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.
You clowns continue to say that yet can't seem to find one example. Rather, you go on and on about me ...
Just present ONE example of how your plan will reduce prices 20, 30, 40%, it would be much simpler than name calling or endless rants (lies actually) about how everyone everywhere has already posted it. .
Dr. Walter Williams has fotten [sic] more about economics that [sic] YOU will EVER know!
Maybe you could get him to show you how it would work then.
Sorry, though (with the exception of the constant little cigarette cough/clearing of the throat) I like listening to him on Rush, but when he talks about economics I can't help but think "affirmative action"....
Article 1, Sec. 9
No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.
Amendment XVI shot that to hell!
Secretary Snow, who likes to snow people,
Any Article that includes lines like this cannot be treated seriously.
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.
Which proposed legislation is that? All Bush is asking for is an extremely small tax cut, with an end to double taxation on dividends.
At the heart of this plan is the elimination of tax on corporate dividends
Actually Joan, the goal is to end the Double taxation on dividends. Someone will still have to pay taxes on any profits earned by dividends.
And so on and so on.
You file with a one page report, monthly, quarterly or annually depending on business level. You keep your records for an audit just in case, but you would do this anyway. Your usual business records (receipts etc) all contain the tax info, so there is no extra burden.
The claimed advantage of such a system over a strictly retail tax is that it captures economic activity that does not make it to the retail level (such as production machinery) thus distributing the tax throughout the economy more fairly. Of course, business has to pass this onto the final consumer anyway.
I am not promoting such a system, just clarifying a previous poster that suggested that producer level taxes would be multiplied.
You tax activities you don't like. I'm not clear that taxing consumption wouldn't create an initial drop in consumer activity. However, I would suggest that eliminating the complexity of the tax code would free society tremendously. Of course, it would create a depressing in the law/accountancy sector. After Enron, maybe that's a good thing for the big firms to take a hit, but many decent lower-level CA's would also be affected.
"Would you like to retract your statement now?"
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PW, No thanks. The numbers on the bite to differing income groups tells the story. Known out take versus possible reductions. These people would make good used car salespersons. Thanks anyway. Peace and love, George.
AFE, That ain't so either. But, THIS article isn't even talking about the NRST. THIS article is speaking about a VAT tax that IS included in the President's{?} tax reduction bill. The VAT will be implemented over the next few years in ADDITION to the income tax and all the rest of the odious "user fees", "permits", "excise taxes", and other SALES taxes such as for gasoline, airline tickets, utility taxes, etc that are already levied. Be afraid for your children's future. VERY afraid! Peace and love, George.
"The best thing for the middle class is a hugh decline in federal spending."
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FSP, Agreed. And, the lower earning taxpayer the hardest. And, the "movers and shakers" would have less incentive to keep the rate low. Whereas, with a flat tax on income with no deductions and or exemptions, they would have a BIG interest in keeping the bite low and lowering government expenditures. Now, and with a NRST they want government help with their favored passtimes. Peace and love, George.
SFG, Actually, the bill that the Tax is written into {Bush's tax cut bill} is designed to ELIMINATE "investment" income from taxation. So, in this instance, you are wrong. Peace and love, George.
SFG, BTW, do you REALLY think that ain't so?? Then, maybe he could be more forthright when discussing our national debt. The Treasury Department is, as of 12/31/2002, above the debt limit set by Congress, and as of 04/17/2003, $460,780,111,309.05, above the national debt limit allowed by Congress. 'Splain that! Peace and love, George.
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