Posted on 05/12/2005 12:25:08 AM PDT by FairOpinion
WASHINGTON - A presidential commission looking into how to make income taxes fairer and simpler heard pitches Wednesday from experts with ideas about revamping or replacing the current system.
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The commission examined plans to base taxes on spending rather than income, which could mean a national sales tax or a European-style value-added tax.
As for transforming the income tax, the commission heard proposals for comprehensive change and minor tinkering.
"Not one person who we encountered as we traveled the country told us that our current tax system was good for America and that we should leave it alone," said the commission's chairman, former GOP. Sen. Connie Mack of Florida.
After hearing complaints about tax laws, the President's Advisory Panel on Federal Tax Reform used this meeting to consider ways to replace the system.
Michael Graetz, a Yale Law School professor, offered an outline of how to meld income taxes with a value-added tax. That tax, used widely in Europe, imposes a levy on the increased value of a product at each stage of production.
Under his plan, consumers would see a 13 percent to 14 percent value-added tax appear on their purchases.
Individuals earning less than $50,000 and families making under $100,000 no longer would pay income taxes under such a plan. Those still paying income taxes would get a simplified system and a top tax rate of 25 percent.
"I am very skeptical that you can fix the income tax," Graetz said.
Federal Reserve Chairman Alan Greenspan has told the commission that he supports some combination of income and consumption taxes as a catalyst for economic growth. Others have warned about the dangers of a poorly designed hybrid.
A consumption tax could take the form of a national retail sales tax, a potential replacement for income, estate and payroll taxes. Americans for Fair Taxation offered a plan setting a 23 percent sales tax on purchases, with exemptions for the poor.
An alternate plan, offered by David Burton of the Free Enterprise Fund, would reduce the rate to 8.4 percent for individuals by also levying the tax on businesses.
In the event the current income tax was retained, experts made the case for ways to promote savings and to simplify credits and deductions.
That could mean letting businesses immediately expense their investments and expanding individuals' ability to save money tax free.
"Why go searching for some new, magic elixir with unknown results?" said Ernest Christian, director of the Center for Strategic Tax Reform. He said the value-added tax was an "exotic import" at odds with the U.S. tax experience.
Others endorsed keeping the incentives for homeownership and charitable giving that President Bush wants preserved, while reducing the many other deductions and credits now available.
The commission, which expects to make final recommendations this summer, discussed options for a flat tax that eliminates deductions and credits, reduces income tax rates and erases taxes on investment income.
"There's not a human being alive today who knows what's in the code," said Steve Forbes, a one-time presidential contender who favors the flat tax.
Commission members asked about how the country could shift to such a tax, wanting to make sure the government got the revenue it needed during that transition.
Former Sen. John Breaux (news, bio, voting record), D-La., the commission's vice chairman, asked whether people could accept a system that taxes wages but not investment income. Others raised questions about eliminating the current system's progressive tax rates.
Former Rep. Dick Armey, R-Texas, said it is a "big job" to convince voters that the poor and wealthy could benefit from a flat tax.
"What's fair is to treat everybody exactly the same as everybody else," he said.
"Every member of the panel yesterday said they had issues with a NRST and compliance..." That isn't true;OK. I have since stated that may not be. Actually, I am going to do something that very few FairTaxers have ever done - admit I was wrong. I will concede that "Every member of the panel yesterday said they had issues with a NRST and compliance" was not an accurate statement.
Senator Mack, in fact, argued in our favor on the compliance issue, if memory serves.No your memory has failed you. He was addressing that fact that no other nation has a NRST and merely stated that the US may be unique because we have state sales taxes.
More to the point, however, is that compliance is exactly where you would expect them to focus if they were convinced of the economic merits of the proposal.LOL. Where's AG talking about spin?
The next hearing BTW has been announced. Its subject will be the implications of the federal government no longer requiring personal tax returns, I believe. Hmmmmm .... I wonder why they would be considering that. If I were a flat taxer, I would NOT view that as an encouraging area of investigation.Uh, a flat tax could be easily implemented without requiring personal tax returns.
Of course, I am sure that they will have panelists testifying that the federal government cannot possibly function without requiring such blatant disregard for our personal liberties. I can "almost guarantee" that YN will spin that as the death knell for the FairTax.What makes you think that? I have focused my comments on the opinions of the panel.
LOL!! Life is good (if you are a liberty loving FairTaxer)LOL!! We'll talk in July! [I can hardly wait for the spin!]
Don't tell my YN subscribes to MSM global warming theory.
Perhaps you could explain to us how your "preferred VAT" tax system would have any different experience that some of the links given in this post - and these are but a few of the countries with actual VAT implementations going.Are you suggesting they've had negative experiences with a VAT?
Don't tell my YN subscribes to MSM global warming theory.I don't pretend to know one way or another, AG does.
"Uh, a flat tax could be easily implemented without requiring personal tax returns."
Sure, a flat tax can be made into anything you want it to be, right?
You want a consumption tax? Flat tax can do that.
You want a tax that doesn't tax prior savings? A flat tax can do that.
You want a tax that doesn't require personal tax returns? A flat tax can do that.
Whatever you want in a tax reform proposal, the flat tax can do ..... as long as you don't require that the specific proposal be committed to writing and the trade-offs determined in advance, the flat tax can be absolutely anything you want. Never mind that getting a "concept" passed into law is impossible.
So it seems your "claim du jour" is merely a dishonest artifice for debating purposes. Actually specifics do matter since your Nightmare VAT might help all those other countries and solidify the EU to boot.As I have stated many times, I misspoke in that post. To continue to bring it up is more a demonstration of your dishonest debating than mine.
Actually you don't seem to realize that ANY of the common tax forms at issue here (NRST, Flat, & VAT) can be DEFINED to be a "consumption tax"Why do you think I don't realize that? You were the one who claimed the flat tax is an income tax.
That doesn't mean that is works out that way in practice as post #97 shows.Post #97 didn't show anything.
Read the links I gave in #97 from the standpoint of a taxpayer in one of those countries and the "negative experiences" are clear.
They typically have a myrian of exemptions and exceptions - all of which are prime candidates for political mischief - but they also have some form of income tax which is also fraught with "politiical mischief".
Perhaps you can't (or won't) figger that out, though, so just tell us how your "Nightmare VAT" overcomes those difficulties rather than falling into them as so many of the VAT countries have done. You might even receive the deed to Zambia from its grateful citizens if you'd but do that.
"What makes you think that? I have focused my comments on the opinions of the panel."
What makes you think you know the opinions of the panel? Because they are asking legitimate questions? I am pretty certain that two members of the commission like our proposal a lot. The others, I have no idea about. Senator Breough has some reservations, but that is ok. Almost everyone has reservations when they first hear about the FairTax. In general, I have found that the more those new to the concept know, the better they like the proposal. Perhaps this panel will be different.
We shall see. I don't claim to know what the panel is thinking, other than some positive signs from two of the members. I doubt that the individual members themselves know what their final report will conclude. For you to insinuate that you do is sort of silly IMHO.
"I have focused my comments on the opinions of the panel."
Since you know what the individual panel members opinions are, would you share with us their impressions of Panel VI on Wednesday - the Flat Tax portion? I heard that those panelists slammed the whole notion of progressivity. This was in spite of the President's Executive Order which said
"share the burdens and benefits of the Federal tax structure in an appropriately progressive manner while recognizing the importance of homeownership and charity in American society"
From what I heard, it was a major political blunder. It validated the impression that this was the proposal of the far right wing of the republican party and would never enjoy mainstream support. What was the impression that left with the commission members, YN?
So if I work 80 hours a week and dipstick works 40 hours a week, I get to pay twice as much as the lazy bum?
You want a consumption tax? Flat tax can do that.It is a consumption tax.
You want a tax that doesn't tax prior savings? A flat tax can do that.A flat tax doesn't tax prior savings.
You want a tax that doesn't require personal tax returns? A flat tax can do that.A flat tax could be implemented that doesn't require personal tax returns.
"Many times" you "misspoke"??? Not so. You were mostly attempting to switch the meaning of your original statement until another poster finally nailed you and you admitted you'd screwed up. I've only seen the one time where you admit it.
Any flat tax IS an income tax and it uses income as its basis (and perpetuates the IRS and the tax code pretty much as is). Many people (yourself included) try to warp it around to be a "consumption tax" so that it is - you THINK - more politically palatable and you are aware that the current political fad is for something called a "consumption tax". You can't make a slik purse out of a sow's ear and you cant make an income tax into a consumption tax except in theory. Too bad you (and a lot of economists) don't realize what a consumption tax is. The FairTax is one. It taxes end-consumption at the retain level.
Neither the Nightmare VAT nor the Nightmare Flat are consumption taxes except by the most convoluted definitions and and modifications and that can be seen by the actual experiences in the real world I gave you in #97. Too bad (for you) that you choose not to study them.
Hahaa, no exemptions. I am a whining old woman. I am for the Fair Tax.
Read the links I gave in #97 from the standpoint of a taxpayer in one of those countries and the "negative experiences" are clear.If they are clear then you won't have much trouble describing them.
They typically have a myrian of exemptions and exceptions - all of which are prime candidates for political mischief -So could a NRST. The lesson is don't have exemptions.
but they also have some form of income tax which is also fraught with "politiical mischief".I'm not suggesting a VAT/income tax hybrid. So what's your point?
Perhaps you can't (or won't) figger that out, though, so just tell us how your "Nightmare VAT" overcomes those difficultiesWhat specific difficulties are you talking about?
"Any flat tax IS an income tax and it uses income as its basis"
I was going to make that point, but you beat me to it. The flat tax still uses income as its base. The fact that you can make some adjustments which are intended to imitate the positive economic impacts of a consumption tax does not make it a consumption tax, since its revenue base is still income.
What makes you think you know the opinions of the panel? Because they are asking legitimate questions?I was basing it on their comments and questions. Please forgive me if I gave impression that I knew the opinions of the panel.
I am pretty certain that two members of the commission like our proposal a lot.Based on what?
Almost everyone has reservations when they first hear about the FairTax. In general, I have found that the more those new to the concept know, the better they like the proposal.I have found that the more people are misled by the supporters of the FairTax the more they like the proposal.
We shall see. I don't claim to know what the panel is thinking, other than some positive signs from two of the members.Did they wink at you or what?
I doubt that the individual members themselves know what their final report will conclude. For you to insinuate that you do is sort of silly IMHO.It's not silly, it's looking at the situation realistically. A NRST has no chance of being recommended by this panel. None.
"I'm not suggesting a VAT/income tax hybrid."
So where is your proposal for a VAT which eliminates corporate and individual income taxes?
How many other supporters do you have for that approach?
I don't dabble in nothing. I drool a lot. Old age.
I just want to get rid of the IRS.
I love HR25.
"Based on what?"
Primarily based on conversations they have had with our people - outside of the hearings. Also, Congressman Linder is very optomistic and he has had numerous in-depth conversations with the commission members individually, even though he hasn't testified. No sitting elected officials have testified.
I have heard reporters write about how difficult it is to determine which way the Supreme Court judges are leaning on a case by listening to their questions from the bench. In some cases, they do expose their positions during that time; in most cases they don't.
"It's not silly, it's looking at the situation realistically. A NRST has no chance of being recommended by this panel. None."
Will you agree not to deny making this statement at the end of July?
Don't make me look this up and post its link to another thread!!
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