1. A Flat Income Tax would remove all of the complexities of the current tax code, without adding ANOTHER tax. Why give Congress another rope to hang us on.
Hardly, the complexity of the income tax is not a consequence of the number of brackets, it lays with defining income to be taxed. A flat income tax on business without deductibility of business expense is nothing more than a VAT, i.e. a tax on all sales receipts at all levels of production.
For the individual the same is true, one must be able to separate return of capital from income returns and wages. The law required to do this is an invitation to ever growing complexity.
Read:
Flat Tax as Seen by a Tax Preparer
by Vern Hoven
2. $77 in groceries, $23 in tax equals 29.87% tax rate in my book. I would call that *Truth in Taxation*
23% income tax is 29.87% on $77 of takehome.
Income taxes are expressed in tax inclusive measure (tax)/(gross income). The NRST is measured in tax inclusive measure (tax)/(gross payment) for comparability.
Your are calling a comparison of apples with oranges *Truth in Taxation*, rather disengenuous of you isn't it.
3. Price decreases are just passed onto the consumer? That is a BIG assumption.
Assumption? Hardly! A business can only remit taxes from its business receipts (i.e. customer sales), if it pays from its capital it ultimately goes bankrupt.
4. You KNOW that the NRST would be changed over time to add exemption, progressivity, income limits, etc.
The income tax began as a simple flat tax. How is this an argument against the NRST, which at the very least provides financial privacy to the individual.
No individual income is reported to government by the individual under a Sales Tax, where do these income limits, progressivity, exemption come from? Those are inherent features of income taxes, not Sales Taxes.
Why do you think Congress would leave its own creation alone??
Eternal Vigilence.
Guaranteed that Congress has already demonstrated its historical ability to dink with flat income taxes.
Changing from a broadbased tax on all goods and services to exemptions of certain items merely raises the rate on everything else, or government institutes a novel tax reduction. So where is the problem?
In the end Congress is must respond to the demand of its constitutencies. Raising tax on goods and services does not make voters happy. Increasing complexity of taxes on businesses does not make business(read contributors) happy. You figure it.
Guaranteed a flat income tax neither starts out flat nor does it remain simple nor flat over time, furthermore there is no true Flat Income Tax proposal before Congress nor will there ever be one.
Why Flat Tax Isn't A "True" Flat Tax
http://www.cac.psu.edu/ur/archives/BUSINESS/flattax.html
Here's how tax rates come out for the Armey/Shelby Flat Tax, a flat individual/corporate income tax, leaving all SS/Medicare, Federal Unemployment, excise taxes and tariffs in place and unchanged.
http://www.library.unt.edu/govinfo/subject/vital.html
- "The chart below shows a hypothetical set of flat tax rates and allowances that would result in revenue neutrality. This model, produced by the Congressional Budget Office shows that all federal income tax revenues could be fully replaced by a system with a flat tax rate of 13.1 percent and no deductions. Allowing total deductions for a family of four to reach $36,800 (more than double the amount allowed in 1995) would require a 19.9 percent rate."
Joint Economic Committee
Revenue Neutral Tax Rates for Alternative Allowances and Exemptions Under a Flat Tax Standard Allowances Option 1 Option 2 Option 3 Option 4 Option 5 Single $13,100 $13,100 $ 6,550 $ 6,550 $0 Joint $26,200 $26,200 $13,100 $13,100 $0 Head of Household $17,200 $17,200 $ 8,600 $ 8,600 $0 Dependent Exemption $ 5,300 $ 2,650 $ 5,300 $ 2,650 $0 Revenue Neutral Tax Rate 19.9% 19.4% 16.8% 16.3% 13.1% Source: Congressional Budget Office, 1995.
Under the Armey "flat" tax, as it is currently proposed,(HR1040 introduced 3/15/2001) a single person would pay:
7.65% ---- 7.65%(SS/Medicare) tax on wages/salary income below $13,600,
26.65% --- 19% + 7.65%(SS/Medicare) tax on wages/salary and other taxable income from $13,600-$75,000
20.45% --- 19% + 1.45% Medicare tax on wages/salaries and other taxable income from $75,001 up.
0% -------- on savings & bond income and stock dividends.
And that single person's business/employer pays,
19% ------ on earnings (Gross Receipts less allowed business deductions, exemptions and credits)
13.65% ---- 7.65% on SS/Medicare employment excises + 6% federally mandated unemployement excises levied on each employee's on wages up to $75,000.
7.45% ----- 1.45% on Medicare employment excises + 6% federally mandated unemployement excises levied on each employee's wages greater than $75,000.
Plus additional selective excises and tariffs dependant upon the nature of business engaged in.
Note: The base "Flat Tax Rate" is subject to meet revenue neutrality requirements under the Budget Enforcement act. The 19% rate stated in the Armey/Shelby Flat Tax proposal does not meet these requirements and would of necessity be adjusted upwards, and/or personal exemptions and business deductions be reduced to meet revenue neutrality criteria for enactment.
True, but Congress has always meddled with the tax code, and will in the future. There is no reason for 95% of tax regulations, but Congress added them, and we need to cut those excess regulations out.
Income taxes are expressed in tax inclusive measure (tax)/(gross income). The NRST is measured in tax inclusive measure (tax)/(gross payment) for comparability.
I am sorry, but this is funny math. All (current) sales taxes are calculated as (tax rate)/(price). Calculating this *inclusively* is twisting the current understanding of how sales taxes operate. You may not like it, but, I repeat, buying $77 in groceries, then having $23 in sales tax still equals a 29.87% tax rate in my book.
The income tax began as a simple flat tax. How is this an argument against the NRST, which at the very least provides financial privacy to the individual. No individual income is reported to government by the individual under a Sales Tax, where do these income limits, progressivity, exemption come from? Those are inherent features of income taxes, not Sales Taxes.
Read Charles Addam's books on the history of taxation. Proponents of income taxes said tax rates will NEVER go above, I believe, 1%, and we will NEVER tax more than the richest, I believe, 1%. If you listen to one thing that I say, know that your pure NRST will NEVER stay the same as proposed, or even stay the same if it is ever passed.
Under an NRST, won't Social Security still be funded as currently, meaning through taxation of income? If so, then some gov't agency will still collect income information.
Guaranteed that Congress has already demonstrated its historical ability to dink with (originally) flat income taxes.
Agree.
Changing from a broadbased tax on all goods and services to exemptions of certain items merely raises the rate on everything else, or government institutes a novel tax reduction. So where is the problem?
The problem, as currently, is that exemptions will eventually happen. I get the feeling that you think that passing an NRST will solve our tax mess. No, it merely will substitute (or add) another one.
In the end Congress is must respond to the demand of its constitutencies. Raising tax on goods and services does not make voters happy. Increasing complexity of taxes on businesses does not make business(read contributors) happy. You figure it.
Despite all of this unhappiness, Congress does it anyway. Do you think passing H.R. 25 (even in its originally pure form, which won't happen) will change Congressional meddling?
Guaranteed a flat income tax neither starts out flat nor does it remain simple nor flat over time, furthermore there is no true Flat Income Tax proposal before Congress nor will there ever be one.
Guaranteed a flat *sales* tax might start out flat but it doesn't remain simple nor flat over time, furthermore while there is a Flat Sales Tax proposal before Congress, it probably won't pass, and if it somehow does, we will be stuck with TWO tax systems.
By the way, earlier you were quoting some Harvard professor on how some certain NRST level would be revenue neutral. Since I think that we both agree that since taxation provides various different disincentives, how can ANY analyst compare two RADICALLY different tax systems?