Posted on 12/17/2004 4:38:48 AM PST by JOHN W K
ANSWERING A FAIR TAX QUESTION
During yesterday's show a caller asked what would happen to her 401K funds if the Fair Tax bill became law. No income taxes had ever been paid on that money residing in her 401K. If, by the time she starts drawing that money out, the income tax is history, will she have to pay some sort of penalty? One month ago I would have rattled off the answer. No. No penalty. No taxes. You take the money and run. Yesterday, however, I was a bit more cautious. I've spent many hours over the past weeks studying the history of the income tax, the history of withholding, and various schemes for tax reform including, of course, the Fair Tax. I wanted my answer to be dead-on accurate, so I deferred until I could dive into the bill.
(Excerpt) Read more at boortz.com ...
Yes the Fair Tax is voluntary. You voluntarily buy stuff retail (necessities up to the poverty level are pre-bated), and if you want something else you can buy it used. In other words, one would voluntarily buy a new IPOD and pay the tax, or that person could elect to buy it used. Therefore, the tax is voluntary.
Voluntary taxes are what the Fore Fathers had in mind. This commie crap about progressive taxes and forcing individuals to give up a portion of their life at the point of a gun is evil incarnate. It fundamentally breaches my right to not only privacy, but also to private property.
The FairTax is across the board on all goods and services, not item-by-item.
-- That's easy for you to say. What about peopel who already own their own homes? Why do they need a tax break on buying "shelter" if they already own it??? Shouldn't they be able to use that money on something else? YES! And that's exactly what the FairTax does by giving everybody a "prebate".
As a student of the Constitution, you are fully aware of the beauty of the concept of apportionment. Under such a system, the BEST method of taxation would emerge within the states: States would strive to find the most efficient, cost-effective way to collect taxes. However, I don't think that this plan could ever be implemented; or if it was implemented, how would it be enforced?
The same way they enforced that scheme back when they tried it, by holding the property owner's land and properties as hostage to the good performance by the state, not a very popular or effective way to make sure states pay the tax, but sure hit's the guy who owned any land:
Direct taxes by definition are a levy against property owners or capitation taxes.
Hylton v. United States(1796), 3 U.S. 171
"A general power is given to Congress, to lay and collect taxes, of every kind or nature, without any restraint, except only on exports; but two rules are prescribed for their government, namely, uniformity and apportionment: Three kinds of taxes, to wit, duties, imposts, and excises by the first rule, and capitation, or other direct taxes, by the second rule. " "the present Constitution was particularly intended to affect individuals, and not states, except in particular cases specified: And this is the leading distinction between the articles of Confederation and the present Constitution." "Uniformity is an instant operation on individuals, without the intervention of assessments, or any regard to states," "[T]he DIRECT TAXES contemplated by the Constitution, are only two, to wit, A CAPITATION OR POLL TAX, simply, without regard to property, profession, or any other circumstance; and a tax on LAND."
Apportionment just means the property owners of a state get to pay the apportioned amount regardless of the true value of the properties. The government adjust rates in each state individually against the value of land in the state, for the amount apportioned according to population.
Property poor states with large populations have a problem in this scheme.
Chapter XVI. An Act for the assesment and collection of direct taxes and internal duties.(a) Sec. 1 Establishment of of direct tax collection districts Sec. 2 Qualifications & Appointment of assessor & collector for disticts.
- freeholder appointed by President
Sec. 3 Assessor to divide tax district into assessment districts, under supervision of the Secretary of Treasury, and appoint freeholders as assistant assessors. Sec. 4 The Secretary of the Treasury shall establish regulations suitable and necessary for carrying act into effect.
- "assessors shall on such day as may be fixed by law laying such a tax, direct and cause the several assistant assessors in the district, to inquire after and concerning all lands, lost of ground with their imponements, dewlling houses and slaves, made liable to taxation, under any direct tax so laid by the authority of the United States."
- "value and enumerate the said objects of taxation ...in conformity with the regulations and instructions above mentioned."
Sec. 5 Direct tax laid on all property except State or Federally owned properties. Sec. 6 Assistants shall require property owners, caretakers or managers to provide lists of taxable property.. Sec. 7 Assistant may assist in preparing a written list for those who are unprepared to exhibit a written list when required. Sec. 8 Person delivering or preparing a false or fraudulent list shall be subject to fine on conviction before a court of competent jurisdiction and pay all costs and charges of prosecution. Sec. 9 Written notice to deliver property list to assessor when person absent from property when assessor calls to receive such a list. Sec. 10 If any person on being notified or required to present property list, refuses or neglects to give such, the district assessor is authorised to make the list to the best he can obtain on his own view and information. A person so failing, except for reason of health or absense from home, shall forfeit and pay a $100 plus costs of suit to recover. Sec. 11 District assessor shall make property list for properties which owner or managers are not resident and present in the district. Sec. 12 None resident owners of property as above, can provide a list on their own, rather than the assessor making list above. Sec. 13 Assistant assessors shall make lists of persons liable to pay tax on properties, with the value and assessment of the objects liable to taxation and when required by principle assessor the amount of direct tax, within each district. Sec. 14 Principal assessor shall advertise in newspapers and by written notifications the place where assessment lists may be seen and examined to receive appeals regarding erroneous or excessive assessments. Sec. 15 Whenever Quotas or portions of direct tax payable by the states, shall be laid and apportioned by law on the counties, state, or state districts. The principal assessor shall have power to revise, adjust, and equalise the valuation of properties by deducting or adding a percentage as shall appear just and equitable. Sec. 16 Lists of the property taxed made out. Sec. 17 Accessors furnish collectors with taxable lists Sec. 18 Bonds to be given and approved by the Comptroller of the Treasury Sec. 19 Assessed taxes to remain a lien upon the estates of persons to which they belong ... ...
it would take 10 years of "pre-bates" to a family of 5 to make up the difference over not taxing the purchase of a 200,000 home.
there is no way of moving to a NST without offending many, many people, but i'd still prefer they find a way to do it without having to offer the pre-bate which you do have to register for and still provides for government influence over social planning (head-of-households/marriage/children).
switch to a fair-tax that has no influence over family structures and you've eliminated most of the desire for gays to want marriage "rights".
The imbedded tax on a $200,000 home that you would pay today if you bought that house is @ $50,000
No, it doesn't. Actually, the NRST is a lot closer to the way the Founding Fathers raised the majority of funds for the nation. The government was initially funded primarily thought excise taxes. The NRST is much closer to that than the income taxes.
Mark
And I'm afraid that this is the reason we'll never see it, at least not without dragging our legislators, kicking and screaming, probably at "pitchfork point!"
Mark
First off, are they buying a new or a used home? If a it's a used home, no tax is paid.
Secondly, how much more money are they taking home each month?
Thirdly, the land underneath the home is not taxed. Only the structure itself is taxed.
Fourthly, this family could save up to buy a home much faster under the NRST.
Fifthly, The FairTax will most likely have a provision that the NRST on a primary home can be paid over the life of the mortgage, similar to how property taxes are paid. This is what the CATO Institute's version of the NRST calls for.
All issues settled???
So does it not stand to reason that if we do well as 40-50% slaves, we would do a lot better if we were free-er....say if we were only 10-20% slaves?
Ahem, HR25 is a 23% tax, designed to be revenue neutral against 1997 tax law, pre-Bush administration tax cuts.
Make the Bush tax cuts permanent, you have your less than 20% rate:
from Tax Freedom Day 2004 PDF http://www.taxfoundation.org/sr129.pdf
|
Total Effective Tax Rates by Level of Government |
|||
| Year | Federal | State | Total |
| 1998 | 22.4% | 10.4% | 32.8% |
| 1999 | 22.5% | 10.4% | 32.9% |
| 2000 | 23.1% | 10.4% | 33.5% |
| 2001 | 22.2% | 10.5% | 32.7% |
| 2002 1 | 19.7% | 10.2% | 29.2% |
| 2003 2 | 18.5% | 10.1% | 28.6% |
| 2004 3 | 17.9% | 10.0% | 27.9% |
| Notes: Leap day is omitted to make dates comparable over time. Positive and negative percentages in parentheses after legislation indicate the first-year fiscal impact of the bill,measured as a percentage of NNP. Since depreciation is not available to pay taxes, GDP is an overstatement of spendable income for the purpose of measuring tax burdens. Depreciation is netted out of NNP. 1 Economic Growth and Tax Reform Reconciliation Act of 2001 Sources: Office of Management and Budget; Internal Revenue Service; Congressional Research Service; National Bureau of Economic Research; Treasury Department; and Tax Foundation calculations. |
|||
free from the internal revenue service and with less regulations.
No IRS, the retail business collects the tax right along with state retail taxes, and remits it to his state retail tax adminstration.
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 & http://www.geocities.com/cmcofer/ftax.html
studies have outcomes based on the agenda of the one doing the study, or the one who is paying for the study......no "study" is completely unbiased.
Suggest you find out about the study done and the person who did it. You will find the person does not support retail sales taxes, and the study was done for reasons other than supporting retail sales taxes.
Your right no study is completely unbiased, they can however have a result that is independant as a result of modeling and paramaters based in empirical measures as Jorgensons intertemporal equilibrium model studies are.
If you look abit closer, Jorgenson is in the game of selling his models and methodology for studying economies and the effects of regulation, and not in the business of generating particular results.
Another paper done for presentation to JCT in his effort to convince them to use his dynamic estimation methods rather than the distribution tables in current use.
The Effects of Fundamental Tax Reform and the
Feasibility of Dynamic Revenue Estimation
by
Dale W. Jorgenson and Peter J. Wilcoxen
January 1997
http://wilcoxen.cp.maxwell.syr.edu/papers/jct.pdf
The example taxes compared in that paper are the Flat Tax and a VAT against the '97 tax law. The 1999 study is just a more uptodate revision with the models empirical parameters adjusted up through 1999 economic conditions and a bare bones NRST replacing the VAT calculations.
The only way we will know for sure what the economic impact of anything is to try it....anything else is opinions and guesses.
There is little to be said in favor of blind jumps into an swimming pool. It sometimes help to check if the water is present, before leaping.
What an extraordinary load of crap. The fair tax is vastly better than the nonsense we have now.
mark to read later.
the only way i could buy into some type of pre-bate would be if it were along the lines of "per human"/legal-resident.
That happens to be the basis on which it is implemented.
All legal residents will receive a monthly demogrant called the Family Consumption Allowence(FCA) equivalent to the FairTax paid on essential goods and services, also known as the poverty level expenditures. The FCA is paid in advance, in equal installments each month. The size of the monthly FCA will be determined by the government's Poverty Level for a particular family size, multiplied by the tax rate, and paid to all households regardless of income or actual expenditure. The HHS poverty llevel is a well-accepted, long-used poverty-level calculation that includes food, clothing, shelter, transportation, medical care, etc. See chart in Figure 1 below.
| Figure 1: 2004 FCA calculation | |||||||
| Family size |
HHS annual poverty level |
FairTax annual consumption allowance (single person) |
Annual rebate (single person) |
Monthly rebate (single person) |
FairTax annual consumption allowance |
Annual rebate (married couple) |
Monthly rebate (married couple) |
|
1 2 3 4 5 6 7 8 |
$9,310 $12,490 $15,670 $18,850 $22,030 $25,210 $28,390 $31,570 |
$9,310 $12,490 $15,670 $18,850 $22,030 $25,210 $28,390 $31,570 |
$2,141 $2,873 $3,604 $4,336 $5,067 $5,798 $6,530 $7,261 |
$178 $239 $300 $361 $422 $483 $544 $605 |
N/A $18,620 $21,800 $24,980 $28,160 $31,340 $34,520 $37,700 |
N/A $4,283 $5,014 $5,745 $6,477 $7,208 $7,940 $8,671 |
N/A $357 $418 $479 $540 $601 $662 $723 |
[ The monthly FCA for each adult is .23 * (HSS poverty level for a single person)/12 to assure no marriage penalty due to the manner in which the poverty level is dependant on family size. The monthly FCA for each child is .23 * (the incremental increase of HSS poverty level for a family with one child over no child) ] A. Geezer
"We need to study and get back to our founding father’s original tax plan!"
Interesting proposal. What's the bill number?
This is a common objection (from conservatives at least), but I don't get it. There are already tons of transfer payments and middle class entitlements used for social engineering; that door has been open for decades and the horses are long gone. The FairTax reduces the amount of manipulation by replacing many of those programs with a single check.
"The problem is that drastically depreciates the value of current homes. That means for people like me, for whom their house is their largest investment, we take a HUGE hit."
Not true. If you bought a house jus before the FairTax and paid $250K for it, and your friend bought one across the street after the FairTax was implemented, he woul pay about $250K after tax. EIther house would sell for about the same several years later, probably $250K + appreciation.
the government is still defining "family".
i'm not saying that is a horribly bad thing but if a system could be designed were no re/pre-bate is necessary then that gets the government out of the contentious family planning business.
but you could argue that the government should be in the family planning business and should support higher birthrates so we don't wipe ourselves out like europe is doing.
"Because of the major upheaval to our economy....."
According to Dr. Dale Jorgenson, former chairman of Harvard's economics department, first year GDP growth would exceed 10%. If that is your idea of "economic upheaval", the we can use all we can get! LOL
if they succeed in the drastic step of going to something like the fairtax then why not go all the way to eliminating social engineering altogether at the same time.
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