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.
You're arguement forgets that many states have a sales tax in place, plus those would be state workers, not federal workers.
It's not my argument it's a fairtax favorable testimony from the State Of Texas...who has no income tax...They have a sales tax....
plus those would be state workers, not federal workers.
AND?
I don't understand your all or nothing comment since you DO seem to be defending the IT with your comments.
The FairTax is hardly a cash cow for liberals. In fact, it is non-partisan and revenue neutral. In the years to come it will, if anything, reduce the tax rate. It is the spending side of Congress that we need to concentrate on after passing the FairTax and that will be more easily done than at present since the individual tax burden will be more easily and clearly seen.
You seem to be against that. I wonder why?
My income taxes aren't a cost, so they aren't paid. Absurd.You don't pay your liabilities?
That's not why the withholding system was created, friend, You should read the words of Beardsley Runl, the man who helped bring it about in FDR's administration.
http://www.freerepublic.com/forum/a374819d77888.htm
That may (or may not) be the case for a sizeable company with access to lots of financial backing, but even then it depends of factors outside the tax system (the dot com craze and consequent stock market movement for example).
Many - or perhaps most - small businesses do not have that sort of access to the financial sstem.
What's your point? Are you saying no business ever needs revenues? Interesting concept.
No need to have a decades long debate, the text of the 16th is quite clear that it grants power to collect an income tax.
It grants nothing that didn't exist previously since we had a fully constitutional income taxes on wages, salaries, and business income many times prior to the 16th.
The 16th's only effective function was to overcome the impediments put on taxing rents of real property, and returns from investment property by the decisions in of the USSC in Pollock.
If this power existed previously, then why the 16th?
It started out as a Republican political ploy to impede passage of an income tax by Congress that backfired:
| The Bailey Bill In April 1909, Senator Joseph W. Bailey, a conservative Democrat from Texas who was also opposed to income taxes, decided to further embarrass the Republicans by forcing them to openly oppose an income tax bill similar to those which had been introduced in the past. He introduced his bill expecting it to get the usual opposition. However, to his amazement, Teddy Roosevelt and a growing element of liberals in the Republican party came out in favor of the bill and it looked as though it was going to pass. Not only was Bailey surprised, but Senator Nelson W. Aldrich of Rhode Island, the Republican floor leader, frantically met with Senator Henry Cabot Lodge of Massachussetts and President Taft to work out a strategy to demolish the Bailey tax bill. Their own party was split too widely to permit a direct confrontation, so the strategy was to pull a political end run. They announced that they favored an income tax but only if it were an amendment to the Constitution. Within their own circle, they discussed how it might get approval of the House and the Senate, but they were quite certain that it could be defeated in the more conservative states-three-fourths of which were required in order to ratify the amendment. Thus, the Democrats were off guard when President Taft unexpectedly sent a message to Congress on June 16th, 1909, recommending the passage of a consitutional amendment to legalize federal income tax legislation. The strategy threw the liberals into an uproar. At the very moment when their Bailey bill was about to pass, the Republicans were coming out for an amendment to the Constitution which would probably be defeated by the states. Reaction to the Amendment Congressman Cordell Hull (D-Tenn., and later Secretary of State under FDR) saw exactly what was happening. He took the floor to excoriate the Republican leaders. Said he: "No person at all familiar with the present trend of national legislation will seriously insist that these same Republican leaders are over-anxious to see the country adopt an income tax...What powerful influence, what new light and deepseated motive suddenly moves these political veterans to 'about face' and pretend to warmly embrace this doctrine which they have heretofore uniformly denounced?" {1} He went on to expose what he considered to be a political trick. He needn't have been so concerned. The slogan of "soak the rich" automatically aroused Pavlovian salivation among politicians both in Washington and the states. The Senate approved the Sixteenth Amendment with an astonishing unanimity of 77-0! The House approved it by a vote of 318-14. When Republican Congressman Sereno E. Payne of New York, who had introduced the amendment in the House, saw that this end run was turning into a winning touchdown for the opposition, he was horrified. He went to the floor and openly denounced the bill he had sponsored. Said he: "As to the general policy of an income tax, I am utterly opposed to it. I believe with Gladstone that it tends to make a nation of liars. I believe it is the most easily concealed of any tax that can be laid, the most difficult of enforcement, and the hardest to collect; that it is, in a word, a tax upon the income of honest men and an exemption, to a greater or lesser extent, of the income of rascals; and so I am opposed to any income tax in time of peace...I hope that if the Constitution is amended in this way the time will not come when the American people will ever want to enact an income tax except in time of war." {2} The end run of the Republican leadership did indeed backfire. State after state ratified this "soak the rich" amendment until it went into full force and effect on February 12, 1913 |
Another article on the same vein:
Another take on the income tax and a bit of history on the Pollock decision and the 1894 tax on rent & investment income it struck down plus some more on the subsequent 16th amendment proposals for specific wording of the amendment. The article includes some of the specific points in debate as regards taxing of income vs consumption taxes that were prevalent up to that time:
Some source material in a PDF containing Taft's address in proposing the 16th to Congress, as well as the Congressional Record of the debates. It is a rather large PDF (several megabytes), and takes awhile to download over phone connections:
Googling on the 16th amendment leads to alot of different opinions on what it was all about, much of it highly agenda driven. But one can find source here and there and put things in context once you take the time to actually read what Pollock said and did as opposed to decades of rhetoric about it and the subsequent manuvering to re-establish income taxes after the Pollock court had struck down the 1894 version in the way it did.
It grants nothing that didn't exist previously since we had a fully constitutional income taxes on wages, salaries, and business income many times prior to the 16th.So it did grant something that didn't previous exist.
The 16th's only effective function was to overcome the impediments put on taxing rents of real property, and returns from investment property by the decisions in of the USSC in Pollock.
The Sixteenth Amendment
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
Wow, you really are stupid! Can you point to one thing I have said I like about the income tax? And, in spite of how much you would like to think otherwise, there are other options on the table.
The FairTax is hardly a cash cow for liberals. In fact, it is non-partisan and revenue neutral.
Did you overlook the fact that the rate would be automatically raised whenevener "needed"? Which is likely to be whenever spending is increased for any stupid, Unconstitutional, liberal reason ...
In the years to come it will, if anything, reduce the tax rate.
Only in Fantasyland.
It is the spending side of Congress that we need to concentrate on
You could be fighting that battle now to greater effect.
... after passing the FairTax and that will be more easily done than at present since the individual tax burden will be more easily and clearly seen.
Sheep don't care how you shear them; wolves will evade it in a thousand ways.
You seem to be against that. I wonder why?
Wasting your strength fighting a meaningless battle means you will lose the war.
Now you say that income taxes paid by business are a liability, not a cost... and that's what keeps them from being paid from sales revenues?... the question remains, where does the money to pay the liability of business income taxes come from???
Your initial position (I think it was yours and justshutup's) was that business income taxes are not costs and are not paid with sales revenues. Are you now saying that although they are not a cost, but rather a "liability", that they still are not paid with sales revenues?! Just where does the money to pay "liabilities" come from?!
LOL! And you wonder why we parse your words...(eyes rolling).
It grants nothing that didn't exist previously since we had a fully constitutional income taxes on wages, salaries, and business income many times prior to the 16th.
So it did grant something that didn't previous exist.
Stanton v. Baltic Mining Co.(1916), 240 U.S. 103:
- "the provisions of the 16th Amendment conferred no new power of taxation, but simply prohibited the previous complete and plenary power of income taxation possessed by Congress from the beginning from being taken out of the category of indirect taxation to which it inherently belonged, and being placed in the category of direct taxation subject to apportionment"
The taxes on income from "rents of real property, and returns from investment property" were considered direct taxes.
Not according to usage of the term "direct" in Federalist Papers,
- 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. ... Impositions of this kind usually fall under the denomination of indirect taxes, and must for a long time constitute the chief part of the revenue raised in this country.
Those of the direct kind, which principally relate to land and buildings, may admit of a rule of apportionment. Either the value of land, or the number of the people, may serve as a standard.
nor according to prior law as expessed from the beginning
Hylton v. United States(1796), 3 U.S. 171
"A general power is given to Congress, to lay and collect taxes, of every kind or nature, without any restraint, except only on exports; but two rules are prescribed for their government, namely, uniformity and apportionment: Three kinds of taxes, to wit, duties, imposts, and excises by the first rule, and capitation, or other direct taxes, by the second rule. " "the present Constitution was particularly intended to affect individuals, and not states, except in particular cases specified: And this is the leading distinction between the articles of Confederation and the present Constitution." "Uniformity is an instant operation on individuals, without the intervention of assessments, or any regard to states," "[T]he DIRECT TAXES contemplated by the Constitution, are only two, to wit, A CAPITATION OR POLL TAX, simply, without regard to property, profession, or any other circumstance; and a tax on LAND."
repeated in the findings of Springer.
Springer v. United States(1880), 102 U.S. 586
"The central and controlling question in this case is whether the tax which was levied on the income, gains, and profits of the plaintiff in error, as set forth in the record, and by pretended virtue of the acts of Congress and parts of acts therein mentioned, is a direct tax." "Our conclusions are, that direct taxes, within the meaning of the Constitution, are only capitation taxes, as expressed in that instrument, and taxes on real estate; and that the tax of which the plaintiff in error complains is within the category of an excise or duty." "[W]henever the government has imposed a tax which it recognized as a direct tax, it has never been applied to any objects but real estate and slaves."
Sure looks to me the entire power to tax incomes whatever their source existed from the very beginning long before Pollock ever ruled, in what was clearly an abberation to precident and usage in law.
Pollock inconsistantly created an exception to taxes on income that focused on earnings from property to advantage of certain groups, yet let incomes of all others open to treatment as indirect taxes not requiring apportionment.
Interesting 5/4 ruling, the abberation of which is clearly highlighted in the majority statements, as well as more explictly in the 4 dissents, of Which Justice White nails the core of the error.
POLLOCK v. FARMERS' LOAN & TRUST CO., 158 U.S. 601 (1895):
- "We have considered the act only in respect of the tax on income derived from real estate, and from invested personal property, and have not commented on so much of it as bears on gains or profits from business, privileges, or employments, in view of the instances in which taxation on business, privileges, or employments has assumed the guise of an excise tax and been sustained as such."
- "If that[rents from land] be stricken out, and also the income from all invested personal property, bonds, stocks, investments of all kinds, it is obvious that by a r the largest part of the anticipated revenue would be eliminated, and this would leave the burden of the tax to be borne by professions, trades, employments, or vocations; and in that way what was intended as a tax on capital would remain, in substance, a tax on occupations and labor. We cannot believe that such was the intention of congress."
- "We do not mean to say that an act laying by apportionment a direct tax on all real estate and personal property, or the income thereof, might not also lay excise taxes on business, privileges, employments, and vocations. "
- Our conclusions may therefore be summed up as follows:
First. We adhere to the opinion already announced,-that, taxes on real estate being indisputably direct taxes, taxes on the rents or income of real estate are equally direct taxes.
Second. We are of opinion that taxes on personal property, or on the income of personal property, are likewise direct taxes.
Third. The tax imposed by sections 27 to 37, inclusive, of the act of 1894, so far as it falls on the income of real estate, and of personal property, being a direct tax, within the meaning of the constitution, and therefore unconstitutional and void, because not apportioned according to representation, all those sections, constituting one entire scheme of taxation, are necessarily invalid.
- Mr. Justice WHITE, dissenting.
16. The injustice of the conclusion points to the error of adopting it. It takes invested wealth, and reads it into the constitution as a favored and protected class of property, which cannot be taxed without apportionment, while it leaves the occupation of the minister, the doctor, the professor, the lawyer, the inventor, the author, the merchant, the mechanic, and all other forms of industry upon which the prosperity of a people must depend, subject to taxation without that condition.
"I'm sure when the alleged 'fair tax' becomes law, these illegals will go right out and apply for a taxpayer ID so they can collect sales tax on the taxable services they sell and remit the sales tax on those sales to the state. Or they could just continue to operate illegally and not report their sales of taxable services and evade the alleged 'fair tax' just like they evade the income tax today."
For the benefit of others on the thread, let me elaborate. Most of the illegal labor is being done on behalf of businesses, which will not be taxable under the FairTax. For example, construction work and agricultural work is not sold to the end using consumer, but to subcontractors and ag producers. Therefore, those services will not be taxable under the FairTax. Those providing the services will, however, pay sales taxes at the checkout counter and they will not get the benefit of the rebate. That is a net gain any way you want to spin it.
"I'm also highly skeptical of your claim that they won't get rebate checks."
That doesn't surpise me in the least. You seem to be "highly skeptical" of any of the FairTax's economic benefits. Should those who funded the research that went into the FairTax's development conduct additional research to identify benefits that you would not be "highly skeptical" of? I think not. It is undoubtedly easier and more effective to simply explain the proposal to more open-minded Americans.
Hey Willie, it's been a while for you, too, though not as long as PD.
As I was reviewing the list of witnesses to the President's Tax Reform Commission week before last, I searched in vain for someone who would represent your proposal to substitute import tariffs for corporate income taxes. Did you not hear about the hearings or did I miss something?
"We'll find out soon enough, though. I think they are supposed to report by Jun 30."
July 31.
"ONLY factors of production have costs."
When did you make that rule up?
So IOW sales and marketing, general and administrative, research and development are not "costs"? Aren't "costs" synonymous with "expenses"? Are you saying that none of those items, not to mention interest expense, are costs/expenses?
Since a service business has no "factors of production", does that also mean that it has no costs?
"Your income from profits is MAXIMIZED by charging the correct price which has NOTHING to do with an income tax."
Incorrect. The optimum price is achieved at the intersection of the supply and demand curves. The supply curve is, in turn, affected by production costs. Income taxes, contrary to your unsupported assertion, are a cost of doing business.
Several other SQLs have argued for years that prices exist in one corner of the economic universe and production costs exist in another and that never the twain shall meet. That belief demonstrates a fundamental lack of understanding of basic economics.
"The problem is that this system will result in unacceptable difficulties for the economy and for individuals and bring few of the alleged benefits touted by its advocates."
From an economic standpoint, the FairTax is the most thoroughly researched tax proposal ever put forth in this country. For example, one study forecasts GDP growth of 10.5% during the first year after implementation. Do you have any economic research that supports your assertion of "unacceptable difficulties for the economy"?
"Just imagine the effect of having everyone having to write a check to the government each and every payday."
One obvious and completely predictable effect would be an exponential increase in enforcement costs. Can you imagine the bureacracy that would have to keep up with paychecks as reported by employers vs. tax remittances coming in from individual taxpayers?
Or would you recommend implementing such a system on the honor basis?
"The problem is not how to collect taxes but how to reduce spending."
That is not the conclusion that the President's Tax Reform Commission arrived at after about 3 months of hearing testimony from witnesses and inviting comments from Americans all over the country. In fact, the title of their mid-term report was "America Needs a Better Tax System". Senator Mack said at the hearings week before last that not a single respondent had commented to the panel that the tax system is fine as is and that no reform is necessary.
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