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 ...
There are no social engineering tools in the Fair Tax as now structured. We can then be alert to any new ones they may attempt to stick in there.
You are just sour on politicains, as you should be. Human nature will not change so we have to keep a close eye on what we are doing, as the founders cautioned us. Free enterprise is the best system going, both economically and socially, and the Fair Tax is complimentary to that. It actually gets us back on track from the socialist direction we are on, which began back in the '20s and '30s.
Our present system is complimentary to that. Which do you want?
I have read the propaganda hundreds of times. What I said is correct.
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.>>>>>>>>
I am not one of those arguing against the Fair Tax, but if we could do as you suggest we could indeed eliminate most problems! I estimate the chances of doing so as about the same as the chances of the country being invaded by flying pigs.
I think any debate on tax reform should include what we have now vs what is the farthest from what we have now in terms of economy, efficiency, and privacy. Leaves lots of room in between.
As long as the tax code requires vast amounts of information on those being taxed, a lot of people are going to make a lot of money making sure the information meets government standards for accuracy. The cost of this tax compliance industry makes the product of American workers cost more in U.S. and world markets. The tax compliance industry is essentially a socialist make work program that produces nothing consumers really want or need in their daily lives.
In the interest of good government a tax code should generate a reliable revenue stream and do nothing else. Taxing normal transactions at banks, credit unions, and others covered by federal insurance would require only a transaction amount and account #. No other information for any one to use for personal gain or political purpose. For individuals and businesses, paying taxes would be simpler than paying their utility bill.
A lot more people would use U.S. banks if the government wasn't using them to collect personal information. Speculative investment would take a hit but I don't think such schemes are of any real benefit long term.
You and me and all the other non Communists. The Fair Tax will eliminate much, not all but much, of the harm they inflicted. They guide their strategy through the tax code, giving incentives to and punishing the wrong things. We can start over and be better stewards in the future.
There Ain't No Such Thing As A Free Lunch.
Indeed it is, and greatly so.
Spooks me.
Ah. Thank you.
You need to do more research on what the FairTax is and how it works. It is nothing at all as you suppose.
Try the FairTax website:
http://www.fairtax.org/research.html
And the bill itself:
http://thomas.loc.gov/cgi-bin/query/z?c109:H.R.25:
If you'll learn about the FairTax you won't have to go around making such wild - and erroneous - statements with no factual basis.
Dear Mind-numbed Robot,
"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."
Well, it depends on what you mean by "live like the poor..."
My wife and I started out without much when we married over 22 years ago, and often, we felt poor. I remember thinking how nice it would be if we merely had all the cooking utensils and gadgets my mother had. But we have tried to be prudent all these years, and I think we were married over 10 years when I finally decided that we had an adequate number and variety of cooking gadgets. LOL.
But we were never poor. We always owned our own home. We could always pay all our bills. We always had two working cars. We always had at least a month's bills in the bank (and usually more than that). We always had enough food, enough clothing, heat in the winter, a/c in the summer. Some years, we didn't have elaborate vacations. Often, I bought the polyester-blend slacks instead of the wool ones, but my gosh, for me to even suggest that we ever lived as we were poor would be to insult everyone who has ever known true want.
We have always spent a high proportion of our income, and over the years, as our income grew, we have enjoyed all the necessities, and many of the luxuries of life.
However, we have also tried to be sensible, and have tried to make sure that some modest amount of our income would be put aside.
I suggest that the difference between living on most of one's income and living on all of one's income isn't as great a difference as you've laid out.
Now, that wisdom is rare is a truism. That many will not bother to do what it takes to accumulate wealth is almost a tautology. But that's not an effect of tax law.
And actually, it turns out that a pretty significant proportion of the middle class HAS availed themselves of some of these things. I've read that 50% of households have retirement accounts through which they invest in equities, either directly, or indirectly through mutual funds.
My point remains, most all the ways by which the rich reduce their tax liability are available to the middle class. In fact, many middle class households are building wealth precisely through tax-advantaged retirement accounts, real estate investing, and other means.
"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."
What are you talking about? For many real estate investors, the vast majority, or even all rental income is tax-advantaged, often to the point of paying no current taxes at all, due to the deduction for depreciation. It doesn't take much effort to avoid taxes on rental income, at all. I've pinged another poster who generates some of his income from real estate investment. If he chooses, he can elaborate on his own experience.
Lots and lots of middle class folks do this.
"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."
That's true to a degree, however recent innovations in this area have made much of this sort of thing available for the merely well-to-do rather than only for the very rich.
"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."
Well, the problem is that the tax laws, which are SUPPOSED to be written for all, have often been written to penalize the most successful. It's difficult for me to offer a criticism of the most successful when they manage to escape those efforts.
"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."
Regrettably, there is no tax system that is immune from that particular type of manipulation. The resident of that address could have been as easily granted, in a private bill or a nearly-hidden amendment to a larger bill, a sales tax exemption, complete with an exemption certificate issued by the Department of the Treasury (or whoever will issue these things at the federal level).
"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."
My own analysis suggests that poor will do pretty well, the working classes will do pretty well, the lower middle class will do okay, and the upper middle class - the folks who often have been most aggressive in the use of the current tax code to avoid federal income taxes, through things like large mortgage payments, acquisitions of cars & things using home equity loans, aggressive contributions to retirement accounts, preference for high non-taxed benefits rather than higher salaries (better health insurance, disability insurance, life insurance policies, etc., rather than higher salary), and who often school their children apart from public schools - these folks will get hit. They will often wind up being net losers.
The truly wealthy, however, will wind up being largely net winners (not that there won't be a few exceptions). My accountant, who has a fair number of folks with "unearned" income in seven figures, tells me that since the 1986 tax reform by Mr. Reagan, most of these folks average about 20% of their income in federal income taxes.
Since it is unlikely that many of these folks will spend most of their income on new, taxable purchases, most of these folks are going to make out like bandits from the proposed national retail sales tax.
However, I'm troubled by the fact that it seems that most economic classes will benefit from the new system, as the act is supposed to be revenue neutral. I've read everything about picking up more money from better compliance, but I'm really not persuaded by the argument. Tax avoidance and tax evasion migrate to where the bulk of the taxes are collected. I can imagine a boatload of ways that folks will use to avoid the payment of these taxes, and I think that the gains from collecting taxes from the "underground economy" may be real, but much more modest than the proponents of this system describe.
In which case, the actual rate of taxation won't be 30%, but rather something higher. Even at 30%, I suspect that we'll be approaching the point of diminishing returns.
"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."
I commend you on your non-statist, non-classist, non-envy-of-the-rich attitude.
However, from what I can tell, the very rich are already doing just that. Few have their money buried in the backyard, or hidden under the mattress. A wonderful way of minimizing one's taxes is to invest in passive investments for the long-term, and sit back and watch the unrealized capital gains mount. That is the single biggest way the rich avoid taxes now, and that will remain the single biggest way the rich avoid taxes under a national retail sales tax. Thus, the level of investments by the rich likely won't rise more than a bit. However, their tax burden will likely fall modestly.
"You seem too smart to have overlooked all this."
Well, flattery will get you nowhere (unless you're female, and cute).
"Another agenda?"
What the hell is wrong with you national retail sales taxers?
Why must you assume nefarious motives for everyone who thinks differently than you think?
Did I accuse YOU of nefarious motives for supporting a tax scheme that I consider half-baked and half-assed?
Did I wonder whether maybe YOU might have a hidden agenda?
I can think of hidden agendae for support of this asinine system, but I don't impute it to those who disagree with me. I give you all the benefit of the doubt that you support this hare-brained scheme because you're honestly convinced it's a good idea.
What is wrong with you people that you cannot give the same benefit of the doubt back?
Don't post back to me, unless it is to apologize for the gratuitous questioning of my own intentions.
sitetest
Consumers can't cheat the system, only the sellers can. (How many people of all stripes are cheating the system now?) Consumers will always act in their best interest as they should. That is the beauty of free enterprise. Each consumer acting selfishly builds a better society for us all.
I honestly don't know how the Fair Tax treats foreign purchases but I don't care. The ripple effect of the Fair Tax throughout the economy will take away the advantages to buying elsewhere. Those foreigners will be moving here to take advantage of our tax system, not the other way around.
I remember before Bush's tax cuts many rich folks were moving offshore and some even denouncing their U.S. citizenship to avoid our high income taxes. No need for that under the Fair Tax.
The fair tax will be a huge boom for the rich.
What do you care? It is a huge boon for you, too. All that extra money the rich are spending to avoid the income tax can be put to better use building our economy. The elimination on withholding on everyone will release a lot of money into the economy. That will create demand, which will create jobs, which will give more people money to spend which will increase demand even more. The taxes on all the new purchases from those millions of people will make the rich irrelevant as far as taxes are concerned. Heck, they don't pay much now anyway.
Subtitle A of the Internal Revenue Code of 1986 (relating to income taxes and self-employment taxes) is repealed. SEC. 102. PAYROLL TAXES REPEALED. (a) In General- Subtitle C of the Internal Revenue Code of 1986 (relating to payroll taxes and withholding of income taxes) is repealed. (b) Funding of Social Security- For funding of the Social Security Trust Funds from general revenue, see section 201 of the Social Security Act (42 U.S.C. 401). ""SEC. 101. INCOME TAXES REPEALED.
You'd be well advised to inform yourself about the bill and what it does. There is no provision at all for the selective rate taxation you project to scare yourself and others - NONE WHATSOEVER.
Nor will there be.
" And whyever would THAT be done?? There is no reason for it, and I am absolutely opposed to it."
We've been headed that way for years. The reason? It's easier to keep track of taxpayer money that way. Governments like databases.
CPAs will do what cobol programmers did. They will either upgrade their skills or change fields. Maybe they could become headhunters and find all the lobbyists jobs. As soon as we can get even more tort reform passed they will have a lot more lawyers as clients, also. They should do quite well.
Without repealing the Amendment itself, it'd just be a matter of burying an income tax in an appropriations bill and we'd be right back where we are, but with two taxes instead of one. HJ Res 61 needs passing BEFORE moving ahead with HR 25.
You can't just steak a vampire out. You need to cut off the head as well.
Maybe if we concentrate on protecting 2nd amendment rights the 1st amendment rights will take care of themselves. :-)
What? Consumers are the ones liable for the tax, they can cheat it in many ways. Consumers can:
1. Buy stuff over the internet and/or foreign sellers and not report it.
2. Buy stuff on the black market and not report it.
3. Buy stuff for personal use and claim it was for business.
Remember, the fair tax bill makes the consumer LIABLE for the tax unless they buy from a registered retailer and recieve an official fair tax receipt. The consumer can cheat the system and will be watched and audited by some big intrusive tax collector whose name will not be the IRS.
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