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.
So continuing you fussing merely makes you look like a chicken little and a IRS flunky.
1)A flat tax on income with no deductions and/or exemptions would have EVERYBODY interested in keeping the percentage low
Taxes would be hidden and embedded as they are now. Folks would fail to realize their true tax burden - as is the case now.
We would still have withholding from our paychecks.
We would still have FICA taxes withheld.
We would still have an IRS.
We would still be allowing the feds to decide how much of our money they're going to take.
2)The NRST creates a class of people who will have very little interest in keeping the bite low.
That assertion is flawed IMHO. It presumes that those who spend less will not desire lower taxes. That's just silly.
3)The same bottle of wine costs rich and poor the same with an NRST.
As it should be. Why should a product cost different amounts for individuals with different wealth???
EVERYBODY covers a whole lot of territory George! Would that include the drug dealer who made $300K selling PCP laced toke to our kids down on the corner George? Or the back room poker player, or the prostitute, or the...? All have $0 legal income you know. You actually believe they are going to run to the taxman and ask him how much do I owe on the $300K I made last year selling dope? If so I got some swamp land over in the Arabian desert I need to sell and you seem like a GOOD candidate for the purchase!
They WOULD pay under the NRST when he bought their gold chains and Mercedes however now wouldn't they?
Well DUH! This IS The United States of America George! You know the place where EVERYONE is supposed to be equal under the law!
Oh! BTW, the KEY element you are overlooking here is that, under the NRST, EVERYONE would get a powerful inducement to reign in the government with the purchase of that bottle of wine and EVERYTHING else they happen to purchase! They would get a detailed reciept showing exactly the extent of the governments bite and, under that condition, I garantee you that the government would SOON begin to shrink!
Indeed he would!
B R A V O ! ! !
Simply CANNOT be said any more plainly than that!
Anyway George, have you considered the opportunity cost due to people unwilling to enter into business relations because of the tax consequences? This one whacks me every time I try to get customers out of state, or try to get certain types of contracts. The income tax system is loaded with all sorts of behavioral modification (aka social engineering), there is no way to seperate the good from the bad, the best course of action is just to nuke it. Attempts to incite class warfare over changing the tax system are not a valid argument.
Yeah sure, tighten the screw on "Joe and Jane Sixpack" in the name of "accountability". Very noble reason.
Z, Or when the company cuts it's prices not because of "choice", but because of the necessity to "compete", they still go out of business. And, as I wrote before, the remaining company at that point RAISES prices to recoop their losses. when competition is eliminated, that is the way it works. "What the market will bear".
"What you been smokin'?" was began by the "I want some of what you and the author are smoking." comment by EEE.
If no one pays a tax on final use products except for folks who are unlicensed godgov approved corporations, the tax rate of 29% is WAY low. If farmers through bakers pay no taxes on their end use products {"tractors, ovens"} then why should harry homeowner? "Godgov" is an entity worshipped by MANY. Some call "him" "Big Brother" or some "Big Mama". I think you may recognize him/her. Peace and love, George.
I do not believe it is anybody's business how much money I or anyone else makes, particulary some government pogue in the IRS!
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TM, Let's say that a person makes 100 million dollars with investment income only. Under the NRST, that person would pay taxes only on the things they need to buy. As mentioned in the article, if the object bought was a "trust" item, not even then. So, say that person spends $10 million just to get by {they already have most essentials no doubt}, at 21% they would pay $2,100,000 to the feds. If, with no deductions and/or exemptions, at 10% under the FIT, they would pay $10 million.
If a person makes $100,000, and spent $60,000 they would pay NRST $12,600, and FIT $10,000.
If a person made $10,000, and spent $10,000 plus their "rebate", they would pay NRST $2,100+, and FIT $1,000.
Now, tell me again how the incentive to keep the tax rate low is the same throughout income levels.
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Godgov WILL KNOW everybody's income and expenditures with either system. And, how do you figure that the "black market would shrink under the NRST."? Why/how will godgov know of all the things one buys and from whom? The only records will be those of godgov approved and licensed producers and vendors. The income tax in the former{?} U.S.S.R. has shown to be a better revenue generator eliminating some of the black market most recently.
Nah, there is NO doubt that for "up and comers", the FIT is MUCH better than the NRST. The people with the time to pay attention, and the wherewithal to most affect tax lawmakers and tax laws would have MUCH more incentive to keep the single rate as low as possible. Peace and love, George.
"The issue is a FReedom issue, George, and all other issues re: fundamental tax reform are subservient!"
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