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.

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.

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.

"... That seems to be a matter of opinion ..."
Not really. The paper from the two U. of TN guys has been linked to numerous times on these threads so your neglect in doing so is certainly spurious. And I've read the paper long ago. And the paper has been pretty well criticized on these threads also.

In fact the authors (who draw heavily from the aforementioned William Gale of Brookings) misstate some parts of the FairTax and, for example, arbitrarily assume a "20% erosion" (shades of Mr. Gale and the President's Tax Panel) with absolutely no definitive (or other) information showing why this is reasonable. That's merely one of the "flaws" in the paper.

The paper primarily (after stating in general terms what the FairTax - which it misnames as "Fair Tax" - is then proceeds to make other assumptions (such as the "erosion" mentioned above) is a fretting that the NRST (it seems to drop the correct name since it prefers the bill-altering tactic of Mr. Gale et al) will badly affect the income tax legislating and enforcing abilities of the states.

Certainly it will since most states use the Federal income tax as a base to club their own citizens similarly with and probably most will quickly ponder whether they can (or wish to) afford duplication the IRS, income Tax Code, etc. at the state level. Most thoughtful people would think that's all to the good since it would probably help eliminate income taxes at that level, too. The paper's authors, though, seem to be trying to replicate the President's Tax Panel and Mr. Gale's efforts but at a state level since they come up with a "rate" of the (non) FairTax plan they devise of over 37% te. this is more of the same old "mis-definition and attack" ploy that we see repeatedly.

Offering this as some sort of serious opinion of the FairTax as you do merely shows how bereft you are of valid analysis.

Not really. The paper from the two U. of TN guys has been linked to numerous times on these threads so your neglect in doing so is certainly spurious.

Oh, the authors don't ask that the paper not be cited or quoted without permission?

Ya, I forgot, erosion isn't in the bill therefore it can't happen. Any assumption that human beings will push the envelope when it comes to taxes flies in the face of experience.

I'd be glad to discuss any concrete figures you might have that show a "20% erosion" when in fact under the FairTax, the act of purchasing the taxable item and obtaining the specified receipt represents 100% compliance with the law by the taxpayer. Since the Department of Commerce recently showed that just 3.6% of retailers collectively make 85.7% of all U.S. sales. Fewer points of collection will mean higher compliance with the FairTax than with today's complex system.

To show your 20% you'd need to show that a huge portion of the businesses doing the 85.6% of the sales (after agreeing in writing to collect and forward the tax) were not doing so but in fact were performing criminal acts.

I don't believe that and I frankly doubt that many others do aside from your own little group of a dozen or so income tax loving associates. You've offered no such concrete proof of anything like that - and I doubt you ever will.

Now your claiming that the FairTax catches more poor people in its net than the income tax?

You are making this up. The nrst prevents near as many people from having negative tax rates (what you've called "entitlement").

That far, far fewer people will profit from tax refunds that exceed tax paid under the nrst means there will be a reduction in redistributing wealth when we go to the nrst.

Why do you think that preventing weatlh redistribution is "catching someone in a net"?!

You would prefer having the government use the income tax system to continue the massive redistrubution in carries out now via credits, exemptions, deductions?

I see, the poor will not be better off thanks to the miracle of the prebate.

I don't know what "better off" means to you...

The prebate makes necessity level spending tax free.

From your comment, you feel that giving poor people more money in refunds than they pay is a good thing.

That's very curious. Just a few posts back you were deriding the nrst for providing tax refunds above the amount of tax paid.

Are you rejecting the nrst because you believe it overpays tax refunds to poor people
or
Are you rejecting the nrst because it doesn't overpay tax refunds as much as the income tax?

You should stop digging!

The prebate makes necessity level spending tax free.

The size of the prebate has nothing to do with taxes paid, goods and services purchased, or income earned. It is determined by family size, and that, alone.

Further, your claim that people below the poverty level spend up to and exceeding the poverty level is somewhat misleading because "spend" in the sense you are using the word includes charitable gifts to the family as income spent. As I understand it, taxes are not paid either by the charity or the family. I'm not suggesting that's wrong, just noting what is. Sometimes that's called telling the truth.

For those reasons, the prebate is not a refund of taxes paid, or about to be paid. It is a grant, or entitlement, as FairTaxers say, to be spent or saved, or to do anything one wishes to do with it.

The size of the prebate has nothing to do with taxes paid, goods and services purchased, or income earned. It is determined by family size, and that, alone.

And lucy, what family size, and that, alone will not spend up to the poverty line?

BLS DATA?

This data shows that the number of people who receive more in refunds than they pay will be negligible if not zero. BTW lucy, do you even know how many do now under the income tax and how much?

You don't or you wouldn't be continually bring this up.

This is a strong point for the nrst - less redistribution than now.

I will note here that on this thread alone you have said that the nrst is bad because it gives overpayment of refunds to some people. But when it is pointed out and shown with data that the nrst gives near zero out over tax payments made, you said the nrst is bad for poor people.

So is it bad for poor people because they don't get overpayments of refunds?

Or is it bad because poor people do get overpayments of refunds?!

You have to pick one, Lucy. It is foolish for you to say both.

And lucy, what family size, and that, alone will not spend up to the poverty line?

If in-kind contributions from charities is included as "spending" then the family is not taking cash out of its collective pocket to purchase. If our family is buying used clothing at garage sales, receives a used car for its use from a church, and receiving free food from a food bank, the family is not "spending" in a taxable sense.

But, perhaps I am misreading the information and misunderstanding you. If that is the case, I would appreciate it if you would explain how a family with and income of less than $5,000 manages expenditures of $20,517 annually. Please explain how purchasing used items under the FairTax, and receiving charitable gifts, translates as a refund on taxes paid.

Nope. I'm not saying that the FairTax is bad because it gives more as a prebate than the poor will pay in tax, I'm making the observation that when that is the case, it is not a refund for taxes paid. I am assuming, for sake of argument, that this all makes sense and I am just not getting it and for that reason, I am giving you the opportunity to clarify.

Why should that matter to you? Because I vote, am capable of writing letters to my Senators and Congressmen, and have the opportunity to influence other voters in conversation just like you do.

"Sometimes that's called telling the truth."

It might not be such a bad idea to practice what you preach. The BLS data linked to is from income tax data, not FairTax data so any "spending" there is what is going on now.

From the bill:

"... `Each qualified family shall be eligible to receive a sales tax rebate each month. The sales tax rebate shall be in an amount equal to the product of-- ...""

... and the definition of "rebate" in the dictionary I use is:

"... a return of a part of a payment ... "

So "rebate" and "entitlement" are different words and mean quite different things ... S/S is an entitlement; the prebate is not. Most people will note that you make certain to misuse words like a true demagogue.

"If in-kind contributions from charities is included as "spending" then the family is not taking cash out of its collective pocket to purchase. "

An interesting speculation on your part all right, but nothing in the BLS data provided indicates anything other that spending of actual dollars of income. The BLS data in no way measures or includes charity contributions to the families involved and your claim that it does is indeed made of whole cloth.

And as has been pointed out to you several times, the criteria for the prebate is not taxes paid at all but strictly family size. Your pretense to the contrary is more of the same warped interpretation.

There is certainly no need to "clarify" something which is so crystal clear and which you merely intentionally choose to misstate as the rebate is clearly defined in the bill. Clarifying your misstatements would no doubt be a full time job.

I'm not saying that the FairTax is bad because it gives more as a prebate than the poor will pay in tax, ...

Right. And it is shown that the FairTax will have far LESS of this situation than under the income tax.

Here it is again Lucy, your false premise.

IF you wanted to mimimize tax refunds that exceed tax payments, you would prefer the nrst. This data show it, again.

The data compares reported income to expenditures (not charity).

So you demonstrate again that this isn't the real reason you oppose the nrst. Why are you afraid to tell the forum the real reason? Don't you think we would like to know about your real reason? Just how far will you go to protect your real reason(s)?

Principled links to a BLS table with no explanatory notes or even an indication of what year is represented in the data. I ask for more information and get back - well - basically nothing useful.

What would you call Regular contributions for support listed under Sources of income and personal taxes? Perhaps that's actual dollars, and perhaps that's in-kind gifts. I don't know because there isn't enough information.

LOL - not enough information in the link. Right....

You haven't even looked have you? Besides, this isn't the real reason you oppose the nrst. But it does give a chance for lurkers to see that today, waaaaaaaaaaaaaay more people receive more in refunds than tax paid than would under the nrst. Link.

You didn't even look at the data. From the link:

Average annual expenditures and characteristics, Consumer Expenditure Survey, 2001

Average annual expenditures..................

Income before taxes b/ ......................

All of which indicate that irrespective of income, people spend up to the poverty level. Whether by spending savings, illegally earned money, borrowed money - whatever. People spend up to the poverty level even if they don't report that much income.

Why not just tell us the real reason(s) you oppose?

Where is the battle for spending reform?

AMEN Glenn!

I've been in that battle for over 40 years.

The reason I think the nrst will battle spending more effectively is because it makes us ALL pay the SAME marginal rate.

If anyone wanted to increase taxes, we would be united in opposition. Similarly, anyone who figures out how to decrease the tax rate (and there's a bazillion ways!) will have complete and united support.

jmho

OK, so Regular contributions for support under Sources of income and personal taxes is cash? Right?

What is Gifts of goods and services? There are at least a couple dozen items and services listed under that. Average annual expenditures and characteristics, Consumer Expenditure Survey, 2001

Thanks, I missed that. The page is larger than my screen and I didn't scroll over far enough.

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