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.
Included in HR 25 will become law upon passage:
defund the IRS
eliminate withholding
destroy existing income tax records (save those delinquent at changeover)
erase the entire income tax code
So how does making these for things happen put us closer to having both?
It doesn't. The closest we are is NOW - when all it would take is a vote in congress and tomorrow we could have both.
But HR 25 implements some formidable obstacles that do not now exist. Those obstacles are what will prevent the income tax from coming back.
Again, why do you select only portions of a post to reply to?
Dear RobFromGa,
It would be easy enough to remedy this fatal flaw of the NRST: Just change the legislation so that it would only come into effect after the repeal of the 16th Amendment. Write into the repeal amendment any sort of transition required between the two systems, but only permit an NRST to come into effect once the power to impose an income tax becomes unconstitutional.
sitetest
Schweeet!
One small problem...
Laws require 51 Senators and 218 Representatives to vote for them and then require a Presidential signature. If the President vetoes the bill, you then need 67 Senators and 291 Representatives.
The chances of this happening are, shall we say, remote?
The chances of these criminals passing a national sales tax on top of the income tax, however, are quite good.
There are no obstacles to this today - except a vote in Congress and a signature.
Why hasn't it happened yet?
I'm ALL for this - provided it doesn't prevent the nrst from being passed. IMO once we're free we will never go back. Plus the obstacles I've mentioned....
The reason we will end up with both, IMHO, as I have posted many times, is that the FairTax will not collect the amount of money that they need to fund the government, and the only remedy they would have with the FairTax is to RAISE THE FAIRTAX rate even higher, which reduces the collections further. I believe the Fairtax rate would start at about 42-45% (exclusive, expressed as a normal sales tax), and quickly move much higher as the taxable consumption base evaporates...
Once it is obvious that the FairTax is unable to raise the necessary taxes, due to evasion, people not buying for whatever reason, people buying used, people buying overseas, people bartering, people using the business exemption, all these reasons, then they will institute an EMERGENCY income tax on the productive "rich" people, probably anyone who makes over $75,000 or thereabouts.
And there will be plenty of votes for that income tax surcharge on the evil rich. People hate the evil "lucky" rich.
You don't understand what self reporting or third party reporting means
What I do understand is the total dependance on accurate self reporting of the current income system guarantees massive tax evasion for maximum gain on unreported cash transactions.
What I do understand is legal businesses do not pay taxes on their purchases which are tracked through their suppliers via their certification.
What I do understand is an illegal business ends up paying taxes on its inputs to avoid monitoring, to minimize its exposure and thus essensially becomes a resale business selling things already having been taxed once and thus not subject to the retail sales tax under the provisions of the FairTax legislation. Course such folk might have abit of problems with competing with legitimate businesses operating with tax exemption in aquiring its products for retail sale.
Only new production, first retail sale products are taxable and thus of concern to the retail sales tax system under the FairTax.
Resold, previously taxed products are not subject to the tax and thus of no concern. Such an operation is not required to collect nor remit or reportthe NRST implemented by the FairTax legislation nor do they make much in a competitive environment where the legitimate seller exempt on their purchases.
Only a certified business subject to monitoring both of itself directly by internal audit, by its suppliers through sales records maintained on exempt purchasers, not to mention customers a the business is required to issue full receipts to, thus creating a large pool of witnesses to sale of any business looking to make a living short changing the government and stealing taxpayer dollars from their customers.
Of the two systems, income tax with nil protections from and maximum gains by the fly by night cash operator, and a retail sales tax system designed to monitor business purchasing as well as retail sales to assure maximum compliance with a system that only taxes products once. The NRST implemented by the FairTax will outdo the current system by large factor in minimizing gain of the sharp operator while maximizing his risks.
Dear Principled,
The repeal amendment must first be passed by the Congress and three quarters of the states and be adopted, guaranteeing that the income tax becomes unconstitutional, before the NRST comes into being.
Otherwise, the 16th Amendment will never be repealed.
The current legislation doesn't do this. That is a fatal flaw.
sitetest
As I've said before, if they were to make this change, then this objection would be removed. But it wouldn't make the FairTax any more likely to be able to generate the necessary income, as it is currently written.
Because you have not made enough people aware of how much money can be stolen by the NRST, that's why.
Because people aren't stupid enough to want a huge Federal sales tax on top of every purchase of goods and services. There are only a few who want this to come to pass.
And the way the FairTax bill is written right now, people would have to pay higher taxes to their state and local govenrments too, because the states and local governments have to pay the exorbitant FairTax on every purchase they make (think road repairs, buildings, police and fire eqpt,...) and every non-teacher salary and fringe benefit. So not only would we pay the exorbitant tax on all the purchases of personal goods and services, but our state and local taxes go up 20% plus as well.
What a deal? Not.
But HR 25 implements some formidable obstacles that do not now exist.
Name one obstacle-- the laws that defunded, destroyed, and erased income taxes could be repealed on a moment's notice by a simple majority of Congress and a signature, and everything brought back.
And if they made it only an income surtax on the "evil" rich, it would be a piece of cake if the situation required it-- like everyone realizing the FairTax caused all prices to go WAY up, and the economy to tank...
Third party reporting is accomplished when both parties of a transaction are required to report. The employer reports wages withheld to the IRS and to SS; the employee reports his wages to the IRS along with documentation that includes FICA taxes withheld.
The FairTax only requires that a report be made by the tax collector.
Repeal of the 16th amendment does not make the income tax unconstitutional.
Exactly!
Dear lucysmom,
I was under the impression that the Supreme Court had eventually struck down the income tax imposed mid-19th century, and that it is the 16th Amendment that gave constitutional authority for it.
If you have an alternative narrative, I'd appreciate reading about it.
However, even if mere repeal of the 16th Amendment doesn't do the trick, that could be fixed by making the language of the repeal amendment sufficiently explicit in forbidding the income tax.
sitetest
The language of any repeal amendment would have to include specific language barring income taxes from being levied.
There is not a snowball's chance in h3ll of 38 states getting rid of the power of the federal government to charge income taxes on the evil rich. Not gonna happen.
"I believe the Fairtax rate would start at about 42-45% (exclusive, expressed as a normal sales tax), and quickly move much higher as the taxable consumption base evaporates... "
Too, too funny!!! But at least it a bit less than one of the FairTax opponents has cited of a "94%" tax rate ... but we notice this poster thinks it will "... quickly move higher... " so perhaps he's trying to say "94%" without saying "94%".
And in any event, all without any sort of reputable economic study backing it up. The FairTax OTOH has many such studies all coming in at a revenue neutral rate of around 23% (and even that may be higher than necessary).
The Court, in Pollock v. Farmers' Loan & Trust Co., redefined "direct" tax to exclude income gained from property, such as rent, and investments. It ruled that tax on income gained from work was Constitutional.
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