Posted on 05/12/2005 7:46:54 PM PDT by Your Nightmare
Members of the President's Advisory Panel on Federal Tax Reform on May 11 expressed concerns over the FairTax national retail sales tax, a plan that has emerged as an alternative with a major grass-roots push.
Panel chair Connie Mack, vice chair John B. Breaux, and other members worried the plan would be difficult to enforce, would be regressive, and would require a high rate in order to take in enough money to fund the government.
Breaux raised concerns that the proposed 23 percent (tax-inclusive) rate would not be sufficient to raise the revenue necessary to fund the government. The Joint Committee on Taxation estimated that it would take as much as a 57 percent (tax-exclusive) rate to be revenue-neutral. Further, Breaux said he thought exemptions that would be carved out to make the sales tax progressive would also complicate it.
Mack, who raised concerns similar to his fellow panelists', said he was "intrigued" by the plan. "But if it's such a great idea, why haven't other political entities around the world pursued it?" he asked.
Americans for Fair Taxation Executive Director Tom Wright emphasized that the plan emerged after "thorough academic research" and "thorough polling" The strong grass-roots push has resulted in some of the group's 600,000 members appearing at each of the panel's hearings and has inspired a large comment-writing campaign to the panel in support of the plan.
Sales tax advocates were among the 20 witnesses who gathered before the panel for a full day of testimony on tax reform proposals. Although the group has held several other hearings in Washington and around the country, the May 11 meeting was its first hearing on specific reform plans since Bush appointed the panel in January. The panel has been charged with identifying tax reform proposals that are progressive, encourage charitable giving and home purchases, and are revenue-neutral. The proposals are due by July 31.
Among the tax replacement and reform plans presented to the panel were the value added tax, consumption-based tax, and the flat tax, as well as proposals that would use the current income tax as the foundation.
Witnesses generally claimed that theirs was the fairest, simplest, most flexible, most transparent revenue-neutral proposal that would improve economic growth and savings while meeting the president's criteria of encouraging charitable giving and home buying. Witnesses presenting consumption-based plans praised their overhaul as taking millions of low-income taxpayers off the rolls, being easy to transition to on a worldwide basis, and including safeguards to prevent new loopholes that would result in increased complexity down the road.
Tax reform panel members, who agree the current tax system needs to be fixed, grilled witnesses without revealing whether they will ultimately endorse a consumption- or income-based tax or a different mixture of the two.
The only difference is I will not have to account for withholdings, not a big deal since those are spit out by the computer. It is not 'greatly' simplified.
You are only able to charge a higher price because you WANT to because there is a Rent component you can take advantage of. In a more competitive environment that component disappears.
You've studying looey-rithmetic it seems. Perhaps you'll soon be up to studying his advanced course in taking things out of context and posting them.
It is virtually impossible to understand these matters without a firm grounding in micro theory. And micro is the most difficult part of economics.
Given the Low unemployment rate and given high capacity utilization rates in industry any increase in production encounters the Law of Diminishing Returns and will cause higher costs and higher prices. This is true for domestic production OR production for export.
IF our U.r. was 10% then ramping up production for more export would NOT cause prices to rise since there is excess labor available and, under certain conditions, may even cause prices to fall. However, I was speaking of conditions NOW.
Yes I did miss that question but it is a lame one having nothing to do with anything I have said. Companies can remain in business without profits for as long as they have assets to convert to cover the difference between revenues and costs. Short run unprofitability is not uncommon.
No reason to do so at all. We're not discussing pricing practices and tactics for alternate marketplaces.We aren't discussing pricing?
Taking stuff out of context??? How is that. We have $8 Trillion in consumption and you tell me your system is going to reduce the prices 20-30%. I just want to see where these $2 Trillion in savings is coming from. So far I can only find $200 Billion in concrete savings.
And Clinton had letters written by hundreds of historians telling the House that is should not impeach him.
However, given the fact that there are thousands of economists and less than 1% signed that letter I am not terribly impressed. I would like to ask them the same questions I have asked you guys.
If they could be answered to my satisfaction there is no reason I would not support FT. Though it would increase my tax bill I have no doubt.
I understand perfectly well that income taxes are NOT a factor of production no matter how you might torture the concept. They are neither Land, Labor or Capital. Costs come from those factors and nothing else.
Again you refuse to seperate income taxes from payroll taxes which ARE an aspect of Labor costs.
It is a simple matter to point out evasions when asked and your inability to do so speaks for itself. Rhetorical bluster won't do the trick.
"Yes, starting with a clean slate does simplify things for a little while. But you can start with a clean slate with a flat income tax and get the same effect."
I disagree. First of all, as I previously pointed out, the deductions are where the bulk of complexity lies - not in the rate schedule. We tried a semi-flat tax in 86, and now the Code is far worse than it was then. Would lobbysists/legislators try to complicate a sales tax system? Of course, but those who worked so hard to enact a simpler, fairer system would be fighting them tooth and nail.
Your question about the voting patterns of FairTax co-sponsors is a red herring. First of all, we will have to add substantially to the supporters in congress or we will never get it passed. It is therefore inevitable that we will have some (or perhaps many) supporters who will have voted to complicate the current system. If you look at the graph of the number of pages of the system, you will see that it has gone up in Republican administrations, as well as Democratic. Does that mean that we wait until we have a "pure" congress untainted by previous votes for complexity to enact a simpler system? I think not.
All of this is really secondary, however. You believe that a flat tax would be as effective in stemming the trend toward complexity and higher compliance costs, our history with an income tax (which began as flat) notwithstanding. The fact is that there is no flat tax proposal which really has any traction right now. The only one in the House is the Burgess bill, which replaces nothing - not one line of Code is eliminated. Senator Shelby is going to reintroduce his flat tax bill as soon as the calendar gets to S 1040, but that bill has never enjoyed much support. If you ask any flat taxer what specific flat tax bill they support, most of them have no idea. The flat tax is a concept that has never generated a specific bill that its supporters can rally around. Ponder that for a minute.
BTW, if you like a flat tax, you will be pleased to learn that we already have one. It's called the AMT. I don't know anyone who has rallied around THAT flat tax, however.
More to the point, however, is that the FairTax addresses the major economic challenges that this country faces in a far more effective way than the flat tax. In addition to the out of control spiral of complexity and compliance costs, the others include
1. the trade deficit,
2. the AMT
3. the federal budget deficit (because of high GDP growth rates)
4. the looming insolvency of Social Security and Medicare
5. the inability of our expanding economy to produce enough good jobs.
Because the flat tax does little about the imbedding of the costs of our tax system in our goods produced here, it would not have nearly the stimulative impact on our economy that the FairTax would. It would also not positively impact our trade deficit the way the FairTax would.
Last but not least, Democrats will never support the flat tax. There are plenty of reasons to expect that some of them (the more moderate ones) will eventually come across to the FairTax. I have met with several of them over the past few months and I can tell you that quite a few are getting pressure from their constituents. As that pressure continues to grow, some of them will respond.
Many FairTax supporters supported the flat tax when it was first introduced. When the FairTax came out, they concluded that it was superior. Some flat taxers stayed with that proposal, but, as I said, few can tell you what specific proposal they support. I find that very telling, in light of how long the flat tax has been around.
Depreciation depends upon the situations at hand. Whether you did it or not by hand is not the issue. Nor is the fact that the "computers just spit it out".
You probably would claim that your computers, your software and those operating same ain't any big cost either wouldn't you? Nothing costs too much to hinder your hype of the status quo, does it?
A suggestion - spend all of the zillions you think you have gained in profits under the IT system so you won't be tempted to invest it and make even more in untaxed income under the FairTax ... but watch out for that death tax should you cork off before the FairTax gets here - it's a killer!!
"And we should not overlook the fact that these compliance costs are declining because of the computerization of accounting and bookkeeping."
Do you have a source for that assertion? Every analysis that I have seen of compliance costs shows them increasing constantly. The reason, of course, is that the growth in our tax system overwhelms the improvements in technology that you cite. In fact, if you look at a graph of the number of pages in the system and study it carefully, you will learn that the rate of growth is not only unsustainable, it is actually accelerating.
"Personally I don't accept the estimates of the actual cost of compliance in any event and believe them to be overstated."
There are a number of estimates of compliance costs out there, with fairly wide ranges. All are huge. Since you don't accept any of them, do I take it that you believe that the compliance costs of the current system are $0?
Dare I suggest you do some reading on the economics of the FairTax on the AFFT website??? Naah! That'd be leading the horse to water AND making him drink.
We both know you'd never make any real attempt to find out so I won't bother to say that.
Since the wesbsite is well known and readily available I won't even bother to post a link here - unless someone asks for it.
"I figured out complicated recaptures and depreciation for years before I incorporated all by myself. It ain't all that tricky, and with computers, it's just a matter of plugging in the numbers. I deprecreated rental properties, office equipment, and all sorts of things. Besides, with the increase in section 179, you can easily write off most of your expenses without worrying about depreciating it."
So for all those Americans who commented to the tax panel that we need simpler system, your answer is: forget it, the current system is as simple as it gets?
LOL. Good luck selling THAT ridiculous position.
Senator Mack: "With all the comments we recived from all over America, not one person said that the current system is just fine; leave it alone."
Why didn't you make your position known to the Tax Panel, AR? Afraid of being laughed at?
ROTFLMAO!!!
Maybe because they are all left-leaning socialists?
Why do we in America even consider what other 'developed' countries do?
Hell, would we have ever broke from England if we weren't the leaders on the forefront?
AR: Bullcrap, you guys say that on every thread.
You're wrong. Find where anyone besides you says that $200 Billion is 30% of $8 Trillion. It won't be there. A google search on those words will show "Always Right" at the bottom of the post.
BTW your continual us of the F word is really helping your argument a lot!
So you are now discounting small business? Really?
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