Posted on 11/15/2004 7:00:17 AM PST by Rakkasan1
MINNEAPOLIS - Rep. Gil Gutknecht is pushing legislation that would replace the federal income tax with a national sales tax.
"Think of a world where there is no income tax, where you get to keep everything you earn and you pay the tax man when you buy stuff," Gutknecht, R-Minn., told the Star Tribune of Minneapolis.
(Excerpt) Read more at twincities.com ...
, but the flat tax is a consumption tax.
Only by equating an income tax to a sales tax in the size of taxbase. Not in the manner it which it is levied.
(Income - investment) = consumption
Income taxes/VATS are laid on the left while retail taxes laid on the right side of the relationship.
On the left side businesses are taxed as in a VAT or corporate tax removing visibility and citizen participation.
On the right side the citizen as a customer participates fully and visibly in the tax system.
"Lots of people have been duped, but by the FairTax supporters. That's why I am so anxious for hearings."
You should be anxious for debates, as well, then. We are waiting for you to drop your protective cloak of anonymnity and come on out and debate in public. No need to wait on hearings.
"I frankly don't care what happens. I survive and prosper just fine and always will."
I know, I know. You charge your customers whatever you damn well please and they have no choice but to pay up. Price competition doesn't exist in LL's world, does it?
Unless the feds (and by the same token, a lot of state govs as well) start actually trimming not only the deadwood but the parasitic poison oak that OUR tax money supports, things will continue to spiral downward.
When you read lists of what OUR tax dollars are spent on, it's enough to toss your stomach contents, raise your blood pressure, and cause an embolism. Did I mention steam issuing from ears?
"In other words, the effect would be to make new construction absolutely impossible to sell (since it would cost 23% extra)."
New homes have 22% or more imbedded in them now from the current system. Are new homes impossible to sell now? Why would making the tax component more visible cause sales to drop significantly??
In terms of making our products competitive on the world market, one would rank the options in this orderActually, there would be no difference between the FairTax and VAT and the flat tax could easily be structure to be the same as the FairTax and VAT.
1. FairTax (or some other type of consumption tax)
2. VAT
3. Flat or progressive income tax
In terms of minimizing compliance costs, an objective ranking would look like thisI really don't see how filing a VAT 3-12 times a year to one entity (max 12 filings) or a flat tax once a year to one entity (1 filing) is more complex than filing a sales tax 12 times a year to 50 entities (600 filings).
1. FairTax
2. Transaction tax
3. Flat income tax
4. Progressive income tax
So tell us, YN, what criteria are you using in ranking the FairTax below that of these other tax systems?The main issue is enforceability.
I get the NTU letter and vote on the 'outrage of the month'
. It's hard to decide which ones are the worst, based on
amount of $ wasted or how stupid the idea was.
Only by equating an income tax to a sales tax in the size of taxbase. Not in the manner it which it is levied.A consumption tax is a tax on consumption, which is what the flat tax does, as does a sales tax or a VAT.
"...besides the obvious political impossibility of eliminating the mortgage interest deduction"
Perhaps we could make the income tax an option for those, like you, who believe the mortgage deduction is sacrosanct. You would be allowed to file a 1040 every year and pay a tax on your income if you chose. That way, you could keep your home mortgage (and charitable contribution) deduction.
For the rest of us, retaining a deduction for a tax that no longer exists would be foolish.
Preliminary report shows that electoral candidates that supported the NRST won the people's vote by landslides. The voting public in those areas have demonstrated that they readily understand the NRST. And did so despite having disinformation shoved at them.
See post 80
|
The Fair Tax calls for abolishing the IRS.
The IRS is the muscle that enforces the parasite tax (income tax). While most people will never be the victim of IRS abuse the IRS steals -- under the color of law -- hundreds of people's savings each year. Leaving them financial ruined the IRS destroys people's livelihoods and lives. IRS Abuse Reports
"Warning: These IRS Abuse Reports start mildly and slowly. After a while, these reports build into such a crescendo of sickening horror, criminal destructiveness, and unbearable evil that a sedative may be required to read them all:"
You've been on these threads for years and while you may -- I repeat may -- have duped a couple of people into siding against the NRST there have been hundreds of people that have visited these threads and sided with the NRST.
After a bit of research people readily reach their own conclusion -- casting your post in the trash can. Ignoring you from then on.
The numbers I provided are personal consuption expenditures!
And include of course not only the busness taxes collected by federal govenment but the overhead costs to business and the economic activity that go along with those taxes all embedded in consumer prices, overhead costs and tax collected that go away with the repeal of income and payroll taxes on business as provided for in the Fair Tax Act, H.R.25 Title I, allowing for reduction of 20-25% in prices recieved by business with no decline in business profitability.
Edgar K. Browning, "found that every dollar of taxes could impose as much as $4 of lost output on the economy, with the probable harm ranging between $1.32 and $1.47" in 1987
confirmed by Jane G. Gravelle and Laurence J. Kotlikoff when they "estimated that the corporate income tax costs more in lost output than it raises for the government." in 1989
Independantly supported by the findings of
James L. Payne, "For every tax dollar collected and spent, Americans pay an additional 65 cents" 1993
Daniel Pilla in '95, figuring "burden is estimated at $700 billion annually. " and
Ernest Christian Jr., figuring "true burden on the U.S. economy is probably closer to $1 trillion" for the $1,275 billion federal tax revenues collected in '94
Dr. Dale Jorgenson "found that each extra dollar the government raises in revenue through the current system costs the economy $1.39."
In the end,YN, it is you who was misleading.
"Actually, there would be no difference between the FairTax and VAT and the flat tax could easily be structure to be the same as the FairTax and VAT."
Not true. A VAT would probably be border adjustable so that the tax burden would be removed from exports. That is certainly a step in the right direction. However, domestically produced goods with a tax burden would still be competing with imports which, in many cases, have no tax burden. IOW, a VAT helps a country compete in foreign markets, but it still creates an unfair advantage in its own domestic market.
If it is so easy to structure a border adjustable flat tax, why is it that none of the flat tax bills introduced into congress have that feature?
A consumption tax is a tax on consumption, which is what the flat tax does, as does a sales tax or a VAT.
Each levied in a different manner.
The NRST is levied visibly on the citizen at retail sale, while the others are levied on business activity throughout the full chain of production not within the full congnizance of the electorate as they are embedded along with their exhorbitant overhead costs as an inflationary addition to consumer price.
In short, the amount of taxbase is not the determinate of whether or not the tax is a RETAIL sales Tax, Which is the is the fact you wish to obscure in using the economic meaning of the terms equating an income taxbase to "consumption" taxbase.
They may all tax the same amount of dollar transactions, they are not equivalent in visibility to the electorate, nor are they equivalent in the overhead burden imposed upon personal consumption and the economy.
And include of course not only the busness taxes collected by federal govenment but the overhead costs to business and the economic activity that go along with those taxes all embedded in consumer prices, overhead costs and tax collected that go away with the repeal of income and payroll taxes on business as provided for in the Fair Tax Act, H.R.25 Title I, allowing for reduction of 20-25% in prices recieved by business with no decline in business profitability.Uh..that's what I was calculating using your 22% figure. How is that misleading?
However, domestically produced goods with a tax burden would still be competing with imports which, in many cases, have no tax burden. IOW, a VAT helps a country compete in foreign markets, but it still creates an unfair advantage in its own domestic market.Sorry, but this is wrong. Imports are still charged the VAT but they don't get the credit for inputs (ie. the "value added" that is taxed is the full amount of the product). Imports and domestic products would be taxed equally under a VAT.
So tell us, YN, what criteria are you using in ranking the FairTax below that of these other tax systems?
The main issue is enforceability.
Understandbly that would be your primary criteria.
Adam Smith, the father of modern economic thought, had a lot to say about that kind of taxation in his still great book Wealth of Nations pp. 561-64.:
A tax was bad that required a large bureaucracy for administration.
A tax was bad that "may obstruct the industry of the people, and discouraged them form applying to certain branches which might give maintenance and employment to great multitudes. While it obliges the people to pay, it may thus diminish, or perhaps destroy, some of the funds which might enable them more easily to do so."
A tax is bad that put the people through "odious examinations of the tax-gatherers, and exposes them to much unnecessary trouble, vexation, and oppression...It is in one or other of these four different ways that taxes are frequently so much more burdensome to the people than they are beneficial to the sovereign"
"A hand from Washington will be stretched out and placed upon every man's business; the eye of the federal inspector will be in every man's counting house....The law will of necessity have inquisical features, it will provide penalties, it will create complicated machinery. Under it men will be hauled into courts distant from their homes. Heavy fines imposed by distant and unfamiliar tribunals will constantly menace the tax payer. An army of federal inspectors, spies, and detectives will descend upon the state."
-- Virginian House Speaker Richard E. Byrd, 1910, predicting the consequences of an income tax.
For others there are overiding considerations that are the issue, those dealing with personal liberty and freedom from coercion:
[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."
I discussed the importance of abolishing the income tax because of its tendency to form a habit of servility in the souls of a people that accepts it. Servility of soul is bad not only in itself, it is also an open door through which will soon walk the abuses of ambitious government power. Leaders who find themselves with governmental power over a servile people will be quick to conclude that such a people exist to serve them. |
"As a matter of fact, what the income tax does and this is the debate that I think we always try to get into in order to let you and him fight, see and the people of this country are led down a path where the actual control of their resources, which in the end is the control over their will, is handed off to the government." . . . "The government then manipulates that will in order to destroy the freedom of our electoral system through the income tax structure, and we call the resulting slavery a free system." "In point of fact, it is not as the founders understood, and the only way to restore real freedom is to give people back control over the income that they earn so that they wont, at the voting booth and in other phony issues, be subject to that manipulation." |
And citizen empowerment:
- "The ability of a country to pay taxes must always be proportioned, in a great degree, to the quantity of money in circulation, and to the celerity with which it circulates. Commerce, contributing to both these objects, must of necessity render the payment of taxes easier, and facilitate the requisite supplies to the treasury."
- "Imposts, excises, and, in general, all duties upon articles of consumption, may be compared to a fluid, which will, in time, find its level with the means of paying them. The amount to be contributed by each citizen will in a degree be at his own option, and can be regulated by an attention to his resources. The rich may be extravagant, the poor can be frugal; and private oppression may always be avoided by a judicious selection of objects proper for such impositions. "
- "It is a signal advantage of taxes on articles of consumption that they contain in their own nature a security against excess.
They prescribe their own limit, which cannot be exceeded without defeating the end proposed - that is, an extension of the revenue."
- "If duties are too high, they lessen the consumption; the collection is eluded; and the product to the treasury is not so great as when they are confined within proper and moderate bounds."The ability of a country to pay taxes must always be proportioned, in a great degree, to the quantity of money in circulation, and to the celerity with which it circulates. Commerce, contributing to both these objects, must of necessity render the payment of taxes easier, and facilitate the requisite supplies to the treasury."
This forms a complete barrier against any material oppression of the citizens by taxes of this class, and is itself a natural limitation of the power of imposing them."
- "The income tax in effect makes us vassals to the government the politicians decide how much income we can keep. No mere reform of this slave tax, such as flattening the rate, can correct its fundamental denial of control over our own money. Only the abolition of the income tax itself will restore the basic American principle that our income is both our own money and our own private business - not the government's."
- "Replacing the income tax with a national sales tax would rejuvenate independence and responsibility in our citizens. True economic liberty and moral revival go hand in hand."
- "A national sales tax would also put the American citizen back in control of national fiscal policy.
Each levied in a different manner.Yeah, and? That wasn't the issue, the issue was whether a flat tax is an income tax. It is not, it's a consumption tax.
Forget the federal taxes, just rid me of my FICA taxes.
They may all tax the same amount of dollar transactions, they are not equivalent in visibility to the electorate, nor are they equivalent in the overhead burden imposed upon personal consumption and the economy.A VAT is no different than a NRST from the customer's standpoint.
Input Value
Added Total VAT
Credit "Sticker"
Price 29.87%
VAT Gross
Payment Net Tax Paid
(Tax - Credit)Raw Materials $ 0 $ 155 $ 155 $ 0 $ 155 $ 46 $ 201 $ 46Manufacturer $ 201 $ 200 $ 401 $ 46 $ 355 $ 120 $ 475 $ 74Wholesaler $ 475 $ 225 $ 700 $ 120 $ 580 $ 209 $ 789 $ 89Distributor $ 789 $ 250 $ 1,039 $ 209 $ 830 $ 310 $ 1,140 $ 101Retailer $ 1,140 $ 375 $ 1,515 $ 310 $ 1,205 $ 453 $ 1,658 $ 142 TOTAL TAX PAID $ 453
Interesting.
You're claiming if wages go down, price goes down.
But when taxes go down, prices don't?
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