One day, income tax system has got to go

Pittsburgh Tribune Review ^ | 2-03-02 | Jack Markowitz

[doosee]

It will be another year of reforming around the edges of the U.S. income tax code.

Too bad. This is a menace that's been asking for it for a long time. It deserves to be driven out of its caves and gotten off the backs of Americans.

[ancient_geezer]

CHIEF Negotiator came up with the last accurate fix on the FCA a few months ago. Here's what he had to say about it:

 

How will the Family Consumption Allowance [FCA] work?

All legal residents will receive a FCA equivalent to the FairTax paid on essential goods and services. The FCA will be paid in advance, in equal installments each month. The size of the monthly FCA will be determined by the government's Poverty Level for a particular family size, multiplied by the tax rate.

Every year, the Department of Health and Human Services [HHS] determine the "poverty level" for each family size.

The 2001 "FairTax" Family Consumption Allowance Figures
Family Size	HHS Poverty Level	Annual FCA	Monthly FCA
One	$8,590	$1,976	$165
Two	$17,180	$3,951	$329
Three	$20,200	$4,646	$387
Four	$23,220	$5,341	$445
Five	$26,240	$6,035	$503
Six	$29,260	$6,730	$561
Seven	$32,280	$7,424	$619
Eight	$35,300	$8,119	$677

1) Federal Register: February 16, 2001, Pages 10695-10697).

[ The monthly FCA for each adult is .23 * (HSS poverty level for a single person)/12 to assure no marriage penalty due to the manner in which the poverty level is dependant on family size. The monthly FCA for each child is .23 * (the incremental increase of HSS poverty level for a family with one child over no child) ] A. Geezer

A family of four, for example, could spend $23,220 per year free of tax because they will have received over the course of the year rebates totaling $5,341. $5,341 is the amount of sales tax paid on $23,220 in expenditures. A family spending double the "poverty level" or $46,440 per year will effectively pay tax on only half of their spending and, therefore, have an effective tax rate of 11 ½ percent or half the FairTax rate.

The beauty of the FairTax is that you can control how much you pay in taxes. If you happen to save, invest or spend a portion on used [previously taxed] items, you can get your effective tax rate below 9%.

H.R.2525 "The FairTax Act

Not only does every family receive a FCA based on family size, not income, but they will also receive 100% of their paycheck:

Fedup Smith makes $39K per year...once the FairTax is the law of the land he will receive an instant increase in pay of $200.00 per week. Since he has a family of four, he will receive a FCA of $445 per month, for a total of $1,305.00 additional income per month that he can do with as he sees fit

[Principled]

I believe the tax code has a lot to do with goofy accounting practices too. While it remains to be seen exactly what happened, it's dollars to donuts that taxes had a major impact on the "fudging" done by the accountants.

[Principled]

Thank you, ancient one!

So it's $165 per parent and about $57 per kid...?

[ableChair]

I agree that a sales tax is by far the best way to go, for many reasons. But there is a reason why no politician would ever support it. Taxing that way means that every citizen, rich and poor, will see, in deed, exactly how much they are being taxed every time they buy something. It would be a daily reminder of the theft to which they are subject. By calculating the total revenue from income taxes, then comparing that to the GDP, one can see that something like twenty cents on every dollar, in federal sales tax alone, would be required to maintain revenue levels. Think about that. Most people would end up paying about thirty to forty cents on every dollar spent from local, state and federal sales tax! The outcry would be unbearable for the politicians. The income tax system, combined with federal withholding taxes, is a way of concealing the severity of the confiscatory scheme from most Americans.

[realpatriot71]

Well, I would think that one would need to differentiate between different types of "food" and "medical service". Groceries, no tax, but restaraunt food gets taxed. In the same way with medicine, emergencies and serious medical care do not get taxed, but if you want some fake boobs . . .

[Bigun]

The income tax system, combined with federal withholding taxes, is a way of concealing the severity of the confiscatory scheme from most Americans.

Yes! There is that but most of all this!

The income tax is FAR more about social engineering than about revenue collection!

[Brad C.]

After the big uproar from Newt and his buddies, didn't they pass legislation that said the income tax code would end on some specific date? I see if I can find it elsewhere.

[max61]

Until such time as the problem of excess federal government is resolved, the system of taxation is moot.

Alexander Hamilton never anticipated a federal tax on income nor what is defined today as income. Consumption today has an entirely different meaning than it did on the 18th century.

---max

[carenot]

Yeah, wouldn't it be great if everyone woke up?

[ancient_geezer]

The method of taxation is irrelavent.

Are you so sure of that?

[Montesquieu wrote in Spirit of the Laws, XIII,c.14:]

• "... a duty on merchandise is more natural to liberty, by reason it has not so direct a relation to the person."
  --Thomas Jefferson: copied into his Commonplace Book.

Patrick Henry, Virginia Ratifying Convention June 12, 1788:

• "the oppression arising from taxation, is not from the amount but, from the mode -- a thorough acquaintance with the condition of the people, is necessary to a just distribution of taxes. The whole wisdom of the science of Government, with respect to taxation, consists in selecting the mode of collection which will best accommodate to the convenience of the people."

Using excise, tariffs, and general point of sale sales taxes. The purchaser, (i.e. citizen) and the transaction remain anonymous as a cash retail sale. This is a far cry from the Income Tax, and the Flat Tax schemes which require the citizen to keep and provide on demand detailed personl finance information to the government, leaving himself open intrusion into family financial affairs in conflict with the 4th amendment.

Under an NRST the purchaser is under no such obligation or threat of audit by the government, and the seller need only provide evidence of register receipts and total sales. Identification and tracking of customer financial condition is totally foreign to a retail sales tax system.

[Brad C.]

Yes indeed they did vote to repeal the tax code:

5. Tax Code Termination. (Roll Call #127, 13 April) The House voted to abolish the current tax code, except for Social Security and Medicare, by Dec. 31, 2004. YES was a vote FOR taxpayers.

Back in the second session of the 106th.

[ancient_geezer]

The sales tax is a fairer way to go but, removes politicians ability to pander for votes.

The Coming Crisis in our Democracy

Featuring

The Honorable James DeMint (R-SC)
United States House of Representatives

THURSDAY, APRIL 5, 2001
12:00 noon

"In 1996, Congress passed a historic welfare reform law that has dramatically reduced the number of Americans who depend on welfare. In spite of this positive development, Representative DeMint is concerned about the steady growth of a welfare/entitlement state that extends well beyond the poor and is forcing millions of middle income Americans into dependency.

There has been a shift in the relationship between individuals and government, he argues, such that fewer and fewer are paying taxes at the same time that more and more are receiving increasingly generous benefits. If it becomes the case that most voters do not bear a financial burden for this largess, then there will be little to restrain--and significant political incentives to encourage--the continued growth of government. And at that point, DeMint warns, we have reached a major crisis in our democracy."

---

 

To remove taxation of the individual, is to remove the goad which assures accountability of government to the electorate. Federal taxes are high because a majority of the electorate do not share proportionately in the burden their demand for largesse imposes on the minority of citizens.

The call for representation without taxation is the formula that got is where we are at today. The ability to hide or disguise taxation from the view of large sectors of the electorate allows the Congress to get away with the creation of the evergrowing monster that it fosters.

A government which robs Peter to pay Paul can always depend on the support of Paul.
-George Bernard Shaw

Liberty and freedom have a price, responsibility. If that price is avoided there are no brakes on the growth of government, the ultimate result is the end of freedom through creeping socialism.

Right now the bottom 60% perceive little to no "Individual Income Tax" burden,(in many cases even a handout) and they continue to clamor for more from government looking for the top 40% to pay for it, corroborated by many recent polls on the subject of people attitudes about tax reduction. That perception continues to grow ever stronger by eliminating even more participants from the Individual Income Tax rolls as proposed in the current tax reduction proposals currently on board through changes in personal exemption limits and other mechanisms such as the EITC.

A prime example of what is happening comes from an analysis of Individual Income Tax effective rates in comparison with the Total rates of Federal taxation:

Those who perceive little burden play the role of Poor little Paul:

Effective Individual Federal Income Tax Rate (Percent of gross income)
Income Category	1977	1979	1981	1983	1985	1987	1989	1991	1993	1995	Projected 1999
Lowest Quintile	-0.6	-0.8	-0.2	-0.5	-0.2	-1.3	-1.9	-2.9	-3.4	-5.6	-6.8
Second Quintile	3.6	3.9	4.6	3.5	3.9	3.2	3.3	2.7	1.8	1.8	0.9
Middle Quintile	7.1	7.5	8.3	6.8	6.8	6.1	6.5	6.3	5.9	6.1	5.4

Those that readily perceive some of the burden.

Effective Individual Federal Income Tax Rate (Percent of gross income)
Income Category	1977	1979	1981	1983	1985	1987	1989	1991	1993	1995	Projected 1999
Fourth Quintile	9.7	10.4	11.3	9.5	9.3	8.7	8.9	8.7	8.5	8.7	8.4
Highest Quintile	15.8	16.3	17.1	14.5	14.3	15.1	15.1	14.8	15.5	16.2	16.1

To play the role of mean ole Rich Peter.

While Congress plays both ends against the middle; hiding the real burden in inflation, higher prices on all goods and services, lower takehome pay, lower return on investment, and higher interest rates. All keeping the poor right where they are and pushing for more freebees.

Consider that 15.3% SS/Medicare tax on the 1st $70K of wages/self-employment income, plus the 6% Federal Unemployment tax, all of which are but a portion of the effect of federal taxes embedded the price of all products we purchase. Taken together with the Individual tax rates above we all pay more than:

 

Effective Total Federal Tax Rate (Percent of reported income)
Income Category	1977	1979	1981	1983	1985	1987	1989	1991	1993	1995	Projected 1999
All Families	22.8	23.4	23.5	21.4	21.8	22.6	22.5	22.6	23.5	24.7	24.2

We all pay corporate/business taxes through high prices and high loan interest rates; with the EIC reducing burden on the low end, relief from SS/Medicare tax and exception rules reducing burden on the high end; The middle stuck gets stuck in the crunch between.

Data from IRS collections statistics and The Bureau of Economic Analysis as compiled in tabular form by the Congressional Budget Office.
http://www.cbo.gov/showdoc.cfm?index=1545&from=4&sequence=0

And the fine print at the bottom of the tables:

SOURCE: Congressional Budget Office.

NOTES:Pretax family income is the sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, and all cash transfer payments. Income also includes the corporate income tax and the employer share of Social Security and federal unemployment insurance payroll taxes."

In short, inflating the income divisor over what the wage earner will ever see lowering the effective percent tax rate; distorted to hide the effect of higher prices and lower takehome pay have on the lower 60% of the electorate.

---

We wonder why over 60% of the voters PERCEIVE no problem with the taxrates and vote for polidiots that promise to bring home the most bacon because they are the only ones that benefit from higher taxes with more spending on socialistic "gimme" programs. As this continues under Bush or anyone else for that matter, expect a liberal tax and waste congress in short order, and for many years to come.

We are all paying through the nose, rich and poor while politicians play the tune of envy and resentment that Americans continue to respond to not understanding the full picture what is happening to them. The NRST is a means to open VOTERS eyes to the reality.

Is it any wonder that Alan Keyes refers to the income tax as the slave tax and supports a National Retail sales tax to replace it?

The Original Intent of the individual income tax is for political and social control not revenue collection. The Individual Income tax is maintained to establish and hold every person in the country perpetual legal jeopardy. That is a situation that must end with the repeal of the income tax from the statutes, and the prohibition of its use by Constitutional amendment that future generations will not face the same manner of manipulation and interference in their lives.

[Judith Anne]

Is that THIS year, that they voted? And now it goes to the Senate where Tiny Tommy will bury it? Am I seeing what you're saying? (*Taxes confuse me. I'm sure they're meant to...*)

[Principled]

Under the nrst, ALL necessities are untaxed... without getting into the mess of exempting indivudal items.

[ancient_geezer]

So it's $165 per parent and about $57 per kid...?

Looks like $58 per kid according to the table. And you are our resident mathmatician? :O)

[ableChair]

"Yeah, wouldn't it be great if everyone woke up? "

Yea, and here's another wake up call.

At an estimated 30% overall taxation level, you are paying more for your slice of government services than you are for food and shelter. What's wrong with this picture? What is it about government services that could be so expensive as to cost more than your most basic, and presumably most expensive, needs? Also, remember that there are nearly 300 million people in this country, all paying an average of around 30%. You're just one in 300 million!!! Please also note that government services are only supposed to cover those things that are of 'common interest' to society; i.e. things that we as individuals can't accomplish alone. What 'common' expense costs that much?

The income tax is obviously fraudulent.

[Principled]

Until such time as the problem of excess federal government is resolved, the system of taxation is moot.

I disagree. I believe the method of taxation is indeed part of the reason spending goes unchecked. By instituting a method that does not allow this, we'd "stop the bleeding". If the new system also created an environment in which REDUCING taxes (and hence spending) was rewarded we would go beyond "stopping the bleeding" and we would then have turned the spending tide.

It is not reasonable to suppose that the method of taxation is unrelated to the spending problem.

[lewislynn]

A portion of the tax collected would go to the general fund, a portion would fund Social security, and another Medicare.

S/he can't tell you what the "portion" is because "the rate shall be determined by the Social Security Administration"...

From HR2525:

`(d) OLD-AGE, SURVIVORS AND DISABILITY INSURANCE RATE- The old-age, survivors and disability insurance rate shall be determined by the Social Security Administration. The old-age, survivors and disability insurance rate shall be that sales tax rate which is necessary to raise the same amount of revenue that would have been raised by imposing a 12.4 percent tax on the Social Security wage base (including self-employment income) as determined in accordance with chapter 21 of the Internal Revenue Code most recently in effect prior to the enactment of this Act. The rate shall be determined using actuarially sound methodology and announced at least 6 months prior to the beginning of the calendar year for which it applies.

`(e) HOSPITAL INSURANCE RATE- The hospital insurance rate shall be determined by the Social Security Administration. The hospital insurance rate shall be that sales tax rate which is necessary to raise the same amount of revenue that would have been raised by imposing a 2.9 percent tax on the Medicare wage base (including self-employment income) as determined in accordance with chapter 21 of the Internal Revenue Code most recently in effect prior to the enactment of this Act. The rate shall be determined using actuarially sound methodology and announced at least 6 months prior to the beginning of the calendar year for which it applies.

`(f) ASSISTANCE- The Secretary shall provide such technical assistance as the Social Security Administration shall require to determine the old-age, survivors and disability insurance rate and the hospital insurance rate.

Your earnings would still be reported to SS, that's what they'll use to "determine" the tax rate, and of course we know we can trust the bureaucrats tinkering with raising taxes without a vote or oversight from Congress to be fair in their assessements.

Their phony 23% rate would actually increase the prices by 30% and that's only for the first year...after the first year they'd use the combined rate of SS and other bullsh!t to figure how to get more money out of you directly because they'll "eliminate" corporate and other taxes their "revenue neutral" tax scam will shift the burden directly to YOU, the consumer...

As to their phony "poverty level" rebate, YOUR rebate is included in the higher tax rate. You'd be paying yourself the rebate and the more you purchased the more rebates you'd fund.

< sarcasm > Don't forget the "poverty level" as defined by the central government is exactly the same everywhere so all rebates will benefit each taxpayer the same wherever they live. Be it New York City or Boise,Idaho the "poverty level", the cost of living is the same.< /sarcasm >

If you haven't already, the next thing you'll be told is that under their plan, if you want to lower your tax burden you can either NOT spend your money or simply purchase someone elses used crap. Those are their options for saving on taxes.

Now which sales tax shill will be the first to call me a liar?

[Principled]

EGAD! Looks like it's exaclty $58! I recall previous years in which the amount was something like $56.33 and so the amounts between family members seemed to vary in a table rounded to dollars.

I was caught merely glancing at the table.... (shame, embarassment).

You're right, GEEZ! It's $58 per on this table!

Thanks for the correction-

BTW what if it's a single parent home? Does the 2nd $165 kick in? or do we go straight to the $58?

[freefly]

The reality is that poor folks (and everyone else FTM) are hit by embedded taxes in the prices of goods which are inflated to the tune of 20-40% (and) are also hit with lower wages that have been forced down to allow employers to pay their income taxes, payroll taxes and compliance costs.

You saved me from saying it, but it bears repeating.
The problem with the flat tax -in addition to what you pointed out-
is that people would see almost ALL of the money that they pay to the fed.
That is exactly what they DON'T want people to know.
The cry for government reform would be much louder when people realized
that government is -by far- the largest expense that we have.
One with minimal return.