When Taxes Start Sneaking Across the Border...(Fair Tax Endorsement)

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.

And how does any of those refute the Congressional Research Papers, or even show that Forbes Flat Tax is not just another variant of the Hall Rebushuka Flat Tax.

I have seen all of the information you point to, not one establishes the Forbes Flat Tax from being anything other than a variation of the rest, all of which have their genesis in the Hall/Rebushka flat tax.

Sorry, for all your effort all you have show is there is a bunch of links that claim the Flat Tax to be a consumption tax, same as CRS, claim personal exemptions for individual wages (making it progressive wage tax) same as the CRS paper, and provides for taxing business on the Hall Rebushka model, i.e. a subtraction method VAT just as the CRS paper points out.

The point being, you show nothing that has not been amply claimed in this thread with the Congressional Research Service's summary of the Flat Tax proposals before Congress today.

Sorry, you apparently went to alot of effort to do nothing more than claim what is already established here. The Flat Tax is a faux "consumption tax", that is merely ontop the SS/Medicare taxes in place and tax businesses with a the subtraction method VAT model to claim to be a consumption tax.

January 5, 2006

A Flat-Out Winner for Tax Reform

The flat tax is supports higher growth in Eastern Europe.

By: Daniel J. Mitchell, Heritage Foundation

This op-ed originally appeared in The Washington Post on Thursday, December 22, 2005

The report issued last month by President Bush's Advisory Panel on Federal Tax Reform landed in no-man's land. The right was disappointed that its proposals were so timid, and the left was critical because the report highlighted the damaging impact of high tax rates on work, saving and investment.

Perhaps the panel could have won more hearts and minds if it had examined the real-world experience with tax reform. The flat-tax revolution in Eastern Europe is particularly compelling. Nine nations from the old Soviet bloc have adopted the flat tax -- which taxes income at one rate -- and others are poised to. In an ironic twist, these countries are rejecting the class-warfare politics of yesteryear and building tax systems specifically designed to attract investment, fuel economic growth and treat all citizens fairly.

Russia, for instance, enjoys the benefits of the 13 percent flat tax it adopted in 2001. The tax quickly yielded positive results. Revenue poured into government coffers as tax evasion and avoidance became much less profitable. Inflation-adjusted personal income tax revenue has more than doubled since the flat tax was implemented.

But Russia was simply learning from its neighbors. Estonia was the first, adopting a 26 percent flat rate in 1994. Latvia and Lithuania followed in the mid-1990s, with 25 percent and 33 percent rates, respectively. Serbia was next; in 2003 it went with a 14 percent rate. Last year, it was Slovakia (19 percent) and Ukraine (13 percent). This year it's been Romania (16 percent) and Georgia, which boasts the lowest rate -- 12 percent.

Estonia has been cutting its rate: It's at 24 percent and will drop to 20 percent before the end of the decade. Lithuania also has decided to make its flat tax more competitive; the rate will go from 33 to 24 percent.

The flat tax is not a silver bullet. But combined with other market reforms, it provides a significant economic boost. All three Baltic nations are enjoying strong growth, averaging over 5 percent per year. No wonder the "Baltic Tigers" became role models for the region. This growth is generating plenty of tax revenue, in part because tax evasion has been dramatically reduced. And the rich are paying the lion's share: In Estonia, for instance, the top 10 percent are paying 41 percent of the tax.

Slovakia's system is not yet two years old, but it's already successful. According to the director of Slovakia's Hayek Institute, income-tax revenue is 0.5 percent of gross domestic product larger than predicted by "static" estimates (those that fail to account for inevitable changes in behavior when tax laws are changed). New investment is flooding Slovakia. So many car companies are building factories that the country is being called the "Detroit of Europe."

Others have noticed the economic success these nations are enjoying. The newly elected coalition in Poland may implement a flat tax, and the opposition party in the Czech Republic has promised a 15 percent flat-tax regime if it wins the next election. Lawmakers in Croatia, Bulgaria and Hungary are discussing tax reform.

Western European politicians have cast a wary eye on this tax revolution. Bureaucrats in the European Union and the Paris-based Organization for Economic Cooperation and Development object to "harmful" tax competition, and politicians from France and Sweden complain about "fiscal dumping." But such criticism is hard to take seriously coming from leaders who preside over economies saddled with high unemployment and anemic growth.

Indeed, some Western European lawmakers, including those in Spain, Greece, Denmark, Holland, Germany and Britain, have begun discussing the possibility of implementing a flat tax.

That these discussions are even taking place is a testimony to the liberalizing force of tax competition. And if the rumors are true about China's implementing a flat tax sometime next year, the tax-reform steamroller may become a juggernaut.

To be sure, Eastern European nations don't have perfect tax systems. Many are still plagued by oppressively high payroll taxes. But tax reform in Eastern Europe is a clear success, and the United States can learn from what other nations have accomplished.

Our economy, under a flat tax, probably wouldn't grow quite as fast as Estonia's, and it's unlikely that we'd get the same revenue windfall as Russia. But the evidence from Eastern Europe strongly suggests that a flat tax would strengthen our economy, improve tax compliance and reduce political corruption. We also could expect it to boost capital formation; it has been a magnet for new investment in Eastern Europe.

In recent years President Bush has praised Russia's flat tax. He even said during a visit to Slovakia that it was his dream to have a flat tax in the United States. Let's hope that dream becomes a reality. America and the West may have won the Cold War, but if we continue to be burdened by the internal revenue code, the former communist nations may get the last laugh.

The writer is a senior fellow in political economy at the Heritage Foundation.

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Every single link brings into doubt the "anointed pronouncement" that FT is the do-all end-all of taxation.

ROTFLMAO

Of course the Flat Tax (FT) is not the do-all end-all of taxation. If you like VATs, progressive wage taxes, and faux consumption taxe, high adminitrative burden tax system your going to love the Flat Tax (FT) and general income taxes.

Of course the Fair Tax (NRST) is not the do-all end-all of taxation. If you want to see what your paying for government, want an above board actual consumption tax instead of a back-door-crypto consumption tax with the states the folks adminitrating the tax system instead of the Feds and their everyloving IRS. You will love the the NRST as implemented in the FairTax legislation.

All depends whether you want your government and its costs handed to you as a pig-in-the-poke Flat VAT Income Tax or an above board, everyone sees it, National Retail Sales Tax/

World experience tells quite a different story

World experience tells us we started with essentially the Flat Tax back in 1913, guess what it grew up to be. The current Income/Payroll tax system with 60,000 pages of gobbledegook that knowone can decipher and everyone is subject to regardless of the fact that no to tax preparers can come up with the same answer for anything beyond a bare-bones set of circumstances.

Horsehockey, plain and simple

Horsehocky indeed, where any income tax or VAT system come in to play. Both have one end and one end only the perpetuation of power in a small group of elites, nothing more and nothing less.

The EU & Russia is repleat with Flat Tax/VAT examplesthey effect economies and are used for the social/political machinations of which even Machiavelli would stand in awe of.

In 1913 Blacks couldn't marry whites - we fixed that
in 1913 women couldn't vote - we fixed that.

in neither case did we throw the baby out with the bathwater.

Indeed, in 1912 we had consumtion taxes predominately in the form of tariffs and excises many of which were collected at retail sale.

In 1913 we started a flat tax, and certainly threw out the baby and bathwater both by dumping the taxation of consumption in favor of taxing income to specifically "tax the rich" in the parlance of that day.

The only way flat tax at that time was sold was its personal exemption, still with us in the same forms today. To assure soaking the rich.

We all know the history of the 1913 flat tax and the monster it rapidly became in this country and the every growing power of government and socialization of our institutions.

Those that do not pay attention to history, are doomed to repeat it.

Those who do not advance in history are doomed to end up like muslims.

Exactly. We had a Flat Income Tax in 1913, which replaced tariffs and excise consumption taxes.

We now have a moribund income/payroll tax system that would be the envy of Machiavelli for its capacity for the control citizens, social engineering and political manipulation.

It is time to end end the "progressive" farce and return to a taxsystem that is designed to empower the citizen's options over government's capacity for suppression. A tax system designed for the convenience of the American people:

Patrick Henry, Virginia Ratifying Convention June 12, 1788:

"the oppression arising from taxation, is not from the amount but, from the mode -- a thorough acquaintance with the condition of the people, is necessary to a just distribution of taxes. The whole wisdom of the science of Government, with respect to taxation, consists in selecting the mode of collection which will best accommodate to the convenience of the people."

not the empowerment of yet more government.

Federalist #21:

"Imposts, excises, and, in general, all duties upon articles of consumption, may be compared to a fluid, which will, in time, find its level with the means of paying them. The amount to be contributed by each citizen will in a degree be at his own option, and can be regulated by an attention to his resources. The rich may be extravagant, the poor can be frugal; and private oppression may always be avoided by a judicious selection of objects proper for such impositions. "

"It is a signal advantage of taxes on articles of consumption that they contain in their own nature a security against excess.
They prescribe their own limit, which cannot be exceeded without defeating the end proposed - that is, an extension of the revenue."
When applied to this object, the saying is as just as it is witty that, "in political arithmetic, two and two do not always make four."
If duties are too high, they lessen the consumption; the collection is eluded; and the product to the treasury is not so great as when they are confined within proper and moderate bounds.
This forms a complete barrier against any material oppression of the citizens by taxes of this class, and is itself a natural limitation of the power of imposing them.

You can take your Flat Income Tax, and related VATs to Europe where they surely appreciate them.

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