Posted on 02/03/2005 9:54:12 AM PST by EternalVigilance
CONGRESSMAN STEVE KING INTRODUCES RESOLUTION TO ELIMINATE IRS
WASHINGTON - As W-2s arrive in mailboxes this week, U.S. Congressman Steve King has introduced a resolution to repeal the 16th Amendment to the Constitution, which gives Congress the authority to collect income taxes.
H.J. Res. 16 would eliminate the IRS and the means for the government to collect income taxes.
"The IRS is an out-of-date, trillion-dollar-a-year drag on our economy," said King. "Instead of continuing to band-aid our complicated, leaking tax system year after year, we can choose a permanent solution and finally rid Americans of the fat leech they feed their paychecks to."
King has been a long-time supporter of the FairTax, a national sales tax placed on goods and services, which would replace the income tax.
H.J. Res. 16 must be approved by two-thirds of both the House and Senate, and then sent to the states, where three-fourths must ratify the amendment.
For information on the FairTax, visit:
http://www.fairtax.org
U.S. Congressman Steve King
Iowa's Fifth Congressional District
1432 Longworth House Office Building · Washington, DC 20515
http://www.house.gov/steveking/
There is an additional effect. see above
It has to aquire that dollar from the electorate to pay that tax in the beginning regardless which removes that dollar from circulation.No it doesn't. Do you think the government aquires a dollar from the electorate to pay for things now? And after the first month, they can use the previous month's money they "paid" themselves to pay this month's "tax." It's just an accounting gimmick used by the AFT to be able to say the 23% rate is "revenue neutral."
In which case federal government can reduce their budget, quit paying the tax and everything balances out. LOL.
In which case federal government can reduce their budget, quit paying the tax and everything balances out. LOL.Exactly. So what's the point?
Exactly. So what's the point?
The budget cut must occur to limit government's capacity for additional consumption, if not the NRST must be paid by the federal govenment.
remember: "A substantive percentage of the cost of govt consumption in the US today is tax related, in going to a consumption tax and not assuring government must pay the same freight as the individual, you effectively increase govt's capacity to consume by that percentage. Furthermore, without an commensurate burden on government consumption, an incentive is created to produce via government rather than in the private sector when the public sector is tax free. Under such conditions the individual is forced to compete with government for services and goods with a high government imposed millstone around their neck."
The budget cut must occur to limit government's capacity for additional consumption, if not the NRST must be paid by the federal govenment.So part of your plan is to cut budgets ~20% across the board?
LOL, of course not. The Congress sets whatever budget it wants. HR25 is a tax bill not an appropriations bill.
Tax reform: Great idea but the politicians will NEVER let it happen unless we hold a gun to their heads. (figure of speech)
Remember they couldn't even impeach the porno president!
Tax reform: Great idea but the politicians will NEVER let it happen unless we hold a gun to their heads. (figure of speech)
Remember they couldn't even impeach the porno president!
Tax reform: Great idea but the politicians will NEVER let it happen unless we hold a gun to their heads. (figure of speech)
Remember they couldn't even impeach the porno president!
So part of your plan is to cut budgets ~20% across the board?
Now what I might want is another thing altogether:
23%........... Effective total federal tax rate with respect to gross expenditure for consumption:
15% ..... rate if Social Security and Medicare were eliminated
14% .......... rate if Nat'l Endowment for the Arts were eliminated
12%........ rate if Dept. of Education were eliminated
10%.......... rate if welfare & foreign aid were eliminated
etc.
So lets look at what the maximum it would take to fund those functions clearly authorized under Article I Section 8 of the Constitution, in current dollars:
http://w3.access.gpo.gov/usbudget/fy2001/guide02.html#Spending
- $334 Billion --- Defense & Military related expenditure
- $ 31 Billion ---- Administration of Justice
- $ 16 Billion ---- General Government
- $199 Billion ---- Interest on the Debt
=========================
$580 Billion ---- Total
Institute an across the board, Flat rate, single stage National Retail Sales Tax, which taxes all imports and domestic products with the same rate.
Replacing all current federal tax law with a retail sales tax would be 23% on new goods and services paid and receipted at the retail register. No hidden tax, no exceptions, exemptions everyone participates.
Such a tax acts in a natural manner to encourage the elimination of excess government functions through visibility of burden among all constituencies of the electorate.
The total federal government budget would move from $2,000 billions towards something less than $580 billions calculated.
The across the board federal tax rate on new goods and services would decline towards less than 6.7%.
As tax rate on sales decreases the economic burden on retail items, the sales volumes and growth in the economy would be tremendous allowing even further reductions in tax rates below that less than 6.7% theoretic level.
That is what I perceive as the ultimate achievements possible under a National Retail Sales Tax structured in the manner of the revenue bill H.R.25. Simple common sense applied to the principal of TANSTAAFEL,( no free lunch, everyone participates in paying their way in proportion to the benefit the extract from their consumption.) encourages the natural change in attitudes required of the electorate as regards the burden of government largess in their lives.
- It is fairer to tax people on what they extract from the economy, as roughly measured by their consumption, than to tax them on what they produce for the economy, as roughly measured by their income
Hmmmmmm....... It's do able, with time and effort, once the blinders are removed from the electorate.
On page 24, Jorgenson, et al, state:
The crucial point for all three methods for implementing a consumption tax [flat income tax, European style VAT, sales tax] could be based on the same definition of the tax base. This greatly simplifies the tax economist's task, since the economic impact would be the same for all three approaches.
Jorgenson, et al, make precisely the same point I do. The three VATs are all "economically equivalent".
Jorgenson, et al, continue:
However, the Armey-Shelby flat tax incorporates a system of individual exemptions for labor income that have the effect of setting the marginal tax rates equal to zero up to the exempt amount of income.
Of course, the "Fair Tax" incorporates a system of individual rebates for consumption that have the effect of setting the marginal tax rates equal to zero up to the exempt amount of consumption. (see the mirror effect?)
Now the rebates have zero effect on the macroeconomy by themselves. However, they do have the effect of requiring a higher marginal rate to be revenue neutral.
Jorgenson, et al, consider the exemption for income on the flat income tax, but do not consider the exemption for consumption in the "Fair Tax". Jorgenson assumed a ~15% rate with no rebate. If Jorgenson, et al, considered equal exemptions for income/consumption for the flat income tax and the "Fair Tax", they would have used the same marginal tax rate. Then, the concept in the original quote would apply: "This greatly simplifies the tax economist's task, since the economic impact would be the same for [both] approaches".
You are not seriously arguing that Jorgenson, et al, analyzed the "Fair Tax", are you?
You are not seriously arguing that Jorgenson, et al, analyzed the "Fair Tax", are you?It might be worse than that. Did you read this part from the paper?
The second issue to be debated is fiscal federalism or the role of state and local governments. Since state and local income taxes usually employ the same tax bases as the corresponding federal taxes, it is reasonable to assume that substitution of consumption for income taxes at the federal level would be followed by similar substitutions at the state and local level. For simplicity we propose to consider the economic impact of substitution at all levels simultaneously. Since an important advantage of a fundamental tax reform is the possibility, at least at the outset, of radically simplifjrig tax rules, it does not make sense to assume that these rules would continue to govern state and local income taxes, if the federal income tax were abolished.Does that mean nation, state, and local sales taxes were all a total of 15.7%? Sounds like it to me.
You are not seriously arguing that Jorgenson, et al, analyzed the "Fair Tax", are you?
The Baker study was initially completed im '98 before the Fair Tax Act, in fact the Fair Tax in part was based on that analysis to the extent that it provided for progressivitity through the budget rather than exclusion or exemption of the the tax as recommeded in Jorgenson's analysis and Way's & Means Testimony in '97.
As far as a specific analysis of the Fair Tax System, which Jorgenson completed in May '97 included the FCA on povertyline expenditure, and replacement of income/payroll and gift estate taxes as the legislation calls for.
The results were only marginally different with a projected average federal tax rate of less than 23% for 1999-2000, the first session of Congress in which Fair Tax Act was introduced.
If Jorgenson, et al, considered equal exemptions for income/consumption for the flat income tax and the "Fair Tax", they would have used the same marginal tax rate. Then, the concept in the original quote would apply: "This greatly simplifies the tax economist's task, since the economic impact would be the same for [both] approaches".
The tax equivalency in revenues and rates is not the issue, the effect on consumer & investor behaviors as well as difference in overhead costs on business between the different systems is what gives rise to differing results in impact on the economy, and is the primary reason that results between the NRST and VAT are substantively different in terms of their impact on the business and the consumer/investor.
You can scream equivalent in rate terms all you want, all that means is there is a function equivalency that transforms one system into another insofar as how it is applied in econometric models. The differences in effect on prices by producers for one example throughout the chain of production are significantly different between the NRST(which does not impose taxes into intermediate stage goods or services) and the VAT which imposes tax, credits and overhead costs as well impacting the price recieved by the producer in very fundamental ways.
For you say there are no economic differences in results between the systems of taxation is a total canard.
Jorgenson, et al, consider the exemption for income on the flat income tax, but do not consider the exemption for consumption in the "Fair Tax". Jorgenson assumed a ~15% rate with no rebate.
Which tells me you didn't actually read the paper, as Jorgenson does not assume any rate for flat tax or the NRST he modeled.
Revenue neutral tax rate is an ouput of his IGEM, not a input and those rates vary in time with variation in economic conditions that are output of his model to maintain equivalency between the baseline '96 income tax system and the tax system under study.
Again, I think you're misinterpreting the paper. (Actually, this one sounds a little more like poor reading comprehension.)
Fom Jorgenson, et al, page 25:
2. Figure 4 compares the consumption tax rates for revenue neutral substituion of the Armey-Shelby Flat Tax (FT) and the National Retail Sales Tax (ST) for existing income taxes. The Flat Tax rate is 25.1 percent in the year 1996 and remains virtually constant through the year 2020. The National Retail Sales Tax rate rises from only 15.7 percent in 1996 to 21.4 percent in the year 2020. Only the Flat Tax includes a system of personal exemptions, so that the tax rate is considerable higher, especially at the initiation of the tax reform.
As I wrote, Jorgenson, et al, assume a ~15% sales tax rate without rebates. The only reason the Flat Tax rate is higher is because Jorgenson, et al, included a system of personal exemptions for the Flat Tax. Jorgenson, et al, did not include a system of personal exemptions for the Sales Tax (rebates). If Jorgenson, et al, had included an equal exemption for income/consumption for the FT and ST, then the ST rate would be the same as the FT rate.
If Jorgenson, et al, had considered equal exemptions for the sales tax and the flat tax, their comment on page 24 becomes operative again: "This greatly simplifies the tax economist's task, since the economic impact would be the same for [both the sales tax and flat tax] approaches."
Again, I reiterate my point. The sales tax and the flat tax are "economically equivalent". They impact foreign trade in the same exact manner. Both taxes are border neutral.
They impact foreign trade in the same exact manner. Both taxes are border neutral.
ROTFLMAO,
Flat Tax has no mechanism for rebate or credit back of taxes paid by manufacturerers& upstream suppliers. NRST does not tax manufacturers nor their upstream suppliers. There is no equivalence whatsoever in that example for even that narrow consideration.
The only equivilency that can possibly be attributed to a Flat Tax that acutally removes all investment and returns from investment,(it is to be noted that no "Flat Tax" before acutally Congress meets that criteria) is that they ultimately reach the same tax base as regards national tax payers, not that all their effects are the same in all areas. The trade example being one area where very different effects on the value of the dollar relative to foreign currencies with the ultimate on foreign economies and our own in terms of shifting investment flows towards the US.
They impact foreign trade in the same exact manner. Both taxes are border neutral.
LOL
“He who asserts must also prove.”
Artistotle
The article you presented supports my point of view. Jorgenson, et al, clearly state that a flat income tax, European style VAT, and sales tax all impact the economy in the same way (as long as the exemptions, and consequently, the marginal rates are the same).
The reason that the flat income tax, European style VAT and sales tax affect the economy the same way is because they are "economically equivalent". They are all members of the VAT family.
The reason that the flat income tax, European style VAT and sales tax affect the economy the same way is because they are "economically equivalent". They are all members of the VAT family.
ROTFLMAO,
Show me the current Flat Tax legislation that provides similar credit mechanism a VAT has to rebate tax at the border to make it border neutral.
Show where in the current Flat Tax legislation that exempt taxation of wages placed into saving or used in investment to make it a consumption tax as described by Jorgenson.
Show me in the current Flat Tax legislation business capital gains, dividends, and interest received are deductible to businesses that receive them.
Merely labeling a thing, and stating that anything with that label is equivalent is insufficient,.
Merely stating a tax is border neutral without showing how it is so, does not make the grade.
Jorgenson states:
"The crucial point is that all three methods for implementing a consumption tax could be based on the same definition of the tax base. This greatly simplifies the tax economist’s task, since the economic impact would be the same for all three approaches."
To make tax systems equivalent, they must have the same tax base, to accomplish that each individual system must have those features necessary to make it so. You have yet to show that is the case with the current and most politically popular "Flat Tax." or even with any poposed VAT legislation as VATs can can take many forms including those that tax elements of investment capital as well.
What is actually proposed in Congress as a Flat Tax fails to meet the consumption tax base criteria as defined by by Jorgenson or any other economist.
Consumption = Income - Investment.
An income tax is levied on wages, profit and investment income and thus is not classifiable as a "consumption" tax even in equivalency. The current Flat Tax legislation taxes both elements of income and initial capital investment as well. Thus is not classifiable as a consumption tax.
the flat income tax, European style VAT and sales tax affect the economy the same way is because they are "economically equivalent". They are all members of the VAT family.
They can all be classed under the lable "consumption tax" only when have a common tax base:
i.e. Consumption = Income - Investment
Anything else fails the test. "Consumption tax" is the general term, the equivalency is stated in the above equation and is the foundational tax base that a tax system is limited to to a be classed as a "consumption" tax in an economist's (not political) terms.
Not all consumption taxes are border adjustable or have the inhenent characteritics necessary to make them border neutral. The VAT achieves border neutality by credit paid to the exporter on the value of his export. The Flat Tax has no mechanism to rebate taxes paid in the manufacture of a product, thus is not ever border adjustible to a border neutral status. Only the NRST is truly border neutral as it does not tax either manufacturing, supplier or any otherinput to business thus is exportable free of taxes without rebate.
You claim border neutrality for the Flat Tax, but the claim fails for your not showing a provision in any Flat Tax proposal to date that rebates or any other way compensates for tax in business inputs for exporters.
“He who asserts must also prove.”
Artistotle
In an era of flating exchange rate, it is not necessary to rebate taxes paid. The exchange rates will take care of it.
You are obviously emotionally attached to the sales tax. But you must understand that the flat income tax, the European style VAT, and the sales tax all have the same tax base: CONSUMPTION. When Jorgenson, et al, observe that these taxes may not have the same tax base, it is because of exemptions. The flat tax and the sales tax exempt ~$25,000 of household income/consumption from taxation. Therefore, they have the same tax base and affect the economy the same way.
I am pleased with Chairman Thomas' tax reform proposal. Like the flat income tax and sales tax, it has a tax base of consumption. Unlike the other two, it has no exemptions. Chairman Thomas' proposal is just like the one analyzed as a "sales tax" by Jorgenson, et al. Jorgenson, et al, reviewed a sale tax (tax base: consumption) with no exemptions. That is the idea proposed by Thomas. Both the flat tax and the "Fair Tax" are inferior due to their exemptions (tax base = consumption minus exemptions).
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