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]

Compliance costs are the costs of compliance to the tax code.

We might be getting somewhere now. What percentage of prices is "compliance costs" exactly?

Oh and if you're going to "scrap the code" how come you're only reducing "compliance costs 90%"?

[manic4organic]

COURTESY OF CONSERVATIVE ALERTS.COM

Congressman John Linder (R-GA) has once again introduced the "FairTax" bill (H.R. 25). The FairTax is one of the most exciting proposals to ever reach the American people. It offers long-needed tax relief -- in the form of lower prices, nearly nonexistent compliance costs, and the ability to choose how much to spend in taxes -- to all Americans, while eliminating the income tax and allowing Americans to keep 100 percent of their paycheck.

The FairTax will dramatically reduce prices, protect and ensure funding of Social Security and Medicare, empower the low-income earners, and put choice and control back into the hands of every American. All the crucial elements are in place: a public that is eager and ready for a fairer tax system, and a Congress willing to seriously consider genuine tax reform. To be competitive in the next century and to renew the American dream, we must change the way we fund our national government.

The FairTax Act:


Repeals all corporate and individual income taxes, payroll taxes, self-employment taxes, capital gains taxes, estate taxes and gift taxes.

Imposes a revenue-neutral national sales tax on all new goods and services at the point of final purchase for consumption. Business-to-business transactions and used products (which have already been taxed) are not subject to the sales tax.

Rebates the sales tax on all spending up to the poverty level.

Results of the FairTax:


Dramatically reduce the costs of goods and services by 20 to 30 percent.

Allows you to keep 100 percent of your paycheck, pension, and Social Security payments.

Gross Domestic Product will increase by almost 10.5 percent in the first year after enactment.

Compliance costs would decrease by 90 percent.

Real investment would initially increase by 76 percent relative to the investment that would be made under present law. While this increase would gradually decline, it remains 15 percent higher than under the existing tax structure.

Exports would increase by 26 percent initially and would remain more than 13 percent above the level under the current tax system.

Real wages will increase.

Increases incentives to work by as much as 20 percent in many households, leading to higher economic growth and efficiency.

Interest rates will fall 25 to 35 percent.

Isn't it time for REAL change in our federal tax system? We need to support this bill TODAY!

ACTION ITEM: Rep. Linder has announced that he has added more than 20 co-sponsors -- including House Majority Leader Tom DeLay (R-TX) -- to the FairTax bill. "The momentum behind the FairTax continues to build, and Majority Leader DeLay's co-sponsorship is just the latest signal that support for the FairTax is growing," said Linder. "The bill now has 21 co-sponsors -- more than any other fundamental tax reform legislation in the House -- and they represent a bipartisan coalition of members from across the nation. Not only do my colleagues recognize the harm done to the American people by the overly intrusive and burdensome income tax code, their constituents recognize it every April 15th," continued Linder.

This bill needs DOZENS more co-sponsors, and needs to be moved OUT of the Ways and Means Committee, to be voted on by the whole House of Representatives. Click "Go!" above to send your Congressman a personal message, asking him or her to support the FairTax bill to abolish all federal income taxes, death taxes, capital gains taxes, and payroll taxes, and replace them with a national retail sales tax.

NOTE: Please be sure to click below to send this Alert to everyone you know who believes that it's time to REPLACE the income tax with a FAIR TAX. Thank you!

[lewislynn]

Payroll TAX costs are not COMPLIANCE costs.

So when you do your required by law payroll taxes you aren't really complying with any laws then?...got it.

Tax costs are the costs of the tax.

What does that mean exactly, it keeps getting muddier and muddier around here...

OH wait, it's not mud...IT'S BULLSHIT!

[Principled]

Oh and if you're going to "scrap the code" how come you're only reducing "compliance costs 90%"?

I'm not doing any of this. It's HR 25 that will do such.

Compliance to tax laws cost money. You can find out yourself how much compliance to the income and payroll tax adds to prices, reduces wages, and decreases ROI....you don't need or want information from me. There are dozens of experts out there who have published research on the topic.

And yes they say 90% of compliance costs will be eliminated. I won't bother you with a link, again, as you've asked not to be "spammed" with links (even thou you ask for them first!).

By "scrapping the code", as you put it, the cost of complying with tax laws is reduced by 90%.

Of course under the NRST it is the business, not the consumer, who is responsible for keeping receipts, so they will still have that expense. Under the income tax, business AND consumers must provide receipts on demand by IRS.

It would be nice to be able to eliminate 100% of compliance costs, but I'm still waiting for that bill to be introduced.

[Principled]

Business will also still have the expense of reporting wages to SSA... I omittied this from previous post..

[Principled]

Thanks manic. The bill has 25 cosponsors now. It may take another 15 years, but this will happen in spite of those who will do anything to stop it.

[Zon]

George writes: Z, Joe and Jane "Sixpack" don't influence politicians. Millionaires do. If people making millions of dollars had to pay the same rate as on their income, they would be clamoring to get that rate lowered. While sipping their favorite beverage, under the NRST, they would probably talk about the government supplied amenities we "all" should have. Concert halls, museums, ballparks and arenas, race tracks, etc and conclude that the tax rate needs to be raised. It's already happened. It caused the Boston tea party. Your utopia just don't exist. Peace and love, George. 178

Zon: The fact of the matter is, politicians need votes to get elected and reelected. Joe and Jane "Smith" are in the majority and their votes can keep any tax-rate raising politician from being elected. Their massive number of votes can also elect a politician that will lower the tax rate. It seems all too clear that you're implying that votes don't matter and the only way politicians would lower the tax rate was if multi-millionaires bribed them. 205

Most times, Politicians make their most odious votes as "lame ducks". They don't care if they get re-elected. Some make "mistakes" like the former Bush. And, it really doesn't matter if the odious politicians get re-elected anyway. Most times if not all, their replacements are odious politicians with the BIG government ideals.

Yeah sure George, politicians don't get voted into office by the massive number of poor and middle class voters. And politicians don't care if the get reelected. They just look like career politicians. Sure George, whatever ever you say George.

[Zon]

You "crapped" in Jim Robinson's "living room" (post 163). The mess you left behind has been cleaned up by the moderator. And all you can do is plead monkey see, monkey do. Grow up!

[Zon]

Okay, so I was wrong, Social Security is a tax. And maybe under the NRST income from interest, dividends and capital gains is subject to social security tax. It's a fact that, for tax incentive purposes the IRS does snoop around in many people's financial affairs.

I made an error, I'm human. Big deal. I acted responsibly as a mature adult and acknowledged the correction.

[Semper911]

For those who have enough savings to live off of their income, this is a windfall

Dead wrong. This is the person who stands to lose the most under the plan.

Savings have already been taxed. Now the retiree who starts to spend what he has saved will be taxed again. In a big way.

[Always Right]

You "crapped" in Jim Robinson's "living room" (post 163). The mess you left behind has been cleaned up by the moderator. And all you can do is plead monkey see, monkey do. Grow up!

Oh puh_leeez get off you friggin hypocritical high horse. You keeping crapping on Jim's living room by bringing this up. If I called you a commie bastard or something what would you say, "thank you sir may I have another"? I had already politely asked Mr. Jesup to refrain from personal attacks in post 153. But no, he had to keep going with more personal attacks. And you have the nerve to get on my case. You seem to have no problem with NRST crapping all over. Give it a rest.

[Always Right]

actually post 154, not 153.

[Zon]

You "crapped" in Jim Robinson's "living room" (post 163). The mess you left behind has been cleaned up by the moderator. And all you can do is plead monkey see, monkey do. Grow up!

[Always Right]

You "crapped" in Jim Robinson's "living room" (post 163). The mess you left behind has been cleaned up by the moderator. And all you can do is plead monkey see, monkey do. Grow up!

So what's your excuse for crap you continue to spew in here. I am a good American who responds when someone attacks me. You seem to expect me to roll over and take it like a Frenchmen. I don't play that game, maybe you do.

[Principled]

And maybe under the NRST income from interest, dividends and capital gains is subject to social security tax.

No. That's not right. Interest and dividends are not taxed under the nrst.

[Principled]

Savings have already been taxed. Now the retiree who starts to spend what he has saved will be taxed again.

The savings will be taxed again regardless of whether the nrst is enacted or not...because under the income tax, prices are inflated by embedded income taxes. So those who have done the right thing and saved money will be in no worse position regarding amount of tax to be paid on savings.

[Zon]

And maybe under the NRST income from interest, dividends and capital gains is subject to social security tax.

No. That's not right. Interest and dividends are not taxed under the nrst.

I said maybe. So I assume you didn't mean that the maybe was no. And that you didn't mean the maybe was wrong. Thanks, for letting me know that those things aren't taxed.

[Zon]

You "crapped" in Jim Robinson's "living room" (post 163). The mess you left behind has been cleaned up by the moderator. And all you can do is plead monkey see, monkey do. Grow up!

[Always Right]

You are like the whinny snotty-nosed little brat that just won't shut up.

Waaaaa!, Waaaaa!, Waaaaa!, Waaaaa!............

[Bigun]

Oh and if you're going to "scrap the code" how come you're only reducing "compliance costs 90%"?

90% is 9000 times better the 0% looie!

Here is an excert from remarks made by The John M. Olin Distinguished Professor of Economics at George Mason University, Dr. Walter E. Williams, in March of is 2002 to a standing-room-only crowd of students, faculty, and guests at Hillsdale College's Constructive Alternatives Seminar:

"...Keep in mind that a working definition of slavery is that you work but do not have any rights to the fruit of your labor. Taxation and regulation constitute confiscation of some or all of the freedom to own and use property. This confiscation has reached unprecedented proportions. In 1902 expenditures at all levels of government totaled $1.7 billion, and the average taxpayer payed only $60 per year in taxes. In fact, from 1787 to 1920, federal expenditures never exceeded 4 percent of the Gross National Product (GNP), except in wartime. Today federal expenditures alone are $1.8 trillion - almost 30% of GNP - and state and local governments spend over a trillion more. The average taxpayer now pays more than $8,000 a year, working from January 1 to May 8 to pay federal, state, and local taxes. In addation to the out-of-pocket cost, Americans spend 5.4 billion hours each year complying with the federal tax code-roughly the equivalent of 3 million people working full time. If it were employed in productive activity, the labor now devoted to tax compliance would be worth $232 billion annually. The federal cost of hiring 93,000 IRS employees is $6 billion. If these Americans weren't fooling around with the tax code, they could produce the entire annual output of the aircraft, trucking, auto, and food processing industries combined..." Emphasis added

I am unaware of Dr. Williams being affiliated with ANY tax reform organization Looie. What do you think he is talking about in the highlighted part of this Looie? I RELLY hesitate to post anything with numbers in it to you Looie because we have ALL seen the effect they have on you bu I'm going to just once more for the heck of it.

George W. has proposed 760 Billion in Tax Cuts over 10 years. I'm ALL for that in the short term but if that would do good things for the economy, as I believe it SURELY would, how much MORE good would eleminating 90% of the compliance costs associated with the current income tax system do Looie?

Let's assume, for the purpose of this exercise, that Dr. William's numbers in the above article are correct (I personally think he errs on the conservative side) and compliance with the income tax consumes $232 Billion per year. 90% of that is $208.2 Billion per annum. Multiply that number by 10 and you come up with $2.08 TRILLION Looie!

That is 2.08 TRILLION with a T currently wasted dollars which would be put to productive use in the economy Looie! I say that would have a huge and beneficial effect Looie!