Shock and awe not only for Iraqis {The "Fair" tax cometh}

WorldNetDaily ^ | 4/16/2003 | By Joan Veon

[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.
============

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.

Lastly, it's time to examine what George Bush stands for, because it appears he is trying to harmonize our tax laws with the other countries of the world. There has been no clarification – let alone an announcement – that the Bush administration is changing the tax code. Why keep truth from the American people? What happened to the country that the colonists fled to from the British and European feudalistic systems?

THIS article at WorldNetDaily

[lewislynn]

Zon says:

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.

Principled says:

The REBATE is not welfare, as welfare is transferred from other individuals. A REBATE is money already paid.

You people need to get your stories straight.

[lewislynn]

I'm still waiting to see your math on how prices are reduced 20, 30, 40%...

[k2blader]

There is a huge difference between a national retail sales tax and a "Value Added Tax."

Count me among the confused...

[iconoclast]

Bump for a later read.

[lewislynn]

You're the one person on the tax threads that has, by far, most discredited themselves. You're the undisputed champion, lewislynn.

Thanks I'll wear that with a badge of honor since not one of you has ever been able to refute any fact I've presented...of course refuting a fact would be an oxymoron wouldn't it.

If you want to see discredited I suggest you re-read your own words from this thread. I posted them once to your cohort but I'll do it again in case someone missed it.

Zon:

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

--------

It's not a welfare check. It's a way to recover the tax that must be paid on necessities, like food and medicine,

Uh huh, so receiving a tax rebate from the taxpayers for taxes never paid isn't welfare?

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.

Gee, the lies and deceit just keep piling on. Were you saying something about discredited? What fool would believe the government would write any law where they lost control of your source of income?...Sorry did I just call you a fool?

`SEC. 903. WAGES TO BE REPORTED TO SOCIAL SECURITY ADMINISTRATION.

`(a) IN GENERAL- Employers shall submit such information to the Social Security Administration as is required by the Social Security Administration to calculate social security benefits under title II of the Social Security Act, including wages paid, in a form prescribed by the Secretary. A copy of the employer submission to the Social Security Administration relating to each employee shall be provided to each employee by the employer.

`(b) WAGES- For purposes of this section, the term `wages' means all cash remuneration for employment (including tips to an employee by third parties provided that the employer or employee maintains records documenting such tips) including self-employment income; except that such term shall not include--

`(1) any insurance benefits received (including death benefits);

`(2) pension or annuity benefits received;

`(3) tips received by an employee over $5,000 per year; and

`(4) benefits received under a government entitlement program (including social security benefits and unemployment compensation benefits).

`(c) SELF-EMPLOYMENT INCOME- For purposes of subsection (b), the term `self-employment income' means gross payments received for taxable property or services minus the sum of--

`(1) gross payments made for taxable property or services (without regard to whether tax was paid pursuant to section 101 on such taxable property or services), and

`(2) wages paid by the self-employed person to employees of the self-employed person.

I've got to stop discrediting myself here.

[Principled]

it's been shown to you a hundred times. You know where to look for ANY of the massive amounts of research showing such. Remember all the LLMs in taxation and the Economics professors and all the studies that have been done that show, even under the most conservative guidelines, a 20-40% reduction in consumer prices...

Oh yeah, we're supposed to take your word for it and ignore the vast research done by experts in the field.

Dolt

BTW if anyone wants the links, they're easy to find. I can help.

[Principled]

A national retail sales tax is a tax levied ONE TIME ONLY, that time being the point of final retail consumption.

A Value Added Tax (VAT)is a tax that levies additional tax at every production step, including the final sale. BTW, the flat income tax is a VAT.

Look here for lots of quick info.

[Principled]

From here

: All goods and services already contain the embedded costs of the current tax system in their prices. When these embedded taxes are removed, prices will come down. Dr. Dale Jorgenson, Chairman of the Economics Department at Harvard University, has projected a producer price reduction of 20 to 30% in just the first year after adoption of the FairTax. Dr. Jorgenson also estimated that service prices would decline by 25% because of the repeal of the income tax. In addition, the FairTax will lower compliance costs by more than 90%, and the removal of these costs will force prices down even lower.

And why is your opinion "fact" but Dr. Jorgensen is wrong???

[k2blader]

Thank you very much for the information and link!

[Principled]

Look at the qualifications of those at the bottom of page 1...

here

Arthur P. Hall, PhD Senior Economist The Tax Foundation in testimony to House Ways & Means Committee
David R. Burton and Dan R. Mastromarco LLM Tax
Lawrence J. Kotlikoff Dr. Dale Jorgensen, PhD Harvard School of Econ...

...and the list goes on.

Please tell us all again just why your silly little opinion should mean anything when measured against opinions of those experts?

Sorry if I've made you cry.

[Principled]

Here is what the experts believe.

Take a look at the footnotes. THose are experts that say prices will fall.

[Principled]

You're welcome. Kick around http://www.fairtax.org and http://www.salestax.org for a while. Also check CATS.

[rwfromkansas]

Can someone explain what this article is about?

The Fair Tax.......not what this article talks about...calls for a 23 percent NRST. Also, the other matter raised, the Senate cutting of Bush's tax cut, does not call for a NRST.

I did not read the entire article, but I am not going to waste 10 minutes reading an article by an author who can't make their point. This author appears to have been smoking pot when writing.

This is truly one crappy piece of writing....absolutely dreadful beyond comprehension. I re-read the beginning and Joan actually is saying the Bush tax cut would install a VAT!

This article needs to be a lesson for us all. Don't down the gin when trying to get your column in by deadline.

[k2blader]

Thanks again. :-)

[k2blader]

Your post seems to sum up why I was so confused when trying to read the article!

[Principled]

Yes, rw, the article is a steaming pile that sparked the "Fair Tax" debate just cuz the words came up.

The article is a real dung heap, huh?

[Principled]

From the National Taxpayer's Union (NTU) just yesterday...

Recently NTU endorsed one such bill, HR 25, which would replace federal income taxes and the personal payroll tax with a retail-level consumption tax.

HR 25 is the "Fair Tax" bill in question.

[agarrett]

The top 5 pay more than 96% of the income tax.

  While true, this is highly misleading. The problem is limiting your view to the income tax alone - that is far from the only tax we pay. To take one very obvious example, for most wage earners, the social security tax is our biggest burden - much more so than the income tax. And that tax is regressive - and it only applies to wages, making it even more regressive. But, if you just look at income tax, it doesn't figure into your calculations at all.

  When you look at our tax burden overall, it turns out we're already pretty close to a flat tax. Everyone winds up paying fairly close to the same percentage of their income in taxes. Now, we take about the most complicated route possible to get there ;-) but we do get there. It is entirely unreasonable to simply look at one tax, in isolation, and declare it is unfair, and must change.

Drew Garrett

[lewislynn]

BTW if anyone wants the links, they're easy to find. I can help.

What about it? Give the links big shot.

And why is your opinion "fact" but Dr. Jorgensen is wrong???

Because unlike your hired economist I can show the numbers.

Please tell us all again just why your silly little opinion should mean anything when measured against opinions of those experts?

It's not an opinion, it's fact.

THose are experts that say prices will fall.

LOL. I didn't say they wouldn't fall, they may or may not...maybe someone will increase profits, but it won't be any 20, 30, 40%...

Show me the numbers, either yours or theirs, not lip service or irrelevant links.

Try this one: 33.33% tax on 60% profit = 20%...In other words to reduce the price 20% at a 33.33% tax rate they first would have to have a 60% profit or gain...A 25% tax rate would need an 80% profit or gain to meet your one pinhead economist's absurd, if not imbecilic estimation.

Sorry if I've made you cry.

Make me cry?...HA-- I'm laughing my ass off at your utter stupidity for not only falling for it but trying to defend and sell it....

[Zon]

Can someone explain what this article is about?

Probably not.