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.
That's no insult at all, looey - quite the opposite.
Congratulations...Cuz, I meant his intelligence far exceeds anything you could ever dream to be.
Very funny, looey ("... doing something rignt ..."). That'll be the day. And, no, I don't lose any sleep at all thinking about you and your vast notions.
I've seen so many of them (really mostly half-vast;truth be told) over the past 6 - 8 years that I think I've heard it all from you. And don't tempt me on post numbers - you have so many years of covering your backside to do that someone might take you up on it. As it is you manage to shoot yourself in both feet plenty often enough.
Perhaps you'd like some helpful information about the FairTax:
http://www.fairtaxvolunteer.org/smart/faq.html
Listen troll, I am getting tried of your barking. Your name, justshutupandtakeit, alone is enough to be annoying, if outright a flame.
You should 'shut-up' and listen to other's people's advice.
Yeah right. You can't do it. I have asked seven times. Zero, nil, nothing.
Oh really? Bet you can't find them.
Why not stop the attack mode and really ask, instead of saying stupid things like "you idiots think $200 Billion is 30% of $8 Trillion". Did you ever really just ask? Did you ever post without attacking?
You may think we want to convince you - that's wrong. We're not here to convince anyone. FR is a tiny corner where these issues can be discussed. What you say is quite unimportant.
phil_will1 wrote:Let's look a little more closely at this. I think you're doing more to support my point than your own.
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.
I'll agree that we tried a much simpler tax code in 1986. Fewer rates, fewer deductions, semi-flat characteristics, much simpler than the code that immediately preceeded it.
Now, nearly 20 years later, we have none of that simplicity. We have more tax rates, a bunch of different "refundable" credits, expanded deductions, and all kinds of added complexity.
Do any of the sponsors of this "fair tax" have any history of fighting tooth and nail against needless complexity and bad tax policy? On what basis are you assuming that they will fight changes to a sales tax code tooth and nail? Is that just wishful thinking on your part? Or is there some actual evidence that at least the supporters of this proposal have a history of resisting changes and needless complications added to the tax code? And what about the part of Congress that won't support the fair tax initially? You aren't even going to try to convince me that those people will not try to add complexity and junk up the new sales tax code to "improve" it and make it more palatable to their constituencies, are you?
Unless the voters start voting people out of office because of this counter productive behavior, the critters in congress aren't going to stop this. And the fair tax supporters would be a lot more credible if they could show some credible history of simplifying the current code and keeping it simplified for a reasonable period before trying a wholesale replacement.
With no history of resisting changes, we have to assume that the sales tax code will become convoluted and complex fairly quickly. There's no credible reason to believe otherwise, and I don't care how badly you want to beleive the congress won't needlessy complicate and convolute the fair tax, it still will happen.
So then the question becomes, do you want to have to deal with a complex and convoluted tax code once a year for an income tax return? (Or once a quarter for your estimated tax payment?) Or do you want to pay the compliance cost of your grocery store, gas station, home improvement warehouse, convenience store, liquor store or whatever having to wade through a convoluted sales tax code every time you buy something? Because with the "fair tax," in 10 years, it will take a whole lot of computing horsepower and a fair amount of CPU time to calculate the sales tax on your weekly grocery run. And you can probably count on a lot more paperwork at least annually to compute what your monthly "rebate" check will be.
In a worst case scenario, you might end up having to provide a federal taxpayer ID of some kind in order to buy anything at a store. I doubt that's on the immediate horizon. But I also doubt that in 1913 anyone could forsee that you would have to provide a taxpayer ID number and photo ID to an employer before they could hire you.
phil_will1 wrote:And you believe that a "fair tax" that starts out flat will stem the trend toward complexity and higher compliance costs. But you ignore what has always happened to "flat", simple federal taxes, at least the ones that are broad based and apply to a lot of taxpayers and a high volume of transactions.
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.
There's nothing but wishful thinking on the part of "fair tax" supporters to support that belief.
I'll admit that I'm speculating here. But you are also speculating about the future, and your speculation has no basis at all in any history available. My speculation is more of an extrapolation of decades of tax policy history. Your speculation assumes that tax policy history will completely change and magically reverse itself with the implementation of a new tax system.
pigdog wrote:Odd that you call it a misrepresentation after agreeing that the same transactions that go untaxed due to tax evasion with the income tax go untaxed due to tax evasion under the NRST. If you want to say I'm making a misrepresentation, please point out which specific transactions you believe are untaxed now that would be taxed properly under the NRST.
All of the above clearly shows the gross misrepresentation in your statement: "Transactions that go untaxed due to tax avoidance or tax evasion under the current system will also be untaxed for the same reason under the NRST."
pigdog wrote:See my previous response to phil_will1. You can believe anything you want. That won't change what actually happens. Do you have any actual evidence that it will be more difficult to implement changes to the NRST if it's implemented. I don't see any reason to believe that the same lobbyists and congress critters that gave us our convoluted, arcane income tax code won't be able to give us a convoluted, arcane sales tax code.
The assumption you make opf 2,000 changes in the first 5 years (as with the past 5 per your numbers) is quite funny in view of the utter simplicity of the FairTax as it now is written. There is nothing like the corpus of arcana that exists with the IT. By comparison the FairTax is an open book and changes would be MUCH more visible - and therefore those attempting them would be more accountable than at present. I believe it would be MUCH more difficult to make the sow's ear when starting with a silk purse that is apparent to all.
The income tax started out as something fairly simple. The 1913 Income Tax Act was probably only 1/3 of the size of HR 25, so I don't think you're starting out with a simpler tax than the income tax was at the beginning. And I doubt that the taxpayers and citizenry will be any more vigilant or observant of changes to the sales tax code than they are with the income tax code.
And the NRST won't tax all goods the same. Right from the start, some goods will be taxed more than others. There are fuel taxes on gasoline and diesel fuels. There are taxes on tobacco and alcoholic beverages. Even if the sales tax code stays relatively static, there are plenty of other opportunities for lobbyists and social engineers to exercise their control over our lives.
The problem isn't so much that the tax code itself is socialist in nature. The problem is that there are a bunch of socialist legislators who write the tax code. HR-25 won't change that. The same bunch of socialist legislators will be in charge of writing the sales tax code for the NRST.
pigdog wrote:Actually, the windfall to the government follows logically from the claims of "Fair tax" supporters and the bill presently being discussed.
It's more than a bit difficult where your statement about a "windfall" for the government and an expansion of their powers comes from since that is clearly not the case from the wording or intent of the bill ... in other words, a completely unsupported statement.
This requires some logical thought and analysis. Tell me if you disagree with anything here, or if I get anything grossly wrong.
First, when the "Fair tax" (so called) is implemented, all employers will get several positive effects from it. They won't have to withhold income taxes and FICA taxes from employees' paychecks any more, and they won't have to send those payments to the government. Most so called "Fair tax" supporters assume that the taxes withheld from the employees' paychecks will be paid to the employees. Hence the claim that you get to keep your whole paycheck.
But there's more. The so called "employer's share" of the FICA taxes won't be due any more either. And there will be less of an accounting burden (and less of a burden for the attorneys in the legal departement as well) under the fair tax. Supporters of the so called "Fair tax" tell us these savings will be passed on to customers in the form of lower prices, and/or passed on to shareholder in the form of higher earnings.
And it doesn't stop there. Since all organizations will be cutting prices to customers due to market pressures, and since goods bought for business uses are exempt from the so called "fair tax," employers will also see their operating costs fall as prices generally fall from the removal of embedded taxes and compliance costs. Revenues might fall slightly, but since costs are also falling, profitability will increase, or at least not be hurt.
So far, this is just the (so called) "Fair tax" mantra. Are you with me so far? Have I gotten anything wrong?
But here's the kicker. There's one employer, one organization, and they are a large one, and they take a significant portion of my monthly budget. This one employer has already announced that they have no intention of charging less money for their services. They intend to keep all of the benefits of this so called "fair tax" for themselves. They will not allow the so called "fair tax" to reduce their gross revenue stream for any reason. This organization doesn't care that stuff will cost less. They will just buy more with my money.
Care to guess which organization it is that won't cut their prices, won't reduce their gross revenue stream and won't pass any of the alleged savings of the so called "fair tax" on to me?
Sorry. I meant to add you to the "To:" and ping you on post 766. There's response there to some of your points and questions in post 660. And there's a question for you at the end.
Thus far I have seen nothing but attempts to tear down a full scale effort to actually DO something about the problems created by the current U.S Tax code from you on these threads. If you have any POSITIVE suggestions as to how to solve the problem I would LOVE to hear them but throwing up our and yelling "we're screwed" is not an option for me and, I suspect, a good many others here!
What literature? Give me a link.
NIPA tells you consumption spending is slightly over $8 Trillion.
IRS statistics tell us Business Taxes are under $200 Billion and 1/2 of SS Tax is about $350 Billion. Nobody disputes this, so I can only find about 6.8% of taxes which are hard costs. I try and try and try to discover where the remaining $1.85 Trillion of savings are so business can keep prices the same, but they refuse. The only thing I haven't accounted for is compliance costs, which will only be a small fraction of that. If they can't come up with the rest of the savings, the only conclusion has to be prices will go up substantially under the Fair Tax (which any honest person already knows).
Of course! We've been fighting tooth and nail against needless complexity and bad tax policy for 8-10 years now.
Interestingly, we're also spending time defending the clear choice as a replacement to our income tax (which is a mess of needless complexity and bad tax policy) from misrepresentative and misleading attacks by some income tax lovers... you know, the kind that just attack the proposed replacement without offering anything better...
Kinda sounds like the Dem policy on - everything.
Separately, I would support the replacement of our income tax system with this consumption tax even if prices changed.
But the overall tax collection remains constant AND the tax base is made larger... they'll be more people paying tax.
If you have a pizza party with 18 people for $90, you could have 9 people pay $10 each. Alternatively, you could broaden the base and have 18 people pay $5 each.
If you really want to see what the remainder of costs that will be reduced or eliminated, do a simple search on google or here on FR. I'm not going to spend my time doing what you could do (but refuse).
Bingo
I have searched and searched and I have provided all the details I have discovered. Why don't you show me where I am wrong if it is so easy to find out? If you can't back up your claims that prices will stay the same with real numbers under the fair tax, quit making it. I have shown what your total tax base is, and what kind of savings we need and what your plan will save. After 9 posts, still no answer. Do I need to reword the question?
WRT 633; BINGO
I didn't say you were wrong, just that you have omitted/missed much of what the income tax system costs that will be eliminated.
I really don't care what you think about this proposal. You already have determined your position without all the info. Your opinion is insignificant and I daresay irrelevant.
OK, the 9th non-answer to a simple question. Are you telling me the costs of the income tax system will be $1.5-1.8 Trillion and that the cost of compliance to the Fair Tax Scheme is Zero? Is that the story you are sticking to???
Yes, as long as the government collects taxes, there will be a big powerful tax collection agency.
But the overall tax collection remains constant AND the tax base is made larger... they'll be more people paying tax.
A larger tax base means more things are taxed not "they'll" be more people, because "they'll' won't be more people. The fairtax exempts some taxpaying businesses from the tax rolls (I thought the fairtax didn't like exemptions).
It's cheesy but it ain't a pizza party.
A larger base means what is being taxed is bigger.
In the case of this consumption tax, there will be more people paying their full share of tax. Illegals, tourists, those with previously unreported incomes, .. oops gotta run
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