From Russia, one-steppe taxation

News and Observer ^ | 3/26/02 | DANIEL J. MITCHELL

[Phantom Lord]

Obviously not an inhouse editorial, but a big surprise that this liberal paper would publish this.

A flat tax, while wide open for debate, in my opinion is the optimum system of taxation over the other current reform alternative. The NRST (sales tax).

[Eric in the Ozarks]

They all laughed at Steve Forbes...remember ?

[Destructor]

Isn't it ironic? Russia has more freedom than we do! The American people are all slaves to the Federal Reserve System, and the IRS. Why can't we have a Flat Tax?

[Orual]

Neat headline Borodin-ping.

[JohnGalt]

13% is the rate Jerry Brown came up with as well in '92.

What a different world indeed if the Dems backed Brown over the Ozark Caligula...

[Poohbah]

Their economy is in the tank and getting worse. Who was it who said that the prospect of getting hanged in a fortnight concentrates one's mind wonderfully?

Sad to say, we may need a second Great Depression to get my preferred tax method--an NRST, enumerated right there on the sales receipt.

[Centurion2000]

Isn't it ironic? Russia has more freedom than we do!

Certainly more than the average Californian .... first the tax thing and the fact that they can own AK-47's and M16's while Ca residents are denied both.

[Madame Dufarge]

They all laughed at Steve Forbes...remember ?

"And finally, the coup de grace, the knife to Steve Forbes's throat as Engberg went on camera to end his story. The 'on camera,' as we call it in the TV news business, is when the reporter gets to look the viewer in the eye and deliver a sermonette. This is when the reporter, if he hasn't been slanting the news up to this point, will often give you a little editorial just to make sure you know how you're supposed to think about the subject at hand. Eric Engberg ended his little vaudeville act thus: 'The fact remains: The flat tax is a giant, untested theory. One economist suggested, before we put it in, we should test it out someplace - like Albania.' Engberg flashed his signature smirk and signed off - Eric Engberg, CBS News, Washington."

from Bias by Bernard Goldberg

[Phantom Lord]

My problem with the NRST is that it will have "exemptions" and other "loopholes" which will allow it to eventually morph into almost as complicated a system as we have today.

Remember the fight in NJ between toilet tissue and tissue paper? Which would be exempt, which wouldnt, would both, would neither? Now imagine that on a NATIONAL scale with 1000's of products and their producers in the fight.

With a flat tax i would also end withholding. Make people write a check every quarter.

One thing that would bring me closer to supporting a NRST would be for all the current federal sales taxes (tobacco, alcohol, gas, etc...) to be repealed so only the NRST would be charged. Otherwise, the ability to selectivly tax items would also morph into the massive complication and unfairness of todays tax system. Though its burden would mostly be laid on producers and retailers, not the ultimate consumers. So while we wouldnt see the problems and complexities like we do with todays income tax, the problems would still be there. We just wouldnt see them as much so most people wouldnt care and reform of those problems would be impossible because there are not enough "votes" to be had by fixing them.

[ancient_geezer]

Obviously not an inhouse editorial, but a big surprise that this liberal paper would publish this.

Take a closer look at the full system. You will find out why they tout it.

You will find out the russian tax system is anything but "a simple and fair 13 percent flat tax."

PART TWO OF THE RUSSIAN FEDERATION TAX CODE

Russia would become the first to adopt the ideal free-market tax system?

Russia uses the Euorpean style income tax with a VAT. Businesses (individual & corporate) are also hit with 30-35% tax rates on "profit" above & beyond the income tax and VAT. Individuals pay a regressive wage tax starting at 32% declining to 2% @$22,000/annum for Social taxes.

There is nothing simple or fair about the Russian tax system.

[ancient_geezer]

Check out the hyperlink in reply #10. The Russian system is a full fledged European style income tax with VAT on steriods.

[Eric in the Ozarks]

I read the book and recall that line.

[APBaer]

Saturday's New York Times had an article on the Russian Flat Tax,
The third paragraph of which was:
Datelined Moscow:

"Still Russia is reporting stellar first results from a bold experiment, a 13 percent flat-rate income tax. The centerpiece of the government's tax reform program, it is the lowest rate in all of Europe and the envy of AMERICAN RIGHT-WINGERS." (EMPHASIS ADDED)

This was a "news article", no on the editorial page. Perhaps the NY Times is in its own little "Moscow on the Hudson"

[mamelukesabre]

Federal income tax should be abolished all together. There is no justification for it.

[ancient_geezer]

My problem with the NRST is that it will have "exemptions" and other "loopholes"

No exemptions, every person pays the full 23% at the retail register every time they make a purchase. The tax is levied once but only once on all products and sevices, there are no exceptions, and like the Armey flat tax no investments or savings are taxed.

The Flat Tax on the other hand retains both the personal exemptions and EITC of the current tax system. Where business in concerned it still retains a full range of allowed business deductions and is just as complex as today.

Flat Tax as Seen by a Tax Preparer
by Vern Hoven

Remember the fight in NJ between toilet tissue and tissue paper?

No products are selectively exempted from the NRST which uses a monthly prepayment based on family size to avoid making product exceptions and provide a mechanism that achieve the same effect of the personal exemption of income taxes.

Make people write a check every quarter.

That is primary harm of any income tax. It imposes an affirmative legal jeopardy on every individual in the nation intruding on personal liberty and demanding an accounting of family finances to the government. It demands the maintainence of a police state organisation to enforce the tax and opens the family to abusive enforcement practices of the IRS.

You may also get a good idea of how the FlatTax operates as compared to the the NRST within the economy if you consider:

As the Government extracts revenues from the Citizen.

• The SalesTax case:
  • increases the visibility of taxation by the Citizen.
  • gives Citizen control of first allocation of resources.
  • tends to inhibit tax increases from visibility and Citizen priority

• The FlatTax case:
  • decreases the visibility of taxation by the Citizen by leving a VAT on business.
  • gives Government control of first allocation of resources.
  • tends to allow tax increases from lack of visibility and Government priority

The substantial difference between the IncomeTax & the NRST lies within who has first control of the allocation of resources, the Citizen or the Government.

Keyes on Taxes & Government Spending:

• "The income tax in effect makes us vassals to the government – the politicians decide how much income we can keep. No mere “reform” of this slave tax, such as flattening the rate, can correct its fundamental denial of control over our own money. Only the abolition of the income tax itself will restore the basic American principle that our income is both our own money and our own private business - not the government's."

• "Replacing the income tax with a national sales tax would rejuvenate independence and responsibility in our citizens. True economic liberty and moral revival go hand in hand."

• "A national sales tax would also put the American citizen back in control of national fiscal policy. The best way to curtail government spending is to cut taxes, because they can’t spend what they don’t get. But with a sales tax, we could deny funds to a spendthrift government – and give ourselves a tax cut – whenever we make the private choice to alter our spending and saving habits."

Alan Keyes Interview with Des Moines Register:

• Conservative commentator Alan Keyes said Thursday one of the first things he would do as president would be to replace the federal income tax with a national sales tax.

• The Republican presidential candidate said he favors a national sales tax of about 23 percent that would also replace the payroll tax that pays for Social Security.

The intent of the structure of any income tax including a Flat Tax is for political and social control not revenue collection. The Individual Income tax is maintained to establish and hold every person in the country perpetual legal jeopardy.

[ancient_geezer]

The American people are all slaves to the Federal Reserve System, and the IRS.

No Flat Tax gets rid of either it is still an income tax with no less requirement for enforcement by the IRS, and Federal Reserve operates just the same.

Why can't we have a Flat Tax?

Why do you want a European style tax system?

See the hyperlink in Reply #10 if you really want to know what kind of tax system is being sold in Russia. It is a full fledged Euorpean VAT with income tax plus a few uniquely Russian wrinkles added in.

As far as the Flat Tax goes being proposed in for this country the Forbes/Armey Flat tax is still an income tax, still requires an IRS, and still taxes business passing on such taxes in higher prices to consumers, lower wages to employees, and lower returns to investors/retirees. It is, quite frankly a VAT combined with an individual income tax and retains the SS/Medicare payroll taxes besides.

CONSUMPTION TAX PROPOSALS; 1996 Deloitte & Touche LLP

• One concern associated with the flat tax is whether the low advertised rates will produce the same amounts of revenue as the current income tax. A June 7, 1995, Treasury Department analysis of a flat-tax plan similar to the Armey proposal, concluded that a rate of at least 22.9 percent would be needed to make the plan revenue neutral, that is, it would allow the government to raise as much revenue as is currently raised. Although the proposal is designed to raise less revenue than present law, the extent of the shortfall will concern policymakers.

• The Armey bill, H.R. 2060, would replace the current corporate income tax with a tax on business activities equal to 20 percent (17 percent after 1997) of business taxable income. The tax would apply to every person engaged in a business activity, whether an individual, partnership, corporation, or otherwise. Taxable business income would be gross active income (that is, income other than investment income) reduced by an array of business deductions.

• This business activity tax resembles a VAT computed by subtracting the costs of inputs from gross receipts, except that H.R. 2060 allows a deduction for cash wage expenses. Note that, under the bill, cash wages are subject to tax at the individual level at the same flat rate applicable to business profits. Thus, the combination of the business activities tax and the individual tax is roughly equivalent to a VAT. In addition, taxing wages at the individual level allows a generous personal exemption that makes the personal tax more progressive. To ensure that compensation is taxed once, tax-exempt entities that pay compensation other than as cash or retirement plan contributions would be subject to an excise tax.

See also:

Flat Tax as Seen by a Tax Preparer
by Vern Hoven

As long as government is able to play a shell game with hiding taxes from the Voter(i.e. individual) it can rely on the old maxim:

A government which robs Peter to pay Paul can always depend on the support of Paul.
-George Bernard Shaw

and keep right on growing without bound.

[ancient_geezer]

Index to bumplist

[jpsb]

Yea, looks like Steve Forbes knew what he was talking about. Steve would have made a great president, too bad we got another expand the federal government, tax and spend RINO instead.

[lewislynn]

One thing that would bring me closer to supporting a NRST would be for all the current federal sales taxes (tobacco, alcohol, gas, etc...) to be repealed so only the NRST would be charged.

Instead the NRST is really a tax "of the gross payment" which means the NRST would tax all other taxes, fees etc. imposed before it...

If there is a $0.50 tax on cigs. the NRST on that would be an additional 30% or $0.65(NOT the 23% lie)

$0.65 minus phony 23% tax = $0.50....get it?

They start their sales pitch with lies about the tax rate...what else are they lying about....plenty

[Phantom Lord]

And Geezer says there will be no exemptions. BULL. He and others know damn well that Congress will have "neccesity" exemptions on food and other "needed" items. And without fail, every year congress will debate which items to add to the exempt list and which ones to remove and it will become a gigantic mess like the current system. And the brunt of the complexity will be visited upon the business owner who has to attempt to keep up with the tax laws to figure out how to configure his prices and accounting practices to be sure and tax the right stuff and not tax the wrong stuff and all else that goes with complying to the tax code.

And then not to far down the road, to avoid the hassle of refunding money to "poor" people they will issue little cards that exempt them from sales taxes on most if not all items and then congress with haggle all year, every year over the income limits and who is eligible and who is not eligible for these cards. What products are exempt from the tax and which are not. Sooner or later we will be right back to where we are now as far as complexity and exemptions and loopholes and the whole rest of the mess.

Its a great idea on paper, but the political reality of congress and the vast amount of people with their hand out for my money is what will be its downfall.