President's Advisory Tax Panel July 20. 2005 meeting - partial transcript.

President's Advisory Tax Panel website ^ | July 20, 2005 | Pressident's Advisory Tax Panel

[pigdog]

And, the last comment that I would make before I turn to Senator Breaux for his comments, I think it's fair to say that as we go through this process of developing a better system, better tax system for America, that there will be five areas in which -- five principles, if you will, that will focus our effort.

The first is filing taxes will be straightforward and easy to understand.

Point two, our tax system will be fair and transparent. Taxpayers will be able to understand their tax obligations, and have confidence that they and their neighbors are all paying their fair share. Hidden taxes and gimmicks will be eliminated.

Third, our tax system will be clean, no more complicated and inefficient tax breaks and loopholes that benefit special interests and unnecessarily interfere with taxpayers' decisions.

Fourth, our tax system will encourage savings in a simple and efficient manner, saving for the future will be straightforward and convenient. And five, and the last point, barriers to competitiveness of American business will be torn down. Investment will be encouraged to spur innovation, productivity and job growth, and our antiquated international tax system will be updated to keep pace with global competition and to make U.S. businesses more competitive worldwide.

Presidential Tax Panel meeting 7/20/05 - partial transcript of comments by Chariman Senator Connie Mack.

[pigdog]

These are the comments of Chairman Connie Mack and they make for interesting reading to see how different tax systems shape up.

The FairTax does quite well in that regard.

[pigdog]

Sounds like the FairTax fits the five points like a glove.

[taxcutisapayraise]

Viva the FAIR TAX! Amigos.

Don't be fooled by flat earth flat taxers who say it can't be done.

Only you (the grassroots) can prevent the IRS from snooping into your personal business by supporting the FAIR TAX.

The flat tax falls flat on that most key point.

FAIR TAX = No IRS
Flat Tax = IRS snoops

[Willie Green]

Is Connie Mack a Scientologist?

...the movement for consumption-based taxation has been hijacked by a group of extremists whose principal interest is abolishing the Internal Revenue Service.²¹ They believe that if virtually all federal taxes are abolished and replaced with a retail sales tax like those in the states, then the states can simply collect the federal government's revenue for it, thereby allowing for abolition of the IRS...

²¹ The Church of Scientology originated this legislation as part of a campaign against the IRS because it refused for many years to allow gifts to the church to be deducted as legitimate charitable contributions, on the grounds that it was not a true church. The IRS eventually relented. See Davis (1997) and Starobin (1995) for discussions of the Church of Scientology's role in the sales tax campaign.

Davis, Bob. 1997. "CATS Out of the Bag." World, 12:9 (May 31/June 7).
Starobin, Paul. 1995. "No Returns." National Journal (March 18): 666-671.

source

Writing science fiction for about a penny a word is no way to make a living. If you really want to make a million, the quickest way is to start your own religion.

~ L. Ron Hubbard

[groanup]

Oh puuuuhhhleeeeease.

[Bigun]

Sounds like the FairTax fits the five points like a glove.

Indeed it DOES fit like a glove but that won't, as you well know, stop the K street crowd from fighting it tooth and nail!

If the fairtax is to become law, and I believe it will do exactly that, it is WE who are going to have to make it happen!

[Principled]

Thanks for the ping PD...

[Taxman]

Let's hold their feet to the fire and make sure that we don't get more "same old, same old" tinkering around the edges of the tax code like they have been doing for 92 years!

[Principled]

Indeed.

Of course, reformers aren't going to give up until it's done.

It won't matter what comes out this year, next year, or the next 25 years - we'll keep after it.

We can hope for a good result this fall - but I'm not counting on it...

[ancient_geezer]

"Fourth, our tax system will encourage savings in a simple and efficient manner, saving for the future will be straightforward and convenient. And five, and the last point, barriers to competitiveness of American business will be torn down. Investment will be encouraged to spur innovation, productivity and job growth, and our antiquated international tax system will be updated to keep pace with global competition and to make U.S. businesses more competitive worldwide."

Think maybe "Chairman Senator Connie Mack" might have an inkling of what we actually need to happen to saver the economy of this country?

http://mwhodges.home.att.net/family_a.htm#saving

[ancient_geezer]

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:

• search: "national sales tax" OR "national retail sales tax" OR "fairtax"

[pigdog]

Nonsense, Willie. You seemed to have missed the threads where that was shown to have been more misinformation about the FairTax. It was not originated by the Church of Scientology at all, but I understand there were some Methodists, Presbyterians, and Lutherans (and even other churches' members) involved.

And the point of your erroneous and misinformed comment is ...???

[Taxman]

Persist, persist, persist. Above all else, persist!

[Mind-numbed Robot]

Is Willie replacing the other nuisance SQLers? Haven't seen them in a while.

[Man50D]

It's hard to imagine there is any other tax system Senator Mack could be speaking about.

[Your Nightmare]

It's hard to imagine there is any other tax system Senator Mack could be speaking about.

LOL! You guys are too funny. You might just find out tomorrow how wrong you are.

[pigdog]

Or maybe how wrong YOU are since I see no mention of anything like your Nightmare Tax.

[Your Nightmare]

Or maybe how wrong YOU are since I see no mention of anything like your Nightmare Tax.

Considering the "Nightmare Tax" is simply your lame (and failed) attempt to ridicule me (what a shock - pigdog ridiculing others!), it's no wonder they didn't mention it. They did, however, discuss the Flat Tax quite a bit.

It's also worth repeating that their discussion of the FairTax showed that the FairTax rate would have to be 25% inclusive just to replace the income tax.

[pigdog]

Uhhh, NO, Nightie - that's not what the Tax Panel found out at all.

From the Treasury staffers we have this invormation presented by Jeff Kupfer, Executive Director for the Tax Panel:

"We also asked Treasury to provide us some information on national sales taxes. What we asked them to do was to replace the current individual and corporate income taxes with a sales tax. In line with our previous experiments, we decided to choose the broadest possible base that we could, and so we decided to use the base that's been proposed by the "Fair Tax," who has testified to the panel and has a specific plan. It is a retail sales tax, it's a tax on sales of all goods and services to individuals, except for educational services, expenditures abroad by U.S. residents, food produced and consumed on farms, imputed rent on owner-occupied and farm housing.

This base, I should note, does not exempt a number of things that many other systems exempt, and which we will explore later, such as health care, government expenditures and food. Also, for this calculation we do not have a rebate, or as the "Fair Tax" proposal refers to it a prebate, and that's something that we will return to later.

Finally, the rates that we are showing depend on assumptions about compliance. We have asked Treasury to provide a range of estimates, ranging from the current level of evasion that we have in our system to two times the level of evasion. We present those numbers, not to suggest that the sales tax would result in that much evasion, but simply because many commentators and others have predicted increased evasion with the retail sales tax, and we thought it would be useful to present the numbers in this way and in this range.

I also want to point out that we are presenting numbers using two types of rates. A "tax exclusive" rate is how most people think of a sales tax, and the "tax inclusive" rate is how we think of the income tax. The tax inclusive rate is always lower than the tax exclusive rate.

An example would be, assuming a good cost $100 before tax, and there's a $25 sales tax, the tax exclusive rate is 25 percent. That's the mark-up at the cash register, the $100 cost and then the $25 in tax. The tax inclusive rate would be the proportion of the tax to the overall amount that the consumer is paying, so that would be the $25 to $125 ratio, and that would be 20 percent.

The calculations from the Treasury Department for a revenue neutral tax inclusive rate for replacing the corporate and the individual income tax range from 18 percent with our current level of evasion to 21 percent with double the level of evasion that we have currently. The tax exclusive rate would be 22 to 27 percent.

We also thought it would be useful to present a VAT rate, a value-added tax rate, for replacing the complete income tax system. As the Panel knows, in a VAT all businesses are taxed on the difference between the value of their sales and the value of their purchases. Although a VAT and a retail sales tax are collected at different places in the business cycle, they tax the same thing. Therefore, with the same base, which is what we are assuming here, a replacement VAT would be 18 percent, which is the same as the retail sales tax rate. That 18 percent rate, I will note, assumes current level of evasion.

We also wanted to present to the Panel another example using a sales tax. As I mentioned earlier, most sales tax bases are not as broad as the base that we have assumed for the retail sales tax numbers that I just gave you. Accordingly, we asked Treasury to run some numbers using a traditional state sales tax base. As you see from the slide, every state exempts prescription drugs, most exempt some food, and most do not broadly tax services, such as financial services. State sales taxes generally exempt governments and charities. So Treasury took what the typical state tax base would be and ran the numbers needed for a sales tax to raise the same amount of revenue as our current system, and those rates run from 39 percent to 46 percent from a tax inclusive basis, and 64 percent to 87 percent on a tax exclusive basis. Once again, those ranges are current law evasion to double evasion."

So Treasury has now come to the realization that an 18% FairTax would be revenue neutral (without the prebate). With the prebate it would be 21% tax inclusive ... and notice that even Treasury is not confused by tax inclusive vs. tax exclusive as some of you SQLers pretend to be. That 21% revenue neutral figure stands in strark contrast to your disinformation about "25% for only income tax replacement"!! Why do you post such nonsense?

[Your Nightmare]

So Treasury has now come to the realization that an 18% FairTax would be revenue neutral (without the prebate). With the prebate it would be 21% tax inclusive ... and notice that even Treasury is not confused by tax inclusive vs. tax exclusive as some of you SQLers pretend to be. That 21% revenue neutral figure stands in strark contrast to your disinformation about "25% for only income tax replacement"!! Why do you post such nonsense?

Talk about nonsense. What were you reading? The 18% inclusive rate assumes the current evasion level and is to replace the personal and corporate income tax only. The 21% isn't with the "prebate," it's assuming double the level of evasion that we have currently. Your quote specifically says "Also, for this calculation we do not have a rebate, or as the 'Fair Tax' proposal refers to it a prebate, and that's something that we will return to later."

So let's see what they said when they returned to it later:

"The other thing that we wanted to do was to add back in the "prebate," which is what the "Fair Tax" calls a rebate that they have in their proposal. What we did earlier was that we ran the replacement sales tax or the VAT without any type of rebate, which would be designed to ameliorate any regressive effects of a sales tax or a VAT, and like I said, this run that we did earlier was different than the actual proposal that was presented to the Panel, because that proposal did include a prebate. The prebate is described on the slide. It would be the tax inclusive retail sales tax rate times the poverty guideline amount defined by Health and Human Services. We asked Treasury to provide those rates. The rates need to be higher than they would be without a prebate, because there is revenue that is being used to fund the prebate.

The rates that Treasury calculated go from 25 percent to 33 percent for a tax inclusive basis, and 34 to 49 percent on a tax exclusive basis. Once again, those rates go from the current level of evasion, assuming a current level of evasion, to assuming double the current level of evasion, and that's why the range is from 25 percent to 33 percent."

So it's just as I said. It's 25% with the current level of evasion and a "prebate" to replace the individual and corporate income tax only.

Caught in another lie, eh?