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When Taxes Start Sneaking Across the Border...(Fair Tax Endorsement)
HumanEventsOnline ^ | June 13, 2006 | Mac Jonson

Posted on 06/14/2006 4:12:23 AM PDT by Man50D

Illegal immigration is an unsolvable problem. America should surrender now to the irresistible will of the leaderless gaggle of semi-literate busboys and landscapers who stumble northward with the unbeatable plan of “that way!” in their diabolical minds. Who can stop these master criminals? Not the poor little U.S. government!

With its limited resources and power, how can it do something as complex as watch to see if a confused mob of aspiring roofers walks across a line in the desert? Or enforce laws against hiring illegal aliens? Or most intimidating of all, how can it find illegal aliens already within America?

After all, they are so well hidden, standing there on the corner of McGrath and Broadway in Somerville, Mass., every morning from sunrise to lunch, waiting to be picked up by anonymous labor johns. Really, how does one capture people so cautious that they jump into the back of any truck that pulls up? I mean, this isn’t something easy like going to the moon or establishing Democracy in all the world.

I’ve often heard that you have to have a will to succeed, if you want to win. But in the case of the open borders lobby that has held sway over our immigration and borders policies for the last 30 years, all they need to win is a will to fail.

It is now national policy to fail to guard borders, to fail to prosecute those who bear forged documents, to fail to arrest illegal aliens even when found. It is our government’s policy to fail to notice the illegal labor pools operating openly in every major city in America. It is doctrine to fail to deport illegal aliens even when they are arrested for other crimes, and to fail to investigate corporations openly claiming they cannot function without illegal labor. It is protocol to fail to notice when “temporary” visa holders never leave, and to fail to pursue court decisions against cities that actively provide sanctuary for immigration criminals.

Never has a fringe political movement succeeded so well by failure, as the open borders wing of our bipartisan ruling class has by its willful sabotage of our nation’s immigrations and customs enforcement apparatus. Now the feigned incompetence and willful neglect that have been used to achieve a de facto opening of borders is being used as a major argument in favor of passing the Bush/McCain/Kennedy/Reid amnesty for illegal aliens—a formal opening of the borders.

Everyday we hear the whine of the willing failures in Washington, D.C: It’s just so hard…Can’t we just give up and start over? ... We tried to guard the borders but they’re soooooo big. … There are so many people to keep track of and it’s just not reasonable to try. … It’s crazy to deport people back to where they actually are supposed to be … so we win, ha, ha, give us open borders like we wanted all along.

By contrast, if you want to see what our federal government is capable of when it stands to benefit from law enforcement, just look at our tax system. The modern tax code is a Byzantine obscenity. It’s too large to be understood by any one person. Armies of lawyers, accountants, and computer programmers are needed just to figure what each individual owes.

Every paycheck in America is tracked. Every corporation monitored. Every home sale and stock trade and bank account in a country of 300 million people is watched for potential taxation. Employers are used as the primary collection and enforcement apparatus in the system, which understands well that a corporation that fears huge fines for small errors will obey the law carefully. Saving a few bucks just isn’t worth it, if you get the IRS on your back.

For many people, the Internal Revenue Service is the most feared law enforcement agency in the country. At the state, county, and city level, nearly every house, trailer, boat, car, truck, RV, and motorcycle in the nation is tracked year to year, assessed, taxed and monitored with rigorous enforcement by every clerk and traffic cop possible. Likewise, nearly every gas station, shopping mall, fruit stand, restaurant and bar in America is expected to collect sales tax on every stick of gum or pair of panties it ever sold.

This the government can do. But it can’t find the illegal aliens on the street corner or shut down the makers of fake green cards or prosecute the same businesses it expects to obey a million different tax laws when they knowingly hire a subcontractor to provide them with laundered illegal labor.

Clearly, if you want a law enforced by our government, you should make it a tax law.

Which brings me to one of the more interesting possibilities in the popular rebellion against the anti-nationalists in the Democratic and Republican leaderships (those who seek to totally open our borders and thus eliminate our nation as anything other than a free-enterprise zone for the world’s excess poor and their would-be employers): What if advocates of secure borders and controlled immigration sought to entangle immigration and border enforcement with tax enforcement?

This could be done by throwing our weight behind the “Fair Tax” tax reform movement that is already gaining steam throughout America. Allow me to explain.

For those of you that don’t know, the Fair Tax movement seeks to replace the maze of current personal income, capital gains, corporate, gasoline, and payroll taxes that the federal government has thrown up over time with a single, fair consumption tax. Every person in America would take home their entire paycheck, and pay only this one tax, which could thus be easily monitored by voters. Likewise, every business would be subject to it and freed from having to hire a flock of lawyers to figure out their tax burden each year. The IRS would be abolished.

The Fair Tax is a consumption tax—a sales tax—it would be automatically calculated and collected every time you or any other person or business bought any item at the retail level. No more W-2s or 1040s or schedules B, or IRS audits or multiplying the greater of either line 32 or 34a by the amount from the appropriate box on the table on page 92. When you buy, you pay.

The tax has an enormous number of economic advantages that have been extensively analyzed by many economists and would spur growth, discourage corporations from moving offshore, and reward savings. These are too numerous and lengthy to detail here, but I encourage you to learn more by reading the Fair Tax Book.

The Fair Tax would neither raise nor lower your taxes, it would simply change the way they are collected—and that is how it might have an unintended effect on border security. When taxes are collected on retail sales, instead of income, the easiest way to avoid paying them is to try to buy your goods across a border, in a jurisdiction without the sales tax. This pattern is very familiar within America.

Just across the border from states with high gasoline taxes are clusters of gas stations. Just out of the reach of states with onerous liquor taxes are clusters of liquor stores. The southern portion of sales tax-free New Hampshire is one great cluster of malls and stores catering to shoppers from high-tax Massachusetts. States are prohibited from interfering with such activity under the interstate commerce clause of the Constitution. They really are powerless to enforce their borders (and properly so).

But imagine if Northern Mexico and Southern Canada became giant outlet malls catering to frugal shoppers from a Fair Tax America. How seriously do you think the federal government would become about inspecting every car and closing every isolated crossing point? If it were taxes sneaking across our borders, instead of illegal aliens, the government would have the Marines mining the fronteir with Quebec. Somebody sneaking in to take a job away from an American doesn’t bother Washington at all. But can you imagine the outrage and panic if that same person were sneaking in to try to sell Americans tax-free iPods?

The impossible-to-patrol border would suddenly become very, very patrolled. Or the government could choose to just forego all those taxes and get smaller and smaller. Which do you think would happen?

Now, the Fair Tax is worth implementing for other reasons, and would also discourage illegal immigration by fully taxing the underground economy for the first time (unlike an income tax, which is easily avoided by those who work off-the-books). But wouldn’t it be nice to have a byproduct of our tax system be secure, well ordered borders, adequately staffed and patrolled?

This year the Fair Tax bill (HR 25) has an impressive 57 co-sponsors in Congress and it gains support every year. The added support of millions of Americans opposed to open borders could push the bill into the realm of real possibility.

Most of life is the result of unintended consequences, and every once in a while they can actually work for you.


TOPICS: News/Current Events
KEYWORDS: aliens; border; illegalaliens; taxes; taxreform
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To: Zon
In other news, Tutankhamen announces massive new public works project...
21 posted on 06/14/2006 7:42:02 AM PDT by xcamel (Press to Test, Release to Detonate)
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To: Taxman; pigdog; Principled; EternalVigilance; rwrcpa1; phil_will1; kevkrom; n-tres-ted; Zon; ...
A Taxreform bump for you all.

If anyone 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 federal income, SS/Medicare payroll, and gift/estate taxes outright replacing 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:


22 posted on 06/14/2006 8:25:06 AM PDT by ancient_geezer (Don't reform it, Replace it.)
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To: xcamel

The only true "fair" tax is a flat tax.

 

Hmmm, which one?

"FAIR" Flat Tax?

 

http://www.taxfoundation.org/files/rl33443.pdf

Congressional Research Service
Report for Congress

Flat Tax Proposals and Fundamental Tax Reform
May 31, 2006


Senator Ron Wyden’s Proposal

S. 1927. The Fair Flat Tax Act of 2005 was introduced on October 27, 2005, and referred to the Senate Finance Committee. This proposal would reform the current income tax base rather than changing to a consumption base. This act has three stated purposes: (1) to make the federal individual income tax system simpler, fairer, and more transparent, (2) to make the federal corporate income tax rate a flat 35% and eliminate special tax preferences that favor particular types of businesses or activities, and (3) to partially offset the federal budget deficit through the increased revenues resulting from these reforms.

The progressive individual income tax would have three rates: 15%, 25%, and 35%. The individual income tax would provide a federal income tax credit for state and local income, sales, and property taxes. The individual income tax would provide for an earned income tax credit for childless taxpayers and a new earned income child credit; repeal the individual alternative minimum tax; increase the basic standard deduction and maintain itemized deductions for principal residence mortgage interest and charitable contributions; and reduce the number of exclusions, exemptions, deductions, and credits. All income including capital gains and dividends would be taxed equally. This act would be effective beginning with tax year 2006 but would sunset after tax year 2010.

Representative Rahm Emanuel’s Proposal

H.R. 5176. The Fair Flat Tax Act of 2006 was introduced on April 25, 2006, and referred to the House Committee on Ways and Means. This proposal would broaden the tax base of the current income tax. The individual income tax would have three tax rates: 15%, 25%, and 35%. The current rate differential for capital gains and dividends would be repealed. The basic standard deduction would be increased, including tripling the standard deduction for single filers from $5,000 to $15,000 and raising it from $10,000 to $30,000 for married couples. A “simplified family credit” would replace the current earned income tax credit, the child credit, and the dependent care credit. A refundable “college tax credit”of $3,000 per year to students for four years of college and two years of graduate school would replace five existing education tax incentives. The home mortgage deduction would be available to all homeowners regardless of whether or not they itemize their deductions. A “universal pension account” would replace 16 existing IRA-type accounts with a single portable retirement account for all workers. The individual alternative minimum tax for individuals would be repealed.

The corporate tax rate would be 35% of taxable income. The Secretary of the Treasury would be required to report “recommendations regarding the elimination of federal tax incentives which subsidize inefficiencies in the health care system ....”5 When sufficient information is available, brokers would be required to report customers’ basis in securities transactions. Penalties for promoting abusive tax shelters would be increased. The criminal monetary penalty limitation for the underpayment or overpayment of tax due to fraud would be increased. A sunset provision states that “All provisions of, and amendments made by, this act shall not apply to taxable years beginning after December 31, 2010.

***

 

The Flater "Flat" Tax with VAT?

For it should be noted that none of them gets rid of the SS/Medicare tax that makes sure everyone's wage gets hit at least twice, and none of them is really "flat", just stealth progessive wage taxes with variations of VATs for the most part.

 

http://www.taxfoundation.org/files/rl33443.pdf

Congressional Research Service
Report for Congress

Flat Tax Proposals and Fundamental Tax Reform
May 31, 2006


Flat Tax (Hall/Rabushka Concept)

A flat tax could be levied based on the proposal formulated by Robert E. Hall and Alvin Rabushka of the Hoover Institution. Their proposal would have two components: a wage tax and a cash-flow tax on businesses. (A wage tax is a tax only on salaries and wages; a cash-flow tax is generally a tax on gross receipts minus all outlays.) It is essentially a modified VAT, with wages and pensions subtracted from the VAT base and taxed at the individual level. Under a standard VAT, a firm would not subtract its wage and pension contributions when calculating its tax base. Under this proposal, some wage income would not be included in the tax base because of exemptions. Under a standard VAT, all wage income would be included in the tax base.


 

Senator Richard C. Shelby's Proposal

S. 1099. The Tax Simplification Act of 2005 was introduced on May 23, 2005, and referred to the Committee on Finance. This act was modeled after the proposal formulated in 1981 by Hall and Rabushka. This flat tax would levy a consumption tax as a replacement for the individual and corporate income taxes, and the estate and gift taxes.

This proposal has two components: a wage tax and a cash-flow tax on businesses. It is essentially a modified VAT, with wages and pensions subtracted from the VAT base and taxed at the individual level. Under this proposal, some wage income would not be included in the tax base because of deductions, while under a VAT all wage income would be included in the tax base.

***

Senator Arlen Specter’s Proposal

S. 812. Flat Tax Act of 2005 was introduced on April 15, 2005, and referred to the Senate Finance Committee. This act is modeled after the Hall-Rabushka proposal, which was previously discussed. The Specter flat rate consumption tax would replace the federal individual and corporate income taxes and the federal estate and gift taxes.

This proposal has two components: a wage tax and a cash-flow tax on businesses. It is essentially a modified VAT, with wages, salaries, and pensions subtracted from the VAT base and taxed at the individual level.

The individual wage tax would be levied at a 20% rate on all wages, salaries, and pensions. In addition, government employees and employees of nonprofits would have to add to their wage base the imputed value of their fringe benefits. The individual wage tax would have “standard deductions” that would equal the sum of the “basic standard deduction” and the “additional standard deduction.”

***

Or the, we want the current system with SS/Medicare plus Flat (vat) Tax?

 

http://www.taxfoundation.org/files/rl33443.pdf

Congressional Research Service
Report for Congress

Flat Tax Proposals and Fundamental Tax Reform
May 31, 2006


 

Representative Michael C. Burgess’s Proposal

H.R. 1040. The Freedom Flat Tax Act was introduced March 2, 2005, and referred to the House Committee on Ways and Means. This proposal would allow taxpayers to select a flat tax as an alternative to the current income tax system. The flat tax was based on the concepts of Hall-Rabushka and is similar to the Armey flat tax proposal. The individual’s selection of the flat tax would be irrevocable. In the first two years, the flat tax rate would be 19%, and in subsequent years it would fall to 17%. An individual engaged in a business activity may elect irrevocably, as an alternative to our current income tax system, to be taxed on business taxable income that equals gross sales less the cost of business inputs for business activity, wages,and retirement contributions. For the first two years, a 19% rate would apply to business taxable income, but after the first two years, this rate would decline to 17%. This act would have become effective for tax year 2006.


23 posted on 06/14/2006 8:55:49 AM PDT by ancient_geezer (Don't reform it, Replace it.)
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To: ancient_geezer
must you allways spam the thread?
24 posted on 06/14/2006 9:02:17 AM PDT by xcamel (Press to Test, Release to Detonate)
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To: xcamel

The only true "fair" tax is a flat tax.

Interesting that those "flat" taxes of yours claim to be consumption taxes.

I think I would rather have a true consumption tax that is visible and clearly what it says it is, over a "true" pretense consumption tax, trying to ride the consumption tax bandwagon anyday.

 

http://www.taxfoundation.org/files/rl33443.pdf

Congressional Research Service
Report for Congress

Flat Tax Proposals and Fundamental Tax Reform
May 31, 2006


The Relationship Between Income and Consumption

Although our current tax structure is primarily an income tax, it actually contains elements of both an income- and a consumption-based tax. For example, the current tax system includes in its tax base wages, interest, dividends, and capital gains, all of which are consistent with an income tax. At the same time, however, the current tax system excludes some savings, such as pension and Individual Retirement Account contributions, which is consistent with a tax using a consumption base.

The easiest way to understand the differences between the income and consumption tax bases is to define and understand the economic concept of income. In its broadest sense, income is a measure of the command over resources that an individual acquires during a given time period. Conceptually, individuals can exercise two options with regard to their income: they can consume it or they can save it. This theoretical relationship between income, consumption, and saving allows a very useful accounting identity to be established; income, by definition, must equal consumption plus saving. It follows that a tax that has a measure of comprehensive income applies to both consumption and savings. A consumption tax, however, applies to income minus saving.

A consumption tax can be levied at the individual level in a form very similar to the current system. An individual would add up all income in the same way as he or she does now under the income tax but then would subtract out net savings (saving minus borrowing). The result of these calculations would be the consumption base on which tax is assessed. Equivalently, a consumption tax can also be collected at the retail level in the form of a sales tax or at each stage of the production process in the form of a value-added tax (VAT).

Regardless of the form or point where a consumption tax is collected, it is ultimately paid by the individual doing the consuming. It should be noted that consumption, in the economy as a whole, is smaller than income. Thus, to raise equal amounts of revenue in a given year, tax rates on a comprehensive consumption base would have to be higher than the tax rates on a comprehensive income base.

***

Types of Broad-Based Consumption Taxes

Four major types of broad-based consumption taxes are included in congressional tax proposals: the value-added tax (VAT), the retail sales tax, the consumed-income tax, and the flat tax based on a proposal formulated by Robert I. Hall and Alvin Rabushka of the Hoover Institution.2

Value-Added Tax

A value-added tax is a tax, levied at each stage of production, on firms’ value added. The value added of a firm is the difference between a firm’s sales and a firm’s purchases of inputs from other firms. The VAT is collected by each firm at every stage of production. There are three alternative methods of calculating VAT: the credit method, the subtraction method, and the addition method. Under the credit method, the firm calculates the VAT to be remitted to the government by a two-step process. First, the firm multiplies its sales by the tax rate to calculate VAT collected on sales. Second, the firm credits VAT paid on inputs against VAT collected on sales and remits this difference to the government. The firm calculates its VAT liability before setting its prices to fully shift the VAT to the buyer. Under the credit-invoice method, a type of credit method, the firm is required to show VAT separately on all sales invoices and to calculate the VAT credit on inputs by adding all VAT shown on purchase invoices.

Under the subtraction method, the firm calculates its value added by subtracting its cost of taxed inputs from its sales. Next, the firm determines its VAT liability by multiplying its value added by the VAT rate.3 Under the addition method, the firm calculates its value added by adding all payments for untaxed inputs (e.g., wages and profits). Next, the firm multiplies its value added by the VAT rate to calculate VAT to be remitted to the government.

Retail Sales Tax

In contrast to a VAT, a retail sales tax is a consumption tax levied only at a single stage of production, the retail stage. The retailer collects a specific percentage markup in the retail price of a good or service, which is then remitted to the tax authorities.

Consumed-Income Tax

Under this consumption tax, taxpayers would keep their assets in an account equivalent to a current IRA (individual retirement account). Net contributions to this account (contributions less withdrawals) would be deducted from income to determine the level of consumed-income. In contrast to a VAT or sales tax, policymakers would have the option of applying a progressive rate structure to the level of consumed-income. Each individual would be responsible for calculating his consumed-income and paying his tax obligation.

Flat Tax (Hall/Rabushka Concept)

A flat tax could be levied based on the proposal formulated by Robert E. Hall and Alvin Rabushka of the Hoover Institution. Their proposal would have two components: a wage tax and a cash-flow tax on businesses. (A wage tax is a tax only on salaries and wages; a cash-flow tax is generally a tax on gross receipts minus all outlays.) It is essentially a modified VAT, with wages and pensions subtracted from the VAT base and taxed at the individual level. Under a standard VAT, a firm would not subtract its wage and pension contributions when calculating its tax base. Under this proposal, some wage income would not be included in the tax base because of exemptions. Under a standard VAT, all wage income would be included in the tax base.

***

 

Representative John Linder’s Proposal

H.R. 25. (A companion bill, S. 25, has been introduced in the 109th Congress by Senator Saxby Chambliss.) The Fair Tax Act of 2005 was introduced on January 4, 2005, and referred to the Committee on Ways and Means. This proposal would repeal the individual income tax, the corporate income tax, all payroll taxes, the selfemployment tax, and the estate and gift taxes and levy a 23% national retail sales tax as a replacement. Every family would receive a rebate of the sales tax on spending up to the federal poverty level (plus an extra amount to prevent any marriage penalty). The Social Security Administration would provide a monthly sales tax rebate to registered qualified families. The 23% national retail sales would not be levied on exports. The sales tax would be separately stated and charged. Social Security and Medicare benefits would remain the same with payroll tax revenue replaced by some of the revenue from the retail sales tax. States could elect to collect the national retail sales tax on behalf of the federal government in exchange for a fee. Taxpayers rights provisions are incorporated into the act.

 

Senator Saxby Chambliss’s Proposal

S. 25. (A companion bill to H.R. 25, which is the preceding bill.) The Fair Tax Act of 2005 was introduced on January 24, 2005, and referred to the Senate Finance Committee. This act would “promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national sales tax to be administered primarily by the states.”


25 posted on 06/14/2006 9:18:15 AM PDT by ancient_geezer (Don't reform it, Replace it.)
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To: ancient_geezer

bump and bookmark


26 posted on 06/14/2006 9:18:20 AM PDT by FBD ("Rapid immigration is at odds with rapid assimilation.)
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To: xcamel

must you allways spam the thread?

You object to actual information instead of foundless personal opinion over information I see.

Nasty things, facts. They tend to get in the way of mere pretense and wishful thinking.

27 posted on 06/14/2006 9:22:16 AM PDT by ancient_geezer (Don't reform it, Replace it.)
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To: ancient_geezer
Flat Tax (Hall/Rabushka Concept) is the product of pure moonbatism, and has nothing to do with a real flat tax. It is the worst form of red herring meant to discredit supporters of a real Forbes style flat taxation system.
28 posted on 06/14/2006 9:23:15 AM PDT by xcamel (Press to Test, Release to Detonate)
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To: ancient_geezer

Take your pitiful "moral superiority" and stuff it.


29 posted on 06/14/2006 9:24:19 AM PDT by xcamel (Press to Test, Release to Detonate)
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To: xcamel

Flat Tax (Hall/Rabushka Concept) is the product of pure moonbatism, and has nothing to do with a real flat tax. It is the worst form of red herring meant to discredit supporters of a real Forbes style flat taxation system.

Show me the substantive difference between the Hall Rebushka model, and Forbes Flat Tax. Give me a link to a discription of the Forbes' flat tax that shows it to be different from Hall Rebushka in any substantive manner.

The Forbes, Armey etc. style Flat Tax is based on the Hall Rebushka model. Forbes just picked up Dick Armey's Flat Tax and filed off the serial numbers, increased the progressivity by increasing the standard exemption and kept it the same otherwise to run his campaign on.

They all are a 17%-19% wage tax with large standard exemptions, (i.e. progressive) coupled with a modified subtraction method VAT. Nothing more and nothing less.

Flat Tax as Seen by a Tax Preparer
by Vern Hoven
Special Report by Tax Analysts Tax Notes, Volume 68, No. 6, pp 747-754.

How Flat Tax Works:

House Majority Leader Richard Armey's 17 percent flat-tax/post-card tax return (to see the form, click on the hyperlink) is cosmetically good looking - proving that tax law in any package turns ugly after the first shave. After analyzing Congressman Armey's tax proposal (H.R. 1040), with its 20 percent transition rate, and the 19 percent The Flat Tax proposal it is based on, (by Hall and Rabushka; Hoover Institute Press, 145 pages; $14.95; 1-800-935-2882)


30 posted on 06/14/2006 9:36:41 AM PDT by ancient_geezer (Don't reform it, Replace it.)
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To: xcamel

Take your pitiful "moral superiority" and stuff it.

Lets see, can't handle facts, so attack the one bringing the message. Figures.

31 posted on 06/14/2006 9:38:03 AM PDT by ancient_geezer (Don't reform it, Replace it.)
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To: xcamel; groanup; socialismisinsidious; ancient_geezer; Man50D; maine-iac7; ovrtaxt; pigdog
PING:
xcamel:>"It [the FairTax] would however allow illegals to send 35-37% more money to mexico, but who's counting."<

-How is that, pray tell? Are you now acknowledging that a wage earners income would INCREASE under the FairTax system? I find your statement very interesting, because in the past, you have made statements to the contrary.

I encourage all to bookmark xcamels post, where he contradicts his previous statements about wages under the FairTax.

Regards
32 posted on 06/14/2006 10:04:39 AM PDT by FBD ("Rapid immigration is at odds with rapid assimilation.)
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To: xcamel

Flat Tax (Hall/Rabushka Concept) is the product of pure moonbatism, and has nothing to do with a real flat tax. It is the worst form of red herring meant to discredit supporters of a real Forbes style flat taxation system.

From Forbes Magazine in describing the Forbes Flat Tax, and Kotlikoff underbidding him with his 14% proposal. Everyone wants a place in the game, LOL:http://www.forbes.com/free_forbes/2005/1017/042.html

Under Steve Forbes' plan the flat rate would be 17%. All families would get generous personal exemptions, so that a family of four would not pay taxes until its income exceeded $46,000. To encourage growth, the Forbes plan exempts income that is saved and invested. Which means that the Forbes plan is really a consumption tax. It taxes people based on what they take out of the system, not on what they put in.

I would offer Americans an even lower flat tax rate--14% as opposed to 17%--and at the same time do more to help low-income people. Boston University economist Laurence Kotlikoff and I have put together a plan that works in the following way.

First we'd get rid of the across-the-board $9,000-per-person exemption in the Forbes plan. Why should billionaires like Bill Gates get an exemption? Forbes is giving too much money away to rich people. We'd save that exemption money and give it instead, in the form of a rebate, to the bottom third of earners, those who bring home roughly less than $25,000 for a family of four.

Second, Forbes ignores the 12.4% Social Security payroll tax (split between employer and employee). Currently, income over $90,000 a year is not subject to the tax. We don't think it's fair that a $50,000-a-year autoworker has to pay payroll taxes on all his income while a million-dollar-a-year auto executive does not. Under our proposal all wages would face the same income and payroll tax rates.

In short, everyone pays 17% on income above the personal exemption for the Flat Tax (yet another progressive income tax), 12.4% SS/Medicare Tax on wages same as today. All income from savings and investment would be deducted from taxed income .

No essential difference from the Armey proposal just increases the personal exemption.

No essential difference from Armey, no essential difference from the Hall Rebushka Flat Tax Model, which at only taxes wages at the individual level, not savings or investment income, and has a substantial personal exemption before the so-called flat tax rate kicks in.

 

The Flat Tax; Chapter 3, by Robert Hall and Alvin Rabushka

The Postcard Tax Return


An integrated flat tax

***

In our system, all income is classified as either business income or wages (including salaries and retirement benefits). The system is airtight. Taxes on both types of income are equal. The wage tax has features to make the overall system progressive. Both taxes have postcard forms. The low tax rate of 19 percent is enough to match the revenue of the federal tax system as it existed in 1993, the last full year of data available as we write.

Here is the logic of our system, stripped to basics: We want to tax consumption. The public does one of two things with its income—spends it or invests it. We can measure consumption as income minus investment. A really simple tax would just have each firm pay tax on the total amount of income generated by the firm less that firm’s investment in plant and equipment. The value-added tax works just that way. But a value-added tax is unfair because it is not progressive. That’s why we break the tax in two. The firm pays tax on all the income generated at the firm except the income paid to its workers. The workers pay tax on what they earn, and the tax they pay is progressive.

To measure the total amount of income generated at a business, the best approach is to take the total receipts of the firm over the year and subtract the payments the firm has made to its workers and suppliers. This approach guarantees a comprehensive tax base. The successful value-added taxes in Europe work this way. The base for the business tax is the following:

Total revenue from sales of goods and services

less

purchases of inputs from other firms

less

wages, salaries, and pensions paid to workers

less

purchases of plant and equipment

The other piece is the wage tax. Each family pays 19 percent of its wage, salary, and pension income over a family allowance (the allowance makes the system progressive). The base for the compensation tax is total wages, salaries, and retirement benefits less the total amount of family allowances.


33 posted on 06/14/2006 10:09:47 AM PDT by ancient_geezer (Don't reform it, Replace it.)
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To: xcamel
Perhaps, but while they're here they, too, will contribute to the tax base under the FairTax where as it presently is we support them with tax money just as we do the illegal aliens with taxes paid by the rest of us.

Or perhaps you think they would refuse any tax supported goodies because of their religious views????

Sauce for the goose is sauce for the gander.
34 posted on 06/14/2006 10:11:40 AM PDT by pigdog
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To: ancient_geezer
More spammage.

and already answered, several times, on several threads.

Denying the truth does not change the facts.

Care to explain to the audience your views on the heated discussions on how much of your fair tax percentage rate was going to go directly to supporting the UN and it's continuing drive toward global socialism and a one-world-government?

(Leo Linbeck and his band of merry men trying to take down the "evil sheriff" IRS support this idea - regardless of what has been said by Boortz/Linder)

35 posted on 06/14/2006 10:29:24 AM PDT by xcamel (Press to Test, Release to Detonate)
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To: xcamel

Denying the truth does not change the facts.

So why do you continue to deny facts?

 

Care to explain to the audience your views on the heated discussions on how much of your fair tax percentage rate was going to go directly to supporting the UN and it's continuing drive toward global socialism and a one-world-government?

You really are devolving into moonbatism now aren't you. You care to tell us how a national retail sales tax in the Unitied States to replace the current income/payroll tax has anything to do with the UN?

Talks about Red Herrings and Straw Man arguments you must set a new low standard.

36 posted on 06/14/2006 10:37:39 AM PDT by ancient_geezer (Don't reform it, Replace it.)
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To: xcamel

and already answered, several times, on several threads.

And what answers were those, on what theads" Please point them out to us so we can evaluate said "answers".

Note no links, no information, merely allusion to some "answer" which may either support what is show above or not.

Total mush, and non-answer to the solid assessments by respected and independant sources of information.

37 posted on 06/14/2006 10:49:00 AM PDT by ancient_geezer (Don't reform it, Replace it.)
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To: Man50D

Another great article from H. E. and right on the money - thanks "mucho"!!!


38 posted on 06/14/2006 11:07:42 AM PDT by pigdog
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To: xcamel
Impugning one's character assumes one has one. And any "flat tax" has at least ALL of the problems as shown in this post.
39 posted on 06/14/2006 11:16:00 AM PDT by pigdog
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To: ancient_geezer
Your sudden memory failure is not my problem but..

http://www.ncpa.org/pi/taxes/tax7.html
http://www.cse.org/flattax/index.php
http://www.forbes.com/free_forbes/2005/1017/042.html
http://www.heritage.org/Press/Commentary/ed032403.cfm
http://usgovinfo.about.com/library/weekly/aa031398.htm
http://www.freedomworks.org/informed/key_template.php?issue_it=17
http://www.washingtonpost.com/ac2/wp-dyn/A50031-2003Nov1?language=printer
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2005/09/04/nflat104.xml
http://www.heritage.org/Research/Taxes/bg1866.cfm
http://www.adamsmith.org/pdf/flattaxuk.pdf
http://www.csmonitor.com/2005/0414/p03s01-usgn.html
http://www.forbes.com/business/global/2005/0523/024.html

But I know you won't look at any of them - you're already bought and paid for.

(And at least I didn't spam the thread with pre-prep html code supplied buy the fairtax propaganda machine)

40 posted on 06/14/2006 11:17:00 AM PDT by xcamel (Press to Test, Release to Detonate)
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