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 information is available. It's there. You choose not to see it.Ahhh, the classic reply from a FairTaxer!
Bigun wrote:Well, there's a lot of people who are trying to do somthing even it it's wrong or won't actually accomplish the goals they are striving for. And a lot of them will be very disappointed with the end result.
Nattering Nabob of Negativity alert!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!
As for things that can be done today to work toward a better solution, I can think of a few. Let's start with the really easy ones:
This is absolutely revenue neutral. And it reduces the burden on employers. They only have to report the amount they pay their employees (that's the same reporting that will be required under the so calle "fair tax," BTW). They don't have to collect the money and remit it to the feds or keep track of exemptions or any of that any more. It should reduce some of the compliance cost of the current system. Maybe not as much as the so called "fair tax," but it's a step in the right direction.
It also makes the taxpayer very much aware of how much they are paying in taxes.
But it accomplishes these things without any huge economic convulsions from completely replacing the current system with something new and unknown.
This isn't the optimal or ultimate solution to the Social Security Crisis. But it does protect some of our Social Security "contributions" from the whims of future Congresses that might cut benefits or means test or whatever. It's a good first step. And the government does issue long term savings bonds, so this isn't illegal or unconstitutional.
Again, I don't propose this as a "final solution" for Social Security reform. It's merely a first step that can be taken toward incremental reform. And it should be difficult to defeat. But it opens the door to some kind of personal accounts.
BingoIt's the epitome of hypocrisy for AG to accuse someone of bloviating.
A larger base means what is being taxed is bigger.
So simply because they're both a sales tax, a sales tax with exemptions has the same tax base as one without in the Principled world of tax bases.
What is it that makes you so absolutely certian of that outcome? Do you deny that the people of this country are, even today, the final authority over those who serve us in government and thus have the ability to make changes resulting in BETTER government for us all?
The only way you tax unreported incomes from things like drug sales is if you can find a way to actually make drug sales part of your tax base. Saying that this money will be taxed once it is brought into the system is just smoke and mirrors. Consumption of illegal contraband and services is just as untaxed today as it will be under the fair tax. Unless you are saying Prostitutes and Drug Dealers will submit the tax on their gross receipts, your arguement as empty like most of the fair tax claims are.
If you want to communicate something with that post, try again.
Wrong. Bad wrong. Here's how the consumption tax HR 25 will capture more of taxes from say, a drug lord.
Currently, the drug lord pays a portion of his share of tax, only a portion. That would be the portion he pays when he buys something. We all know about the hidden taxes in prices.(and some of us know the tax system hides related costs). But what he pays in prices represents only a portion of his fair share. He is NOT paying payroll taxes, nor is he paying income taxes. Our tax burdens are currently in 3 places; prices, payroll taxes, income taxes.
Under the consumption tax HR 25, any individual pays his FULL tax burden when he buys stuff. So when the drug lord buys stuff, he pays his full share... not just part of it.
That is stupid. THe prostitutes and drug dealers pay their tax when they buy stuff.
I will ask you the exact same question.
What is it that makes you so absolutely certian of that outcome with regard to the FairTax proposal? Do you deny that the people of this country are, even today, the final authority over those who serve us in government and thus have the ability to make changes resulting in BETTER government for us all? If so, I would submit that you need to hear the words of one Johann Wolfgang von Goethe:
“Until one is committed, there is a hesitancy, the chance to draw back, always ineffectiveness, concerning all acts of initiative (and creation). There is one elementary truth the ignorance of which kills countless ideas and splendid plans: that the moment one definitely commits oneself, then providence moves too. All sorts of things occur to help one that would never otherwise have occurred. A whole stream of events issues from the decision, raising in ones favor all manner of unforeseen incidents and meetings and material assistance which no one could have dreamed would have come their way. Whatever you can do or dream you can, begin it. Boldness has genius, power and magic in it. Begin it now.”
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
Illegals can buy used (they probably already do) with what money they don't send home and any unreported income that isn't spent on used crap could safely go into savings.
Speaking of unreported income. By eleminating the fear of audits on individuals the financial rip off industry and money laundering should do quite well under the Fairtax...In fact with no audits on individuals the US could become a haven for money laundering and fraud...
This is true for any one of us. We could buy used and save the rest. That doesn't change the fact that one's full tax burden comes from taxes paid when purchases of new goods or services are made.
You previously have stated that this could never happen. Now you say it will. Interesting.
Under the consumption tax HR 25, any individual pays his FULL tax burden when he buys stuff. So when the drug lord buys stuff, he pays his full share... not just part of it.But the people buying from him won't be paying any tax on that money, income or sales tax. Think of it this way. The income tax gets the money going into the underground market, the sales tax get the money going out.
Yes it is a stupid claim. Of course when they buy stuff, just like today, taxes get paid. But the issue is the taxes they are AVOIDING. It is really not that hard to get if you were not blinded by your allegence to this cause. It is just plain intellectual dishonesty at it worse.
But he DOES NOT pay his FULL SHARE when he sells illegal stuff. No tax is remitted. Tax is avoided. Just like today. Absolutely ZERO difference and you know it.
But today, they only pay a portion of their tax burden. Remember they don't pay payroll or income tax, just the hidden taxes (and tax costs). Under the nrst, their entire tax burden comes from what they pay on the nrst.
It's just plain you missed that now there are 3 places (at least). Under the nrst, 100% of one's burden is paid at purchases.
Sellers don't pay tax. Buyers do. That wasn't what you asked me.
No apology required ... got the info and thanks for the answers.
You asked "Do any of the sponsors of this "fair tax" have any history of fighting tooth and nail against needless complexity and bad tax policy?". The answer, of course, is a resounding "yes" in that many of the FairTax sponsors (and supporters) have been "fighting" as you put it to bring the FairTax into being as the tax law of the land. Understand that there are something like 600,000 FairTax members which represent a very good start of aware citizens.
I expect the FairTax bill to pass pretty much in its present form and start life as a much cleaner, simpler tax system than even the 1913 tax bill ever was since that tax bill already had in its makeup the seeds of its own destruction with exemptions, deductions, etc. and the very basic flaw of giving the government the ability to DEFINE "income" and to control citizens through the "aberrations" of deductions, etc. built in at its inception - and increasing thereafter. Those sorts of things are open invitations to political meddling. The "1913 experience" has certainly taught us (finally) what happens when you allow such a weakened bill into law.
With the FairTax, OTOH, the taxable item is not something such as "income" already at the start replete with deductions, exemptions, etc., but end-consumption retail sales of goods and services without all the aberrations just mentioned. That is a more concrete and identifiable tax basis than the sort of "income tax" at its inception, even, in 1913. It was all of those very deductions, exemptions, etc. that were the death knell for the IT as it clearly showed the pols a way to manipulate and gave the inference that taxpayers were amenable to that sort of manipulation - after all, it was there as a starting example. There certainly are no similar embedded starting points in HR25 despite your fanciful speculation of future government controls. After all, it is up to us to elect the pols (or not) - many people seem to have forgotten that or have the hopeless attitude they cannot do anything to influence the fellows in DC. Despite what you may think, you can by grassroots support.
The FairTax is much cleaner initially than even the 1913 tax bill and by modern legislative standards is a small bill in size. The history of trying to eliminate the anathema of the IT (along with its bugbear the IRS) is clearly the "fighting against complexity and bad tax policy" you inquire about. As for attempts to change the FairTax bill, as I said in my last paragraph of #660 (which perhaps you might re-read since you may have missed it) there certainly WILL be attempts to defeat the bill legislatively either by outright opposition or by offering up alterations that have the effect of gutting and weakening the effect of the bill. This is already well known, I think, to most who support the bill presently.
Actually, you needn't even pose the question of which tax system most reasonable people would rather live under; the present IT or the FairTax. The answer is very clear to most people - the FairTax would be far, far less intrusive in our private lives that the IT and there would certainly would be no need at all ".. wade through a convoluted sales tax code every time you buy something ...". In operation the FairTax is simplicity itself and even for the retailer reporting the sales each month the report required is greatly simpler (is is identified in the bill) than the body of reports required for the IT --- and the retailer is paid for doing so.
With the FairTax, the government has no say so over how (or when, or if) I spend my money to consume ... and there are no penalties on (or legal nightmares facing me) as an individual payer of the tax. Those things are certainly at least potentially if not actually there there with the IT. The choice is a zero-brainer for most except those who support the status quo or who haven't (yet) found out what is involved in the FairTax. If you've never been treated to the tender mercies of the IRS under the present IT system, you just haven't lived.
My observations about the FairTax vs the IT are based upon observation of the two tax systems at inception and I showed above why the IT was greatly flawed from the beginning which some politicians of the time realized:
""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 taxpayer. 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."
Too bad we didn't listen. But you see that, unlike your statement that it could not be foreseen, indeed it was and clearly so.
The avoidance/evasion comments in #660 were referring to income obtained by drug dealers which clearly have no income tax paid directly to the government by the volition of the criminal. As I pointed out the situation changes when the sales tax collects 23% from his purchases - considerably more than at present.
As we've seen, even the 1913 tax code was anything but pristing OR simple and carried the seeds of its own destruction. The FairTax is quite different and starts us with a much cleaner tax slate making it much more difficult to legislatively assault. It is up to us as taxpayers to begin to control those who are out of control in DC (and not all are - witness the building number of co-sponsors).
The one employer you mention is - believe it or not - subject to voter control and must operate under a set of laws. One of these laws, when repealed, will help make it more and more likely the IT will not rear its ugly head at least in our lifetime under reasonable circumstances. In addition with coitizens having the ability to withhold tax revenues is they don't like government spending it will certainly soon dawn on the Congress that indeed things have changed and this ain't your Father's IT no mo' with most of the bils introduced to add some particular loophole or special exemption to the IT which can't be seen by the citizens since they can't see their tax burden. It's called empowering the people a bit. Your presumption that they won't cut their prices is just that - a presumption.
Wrong. Read #660.
That's just an assumption. It is just as valid to assume the cost burden (including payroll taxes) ultimately falls on the consumer reguardless of who actually submits the tax. The important thing for analysis purposes, is to keep that assumption consistant.
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