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.
And the problem with you is you have an agenda and that agenda is that you think your business will go belly up with a 23% sales tax on the new houses you build. That is a very legitimate concern and I respect it. I ask you one very simple question: Do you sell more houses when the economy is good or when the economy is bad? I am a Neal Boortz listener for 35 years (yeah, I know it gets old) and I have heard more than one builder come on his show and support the fair tax. If the fair tax makes the economy soar I should think that your business will too. Think it through. Manufacturers have stated that they would relocate to the US if they could avoid taxes (which they could do under the HR25). Who's going to build all the houses for their executives and their employees? I don't pretend to know your business but I do pretend to understand expansionary economics.
Individual consumers can be audited just like businesses.
You want to show us where it authorizes such audits in the legislation against the consumer?
Heres a link to the text so you can go look for such:
Fair Tax Act of 2005
http://thomas.loc.gov/cgi-bin/query/z?c109:H.R.25:
Audits may certainly be performed with regard businesses and sales tax authorities themselves who can be liable for both collecting and remitting the NRST, and are explicitly provided for:
`SEC. 508. SUMMONS, EXAMINATIONS, AUDITS, ETC.
- `(a) Summons- Persons are subject to administrative summons by the sales tax administering authority for records, documents, and testimony required by the sales tax administering authority to accurately determine liability for tax under this subtitle. A summons shall be served by the sales tax administering authority by an attested copy delivered in hand to the person to whom it is directed or left at his last known address. The summons shall describe with reasonable certainty what is sought.
- `(b) Examinations and Audits- The sales tax administering authority has the authority to conduct at a reasonable time and place examinations and audits of persons who are or may be liable to collect and remit tax imposed by this subtitle and to examine the books, papers, records, or other data of such persons which may be relevant or material to the determination of tax due.
For under HR25, the business is liable to "collect and remit" the NRST, and thus a business can be audited.
The individual consumer however, can only pay the NRST. The consumer is not authorized to collect the NRST.
Point is, there is no purpose for an audit of the average person making purchases for consumption under a retail sales tax. Thus there are no provisions for such in the legislaton.
OTOH, obviously a search under warrant can be obtained if there is sufficient probable cause for such, meeting 4th amendment requirements in a criminal investigation, or production of records by court order in a civil proceeding as in any civil action brought to a court where the civil action can be justified.
Provisions protecting the citizen are explict and stringent with express instruction to the courts under HR25 setting the standard of presumption of lawful behaviour under civil proceedings and presumption of innocence under criminal proceedings. You will not find like provisions anywhere in the current Internal Revenue Code.
I'll concede that the 23% reduction of prices due to embedded taxes can't happen without wages being reduced. But I won't deny that at least a 10-15% price reduction will happen. Over and above that the only reduction in costs will be compliance. But the increase in economic activity and productivity is a reason to consider the fair tax. I honestly believe that with the increase in jobs and permanent employment the USA will experience explosive growth. The only caveat is the stupid mindset of so many of our young people and union employees who have become accustomed to not having to turn a hand to receive a wage. But that is a story for another day.
The problem with that equation is that it assumes 100% compliance. That assumption alone causes the NRST to underestimate the neccessary rate by at least 15%.
Wrong, the NIPA:GDP measures only reported income and retail sales. It does not track unreported hence tax evasion in the underground economy. As a consequence the taxbase defined with GDP data is smaller by the amount of evasion and other unreported sales going on in the country.
The tax rate thus determined is compensated automatically for the existant rate of evasion and non-reporting that currently exists.
There are all sorts of reasons for the NRST police to come audit the average person. If an individual seems to be getting a lot of shipments overseas, they become suspected tax cheat. If an individual takes out too much cash, they become suspected tax cheat. If a person hires a lot of domestic help, they become a potential tax cheat. There are lots of circumstances where the NRST police might think some individual is liable for tax and are subject to an audit. Just a descriptive statement in the law that says collect and remit will do nothing to prevent the NRST police from knocking on your door. If the tax man suspects you owe tax, even as an individual, he will be coming. You are living in fantasy world if you don't think the sales tax man will come after consumers. You just need to look at how states are tracking down individuals who avoid cigarette taxes to see what will go on with an NRST tax.
Then just show the "NRST police" (your term) your receipts and you have no further obligation ... amd that's what the bill calls out in Sec. 101 under "EXCEPTION WHERE TAX PAID TO SELLER".
Also see Sec. 510.
Wow - you really have fleshed out your Nightmare Tax bill haven't you??? "Some form of W-2" ... that's real extesnsive definition. Please let us know when you flesh out the 1099 requirement.
Oh, and don't hold your breath for the revenue neutral requirement info (#157). It is both common sense (which you like to think you have) and available via your search engine.
Looks like you'd never make it through Government 101 and thats a shame since it is a prerequisite for Government Taxation 101.
Educating you seems like a never-ending proposition. Please go back and read #97 where I gave the links to the other countries.
I said the 3 had income tax (not flat tax) in addition to a VAT. I have not gone on to investigate the flatness of those 3 income taxes and don't intend to, but from memory all three, I think, have a corporate oncome tax in addtitional to a personal one.
And yes, I purposely did not post the link to the income tax for Zambia because I figured some wiseacre would point that out. That's another good reason for you to learn to use your search engine.
Sorry, but the flip-flopping comments stay since that's what you do and I see several FReepers have picked up on your little game.
You're right, though, lying is probably the more accurate appellation for what you do.
The FairTax is a lot more than a theory but has a completely fleshed out bill in Congress that describes the plan - in fact, 2 bills; one in each legislative body. I thought you knew that.
Yopur Nightmare Tax (either flavor) IS INDEED a set of two theories that are quite incomplete (at best).
Try putting a tax bill before Congress that cuts tax revenues by, say, 30% if you think revenue neutrality is not required. Or just for fun, try one that boosts taxes by 30%. You will find a complete blockage in either case. In fact, you'd probably be laughed off the Hill.
I already DID point you to the information you seek ... see my post #209 this thread and note that in #97 I said they had income taxes not flat taxes. The overall effect on the citizens is about the same though (unremittingly bad).
Too bad for you if you didn't read them to see that they all have exemptions/exceptions all over the place - even Zanbia; the income tax part of which you can find for yourself. I wasn't TRYING to point you to flat tax countries but rather VAT countries which was the discussion at that point in the thread (and you claim not to flip-flop ... shame, shame; pants on fire).
BTW looey (your 4th screenname I think but maybe I've missed some) can you gives us the tax exclusive income tax bracket rates since you think that that way of presenting things is grand?
No I can't "gives" it to you, it isn't possible to have an exclusive tax rate on income. Who is "us"?
the VAT was being discusses and that initial part of the post was to illustrate what just a single private citizen in the UK thought about it.
"the VAT was being discusses?" What the hell does that even mean?
In other words your post IS irrelevant to the discussion.
You might as well drop that "of the gross payment" business as you've been repeatedly shown that is wrong,That's a lie repeated many times (which still doesn't make it true) but you can be the first one to prove me wrong.
Had you read the FairTax bill with any understanding instead of just the intention of making out-of-context quotes, you might know that.
Actually if you'd ever read the bill you'd know that "23% of the gross payment" isn't out of context...it's a direct quote...If you have read the bill then you're just lying...No surprise there.
Your lying indeed IS an issue. See my post #211.
No, the FairTax doen not TAX the underground economy directly but it does get a chunk of their ill-gotten gains when they buy things at retail which is when the tax is paid.
Just think, it makes taxpayers out of your neighborhood drug dealer and your illegal alien workers - not to mention those millions of foreign tourists.
If you are concerned about that then by all means, retain your receipts and you're cool - says so in the bill.
Both premesis are not correct. Shipments are not a taxable evemt and not monitpred nor have they any tax value. Withdrawing cash is likewise not a taxable event and not monitored.
Retail sales are what is being taxed not the other two items you mention. Again, if you are concerned - keep your receipts.
Looey, luv ... don't try to ape the style of another poster; it just doesn't fit your personna.
You can't gives us the t.e. rates?? Do you need a calculator? That has never stopped you before. The "us" are all of the people reading the thread who may not realize how high their income tax brackets are when calculated as tax exclusive - so they can be compared on the same basis quth your tax-exckusive FairTax number. As you know (but refuse to admit) that is why the FairTax uses the tax inclusive figure normally (though they actually use both 23% and 29.87% which some - ahem - always round off to the high side as 30% to make it seem higher).
The "being discusses" means I ain't got no larnin'. Et tu??
At the point in the thread of #97, the subject was the VAT and both the individual's post from the UK and the links were illustrating points about that. I would have thought you would have deciphered that OK, but guess not.
Anyone who's "seen" you on these threads since '98 or '99 (I forget just when you started) and has been through all of your screenname changes KNOWS that you'll never admit ANYTHING positive about the FairTax. Never have, never will, but you DO like to take little snippets out of context to try mnaking them seem like something they are not (the gross product thing) and your almost-lovable malformed arithmetic. Do you remember the time you were 400% in error on a calculation that YOU defined???
Probably not - the Good Lord shields certain minds from that sort of thing. Sorry, looey, but your "23% of the gross product" IS an out of context snippet as people reading the bill will discover.
who may not realize how high their income tax brackets are when calculated as tax exclusive
An income tax can't be calculated "tax exclusive".
Income taxes are a percentage of your income not a percentage on your income...
Your ignorance is shining bright.
you DO like to take little snippets out of context to try mnaking them seem like something they are not (the gross product thing)-----
Sorry, looey, but your "23% of the gross product" IS an out of context snippet as people reading the bill will discover.
Paying attention has never been your strong point...Who (besides you) said anything about "gross product"?...
Not only is that "out of context" it's a flat out lie. You even put your lie in quotes...or did you just "misspeak"...TWICE?. It's so transparent that you have to be dishonest, it is all you've got.
`(b) Rate-`(1) FOR 2007- In the calendar year 2007, the rate of tax is 23 percent of the gross payments for the taxable property or service.
This would be the part where you say "gross payment" doesn't mean "gross payment"....
Both are absolutely correct. Shipment of goods from overseas (which is what I said) is a taxable event. How can you say it is not? And the use of cash will be highly suspect because the government will not know how you spent that money and if you paid tax on that consumption.
Again, if you are concerned - keep your receipts.
Exactly, but then the record keeping for the individual has just become more tedious than it is currently. Every penny you spend has to be accounted for and every receipt must be maintained. This is actually much more difficult than just accounting for what your employer paid you. Plus every month you buy goods or services from non-registered retailers, you need to file and pay your tax. Then the real issue is, where is all the savings in compliance costs?
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