Posted on 04/21/2008 6:04:34 PM PDT by BGHater
Taxes were on the forefront of many Americans’ minds this week as they scrambled to meet the April 15th deadline to file their returns. Tax policy in this country hurts taxpayers twice – once when they pay taxes, and then when the government spends the money. Americans are sick and tired of the financial burden and the endless forms to fill out. To add insult to injury, after collecting this money the government does some very detrimental things to the economy.
The burden of complying with the income tax is tremendous. Since its inception in 1913, the tax code has gone from 400 pages to over 67,000. The Tax Foundation estimates that around $265 billion dollars and 6 billion hours are spent just on compliance. That expense amounts to about 22 cents of every dollar the IRS collects. Imagine the boon to the economy if we spent that time and money expanding our businesses and creating jobs!
Aside from the direct loss of money and productivity, the funds from the income tax enable the government to do some very destructive things, such as vastly over-regulating economic activity, making it difficult to earn money in the first place. The federal government funds over 50 agencies, departments and commissions that formulate rules and regulations. These bureaucracies operate with little to no oversight from the people or Congress and generate around 4,000 new rules every year and operate at a cost of about 40 billion dollars. There are some 75,000 pages of regulations in the Federal Register that Americans are expected to know and abide by. Complying with these governmental regulations costs American businesses more than one trillion dollars per year, according to a study by Mark Crain for the Small Business Administration. This complicated system drives production to other countries and shrinks our job market here at home.
Big government is destructive when it takes your money and when it spends it. There is no economic benefit to supporting a government sector as massive as ours. In fact, this country thrived for well over 100 years without an income tax. Today, if you took away the income tax, the government would still have revenue from other sources equal to total government spending in 1990, when government was still too big. $1.2 trillion should be more than enough to fund a government operating within its constitutional confines, and that is exactly what we need to get back to.
I have introduced legislation many times to abolish the IRS and the income tax. It is fundamentally un-American to require taxpayers to testify against themselves and be considered guilty until proven innocent. Abolishing the IRS altogether would trigger an avalanche of real growth in the economy.
With these financial hard times only just beginning, this would be the most efficient and logical way to get our economy growing again, and Americans would need not dread the 15th of April every year.
The transaction tax depends on the number of times the money moves in the economy--something which we consider healthy--but it works against it in that the more the money moves, the less of it there is to move. The more it moves, the bigger bite the Government gets, irrespective of how long it takes or doesn't, thus the tax is levied not once per annum, but repeatedly without limit.
Your example assumes that the alternative isn’t taxed. The first $40 was $50 before income tax. When it is spent the one making the profit has to set aside an amount to pay his/her income tax.
Under the fairtax, it would be immediately removed from the economy at the point of sale, at each transaction, and not something which could be deferred to the end of the fiscal year, or at worst the end of the quarter as with the estimated tax.
With the current system, losses can offset profits and the tax might be less than the initial transactions might indicate. With the fairtax, no such offset exists, the money comes out of the deal even if the seller loses money on the sale.
But you must pay it on each and every transaction.
and not something which could be deferred to the end of the fiscal year,
In most cases it isn't. It is removed before you ever see your income.
By contrast, the consumption tax is levied on each and every transaction, in total, immediately at the point of sale. Kiss that 22% goodbye. It is out of play.
The oft cited example of the $50 wickipedia economy would not function with out an infusion of $18.80 in order fot the farmer to buy the mechanic work, a nearly 40% infusion of funds into the economy from outside.
That money also is gone, out of play. So under the IT you are starting with a smaller pie from which to tax transactions as many states do. I would think that the states would raise bloody hell about it if, as you say, the money disappears so quickly when transactions are taxed.
I think you missed my point. After the first ($40) transaction, do not have $50 between them The total left in the private sector is $42.20, and only $32.20 of that is in the farmer's hands. All of the money in private hands in the economy put together cannot buy a $50 tractor repair.
I don't think anyone else has mentioned it.
bump
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