Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

An Accidental Tax Boon
Washington Post ^ | June 1, 2006 | Robert H. Nelson

Posted on 06/01/2006 6:58:55 PM PDT by Angel

The AMT is viewed by many as a bad thing. Yet, consider this: There is wide agreement among economists on the benefits of a federal "flat tax" on income that would apply a uniform rate to every taxpayer and eliminate most current deductions and tax credits. A flat tax would get rid of a large number of economic distortions resulting from the many tax "subsidies" that often benefit narrow interest groups. This is tax "pork," and Congress is as addicted to it as to the ordinary spending kind.

snip . . .

If we wait long enough, and with some continuing degree of inflation, the AMT flat tax eventually will apply to most taxpayers. The AMT will, in effect, have become the federal income tax system. And unlike most other important policy changes, this is one in which Congress need do nothing, although at some point it would probably be desirable to modify details of the current AMT that limit its effectiveness as a flat tax.

(Excerpt) Read more at washingtonpost.com ...


TOPICS: Business/Economy
KEYWORDS: atm; flattax; taxes
Navigation: use the links below to view more comments.
first previous 1-2021-4041-60 next last
To: LurkLongley
A tax that takes from one person to give it to another is stealing, pure and simple.

Somebody has to feed the "leviathon," as it would be characterized in the dark corners of libertarianism. Defense, roads, and a host of other stuff are not free, putting aside whether the relatively dumb and ill and disabled, should just be left to their own devices, or even those who were feckless, and get in a jam, like a medical emergency, or a problem in obtaining basic housing and food, including for their kids.

21 posted on 06/01/2006 8:52:12 PM PDT by Torie
[ Post Reply | Private Reply | To 20 | View Replies]

To: Torie

First off, one of the main aims of conservatism should be the choking off and eventual death of the leviathon to its smallest possible level. This is something that doesn't take a libertarian.

Of the things that you mention, defense and roads are the only things that really fall under the federal baliwick, but even including the others, it is incumbent upon us as citizens to be certain that our efforts to fund government do not fall unequally upon the backs of any. There is too much power inherent in the ability to favor one group over another, and to allow envy and greed to dictate policy when "progressive" taxation becomes the method of funding our governmental largess.


22 posted on 06/01/2006 9:02:58 PM PDT by LurkLongley (Ad Majoram Dei Gloriam-For the Greater Glory of God)
[ Post Reply | Private Reply | To 21 | View Replies]

To: LurkLongley
while pondering and musing about the rates a flat tax or fair tax would impose on the working folk of this country, keep this in mind: When the 16th Amendment was being debated, republicans wanted to include a cap of 1% for the income tax. Democrats fought against this, as it might have scared people into thinking it might, one day, get that high; and the sheeple wouldn't stand for a tax rate as high as 1%.

No matter what rate is established, if it's in a law rather than in an Amendment, it will be subject to the manipulations of the money grubbers on capital hill.
23 posted on 06/02/2006 12:32:06 AM PDT by Manfred the Wonder Dawg (Test ALL things, hold to that which is True.)
[ Post Reply | Private Reply | To 22 | View Replies]

To: Angel; ancient_geezer; Taxman; pigdog; Principled; EternalVigilance; PhilWill; kevkrom; ...
The current tax code began as a flat tax when enacted in 1913. The first tax ranged from merely 1% on the first $20,000 of taxable income and was only 7% on incomes above $500,000. Only 2% of the population was taxed. It has evolved into an oppressive complex 60,000+ page tax code taxing more than 80% of the population.

Fair Tax Ping!
24 posted on 06/02/2006 2:39:56 AM PDT by Man50D
[ Post Reply | Private Reply | To 1 | View Replies]

To: Manfred the Wonder Dawg

I object to the entire idea of income taxes for several reasons, not the least of which is that it imposes a form of economic serfdom/slavery. I am not sure what the best form of taxation is, but I am coming around to the belief that the only fair form would be a consumption tax of some sort, perhaps a national sales tax.

Our current system is highly unfair and unjust, not to mention complicated. It is ridiculous in the extreme that our tax code has spawned an entire industry that is dedicated simply to helping individuals and corporations to figure it out.


25 posted on 06/02/2006 6:00:55 AM PDT by LurkLongley (Ad Majoram Dei Gloriam-For the Greater Glory of God)
[ Post Reply | Private Reply | To 23 | View Replies]

To: Galactica

FWIW, conventional wisdom among flat tax proponents in the early to mid 70s was that 11% would be more than sufficient.


26 posted on 06/02/2006 6:04:23 AM PDT by savedbygrace (SECURE THE BORDERS FIRST (I'M YELLING ON PURPOSE))
[ Post Reply | Private Reply | To 4 | View Replies]

To: Angel
Rather than "flat tax" we should be concentrating on simplying the tax code.

The code is now 17,000 pages and 5.5 million words.

We should write a new one from scratch limiting it to 25 pages (nice big type, lots of white space) and 7,000 words (hmmm what real successful document is 7,000 words long?)

It is possible for one person to read the tax code. At about 40 minutes a day it could be done in about two and a half years. It would be a pretty serious waste of time. It's a lot easier just to scrap it and start over.

27 posted on 06/02/2006 6:17:10 AM PDT by Tribune7
[ Post Reply | Private Reply | To 1 | View Replies]

To: Torie

"From each according to his needs....."

That line of thinking is positively Marxist.


28 posted on 06/02/2006 7:22:30 AM PDT by Conservative Goddess (Politiae legibus, non leges politiis, adaptandae)
[ Post Reply | Private Reply | To 14 | View Replies]

To: KarlInOhio; Angel; Man50D

Although Steve Forbes pushes the flat tax, his real advantage is simplification, not flatness.

There is nothing particularly simple about the Forbes or any other flat income tax proposal for that matter.

The complexity of any income tax system, regardless the number of tax brackets it contains, is inherent to the definition of income and separating gain (i.e. income) which is taxable from return of one's capital inputs which are not income to be taxed.

Tax Foundation: http://www.taxfoundation.org/blog/show/1629.html

The Congressional Research Service has released an interesting new report, "Flat Tax Proposals and Fundamental Tax Reform: An Overview". Here's the summary:

President George W. Bush has stated that tax reform is one of his top priorities.
He appointed a nine-member bipartisan panel to study the federal tax code, and
November 1, 2005, this panel proposed two alternatives to reform the code including simplification elements. Consequently, the concept of replacing our current income tax system with a “flat-rate tax” has received renewed congressional interest.

Although referred to as “flat-rate taxes,” many of the recent proposals go much
further than merely adopting a flat-rate tax structure. Some involve significant
income tax base broadening whereas others entail changing the tax base from income to consumption.

Proponents of these tax revisions often maintain that they would simplify the tax
system, make the government less intrusive, and create an environment more
conducive to saving. Critics express concern about the distributional consequences and transitional costs of a dramatic change in the tax system.

Most observers believe that the problems and complexities of our current tax system are not primarily related to the number of tax rates but rather stem from difficulties associated with measuring the tax base.

Read the full report here (PDF).

The above PDF report from the Congression Research Service, compares and contrasts the numerous tax reform proposals before the current session of Congress. It is a very informative report, that anyone interested in understanding what is actually being proposed in legislation before Congress today should read. The CRS report has a broad discussion of the various "Flat Tax" and "consumption tax" proposals that have been introduced as bills to be considered for enactment.

The dominant portion of the current tax code is mainly involved with separating income which is taxable from return of one's capital with is not and therein lay the inescapable complexity that is inherent to any income tax system.

I highly recommend everyone to read the Vern Hoven paper on this particular topic and how the Forbes version of a flat income tax would impact the tax preparation industry and there by all businesses that must deal with income taxes what ever there nature.

See:

Flat Tax as Seen by a Tax Preparer
by Vern Hoven
A Special Report by Tax Analysts Tax Notes, Volume 68, No. 6, pp 747-754.


29 posted on 06/02/2006 8:14:41 AM PDT by ancient_geezer (Don't reform it, Replace it.)
[ Post Reply | Private Reply | To 12 | View Replies]

To: Conservative Goddess

See #29 above.


30 posted on 06/02/2006 8:16:40 AM PDT by ancient_geezer (Don't reform it, Replace it.)
[ Post Reply | Private Reply | To 28 | View Replies]

To: savedbygrace; Galactica

FWIW, conventional wisdom among flat tax proponents in the early to mid 70s was that 11% would be more than sufficient.

Probably true, if one were designed with no standard deductions or personal exemptions. Unfortunately that would only replace the income tax half of what hits the average household's wages. It would do nothing to relieve the 15% hit on wages that the SS/Medicare taxes hit nearly everyone with as well.

That other problem with the 11% tax rate, is that there is no "Flat Tax" proposal before Congress, nor ever has been, which doesn't have a standard deduction/personal exemption scheme. Thus all their rates are much higher for having that built in progressive structure in them.

31 posted on 06/02/2006 8:24:36 AM PDT by ancient_geezer (Don't reform it, Replace it.)
[ Post Reply | Private Reply | To 26 | View Replies]

To: uglybiker

So-called 'fair' tax spam to be posted in 5...4...3...2...

I see you have a problem with opposing views and alternatives to the income tax system.

32 posted on 06/02/2006 8:34:33 AM PDT by ancient_geezer (Don't reform it, Replace it.)
[ Post Reply | Private Reply | To 9 | View Replies]

To: Angel; Taxman; pigdog; Principled; EternalVigilance; rwrcpa1; phil_will1; kevkrom; n-tres-ted; ...
A Taxreform bump for you all.

If anyone would like to be added to this ping list let me know.

John Linder in the House(HR25) & Saxby Chambliss Senate(S25) offer a comprehensive bill to kill all income and SS/Medicare payroll taxes outright and replace them with with a national retail sales tax administered by the states.

H.R.25,S.25
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.

Refer for additional information:


33 posted on 06/02/2006 8:36:48 AM PDT by ancient_geezer (Don't reform it, Replace it.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Torie
So high income earners should pay more? Guess what, THEY DO!! So you think they should pay a higher RATE too?

Why in the world should higher CONFISCATION of someone else's income be considered 'social justice'?

Great incentive for increased education, higher work skills, working longer (and overtime) hours, and taking more risk (as entrepreneurs) don't you think? Yep, the increase in the penalty/punishment for working longer, harder, smarter, and/or achieving more--or increasing your educational/professional skill levels is 'social justice'. (rolling-eyes)

34 posted on 06/02/2006 8:46:19 AM PDT by stockstrader
[ Post Reply | Private Reply | To 14 | View Replies]

To: stockstrader
Hey stocks trader

So high income earners should pay more? Guess what, THEY DO!! So you think they should pay a higher RATE too?

funny - for ex: sKerry/Heinz, with all the loopholes, paid a lower rate that joe-sixpack.

FAIR TAX illuminates the loop holes...that's why it's called FAIR. Oh, and the super wealthy will only being paying the SAME rate as the not so wealthy - it's called FAIR for all...but the Trumps and Hienz's don't want to see their loop holes close up...and then have to pay the same rate everyone else does... They get the SAME prebate, and then pay the SAME tax rate. That's what FAIR means. ( no longer the unfair myriad poopholes - oops, Freudian slip?)

But we expect a lot of caterwauling from those who have been used to swimming through the loop holes

35 posted on 06/02/2006 9:18:38 AM PDT by maine-iac7 (Lincoln: "...but you can't fool all of the people all of the time.")
[ Post Reply | Private Reply | To 34 | View Replies]

To: LurkLongley
Great post. Progressivity IS based primarily on mixing class envy/class warfare with traditional socialist tripe and an added touch of historical amnesia.

As Hillary so elqouently stated in her San Francisco speech a couple of years ago,
"We're going to take things away from you on behalf of the common good." -Hillary Rodham Clinton, 6/28/04

Yep, real 'social justice' there. (s/off)

36 posted on 06/02/2006 9:31:21 AM PDT by stockstrader
[ Post Reply | Private Reply | To 17 | View Replies]

To: Torie

"It is a social justice position"

You must have had a great time in college studying Karl Marx.


37 posted on 06/02/2006 9:52:32 AM PDT by webstersII
[ Post Reply | Private Reply | To 19 | View Replies]

To: Reagan Man
The AMT was placed in the tax code in 1969, based on Congressional testimony that 165 Americans had paid NO federal income tax in 1967.

As always, that was the political tug at the heartstrings of the public and was strictly for public consumption. The real reason was to get at some tax deductions that businesses were taking, specifically depreciation on capital equipment. They also restricted the time over which those assets could be depreciated.

Combined with a strong dollar, the AMT had the effect of putting many US manufacturers out of business. The Germans and Japanese quickly moved in with equipment at about 50% of what American equipment was selling for. That, plus the obstinacy of the unions, meant bye bye for lots of US manufacturing.

At the root of it all is taxing income and the myriad of hoops that must be jumped through to comply or avoid. The NRST is a complete sea change from that Marx inspired income tax. That is the direction we should go.

38 posted on 06/02/2006 10:03:26 AM PDT by Mind-numbed Robot (Not all that needs to be done, needs to be done by the government.)
[ Post Reply | Private Reply | To 7 | View Replies]

To: uglybiker; ancient_geezer; pigdog; groanup; Bigun; Principled

...1.


39 posted on 06/02/2006 10:45:08 AM PDT by ovrtaxt (My donation to the GOP went here instead: http://www.minutemanhq.com/hq/index.php)
[ Post Reply | Private Reply | To 9 | View Replies]

To: Torie
Yeah let's get that rich guy! It is only "fair" that the rich pay more. Why shouldn't they? So what if he worked hard/sacrificed to get an education, so what if he worked his entire adult live to build his business....it's not fair that I don't have what he does!...whine, whine, whine.

Class envy: what a beautiful thing...you'd be surprised what you can get the sheople to do when you start beating the class envy drum.

Seriously, what right do you have to enslave another American Citizen? Why should I be forced to work through the month of May for you? Taking the wealth of one man (via IRS gunpoint) to give to another is socialism.
40 posted on 06/02/2006 10:59:30 AM PDT by socialismisinsidious ( The socialist income tax system turns US citizens into beggars or quitters!)
[ Post Reply | Private Reply | To 14 | View Replies]


Navigation: use the links below to view more comments.
first previous 1-2021-4041-60 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson