Posted on 04/16/2003 7:28:39 AM PDT by George Frm Br00klyn Park
WorldNetDaily / Commentary
Shock and awe not only for Iraqis
Posted: April 16, 2003
1:00 a.m. Eastern
By Joan Veon
© 2003 WorldNetDaily.com
While jubilant Americans can't help but be fixated on "revolutionary" military operations they have witnessed on television for the past two weeks – called "Shock and Awe" – most are not aware that Americans are about to receive their own economic "Shock and Awe."
Many forget that while Rome burned, Nero was busy deflecting attention away from the real center of action. For example, the front page of the March 8 Washington Post featured a huge picture showing the burning of Baghdad with all but 5 percent of the front page devoted to the war in Iraq. However, at the bottom was the "bunker buster" which will shatter our own field of dreams here in America.
While the house voted well past midnight several weeks ago to approve the full tax plan of $726 billion, the Senate cut it by half when they voted several days later. While you may think this is not a sure thing, a recent editorial, entitled "Lay off the Tax Candy," in the Washington Post explained the deceptive game now being played. They said that there is some fine print in the Senate version that provides for some fancy footwork which gives them the ability to vote for the full amount, while making it look like they are against it.
Unfortunately, our government has not really made clear what this tax law is all about. From the extensive research I have done, I consider this proposal to be the most heinous change as it will destroy the ability of the middle class to sustain their economic power while enhancing the upper classes.
If enacted, this legislation, will deliver the final blow to the ability of "Joe and Jane Average" to get ahead. It should be pointed out that its title is a misnomer. This plan will not stimulate the economy but will cause much larger deficits, which will be borne by Americans as a result of the war, which is being waged.
Recently at the G7 finance ministers meeting, Secretary Snow, who likes to snow people, basically said that this increased deficit spending could be seen as a type of "capital spending" that most companies do when they want to expand. If it does not work, it is not the shareholder who has lost out, it is the entire populace of America. After the $4 to 6 trillion Nasdaq crash, most Americans who suffered any type of substantial loss are not looking to the market for answers.
The proposed legislation will, instead, change the entire tax code of America from a tax on income to a tax on consumption over a 10-year period. At this point in history, we are the only developed country not to have this form of taxation – which means Bush is globalizing our tax laws. In other words, he is harmonizing our tax laws and system to conform to what the major European industrial countries have. In my opinion, this basically will set the platform for a global IRS. By the way, the United Nations has been working on these kinds of ideas for the last 30 years.
Under this VAT (value-added tax), every time a purchase is made, there will be up to a possible 27 percent tax on it. This tax could replace the tax on income, making only consumption taxable while all forms of income are tax-free. There are some countries that have a value-added tax plus a tax on income while America is the only country without a VAT, but has a tax on income.
For those who have enough savings to live off of their income, this is a windfall, but for those who have only debt with little or no savings, this will create a financial burden equal to the Israelites having to make bricks without straw.
At the heart of this plan is the elimination of tax on corporate dividends. Again, if you obtain your living from stock dividends, this will be like going to heaven. No tax on income – only a tax on what you buy. Let's look at three different sets of individuals.
First we have Old Money Harry. He has never had to have a real job because he gets his living from the family trust. All of the family assets – the fabulous house, the cars, the summer homes, the yacht, the Mercedes and Rolls are held by the family trust, along with title to three large commercial pieces of real estate. Harry made several killings buying and selling real estate because the gains were tax-free since they were inside the family trust. The only downside is that the income from the trust is taxed.
However, under the proposal to reduce tax brackets – which is necessary in order to make the rates flat – from 38 percent to 21 percent, it won't hurt as much. Harry will have 17 percent more to spend. Only what you buy will be taxed – however, if you have it in a trust, no tax. Old Money Harry will achieve growth unsurpassed under the proposed tax-stimulus plan, just like the Kennedys, the Rockefellers, the Mellons and anyone else with this arrangement.
Next are John and Jane Middleclass. Both have reasonably good jobs with attractive incomes. They both have advanced degrees and live in the "executive home" to match their rising social status. They lease a Lexus and Jaguar and think nothing of packing up and going to Vale or to the Bahamas at a moment's notice. They have re-financed the house several times to add a new wing, exceptional landscaping and a pool.
While they know they are basically spending everything they are bringing in, they rationalize by thinking about the rising equity in their home and how much they will be able to cash out when they retire. Unfortunately their 401ks got zapped during the NASDAQ crash.
Donnie and Susie Squeeze are 25 years old. Donnie served in the military and works as a mechanic for the local Honda dealer. They have three small children and Susie works part-time at the local grocery store. They are saving for a down payment on a home and hope to send their kids to college if they can afford it. Right now they are just barely making ends meet.
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In order to explain the proposed tax stimulus program, let us take a look at who will come out like a bandit. Old Money Harry will be able to double his assets because he has the right tools: a pile of money and a trust. He will basically pay very little tax considering his income and assets. The stock dividends will be tax free, and other sources of income may be tax free, depending on if he takes advantage of the new Lifetime Savings Accounts.
Joe and Jane Middleclass will experience some drop in tax on income. However, once the proposed stealth tax is in full force, they probably will not have any tax break from the mortgage interest expense because it had to be sacrificed in order to pay for the other parts of the tax package. Since they have no savings outside of their 401ks, they won't have any benefit from the tax-free sources of income.
But because they like to spend, they will pay 21 to 27 percent every time they make a purchase. There is no doubt their spending habits will change. If the economy tanks and one of them gets laid off, they might have to sell the house. If the economy is not doing well, who will buy their house and at what price?
Donnie and Susie Squeeze are about to be squished. Their tax bracket will have to rise in order to help pay for the new tax law, but since they have very little savings they really won't feel the benefit of tax free dividends and investment income. Since they are still accumulating, every time they buy a car, a dishwasher, etc., they will pay a hefty consumption tax.
Unfortunately, the thought of buying a house might be out of the picture since it too will have a 21 to 27 percent tax. Depending on whether the U.S. can stimulate the economy enough to pay for the war, they may be on the hook for the cost of war.
I never mentioned the air line industry anywhere.
Yes that is a fair assessment. The problem I have is that the sales tax folks always minupulate the statistics to show how everyone will be saving a ton of money in taxes, when in fact the same amount of taxes are being paid.
And that "new" bureaucracy is to REPLACE (look it up!) the current IRS. Under the NRST, the present IRS would be disbanded and a new, much smaller NRST collection office would be established directly under the Secretary of Treasury. Since this new agency will NOT have to deal with 100 million individual taxpayers and 20 million businesses but only with the 45 to 50 state collection agencies, the entire federal end could be run by a few hundred folks. It might take perhaps 200 field agents (4 per state) to work with the state revenue offices to be certain they aren’t cooking the books or playing games with the fed’s piece of the action + additional for those non-sales tax states foolhardy enough to allow the feds to have their way with their businessmen. Perhaps another 100 more in the main office to run the computers and post deposits, make coffee, run out for the donuts, etc.
They WERE going to call this "NEW" bureaucracy "RAPLH" but settled on something a bit more descriptive of its activities.
This is a real simple question, so it should be easy to answer.
You mean there isn't gonna be a tax collection agency with the full force of the government behind them in a sales tax scheme? We will still have an 'IRS', but it may not be called the 'IRS'.
Go to the DU, they'll love your comments and support of the IRS. Here we will merely at best question your sanity.
This a step up from what we have now.
People are still gonna be held personally liable for taxes. Otherwise people will just set up a bunch of phoney companies, defraud the government and fold up shop. You really think the feds are gonna let that happen?
The national sales tax will favor cheaper imports over more expensive home grown items
Wrong. There will be no hidden taxes embedded in American made products. The NRST strips out the cost of embedded taxes in products. Most imported products have embedded taxes in them.
As I lean libertarian, the end in mind, the radical reduction in the size and scope of government
Got it. I'm not a libertarian but I have read and understand the libertarian platform.
A suggestion to my NST friends, and I am listening (hope you are checking in on us, chiefnegotiator) is to focus on the political end in mind. Ending the 'IRS' may put some bad people out of work, but I have bigger goals in mind.
The flat tax involves government initiation of force and or threat of force -- "report your income and pay the tax or we'll fine you and put you in prison". It also requires every person to report to the government how much income they make. That's an open door for the government to snoop around in people private financial affairs.
With the NRST if a person doesn't want to pay the tax they can choose to not buy the item -- and they can still get a check every month to cover the tax up to the poverty level. And since no person has to report their income to the government the government has no tax incentive to snoop around in a person's private financial affairs. No doubt if chiefnegotiator is looking in, he now has a reason to cast a happy smile.
Apparently the bigger goals you have in mind include the government prying into people's private financial affairs and the government initiating force and threat of force against people. Have you read the Libertarian platform?
You ought to read the fair tax bills that have been proposed in both the house and senate. It is the individual who is liable for the tax.
Glad you asked.
Suppose a company realizes savings of $1000.
The company reduces prices in an amount that uses up $400
The company increases wages in an amount that uses up $350
The company increases ROI in an amouont that uses up $250.
There. $1000 of tax savings used to do three things:
1) lower prices
2) increse wages
3) improve ROI.
Jeez. That was easy.
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