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WSJ: One Simple Rate - A flat tax would uleash a stupendous economic boom, by Steve Forbes
Wall Street Journal ^ | August 15, 2005 | STEVE FORBES

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 ...


TOPICS: Business/Economy; Culture/Society; Editorial; Government; News/Current Events; Politics/Elections
KEYWORDS: bush; consumptiontax; economy; fairtax; flattax; forbes; jobs; profits; steveforbes; taxes; taxreform
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To: Always Right

The only way to get rid of lobbyists is to make donations from anyone who does not have a constitutional right to vote illegal. This takes out churches (but not their members), unions (but not their members), lobby organizations and PACs (but not their members), etc. I also would limit donations to those in the actual constituency of the election. Now, how to enforce that is a different, and potentially prohibitive, issue.


41 posted on 08/15/2005 7:24:12 AM PDT by DeeOhGee (Quando Omni Flunkus Moritati)
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To: T.Smith
You seriously need to read and understand a little about the Fair Tax before you attempt any further comment.

Why, he is correct. Rich people can buy all sorts of things in foreign countries and save 30% tax. It's not like they have to bring everything back in the US or report it. Of course without any IRS (or so the claim is) whose going to check if consumers are cheating the system? The fair tax will be a huge boom for the rich.

42 posted on 08/15/2005 7:25:36 AM PDT by Always Right
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To: OESY

I like the flat tax better because it helps the economy far better than the "fair tax." The "fair tax" assumes that products and services can absorb any changes - but they cannot.

My clients will not take on an additional 20% tax hike onto the services I provide. Its rediculus. Forbes is right. The flat tax is proven and is simplistic.

In either case I hope that businesses still would get tax write offs for expenses. If they do not, we will be hosed.


43 posted on 08/15/2005 7:25:48 AM PDT by BoBToMatoE
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To: Mind-numbed Robot

"Reality is usually scoffed at, illusion is king." The founding fathers never wanted an income tax, a fed, an activist court nor a state-run education system. As far as I'm concerned, Optimists 0, Realists 0. Just WHO do you think is going to stop this landslide into mediocrity and declining standard of living - the optimists? Better give them all AK 47s and a hotline to the Congressional Voting Record.


44 posted on 08/15/2005 7:27:56 AM PDT by steenkeenbadges
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To: T.Smith

BALONEY!

As a small business owner, I will be forced to stick an additional 20-30% sales tax on my services - my clients will not be able to afford that, which means I will take a hit on the income.

That goes with all services and products. The savings we get from our personal income taxes is not nearly as much as we will have to pay in a huge sales tax.

Just say no to "fair tax." Its a fraud that will kill small business.


45 posted on 08/15/2005 7:29:57 AM PDT by BoBToMatoE
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To: steenkeenbadges
The founding fathers never wanted an income tax, a fed, an activist court nor a state-run education system...Better give them all AK 47s and a hotline to the Congressional Voting Record.

Well said. They also did not want a standing army, knowing that just such a beast would prohibit citizen reforms and have the trappings of a tyranny (the same reasons Rome outlawed standing armies in Italy during the Republic until Julius Ceasar ignited civil war by taking his army across the Rubicon; thus ended the Roman Republic).

46 posted on 08/15/2005 7:32:05 AM PDT by DeeOhGee (Quando Omni Flunkus Moritati)
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To: BoBToMatoE
As a small business owner, I will be forced to stick an additional 20-30% sales tax on my services - my clients will not be able to afford that, which means I will take a hit on the income.

Service providers get hit hard. But just think how easy it will be to send in your 23% of your gross to the government each month. Just one simple form and your check. Boy, I bet you could just set it up where the federal government just automatically takes 23% of all your deposits out. That would really be easy. And that doesn't even include what the states will add on.

47 posted on 08/15/2005 7:36:12 AM PDT by Always Right
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To: OESY

This would be one of the best reforms in government. It would eliminate in a stroke a lot of the payoffs by special interests. It also would be fairer, and more economical.


48 posted on 08/15/2005 7:38:51 AM PDT by docbnj
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To: Mind-numbed Robot

Why add a new set of social engineering tools. Just because you like those more than the current ones?


49 posted on 08/15/2005 7:40:28 AM PDT by Doctor Stochastic (Vegetabilisch = chaotisch is der Charakter der Modernen. - Friedrich Schlegel)
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To: Always Right

What's passed in the first year need have no relation with what's passed in the next.


50 posted on 08/15/2005 7:41:17 AM PDT by Doctor Stochastic (Vegetabilisch = chaotisch is der Charakter der Modernen. - Friedrich Schlegel)
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To: sitetest
You make an excellent analysis but I would like to make a couple of comments about it.

What you say about the poor or middle class's access to some tax benefits is correct but unlikely because wisdom is rare. In order to accomplish what you suggest, the middle class would have to live like the poor for a period of time in order to save to make the investments, to give time for the investments to start paying off, and finally until the investments paid off enough that they could live like the middle class they are. If they stay that wise and disciplined they could eventually climb into the upper class.

Most aren't that disciplined, aren't aware of the opportunities, and wouldn't know how to take advantage of them they did. In addition, those that do take advantage of them are still guided by the tax laws, as the politicians intend, rather than the best business decisions, and must keep records and take actions according to tax schedules. They then must correctly report it all.

Real estate appreciation can be deferred, tax wise, but the rent on the property can't be and that is when they get into all the tax shenanigans to minimize their taxes and maximize their gain. That takes lots of sophisticated effort that most poor and middle class are not going to participate in.

The rich also have trusts, foundations, and other avenues they utilize to shelter large amounts of wealth from taxes. The middle class can't participate in that because they don't have that much money. I suppose they could go through the motions but it would be meaningless. The tax laws, like all laws, are supposed to be written for all, not just a few. These laws meet that criteria only technically as only a few can access them.

I recall an especially egregious case when Jim Wright was Speaker of the House, before his shenanigans got him booted so as not to shine too much light on the rest, was a provision of the tax code that excluded everyone living at a certain address in Ft. Worth from taxes for a particular year. Of course that was fair to everyone as all could access it, but not really. Only those living at that address could, so the rest were screened out. His elderly benefactor was saved from four million dollars in taxes because of that provision. I am sure that is more common than not.

The Fair Tax eliminates all that and leaves the poor and middle classes with more money to do the things you suggest, and they do them for the money they will make rather than for the money they will keep away from the government.

As for the rich, who cares how much they have or what they do with it. Unless they keep it in millions of mattresses or jars buried in the backyard, they will put it to work helping the economy. Even if they just stuff it in the bank or other financial instruments that money is reinvested in the economy. That creates jobs and millions more people buying things. That more than makes up the money they spent on used yachts rather than new ones.

You seem too smart to have overlooked all this. Another agenda?

51 posted on 08/15/2005 7:53:33 AM PDT by Mind-numbed Robot (Not all that needs to be done needs to be done by the government.)
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To: Always Right
Please go to the Fair Tax site and get answers to those criticisms.

www.fairtax.org
52 posted on 08/15/2005 7:57:33 AM PDT by T.Smith
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To: T.Smith

TANSTAAFL.


53 posted on 08/15/2005 7:58:42 AM PDT by HostileTerritory
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To: DeeOhGee

I'd rather return to a currency backed by something solid, and not the full faith and credit of the US government, which is, frankly, worthless.>>>>>>>>

Me too, our conversion to fiat money has resulted in unending inflation which is being very much understated in official figures. Most of those now under forty years of age have no real understanding of this. A lunch for two at McDonalds now can cost more than what the average person earned for eight hours work when I was a small child,(I was born in 1944). A Ford model 8n farm tractor cost around $600.00 new when I was a little guy, the same amount now is not even a good week's wage. We have reached the point that anyone with a halfway decent job will earn as much in two years as my father earned in his life time and he supported a wife and four sons. My mother only worked a job for a short time when I was very small and she started out in a sewing plant for 20 dollars a week and received a raise to thirty dollars a week after completing training. She said she didn't know what to do with all that money as it was more than she had ever seen in her life. The dollar has been devalued beyond recognition and the process continues.


54 posted on 08/15/2005 8:09:15 AM PDT by RipSawyer (I wouldn't mind being broke if I weren't so short of cash.)
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To: DeeOhGee
...to make donations from anyone who does not have a constitutional right to vote illegal.

Great idea but with the attendent problems you mention. I would rather deal with those problems, though, than the unions and the Soroses.

55 posted on 08/15/2005 8:11:41 AM PDT by Mind-numbed Robot (Not all that needs to be done needs to be done by the government.)
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To: Mind-numbed Robot

Yeah I keep getting stumped on how to make it happen in a way that would not infringe on anyone's 1st Amendment rights.


56 posted on 08/15/2005 8:18:23 AM PDT by DeeOhGee (Quando Omni Flunkus Moritati)
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To: XRdsRev; Taxman; pigdog; Principled; EternalVigilance; rwrcpa1; phil_will1; kevkrom; n-tres-ted; ...

As a small businessperson, I already have to work for free as a tax collector for my state,I don't need another nonpaying job working for the Federal government.

Then you will be glad to know that you would be remitting the federal retail sales tax to your state on the same returns, and be paid to do so under the FairTax legislation. This coupled with no more federal income or payroll taxes to be filed with the feds is a strong advantage over the current system.

You really should look into the legislation rather than through out inaccurate knee-jerk comments that miss the mark.

 

A Taxreform bump for you all.

If you would like to be added to this ping list let me know.

John Linder in the House(HR25) & Saxby Chambliss Senate(S25) offer a comprehensive bill to kill all income and SS/Medicare payroll taxes outright and replace them with with a national retail sales tax administered by the states.

H.R.25,S.25
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.

Refer for additional information:

 


 

By the way, the National Small Business Association endorses the FairTax Natioal Retail Sales Tax legislation.

As far as the Flat Tax proposal's impact on business, I suggest you read the Vern Hoven tax seminar piece about it:

Flat Tax as Seen by a Tax Preparer
by Vern Hoven


57 posted on 08/15/2005 8:22:56 AM PDT by ancient_geezer (Don't reform it, Replace it!!)
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To: HostileTerritory
I've read plenty about the so-called Fair Tax, thank you,...

Apparently not enough. Care to try some specifics?

... and rose-colored glasses don't begin to describe how its advocates view it.

As opposed to the blinders worn by the opponents.

I was a sceptic at first myself but learned enough not to be. The only weakness of the Fair Tax is it is still vulnerable to crooked and greedy politicians. If we get rid of those we could eliminate many, many problems. Until then, the Fair Tax gives us a good restart with lots of experience on how to cut them off at the pass.

58 posted on 08/15/2005 8:23:02 AM PDT by Mind-numbed Robot (Not all that needs to be done needs to be done by the government.)
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To: HostileTerritory
"TANSTAAFL." WTF?
59 posted on 08/15/2005 8:23:53 AM PDT by T.Smith
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To: clee1
BRAVO!

Well said and spot on target!

60 posted on 08/15/2005 8:26:35 AM PDT by Bigun (IRS sucks @getridof it.com)
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