Visions of vaporizing the IRS abound again

sacbee ^ | 11-18-04

[LouAvul]

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," said Minnesota Republican Rep. Gil Gutknecht.

That's the basic premise behind a proposed national sales tax, just one of many ideas for overhauling the nation's tax code. Under a bill co-sponsored by Gutknecht and more than 50 others, all federal taxes on income would disappear, but consumers would pay a 23 percent federal sales tax on their consumption - on top of existing state taxes.

Washington is abuzz with ideas after President Bush won a second term and immediately pledged to make "tax reform" a top domestic priority.

Nevertheless, the Senate's top tax-writer is expressing doubts about prospects for a major overhaul, perhaps dealing a blow to its chances. Sen. Chuck Grassley, R-Iowa, chairman of the Senate Finance Committee, told USA Today that comprehensive tax reform would be "difficult" to do.

Grassley said Bush would have to aggressively use his "bully pulpit" to win wider popular support.

[Marine_Uncle]

"Anyone who is considered poor would be compensated for the 23% Sales tax. Therefore, if you have a family that makes $20,000 a year. Then the government would send a check for 23% of 20,000. I believe that is $4600 to cover that 23% Sales tax. Now instead of getting it once a year the family would receive a check for $383.33 each month to cover the tax. What do you think of that?"

I have mix thoughts on all the good arguments many of you are sharing. I guess I just have to sit down and carefully learn what is totally involved. I believe I simply have gut reacted without having an even small number of facts on this issue. Thanks again to all you that have
shown patience in trying to help me out on this issue.

[Sprite518]

"Direct Consumption Taxes, such as a National Sales Tax (NST) might make a substantial contribution to Federal Revenue, but it's highly unlikely that it could provide more than perhaps 50% of what's required."

According to what study? I could rip you very easy by everything you just wrote. However, I am not going to be sophomoric. You are swimming in the sea of gullibility. You need to understand that governments take from the people who earn their money, and redistribute for votes and power. Just by what your writing its is quite obvious you have never read the fair tax. It covers all the nonsense you are talking about. Please read it. Instead of repeating clueless Karl Marx theories out of text books.

[WhiteGuy]

I was suggesting that large amounts of "appreciating" assets which are being held only because of the CG tax liability being faced upon sale.

I can appreciate your point as well.

Personally, I'm in favor of giving anything new a try. What we have had in place for all these years is simply out of control.

[kevkrom]

Thank you folks for all your input. I learned some things about the proposed plan, from your patience. I hope it turns out to benifit all Americans. The topic hopefully will be fully elucidated with no hidden gottchas, so that our congress can determine it's worth. I am sure we shall continue to see much debate pro and con on this issue.

If Hastert is good to his word, there will be a full-fledged open debate on any and all ideas to reform or replace the curent system in this term... I'm sure this topic will not be going away quietly any time soon.

:)

[TChris]

You're kidding me, right?

Not at all. The very definition of a regressive tax is that lower incomes are taxed at a higher rate, which is not the case in a flat tax system. Now, given that, there certainly could be a partial regressive effect because of the percentage of one household's income going to necessities vs. "toys." However, I would argue that, because the "poverty" line is a political football, and that even the poor in the USA are much better off than most other citizens of planet Earth, it isn't a valid argument against a flat tax rate.

I think it's a knee-jerk reaction to presume that a flat tax would be unfair to the poor, simply because we have used progressive taxation for so long that it feels like "that's the way it should be."

Of course, such a change would be a jolt to those who haven't been paying any income tax to this point. But there is good reason to believe that everyone should pay something, IMO.

Perhaps there could, instead, be an exemption for those below some "minimum living standard", and so implement a hybrid system with two tiers: a no-tax, poverty tier, and a flat tax for the rest. At least that would reduce the current system to one political football: the "minimum living standard" line.

[kevkrom]

Under the NST, would tourists and illegal aliens finally pay income taxes, or would they be returned them once they leave the country?

Tourists/illegals would pay the full NRST rate on purchase of retail goods and services, with no rebates or refunds.

[Sprite518]

your welcome :-)

[ThinkDifferent]

And please don't believe for a minute that corporations will lower the price on large ticket items such as cars, because they are no longer federally taxed. That is just ridiculous. They will simply reep the extra bucks.

Not unless they want to lose business to competitors who do lower their prices.

[Sprite518]

Please go to this web site and read it. It should answer all your questions.

www.fairtax.org

[TChris]

How many states with sales (flat) taxes are in the black?

Whether or not a particular state is "in the black", is a function of many more variables than what type of taxation is used. Your response seriously oversimplifies the issue.

[elbucko]

All these scumbags would be paying tax under a national sales tax plan.

It would not be enough! Furthermore, this promotes the motive that so many of us despise: Using the tax code to "punish", or reward, such as "wealth transfer".

The reason we are in the mess we are now, is that someone wants to reward or punish somebody else with a tax. Taxes are for only one thing. Paying the governments bills, not social engineering. Even taxing "pimps an' ho's", jus' 'cause dey's pimp's an' ho's, ain't gewd.

[HostileTerritory]

Why do people believe that the NRST is a *cure* for the underground economy? Raising the sales tax from 5% to 30% (it's not 23% the way sales taxes are calculated today) is the surest way to recreate a black market in goods short of introducing rationing or price controls.

If someone has goods they want to sell, and someone else wants to buy them, the two will find a way to make the transaction without paying a 30% tax to the government. Right now, with sales taxes of 4% to 8%, convenience is key and there's only a small black market. But raise sales taxes to 30%, and Katie bar the door, your mall shops will close all their front doors and do all their business in the parking lot outside the trucks!

Perhaps we could create a new government agency to monitor people's finances to demonstrate they aren't making or spending money outside of official, monitored transactions. That's the only way to cure the black market.

We'll call it the Internal Revenue Service.

[Marine_Uncle]

IW:"they will have to rise as during slow economic or depressed business cycles finds less people buying things"

YW: "How do you come up with that? LOL! When people get more in their pay check. They spend more. That is a fact. You think Joe Blow is going to say hey I have $400 more in my pay check. I am not going to spend one extra cent. LOL!"

I guess your right.

[tvn]

FYI

“It was only three years after McCulloch’s warning that Karl Marx and Frederick Engels, in the Communist Manifesto, advocated a heavy progressive tax as a means of despoiling the “bourgeoisie” and softening middleclass society up for the dictatorshp of the proletariat. Walter Bagehot, editor of the London Economist, feared that the Marxians would prevail: he predicted that the progressive tax, in combination with the principle of universal suffrage, would result not only in the destruction of the rich but in the very dissipation of the productive capital which gives society (the poor included) its margins of comfort.

The predictions of McCulloch and Bagehot have not yet come to pass in their ultimate direness; maybe they failed to reckon with the adaptability of man. Psychologically speaking, there is obviously some point where the progressive tax must recoil upon itself, destroying the base from which it might hope to achieve a maximum of “take.” Just where the point is we cannot tell: there is no way of measuring businesses that are unborn, or energies and creative enthusiasms that simply fail to well up. But when a progressive tax dampens the impulse to generate income, then the tax base itself must narrow and diminishing returns set in.”

The Progressive Income Tax
Published in The Freeman: Ideas on Liberty - April 1981
by John Chamberlain

http://www.fee.org/vnews.php?nid=951

[elbucko]

Your response seriously oversimplifies the issue.

You mean whether or not a tax works is beside the point?

[HostileTerritory]

Currently, whores, pimps, drug dealers and millions of shady businesses avoid income taxes in the underground economy.

In the new world, I suppose they'll be charging customers and johns the 30% NRST, and will only make their purchases (cars, clothes, jewelry) from merchants who are above-board and will report every transaction to the central authorities for tax purposes. Because the NRST magically cures lawlessness that infects the income tax system.

[TChris]

OK, for those who are a little slow, or not reading the whole post, or ignoring half of an argument, here's what I wrote:

Whether or not a particular state is "in the black", is a function of many more variables than what type of taxation is used.

Now, are you going to respond to the whole argument?

[kevkrom]

Raising the sales tax from 5% to 30% (it's not 23% the way sales taxes are calculated today) is the surest way to recreate a black market

No worse than the underground labor market right now due to income taxation. There will always be some folks who will try to cheat or game the system, regardless of what method of taxation is used.

As for retail sales, about 80% of the retail goods come from large chain stores like Wal-Mart. The Wal-Mart folks aren't going to risk jail time to help you avoid paying taxes...

[elbucko]

“It was only three years after McCulloch’s warning that Karl Marx and Frederick Engels, in the Communist Manifesto,......

Yes, I've seen that a hundred times. Tell me something new. And relevant.

[HostileTerritory]

No worse than the underground labor market right now due to income taxation.

On the contrary, I would think it would be a lot worse. Which is easier to hide these days, a purchase or an income? Remember, very few Americans are paid in cash, but it is remarkably easy to convert one's paycheck or investment proceeds into cash.

The IRS exists for a reason; it enforces the income tax system. It doesn't work as well as it could, and it works at the expense of our freedom, but if you believe that the income tax laws should be observed and the money should keep flowing, the IRS does a good job.

Once the NRST goes into effect, everyone's going to be a tax dodger. You'd feel like a chump not to avoid a 30% tax when there will be opportunities left and right to buy what you need.