Posted on 05/26/2003 7:07:15 AM PDT by George Frm Br00klyn Park
WorldNetDaily / Commentary
Bush tax package guts middle class
Posted: May 26, 2003
1:00 a.m. Eastern
By Joan Veon
© 2003 WorldNetDaily.com
Using tactics of deceit and distortion, President Bush will sign a tax bill that was literally dictated by him to Congress and passed by the Senate late last week while the writers were still crafting it. What is being put into action will not only completely gut our entire tax code but will add a level of taxation that heretofore was only known by the children of Israel when pharaoh commanded them to make bricks without straw.
The tax deductions have been sold to the American people as creating more jobs but the truth of the matter is that Congress feels you and I are not paying enough in taxes. What Bush has done, Clinton could not have ever gotten away with: a tax on everything we buy otherwise known as a Value Added Tax for you and I.
If you think you pay a lot in tax now, just wait and see what the Republicans or should I say, "neocons" have in store for us. Let me give you a glimpse.
First, a Value-Added Tax system is a more "purer" form of tax because it is structured like the morning dew it will tax everything and every process . For example, currently you are not taxed on the activity (not the gain but the activity) of buying or selling a house. Under a VAT, we will be taxed. Currently you are not taxed for the professional services of our doctor and dentist those services will have a tax.
The basic structure of a VAT is that it is essentially equivalent to a tax on wages and pure profits in other words, it is a superior form of tax. In fact, it is a "vertical" tax depending on how the VAT is structured, every phase of manufacturing and production will be taxed. Currently it is not taxed. For example, the farmer who grows sheep will pay a tax to buy the sheep, then, when he sells the sheered wool, the weaver who buys it from the farmer will pay a tax on that purchase. When the weaver who spins the wool into fabric sells it to a pants factory, the processed wool will be taxed. When the factory sells the pants to the department store, another tax will be levied. At each phase, while there may be some offset in the tax between the various stages of production, you will be taxed on the cost of the shirt which also includes the tax that was paid at each phase. Will the price of the shirt increase absolutely! So will the cost of living.
According to the International Monetary Fund, the VAT is a more modern tax, providing the ability to tax each phase of production and also the turnover of goods and services, thus increasing the cost to live while providing a greater income stream to the government. A VAT is basically sustainable development at its finest. Government can't continue spending unless it increases its income stream!
Now this brings me to another point the need for government to increase their income. Do you remember John Maynard Keynes and his socialistic "Keynesian economics"? Essentially, back in 1933 when America went into a major depression, Franklin Roosevelt relied on the "innovative" thinking of Keynes who recommended deficit spending to create new jobs. Well, 70 years later, every level of government in the United States is broke.
Currently, the U.S. government is $7 trillion in debt. Democrats, who have opposed this bill from the beginning, project that under the weight of the huge tax reductions being given to the very wealthy, that by 2013 when it is fully phased in, our debt will rise to $12 trillion or $36,000 for every person in the United States. Basically the July tax rebates we are going to receive will help contribute to this figure.
Nothing like paying one credit card with cash from another!
Furthermore, instead of you and I paying taxes and receiving a service, we now live in a time when our government is privatizing (selling its assets to reduce its debt), changing the code so it can increase its income while reducing services to you and I. Under the current tax system, mortgage interest and charitable contributions are deductible. These will have to be sacrificed to provide the government with a greater and constant income stream. Simply put, a "pure tax" is basically "squeezing" the turnip which is you and I.
So how does a government with a VAT increase revenue? In order to switch to a VAT from our current system of taxing income, the tax brackets of the rich will be reduced from 38.5 percent gradually over a 10-year period to the targeted 21-27 percent VAT rate. This level of taxation is the level that will produce the same amount of tax under our current system. At the same time, the tax brackets of those who have an income of $1 million and above is being reduced, those who currently don't pay tax because they have too little income will have be subjected to an increasing tax bracket which may start out at 10 percent but will have to rise to meet the brackets of the extremely wealthy at 21-27 percent. Is your back breaking yet?
So what if, in this time of never-ending war on terrorism, the government still does not have enough income? Well, then the rate can be increased. For example, in 1973 when England introduced the VAT, it started at 10 percent ... today it is up to 18.5 percent.
Lastly, the president and his cabinet are unwilling to even admit that they are gutting the current system and putting a VAT in place that will benefit those like Warren Buffet who calculated that he will save $300 million while his secretary's tax rate will increase. This tax bill should be more accurately called, "The Gutting of the Middle Class."
Joan Veon is a certified financial planner and is president of Veon Financial Services, Inc., an investment advisory firm. Visit her website, WomensGroup.org.
THIS article at WND
I often think the same thing. Start the NRST at 1% or lower and have the income tax drop at a proportionate level. For some reason I can't see us every going to a NRST without some similar plan. Eliminating the income tax one day to swap with the NRST would be difficult as I see it if the NRST wasn't already in place.
But then I remember that I'm talking about politicians remaining honorable.
Same here and I would imagine other folks feel the same way. I can imagine the NRST at X% and the income tax almost eliminated, and somebody coming along and saying we just can't eliminate the income tax and the income tax rates slowly increase.
NF, Where exactly at the "homepage of the author of this piece." do you see this "class-warfare arguement" stuff?? All I see is a bunch of well researched articles about the coming NWO. Of course, the NWO is just a figment of imagination of the tinfoil hatters. Exactly WHO do you think initiated the "class-warfare" anyway?? If writing articles about meetings and folks who are running them that she chronicles is "class-warfare" to you, the problem is not Joan's. Nothing to see here. Just move along. Peace and love, George.
I like the idea, and an honorable group of people could make it work. But that's the problem.
Maybe signing legislation that required an irrevocable phase in/phase out period would be the answer. But I think it's unconstitutional to dictate policy to a future Congress.
Is there anyone else who thinks that the tax cut is a hidden VAT tax? I remember another thread on this a few months ago, but I am pretty sure it's the same writer.
Maybe so.... I haven't been there in awhile. It wasn't that way 5 years ago.
Maybe Russia today is a better place to raise your children.
They now have a flat tax based on income that works.
Coupled with a VAT. Be careful what you ask for, you may get it.
RUSSIA: PART TWO OF THE RUSSIAN FEDERATION TAX CODE August 10, 2000
Alexander Chmelev and Evgeny Astakhov Baker & McKenzie, Moscow Office
Sent by BISNIS, U.S. Department of Commerce, http://www.bisnis.doc.gov Judith_Robinson@ita.doc.gov, Tel: 202-482-2293. BISNIS sends this report as a courtesy to the U.S. business community. This is not to be construed as endorsement or sponsorship of any information or group. On August 5, 2000, Russian Federation President Vladimir Putin signed into law four chapters of Part Two of the Russian Federation Tax Code and Federal Law No. 118-FZ ôOn the Implementation of Part Two of the Russian Federation Tax Code and Amendments to Certain Federal Laws on Taxationö (the "Implementation Law"). The chapters of the Tax Code signed into law by the President are Chapter 21 - VAT, Chapter 22 - Excise Taxes, Chapter 23 - Personal Income Tax, and Chapter 24 - Unified Social Tax. These four Chapters and the Implementation Law were officially published in Rossijskaya Gazeta on August 10, 2000, and, with few exceptions, will become effective on January 1, 2001. The most sweeping changes introduced into the Russian tax system by this new legislation are as follows: 1. VAT (Chapter 21 of the Tax Code) Although Chapter 21 of the Tax Code does not change VAT rates or the general VAT structure, it contains numerous provisions, which will significantly affect most businesses in Russia. Most notably, Chapter 21 substantially modifies the "place of service" rules, which generally determine whether for VAT purposes a particular transaction has occurred in Russia and is, therefore, subject to Russian VAT. Effective from July 1, 2001, Chapter 21 also will treat export sales to CIS countries in the same way as sales to all other foreign countries, and will exempt them from VAT. On the downside, Chapter 21 will repeal a number of long-standing and important VAT exemptions, including an exemption for license fees for the use of intellectual property (such as, patents, copyrights, and trademarks), and will significantly narrow the VAT exemption for pharmaceuticals. 2. Personal Income Tax (Chapter 23 of the Tax Code)
Chapter 23 of the Tax Code will replace the current progressive tax rates ranging from 12% to 30% with a flat tax rate of 13%. This 13% rate will apply to almost all categories of income earned by individuals who are Russian tax resident. A 30% rate will apply to dividends, and to any Russian source income received by individuals who are not Russian tax resident. A 35% rate will apply to income from gambling, lottery prizes, deemed income from low-interest or interest-free loans, certain insurance payments, and excessive bank interest. 3. Unified Social Tax (Chapter 24 of the Tax Code) Chapter 24 of the Tax Code will replace the existing employersÆ contributions to four separate social benefit funds (which currently are imposed at an over-all rate of 38.5%) with one unified social tax. This unified social tax will have a regressive tax scale from 35.6% to 2% of an employee's salary with the lowest rate applicable to the portion of an employeeÆs annual salary in excess of 600,000 Rubles (approximately US$22,000 at the current exchange rate). It should be noted that under the Implementation Law, as a transition rule, the lower rate of this tax will be 5% rather than 2% during 2001. 4. Excise Taxes (Chapter 22 of the Tax Code) As a countermeasure to reducing rates of other federal taxes, Chapter 22 of the Tax Code provides for an increase in excise tax rates for gasoline and other oil products by almost 300%. It also provides for a less dramatic increase of excise tax rates for tobacco products and certain passenger cars. 5. The Implementation Law a. Turnover Taxes Effective from January 1, 2001, the Implementation Law repeals the Housing Fund Tax of 1.5% and reduces the Road Users Tax from 2.5% down to 1% and completely repeals the Road Users Tax effective January 1, 2003. These taxes are imposed on gross sales and have been among the most onerous taxes on business in Russia. b. Regional Tax Concessions The Implementation Law reconfirms the right of regional authorities to provide tax exemptions for the regional portion of federal taxes retroactive to April 1, 1999. This reconfirmation resolves an issue that arose in 1999 as to whether the regional portion of profits taxes could be reduced pursuant to regional incentive laws. c. Profits Tax Rate Apparently in compensation to local budgets for the cancellation of turnover taxes, the Implementation Law authorizes municipal governments to introduce an additional "municipal" profits tax of up to 5% of a taxpayer's taxable profits. Thus the maximum overall profits tax rate may be increased from 30% to 35%. This report is provided courtesy of the Business Information Service for the Newly Independent States (BISNIS) |
Just like all FLAT INCOME TAXES ARE:
The flat tax is a VAT. None other than the father of the flat tax, Robert Hall of Stanford University (along with Alvin Rabushka), in his 1995 Ways and Means Committee testimony said, "The Hall-Rabushka flat tax is a value-added tax."
Which was pointed out again in additional hearings in April of 2000:
http://waysandmeans.house.gov/fullcomm/106cong/4-11-00/4-11kotl.htm
"Robert Hall, one of the originators of the proposal(Flat Tax), who describes his Flat Tax as, effectively, a Value Added Tax. A value added tax taxes output less investment (because firms get to deduct their investment.)"
"The Flat Tax differs from a VAT in only two respects. First, it asks workers, rather than firm managers, to mail in the check for the tax payment on that portion of output paid to them as wages. Second, it provides a subsidy to workers with low wages."
The Flat Tax; Chapter 3, by Robert Hall and Alvin Rabushka
In our system, all income is classified as either business income or wages (including salaries and retirement benefits). The system is airtight. Taxes on both types of income are equal. The wage tax has features to make the overall system progressive. Both taxes have postcard forms. The low tax rate of 19 percent is enough to match the revenue of the federal tax system as it existed in 1993, the last full year of data available as we write. Here is the logic of our system, stripped to basics: We want to tax consumption. The public does one of two things with its incomespends it or invests it. We can measure consumption as income minus investment. A really simple tax would just have each firm pay tax on the total amount of income generated by the firm less that firms investment in plant and equipment. The value-added tax works just that way. But a value-added tax is unfair because it is not progressive. Thats why we break the tax in two. The firm pays tax on all the income generated at the firm except the income paid to its workers. The workers pay tax on what they earn, and the tax they pay is progressive. To measure the total amount of income generated at a business, the best approach is to take the total receipts of the firm over the year and subtract the payments the firm has made to its workers and suppliers. This approach guarantees a comprehensive tax base. The successful value-added taxes in Europe work this way. The base for the business tax is the following: Total revenue from sales of goods and services less purchases of inputs from other firms less wages, salaries, and pensions paid to workers less purchases of plant and equipment The other piece is the wage tax. Each family pays 19 percent of its wage, salary, and pension income over a family allowance (the allowance makes the system progressive). The base for the compensation tax is total wages, salaries, and retirement benefits less the total amount of family allowances. |
FLAT TAX, VAT TAX, ANYTHING BUT THAT TAX; Duke Law Magazine, Spring 96:
CONSUMPTION TAX PROPOSALS; 1996 Deloitte & Touche LLP
The Flat Tax is a VAT even as the current income/payroll tax structure now in place is a subtraction method VAT, in that it is a levy imposed on businesses at all levels of production, it is passed on to the consumer hidden in the price of goods and services.
As long as government is able to play a shell game with hiding taxes from the Voter(i.e. individual) it can rely on the old maxim:
A government which robs Peter to pay Paul can always depend on the support of Paul.
-George Bernard Shaw
and keep right on growing without bound.
Is there some legal double-speak that would conjure up VAT?
Yep, something that has been in the works for years now:
http://www.taxfoundation.org/foundationmessage03-00.html
"Under the WTO definition of the term, a sales tax is an indirect tax, as is an European-style VAT. The economic equivalence of an European-style VAT and a subtraction-method VAT is well-established. A subtraction-method VAT is essentially identical to a business income tax except that all purchases of plant and equipment may be expensed, rather than depreciated as under current U.S. law."
And every man woman and child in the nation, pays federal taxes through that VAT.
DO YOU PAY YOUR INCOME TAX
AT THE SUPERMARKET?
by D. Sherman Cox J.D. L.L.M. Taxation
The full impact of the federal tax system(taxes in gross wage/salaries & other compensation + business income/payroll taxes) added onto the base(taxfree) price of retail consumption goods and services is 36% for federal taxes alone.
Its other variant is called the Flat Income Tax:
http://waysandmeans.house.gov/fullcomm/106cong/4-11-00/4-11kotl.htm
"Robert Hall, one of the originators of the proposal(Flat Tax), who describes his Flat Tax as, effectively, a Value Added Tax. A value added tax taxes output less investment (because firms get to deduct their investment.)"
"The Flat Tax differs from a VAT in only two respects. First, it asks workers, rather than firm managers, to mail in the check for the tax payment on that portion of output paid to them as wages. Second, it provides a subsidy to workers with low wages."
The Flat Tax; Chapter 3, by Robert Hall and Alvin Rabushka
In our system, all income is classified as either business income or wages (including salaries and retirement benefits). The system is airtight. Taxes on both types of income are equal. The wage tax has features to make the overall system progressive. Both taxes have postcard forms. The low tax rate of 19 percent is enough to match the revenue of the federal tax system as it existed in 1993, the last full year of data available as we write. Here is the logic of our system, stripped to basics: We want to tax consumption. The public does one of two things with its incomespends it or invests it. We can measure consumption as income minus investment. A really simple tax would just have each firm pay tax on the total amount of income generated by the firm less that firms investment in plant and equipment. The value-added tax works just that way. But a value-added tax is unfair because it is not progressive. Thats why we break the tax in two. The firm pays tax on all the income generated at the firm except the income paid to its workers. The workers pay tax on what they earn, and the tax they pay is progressive. To measure the total amount of income generated at a business, the best approach is to take the total receipts of the firm over the year and subtract the payments the firm has made to its workers and suppliers. This approach guarantees a comprehensive tax base. The successful value-added taxes in Europe work this way. The base for the business tax is the following: Total revenue from sales of goods and services less purchases of inputs from other firms less wages, salaries, and pensions paid to workers less purchases of plant and equipment The other piece is the wage tax. Each family pays 19 percent of its wage, salary, and pension income over a family allowance (the allowance makes the system progressive). The base for the compensation tax is total wages, salaries, and retirement benefits less the total amount of family allowances. |
. For the most part, it looks like the VAT would reduce my tax liability.
Only problem is a VAT adds to the the price of goods and services that you pay as a consumer, by both the amount of tax remitted and the costs to business of planning, accounting, reporting, and litigating, not counting the cost of government administratation of the system and economic distortions introduced.
The price tag for government is effectively hidden hidden from the view of the electorate.
How does one exercise "Eternal Vigilence" with blinders on?
We must . . . End Tax Slavery Now; Nov '97
by Jarret B. Wollstein
HOW MUCH DO YOU REALLY PAY?
According to the Tax Foundation, in 1994 the average American paid 22.4% of his or her income in federal taxes, plus 11.8% in state and local taxes - 34.2% total.
But that's just the beginning! Dr. James Payne of the University of California found that in addition to direct taxes we also pay huge, hidden taxes including:
- Compliance costs - record keeping, monies spent on tax planning, computers and software purchased to fulfill IRS requirements, etc.
- Enforcement costs - IRS audits, field investigations, service center corrections, criminal investigations, litigation, and forced collections.
- Emotional, moral and cultural costs - families forced onto welfare, time and creative energy lost figuring out how to avoid taxes, etc.
For every $1 we pay in direct taxes, we spend an additional $0.65 in compliance costs. And even that figure doesn't include the cost of import duties, license fees and other government regulations.
The full impact of the federal tax system(taxes in gross wage/salaries & other compensation + business income/payroll taxes) added onto the base(taxfree) price of retail consumption goods and services is 36% for federal taxes alone.
All wages and the taxes on them are paid for out of sales receipts to business,(i.e. consumption expenditure).
Federal tax revenues collected as % of current family expenditure = fed/(1-state-fed-savings) =
23.5/(1-.235-0.102-0.012) = 36.09%
If we add in the cost of federal tax compliance, planning, litigation & enforcement, the percentage that truely represents the burden on the family due to the Federal income/payroll tax system, product prices are increased by more than 55% over taxfree prices.
Where Have All the Dollars Gone?
How the government robs Peter to pay him back.
By economist James L. Payne, Reason Magazine February '94When the overhead costs are added together, (24 percent compliance costs, 33 percent disincentive costs, and 8 percent other costs), they total 65 percent of tax revenue.
Current total Federal tax revenues are about $1900billion, more than $1,000 billion additional dollars are added on onto consumption prices due to the business costs of complying with the federal income/payroll tax laws.
The percent total current federal burden (taxes + compliance costs) of consumption dollars = 36*(1900+1000)/1900 = 54.95% economic burden added on to base retail(i.e. taxfree) prices.
Too bad that citizens don't get a receipt detailing those "hidden sales taxes" buried in their consumption purchases. If they ever did, some of those 70% of the public clamoring for more from government, thinking someone else foots the bill, might be tempted to change their mind.
Depends on the industry, very few have such pension plans anymore.
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