Posted on 11/09/2006 6:50:19 PM PST by Principled
Hidden [income tax] costs go well beyond the question of economic incidence versus legal
incidence or the compliance burden. Every tax system distorts economic decisions, alters
economic behavior, and retards economic output below that which otherwise would occur, resulting
in what economists agree is the “deadweight loss” or “excess burden” of taxation.
Deadweight loss is a hidden extraction cost of taxation – the machine that didn’t spin,
the worker who didn’t show up – which represents a depletion in purchasing power
perhaps more nefariously improvident than if the government had collected that resource.
The average worker is of course completely anesthetized to the deleterious economic effects
of a tax system that imposes a drag on economic growth, despite its nontrivial implications.
The current system imposes such a severe relative drag on economic growth vis-à-vis
the FairTax that it will reduce capital per unit of human capital 5.0 percent over the course
of the century for an 18.0 percent long-run decline in after-tax take-home pay.10
SNIP
And because everyone pays the FairTax, and pays it at the same rate, the visibility
of the FairTax ensures a built-in downward pressure on the size of the government in
the most effective way: By requiring the government to change the rate for everyone – even
for a seemingly insignificant loophole. And the FairTax minimizes the
economic harm caused by taxes that serve as a stealthy exaction.
SNIP
Of the various forms of consumption tax, the sales tax surely has the
great advantage … of eliminating the despotic power of the government over the life of every
individual, as in the income tax, or over each business firm, as in the VAT.
It would not distort the production structure as would the VAT, and it would
not skew individual preferences as would specific excise taxes.
(Excerpt) Read more at fairtax.org ...
Aw heck geezer. Get the pinger out!
Well, as you now, one man's unnecessary cost is another man's livlihood.
No proposal will be unopposed.
I'm glad this nrst does NOT exempt any specific necessity but instead exempts a spending level.
nrst ping
A Taxreform ping for you all.
If anyone would like to be added to this ping list let me know.
John Linder in the House(HR25) & Saxby Chambliss Senate(S25) offer a comprehensive bill to kill all federal income, SS/Medicare payroll, and gift/estate taxes outright replacing them with with a national retail sales tax administered by the states.
H.R.25,S.25
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.Refer for additional information:
The progressive and hidden income tax has cost untold opportunities to be lost. With transparent taxation it's likely that many alphabet agencies would not have become such a drag on businesses. Some agencies would be nonexistent. Perhaps cures for cancer, AIDS and other diseases were squashed opportunities. Drilling for oil in ANWAR, no minimum wage laws, no McCain-Fiengold, would have been half as many assaults on the constitution and Bill of Rights, and on...
It would be interesting to see whether support of the nrst seemed to have any effect on whether they're getting REelected.
The cost of "compliance" with the current "voluntary" system is probably larger than the GDP of some fairly large States.
Arduin, Laffer & Moore tax studies:
|
Arduin Laffer & Moore Summary Sheet Incentives matter for economic growth. For years, the principals of Arduin Laffer Moore Econometrics (ALME) have advocated fundamental tax reform that would replace the adverse incentives enshrined in our current tax code with a neutral, broad-based flat tax. The FairTax, a proposal that would replace our current tax system with a simple flat national sales tax, meets this criterion. *** Snip *** The FairTax addresses the ills of the current tax code by simplifying the tax structure; removing the tax on savings and investment; and lowering effective marginal tax rates throughout the economy. Removing the current code’s prevalent distortions allows the FairTax proposal to offer a revenue neutral replacement tax system that contains a much lower effective marginal tax rate. *** Snip *** In this paper, we evaluated the macroeconomic implications of abandoning our current tax system and replacing it with the FairTax proposal. We began this investigation with an overview of the proposal being examined: the FairTax. Following this brief overview, we then examined the current income-based tax system with specific attention on its adverse impacts on economic activity. *** Snip *** This analysis showed that in both the short- and long-term, a policy shift from our current tax system toward the FairTax would greatly benefit the U.S. economy by increasing economic growth, savings, foreign investment, and personal income.
Link to Summary Sheet Link to the full PDF paper ---> "A Macroeconomic Analysis of the FairTax Proposal" |
So what's the stats on Congresscitters who cosponsored?
Of the 59 Sponsors and cosponsors in the house for HR25 two lost there re-election bids. That is 1 in 30.
1 in 9 members of the republican house encumbents lost to dems in the midterm elections no dem cosponsors lost out in their bids.
I would say supporting the NRST did not hurt them by any means, and that inspite of the extreme distortions their opponents had to say about their support of the FairTax legislation.
If people think Social Security is the third rail, wait until a serious push for tax reform comes around. It's (unfortunately) so deeply ingrained into the economy. Jobs and companies are built around interpreting the dizzing array of tax laws. Honestly, I think it would almost take another Revolution to bring it about.
To be sure, but I meant a bloodier one.
Imagine telling a bunch of retiring boomers that, after a lifetime of being taxed on their income, they're now going to be taxed on spending what they've managed to save.
You don't have to imagine... They're being taxed on it now... It's just not as visible as a consumption tax is.
Honk, but don't hold your breath thinking a Democrat House or Senate would ever even talk about it.
Imagine telling a bunch of boomers that, after a lifetime of expecting to pay income taxes on 401k withdrawals that they will have no income tax due on the 401k or its earnings.
Imagine telling a bunch of boomers that, after a lifetime of expecting to pay inheritance tax when they pass on assets to loved ones that there is no more death tax.
Imagine telling a bunch of boomers that, after a lifetime of expecting to pay income tax on IRA withdrawals, the they will have no income tax due on the IRA or its earnings.
Imagine telling a bunch of boomers that, after a lifetime of expecting to pay taxes on the sale of their home, that there will be no tax on the profits of the sale.
Imagine telling a bunch of boomers that, after a lifetime of expecting to pay tax on SS that there will be no tax on SS income.
Imagine telling a bunch of boomers that, after a lifetime of expecting to have SS go broke, that the system is solvent.
Imagine telling a bunch of boomers that, after a lifetime of expecting to pay embedded tax costs in their necessities that necessity level spending is not taxed.
Imagine telling a bunch of boomers that, after a lifetime of expecting to pay income taxes on dividens that there will be no tax on dividend earnings.
Imagine telling a bunch of boomers that, after a lifetime of expecting to have the IRS audit individuals, that no individuals will be subject to audits, only businesses will.
Imagine telling a bunch of boomers that, after a lifetime of expecting to have US manufacturers be uncompetititive in the word market that the nrst is border adjusted.
With time, the electorate becomes more aware of its advantages.
There is only one Dem as cosponsor now - but i would hope that changes as the new majority (ack!) will begin to try to claim the issue as their own.
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