Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Presidential Panel Hears About Tax System
AP/Yahoo News ^ | May 11, 2005 | MARY DALRYMPLE

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.

ADVERTISEMENT

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.


TOPICS: Business/Economy; Culture/Society; Extended News; Government; News/Current Events
KEYWORDS: bush43; economicteam; incometaxes; taxes; taxpanel; taxreform; term2
Navigation: use the links below to view more comments.
first previous 1-20 ... 201-220221-240241-260 ... 381-389 next last
To: Always Right

There are all sorts of reasons for the NRST police to come audit the average person.

No authority in the legislation to audit the individual only a business.

If an individual seems

You draw a lot of dead hypotheticals and strawmen, but not once have you shown authority for random audit of individual citizens in the legislation.

All you list may singly or in combination provide cause for a search warrant by a court with showing of sufficient cause, not an audit.

There are lots of circumstances where the NRST police might think some individual is liable for tax and are subject to an audit

There are lots of circumstance where police migh think some individual has committed any number of civil or criminal offenses, no audit, but plenty of search warrants, and court orders when sufficient cause exists for a cause of action.

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.

True with search warrant in hand and probable cause, or subpenoe backed up by court order to produce records for a grand jury, or civil discovery action. Not an audit in the night.

If the tax man suspects you owe tax, even as an individual, he will be coming.

If the taxman under the NRST has probable cause and warrant is issued, r by subpoena under grand jury, or by court ordered discovery process in a civil action. But not on mere suspicion.

You are living in fantasy world if you don't think the sales tax man will come after consumers

I have yet to see an audit or even inquiry as to whether or not I paid a state retail sales tax on my goodies. Seen plenty of businesses audited as matter of course though which law expressly authorizes.

Then again with probable cause, and proper search warrant or court order in civil action much is possible for many reasons, taxes are only one.

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.

Once again, I have yet to see an audit or even inquiry as to whether or not I paid a state retail sales tax on my goodies or smokes for that matter. Nor have I ever head of such a case targeting an individual lacking search warrant with sufficient cause for the search behind it. Not random audits on individual citizens' home finances.

221 posted on 05/14/2005 3:44:22 AM PDT by ancient_geezer (Don't reform it, Replace it!!)
[ Post Reply | Private Reply | To 206 | View Replies]

To: lewislynn

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".

Sure it can, you can calculate on the basis of whats left from government claiming its cut. Very easy formula to convert betweent the two systems.

Getting the tax-exclusive rate given the tax-inclusive rate

Te = Ti / (1 - Ti)

Where Te= Tax exclusive rate and Ti= Tax inclusive rate.

For example, the a 17% (tax-inclusive) flat tax has a tax-exclusive rate of 20.48%.
(0.1700 / (1.0000 - 0.1700) = 0.2048)

For the NRST as proposed by HR 25, the 23% inclusive rate comes out to 29.87%.
(0.2300 / (1.0000 - 0.2300) = 0.2987)

 

Other examples Comparing tax-inclusive and tax-exclusive rates

Inclusive Rate Description Exclusive Rate
4.76% Sample State Sales Tax --> 5.00%
10.00% <-- Penalty for IRA/401k Early Withdrawal 11.11%
15.00% <-- Marginal Income Tax 17.65%
15.00% <-- NRST (not including SS/Medicare) 17.65%
15.30% <-- Social Security/Medicare Payroll Tax 18.06%
17.00% <-- Flat Tax (not including SS/Medicare) 20.48%
20.00% <-- Capital Gains Tax 25.00%
23.00% <-- NRST (including SS/Medicare) 29.87%
28.00% <-- Marginal Income Tax 38.89%
32.30% <-- Flat Tax (including SS/Medicare) 47.71%
39.00% <-- Marginal Income Tax 63.93%
54.30% <-- Max Margin Income/Payroll tax rate 118.81%

Note that any tax-inclusive rate larger than 50% would have a tax-exclusive rate of over 100%. And you figure that tax-exclusive measures are a good basis for judging the actual effect of tax burdens relative to your resources to pay them? Pitiful.

222 posted on 05/14/2005 3:58:03 AM PDT by ancient_geezer (Don't reform it, Replace it!!)
[ Post Reply | Private Reply | To 218 | View Replies]

To: ancient_geezer
No authority in the legislation to audit the individual only a business.

Not true at all. The bill is quite clear if the government thinks you might owe taxes you are subject to an audit. Individuals included.

If the taxman under the NRST has probable cause and warrant is issued, r by subpoena under grand jury, or by court ordered discovery process in a civil action. But not on mere suspicion.

The bill is quite clear on this point to. If the NRST police ask you to produce records (including 510 receipts) you must produce the records. Here's the wording from the bill:

`SEC. 506. BURDEN OF PERSUASION AND BURDEN OF PRODUCTION. `In all disputes concerning taxes imposed by this subtitle, the person engaged in a dispute with the sales tax administering authority or the Secretary, as the case may be, shall have the burden of production of documents and records but the sales tax administering authority or the Secretary shall have the burden of persuasion.

There is no provision here for warrants or probable cause or court orders. YOU HAVE THE BURDON TO PRODUCE RECORDS. No ands, ifs, or buts about it. But I know you will be unpersuaded by the black and white facts. They have never persuaded you before no matter how clearly that were laid out in front of you. I know you are smarter than that. You never concede a point even when you are obviously wrong.

223 posted on 05/14/2005 4:01:24 AM PDT by Always Right
[ Post Reply | Private Reply | To 221 | View Replies]

To: ancient_geezer
I have yet to see an audit or even inquiry as to whether or not I paid a state retail sales tax on my goodies.

That's because the rates are low and compliance is fairly high. The problem comes with the higher rates such as you are proposing. There was an article on the cigarette tax evasion just a week or two ago. States have cracked down on individuals. They subpoenaed records from Internet resellers and put liens on all their customers for fines and unpaid taxes. So when avoidance becomes a problem, you better believe the tax man will use every trick in the book to track it down, including going after the individuals.

224 posted on 05/14/2005 4:10:57 AM PDT by Always Right
[ Post Reply | Private Reply | To 221 | View Replies]

To: ancient_geezer
You are correct, I was mistaken, as HR25shows:
So should I accept the fact that you were mistaken (as happens to everyone on occasion) or should I continually bring it up as evidence that you are a "flip-flopper," a liar, etc.?

What should I do?
225 posted on 05/14/2005 4:39:39 AM PDT by Your Nightmare
[ Post Reply | Private Reply | To 196 | View Replies]

To: pigdog
I said the 3 had income tax (not flat tax) in addition to a VAT.
So when you said "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" in post #160 you didn't mean "flat tax"? You're getting pretty weaselly.
226 posted on 05/14/2005 4:42:58 AM PDT by Your Nightmare
[ Post Reply | Private Reply | To 209 | View Replies]

To: pigdog
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.
Check your buddy AG's post in #166. The PayGo rules expired a year ago. So when you said revenue neutrality was "required for Congress to enact such a law" you were either misspeaking, mistaken, or lying. Which was it.

Considering your refusal to admit you were wrong, I'm leaning toward lying.
227 posted on 05/14/2005 4:47:21 AM PDT by Your Nightmare
[ Post Reply | Private Reply | To 208 | View Replies]

To: Always Right

They subpoenaed records from Internet resellers and put liens on all their customers for fines and unpaid taxes.

Note it took a court order backed by cause to accomplish, not just the suspicion of the tax man that something might be going on.

The point being random audits of individuals such as you posited are not authorized under the NRST legislation. Note that the cigarette case involved the courts getting in on the action and full investigation under authority, not merely banging on citizens doors.

So when avoidance becomes a problem, you better believe the tax man will use every trick in the book to track it down, including going after the individuals.

Every trick authorized by law I'm sure you mean. Now where is that provision you were telling us gives the state tax bureaus the authority to conduct random audits on individual citizens. This little diddy you pulled up out of context of the Chapter lacks the grant of authority, that is found in section 508 under which burden of production arises in the first place.

The bill is quite clear on this point to. If the NRST police ask you to produce records (including 510 receipts) you must produce the records. Here's the wording from the bill:

`SEC. 506. BURDEN OF PERSUASION AND BURDEN OF PRODUCTION. `In all disputes concerning taxes imposed by this subtitle, the person engaged in a dispute with the sales tax administering authority or the Secretary, as the case may be, shall have the burden of production of documents and records but the sales tax administering authority or the Secretary shall have the burden of persuasion.

What you fail to note is that the only persons the bill authorizes this burden of production for, is by summons, to persons "who are or may be liable to collect and remit tax", those engaged in business.

`SEC. 508. SUMMONS, EXAMINATIONS, AUDITS, ETC.

For under HR25, only 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.

Only a court order such a warrant or subpeona or discovery in civil actions, can result in pulling the average citizen into the mix. For that the tax cops need more than mere suspicion that you say is all is necessary.

Yes the tax law will be enforced by state tax authorities operating under express provisions in the Fair Tax legislation. Enforced through the lawful authority and due process which is expressly required under the NRST legislation in much more explicit form than exists under current Internal Revenue Code that the federal IRS operates under.

228 posted on 05/14/2005 4:50:09 AM PDT by ancient_geezer (Don't reform it, Replace it!!)
[ Post Reply | Private Reply | To 224 | View Replies]

To: Your Nightmare

So should I accept the fact that you were mistaken (as happens to everyone on occasion) or should I continually bring it up as evidence that you are a "flip-flopper," a liar, etc.?

What should I do?

What ever you want to do as you always do anyway.

229 posted on 05/14/2005 4:52:32 AM PDT by ancient_geezer (Don't reform it, Replace it!!)
[ Post Reply | Private Reply | To 225 | View Replies]

To: groanup
How can you say that? Joe Pimp buys a $5,000 watch with cocaine cash and has to pay a sales tax on it? He never had to before. Clue me in.
Let me try and explain.

Under an income tax, the cocaine user (a criminal, also, remember) makes $6,000 pays $1,000 in income taxes and spends the remaining $5,000 on cocaine. The government gets $1,000. One criminal is taxed (the user) and the other isn't (the dealer).

Under a NRST, the cocaine user makes $6,000 and spends it on cocaine (the dealer has to raise prices like everyone else or his "real" profits decline). The dealer takes that $6,000 and buys a $5,000 Rolex and pays a $1,000 sales tax on top of that. The government makes $1,000. One criminal is taxed (the dealer) and the other isn't (the user).

There is no increase in revenues to the government.
230 posted on 05/14/2005 4:57:58 AM PDT by Your Nightmare
[ Post Reply | Private Reply | To 198 | View Replies]

To: ancient_geezer
What you fail to note is that the only persons the bill authorizes this burden of production for, is by summons, to persons "who are or may be liable to collect and remit tax", those engaged in business.

Individuals who owe tax are required to collect and remit it. You harp on that point, but that will not protect the individuals from being audited. The NRST does not protect the individual in any way. Records must be produced upon demand, no matter how lengthy your posts are. But I do give you an 'A' for presentation, but a 'D' for content.

231 posted on 05/14/2005 5:00:02 AM PDT by Always Right
[ Post Reply | Private Reply | To 228 | View Replies]

To: Always Right

"How can you say that? The first thing the bill does is make the consumer liable for the tax. And unless the consumer has an offical receipt, they are still liable. And all it takes to trigger an audit is for the government to think you might owe tax. There is NO PROTECTION for consumers in the entire bill. Individual consumers can be audited just like businesses."

Whoa there, AR!!! Are you really arguing for a continuation of the current system based on its greater respect for "consumer protection"? Are you saying that the current system is superior in regard to its respect for individual freedom and liberty?

You may want to rethink that position.... just a suggestion.


232 posted on 05/14/2005 5:00:12 AM PDT by phil_will1
[ Post Reply | Private Reply | To 191 | View Replies]

To: groanup

The internet is the solution? Come on now, get a grip on reality.


233 posted on 05/14/2005 5:03:22 AM PDT by Final Authority
[ Post Reply | Private Reply | To 133 | View Replies]

To: pigdog
Shipments are not a taxable evemt
What makes you think shipping to an individual isn't a taxable event? Isn't it a taxable service? And couldn't the item in the box have a taxable value?

Withdrawing cash is likewise not a taxable event and not monitored.
Use ATMs much? Any service charge is payment a taxable service and will have the sales tax added on to it.
234 posted on 05/14/2005 5:05:53 AM PDT by Your Nightmare
[ Post Reply | Private Reply | To 216 | View Replies]

To: Your Nightmare; pigdog

So when you said revenue neutrality was "required for Congress to enact such a law" you were either misspeaking, mistaken, or lying.

By the way revenue neutrality was required prior to 2004 before the PayGo rules and Budget Enforcement Act expired, and at the time the FairTax legislation was drafted during the Clinton years when the tax rate for the FairTax was established.

Seems to me a matter of timeframe here is at issue, not whether or not revenue neutrality is required by statute today.

Today, anything goes and the issue of revenue neutrality is moot except as the president may require such to get past his potential exercise of authority to veto a tax reform bill if he expects revenue neutrality to be a critical aspect.

Which apparently president Bush does:

 

http://www.taxreformpanel.gov/executive-order.shtml

Executive Order: President's Advisory Panel on Federal Tax Reform

By the authority vested in me as President by the Constitution and the laws of the United States of America, and to assist in reforming the Federal Internal Revenue Code to benefit all Americans, it is hereby ordered as follows:

*** SNIP ***

Sec. 3. Purpose. The purpose of the Advisory Panel shall be to submit to the Secretary of the Treasury in accordance with this order a report with revenue neutral policy options for reforming the Federal Internal Revenue Code. These options should:

(a) simplify Federal tax laws to reduce the costs and administrative burdens of compliance with such laws; (b) 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; and (c) promote long-run economic growth and job creation, and better encourage work effort, saving, and investment, so as to strengthen the competitiveness of the United States in the global marketplace.

At least one option submitted by the Advisory Panel should use the Federal income tax as the base for its recommended reforms.

 

So is revenue neutrality of a tax reform bill a matter of law? It would appear to be so within to the degree that an Executive Order of the president represents law, and his constitutional authority to veto a bill if a president finds lack of revenue neutrality sufficient cause for him to do so.

235 posted on 05/14/2005 5:09:36 AM PDT by ancient_geezer (Don't reform it, Replace it!!)
[ Post Reply | Private Reply | To 227 | View Replies]

To: pigdog
I respect your answer as the answer you offer is the only one possible, that is, based on the plan. The plan is not the law that will be enacted 'cause bills are never reported out of conference committees the way they went in. Before that even, at the time when a bill is voted on in the house, all sorts of mischief by way of amendment can be caused. That is before it goes to the Senate. What you see now is not what you will get.

BTW, when MA issues SS#s to criminal aliens or all of the criminal aliens who have moved back to Mexico, do we also pay them a monthly basic income guaranty as well? That is, is the system going to be automatic or will there be some sort of verification? I can see so much fraud right now it ain't even funny.
236 posted on 05/14/2005 5:11:53 AM PDT by Final Authority
[ Post Reply | Private Reply | To 132 | View Replies]

To: phil_will1
Whoa there, AR!!! Are you really arguing for a continuation of the current system based on its greater respect for "consumer protection"? Are you saying that the current system is superior in regard to its respect for individual freedom and liberty?

No, I am just so sick and tired of the lies posted here on a daily basis by NRSTers. NRST does not provide protection for the individuals. NRST does not relieve the individual from keeping records. The NRST police will be just as likely to go after individuals who they think are avoiding taxes as they are today. The advantages the NRSTers claim are either nonexistent and/or grossly exaggerated. There are lies, damn lies, and NRST posts. And I am not going to let the lies go unchallenged.

237 posted on 05/14/2005 5:13:05 AM PDT by Always Right
[ Post Reply | Private Reply | To 232 | View Replies]

To: Always Right

"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?"

AR, get a grip, man!! So now you are arguing for the current system based on ease of administration? Have you ever heard of DEDUCTIONS???

Unbelievable.


238 posted on 05/14/2005 5:18:03 AM PDT by phil_will1
[ Post Reply | Private Reply | To 220 | View Replies]

To: Always Right

Individuals who owe tax are required to collect and remit it.

Customers tax are required to pay it. Not collect it.

Only persons acting in the capacity of a business or for a tax agency are required to collect and remit the tax in any circumstance:

`SEC. 103. RULES RELATING TO COLLECTION AND REMITTANCE OF TAX.

`(a) Liability for Collection and Remittance of the Tax- Except as provided otherwise by this section, any tax imposed by this subtitle shall be collected and remitted by the seller of taxable property or services (including financial intermediation services).

`(b) Tax to Be Remitted by Purchaser in Certain Circumstances-

There is no situation where the purchaser is required to ever "collect" a tax under HR25.

Thus no situation where the purchaser is subject to audits under the provisions of:

`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.

 

Which is the only authority that can be used by the taxman short of a court order or warrant with sufficient cause for a court to believe a crime or civil offense may have occurred.

239 posted on 05/14/2005 5:24:13 AM PDT by ancient_geezer (Don't reform it, Replace it!!)
[ Post Reply | Private Reply | To 231 | View Replies]

To: phil_will1
AR, get a grip, man!! So now you are arguing for the current system based on ease of administration? Have you ever heard of DEDUCTIONS???

No, I am arguing against lies. Keeping track of income (which is reported to you) and a handful of receipts is much easier to account for than maintaining records for every penny you spend. Remember, if you don't have proper reciepts you are liable for sales tax on all your purchases. Where is all the freedom that they profess???

240 posted on 05/14/2005 5:24:59 AM PDT by Always Right
[ Post Reply | Private Reply | To 238 | View Replies]


Navigation: use the links below to view more comments.
first previous 1-20 ... 201-220221-240241-260 ... 381-389 next last

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.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson