Posted on 05/27/2005 10:53:33 PM PDT by Extremely Extreme Extremist
President Bush is calling for a complete overhaul of the broken U.S. tax code, and his Advisory Panel is holding hearings to make recommendations for reform. As I testified to the Panel earlier this month, instituting the flat tax is the right answer.
Our current income tax system is a catalog of favors for special interests and a chamber of horrors for the rest of America. As a country, we spend more time filing taxes than we spend building every car, truck, and van produced in the United States. To put this in perspective, it takes the average taxpayer over 26 hours to file a standard 1040, which has caused over 60 percent of Americans to pay a professional to complete their taxes. Simply complying with the complex tax code costs $194 billion each year, or about $650 for every man, woman, and child in America.
Aside from the tax system’s complexity and unfairness, it also inhibits saving, investment, and job creation; it imposes a heavy burden on working families; and it undermines the integrity of the democratic process. The U.S. tax system cannot be repaired by tinkering or fine-tuning. It must be completely replaced with a simple and more efficient alternative. Of the many proposed reform measures, the flat tax best meets the goal of collecting revenue in the simplest, fairest, and most transparent manner possible.
The flat tax will replace the current tax code with a flat-rate income tax that treats all Americans equally. All income is taxed only once and at one rate. There are no breaks for special interests and no loopholes for powerful lobbies, just a simple tax system that treats every American the same.
Individuals and businesses will simply complete a tax return the size of a postcard. All deductions and credits would be eliminated, while the only income not subject to tax would be a generous personal exemption for every American. For example, a family of four could be exempt from the first $40,000 of income. This personal deduction would be indexed to inflation and the flat tax rate could be calculated to be revenue neutral, so as to not increase the deficit in the process of enacting this important reform. Additionally, according to a study by the former chief economist for Congress’ Joint Committee on Taxation, national income would be 5.7 percent larger after five year under the flat tax than under the current system. That means over $500 billion in increased output or more than $3,000 in additional income for a typical family of four.
One competing idea-- the national sales tax-- exhibits the perception of efficiency, but we cannot introduce such a powerful new tax collecting regime unless the 16th Amendment to the Constitution is repealed (a highly unlikely event). Otherwise, we risk the harmful reality of having to pay both a national sales tax and a federal income tax. Therefore, those in favor of modernizing the current code should work towards enacting the flat tax. It solves the problem and it is politically achievable.
Every American will benefit under a flat tax system. An increase in national income will increase charitable giving, lower interest rates will more than offset the loss of the mortgage deduction in the current system, the income exemption will continue the tax code's progressive precedent, saving for your retirement or children’s education will be easier, the marriage penalty will be eliminated, the deduction for dependent children will double, and every taxpayer will see their tax rates reduced.
For the sake of fairness, simplicity, and an improved economy, I strongly urge the President’s Advisory Panel on Federal Tax Reform to recommend the flat tax.
Former House Majority Leader Dick Armey currently serves as co-chairman of FreedomWorks, a national grassroots organization fighting for lower taxes, less government, and more freedom.
"Actually, it's much more general than that. One should never trust a politician. You can no more trust those promoting the NRST than those who promoted the income tax. The NRST, no matter how it starts out, will change."
Actually, relatively few politicians are promoting an NRST and the ones that are, do so in the main because of constituent pressure.
So your solution to our out of control tax system, which is antiquated, inefficient and puts US producers at a disadvantage in the global marketplace is to insist on the elimination of withholding (which, contrary to your assertions, would be a compliance nightmare) and to leave the rest of it to the politicians.
Get some of the other SQLs on board with that approach. You will have a hard time convincing any FairTaxers that the solution to self serving politicians is to abandon the field of tax reform and take whatever they want to dish out.
"Is that the official goal of the Fairtax, keeping taxes up to pace with spending, rather than spending with taxes?"
The "official goal of the FairTax" is to put forth a REVENUE NEUTRAL, simple, fair and pro-growth alternative to the current tax system.
What part of the term "revenue neutral" do you not understand?
"Tracking should not be all that much of a problem. After all, the employer could still produce a W-2 itemizing what is owed. The main thing is that the employee would have to actually write a check. It really wouldn't be all that much different from a compliance stand point."
W-2s are produced annually (unless you are now proposing increasing the frequency), while paychecks are produced monthly (or even more frequently). On a monthly basis, there would be no W-2 to compare tax receipts to. Even if you are proposing monthly W-2s, who would be responsible for reconciling the tax receipts of millions of wage earners to their respective W-2s from their employers?
Are you sure you have thought this through? Is there anyone else who supports this approach?
How do you address the fact that the current tax system imbeds its cost into our production, making US produced goods less competitive on the world market? How do you address the demographic problem with Social Security and Medicare? How do you address the spiral of complexity and compliance costs which we are caught in? How do you address the problem with the AMT?
"Success is predicated on doubling the economy in 15 years. I expect the opposite."
You are entitled to your opinion, but none of the economists who have studied the FairTax expect "the opposite". No reputable economist that I am aware of, for example, thinks it would be economically detrimental to eliminate the bias that our current tax system provides to foreign producers.
No reputable economist that I am aware of, for example, thinks it would be economically detrimental to eliminate the bias that our current tax system provides to foreign producers.
Not to mention make the United States an international tax haven for manufacturers.
Chairman of the House Ways and Means Committee,
Rep. Bill Archer (R-TX)
August 12, 1996
- "A recent survey was done, in Europe and Japan, of the major corporations and I was astounded at the results. They were asked, 'If the US abolished its income tax and went to a sales tax, would that have any impact on your decisions?' Eighty percent of the corporations said they would build their factories in the United States of America. Twenty percent said they would move their international headquarters to the United States of America."
Naw! Read the bill. If you have received the legally-reqired receipt you have no liability under the FairTax. The problem then is on the hands of the retailer who has (in the proffered scheme) decided to cheat the state by collecting the tax and not sending it on (all the while being paid to do so) ... isn't that not only illegal on any of several counts but also a tad greedy?
If you don't get a receipt then you are involved potentially since you have participated with the retailer in not paying the tax - I believe they call that "collusion" under the law - but I ain't no barrister. Seems to me, though, that most people (retailer and buyer) would know - deep in their heart or otherwise - that that is quite against the law.
Perhaps what your post is trying to proffer is the idea that those evading the law be allowed to do so? Hmmm!!!
Au contraire - the government DOES fire people. It's called RIF (reduction in force) and I know several people now employed otherwise who used to work for the government.
Oddly enough, many of them think it was the best thing that happened to them. Isn't that interesting?
Certainly we do share many of the same objectives, but it is important to eliminate the income tax (along with the corresponding tax code) as well as the estate, gift, and other taxes that the FairTax rids us of. It also eliminates the IRS, defunds it, and requires destruction of the income tax recoprds.
To me, that is a much better base to proceed from in the 21st century.
What??? "... proploe ..."?? Looey, your spelling is getting almost as bad as mine.
I'm just old and decrepit - what's your excuse?
Actually, NO. The flat tax wouldn't help much at all with respect to the WTO and our trade balance. The Euro countries are in enough of an uproar as it is - and they are typically VAT countries.
The FairTax will greatly benefit US exporters by removing the taxes now embedded in the pices of our goods. It will also offer an attractive place to do business for organizations in other countries.
If you have received the legally-reqired receipt you have no liability under the FairTax.How is the IRS...err... STB suppose to know if you have the legally-required receipt?
I'm just old and decrepit
That's dekripit to you young'ns.
Don'ch yah know creetive spill'ns has traditionly bin held tah bee a sine of creetivity and genuus!!
Why for every surviv'n example of the Bard's own hand writ signature, he managed to spil his' name a diffrent way each time.
And Clark's journals of the Lewis & Clark expiditions had 27 differint spill'ns for Sioux injun alone.
That isn't correct wither. There's nothing right now to stop Congress from implementing a sales tax of some sort in addition to an income tax. That would be nefarious since so much of the tax burden would be hidden as at present.
Geting rid of the 16th first isn't a realistic idea since no Congress would ever opt to eliminate income tax without first having an operating tax system in place. Then, too, once the FairTax is in place the repeal of the 16th becomes easier since it no longer serves any purpose.
I dint no thet, but glad to heer it!
Actually, we coulb probably use a lot more border patrolmen ... maybe that's be gainful employment for a few.
That aside, though, under the FairTax, the IRS is eliminated and defunded and the income tax records are required to be destroyed.
No provision in the FairTax bill for what you say about being "accused" of not paying the sales tax. If that's your concern, then all you need do is to retain a legally-required receipt.
More of your misinformed garbage! It is obvious that the President disagrees with you:
http://www.whitehouse.gov/news/usbudget/blueprint/bud02.html
Don't fret, Nighmare VAT/Nightmare Flat Boy ... I intend to.
Your idiotic posts need (and deserve) all the refutation they can get.
Aha! The "starve-the-government-and-attack-'em-with-pitchforks-brigade" is heard from.
I hope all of your Tax Protester buddies (including looey) are staying out of the TP hoosegow at present.
Why should he pick one when you can't even decide on whether your theory-only Nightmare VAT is better than your theory-only Nightmare Flat tax to save mankind - and, hell, those are just theories!!
There's nothing right now to stop Congress from implementing a sales tax of some sort in addition to an income tax.
Never fear, Crats are working at it, a sales tax on out of sight business purchases that is:
H.R.15 summary
Title: To provide a program of national health insurance, and for other purposes.
Sponsor: Rep Dingell, John D. [MI-15] (introduced 1/4/2005)"Amends the Internal Revenue Code to impose a value added tax of five percent on each sale of property, performance of services, and importation of property in the United States by a taxable person in a commercial-type transaction. Sets forth exceptions, including for food, housing, medical care, exports, interest, governmental entities, and certain tax-exempt organizations."
Then, of course, there is the otherside's approach to accomplish the same:
ECONOMY; A New Money Machine for the U.S.;
NCPA, August 29, 2004
By Bruce Bartlett
http://www.ncpa.org/abo/quarterly/20043rd/clip/20040729lat.htm
The United States needs to adopt a value-added tax. Passage of the prescription drug legislation last year demonstrated that there is no longer any hope of holding the line on government growth -- especially when Republicans voted for the multitrillion-dollar entitlement program.
That being the case, the only relevant question is how to finance the growth of government. A value-added tax, or VAT, isn't the complete answer. Other taxes are also going to rise. But a value-added tax is the least bad way of raising the needed revenue because there is little likelihood that spending will be cut enough to avoid that necessity.
*** SNIP ***
From the point of view of consumers, a value-added tax is embedded in prices, which tends to make it less transparent than the state and local sales taxes Americans pay. And because a VAT falls only on consumption, it doesn't burden saving or investment. This makes it a highly efficient tax in the sense it discourages less economic output -- what economists call the "deadweight" cost of taxation -- than income taxes of similar magnitude.
The lack of transparency and the low economic cost of a value-added tax make it possible for this tax to raise substantial revenues relatively easily, both politically and economically. The average VAT in Europe is 20%, and European governments raise about one-third of their total revenue from consumption taxes, including excise taxes on gasoline, tobacco and other items. The U.S. raises about half that, including sales taxes at the state and local levels.*** SNIP ***
A very broad value-added tax levied on virtually all personal consumption could raise about half a percent of GDP in revenue for each 1% tax rate. But this sort of value-added tax is highly unlikely, though it would be best to treat all consumption equally. In practice, it is unlikely that more than 30% of GDP would be taxed, meaning that a 10% VAT would raise revenues equal to 3% of GDP -- about $350 billion this year. We could raise twice that at a rate no higher than now exists in most European countries.
Interesting how they all hang their argument for a VAT on the same thing isn't it?
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