's a 30% sales tax - not the 23% many supporters claim.

According to the testimony of Democratic Congressman Nick Lampson 9th District of Texas you say.

Always good to know where you get your talking points anyway.

 

Too bad for you that the above is in totally erroroneous as established above in reply#99

As well as the fact that prices would be forced downward to their equilibrium level 20-25% lower than they are today. The figures above are deceptive in that they do not reflect the reductions of costs on business with the repeal of all business income and payroll taxes.

Thus what a person pays today for a given basket of goods, including the additional income they must give up to government before they can even put out the first dollar towards buying goods and income/payroll tax system prices, is much lower under the NRST.

 

That is why conservatives throughout the House of represenatives are behind and support HR25, as opposed to the dirth of support and outright opposition coming from the other side of the aisle. Seems liberals are in total fear of losing their favorite tax system and all they have to argue with is trumped up scare statistics based on a invalid assumptions and downright disingenuous distortions.

 

 

H.R. 25 FairTax Cosponsors

Alphabetical: w/State, District and Party affiliation.

The list below is current as of 05:00pm (CT) Friday - Oct 8, 2004.
Does not include any Cosponsors who may have signed-on since then.
(Webmaster will update this List as time permits.)

1  Sponsor plus  54  Cosponsors =  55  Total

H.R. 25
Title: To promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national sales tax to be administered primarily by the States.

Sponsor: [R] Linder, John [GA-7] (introduced 1/7/2003)
Latest Major Action: 1/7/2003 Referred to House committee.
Status: Referred to the House Committee on Ways and Means.

Cosponsors:

1. [R] Akin, W. Todd - 4/10/2003 [MO-2]
2. [R] Baker, Richard H. - 3/26/2003 [LA-6]
3. [R] Bartlett, Roscoe G. - 10/2/2003 [MD-6]
4. [R] Beauprez, Bob - 6/2/2003 [CO-7]
5. [R] Bilirakis, Michael - 11/18/2003 [FL-9]
6. [R] Bonilla, Henry - 4/2/2003 [TX-23]
7. [R] Brady, Kevin - 3/18/2003 [TX-8]
8. [R] Burns, Max - 3/31/2003 [GA-12]
9. [R] Burton, Dan - 5/6/2004 [IN-5]
10. [R] Carter, John R. - 3/31/2003 [TX-31]
11. [R] Collins, Mac - 2/25/2003 [GA-8]
12. [R] Cubin, Barbara - 3/2/2004 [WY- at large]
13. [R] Culberson, John Abney - 2/25/2003 [TX-7]
14. [R] Deal, Nathan - 3/17/2003 [GA-10]
15. [R] DeLay, Tom - 3/26/2003 [TX-22]
16. [R] DeMint, Jim - 9/3/2003 [SC-4]
17. [R] Doolittle, John T. - 3/25/2003 [CA-4]
18. [R] Duncan, John J., Jr. - 9/24/2003 [TN-2]
19. [R] Flake, Jeff - 2/25/2003 [AZ-6]
20. [R] Franks, Trent - 4/2/2003 [AZ-2]
21. [R] Gingrey, Phil - 3/31/2003 [GA-11]
22. [R] Goss, Porter - 5/11/2004 [FL-14]
23. [R] Granger, Kay - 7/24/2003 [TX-12]
24. [R] Graves, Sam - 4/27/2004 [MO-6]
25. [R] Gutknecht, Gil - 3/26/2003 [MN-1]
26. [R] Hall, Ralph M. - 2/25/2003 [TX-4]
27. [R] Hefley, Joel - 4/3/2003 [CO-5]
28. [R] Hensarling, Jeb - 6/2/2003 [TX-5]
29. [R] Hoekstra, Peter - 2/6/2004 [MI-2]
30. [R] Isakson, Johnny - 9/3/2003 [GA-6]
31. [R] Jones, Walter B., Jr. - 9/3/2003 [NC-3]
32. [R] Keller, Ric - 9/15/2003 [FL-8]
33. [R] King, Steve - 2/25/2003 [IA-5]
34. [R] Kingston, Jack - 4/8/2003 [GA-1]
35. [R] Lewis, Jerry - 4/2/2003 [CA-41]
36. [R] McInnis, Scott - 10/8/2003 [CO-3]
37. [R] Miller, Candice S. - 6/2/2004 [MI-10]
38. [R] Miller, Gary G. - 4/30/2003 [CA-42]
39. [R] Miller, Jeff - 4/30/2003 [FL-1]
40. [R] Neugebauer, Randy - 10/29/2003 [TX-19]
41. [R] Norwood, Charlie - 3/17/2003 [GA-9]
42. [R] Otter, C.L. - 7/14/2004 [ID-1]
43. [R] Pearce, Stevan - 3/25/2003 [NM-2]
44. [D] Peterson, Collin C. - 1/7/2003 [MN-7]
45. [R] Sessions, Pete - 5/11/2004 [TX-32]
46. [R] Shadegg, John B. - 3/31/2003 [AZ-3]
47. [R] Smith, Nick - 7/9/2004 [MI-7]
48. [R] Stearns, Cliff - 5/4/2004 [FL-6]
49. [R] Tancredo, Thomas G. - 4/30/2003 [CO-6]
50. [R] Taylor, Charles H. - 9/15/2003 [NC-11]
51. [R] Thornberry, Mac - 3/11/2004 [TX-13]
52. [R] Toomey, Patrick J. - 3/10/2004 [PA-15]
53. [R] Wilson, Joe - 5/22/2003 [SC-2]
54. [R] Young, Don - 4/30/2003 [AK-at large]

[concretebob]

Everyone needs to read exactly how the fairtax will work.
This is a one time consumer/end-user tax on goods purchased.
Manufacturers, builders, and producers would pay no tax on materials used to manufacture end-user products. The tax would be paid at the time of purchase by the user.
There will be an exemption for the first $35K which would be refunded to the payer at the end of the year.
The tax would be paid on the first purchase, and thats it. Used cars would not be taxed. Same for people selling their first home, if they had paid the tax at time of purchase.
I've beem pushing this thing at the local level since 1998.
We finally have a President who just might get on board.

HR 25 www.fairtax.org

[concretebob]

See my post to FairOpinion please...the answers are

1.No
2.yes
3.No if paid at original purchase

[concretebob]

The underground economy is already there, and pays very little in taxes on the money it generates. The only time cash is taxed is at the cash register. It was the IRS which created the underground economy to start with.
Under the Fair Tax, you only pay taxes on what you decide to buy.

[CWOJackson]

First thing we should do regarding taxes is exempt anyone from federal taxes who is immigrating FROM this nation within the next two months...no 2004 taxes.

[concretebob]

Actually, the price rise would not be apparent after the system balances out.
The taxes which are now part of the cost of consumer goods, would be eliminated, thus reducing their cost.
The consumer would have more spendable cash, and would pay the sales tax at time of purchase, on cheaper goods.

[ancient_geezer]

Top 10 Secrets of a National Retail Sales Tax Debunked

1. The 23% sales tax rate turns 35%.

The example is fallacious. The cost of the item under today's tax code is $100 -- but that does not imply that the cost will remain the same under a sales tax. The average business will save appx. 30% on taxes and complaince costs -- if only 20% savings is passed onto customers, the cost (including federal sales tax) of the item becomes $104, not $130. (At a 30% passed-to-consumer savings, the cost turns into $91.) The reason this is true is that current products have such a high hidden tax built into them. The NRST just makes the tax visible.

2. 35% goes higher.

No tax plan can assume 100% compliance -- I see an assertion that the NRST does assume this, but I have yet to see anyone post evidence proving that assertion. In fact just the opposite is true as the NRST tax rate is determined from NIPA consumption data, from which transactions related to tax evasion is missing. Tax evaders do not report either their income no sales to the government for tracking, same is true of illegal sales, and underground cash transactions generally. As a consequence the tax rate computed for the NRST on the basis of NIPA (23%) actually more than compensates for evasion and underground economy activity arising not only from avoiding the income/payroll tax system but from all other reasons as well.

3. Hidden Taxes still exist.

NRST makes its claim only in regards to the federal tax system, you want to change state taxes you will have to deal with that level directly.

The NRST is a federal program -- local taxes are a local program -- the federal program (rightly) does not require the states to change their own tax policies.

4. Millions must file. The NRST supporters would have you believe that only retailers need to file under the Sales Tax. That simply is not true.

Of course it taxes retail services to, it does not however tax services provided to businesses (non-retail) purchased (i.e. outsourced) in the conduct of business.

Retail trade is not goods only, it encompasses all consumption trade including services to final consumers.

Wage reporting for SS benefits will be done by employers -- this is nowhere near as intrusive as the current system.

All retailers must file, but wholesalers do not. Brooking's numbers are way off in that regard. I would like to see the wage reporting go away, but that will require a major overhaul of the SSA (let's cross one chasm at a time, eh?). The rebate filing is as simple as voter registration, hardly a burden.

5. Tax Evasion will skyrocket. 20 countries have tried a national sales tax, and 20 have switched to a value-added tax.

Not because of any National Retail Sales Taxes, they have switched to a value added tax because it is a requirement of European Union membership. In fact the first VAT was created by France as a consequence of problems of cascading of their original business turnover taxes that casaded multiplying throughout their economy and burdening their production to a standstill.

The Creation and implementation of VATs in Europe had nothing to do with RETAIL taxes at all.

 

6. Big Government gets Bigger. .

There is no Country in which a National Retail Sales Tax has been implimented.

The reason that VAT countrys expand their taxes with virtual impunity is that VATS are inherently invisible to the electorate. The burden imposed by government is blamed on business.

As a consequence government grows without bound.

7. Underground Economy still not taxed.

LOL, whenever any one spends their income, however aquired, in a legitimate business, they will pay the NRST or not receive the goods or services. The tax is collected by the seller from the purchaser of legitamate goods under the NRST.

AFFT does not claim there can be no underground economy, only that it will be no greater than it is today, as the marginal tax rates of the federal income/payroll tax system that creates such a large incentive to cheat will fall to 23% decreasing the profitability of evasion. Since the enforcement effort of an NRST is more focused, retail businesses only vs all businesses & individuals the potential for discovery is much higher and risks greater for cheating.

 

8. Lower and Middle Income pay more.

After the rebate, "low" income families pay nothing

 

A family of four, for example, could spend $24,980 per year free of tax because they will have received over the course of the year a demogrant totaling $5,745. $5,745 is the amount of sales tax paid on $24,980 in expenditures. That family spending double the "poverty level" or $49,960per year will effectively pay tax on only half of their spending and, therefore, have an effective tax rate of 11 ½ percent or half the FairTax rate.

The beauty of the FairTax is that you can control how much you pay in taxes. If you happen to save, invest or spend a portion on used [previously taxed] items, you can get your effective tax rate below 9%.

To illustrate examine the tax burden that a family of four will have at various annual expenditure levels as compared to that same family under the current system:

 

H.R.25 "The FairTax Act

Not only does every family receive a FCA based on family size, not income, but they will also receive 100% of their paycheck:

9. Elderly assets are unfairly burdened.

See #1 -- the effective cost of goods and services will be roughly the same. The elderly are already paying hidden taxes on these services.

10. Marriage Penalty Still Exists.

How often does a divorced couple split up and each have one of two children? Two adults living together have the same rebate combined as two adults living apart. That is what the "marriage penalty" refers to. There is no marriage penalty under the FairTax as both adults receive precisely the same benefit and pay precisely the same tax as regards their consumption.

[ancient_geezer]

The National Retail Federation

Wonder if they like paying thier business income & payroll taxes?

Suspect that there may be a little bit of self interest showing as well as a great deal of mis understanding of how the NRST works as a tax replacing federal taxes that exist now, in this particular hit piece.

Interesting, isn't it? Today they pass all federal taxes onto you in the price of their goods and services where you do not perceive it, but object to collecting the same amount of tax on there product openly and reporting it to you via a recipt. That same amount that now costs them 20-25% in federal tax burdens on all businesses.

[ancient_geezer]

What is so difficult about this?

You want to keep paying the income tax and reporting your families financial condition to the government go ahead.

I'm not interested.

 

I discussed the importance of abolishing the income tax because of its tendency to form a habit of servility in the souls of a people that accepts it.

Servility of soul is bad not only in itself, it is also an open door through which will soon walk the abuses of ambitious government power.

Leaders who find themselves with governmental power over a servile people will be quick to conclude that such a people exist to serve them.

Alan Keyes 1999

 

Whats so difficult about this:

Tax form filed by a customer for retail sales taxes paid to the government.

 

 

 

[FreedomCalls]

Same for people selling their first home, if they had paid the tax at time of purchase.

So a developer can sell his newly built house to his son for a dollar and pay sales tax on it, then he can turn around and sell it as an existing house for $150,000 and the buyer will pay no tax? Is that what you are saying?

[FreedomCalls]

Tax form filed by a customer for retail sales taxes paid to the government.

 

 

 

I thought I would have to collect "a retail sales tax" on payments made to my plumber, gardener, doctor, dentist, and so forth? That is not simple. If you are saying they would pay their own, then you are imposing an income tax on them.

[ancient_geezer]

So a developer can sell his newly built house to his son for a dollar and pay sales tax on it, then he can turn around and sell it as an existing house for $150,000 and the buyer will pay no tax? Is that what you are saying?

He can try, at least until the state tax authority catches up with him, and slaps him with a demand for NRST due on prevailing market prices.

Suggest you read the bill, it does have the necessary enforcement teeth that any tax bill of necessity must have. Wrongful asset conversions and fraud are well understood by the tax authorities and the courts.

[concretebob]

No, thats ludicrous. Why would an honest business man want to cheat? You've just spent 175K to 225K to get it built, why would you not try to get your money back? Besides, real estate leaves a paper trail, and fraud is obvious.

[FreedomCalls]

Suggest you read the bill, it does have the necessary enforcement teeth that any tax bill of necessity must have. Wrongful asset conversions and fraud are well understood by the tax authorities and the courts.

So you would have a agency larger than the IRS monitoring every retail sales transaction and auditing every sales slip for fraud. Sounds worse than what we now have.

[concretebob]

However, being a decsendant of bootleggers, I can see certain areas which would be subject to mischeif by unsavory characters.

For instance, wholesale suppliers and logistics companies.
The transport and distribution areas would be subject to pilfering for sale on the black market,thus tax free. Thats human nature.