Posted on 01/11/2006 11:59:10 AM PST by Eaglewatcher
There are essentially three tax reform proposals being considered by Congress. There’s Rep. John Linder’s (R-GA) FairTax, the flat tax, and the politically (though not popularly) preferred method of incrementalism.
Before we dwell on the differences between the flat tax and The FairTax Book co-authored by John Linder and myself, let’s acknowledge one political reality illustrated by the success of both The FairTax Book and Steve Forbes’ Flat Tax Revolution: the people of the United States are ready for bold and decisive tax reform NOW. They don’t want the incremental approach. The FairTax Book would not have debuted No. 1 on the New York Times Bestseller List if people were disinterested in wholesale tax reform.
Pleasantries aside, let’s illustrate the superiority of the FairTax plan over a flat tax. Flat tax advocates propose a flat 17% tax on all earned income with just a few allowable deductions. Nice try, but we’ve been there --- done that.
In 1986 Congress passed what was essentially a flat tax. The main difference between the 1986 effort and that proposed by Dan Mitchell, Steve Forbes and others was that the earlier effort set forth two flat tax brackets: one at 15% and the other at 28%. It’s now 2005, some 19 years after this attempt at a flat tax … and the tax code has been amended nearly 10,000 times.
A flat tax leaves politicians room to tinker, to manipulate the tax code for the benefits of large campaign donors or specific constituencies. As we’ve seen, with a flat tax it is all too easy for the political class to decide to add just a “small” surcharge to high income taxpayers; after all, the surcharge will only affect a small percentage of taxpayers, and the money can be used to buy votes from an even larger percentage! Under the FairTax, the national retail sales tax, there is no way to raise the tax rates on the rich, or to favor any one particular business group. The FairTax treats each and every citizen exactly the same, playing no favorites among people or business entities. You can’t raise the rate without raising it for everyone, nor can you offer one particular product a break since the tax is applied universally. Nobody, rich or poor, has to pay the FairTax on the basic necessities of life, because the prebate* is applied universally.
The FairTax would constitute the largest transfer of power from government to the people since the Revolutionary War. The flat tax takes no power from government. The FairTax is a revolution. The flat tax is an idea that’s been tried before, and found wanting.
*Prebate? Read The FairTax Book … you’ll love this idea.
Euphemism?
I pretty much always knew what it was, a sales tax on CONSUMPTION instead of taxing INCOME, and, along with it, PROSPERITY.
Taxing consumption is preferable.
I'm sorry, but I can't agree. Unless the 16th Amendment is repealed there is still nothing to legally stop Congress from re-imposing an income tax sometime in the future.
Allowing something isn't the same as requiring it.
Allowing something isn't the same as requiring it.
true in the short term, but in the long term, the consumer pays it all as the market eventually adjusts to the new tax.
We had all better hope we get these jerks in Congress to bend or it will be BIG trouble for us.
The latest is they are working to eliminate the home mortgage interest deduction in round about ways.
They can do that, but if they want to be reelected they won't eliminate that deduction...If they did, a large uproar will be heard across the country.
FAIR TAX BUMP!
Fair Tax = NO IRS = No Tax on Income
Flat Tax = Keep the IRS and the Income Tax.
Which one do you want?
They are working on it. They intend to limit that deduction for people making goodly amounts of money. Now whats that tell a person? Tells me that after they do that, they will chip away at the thing till they eliminate the whole deduction for ALL of us.
Consider changing nothing except eliminating withholding and having individuals pay their tax monthly like any other bill.
Bingo! Joe Six-Pack is clueless. He just wants a refund, which he considers and annual bonus by the Feds.
Even if the 16th is repealed, they can still "legally" impose an income tax by passing another amendment reinstating the 16th, couldn't they?
Do you feel safer with zero protection against having both taxes as we sit now or as we would sit under a flat income tax, or would you feel safer from having both if the income tax didn't even exist anymore?
Your argument contains a contradiction: you are rejecting the nrst until the 16th is repealed in order to provide for protection against having both taxes, BUT you are willing to continue today's system which has zero protection against both taxes while the nrst does provide a measure of protection.
Tis possible, but I just think that too many people would rebel against it and it would be career suicide to support...
Well, IMO taking taxes that are currently invisible and making them visible will help curb gov't spending.
That the previously hidden taxes become visible would be sufficient to make a difference - that the taxes are lumped into a single amount instead of income tax here, business taxes there, payroll over there etc will also help invididuals perceive the cost of government.
But the most important change is that these taxes will have to leave your pocket in cash - and will represent a significant portion of your outlay on a daily basis... 23% of total spending on non-discretionary consumption of goods and services.
That'd be $6 dollars added onto a jumbo pak of huggies diapers to pay for government, $1.50 onto a six pak to pay for government, $150 onto a new easy chair to pay for government... and this is paid in cash, right out of your wallet! Damn right there will be downward pressure on taxes.
non-discretionary = discretionary.... arghhh
Tricks?
If you don't know our government is running a huge budget deficit you are not paying any attenion.
Instead of being fooled, I find many "Conservatives" justifying our goverment's excesses by talking about percentage of GDP.
As you say, there are some who think that if they don't pay income taxes that the deficit doesn't cost them anything.
They're missing the hidden taxes in goods and services among other things that cost them plenty.... but they don't realize it because of the "tricks" and so have no motivation to do something about it...
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