CAVUTO REPORTS THAT BUSH CONSIDERING SCRAPPING THE IRS CODE!!!

Fox News Channel | November 6, 2002 | n/a

[Tree of Liberty]

Neil Cavuto just interviewed Mitchell E. Daniels, Jr., the director of the OMB, and Neil let it be known that he's hearing rumblings that Pres. Bush is considering a total re-write of the tax code and that SecTreas O'Neill is strongly pushing a national retail sales tax!

[OrthodoxPresbyterian]

THe rebates for HR2525 are higher than you're assuming. The rebates (last year) were something like $186 per parent plus $156 per child all per month. It's based on HHS poverty levels. 551 posted on 11/06/2002 8:23 PM PST by Principled

Actually, that's LOWER than I assumed.
I assumed $200 per month, per person, flat household rate.

But $186 vs $200?? $14 bucks for a single person is not much.

OTOH, $156 per child is not as good as $200, but I still think my Pastor (nine children) will be happy as punch that he's not getting penalized (paying the same taxes as me, no children).

And I'm kosher with that... right now, the Tax System starves him to death. We pay him well enough, but I'm still amazed he gets by.

[ancient_geezer]

Incidentally, assuming a 30% Sales Tax rate, with a $200 monthly rebate, persons earning less than $8000 per year would be living essentially Tax Free, and persons earning less than $17,000 per year would be paying less in Sales Tax than they are now under Payroll and Income Taxes

How about some real numbers from a real bill before Congress:

 

All legal residents will receive a FCA equivalent to the FairTax paid on essential goods and services. The FCA will be paid in advance, in equal installments each month. The size of the monthly FCA will be determined by the government's Poverty Level for a particular family size, multiplied by the tax rate.

Every year, the Department of Health and Human Services [HHS] determine the "poverty level" for each family size.

The 2001 "FairTax" Family Consumption Allowance Figures
Family Size	HHS Poverty Level	Annual FCA	Monthly FCA
One	$8,590	$1,976	$165
Two	$17,180	$3,951	$329
Three	$20,200	$4,646	$387
Four	$23,220	$5,341	$445
Five	$26,240	$6,035	$503
Six	$29,260	$6,730	$561
Seven	$32,280	$7,424	$619
Eight	$35,300	$8,119	$677

1) Federal Register: February 16, 2001, Pages 10695-10697).

[ The monthly FCA for each adult is .23 * (HSS poverty level for a single person)/12 to assure no marriage penalty due to the manner in which the poverty level is dependant on family size. The monthly FCA for each child is .23 * (the incremental increase of HSS poverty level for a family with one child over no child) ] A. Geezer

A family of four, for example, could spend $23,220 per year free of tax because they will have received over the course of the year rebates totaling $5,341. $5,341 is the amount of sales tax paid on $23,220 in expenditures. A family spending double the "poverty level" or $46,440 per year will effectively pay tax on only half of their spending and, therefore, have an effective tax rate of 11 ½ percent or half the FairTax rate.

The beauty of the FairTax is that you can control how much you pay in taxes. If you happen to save, invest or spend a portion on used [previously taxed] items, you can get your effective tax rate below 9%.

 

The Effective total federal tax rate as a function of expenditure for a family of four under the NRST

[Route66]

I know that HR2525 is a proposed bill, but the treasury itself is doing a study on tax reform which includes such possibilities as reforming our current code yet again and a national sales tax. Do you know if they are looking at this plan in particular or just a national sales tax in general?

[rolling_stone]

All legal residents will receive a FCA equivalent to the FairTax paid on essential goods and services

I like the legal residents part, that has got my vote!!!!!

[is_is]

If there is no income tax, then effect EVERY ACCOUNT YOU HAVE IS A 401K!

when things like that have to be explained it becomes obvious why we have the system we have......can we say SHEEPLE!!!!

[concerned about politics]

Incidentally, assuming a 30% Sales Tax rate, with a $200 monthly rebate, persons earning less than $8000 per year would be living essentially Tax Free, and persons earning less than $17,000 per year would be paying less in Sales Tax than they are now under Payroll and Income Taxes.

They may pay taxes at first ,but get money (more than they paid in taxes) back through earned income credit.
Therefore, are really tax free already. They're making money from the government by being low income.
The numbers you exampled would get them something like $1,500.000 in tax rebates even though they didn't even pay that much in taxes in the first place. It's "free" money back because they're "poor." It's a social program- type handout.

[rolling_stone]

Thanks for the informative posts...besides the waste on money spent on the nonproductive accounting etc for the present income tax, a NRST would provide those taxed the freedom to buy more or less and pay more or less tax according to their situations. It would take the power of loopholes and special interest groups away from Congress who has used the Income Tax to generate contributions and allows them to attempt social engineering. None of those things are helpful to the general populace and promote the general welfare. Imagine people & businesses being able to not worry about depreciation, interest, expensing items etc when making purchase decisions. A freer marked would result, and products might be well made to last longer if there is no tax benefit to replacing them every few years, but instead have to pay sales tax when they were replaced or else buying used goods. I think that would benefit those that make products that last a long time, resulting in old fashioned thriftyness and less waste of our resources. Between that and all the trees saved by less paperwork, this is an environmental friendly solution...

[Principled]

With a VAT/NRST, we could see an income tax brought back, and we get the worst of both worlds.

You need to learn more... we are in far more danger of having both an income tax and sales tax NOW than we would be if we passed hr2525...even without repealing the 16th first.

If we passed hr2525:
the IRS is defunded
all existing income tax records are destroyed
the income tax code is 100% erased from existence
all withholding ends - ALL withholding ends.

Now it is certainly possible to refund the IRS, research and recollect all necessary data on every individual, rewrite an income tax code and pass it, and convince the voters that we need to start paycheck withholding again. But that ain't likely.

Compare that to today- we have absolutely NO protection against getting both systems. We could wake up tomorrow with them.

If your concern is having two tax systems, you will want to pass HR2525 pronto, and not wait to repeal. That may take longer than our window of opportunity- cuz the dems don't like this idea ya know.

[El Cid]

I give this 0.0% chance of happening. Congress derives a good deal of their power from the tax-code: the money they bring in; the special breaks they can cut; the class-warfare posturing. If all of a sudden people would see the tax they'd pay on every purchase - people would become extremely interested in understanding where their tax dollars were going.
I frankly think that a NST (exemptions on food, and perhaps housing - so the poor aren't nailed) would be great for freedom, and limiting the size of government -- but its that latter point that makes it really hard for me to see how the Congress folks would allow this to happen.
I'd like it to be so -- but it presumes the existance of a Congress that was more interested in the nation than its own power.

[nanny]

[If the goods at that flea market are used, and if the Fair Tax plan that some have talked about here today were the plan enacted, you would still not pay any tax. ]

I don't know what 'Fair Tax' is, but used items in TExas are certainly taxed. It is taxed everytime it is sold, if the dealer is honest, or if it is not being sold for resale.

There are millions of dollars worth of merchandise sold over the internet, at flea markets, and garage sales (that are not garage sales, but businesses), on which no sales tax or income tax is collected. I wonder just how strict they would be on the enforcement.

States have been salivating at the prospect of being able to tax internet-interstate sales for a long time. That was one thing I didn't like about Ron Kirk.

[concerned about politics]

Nor do they discuss how this will eliminate drunk-driving by bald headed men.

BTW -That leads me to a question. What hair color do they put on the drivers licenses of bald men?

[Principled]

Geezer to the rescue! You're an html machine! Thanks for the tables/graphs...

[Principled]

Do you know if they are looking at this plan in particular or just a national sales tax in general?

I cannot see into their souls, but HR2525 is by far the most popular bill...supported by millions of politically active individuals. For this reason, I assert that if a national sales tax is under serious consideration, this is the bill they're studying.

[Travelgirl]

Gosh, if all the IRS employees are put out of work, they can do the work we currently bring people into the country to do. If they are smart enough to understand the IRS Tas Code, they are smart enough to do any job. We could then limit immigration. I like the idea.

[Zon]

Not through your hyperbole. I see a very different process with many advantages to individuals and society. Replacing the graduated income tax with a NRST is not an end all be all. It's but one of five key factors for collapsing a corrupt government while allowing a fair and honest government to rise in its place.

[Principled]

BTW -That leads me to a question. What hair color do they put on the drivers licenses of bald men?

You're getting a bit too series, concerned about politics. Time for a shower maybe....

[lewislynn]

I don't know why everyone is getting all giddy about a NST, You're in for a HUGE let down, that, isn't the plan at all.

Sec O'neill wants to eliminate the income tax ON CORPORATIONS, (no mention of indidviduals).

In order to offset "the cost" of eliminating a select group of tax payers they'll have to re-write the tax code...HELLO!

Inching Away From Income Tax
'Value-Added' Levy Would Turn System Upside Down

The Treasury is looking at long-term proposals to scrap the corporate income tax and replace it with a value-added tax, which would work like a national sales tax on consumer and corporate purchases....

More

......The United States is the only developed Western nation without a value-added tax. European nations have been able to lower income tax rates -- but not abolish income taxes -- with a system of value-added taxes that have steadily risen since World War II.

[concerned about politics]

I give this 0.0% chance of happening. Congress derives a good deal of their power from the tax-code:

Yes. They control the people through taxation. If they want a certain behavior,lower taxes.
If they want a certain behavior to stop, increase taxes. Look at cigarett taxes, for example.

[Deuce]

You will be FAR BETTER OFF with the NSRT.....

If NRST raises the same amount of money as the taxes it replaces, BY DEFINITION, some people will pay more, some less than they pay now.

[OrthodoxPresbyterian]

They may pay taxes at first ,but get money (more than they paid in taxes) back through earned income credit. Therefore, are really tax free already.

No, the EITC does not come anywhere near to the Taxes that poor people pay in Payroll Taxes. Try a 15.3% Tax Burden when you include both employee and employer Social Security Taxes -- with Income Taxes hitting pretty low on the bracket too, even with the Bush Tax Cut.

That's a real bite outta the low-income paycheck.

They're making money from the government by being low income.

Only those who collect Welfare.

The Low-income Worker is taking it in the shorts on Payroll Taxes.

The numbers you exampled would get them something like $1,500.000 in tax rebates even though they didn't even pay that much in taxes in the first place. It's "free" money back because they're "poor." It's a social program- type handout.

Actually, the Poor spend almost 100% of their money on Consumption, so all their Income would be Taxed under the NRST. By comparison, the Middle Class and Affluent invest some of their money (Investments are not Taxed under the NRST), and do not spend 100% on Comsumption.

So the Rebate "Tax Break" which accrues to the Poor is really just a measure to keep them from being over-taxed -- paying Taxes on the 100% of their income that they spend, versus more affluent households which do not spend 100% of their income on Consumption.

Cato Institute (Libertarian, and therefore no "friend" of Welfare) did a study on the HR 2525 NRST indicating that the "progressivity factor" (the amount of Taxes paid by Income Class) would be almost the same (within a couple of percentage points) as under the current Income Tax -- the Poor consume more of their income, but they get a Rebate, etc. Half a dozen of one, six of the other.

The difference being that Companies save tens of billions on Payroll Tax compliance, and Individuals save hundreds of billions on Income Tax compliance... the amount of productive man-hours saved under the NRST, versus the Income Tax, is almost mind-boggling.

Not to mention the fact that the friendly IRS man no longer comes to your door and riffles thorugh your personal files.