White House Floats Idea of Dropping Income Tax (altogether)

New York Times, Business and Financial Desk, Page 14, Column 5 ^ | 2/8/2003 | EDMUND L. ANDREWS

[Bigun]

White House Floats Idea of Dropping Income Tax Overhaul By EDMUND L. ANDREWS

WASHINGTON, Feb. 7 — President Bush, having already set off a firestorm over his proposals to cut taxes and revamp retirement accounts, suggested today that the time might be near to drop the income tax as a whole and replace it with some form of consumption tax...

[clintonh8r]

Sounds good to me. I'm for a consumption tax with NO exceptions. Simple and fair. Doesn't penalize saving and investing, rewards productivity. Do it! (RATs will say it's "unfair to the poor." They can bite it.)

[SupplySider]

It would be funny to see what happened when people were faced with just how much they are really paying. Bet it wouldn't stay 17% very long.

That is thre best feature of it, in my opinion. Imagine a big red "17%" at the bottom of every receipt. A tax-and-spend liberal's and lobbyist's nightmare!

[no-s]

How could you be double-taxed? You will be just as taxed as everyone else, regardless of the source of your money, when you spend it. lessee now, you putcha money in taxfree deferred savings, and then down the road some time the law changes, and:

• They pass a confiscatory tax to share your windfall
• They decide your account has to pay income taxes on new earnings because you have exceeded some newly proscribed limit
• or we ditch the income tax, the apparatus of enforcement, and the rationale of tax from before birth until after death in favor of a national retail sales tax administered by the states (healthy competition) with a poverty-line lump-sum refund available for tax on spending up to the poverty line

And you're worried about paying sales tax after you extract your effectively tax free earnings from retirement account? You realize in many jurisdictions sales tax has already crept up above 10%...? What makes you think you're safe from next tax...(hey, the capital tax! Comes up every so often...remarkably similar to Ad Valorem in justification)

[livius]

no longer be laboring under the yoke of the income tax

That's exactly what it feels like. I know that a consumption tax would probably work out about the same, in real terms, but psychologically it would feel so much better. I'm self employed, so I have to write the checks to pay my taxes. Every time I do, I think of all the time I've spent chained to my desk to produce those thousands of dollars I send off, and it makes me simply not want to work any more.

Again, it's probably purely psychological, but, boy, it would sure make the self-employed feel better if we didn't have to write those checks! (To say nothing of keeping every tiny little receipt and paying ridiculous amounts of money to our accountants.)

[Starrgaizr]

For complete text of the President's report, see the Economic Report of the President at

http://w3.access.gpo.gov/usbudget/fy2004/pdf/2003_erp.pdf

[Blue Screen of Death]

I've finally got myself set up to beat their stinking game and now they want to go and CHANGE THE FREAKING RULES!

Yeah, I am about ready to enjoy retirement after a lifetime of paying income tax. Now they want to stab me again. I thnk not. While I am in favor of getting rid of the income tax, it should be phased in. I don't feel like getting screwed twice. They need to make provisions for those of us that have already paid our dues.

[ovrtaxt]

Thanks for the article. I was hoping somebody would post it. If W passes this, he is instantly immortal, bulletproof, and beloved by America for decades, possibly longer. (At least the half of America that makes thsi country work.)

[no-s]

I'll bite. What do you mean, double taxing of savings?

[NetValue]

"I'm a CPA and I say go for it! The tax code is an abomination. Just think of all the lobbyists who would be out of a job too!"

I am an Enrolled Agent who has written on the nightmarish complexity of the tax laws and their impact on the citizenry. There has to be a better way than the way we have now (which survives primarily so politicians on both sides can grant favors.)

[CyberAnt]

It really is funny to watch! And ... I think he does it - BECAUSE HE CAN!!!

Again ... misunderestamation of the strategery

[GovernmentShrinker]

White House Floats Idea of Dropping Income Tax Overhaul

This title doesn't say what the story says.

The headlines editor just couldn't believe the first sentence of story said what it actually says. These are very tough times for socialists in the U.S, and some of them are apparently going into full-blown denial.

[ovrtaxt]

There would be no tax on items sold for re-sale. Items or services taxed ONLY one time, at the point of RETAIL sale!

The alternative is a commerce tax. Every transaction, resale or not, is levied a 1.5% tax. NO EXEMPTIONS AT ALL FOR ANYTHING. Im a resaler, and I like the idea.

[Bigun]

You may find this interesting!

[Thane_Banquo]

Bump for the Fair Tax!

[Maximum Leader]

Well, I doubt we'll see a NRST (which is a pity). The only way to get a consumption tax through Congress would be a "Progress Consumption Tax" like the Nunn-Domenici plan thats been around since, well, before Sam Nunn left the Senate 6 years ago.

In this plan, you still file a return, but every dollar that an individual invests is tax-exempt. Everything that is left over is consumption and taxable. There is a large exemption at the bottom rates and a progressively higher rate on the consumption as you have a a higher income.
Corporations are taxed similiarly-- basically its a VAT tax on corporate revenue.

Obviously its not as economically efficient as a NRST tax but it would be an improvement over the present system (weven when the Democrats muck it up with tax breaks for the poor and Republican muck it up with tax breaks for corporations). For the economy to grow, its better to tax consumption than income.

[FairOpinion]

Still, no one has figured out how not to double tax people who have savings when that saved money is spent.
=====

A lot of people, if not most people have their largest savings in their 401K plan and pension.
When they retire and start to pull money out of there, it gets taxed as ordinary income.

Just think, if they will be able to pull out the money, NOT pay taxes on it, then they will easily afford to pay the consumption tax.

Abolishing the income tax and substituting it with a consumption tax is a great idea.

It is fair, and also, when Congress raises taxes people will see it immediately and vote accordingly.
As long as taxes are taken out of paychecks automatically, people don't even realize how much taxes they are really paying.

http://www.fairtax.org

[spokeshave]

AlQueda...Iraq....UN....North Korea....NATO and the IRS all disbanded and dispersed....nice thought

[GovernmentShrinker]

Big corporations ARE the retail buyer for many goods and services -- huge orders of PCs, customized software (costing in the millions), accounting and legal services, temp agencies, etc.

[Eala]

>White House Floats Idea of Dropping Income Tax Overhaul
>WASHINGTON, Feb. 7 — President Bush, having already set off a firestorm over his proposals to cut taxes and revamp retirement accounts, suggested today that the time might be near to drop the income tax as a whole and replace it with some form of consumption tax...

This title doesn't say what the story says.

Do you perceive my disappointment?