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.
Maybe if people didn't have so much taken out of their paychecks they could give more to charity, did you ever think of that?
I did make a donation in your name once though. LOL April Fool.
That wouldn't even pay Ted Kennedy's liquor bill.
You don't know his situation. Maybe he can afford it. I'm not saying you're right.
Hey Will the Shill - how much of the tax and lobbyists costs saved would be passed along in lowered consumer prices?
Wrong again. First, I buy all essentials tax free. Second, I save on compliance costs as do the companies I am buying products from. Third, the embedded taxes now existing on all products will disappear. Fourth, the economy will boom and I will have more assets under management and my business will prosper.
Nothing is free, taxpayers give the money to the government, then the government sends the check.
Second, I save on compliance costs as do the companies I am buying products from.
Not nearly as much as the sale tax whore economists say.
Third, the embedded taxes now existing on all products will disappear.
They don't 'disappear', they just become more visable.
Fourth, the economy will boom and I will have more assets under management and my business will prosper.
The economy will not boom as certain sector such as new homes will be hit harder than others. People will be much more relunctant to make purchases when they realize just how much money they are throwing down the toilet.
Well, you did say that non-profits would pay taxes on the goods and services they bought. I showed you in the bill where it said they didn't and you didn't respond. It was on one of these two threads.I don't think your evidence was conclusive. I'm looking into it.
I'll be waiting.
First, I buy all essentials tax free.Nothing is free. The money the government would send you for the FCA is factored into the FairTax you would be paying. And you are probably would be paying more than you would be getting back. So no change or a drop in real income there.
Second, I save on compliance costs as do the companies I am buying products from.And lemme guess...you spend 10 months a year complying with the income tax, right? Supporters always overstate the compliance costs of the current system. Always. That's not to say that there would be some savings, just not significant.
Third, the embedded taxes now existing on all products will disappear.Only if everyone else is willing to cut their nominal income. But if nominal incomes go down and pre-tax prices go down, there would still be no increase in real income.
Fourth, the economy will boom and I will have more assets under management and my business will prosper.Right...the economy will go boom.
Excuse me sir. Is it really that hard to apologize? And if so, is it really that wrong to state the facts? "YOU" sir, are a slob.Also... using p.s. is horribly feminine, please continue to show your personal characteristics on this forum.
Once again your logic astounds and amazes me. I can not argue with such a well formed opinion. To you oh knasher of teeth, I say only, well played.
P.S.
A first grader called he wants his writing skills back.
Hey newbie troll. Why don't you try to add something to the debate instead of coming on here and disrupting. Go back to DU.
Then you would be taking a cut in real income. To avoid this loss in real income, you would have to keep your fees where they are so you can pay the sales tax.
Now read your post again.
I like tarrifs exactly because of what you have pointed out.
The communist one worlders always blame the depression on tarrifs...which is a lie.
Now read your post again.Maybe you would like to clue me in?
Don't you see? You are saying that I would have to keep my fees the same to receive the same amount of income. No sir Mr. YN. If I am not paying income taxes then I am saving at least 25% of my gross. So if my gross is 100,000 per year I am now going from an income of 75,000 to one of 100,000. But where is it written in the fair tax law that I have to give that 25,000 back to the government when they want it? You seem to infer that is the case.
Now you seem to also have a problem with the compliance cost claims. You and yours seem to only see compliance costs as the costs of CPA's, etc. So here we go again:
Mom and Pop. They have a business that is worth 5 million dollars. They are in their 70's. In order to preserve that business for their children and grandchildren they take out a life insurance policy for 2.5 million dollars to pay the estate taxes on their assets. The premium costs them 20,000 a year. Under the fair tax they would not have to take out that life insurance policy and that 20,000 per year would not disappear down the hole. It could be used for other purposes. Now some will argue that that 20,000 will be used by the insurance company to invest in stocks and bonds and improve the economy. I will argue that Mom and Pop have already proven they can invest better than the insurance companies.
Now take my Mom and Pop example and multiply it by 10,000. Now do compliance costs seem real?
correction, 100,000
OF course. Couldn't affiliate if I didn't.
Maybe that explains your "b/d" apprehension. What you described didn't sound like an affiliation, it sounded more like you wanted to be an incorporated independent contractor.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.