Instituting a flat tax benefits you

TOWNHALL.COM ^ | 05/28/2005 | DICK ARMEY

[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.

[Your Nightmare]

Upping the personal deductions sure makes certain we'll have more voters interested in getting government spending under control, NOT.

So many Americans paying little or no federal taxes makes for a natural spending constituency. It's like me in the restaurant: What do I care about extravagance if you're footing the bill?
Walter Williams

It's really funny that you keep saying things like this and posting this quote considering the number of people who would pay absolutely no tax under the FairTax including the people who would profit by a rising rate. Would they care about extravagance if we were footing the bill?

Of all the plans I've looked at, including the current system, the FairTax excludes the most from paying any taxes. So keep talking, old man.

Right there you have the prime reason Congress is luk warm on any bill retaining Corporate Income Taxes, built on the same formula as the current system. This one's DOA even before it get to the gate, with nil advantages over the current tax system at all to business or the citizen who still ends up having to prove their income to the IRS same as ever.

Said the man whipping the dead horse... I would say the chances of the Tax Reform Panel recommending a flat tax is 50/50. The chance for a NRST is probably worse than 100 to 1.

::tick:: ::tick:: ::tick::

[groanup]

Just for you louie:

http://web2.uvcs.uvic.ca/elc/studyzone/200/grammar/prepo.htm

[ancient_geezer]

It's really funny that you keep saying things like this and posting this quote considering the number of people who would pay absolutely no tax under the FairTax including the people who would profit by a rising rate.

Strange, just who would not be paying 30% ontop of seller's price at the retail counter on everything they buy.

Last time I noticed welfare mother's and folks on SS never count the fact they might get a check from the government (rebate or otherwise) as basis to not complain about sales tax increases in the states. And that from much lower levels that that of an NRST, LOL.

Of all the plans I've looked at, including the current system, the FairTax excludes the most from paying any taxes. So keep talking, old man.

Actually it excludes no one from paying the tax, in point of fact it does however, assure every one receives a sales tax rebate for expenditures to the monthly poverty level of expenditure.

So yep on an effective basis most folks now paying taxes into the income payroll tax system pay less. OTOH however, most folks not paying income or payroll taxes today end up paying the NRST, that's what happens when the tax base is expanded, more folks pay taxes, and many paying taxes before the change end up paying less than the did.

Just the way it should be to me people ought to pay taxes commensurate with "what they actually take out of the common pot, not what they leave in."
-- Thomas Hobbes, Leviathan, it is fairer to tax people on what they extract from the economy, as roughly measured by their consumption, than to tax them on what they produce for the economy, as roughly measured by their income.

Problem with your progressive "Flat Tax" with its high personal exemptions, is that it removes more people from even participating in the tax system. That narrows the base of voters actively engaged in actively paying the costs of government, while at the same time expanding the taxes collected through business out of sight where the electorate can nolonger appreciate the actual cost of government in a personal way.

Said the man whipping the dead horse...

Whistling past the grave yard once again YN? You really ought to get a new crystal ball.

I would say the chances of the Tax Reform Panel recommending a flat tax is 50/50.

A flat income tax, not being boarder adjustable as regards international trade of goods and services is going nowwhere, however it does serve as a good distraction to the public as providing cover for the real action going on in government:

IPI Policy Report - # 166a Introduction to the International Side of Tax Reform

PDF: CATO Handbook for 108th Congress: International Tax Competition

see also:

http://waysandmeans.house.gov/hearings.asp?formmode=archive&hearing=20

http://www.finance.senate.gov/sitepages/2002HearingF.htm/hearing073002.htm

 

::tick:: ::tick:: ::tick:: fizzle, and watch your Flat Tax delusions die wither before your eyes, as it sits as the unloved stepchild in Congress.

The chance for a NRST is probably worse than 100 to 1.

"The lady doth protest too much, methinks."
--Hamlet (III, ii, 239)

[Your Nightmare]

Strange, just who would not be paying 30% ontop of seller's price at the retail counter on everything they buy.

That's not the question. The question is who will be paying less at the retail counter than they are getting from their "family consumption allowance." Let me show you a chart you may have seen before

See how the current system's line crosses 0% before the FairTax's line? That mean more people would be paying no taxes under the FairTax.

::tick:: ::tick:: ::tick:: fizzle, and watch your Flat Tax delusions die wither before your eyes, as it sits as the unloved stepchild in Congress.

Wanna bet? Didn't think so...

[ancient_geezer]

Strange, just who would not be paying 30% ontop of seller's price at the retail counter on everything they buy.

That's not the question. The question is who will be paying less at the retail counter than they are getting from their "family consumption allowance."

 

Let me show you a chart you may have seen before

LOL, what a wonderful chart, I notice you fail to note that chart is relative to a family of four now filing income taxes on earned wage income,

See how the current system's line crosses 0% before the FairTax's line?

Yep, works that way for the folks receiving EITC of those earned wages as well I notice.

That mean more people would be paying no taxes under the FairTax.

 

I notice you overlook those who do not participate in the federal income tax system at all today yet who intrestingly do indeed purchase well above the provertylevel of expenditure:

http://bls.gov/cex/2001/Standard/income.pdf

As can be readily perceived in CES data,

Table 2. Income before taxes:
Average annual expenditures and characteristics, Consumer Expenditure Survey, 2001

Complete reporting of income a/

Item	Total complete reporting	Less than $5,000	$5,000 to $9,999	$10,000 to $14,999	$15,000 to $19,999	$20,000 to $29,999	$30,000 to $39,999	$40,000 to $59,999	$50,000 to $69,999	$70,000 and over
Households (thousands)	88,735	4,100	6,829	8,099	7,014	12,075	10,508	8,737	12,480	18,892
Income before taxes b/	$47,507	$1,666	$7,675	$12,380	$17,282	$24,494	$34,456	$44,418	$58,943	$113,978
Income after taxes b/	$44,587	$1,528	$7,678	$12,388	$17,086	$23,924	$33,047	$42,362	$55,572	$104,685
Average annual expenditures	$41,395	$20,517	$16,625	$20,642	$25,028	$28,623	$35,430	$40,900	$50,136	$76,124
Estimated market value of owned home	$97,681	$41,007	$49,326	$53,907	$58,377	$61,612	$72,720	$79,331	$115,123	$194,720

 

it seems people don't like to report all the facts about what they are getting in income to government for some strange reason.

For one of the little understood factors of the income tax by most folks is that it fails to reach over half the electorate out here in the real world because it is so easy to evade/avoid or just not have to pay by virtue of not having earnings in the form of reportable or "taxable" income. That in a nut shell is the basis of our problem with ever more people pushing for ever more government.

[ancient_geezer]

::tick:: ::tick:: ::tick:: fizzle, and watch your Flat Tax delusions die wither before your eyes, as it sits as the unloved stepchild in Congress.

Wanna bet?

Sorry, not a betting person, I operate by adapting to sitations , not on the basis of out guessing them. But you are quite welcome to continue gazing into your little crystal balls and reading chicken enterails for their portents. Heck you might even find others doing the same and make your bets with them. Have fun.

Didn't think so...

Your right, is so thinking. Only losers bet. Winners adapt and don't throw there working resources to the fates.

[Your Nightmare]

Let's see, who spends a lot but doesn't make money. Hmm, well, people living off of savings I guess. Wouldn't that be a lot of retired people? Looks like your plan would hit them pretty hard.

[hosepipe]

Anyone that would TRUST THIS congress to make massive changes in ANYTHING should have their head examined..

Suggest fishing as a pastime to take up your off hours until the revolution which is the ONLY thing that can bring any real change.. Chickens visiting the Fox House is what Washington D.C. has become. The days of a Chicken House with an occasional Fox "visiter" has long since passed..

Washington D.C. has become owned by the Foxes and is a Chicken preserve.. and hunting licenses are taxed..

ONLY a stampede by the sheeple will trample the Foxes..

[ancient_geezer]

Let's see, who spends a lot but doesn't make money. Hmm, well, people living off of savings I guess. Wouldn't that be a lot of retired people?

Hmmm, you really ought to study the data YN, you only end up looking foolish when you're reading your chicken entrails and guessing, tends to lead you astray alot.

It fits,you would guess, the average 39 - 55 year old supposedly earning less than "19,999" dollars of "income" in this country is really retired and living off savings. ROTFLMAO.

http://bls.gov/cex/2001/Standard/income.pdf

Table 2. Income before taxes:
Average annual expenditures and characteristics, Consumer Expenditure Survey, 2001

Complete reporting of income a/

Item	Total complete reporting	Less than $5,000	$5,000 to $9,999	$10,000 to $14,999	$15,000 to $19,999	$20,000 to $29,999	$30,000 to $39,999	$40,000 to $59,999	$50,000 to $69,999	$70,000 and over
Households (thousands)	88,735	4,100	6,829	8,099	7,014	12,075	10,508	8,737	12,480	18,892
Income before taxes b/	$47,507	$1,666	$7,675	$12,380	$17,282	$24,494	$34,456	$44,418	$58,943	$113,978
Income after taxes b/	$44,587	$1,528	$7,678	$12,388	$17,086	$23,924	$33,047	$42,362	$55,572	$104,685
Average annual expenditures	$41,395	$20,517	$16,625	$20,642	$25,028	$28,623	$35,430	$40,900	$50,136	$76,124
Estimated market value of owned home	$97,681	$41,007	$49,326	$53,907	$58,377	$61,612	$72,720	$79,331	$115,123	$194,720
Household Demographics:
Age of reference person	48.0	39.4	54.1	55.4	53.0	49.5	46.8	45.3	44.8	45.5
Avg Number Persons	2.5	1.7	1.6	1.9	2.1	2.3	2.4	2.7	2.9	3.1
Children under 18	0.7	0.4	0.3	0.5	0.5	0.6	0.6	0.8	0.8	0.9
Persons 65 and over	0.3	0.2	0.5	0.5	0.5	0.4	0.3	0.2	0.2	0.1
Earners	1.4	0.8	0.5	0.7	0.8	1.1	1.4	1.6	1.8	2.1
Vehicles	2.0	1.0	.9	1.1	1.5	1.7	1.9	2.2	2.5	2.9

[groanup]

Wouldn't that be a lot of retired people? Looks like your plan would hit them pretty hard.

Actually, for most of them it would be a tremendous boon. They wouldn't be taxed when they HAVE to withdraw their qualified money at age 70 1/2. As it is now the HAVE to take their money out so Uncle Sam can get his. Nice, huh?

[lewislynn]

Just for you louie:

http://web2.uvcs.uvic.ca/elc/studyzone/200/grammar/prepo.htm

You didn't know the difference between the "of" and "on" relation to figuring percentages so you had to look them up?

[Leto]

You are correct, now answer the question you and D Armey raising. What are the odds of repealing the 16th amendment???? Since we can't even get a judge passed, I'm saying the odds of repealing the 16th amendment are slim and none.

SO in the abscence of repealing the 16th amendment what is better a Flat Tax or a NRST????

IMO a Flat Tax is the lesser of the many evils we face. BTW the Aremy Flat Tax is a Tax cut for almost all Americans, HR 25 is 'revenue neutral, no tax cut, they take just as much money from us.

[Your Nightmare]

Actually, for most of them it would be a tremendous boon. They wouldn't be taxed when they HAVE to withdraw their qualified money at age 70 1/2. As it is now the HAVE to take their money out so Uncle Sam can get his. Nice, huh?

Most retired people have a much lower effective tax rate than younger people. In 2002, the total effective tax rate (minus excise) for elderly childless couples was 7.6%. The average income tax rate was 2.7%. Most of the distributional analysis of a NRST has shown that it shifts the overall tax burden from the young to the old.

The FairTax would not be a boon to retired people. One of the groups that would fight it the hardest would be the AARP.

[ancient_geezer]

SO in the abscence of repealing the 16th amendment what is better a Flat Tax or a NRST????

NRST because it repeals the current income tax system, destroys taxpayer records, moves the administration and collection of taxes under state administration, totally destroying the federal income/payoll tax infra-structure we have today, placing a filibuster and large public opinion barrier to re-enactment of an income tax anytime in the near future while we work to repeal the 16th after making income taxes obsolete and history. A much easier task that what we have had to face the last 100 years with income taxes lock into the fabric of government working against us.

Bottomline, the Flat Tax is still an income tax, infact is a progressive wage tax with a subtraction method VAT. In international trade, the flat tax falls flat on its face in resolving any issues concerning border adjustibility leaving US manufactures in the lurch, and folks like Bruce Bartlett & NCPA with all the more ammunition to take that one more step into a full fledged EU style voucher/credit system VAT with income tax.

Furthermore, we know where any income tax leads through 100years of experience with them, we see the result before us today.

"A hand from Washington will be stretched out and placed upon every man's business; the eye of the federal inspector will be in every man's counting house....The law will of necessity have inquisical features, it will provide penalties, it will create complicated machinery. Under it men will be hauled into courts distant from their homes. Heavy fines imposed by distant and unfamiliar tribunals will constantly menace the tax payer. An army of federal inspectors, spies, and detectives will descend upon the state."
-- Virginian House Speaker Richard E. Byrd, 1910, predicting the consequences of an income tax.

The Flat Tax does not one single thing to change that fact of life, in fact because of it large personal exemptions it assures and ever growing constituency for spending and governement growth that has no visible participation or stake in maintaining lower tax rates or less government.

BTW the Aremy Flat Tax is a Tax cut for almost all Americans,

Which is why it will never get out of committee and is merely a distraction from the real debate going on. Tax reform is about addressing fundamental structural problems in our tax system, not tax rates. We already have bill providing tax cuts and more to come, problem they do nothing to address the core problems of the system that exists and are nothing more than window dressing the same as the Flat Tax is. The Reagan tax cuts flattened down to 3 brackets and deceased rates, just turned out to be more excuse to make the tax code all the more complex, put more voters on the bennie lists and grow government.

Bush touts relief as tax day looms

Another 3.9 million Americans will have their income tax liability completely eliminated, officials said.

That's 3.9 million Americans more added to the spending constituency of 70% of the public clamoring for more from government, expecting someone else to foot the bill.

All Flat Tax lite will do is shuffle the chairs some more and hiding the load under business taxes just like its cousion the voucher/credit VAT does.

Sorry but NO thanks, I'll go with the NRST where people perceive the real burden of government growth and can react to it, rather than go with a VAT lite looking to growup and be like its guerilla cousin in the EU.

[phil_will1]

"Let's see, who spends a lot but doesn't make money. Hmm, well, people living off of savings I guess. Wouldn't that be a lot of retired people? Looks like your plan would hit them pretty hard."

Let's see, who has a lot of investments and would benefit from a rising equities market? Might that be well off retirees? If so, it looks like this plan would benefit them greatly.

[Badray]

bump

[phil_will1]

"BTW the Aremy Flat Tax is a Tax cut for almost all Americans, HR 25 is 'revenue neutral, no tax cut, they take just as much money from us."

If it isn't revenue neutral, then it isn't even in the running, because the President has said that that is a requirement.

[groanup]

You didn't know the difference between the "of" and "on" relation to figuring percentages so you had to look them up?

Yes. And when I did I realized that your whole argument is about prepositions. "Of", "for" and "by" the people. The people want a consumption tax. Not all of them know it yet, but they will.

[groanup]

The FairTax would not be a boon to retired people. One of the groups that would fight it the hardest would be the AARP.

LOL. So you're telling me that if the trillions of dollars now tied up in qualified plans becomes non-taxable it wouldn't be a boon to retirees. Now that's logical. ???

[Your Nightmare]

LOL. So you're telling me that if the trillions of dollars now tied up in qualified plans becomes non-taxable it wouldn't be a boon to retirees. Now that's logical. ???

It would be taxable under the FairTax...when they spend it.

What's the difference between taxing previously untaxed money when someone takes it out of savings and when they spend it? Answer: none. They are both taxing consumption. You want to tax them at a higher rate.

In a revenue neutral tax reform there has to be some winners and some losers. With the FairTax the losers are the middle class and the elderly.