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.
I usually like Armey, but I think his position supporting the flat tax is a typical pro-establishment approach. I don't see how a flat tax makes record keeping or dealing with the IRS any easier than it is today. Maybe, just maybe it reduces special interest meddling, but if they allow mortgage deductions, that will be the foot in the door.
Right, fine for the W-2ers, of which I also am, but I still need to record my mileage, 59 cent reciept for paperclips, figure our personal vs. business use of my cell phone, calculate home office deductions, etc. for my real estate business. It is a real pain to track all that stuff, and then have to explain it all to an auditor who ends up disagreeing with legitimate deductions on a whim.
With an NRST, OTOH, every business owner in the US will be faced with audits of their receipts and tax collections. The IRS may be renamed but there will still be jobs for all those bureaucrats checking on compliance with their new tax collectors, ie, the businessman.
NSRT is much easier to track than all the above under Income Tax. For example, if I rent houses, I have only 12 transactions per year to report and track per house. I probably have 50 or more recipts or other transactions I have to tabulate to figure my net income, many of which are hard to document and easy to loose as a deduction during an audit. Plus, it shifts the burdon of proof. Instead of me having to prove a deduction, they have to prove I recieved more income than I reported.
Very good points all and, if anything, understated. Any tax form retaining income tax as a base is just - by definition - rife with difficulty of the taxpayer having to prove his innocence. Having income tax means having this continued intrusiveness.
I don't think that for most of the FairTax supporters that it is so much a question of the amount of taxes paid (since the FairTax is revenue neutral) as it is a disgust with the sorts of things you outline and just the general lack of the freedom under an income tax. Alan Keyes calls it a "slave tax" - the slaves being the taxpayers and the masters the federal government. It's time to change that.
The FairTax is non-partisan and any wage-earner in a union (or elsewhere) should be delighted with the benefits of the FairTax.
If that's your concern, then all you need do is to retain a legally-required receipt.So pigdog, a spokesman for the Fairtax, recommends individuals retain their legally required receipt in case of random audits on individuals by the Federal Sales Tax Bureau.
No, looey, that's not what was said at all. Go back an read it again. I "recommended" nothing of the sort.
You're getting as dishonest as your Nightmare Tax counterpart.
The FairTax not only specifies eliminating the IRS and its function but in defunding it.But not untill after 2 yrs. What would all those IRS agents have to do all those 2 yrs?...Audits maybe?
Wouldn't defunding be the natural result of eliminating it?...I thought so.
They'd keep after delinquents and those who have been selling "Pay No Income Tax" kits for $49.95. You worried?
Wrong again, looey. It is 1-3/4 years and not 2. You SQL dudes just have to boost the numbers of everything if you think it'll halp you case.
The time is to allow for the IRS to pursue you and all the other TP types they are now after plus to finish wringing all the blood out of all the other turnips they are nowgrinding to bits for payments.
Did you cheat and look up "defunding" in a dictionary??
People who don't have much disposable income won't do much consuming.Sure they will, they'll all get another government check every month
Look at consumer debt today.
That's what makes the sales pitch of the fairtax so attractive to the numbskulls...their taxes would be charged to the Visa, MC, car payment, mortgage etc. without ever knowing the difference.
"I guess you just cannot understand a simple concept, your mind has been so warpped that a simple concept is beyond your understanding."
I guess it takes a simple mind to grasp the beauty of the NRST.
Do you call today's standard deduction "another government check" or is it a refund?
"Are you sure you have thought this through? Is there anyone else who supports this approach?"
Actually, the idea was first formulated by Dick Armey.
"W-2s are produced annually"
You get a pay stub now showing your witholding. You'd still get a pay stub but you'd still have to write the check yourself rather than your employer.
"who would be responsible for reconciling the tax receipts of millions of wage earners to their respective W-2s from their employers?"
Let the IRS continue to do it just as they do now.
"How do you address the fact..."
Please can the commercials. Since the NRST will be 'revenue neutral', the same amount of tax will be paid. The NRST will still be embedded into our production, directly or indirectly. TANSTASFL.
Actually they'll be in much better financial shape than they are today since prices will be lower and they'll have all their paycheck in addition to the prebate.
That will give almost everyone MORE disposable income than at present.
I'm not looking for any sort of national sales tax of any percentage, especially one above 20%. Nice and quick way to kill an economy.Then their 30% rate in sales tax terms would be out of the question for you?
Actually all it takes is a little bit of reading on this site to grasp why it is becoming so popular:
http://www.fairtax.org/index.html
"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."
I've heard of RIFs. Very rare.
"Oddly enough, many of them think it was the best thing that happened to them. Isn't that interesting?"
Not surprising, I became suddenly 'unemployed' in '94. I've done very well since and it was a good thing it happened. Kind of like my divorce.
Actually, numbskull, that's what's happens today. The costs of the income tax system are built into prices, but hidden.
Under the nrst, any tax paid anywhere - whether it be Visa or for a 12 pack, the amount of tax is shown on the receipt.
That is not to say simply knowing the amount is what is most important - it is not. The difference maker is that consumers will have to pull green money out of their pockets everday to feed the government beast... and they'll be reminded of that at every purchase and on every receipt.
Numbskull.
Did you see him create a panel before he wanted the prescription drug package or NCLB or Sarbanes-Oaxley? If Presidents want something, they don't need to create a "panel" and send them across the country.An excellent point/observation.
But the base will be larger.
"To me, that is a much better base to proceed from in the 21st century."
It may well be a better base. My problem isn't so much with the idea of an NRST as it is with the idea that it will be a panacea solving all the problems with taxation. I'm not at all sure that it won't create as many problems as it solves.
I'm afraid that those who advocate the NRST are like a guy with a new girlfriend, being blinded by love, they really don't see everything. And, they certainly don't won't to be told their new girl might have a just a small blemish or two. I'm really advising caution more than anything else.
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