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.
Your "return free filing" link is hardly that (if you'r read it which you obviously do not do) since it states on the cover page that tax simplification has to preceed (that means comes before) "return free" filing. So much for your "return free" filing.
It then goes on the say that only 12% of those filing Form 1040 would be able to do "return free" siling. Some "return free", eh?? And we still have the income tax and the IRS.
I've got a better solution for return free filing ... lets do the FairTax and have no returns filed by US citizens relating to income. No paperwork, no IRS, etc. And it helps boost savings as well.
As I said to you before, the Nightmare Flat tax (or any other flat tax) is merely an income tax hiding in sheep's clothing until the political manipulations show us its true form - and those manipulations are very easy under that tax form as we see with the present system.
Taxes have already been paid on prior savings and since the politcians would probably initially exempt interest income it wouldn't be taxed a second time ... until spent when the increased hidden tax cascaded into prices and hidden from the taxpayeer (just like as at present) when it WOULD be taxed a second time.
"Many times" you "misspoke"??? Not so.Huh? I misspoke that once. I have stated many times that I misspoke in that post. What's the point of bringing it up continually? Have you never misspoke? Should we peruse your posts looking for inconsistency so we can discount everything you say without addressing the particular points (as you are trying to do with me)?
Any flat tax IS an income tax.No more than a NRST.
and it uses income as its basisNo more than a NRST in that it taxes the income you consume and not the income you save, just like a NRST.
(and perpetuates the IRS and the tax code pretty much as is).The tax code would be completely different and if you want to get rid of the IRS, get rid of the IRS and create a Flat Tax Bureau.
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".Actually, we "try to warp it around to be a 'consumption tax'" because it is a consumption tax. It taxes consumption, not income, not savings. Consumption. Ironically you are trying to warp the flat tax into an income tax because you think it would be less politically palatable.
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.I'm not trying to.
Too bad you (and a lot of economists) don't realize what a consumption tax is.Actually, it is you who are ignorant on the subject as is demonstrated by your repeated claim that a flat tax isn't a consumption tax when it most certainly is.
The FairTax is one.Yes, it is.
It taxes end-consumption at the retain level.Otherwise known as a retail sales tax.
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.You continue to flaunt your ignorance.
Perhaps you should try Remedial Reading 101. Most interested in the subject will have no difficulty seeing from the links in #97 what the actual VAT experiences in several other countries have been.
You're not suggesting anything except the idealized concept of a VAT. How is it you expect it to be any different in practice that the existing VATS (or are all those countries doing it wrong?).
You - I'm sure - can explain how your Nightmare VAT will keep all those nasty things from happening here (like both a VAT and Income tax).
One of the primary principles behind the FairTax is to not have exemptions/exceptions whenever possible - and the bill is quite good in that regard. To start that nonsense after passage would be a HUGE uphill battle since the law would be the FairTax which says as a guiding principle:
"To tax all consumption of goods and services in the United States once, without exception, but only once."
So where is your proposal for a VAT which eliminates corporate and individual income taxes?If you are looking for a bill number, I don't know of any specific one. So what? You keep trying to make an issue out of the fact that there is a NRST bill in Congress when it doesn't matter. Nobody is going to pick one system over another simply because one happens to have a bill in Congress. To think that would matter in decision as significant as comprehensive tax reform is simplistic to the extreme.
How many other supporters do you have for that approach?I have no idea how many people support a VAT.
Will you agree not to deny making this statement at the end of July?Of course not, I'll even make it my tag. I've eaten crow before but I don't think I will have to this time.
Your "return free filing" link is hardly that (if you'r read it which you obviously do not do) since it states on the cover page that tax simplification has to preceed (that means comes before) "return free" filing. So much for your "return free" filing.Golly, somebody should form a panel to discuss tax simplifi...wait a minute...aren't we talking about a tax reform panel?
It then goes on the say that only 12% of those filing Form 1040 would be able to do "return free" siling. Some "return free", eh?? And we still have the income tax and the IRS.I was only using that link to illustrate what "Return-Free" filing is.
I've got a better solution for return free filing ... lets do the FairTax and have no returns filed by US citizens relating to income. No paperwork, no IRS, etc. And it helps boost savings as well.Well maybe they will discuss that on the 17th, but I doubt it.
As I said to you before, the Nightmare Flat tax (or any other flat tax) is merely an income tax hiding in sheep's clothing until the political manipulations show us its true form - and those manipulations are very easy under that tax form as we see with the present system.Yes you said it before and you continue to demonstrate your ignorance by repeating it.
Taxes have already been paid on prior savings and since the politcians would probably initially exempt interest income it wouldn't be taxed a second time ... until spent when the increased hidden tax cascaded into prices and hidden from the taxpayeer (just like as at present) when it WOULD be taxed a second time.I'm not sure what you are talking about here but I am sure that a NRST would tax current wealth even if it had been previously taxed.
In #99 you claimed:
"As I have stated many times, I misspoke in that post." when in fact you did not state that you had misspoken until you had to admit you were wrong.
Until that time you persisted in attempting to alter the meaning of what you said to be something quite different.
You're welcome to read as many of my posts as you like; I started posting about 1988 or so (or maybe I "misspoke" - maybe it was 1998; I forget:-)) so that should keep you out of mischief. But I'm sure we "misspokers" understand what we are "misspeaking" about.
Sorry, but a Nightmare (or other) Flat tax is an income tax and requires pretty much all of the supporting machinery now in existence for the present system (massive tax code replete with exceptions, exemptions, the IRS, etc.). The Fairtax does its thing without all that folderol which not only saves tax (my) money but also saves lots of aggravation in dealing with the authorities. I think most citizens do not mind paying taxes (though most think they are too high which is true) so much as putting up with the potential criminalization and general mental strain of complying with government mandated arcane paperwork and procedures eary April 15 (or so) and being guilty until you prove you're innocent. The FairTax frees us from that. Your Nightmare Flat tax does not.
If you had taken the trouble to read the links in #97 you would see that in practice the flat income taxes implemented as companions to the VAT do not remain flat at all and end up cascading and being embedded into proices - which was why most of these countries bought into the VAT or VAT/income tax idea in the first place - to eliminate the tax cascading into the prices of things. So as time goes along the flat taxes end up taxing (guess what) - INCOME - to a far greater degree than you pretend.
The Tax Code would be "completely different" ... REALLY??? How - can you offer, perhaps a few hundred (of thousand) sections to replace what we have that support that wild swing of fancy?? Just post it here on FR. I'm sure we'd all like to see it.
Actually starting out as a "flat tax" (the sow's ear you're trying to tell us is the silk purse), such a scheme rapidly becomes just what the Euro-folk have ... and which we're trying to get rid of. A tax on income is a tax on income and making exceptions and exemptions at the start is just an open invite to the pols to "have at it" - and that's exactly what has happened in the other countries that have taken that approach.
Perhaps if you could explain how your Nightmare VAT or Nightmare Flat overcomes that little set of problems we'd all be more relieved. Read the links in #97 so you can know what you must overcome to be palatable.
As if they don't already have all the ideas right in front of them.
Now, now ... have you so soon forgotten that you were corrected on this particular - ahem - "misspoke" back on post #99.
How soon we forget! Maybe we'll someday seeyou posting on FR as to how you supported the FairTax - except for a "misspoke" or three.
Wouldn't that be grand???
If you want to point out such an observation you also need to point out that, in the future, a sales tax would create much more in savings. Also, if prior savings are in the form of qualified plans the sales tax is a boon, a helluva boon.
You might read about the prebate mechanism on the THOMAS website - http://.thomas.loc.gov - and enter "hr25" (without the quotes) after selecting the choice for "bill number".
It is actually pretty strightforward and can be handled by the SSA much as they now do for SS payments (or wire transfers). It is a highly computerized operation.
I don't recall any who support the FairTax as claiming that the prebate (or anything else) would be without fraud. Whenever you have people, you have the potential for fraud. I personally think the opportunity for fraud is fairly low however.
The prebate is based upon family size ONLY and everyone may obtain it (unless you choose not to for some reason). It is your money to spend and you choose what (or whether) you spend it - and when. Seems to me that is fair.
But please read the bill (it's in English, not legaleese) and the prebate is called the Family Consumption Allowance.
Yes. But the world is changing rapidly. Since everything you buy on the internet will be subject to the tax it isn't out of the question that most people will soon be ordering a lot of basic neccesities off the internet. Even as we speak, the advent of the eBay's and Amazon's are evening out regional price differences.
Actually, the posteer doesn't have a plan - just a fvague concept so no one (including the poster) knows what's in it and that changes as he posts.
Actually he used to be a big proponent of the VAT and had tables and charts to show how well it worked. Maybe he'll share them with us again.
Your link does not illustrate what return free filing is but rather a pathetic effort by our government to attempt to do everything they can to hold onto the existing tax system.
As I pointed out, "return free" is a misnomer - and a bad one. The FairTax is a better illustration of return free filing.
Take a look at the data contained in the links for #97 to see where both the VAT and the flat tax end up - a nightmare scenario.
You don't understand the income tax cascading method that embeds some or all of the taxes into prices??? Guess you don't or you wouldn't be pushing VATs and Flats.
He still is ... it's called the Nightmare VAT. He just "misspeaks" occasionally whenever it suits his debating purpose and claims to be for the Nightmare Flat (which is also undefined and only a vague notion).
He seems to think he's fooling people but most Freepers get it, I think. They're sharper than that.
The vast majority of transactions under the NRST would require the collusion of two people to effect a fraud while the current system let's you cheat alone. The fraud losses under a NRST probably would not approach the gains from the taxing of the underground cash economy. In fact, if you assume fraud losses under the NRST would stay about the same (I think they will decrease) the additional underground tax base would be a huge net increase in revenue. Add in a few tens of millions of foreign tourists and...well?
"A combination of income and retail sales tax would be deadly."
As I was reading the thread I thought he was now advocating a flat tax. He does go back and forth.
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