The Underground Economy

Barron's (cover story -The Wall Street Journal Classr0oom Edition) ^ | April 2005 | Jim McTague

[sheana]

That's you and me in case it hasn't dawned on you

Oh puhleeeeasse! Like I don't know that. But instead of letting Congress and the President get away with it I think we should hold their feet to the fire and enforce the laws.
Whatever happened to a "representative government"? Yeah I know, a novel idea!

[Principled]

According to critics, doctors, dentists, lawyers, gardeners, and a host of new tax collectors will be created.

In this case, the critics are wrong. These folks all already ARE tax collectors.

The tax they collect is just hidden in higher prices, lower wages, or reduced ROI. THe revenue from the higher price or savings from lower wages/ROI is then sent to Uncle Sam as employer payroll tax and any income tax (or is spent on compliance.) Pretty nifty way to hide taxes eh? Those marxists are good.

The only thing that will be new under the nrst is that the doctors, dentists, lawyers, gardners and a host of others will be compensated for collecting and remitting the tax.

But most importantly to me, the amount of federal tax will not be hidden anymore but will be printed on each receipt.

[Principled]

The government increases the size of the bureaucracy so they can send you a check for the tax they haven't even collected yet just to make it fair.

It's not at all important to you that it be fair?!

Beyond that, the bureaucracy that would be required to exempt certain items and/or track everyone's income would far exceed adding computers and personnel to the SSA.

Not to mention opening the doors to exemptions and changing exemptions. "I'll untax your good if you make it sugar free", or "Here's 100k fo ryour campaign Senator - and by the way, how's that exemption for ice cream coming along". Sounds about like what we have now - like when hastert got a tax break for tool manufacturers (IIRC) cuz he has one in his district.

Pretending that the additional labor needed to increase the number of checks/EFTs going out is anywhere near the entire industry that would surround exemptions is preposterous.

Why don't you tell the poster why you don't want the nrst?

[ancient_geezer]

adding computers and personnel to the SSA.

Not to mention the significant plus that doings so would be in actually validating Social Security numbers against who is using them and their residency status in dealing with the illegal alien and stolen ID problems were are having today.

[Kozak]

He wants to push ahead with tax reform this year, including the creation of a national sales tax.

Here's a prediction: Any national sales tax will be in ADDITION to the current income tax and not a replacement. I'd be willing to bet big money on that.

[ancient_geezer]

Here's a prediction: Any national sales tax will be in ADDITION to the current income tax and not a replacement.

Not if we manage to assure the FairTax act is enacted which would implements just the opposite.

 

 

H.R.25

Fair Tax Act of 2005 (Introduced in House)
http://thomas.loc.gov/cgi-bin/query/z?c109:H.R.25:

---

 

TITLE I--REPEAL OF THE INCOME TAX, PAYROLL TAXES, AND ESTATE AND GIFT TAXES

• Sec. 101. Income taxes repealed.

• Sec. 102. Payroll taxes repealed.

• Sec. 103. Estate and gift taxes repealed.

• Sec. 104. Conforming amendments; effective date.

TITLE II--SALES TAX ENACTED

• Sec. 201. Sales tax.

• Sec. 202. Conforming and technical amendments.

[Principled]

TITLE I--REPEAL OF THE INCOME TAX, PAYROLL TAXES, AND ESTATE AND GIFT TAXES

SEC. 101. INCOME TAXES REPEALED.

SEC. 102. PAYROLL TAXES REPEALED.

SEC. 103. ESTATE AND GIFT TAXES REPEALED.

If we were gonna have both, we'd already have it IMO. HR 25 would prevent that from happening though.

Not only is the entire income tax code gone after HR 25 becomes law, all existing income tax records (save those delinquent at changeover) will be destroyed, and withholding will be gone.

Thomas Library of Congress to read over the bill. Enter "hr 25".

[Man50D]

I asked you, not the website.

I did provide you with information in post #125 along with links to that information about the Fair Tax that you obviuosly have no taken the time to read. My apologies for reasonably assuming you would simply prefer statements from a stranger rather information from the source as most people are inclined.

Your question:

Which brings me to the question, what happens to medical expenses if another 23-30% is added to a medical bill? Will insurance pick that up or will it be out of pocket?

The answer is no one will pay 23-30% on medical expenses since the monthly rebate Fair Tax FAQ #3 will be equivalent to the Fair Tax paid on essential goods and services, also known as the poverty level expenditures. The maximum effective tax rate (after the rebate)will be slightly less than 23%. That will be only for those with the highest income. The effective tax rate will decrease with progressively lower incomes Fair Tax FAQ #48. The poorest may receive more with the rebate than they paid in taxes.

It appears you believe the Fair Tax will range from 23-30%. This is a misconception. The 23% is the inclusive tax when comparing the Fair tax to the income tax. The 30% rate is the exclusive tax quote compared to the sales tax. Fair Tax FAQ #47. The dollar amount paid in taxes is the same regardless of which quote you consider.

[ancient_geezer]

Any national sales tax will be in ADDITION to the current income tax and not a replacement. I'd be willing to bet big money on that.

Now if they implement a flat tax, putting a VAT in place under the guise of a business activities 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 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.

 

 

You are probably right.

Too many of the folks pushing the Flat Tax are also VAT proponents.

 

http://www.ncpa.org/abo/quarterly/20043rd/clip/20040729lat.htm

 

ECONOMY; A New Money Machine for the U.S.; The old ways can't keep up. We need a value-added tax to meet revenue demands. August 29, 2004 Sunday

by Bruce Bartlett

The United States needs to adopt a value-added tax. Passage of the prescription drug legislation last year demonstrated that there is no longer any hope of holding the line on government growth -- especially when Republicans voted for the multitrillion-dollar entitlement program.

That being the case, the only relevant question is how to finance the growth of government. A value-added tax, or VAT, isn't the complete answer. Other taxes are also going to rise. But a value-added tax is the least bad way of raising the needed revenue because there is little likelihood that spending will be cut enough to avoid that necessity. If some of a VAT is used to finance improvements to the tax code, more total revenue could conceivably be raised at less economic cost.

[ancient_geezer]

Which brings me to the question, what happens to medical expenses if another 23-30% is added to a medical bill? Will insurance pick that up or will it be out of pocket?

Insurance premiums cover that tax under the FairTax system, the healthcare provider receives credit for the tax having been paid through the insurance system, relieving them from the liablity for collecting the tax from you.

[allrightythen]

"It seems unclear as to what your are talking about".

Before 1913 we had no income tax and no central bank. Paper money was convertible to gold. In fact the dollar used to be a wieght of gold.

Now the 'dollar' is just script. Its made valuable by nullifying half the output of every taxpayer every year. The FED doesnt need your tax 'dollars'. It creates/prints as many as it dares. What it needs if for everyone to work the half year to make its script valuable.

Thats the economy we live in. Every other country in the world is stuck with the same deal. We could say the world fiat economies work,....but at such a cost.

Your fair tax is just another means to keep the money printers printing.

[ancient_geezer]

The FairTax is a consumption tax levied on products and services for sale rather than on incomes.
Taxation is the mandated means by which the nation's debts, and provision for common defense is to be paid for under Article II Section 8 clause 1. The dominant taxes provided for and expected to be used by the national government were of the the indirect, consumption tax variety.


The tax system in place prior to the income tax in this country was a system of tariffs and excises many of which were collected at retail sale.


As such the FairTax proposal is a return to a tax system similar to what existed prior to the income tax, and lays the ground work necessary for repeal of the 16th amendment and express prohibition of the taxation of incomes.

You claim that it is something other than that simply holds no water.

[allrightythen]

"As such the FairTax proposal is a return to a tax system similar to what existed prior to the income tax,..."

I agree that a consumption tax is reminiscent of the Constitutional scheme.

However the Constitution doesnt apply to the present economic system. Our relationship to the post-1913 economy and its tax is commercial. Its a contract. Nothing illegal or unconstutional about that.

Likewise there should be nothing illegal or unconstitutional about engaging in commerce outside the system. So the 'denizens of the underground economy' are OK as long as their dealings do not use system banks, system script, or any other system accutriments.

Do you agree?

[ancient_geezer]

Likewise there should be nothing illegal or unconstitutional about engaging in commerce outside the system. So the 'denizens of the underground economy' are OK as long as their dealings do not use system banks, system script, or any other system accutriments.

Fine, they can continue doing whatever they wish.

Since the FairTax NRST is only collected on retail purchases whether by individuals generally or by uncertified businesses, I see no problem with either doing whatever they wish, even using any financial system that exists.

You seem to have this fixation that the choice of tax system is supposed to somehow fix the money system. Sorry it is a revenue bill only designed to change the mode of taxation, not all that ails the nation.

One step at a time got us where we are, it'll take one step at time to undue all that needs to be undone.

[Man50D]

However the Constitution doesnt apply to the present economic system.

If you exclude the economic effects Article 1 Section 8 and the 16th Amendment have had throughout the existence of the U.S. economy then you are absolutely correct.

Our relationship to the post-1913 economy and its tax is commercial. Its a contract. Nothing illegal or unconstutional about that.

There is nothing commercial about taxes. Commerce is predicated on maximizing profit created solely by offering goods or services free of intimidation or punishment of individuals who refuse to pay. A contract can only be created when two parties agree to the terms of their own volition. Governments impose taxes for the purpose of redistributing the wealth to fund expenditures without profit and loss considered as a factor and with understanding failure to pay will result in some form of punishment. There is no contract if someone engages in an activity with another party under duress.

Likewise there should be nothing illegal or unconstitutional about engaging in commerce outside the system. So the 'denizens of the underground economy' are OK as long as their dealings do not use system banks, system script, or any other system accutriments.

Any "dealing" committed for the purpose of tax avoidance has always been and still is illegal regardless of how it is financed.

[Man50D]

Here's a prediction: Any national sales tax will be in ADDITION to the current income tax and not a replacement. I'd be willing to bet big money on that.

Congress could have enacted an additional tax long ago but for the fact they knew their heads would be handed to them on a silver platter by not being reelected.

[lewislynn]

It's not at all important to you that it be fair?!

No. I don't call some people paying more for the sole purpose of some paying less "fair" which is what the (GAG!) prebate is for.

I also don't expect you to understand, since you aren't capable of distinguishing the difference between the (GAG!) prebate and an income tax refund.

[allrightythen]

"There is nothing commercial about taxes".

If that's so why can the IRS sue or be sued in its own name?

" A contract can only be created when two parties agree to the terms of their own volition."

But we do agree in so many ways. Signing all that fine print when opening a bank account is an agreement to be in the system. Accepting a job with an American employer is an agreement. Accepting a paycheck from that employer is an agreement. Filing a 1040 is an acknowledgement of performance under the agreement for the past year.

Once all these agreements are in place, do we have a choice to not honor them? I dont think so.

So I agree that the denizens are in breach of agreement and behaving outside the law if they recieve any benefit from, thus agreeing to the economic system, then fail or avoid 'payment' according to the agreement. In practical terms its impossible to live outside the present economic system.

Why is concept of a commercial economy so hard to accept? The country is deeply in debt. When a person or business is in debt, who is in charge? Answer: the lender. When a king goes into debt, who then is the king?

[allrightythen]

"One step at a time got us where we are, it'll take one step at time to undue all that needs to be undone."

Hear hear to that.

[Principled]

I don't call some people paying more for the sole purpose of some paying less "fair"

Neither do I. That's one of the reasons I oppose the income tax... so much redistribution.

The nrst, OTOH, has all paying the same rate on discretionary spending - nobody more, nobody less.

I also don't expect you to understand, ...

Does anyone understand the motivations of someone who isn't honest about his reason for opposing tax reform?