Posted on 08/15/2005 5:55:06 AM PDT by OESY
A major domestic battle looms this fall, when tax reform-- a centerpiece of the president's bold domestic agenda-- will finally be on the table. The President's Advisory Panel on Federal Tax Reform is expected to release its findings by the end of September. After the political shellacking the White House took on Social Security, the administration will be strongly tempted to take a conciliatory path that supports only superficial reforms, essentially preserving the status quo of our hideous income tax code.
Such a course would have perilous consequences, economically and politically. In fact, the administration has an opportunity here to boldly retake the initiative, to recover lost political support and thrust an already decent economy into high gear and, at the same time, make America better able to meet intensifying competition from China, India and others. How? By junking the entire federal income tax code and starting over with a flat tax. A growing number of countries are doing this -- and so should we.
The current system is beyond redemption, a beast whose complexity, confusion and outright unfairness have corrupted our economy and society. Americans waste more than $200 billion and over six billion hours each year filling out tax forms. They engage in all kinds of useless economic activity intended to take advantage of the code's complicated maze of deductions and to reduce taxes -- from deducting donations of old socks to making unwanted investments. The waste of brainpower -- at a time of increasing global competition -- is incalculable.
The code corrupts our system of government by encouraging the crassest political conduct and by creating a massive, intrusive federal bureaucracy. One-sixth of the private-sector employees in Washington are employed by the lobbying industry. One-half of their efforts are directed at wrangling changes in the tax code....
(Excerpt) Read more at online.wsj.com ...
Actually, if anything the FairTax is greatly more visible than any income-based tax system (which includes the flat tax).
Actually, the "prebate" feature helps make the FairTax quite progressive. And there are many other advantages as well in the economic benefits if offers to the country.
You'd be doing yourself a huge favor if you'd visit the FairTax website:
http://www.fairtax.org/research.html
or even check the bill itself:
http://thomas.loc.gov/cgi-bin/query/z?c109:H.R.25:
or even get a copy of The FairTax Book.
There are several things to not like about any flat tax:
By definition it IS confiscatory - the money is taken without exception before the taxpayer ever sees it.
It is STILL an income tax and as such operates (by its very nature) to embed some amount of embedded tax costs into the prices of everything sold in this country - or others.
It does not and cannot offer border-adjustability of taxes to help lower our export prices and therefore make us more competitive in the world economy.
It does not even begin to approach the FairTax in gleaning tax revenues from the huge illegal economy.
There is far more opportunity for non-compliance, avoidance, and evasion (and just for the illegal economy in general) than there is under the FairTax. Huge amounts are "missed" right now and never considered by those claiming "massive evasion" uinder the FairTax. They don't seem to realize that's what they have right now - not under the FairTax.
Any income-based tax system has embedded within its very definition the ability (almost an invitation) for political manipulation and mischief, giving advantage to some and disadvantaging others. It gives the government the ability to freely define the elements such as "income", deductions, etc. which is "meat and potatoes" for the K Street crowd.
It is not likely to remain "flat" for too long. Here is the 1913 income tax form which was, itself rather "flat" and together with the instructions and affadavit (penalty of perjury type statement we now have) it totalled 4 pages. Check it out:
http://www.salestax.org/library/1913form1040.html
Also it does not offer the freedom from government intervention and meddling in private affairs as does the FairTax. In this sense, it's truly an issue of freedom.
These are merely some of the reasons I prefer the FairTax.
Dear twrcpa1,
"You know, the Unabomber used less words than you do."
1. I don't think so.
2. So what if he did? Non sequitur.
3. You folks seem to offer little but insults in response to reasoned conversation.
4. The 16th amendment STILL won't be repealed, and politicians will be able to saddle us with BOTH a national retail sales tax AND a federal income tax.
And you and the other NSRTers trust them not to do so.
And all the insults in the world won't change that fact.
sitetest
Nope ... the FairTax bill deletes the income tax along with the IRS and requires the income tax records to be destroyed.
Check post #75.
And that is precisely why many of these dip dunks on this forum oppose it as well. They have found a niche that let's them scam the system fairly effectively and so to hell with what's right for the country and everyone else.
Dear rwrcpa1,
"We should demand that on Tuesday the Fair Tax is passed and on Wednesday the 16th amendment repeal is passed."
Why not repeal the 16th amendment on Tuesday, and pass an alternative to it on Wednesday?
It seems once you pass the alternative, the politicians have no real motivation to forego the authority to re-introduce a federal income tax.
But, of course, our politicians would never do something like that, would they?? LOL.
Why not repeal the 16th amendment with a clause to permit Congress a transition period of a few years from the income tax to the alternative?
Or, why not pass the alternative legislation with the clause that it ONLY takes effect upon the repeal of the 16th amendment?
Why trust the politicians with a national retail sales tax AND the ability to re-introduce a federal income tax?
sitetest
But you do have to tell them your location, age, and dependency status every month so they can send you the monthly welfare check prebate.
Bzzzzzzz! Wrong answer. ALL purchases; personal, business, governmental, would pay the tax on new items.
Well. You're right. I need to read-up on the "Fair Tax". It's the accounting aspect that bothers me. Certainly a national sales tax is closer to the excise taxes envisioned by the founders. Still, a flat income tax seems less complicated and more private than a sales tax.
It's very clear that any "accumulation" of wealth today must be done primarily using only income after it has been taxed which reduces the capital that can be used for savings/investment.
Under the FairTax there is no taxing of income so that savings and investment may be done with untaxed money. This alone gives a person more working capital. In addition, there are no embedded tax costs in the prices of things purchased under the FairTax as there are today which also make for more working capital.
Since income is not taxed under the FairTax, the capital accumulation will progress much more rapidly than at present and it is only when someone chooses to spend on taxable items (and not all things are taxable) that such consumption is taxed. There is no requirement as at present to jump through a myriad of hoops, forms, and regulations in the hope of minimizing the income tax to some degree. There is no tax on income under the FairTax, and it seems ridiculous to have to go to such lengths under the present system - all caused by the income tax system.
What your post really seems to illustrate is the arcane complexity of trying to minimize taxation now and the class-envy rhetoric in the latter part of your post is misplaced since under the FairTax anyone consuming taxable things will be paying at the same tax rate. If they (or you) have your money invested instead of consuming, power to all of you. That will, overall, eventually redound to the economic benefit of the country and help create jobs in doing so.
A lot of folks buy used goods right now (and not just rich ones eoither) and that is perfectly legal under the FairTax. Trying to present it as some sort of illegal or questionable tax dodge is just plain silly since you could do that also.
Me too. Heck, I'd start my own business. Only thing stopping me now is the morass of legal tax crapola standing in my way. I'm unwilling to play that game using the rules they currently have in place.
`(1) the name of each family member who shared the qualified family's residence on the family determination date, ` (2) the Social Security number of each family member on the family determination date who shared the qualified family's residence on the family determination date, `(3) the family member or family members to whom the family consumption allowance should be paid, `(4) a certification that all listed family members are lawful residents of the United States, `(5) a certification that all family members sharing the common residence are listed, `(6) a certification that no family members were incarcerated on the family determination date (within the meaning of subsection (l)), and `(7) the address of the qualified family. Said registration shall be signed by all members of the qualified family that have attained the age of 21 years as of the date of filing. ""`(d) Annual Registration- In order to receive the family consumption allowance provided by section 301, a qualified family must register with the sales tax administering authority in a form prescribed by the Secretary. The annual registration form shall provide--
Please see #101.
You may have "read" plenty but I question how much you really understand about the FairTax.
Perhaps you could illustrate some of these "rose-colored glasses" views?
You should check into the FairTax more thoroughly and not merely accept what opponents tell you. Make your own decision on the basis of information.
With the FairTax you are actually well-paid to collect the sales tax on retail sales and forward it. At present any work of that sort is an unfunded mandate IMPOSED upon you by the present tax system. The FairTax has no such unfunded mandate.
Check the FairTax website here:
http://www.fairtax.org/research.html
Or read the bill itself here:
http://thomas.loc.gov/cgi-bin/query/z?c109:H.R.25:
Or even get a copy of the recent book called The FairTax Book.
And actually, keep in mind that all the flat tax plans keep in place the payroll taxes which are probably the most regressive part of the present system.
There has never been such a "promise" by anyone I know, but the FairTax bill WILL certainly greatly reduce the K Street crowd considerably since much of their rent-seeking involves the income/payroll taxes presently.
That's not true either, Rongie. Import duties would need to be paid to bring something from off-shore into the US. That's what the Customs Service is for.
Eliminating the IRS is not just a "claim" which you'd know if you read the bill. It is an integral part of the bill. Not only is it eliminated along with income (etc,) taxes, but the income tax records are required to be destroyed.
Dear pigdog,
"It's very clear that any 'accumulation' of wealth today must be done primarily using only income after it has been taxed which reduces the capital that can be used for savings/investment."
If you're premise were true, you'd have a point.
However, for all but the wealthy, the existence of tax-advantaged retirement accounts permits most individuals to use pre-tax income to accumulate wealth. The new limits on 401(K)s go up to $40,000 and 25% of one's income. That means that anyone making $160,000 or less may invest fully 25% of their pre-tax income in stocks, mutual funds, and bonds, and that money may be invested pre-tax. That's even before payroll taxes.
Even folks who are not covered by 401(K)s, 403(b)s, SEP IRAs, SIMPLEs, and the like, may invest modest sums into regular IRAs.
As well, although initial investments are with taxed income, those who are building wealth through real estate investment can create streams of long-term tax-deferred income that can be reinvested, to accumulate real estate wealth.
I had an employee who worked for me for about seven years, and by the time he left my employ, he'd accumulated five rental properties this way, using taxed income only to acquire the first. Pretty good for a guy who was in his early 30s.
As for the wealthy (where this conversation started with the other poster before it decided to question my motives), in that the very wealthy often invest for the long-term, and thus only pay taxes when they realize capital gains of certain investment instruments (remembering that in real estate, even the taxation of capital gains can be put off indefinitely with Starker Exchanges), they don't pay much at all in taxes on their investments, either.
And they will pay markedly less in taxes under the proposed system.
"There is no tax on income under the FairTax, and it seems ridiculous to have to go to such lengths under the present system - all caused by the income tax system."
It may seem ridiculous, but if one remembers a single principle to the concept of an income tax, it becomes readily explicable: only actual income is taxed, not all revenue. That's the principle that permits an income tax to even begin to approximate fairness, but it is also the principle that introduces complexity, with that I agree.
"What your post really seems to illustrate is the arcane complexity of trying to minimize taxation now and the class-envy rhetoric in the latter part of your post is misplaced since under the FairTax anyone consuming taxable things will be paying at the same tax rate."
There are parts of the current income tax law that ARE unnecessarily complex and arcane. Can you say "alternative minimum tax"?? That one makes me crazy.
But for the most part, the rest is about figuring out the difference between revenue and income (revenue is the total amount of bucks that come into an enterprise or household, income is the amount of "profit" left after deducting all legitimate expenditures required to generate the revenue).
Without the AMT, I can just about figure my income taxes in my head.
As for class envy, there are no classes I envy, so I'm not sure what you're talking about. To note that the very rich will pay fewer taxes isn't class envy, just a statement of fact. And in that we're positing that nearly every class, including the very rich, are going to pay less in taxes, it does legitimately raise the question of how this is going to be revenue neutral at 30%.
"...since under the FairTax anyone consuming taxable things will be paying at the same tax rate."
Well, sorta yes, and sorta no. In fact, in that ambiguity lies much of the actual direct appeal that NSRTers make, as they point out that although the actual sales tax rate applied is the same to all income groups, because the "prebates" are the same for everyone, and we assume wealthy folks will consume more than non-wealthy folks, NSRTers actually point out the overall progressivity of the overall actual, effective rate of taxation.
However, the advantage to the wealthy (and disadvantage to the not-so-wealthy) is that the very wealthy often spend far less percentage of their income on taxable items than the not-so-wealthy.
So, based on percentage of INCOME, the non-wealthy will often pay a larger percentage than the wealthy (although for those in the lower half of the income distribution, it's likely that they will pay little net taxes at all, just as now).
"If they (or you) have your money invested instead of consuming, power to all of you. That will, overall, eventually redound to the economic benefit of the country and help create jobs in doing so."
That occurs now, without recourse to the NSRT.
"A lot of folks buy used goods right now (and not just rich ones eoither) and that is perfectly legal under the FairTax. Trying to present it as some sort of illegal or questionable tax dodge is just plain silly since you could do that also."
Gee, that's your interpretation, that it's an illegal or even questionable tax dodge. But when Bill Gates buys his umpteenth "used" $10 million estate, rather than build new, and pay an extra 30%, it WILL be a way of avoiding the sales tax. A legitimate, perfectly legal way to avoid it, but a way to avoid it, nonetheless.
And he will avoid the tax with his already-tax-free income.
The same thing will happen as he expands his fleet of classic cars, buys a used airliner, and buys a pre-owned 100-foot yacht. He'll be buying this stuff tax-free with his tax-free income.
He won't be able to buy his food used, so he'll pay sales tax on that.
I imagine that the very rich will be the greatest proponents of this law.
sitetest
Forbes is a long way from being right. The FairTax benefits the economy to a FAR, FAR greater degree than any flat tax.
Please read post #101.
It is no "fraud" and it will greatly help small businesses. With the removal of embedded tax costs from prices, the prices of things will reduce by something like 20% before bneing taxed by the FairTax ending up about the same overall - even with the tax.
The tax, though, is paid by your retail customers (assuming they buy taxable things ... and not all things are taxed), not you. You are actually well-paid to collect and forward these sales taxes and a monthly 2 line report is all that is required.
It's in the bill itself and/or in the FairTax website. You should find out a bit more before jumping to conclusions that are incorrect.
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