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.
Only if we let them.
A combination of income and retail sales tax would be deadly."
then that is what they will give us.
You plan on just letting 'them"?
Only "them's" that could try it, are subject to losing their cushy jobs after the electorate gets through ripping their gizzards out.
My apologies for the broken link ... please try http://thomas.loc.gov
The "loc" stands for "library of Congress" BTW - an official site.
I think they intend to 'give it' to us, at gunpoint.
We need a nationalized version of a 'howard jarvis' tax rebellion, to get this going. The national RETAIL sales tax is imo, the right way to go, as it taxes spent dollars.
Evasion becomes legal in this scheme by taxpayers legally deciding what, and when to cut back on their personal expenditures. I like that form of tax evasion.
But dismantling the power structure both parties look to, to create their versions of eutopia for the rest of us little people, aka: IRS, isn't going to come easy. There needs to be an inspirational event to help them concentrate on the financial realities of the 'little people'.
It requires a tax related event of national proportions, perhaps 15 states who refuse to participate on some level UNTIL the item is put to a vote after real debate... or some such PUBLIC display of discontent.
Right now, the pubs and dems are laughing confidently that the status quo, will be upheld... by gunpoint if necessary. Until they have a rational fear that their ponzi schemes and armed robbery scams, are in serious danger of being interrrupted, they will do NOTHING to advance OUR cause.
With icons like gingrich, the smaller government and less intrusion guru of yesteryear... sucking up to hillary's butt on socialist medicine... what can I say?
YOU keep up the GREAT work.
I do agree with you.
"BTW, I would prefer a flat tax which, as is evident by the poll I posted previously, has significant support."
The concept of a flat tax has considerable support. If you measure the support of any of the various flat tax proposals, they are miniscule. Apparently, there is a major problem reducing the concept to a workable level of specificity. After all, it isn't like the flat tax is a new arrival on the tax reform scene, is it?
"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.Whatever. The fact that you keep bringing it up says more about you than me misspeaking says about me.
Until that time you persisted in attempting to alter the meaning of what you said to be something quite different.
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.).Sorry, you are just wrong on this one. You may not be able to understand why, but that doesn't change the fact that a flat tax is a consumption tax.
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.I'm not recommending a flat tax as a companion to a VAT. So what's your point?
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.Uh, you do exactly what the FairTax bill does; you repeal the relevant subtitles of the Internal Revenue Code and replace them with the flat tax code. What's the problem?
Perhaps if you could explain how your Nightmare VAT or Nightmare Flat overcomes that little set of problems we'd all be more relieved.You keep saying there are problems but have yet to describe any.
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.Your links were just to pages that describe the code or the actual code of other countries. That doesn't describe "negative experiences." Again, if it's so clear you should have no difficulty pointing them out from the pages you linked to. Is this one of your tactics? Point to pages that don't describe what you say they will so it looks like you have verification of your claims? Caution: Watch for falling credibility!
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:Well that solves everything. No getting around that! It's airtight!!!
"To tax all consumption of goods and services in the United States once, without exception, but only once."
"Nobody is going to pick one system over another simply because one happens to have a bill in Congress."
You keep missing the point, so let me splain it to ya (as we say in the south).
The flat tax has been around a LONG, LONG time. Many flat tax bills have been introduced, many have died and none .... ZERO ..... have ever gained any real political traction. Democrats will never support one. The tough part of developing a plan is NOT, I repeat NOT, deciding which form you want to use. The tough part is to make all the trade-offs that are necessary to develop a real fleshed out proposal with all the particulars as to base, rate, etc. You attack the particulars of the FairTax and , in so doing, insinuate that some flat taxer (or VAT taxer) could to a better job of making those judgements.
That being the case, the burden of proof is on you to back that up with something other than empty rhetoric.
I find it very interesting that Mr. Burgess found it necessary to shift his flat tax bill to an option. I am pretty sure that the Armey bill was a replacement, not an option. Kind of makes you wonder why Mr. Burgess found it necessary to basically abandon the idea of simplification and introduce a proposal that isn't even revenue neutral. For that reason alone, that proposal isn't going to receive serious consideration.
The more serious concern, of course, is over progressivity. The flat taxers basically pooh-poohed that whole notion. That stakes out their territory as being far out of the mainstream.
Now, now ... have you so soon forgotten that you were corrected on this particular - ahem - "misspoke" back on post #99.Listen, if you are going to rehash months old posts, you may want to read all the posts inbetween. What you are bringing up has been dealt with long ago. You are going to have try the next logical fallacy...
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.Did it help you understand a VAT? If not I can post them again.
"You want a consumption tax? Flat tax can do that."
"It is a consumption tax."
So employers won't have to generate W-2s and 1099s when your flat tax proposal is implemented?
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.Damn, this is the infamous pigdog? I'm not impressed. You're not the brightest bulb, are you? A little slow on the uptake...
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 have not been able to show how your links in #97 describe a "nightmare scenario." Although you keep making the claim as if repetition makes it true.
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).Appeal to Ridicule. Yet another logical fallacy.
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.That's just not true. The tax on every transaction under a NRST could be evaded by just one person. The retail collects the tax and doesn't remit it.
The fraud losses under a NRST probably would not approach the gains from the taxing of the underground cash economy.The "underground cash economy" isn't tax any more under a NRST than the current system.
Add in a few tens of millions of foreign tourists and...well?And subtract a few million Americans visiting foreign countries and ... well?
As I was reading the thread I thought he was now advocating a flat tax. He does go back and forth.Are you going to start this crap, too? I support a flat tax or a vat. In that order. When a flat tax is being discussed, I discuss a flat tax. When a VAT is being discussed, I discuss a VAT but that doesn't mean I would prefer it over a flat tax.
The misspeaking bit says PLENTY about you since you do it so frequently. And since the shoe fits you we hope it doesn't pinch your toes too tightly.
Apparently you cannot grasp that - as I have pointed out - the actual flat tax (i.e., one that actually becomes law in one or more countrys) never stays either flat and does not stay as a consumption tax too long.
That is what the links in #99 clearly show despite the fact you don't wish to read them. Since the Nightmare Flat is not a flat tax at all but merely the concept of one in complete theory, it does not qualify at all as a consumption (or any other kind of) tax at all - it is merely a pretty (to you) idea that you can harrangue endlessly about without defining it.
The point of the #99 links is to illustrate what the flat tax in the real world becomes - a companion to the VAT and an embedding of the some part cost of taxation into prices. Your theoretical dream of either type ends up in the same place as those links show when both should be on the ash heap of history.
Should you try to draft a Nightmare bill (let's call it) for either of your Nightmare tax plans, you would encounter serious difficulties merely using the same code sections replacements. You are merely showing your lack of grasping what is involved in drafting such a bill ... that's understandable since you don't HAVE a tax system in mind and so can't draft a bill for it.
It is also true that you cannot show your Nightmare VAT/Flat to be revenue-neutral - which the FairTax is - since you don’t have anything but a conceptual figment of your imagination ... and a faulty one to boot.
You're merely flip-flopping again. That has been clearly shown on this thread. Or peerhaps you prefer "misspeaking" again. Or maybe just lying?
To be accurate, you support the theoretical notion of a VAT or flat tax which is best described as a Nightmare VAT or Nightmare Flat and you have no specifics on either and no showing of revenue neutrality (which is required for Congress to enact such a law BTW).
My error - the links referred to are in #97, not 99. The #99 merely shows you saying you prefer the VAT which we now know is true or not true depending ... your honesty problem again is showing again (or lack of it).
Apparently, there is a major problem reducing the concept to a workable level of specificity.
Several problems from what I have discerned in comments of businesses, individuals and politicians concerning why the flat tax looses its luster when it comes down to nuts and bolts implementation.
1) For all intents and purposes, despite the attempt, to place it in a psuedo consumption tax catagory by not taxing income from savings or investment. The flat tax implementations still tax principal from non-investment sources going into savings or aquiring investment securites.
2)The flat tax, still requires complex rules and regulations to distinguish return of capital from taxable income. A primary bugaboo of the income tax causing the more significant part of the complexity of tax income.
3) The flat tax is not acceptable as a boarder adjustable tax. There is no sufficient mechanism of rebating taxes paid under it that are embedded into export goods and services to the businesses and corporations paying income and payroll taxes under a flat tax system.
4) Regardless of the hype implying otherwise, IRS is still there in all its glory collecting and charged with verifying the truthfulness of reporting of income for tax purposes and that income is even being reported. Bottomline that is the factor that never goes away in any income based tax laid on the doorstep of individual or business to report and assess ones own tax liability.
5) All actual flat tax proposals before congress have removed large sectors of the electorate from direct participation in the flat tax system fostering a large constituency supporting ever growing government hand higher tax burdens over time as a consequence.
6) No flat tax proposal submitted to congress has ever attempted to do anything concerning the SS/Medicare payroll tax levied on both business and individual coincident with the flat tax its self.
No flat tax legislation proposed has even come close to the concepts that it has been promoted to the public under, and none have even begun to address the need to remove tax burdens from our export goods and services placing the U.S. at severe disadvantage in foreign trade with nations that have border adjustable or nil taxation in products placed into international commerce.
The links o the VAT countries describe how exemptions, excemtions and - in addition - income tax are all part of the VAT/flat scene in actual practice. The fact that you don't care to read it and observe that makes no difference at all.
I'm pleased to hear that you agree that the FairTax solves everything - at least you're beginning to learn. Who'da thunk it?
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