Posted on 10/18/2005 11:00:47 PM PDT by indianrightwinger
Tax-Overhaul Panel Gives Bush Two Choices Options to Consider Include
A Simplified Current System Or a Consumption-Based Levy
By ROBERT GUY MATTHEWS Staff Reporter of THE WALL STREET JOURNAL October 19, 2005; Page A4
WASHINGTON -- President Bush's tax-overhaul panel agreed to offer two alternatives to the present tax code: one that streamlines the current income tax and another that would replace it with a progressive tax on consumption.
SNIP
Neither is likely to become law, but they offer the Treasury Department and the White House a framework for legislative proposals that could be considered by Congress next year.
SNIP
The streamlined version of the income tax that the panel approved in principle yesterday includes: • Creating four income-tax brackets of 15%, 25%, 30% and 33%, which is below the current top rate of 35%
• Replacing the mortgage-interest deduction with a tax credit equal to 15% of mortgage interest paid, but limited to interest on mortgages between $172,000 and $312,000, depending on the geographic region
• Replacing the earned-income tax credit with a work credit that can be calculated by the Internal Revenue Service
• Eliminating the "marriage penalty" by providing a family credit of about $1,650 for singles and $3,300 for couples
• Imposing a new limit on health insurance provided tax-free by employers of about $11,000 for families, $5,000 for individuals
• Reducing the tax on capital gains to 25% of the ordinary income-tax rate, or a top rate of 8.25%, down from today's 15%
• Eliminating the tax on dividends
• Simplifying tax breaks for savings
• Shrinking the Form 1040 tax return to 32 lines from 75
(Excerpt) Read more at online.wsj.com ...
Sales taxes are, by their very nature, regressive.
Dump the idea of "streamlining" the existing system and dump the idea of a national sales tax. Just go with the flat tax and fuggedaboudit.
Amen. I will take that any day compared to all the other crap being debated in the halls of DC.
" -- President Bush's tax-overhaul panel agreed to offer two alternatives to the present tax code: one that streamlines the current income tax and another that would replace it with a progressive tax on consumption. "
Tax Reform PING
Big question -- what is tax on "consumption"? VAT would be terrible, retail sales tax, fair tax good -- but what is this "progressive" bit?
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They might as well entitled these recommendations: "How to crash and destroy the US economy permanently, starting with a precipitous recession".
Since Al Qaeda's main aim is to destroy the US economy -- they must be clapping their dirty little hands.
The problem with flat tax is that flat tax ON WHAT?
When Reagan cut taxes, the approach was to lower tax rates and eliminate deductions. Well, deductions were eliminated, and later taxes were raised.
If they reduce home mortgage deductions, a flat tax will still be a killer.
Retail sales tax is really the only fair tax -- poor people spend less, so they pay less taxes, rich people spend more and pay more taxes, and it's up to the people how much they want to spend.
The whole income tax structure was designed to redistribute wealth.
With all the spending the GOP has been doing lately, borrow and spend I might add, tax reform will be very dificult to do. The feds needs just about every dime they can squeeze out of us so the GOP can continue to throw money at every problem on planet earth. The federal government is now totally out of control, (thanks GOP I will be sure to vote for yall big spender in Nov) with zero chance of ever getting reform out of either the D or the R. The bush GOP has driven a stack into the heart of the republic with all it's big spending neocon policies.
Nonsense. The government should not be in the business of subsidizing anyone's purchases.
And the absurdly misnamed "fair tax" is nothing but a regressive tax that will depress purchasing, create a burgeoning black market, and force government intrusion into every private citizen's lives as they will be forced to prove they purchased products legally or pay a "fee."
Your model is simplistic, by the way. Under the misnamed "fair tax," someone who makes $40K and pays out $4K in taxes is shouldering a 10% tax rate whereas someone who makes $80K and purchases the same amount pays only a 5% tax rate.
That's many things, but "fair" isn't one of 'em.
This is not tax reform, it is tax adjustment. What a bunch of B.S. I want Forbes, I want Forbes, I want Forbes.
"The government should not be in the business of subsidizing anyone's purchases. "
I agree with you. But when you do things under some rules and all of a sudden the rules are changed drastically, it's fiscal disaster for a lot of people.
In CA cities you can't even find a house under $500K,
Progressive simply means varies in effective rate with the amount subject to tax grows.
In the income tax case, income grows and the rate at which income is taxed grows with the amount of household income. The so-called Flat Tax is progressive due to the personal exemptions it implements.
The FairTax implemented in HR25 is an example of a progressive consumption tax due to the FCA sale tax rebate paid to all households.
All tax on expenditure up to the povertylevel is covered by the FCA. Thus its "effective" tax rate for the household increases with the amount of dollars spent for consumption.
You say that the poor spend less, so are taxed less, but the poor spend a greater percentage of their total income and wealth than those who are "middle class" and the drawback to the middle class paying a sales tax is that much of the wealth of the middle class is tied up in debt so to move towards an exclusive consumption tax is that you force those people with debt, to assume a greater liability of debt.
I support the continued use of the income tax, at about the rates they are at now, but with the elimination of deductions based on twisty turny subsidations that are hidden away in a thousand bills that accomplish nothing.
Let the tax be a tax for all, isn't that the goal of our free democratic and relatively egalitarian society?
If anyone would like to be added to this ping list let me know.
President Bush's tax-overhaul panel agreed to offer two alternatives to the present tax code: one that streamlines the current income tax and another that would replace it with a progressive tax on consumption.
Hmmm, all the public complaints about the Panel's trial balloons from the 11th, pay off? Or something else in the mix?
Who has a subscription to WSJ's website?
Are they describing:
John Linder in the House(HR25) & Saxby Chambliss Senate(S25) offer of 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:
You say that the poor spend less, so are taxed less, but the poor spend a greater percentage of their total income
Not under the FairTax legislation, as the poor are fully compensated for the tax they pay on anything less the the povertylevel of consumption.
Instead of opening the political and administrative rats nest of excepting specific items or persons from paying the NRST at the cashregister, the Fair Tax Act(H.R.25) provides what amounts to a personal exemption in the form of a demogrant that all legal residents will receive; a monthly amount called the Family Consumption Allowence(FCA) equivalent to the FairTax paid at the HHS defined poverty level of expenditure. The FCA is paid in advance, in equal installments each month by check or electronic tranfer to bank account from the Social Security Administration.
The size of the monthly FCA will be determined by the government's Poverty Level for a particular family size, multiplied by the tax rate, and paid to all households regardless of income or actual expenditure. The HHS poverty llevel is a well-accepted, long-used poverty-level calculation based on the cost of a healthy diet comprising 1/3 of total family budget value. The povertylevel statistic is fixed in 1969 dollars updated annually for CPI.
The chart below in Figure 1 tepresents the current FCA as it relates to the 2004 povertyline statistic, adjusted pay a fixed amount for each adult in a household to remove implicit marriage penalties.
| Figure 1: 2004 FCA calculation | |||||||
| Family size |
HHS annual poverty level |
FairTax annual consumption allowance (single person) |
Annual rebate (single person) |
Monthly rebate (single person) |
FairTax annual consumption allowance |
Annual rebate (married couple) |
Monthly rebate (married couple) |
|
1 2 3 4 5 6 7 8 |
$9,310 $12,490 $15,670 $18,850 $22,030 $25,210 $28,390 $31,570 |
$9,310 $12,490 $15,670 $18,850 $22,030 $25,210 $28,390 $31,570 |
$2,141 $2,873 $3,604 $4,336 $5,067 $5,798 $6,530 $7,261 |
$178 $239 $300 $361 $422 $483 $544 $605 |
N/A $18,620 $21,800 $24,980 $28,160 $31,340 $34,520 $37,700 |
N/A $4,283 $5,014 $5,745 $6,477 $7,208 $7,940 $8,671 |
N/A $357 $418 $479 $540 $601 $662 $723 |
[ The monthly FCA for each adult is .23 * (HSS poverty level for a single person)/12 to assure no marriage penalty due to the manner in which the poverty level is dependant on family size. The monthly FCA for each child is .23 * (the incremental increase of HSS poverty level for a family with one child over no child) ]
As an example, under the Fair Tax Act, a family of four with two wage earners paying income and SS/Medicare taxes, could spend $24,980 per year free of tax because they will have received over the course of the year a demogrant totaling $5,745. $5,745 is the amount of sales tax paid on $24,980 in expenditures. That family spending double the "poverty level" or $49,960per year will effectively pay tax on only half of their spending and, therefore, have an effective tax rate of 11 ½ percent or half the FairTax rate.
The Draw back is. . . . .
I don't know what I spent on dinner, how can the government calculate what I actually spent, unless they are using income as a basis of their calculations? So if they are using income as a foundation, how do they judge what is actually "fair?"
The idea of automatic refunds just doesn't make sense to me. There might be way's that it works out, but the measure still seems flawed.
you know the other day there was a thread bashing christians for wanting to take over s carolina and make it a more christian nation. i think we need to just skip that state thing and find a piece of real estate on some other continent and encourage real americans to emigrate there and start a new society. this tax nonsense is getting close to breaking the camels back, imo.
No way in hell the government should be taking at leat 30% of your check!....Why work overtime????...they just get more!
You noticed that little tidbit as well. Why not just bring back Hillarycare while we're at it?
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