Posted on 10/25/2011 8:53:31 PM PDT by smoothsailing
I agree wholeheartedly. However, the question is, what’s the best way to tax the people. I like a fair tax but I think the 999 plan is a better deal than a fair tax in the 20’s, looking at the numbers.
I’m not trying to bash Forbes’ plan. It’s like arguing between two types of medication, both of which will be an enormous improvement.
Nope. No deductions. If there are deductions, then the system can be gamed, and once the system can be gamed, then the lobby for (insert name of industry who wants to sell more) is in DC, begging to be put on the list of allowed deductions. That’s why deductions need to be disallowed. Once you open that door, a herd of interests want to push through it.
Right now, businesses all over the US are timing and gaming their purchase of inputs to minimize their taxes. I know this, because I did it, and I know many small business people who talk about doing it. They spend inordinate amounts of time playing the timing of capital equipment purchases vs. leasing vs. outsourcing. Without deductions, the issue will become much simpler: how to minimize the input costs, period. If it can be done cheaper by bringing it “in-house” (and it often can), then it will be brought in-house.
Reparation Zones ...
Well put.
I know.
The other aspect of a consumption tax that everyone misses is that a consumption tax hits both domestic producers and foreign producers equally. ie, right now, the domestic tax code is part of what is driving our manufacturing off-shore. The tax system in Communist China is easier for a manufacturing company to deal with than the US system. When goods come in from a place like China, the offshore companies don’t have to pay any taxes. With a consumption tax, they would have to, and a universally applied consumption tax isn’t called a tariff because it is applied equally to all goods.
Suddenly, moving a business off-shore isn’t quite so attractive with a consumption tax, because there is no way to escape the taxation.
Feel free to use the phrase.
Newt’s 21st Century Contract with American introduced a Flat Tax too, with a 15% rate.
Fortunately for flat tax fans, Newt does and his flat tax plan has a lower rate.
I paint houses—very small time, one man operation any more. I should pay income tax on that portion of my gross income that goes into paint, caulk, etc? That’s not income.
And people in other trades, their jobs might have a much higher percent of the total job go to materials and supplies. Plumbers or electricians, for example. One guy might pay 20% of a job in materials, another guy might pay 6o? So by your plan, they should both pay income tax on the same amount. Say a $1000 job, to keep the math simple. One guy makes $800 after materials, the other guy makes $400, but they both pay income tax on $1000.00? Doesn’t make any sense, and it is patently unfair.
Tools and equipment, I’d listen to your argument, but I doubt you’d sell me on that one, either.
I think I just talked myself into some variation on the “Fair Tax” after the 16th amendment is abolished, of course.
You can either put a markup on your inputs (and pay taxes on this margin), or have the customer pay for the inputs directly and you’re providing the service.
The problem in this tax debate is that so many people’s mindsets have been permanently altered by the current tax system that they simply cannot see any other way of doing business. You’re setting an example here.
My point is that if we eliminate all deductions, the business community will adapt (and rather quickly) to the new system. The beauty of small business in the US is that we are so adaptable. We don’t want to spend any more time on this crap than necessary, and I completely understand that. But we will adapt. The crux of the matter here is to get something that a) generates the required revenue without being odious upon business and b) something in which Congress cannot play games any longer.
Here’s the real crux of the problem: If you have even ONE deductible segment of the economy, others WILL be trying to get their segment’s outputs or inputs deducted as well. As soon as you start down that road, we’ll be back where we are in no time at all. Here’s an example: 80 years ago, home mortgages were rare. The “mortgage deduction” came about because Congress allowed FARMERS to take an interest deduction for loans on farmland in the 1920’s in order to encourage wheat production after WWI. This was part of the whole package of stupid that Congress and the banks built on the plains that became known later as “the Dust Bowl.”
The thing that people miss here is that the power to hand out deductions, breaks and loopholes is what gives the clowns in Congress their power. I want to take that away from them. I want Congress out of my life as much as possible. To that end, I want a tax system where they have no favors to give away. I’d also like to ban all central air conditioning on federal buildings, so as to make working for the federal government at any level as unpleasant in the summertime in DC as possible, but that’s another rant of mine.
If people really want a different tax system, one which is both less complex and gets Congress out of their business, then they have to let go of how they’ve structured their business or life around the current tax system. I know what this is like. I’ve run a business. I structured our business to take advantage of as many tax breaks as I could. I very successfully exploited one loophole after another to minimize our tax liability.
I’d give up all of those loopholes in order to a) take the power away from Congress and b) quit spending so much of my time studying the Internal Revenue Code for these “gifts” to the public by Congress.
I agree with taking the power away from congress. I just don’t want a lot of taxpayers to get screwed in the process.
What you’re proposing is more of a gross receipts tax. There’s no way certain businesses can have customers pay cost of materials directly. Agreed. it would not be too difficult for what I do, though still a bit of a pain.
But your cure may be worse than the disease...
So everyone who gets a net plus check from the government will select to remain in the current system, the rest will get out, so my 20 percent will continue to go to those who contribute nothing. So all my deductions are gone and the thing I resent the most about the tax code will continue, government theft for the parasite class.
The complexity of the tax code dose not end it simply gets shifted from the middle class to the parasite’s and the very rich who can afford the tax attorney to game the system. I’m sorry the tax code must be thrown out, period. Nothing less will suffice.
Perry is playing a political game of divide and conquer, I’m tired of that game.
At least Cain is trying to think of alternatives to the current system, which is causing others to come up with some kind of plan too. You have to throw something in somewhere to begin discussions on a real overhaul of the system. Hasn’t ever been seriously touched on before.
That’s why my comments were about the “optional” nature of the Perry plan.
I like Cain’s plan without the Sales Tax piece. Then simplify the Income Tax piece to eliminate the exclusions and treat all income the same, even if it is from capital gains or inheritance or was spent on charities. The Business Tax piece is fine as-is.
Then cut the spending to fit in the $2.5T revenue this ‘9-9’ plan would generate.
I think that your suggestions are worthwhile and hopefully there will be those in the powers that be who will come up with some kind of plans which incorporates ideas such as yours, parts of Cain, Perry’s and others that will actually end up helping this country yet still be fair to all taxpayers/wager earners (and get more people paying at least something toward taxes).
“...and get more people paying at least something toward taxes.”
I think it needs to be more than that. Like in the debate last night when Bachmann shot herself in the foot. She said (paraphrasing) “Everybody needs to pay some tax so the cost of government matters to them, even if it is only $10, the price of two Happy Meals.” What nonsense. There is no reason at all why even a minimum wage worker shouldn’t pay 10 cents out of every dollar earned. Anything less will not have the effect she is talking about — people caring about the cost and effectiveness of government because they feel that cost personally. The irony is that if everyone’s income was taxed 10%, it would collect more money than the convoluted progressive income tax we have now, and nobody would need to be taxed at 35%.
Spot on with all your comments!
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