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.
The nrst doesn't increase prices.
Arguing for the retention of any sort of income tax is just another way of defending the status quo.
You seem to not understand that the income tax is a huge part of the problem and that it causes increased prices in everything we buy. That's a hidden tax and one your pay stub certainly does not show.
You're apparently not too familiar with the workings of the real IRS to say "... let the IRS to continue ...".
The FairTax will start as revenue neutral but how the tax is collected is not only far simpler and much less expensive that the income tax, but it relieves all taxpayers from direct accountability to the IRS. That's a huge difference.
I believe we will also quickly see the tax rate reduced with the FairTax due to the economic growth it brings about.
I'd suggest you do more reading up on both the FairTax bill:
http://thomas.loc.gov/cgi-bin/query/C?c109:./temp/~c109Cauz5d
and the FairTax website:
http://www.fairtax.org/index.html
I think you'll find a lot of your concerns answered.
"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."
Only one concern and probably not the largest. I don't normally keep receipts and the thought of having to keep them all is not pleasing.
I guess my real concern is that if the NRST is such a profound reshaping of the tax process, how can we be certain of knowing how it will actually affect the economy? It will send a tremendous shock throughout the economic system.
I know all the NRST advocates are absolutely convinced that all the changes will be beneficial. I'm a little bit more cautious about tinkering with any thing as complex as our economic system. And, my friend, a wholesale changing of the tax process, is really a bit more than casual tinkering.
Take this one example. Probably one of the most crucial thing a business does is price it's product. The current tax code drives a lot of the pricing process. If you eliminate this code, even if it turns out to be a good thing in the long run, that elimination will require a profound restructuring of the pricing process. Quite simply, businesses will face a tremendous uncertainty in how to price their product. Mistakes in this matter can be the end of a business. It's one thing to say that businesses will learn to adapt to the new system. Of course they will, the market will force that, but there will be a period of uncertainty, mistakes will be made, and not all will be well.
"In other words, it's still an income tax with a ploice force to crack down of ordinary citizens who are guily until they prove their innocence. That's greatly backwards."
Of course it's backwards, I'm not defending the current system. But will it be any better under NRST when you have to save all your receipts to prove the tax was paid?
that's not what was said at all. Go back an read it again. I "recommended" nothing of the sort.Yes you did. If that's not a recommendation, what do you call it?...----
"then all you need do is to retain a legally-required receipt".
If there's not a chance of random audits by the joint State/Federal Sales Tax Bureau, why would you recommend any individual need to "retain a legally-required receipt"?
To us, this is trivially obvious. Can you believe there are posters on these threads that deny this?
They'd keep after delinquents and those who have been selling "Pay No Income Tax" kits for $49.95. You worried?Do you think you know of any reason why I should be?
With the FairTax you needn't keep your recei[ts and show them. In the bill that is not required - only that you receive a receipt. The "keeping all your receipts" business is something looey cooked up to frighten the paranoid.
Check the bill itself on the matter.
The FairTax will not have tax considerations driving busines decisions that make no economic sense as happens presently in many cases.
I suggest you do some reading of the links just given.
Do you think you know of any reason why I should be?
Of course this is an anonymous internet board. How could I know such?
Exactly. Minimum wage increases result in a wave of price increases to cover the additional labor costs. That is followed by a wave of wage increases for higher paid workers. The cost of goods and labor both go up and nobody is really better off...except the government tax collector. NRST will inspire a call for pay increases to dull the pain of the high sales tax. Especially if the rate gets adjusted upward because the revenues didn't meet projections.
Just nuts!
And, this proves why Democrats do not have a lock on insanity.
A flat tax will gradually be raised to a higher level. It does nothing to stop the unfairness of such a large percentage paying no taxes and fewer people paying the taxes. The only fair tax is the a national sales tax. This is the only way the whores, the pimps, the drug dealers and the dishonest business people pay their fair share.
"Arguing for the retention of any sort of income tax is just another way of defending the status quo."
I've not argued for the status quo. In fact, the elimination of witholding would have profound consequences.
"You seem to not understand that the income tax is a huge part of the problem and that it causes increased prices in everything we buy. That's a hidden tax and one your pay stub certainly does not show."
Do you really believe that I don't understand that?
"You're apparently not too familiar with the workings of the real IRS to say "... let the IRS to continue ..."."
Actually, it took a bit over two years to solve my last issue with the IRS.
"I believe we will also quickly see the tax rate reduced with the FairTax due to the economic growth it brings about."
As I've said before, one should alwasy remember that the income tax was touted as an temporary measure to fund WWI, would never exceed 2%, and would only apply to the richest 5 per cent. If the hedious monster we have now evolved from this small beginning, how can you be sure that the NRST won't also evolve?
"To us, this is trivially obvious. Can you believe there are posters on these threads that deny this?"
I'm not sure how they could deny this. They speak continually of how the income tax is 'embedded' into the existing price of product. That is the same thing. Perhaps they don't realize the implications of 'un-embedding'?
No, looey - that a suggestion to a person who was paranoid about somehow being accused of not p[aying sales tax (which there is no provision for so long as a required receipt has been given).
It was for solely his concern and not a recommendation - the point was even someone so afflicted with panic could allay his own fears. That is by no means a suggestion that everyone do so.
Do you call today's standard deduction "another government check" or is it a refund?A standard deduction is just that moron...A "standard deduction" from earned income. Does the Fairtax "refund"(?)come in the mail before any taxes are paid or even if NO taxes are paid? .
Do you call an income tax refund a "prefund"?...Why not?
"With the FairTax you needn't keep your recei[ts and show them. In the bill that is not required - only that you receive a receipt. The "keeping all your receipts" business is something looey cooked up to frighten the paranoid."
Really? Then why must some one be given a receipt when they buy something? Why should the governmen care if I get a receipt or not? I can foresee a situation where non-compliance becomes an issue and at that time, requiring a tax stamp or a receipt to prove the tax has been paid might become standard.
I know the bill doesn't say that a receipt must be maintained so don't tell me to go read the bill, I'm just anticipated possible outcomes. And, don't tell me I'm just imagining things because most of those touting the NRST are also 'imagining'.
prices will be lowerNo they won't.
"NRST will inspire a call for pay increases to dull the pain of the high sales tax."
That may be one of the 'unintended consequences' one should always be on the lookout for. But, my issue with wages is this. On one day, the price is one thing and on the next day it's a quarter or so more due to the NRST. But, my wages haven't changed. You can hypothesize that businesses will be able to reduce prices accordingly, but businesses won't be able to do that in a short period of time and that process might take months. Meanwhile, Joe Six-pack is caught between his wages and the NRST price increase. His purchasing power is drastically reduced, his purchases (particularly big-ticket) goes down, factories close, Joe's out of work ... tax receipts fall, the NRST goes up... more Joe's out of work....
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