Posted on 03/31/2005 4:42:13 AM PST by CSM
WASHINGTON -- The power to tax involves, as Chief Justice John Marshall said, the power to destroy. So does the power of tax reform, which is one reason why Rep. John Linder, a Georgia Republican, has a 133-page bill to replace 55,000 pages of tax rules.
His bill would abolish the IRS and the many billions of tax forms it sends out and receives. He would erase the federal income tax system -- personal and corporate income taxes, the regressive payroll tax and self-employment tax, capital gains, gift and estate taxes, the alternative minimum tax and the earned income tax credit -- and replace all that with a 23 percent national sales tax on personal consumption. That would not only sensitize consumers to the cost of government with every purchase, it would destroy K Street.
``K Street'' is shorthand for Washington's lawyer-lobbyist complex. It exists to continually complicate and defend the tax code, which is a cornucopia from which the political class pours benefits on constituencies. By replacing the income tax -- Linder had better repeal the 16th Amendment, to make sure the income tax stays gone -- everyone and all businesses would pay their taxes through economic choices, and K Street's intellectual capital, which consists of knowing how to game the tax code, would be radically depreciated.
Under his bill, he says, all goods, imported and domestic, would be treated equally at the checkout counter, and all taxpayers -- including upward of 50 million foreign visitors annually -- would pay ``as much as they choose, when they choose, by how they choose to spend.'' And his bill untaxes the poor by including an advanced monthly rebate, for every household, equal to the sales tax on consumption of essential goods and services, as calculated by the government, up to the annually adjusted poverty level.
Today the percentage of taxpayers who rely on professional tax preparers is at an all-time high. The 67 percent of tax filers who do not itemize may think they avoid compliance costs, which include nagging uncertainty about whether one has properly complied with a tax code about the meaning of which experts differ. But everyone pays the cost of the tax system's vast drag on the economy.
Linder says Americans spend 7 billion hours a year filling out IRS forms and at least that much calculating the tax implications of business decisions. Economic growth suffers because corporate boards waste huge amounts of time on such calculations rather than making economically rational allocations of resources. Money saved on compliance costs would fund job creation.
Corporations do not pay payroll and income taxes and compliance costs, they collect them from consumers through prices. So the 23 percent consumption tax would allow taxpayers to stop paying the huge embedded cost of corporate taxation. Linder says the director of the Congressional Budget Office told him it costs individuals and businesses about $500 billion to remit $2 trillion to Washington. And studies show that it costs the average small business $724 to collect and remit $100.
In 1945, corporations paid more than one-third of the government's revenues. Now they pay only 11 percent because corporations, especially multinationals, are voluntary taxpayers. In a world increasingly without borders that block capital movements, corporations pay where the burden is lowest. Linder says $6 trillion in offshore accounts would have an incentive to come home under his plan.
Furthermore, by ending payroll and corporate taxes, America would become the only nation selling goods with no tax component -- such as Europe's value added tax -- in their prices. With no taxes on capital and labor, multinationals would, Linder thinks, stampede to locate here, which would be an incentive for other nations to emulate America. ``This,'' Linder says, ``would unleash freedom around the globe.''
Critics argue that ending the income tax, with its deductibility of charitable contributions, would depress giving. Linder says: Piffle. In 1980, when the top personal income tax rate was 70 percent, a huge incentive for giving, individual charitable contributions were $40.7 billion. In 1986 the top rate was reduced to 28 percent, and by 1988 charitable giving was $86.7 billion. The lesson, says Linder, is that we give more money when we have more money.
When Speaker Dennis Hastert published a book last year, he was startled that interviewers were most interested in talking about Linder's bill, which then had 54 co-sponsors. This year Hastert added Linder to the Ways and Means Committee. Linder cheerfully says his bill would reduce Ways and Means to ``a B committee'' by ending the political fun of making the tax code ever more baroque for the benefit of K Street's clients. Bliss.
Attaboy! I like your way of thinking, and I agree with it. Welcome aboard, George.
And thats a downside how?
I should have tagged the above with a sarcasm indication.
It would be a downside for any of those who make their living due to the complexity of the tax laws.
Said in jest. I should have tagged the tax lawyer downside statement with a sarcasm indication.
Oh no. I weep for all those pure liars lawyers. NOT.
Apparently you are one of the few who detected the sarcasm in reference to the downside for tax lawyers. I should have tagged the statement with a sarcasm indication.
So now to defend yourself you are pulling out a 5 year old quote?
So now to defend yourself you are pulling out a 5 year old quote?Is there a statute of limitations for quotes? If so I need to go over a lot of FairTaxer's posts...
Well it's just funny that you agreed with me...But...that's not going to be the tax rate anyway!
I agree. I was just pointing out the shortcomings of a NRST compared to tariffs.
My dear Conservative Goddess, how you have bought into globalist trade theory! Have you bought into globalist tax theory, too? If not, why not? Why the contradiction? If so, perhaps you are really a Globalist Goddess?
I don't care about capital outside of America's borders for even a nanosecond, because no other country compares to America. In spite of the gradual socialization of America ours is still the market everyone wants to sell to - not buy from. Tariffs are a tax on access to our market. A NRST would tax American access to the American market equally with French, Germans and the Chinese.
What is misguided about tariffs on anything French, German or Chinese? Why would you want to tax US made goods on par with them with a NRST? Why would you want to see the US economy continue to bolster failing socialist economies and a communist economy? And you call yourself conservative? Why? Because you don't like taxes?
Thank-you for pointing out George Will's gullibility. I never saw it before. He must be on the primrose path. LOL!!
You will have to believe in the tooth fairy if you want lewislynn to enlighten you. I tell you here and now that he comes on these threads and hammers on one or two missteps in the way the bill was originally written to splatter the whole thing against the pavement. His agenda is nothing more than the status quo. The bill, if it goes far enough, will be subject to write up in congress. lewis doesn't want anything to change so he conjures up this lie that the mistakes in the original bill will be written in stone. Don't believe anything he says.
Come on YN. You don't really think the above is an accurate statement do you? Don't jeopardize your credibility here as lewis has done.
Kind of like if I make 10,000 dollars and pay a 25% tax my tax is 2500 dollars. But if I turn it around like you do I have made 7500 dollars and I owe the government 2500 dollars. So my tax rate is a lot more than 25% isn't it?
Anyone who thinks the fair tax dissolves the social safety net is nuts and you aren't nuts. The K street lobby is the enemy that we need to kill.
C'mon YN. Those foreign visitors aren't paying taxes now and the Americans who visit foreign countries are. You really lost on this one. The only change would be that foreign visitors would pick up some of the tab.
It's a game. We [tax lawyers] teach the rich how to play it so they can stay rich -- and the IRS keeps changing the rules so we can keep getting rich teaching them.
-- John Grisham (The Firm)
I am in the process of breaking wind over my tax status. I work for a broker/dealer who, like all b/d's is paranoid about lawsuits. I formed a Sub S corp and applied to the b/d for status as an outside business activity. To make a long story short, the b/d is reticent to grant my Sub S because of various legal constraints about commissions paid to a non-person etc. Bottom line, I have spent many hours hammering this out because of taxes. Why? Because I am doing this to avoid some tax liabilities legally but the b/d finds those actions to be in jeopardy of its protection from something or other. Your survey has no idea that c^^p like this goes on. You obviously don't either. If there were no income tax I wouldn't have to go through this.
We should believe you. George Will obviously has a deficiency in facts.
From what I've seen Linder can back up 90% of what he has said. You..., maybe 50%.
Okay, without footnoting, everything I have seen about the European VAT shows a crimping of economic activity and a blessing for big government. Everything, that is, except for YN.
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