Posted on 09/17/2006 8:03:05 AM PDT by Principled
A Battlefield for Tax Reform
There are a few significant battlefields in the war for tax reform. One of them is Free Republic. What makes the Free Republic battlefield significant is that the debate is at the cutting edge. The debate on Free Republic is the most current and most knowledgeable. It is a year ahead of other significant battlefields (radio talk shows, political town-hall meetings, conversations among neighbors and coworkers.)
The trend on Free Republic with respect to tax reform is going to show up in the real world. Free Republic is a tiny segment of the world, albeit a more educated, more politically motivated, more affluent segment than most. Perhaps those are a few of the reasons that Free Republic predicts what will happen in the real world – the world of radio, newspapers, network television, and most importantly - elections.
The choices are
Keep the status quo and continue with our graduated income tax
Eliminate the income tax and implement a flat income tax (although this option has negligible support)
Eliminate the income tax and implement a national sales tax
There are no other options. We are going to have taxes. The only choice is deciding the best way to have them.
Whichever choice you prefer, one thing is clear. The opponents of tax reform on Free Republic will stop at nothing to protect the status quo. Here’s what’s happening on Free Republic (remember it’s a predictor of what will happen in the real world.)
Opponents of reform randomly select perceived problems, however insignificant, and say that’s the reason this reform cannot work. For example, attackers of HR 25 (the “Fair Tax”) have alternately said the rate is too high and then the rate is too low. Whatever seems to get traction is what they stick with. Is it no wonder the perception is that these anti-reformers are not being honest with the reason(s) they oppose the reform. This is why so many question the motives of the anti-reformers. What are they hiding?
The anti-reformers try to make the reform threads so unpleasant that people choose not to participate in them (what does this predict about the real world?)
An anti-reformer may be taking advantage of the positions he he was entrusted with by the site (modertor). By taking sides in threads, berating and belittling pro-nrst posters, by deleting threads, by locking threads, and by moving threads from news/ACTIVISM to “Bloggers and Personal” and to “Smokey Backroom”, the mod(s) in question are taking away from the greatest site on the internet. Sometimes, threads are moved to bloggers and then moved to SBR or vica versa.
Pro-nrst posters are suspended for things that don’t make sense. Anti nrst posters are not suspended for things that should require it - comes to mind the picture of a dog copulating with a pig with the comment “screw you pigdog”… “I found a picture of your parents”. Noteworthy is that the poster of said graphic and phrase were not suspended but rather the recipient of it was suspended for complaining about it.
What does this predict about the real world?
Suffice to say that the debate about tax reform is won by the reformers. The proof is that when educated about the three reform options, the general public chooses the nrst over 70% of the time.
The only question is whether the dishonesty of the anti-reformers will slow the progress of reform in the real world. This is NOT to say that all anti reformers are dishonest - but it is the dishonest ones who are tainting the others.
The good thing about the debate is that the nrst is the most thoroughly investigated alternative - each and every point is debated in complete detail. Problems have been identified and some changes have been made. That's a good thing. And as debate continues, the level of knowledge of any lurkers continues. As I said, I predict over 70% will choose the nrst.
"We need to ween our country off of social security."
I'd put it a bit differently rather than "ween" but would certainly like to see the whole S/S eliminated. Realistically that's not going to happen until taxpayers realize how much it's really costing each of the them - and, don't forget, there are those right now who don't pay into S/S but are eligible for its payout. That's part of the problem.
I don't see any likelihood of taxpayers (under the present system) suddenly waking up and believing "... hey I'm paying WAY too much to support mom and dad ...". Quite the contrary, many taxpayers believe that others pay the taxes, not them ... and in some cases hey are right. With that sort of environment, there is probably no chance that S/S will be "weaned" from us. After all if I'm not paying for it why should I care?
With the FairTax, everyone will be paying the tax and you can certainly believe they'll take note.
That's how you define "wean"???
No because the social security portion is hidden in the total. If you want reform you need to show how much is collected because of social security.
To be bankrupt does not mean you go out of existance. It just means you have to find ways to reduce you costs so you can afford to continue. It forces their hand to reform.
There is no conceivable way to make a welfare safety net scheme that is 'fair' to those who pay for it and don't need the 'net'.. -- We just have to learn to bite that bullet.
The current social security setup is both visible and separate.
Round we go..
It's truly a counterintuitive experience to see those who supposedly fight socialism -- fight against a fair way of paying for taxes and for the welfare system they themselves built.
We can see the oncoming disaster and we can make changes such as increasing the retirement age, reducing the COLA's, etc.
We've 'been there and done that'. Tinkering with a failed system doesn't work.
With the fairtax, you just hide the problem in the lump sum and the tax automatically increases to 'solve' the welfare problem.
You are speculating.
That is not a solution, but it makes the problem worse and social security to grow without bounds.
Speculation with no basis in the facts as proposed.
Incorporating social security into the sales tax is perhaps one of the stupidest things about the fairtax along with the whole prebate nonsense.
There you go again, with the "stupid -&- nonsense" bit. -- For shame. JR was right.
Lets end this for now.. You're getting emotional.
"... `(2) 27.43 percent of total revenue to the old-age and survivors insurance and disability insurance trust funds ..."
... and that would make it 0.2743 x 0.23 = 6.3089% of your taxable purchases. You think the media (or some other body) wouldn't report that endlessly - or that most people couldn't easily approximate that???
Spending has always been the biggest problem, not the method of collection.
Does that include retirees who have already paid 100% of their taxes and now get to pay 100% of their taxes again?
It is right there on every pay stub. At the end of the year, the total paid for the year is on the employee's W2. If the taxpayer has "little idea how much he pays", he is either impaired, or just doesn't care.
I wonder, is the employee who doesn't know how much is deducted from his pay check for SS going to have any interest in or ability to understand how much he pays in sales taxes? Will he save his receipts and add the tax every two weeks to see how much he is paying?
There seems to be no great rush in Congress to do much about S/S and it's pretty obvious that there will soon be one wage earner supporting many receivers - not economically healthy at all.
I don't think even the most pessimistic projections anticipate that.
The FairTax OTOH gives us additional time by funding the plan without making it a practical impossibility and it makes the tax costs very visible to each taxpayer with every taxable purchase. That will certainly ratchet up the political pressure to alter S/S and reduce tax rates unless you believe that taxpayers actually like higher taxes...
What happened to all that talk about lower effective tax rates and more disposable income you've been promising.
"If the taxpayer has "little idea how much he pays", he is either impaired, or just doesn't care."
I don't think I'd insult the taxpayer like that, but you're welcome to your opinion.
I believe the effect of a pay period notification (for those who actually get such ... and not every taxpayer does, you'll perhaps note) or a one time each year (after the withholdings have been withheld - and which you can do nothing about IAE) is quite different and far less immediate than paying the FairTax upon purchase. Buying, say, an item whose untaxed price is $77 and having to shell out $100 at the cash register will definitely be noticed more quickly. The fact that it's actual cost to the taxpayer is less due to his much lower effective FairTax tax rate will be appreciated by the taxpayer but he'll certainly note the tax-inclusive amount and be reminded how much (in addition to the item cost itself) "his" government costs.
And he'll do this time after time after time each and every time he purchases taxable things - and he need not save the receipts to notice.
"I don't think even the most pessimistic projections anticipate that."
Perhaps I should have included a smiley after that comment since it was intentionally ironic, but some of the projections are not greatly far from that. The point is S/S is going broke and that we'll soon be out of sufficient wage income to fund it. Originally with S/S, there were many, many workers supporting 1 recipient, now there are something like 3 or 4 and the number is rapidly dwindling.
Since S/S is not the topic of this thread I have no intention of pursuing the subject since it per se is not the point. The point is that the funding source is drying up - and quickly. Certainly Congress realizes this and this merely gives another reason to have the FairTax to give us some time to - hopefully - eliminate the whole thing and let people invest for themselves to obtain their own old folks income. You and I may not live long enough to feel the effects, but perhaps our kids/grandkids will, But then again, if Congress gets off its collective duff and brings the FairTax law into being perhaps we'll benefit too. I've noted that Congress CAN be slow to do things sometimes (there's an implied smiley there).
"What happened to all that talk about lower effective tax rates and more disposable income you've been promising."
Happened??? Nothing at all. It's still right there in bill form as HR25/S25 in front of the elected representatives of the American voter waiting for sufficient notice by the assorted politicians in DC to act upon it and give us the tax law we want and deserve rather that keep the abomination we now have which violates - AT THE VERY LEAST - the spirit (if not the actual practice) of FREEDOM. It'll happen!!!
Yes, the FairTax paradox - freedom is a sense of oppression.
No - that's not what was said. Not at all. You're getting the OOC cut and paste thing like Looey.
I think you're omitting an obvious other choice; that he doesn't care because he can do nothing about it. It wouldn't matter to him if his stub showed he paid a bazillion in tax last week- he doesn't ever see it. Withholding works that way.
If, however, he had to pull green money cash from his wallet to pay his fed taxes, he'd notice.
I wonder, is the employee who doesn't know how much is deducted from his pay check for SS going to have any interest in or ability to understand how much he pays in sales taxes?
Maybe so, maybe not. It isn't the amount that interests people so much. As noted, paystubs have no effect. The difference maker is that he will have to pull extra money from his wallet to pay fed taxes.
EVERY projection puts SS bankrupt as a result of boomers retiring. Pessimistic projections just make it happen a few year sooner.
Under the nrst, the idea of SS privatization will be infinitely more popular as a pol running for election says "Listen, I can lower your rate from 23 to 15% by privatizing SS". That should be obvious.
But the FairTax promises to fully fund SS into infinity, doesn't it?
Under the nrst, the idea of SS privatization will be infinitely more popular as a pol running for election says "Listen, I can lower your rate from 23 to 15% by privatizing SS". That should be obvious.
And his opponent can quote the president's tax panel
The Prebate-type program would cost approximately $600 billion in 2006 alone. This amount is equivalent to 23 percent of projected total federal government spending and 42 percent of projected total federal entitlement program spending, exceeding the size of Social Security, Medicare, and Medicaid.
Some might think its hypocritical to support the privatization of one entitlement program while supporting the creation of another, and much larger entitlement program.
But the basic problem with Social Security that FairTaxers persist in overlooking is that the program is self funding. Those that pay into the system through payroll taxes are those (and their families) able to collect from the system. If everyone pays into the system through the sales tax, it will be perceived as unfair that everyone can't also collect (making the "FairTax" a misnomer). It is possible that the result will be to speed up the process of privatization, but it is also probable that SS will be expanded to include every legal resident of the US. Why not? We all buy stuff and pay the tax. The prebate has made us all dependant on, and psychologically entitled to a monthly check from government. Its not such a big step from a monthly prebate to the expectation of SS coverage.
FairTaxers really need to get their goals in focus.
Yes, it does. Curiously, you fail to recognize the windfalls they receive and only see the reductions they see. Why's that?
Can you fabricate a situation in which the overall purchasing power of an individual (legally particpating in the income/payroll tax system) reduces? I'm even willing to use the maximum possible nrst rate. Go for it.
If your position is that purchasing power is secondary to the $ amount of tax paid, you're misguided.
Which would you pick?
$100,000 and $25,000 in taxes
or
$150,000 and $50,000 in taxes?
Seems pretty obvious that YOU would pick the first option since it pays less tax!
The first option keeps $75,000 (according to what you've said, you'd pick this option).
The second option keeps $100,000.
Even though the second option has increased purchasing power, you choose the first option. Why's that?
If you want to examine one component of the nrst, why pick this one? Why not pick the component that gives seniors, retirees, and savers a major windfall on the amount of pre-tax savings thy have? What's the breakdown of money in pre-tax vs post tax savings instruments? Do you know?
You tell me. I didn't say anything about this.
I did, however, say that SS will be bankrupt under the income/payroll tax without any question. It cannot survive without changes. THat is obvious.
Secondly, if you object to taxpayers having negative tax rates, then you will object to the income tax. The nrst will have FAR fewer of those. Indeed it isn't clear that the number will be more than negligible.
Irrespective of reported income, people spend up to the poverty line.
Whether by spending savings, borrowed money, charity, illegally gotten gains or whatever, people will spend up to or beyond the poverty level.
Nowhere in there lucy will you find a negative tax rate. Why's that?
It's only nits that they pick.
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