Posted on 10/23/2001 3:40:14 PM PDT by tim_h
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As many of us have been filling out income tax forms over the past few weeks, it's been hard not to wonder: How did we get into this mess in the first place? Why did our ancestors ever agree to a complicated system with a morass of different rates, which means a bureaucracy waiting to happen? The answer: As with so many expansions of governmental power, the income tax was first sold as a minor measure. Some politicians and journalists issued warnings, but only after enactment of the tax did the full consequences become apparent. The warnings began in 1894, when Congress passed a bill imposing the first-ever peacetime income tax. Tied to a tariff-reduction measure, the bill required all citizens with incomes of more than $1,000 to pay a 1 percent tax. Since the dollar was worth much more then than it is now and incomes were lower, only about one out of every 100 Americans was affected. Leading newspapers were nonetheless furious. The New York Times, then a conservative Republican publication, called the income tax law "a vicious, inequitable, unpopular, impolitic and Socialistic scheme ... the most unreasoning and most un-American movement in the politics of the last quarter century." The Washington Post, then a conservative Democratic newspaper, argued that record-keeping requirements would force an employee to be "catalogued by his employer, as though he were a beast of burden." The Post called the graduated income tax an "abhorrent and calamitous monstrosity" that "represents a repudiation of the spirit as well as the letter of Democracy.... It punishes everyone who rises above the level of mediocrity.... The fewer additional yokes put about the necks of the people, the better for the commonwealth." The Chicago Tribune also predicted that the income tax would lead to distrust: "The tax can only be collected by prying into the private affairs of the people by arbitrary means hateful to the citizens of the republic." The Dallas Morning News complained that the income tax "attacked constitutional guarantees for tenure of property, for freedom of industry, for freedom of contract and for personal security." In 1895 the Supreme Court declared the income tax measure unconstitutional. It ruled that any such tax had to be levied in proportion to population, and not differentially by income level. The Washington Post lauded the court's decision: "This is still a land where honest men cannot be made to pay tribute." The New York Times predicted that "neither the Democratic nor the Republican party will ever attempt to revive the corpse that the Supreme Court buried yesterday." But the corpse was soon walking. Progressive Era politics created pressure for more federal spending, and the politics of class warfare led to support for having the rich pay more. In July 1909, Congress sent an income tax amendment to the states for ratification. Again The New York Times was in opposition: "When men get the habit of helping themselves to the property of others they are not easily cured of it." The Washington Post, however, was starting to become a house organ for the government bureaucracy: It changed sides and argued that an income tax was needed to "wipe out the deficit [then $89 million] without impairment of the public service or calling a halt upon needed public improvements." The Post argued speciously that the income tax would place a check on spending habits: "Congress will have to go slow in making appropriations unless the President is to be put in an embarrassing position. He will not want to increase the income tax, and if he had to do it would not hesitate ... to put the blame where it belonged. The provision will be a whip in the hands of the president to keep Congress toeing the mark of economy." The Dallas Morning News was even more optimistic, arguing the constitutional amendment would give Congress only authority to levy an income tax: "There would still be the question of whether the Congress would exercise the power thus given." New York and Massachusetts both rejected the amendment, but smaller states supported it. In February 1913, the 16th Amendment, authorizing an income tax, was ratified. By October, Congress had passed implementing legislation. But no one simply looking at the present was upset: Taxes were only on the rich, and rates were low. Only those who looked ahead were concerned. The New York Times soberly reported that the new income tax had established a "rock of credit from which abundant streams of revenue will flow whenever Congress chooses to smite it." The Times predicted, "We may be sure that it will be smitten hard and always harder, until the national conscience, if there is such a thing, revolts against the inequality and injustice of such a plan of taxation." |
Are you a vampire?
Just the voice of reality.
You want lower taxes? Then repeal programs, otherwise you are just playing hide the thimble with the the wealth of the people.
Under the current proposals as regards income tax Congress and Public pressure appears to be headed towards removing "voters" from the "individual" income tax rolls:
http://www.cbo.gov/showdoc.cfm?index=1545&from=4&sequence=0
| Effective National Individual Income Tax Rates (percent of gross income) | |||||||||||
| Income Category | 1977 | 1979 | 1981 | 1983 | 1985 | 1987 | 1989 | 1991 | 1993 | 1995 | Projected 1999 |
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| Effective (Federal) [Individual] Income Tax Rate (In percent) | |||||||||||
| Lowest Quintile | -0.6 | -0.8 | -0.2 | -0.5 | -0.2 | -1.3 | -1.9 | -2.9 | -3.4 | -5.6 | -6.8 |
| Second Quintile | 3.6 | 3.9 | 4.6 | 3.5 | 3.9 | 3.2 | 3.3 | 2.7 | 1.8 | 1.8 | 0.9 |
| Middle Quintile | 7.1 | 7.5 | 8.3 | 6.8 | 6.8 | 6.1 | 6.5 | 6.3 | 5.9 | 6.1 | 5.4 |
| Fourth Quintile | 9.7 | 10.4 | 11.3 | 9.5 | 9.3 | 8.7 | 8.9 | 8.7 | 8.5 | 8.7 | 8.4 |
| Highest Quintile | 15.8 | 16.3 | 17.1 | 14.5 | 14.3 | 15.1 | 15.1 | 14.8 | 15.5 | 16.2 | 16.1 |
| All Families | 11.1 | 11.6 | 12.6 | 10.7 | 10.7 | 10.8 | 10.9 | 10.5 | 10.9 | 11.3 | 11.1 |
| Top 10 Percent | 17.6 | 18.0 | 18.7 | 15.9 | 15.6 | 16.9 | 16.6 | 16.3 | 17.4 | 18.2 | 18.0 |
| Top 5 Percent | 19.3 | 19.7 | 20.0 | 17.1 | 16.8 | 18.5 | 18.0 | 17.6 | 19.3 | 20.0 | 19.6 |
| Top 1 Percent | 23.1 | 22.6 | 22.0 | 19.3 | 18.7 | 20.9 | 19.7 | 19.9 | 22.8 | 23.4 | 22.2 |
What happens when only 40% of the public participates in a substantive manner in a tax program, and 60% never perceive the full true cost of government on their lives?
60% vote for more benefits and lower taxes, on the backs of the upper 40%. The result, no accountability, either of Congress or of those demanding the higher benefits, higher prices from increased taxation of business (>22% of the prices of all goods and services are embedded tax related costs), and direct inflation of the money supply through financing of government through increasing the National Debt.
It is said more the 60% of the public is not interested in lowering tax rates of the individual income tax. I wonder why? That same 60% looks for ever more from the Federal Government and a growing bureaucracy as a result.
Merely doing away with taxes encourages Congress to exercise the powers to:
And the people demand more from those Congress Critters.
A government which robs Peter to pay Paul can always depend on the support of Paul.
-George Bernard Shaw
While Congress plays both ends against the middle; hiding the real burden in inflation, higher prices on all goods and services, lower takehome pay, lower return on investment, and higher interest rates. All keeping the poor right where they are and pushing for more freebees.
Consider that 15.3% SS/Medicare tax on the 1st $75K of wages/self-employment income, plus the 6% Federal Unemployment tax, all of which are but a portion of the effect of federal taxes embedded the price of all products we purchase. Taken together with the Individual tax rates above we all pay more than:
The real state of Federal taxes:
| Effective Total Federal Tax Rate (Percent of gross income) | |||||||||||
| Income Category | 1977 | 1979 | 1981 | 1983 | 1985 | 1987 | 1989 | 1991 | 1993 | 1995 | Projected 1999 |
| All Families | 22.8 | 23.4 | 23.5 | 21.4 | 21.8 | 22.6 | 22.5 | 22.6 | 23.5 | 24.7 | 24.2 |
Tanstaffel, there ain't no free lunch, but some people sure want to believe there is and will steal from others through the proxy of government if given the opportunity.
We wonder why over 60% of the voters PERCEIVE no problem with the taxrates and vote for polidiots that promise to bring home the most bacon. They are the ones that perceive benefit from higher taxes with more spending on socialistic "gimme" programs. As this continues under this administration or anyone else for that matter, expect a tax and waste congress pandering to special factions for many years to come.
We must control expenditure, those who are responsible for excessive expenditure must participate, that they may be informed of the cost of government imposed on all.
The NRST provides the monitor to allow Vigilance. Public demand and spending go hand in hand with perceived cost, that is simple economics. Obscure cost, government spending runs rampant and will continue to do so until such time as a voting majority of the citizens become informed, on a personal level, of the true cost of government largess in their lives. The NRST provides that where the income/payroll tax system does not.
We are all paying through the nose, rich and poor while politicians play the tune of envy and resentment that Americans continue to respond to not understanding the full picture what is happening to them. The NRST is a means to open VOTERS eyes to the reality.
As pointed out by Alan Keyes in referring to the income tax as the slave tax and supporting a National Retail sales tax to replace it. The Original Intent of the individual income tax is for political and social control not revenue collection. The Individual Income tax is maintained to establish and hold every person in the country perpetual legal jeopardy. That is a situation that must end with the repeal of the income tax from the statutes, and the prohibition of its use by Constitutional amendment that future generations will not face the same manner of manipulation and interference in their lives.
It is long past time to end the Income Tax once and for all,and support the enactment of the only bills before congress that would actually achieve that.
H.R.2525
SPONSOR: Rep Linder, John (introduced 07/17/2001)
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: http://www.fairtax.org
the modification then enactment and ratification of:
H.J.RES.45
Sponsor: (introduced 4/25/2001)
Latest Major Action: 5/9/2001 Referred to House subcommitte.
Title: Proposing an amendment to the Constitution of the United States relative to abolishing personal income, estate, and gift taxes and prohibiting the Untied States Government from engaging in the business in competition with its citizens.
(Modified to prohibit all income, payroll, gift estate taxes as HR2525 calls for, or we will see European VAT style hidden taxes along with payroll excises to take over in the place of the of the current individual income tax(i.e. personal income tax) that Ron Paul amendment prohibits.)
And to keep em reminded that there is indeed a Constitution to pay attention to:
H.R.175
Sponsor: (introduced 1/3/2001)
Latest Major Action: 2/12/2001 Referred to House subcommittee
Title: To require Congress to specify the source of authority under the United States Constitution for the enactment of laws, and for other purposes.
Fallacy: The cost of taxes cannot be reflected in the price of goods and services because competitors don't have the same costs.
Fact: Those competitors also have to pay taxes and pay other complaince costs -- they cannot undercut prices and still make a profit.
Fallacy: Because of anecdotal evidence that some companies, especially those in volatile or high-risk industries, do not accurately estimate their earnings every quarter means that it is impossible for any company to predict its future earnings with any accuracy.
Fact: These reports generally show outlier data, usually based on exceptional or otherwise unforseen circumstances. While their numbers for a particular quarter, or even fiscal year, may have been off, they still have a larger historical picture to use when forecasting. Estimation can be very accurate (multiple data points, averaged out, show pretty much the correct value) without being precise (each data point matching exactly the expectation).
Fallacy: Companies blindly chug along, not having any idea of whether they will ever turn a profit or a loss.
Fact: As with any other investment, there is an expected return on investment (ROI) over some period of time. The ROI for the investors must be enough, after tax, to make it worth the investors' whiles. The business would never even be started if they could not anticapte making the proper return. Compare to bond investments: a tax-free bond, all other things being equal, clocks in at about 25% lower yield than a taxable bond -- because the latter has the cost of taxes paid on the return built into it, and the market stabilizes around the value where the two investments are basically equal post-tax returns (otherwise one would be in higher demand than the other).
Fallacy: Actual income taxes paid by the company are the only thing that could increase cost.
Fact: Complaince costs have to be considered for both the company and its competitors. Even if the company pays no income taxes, there are costs associated with doing the tax complaince that have to be paid regardless. Any interest the company pays on loans is inflated by income taxes (see the bond discussion above). The company may make otherwise poor or inefficient financial decisions strictly for tax purposes, again increasing costs even if no taxes are paid.
Fallacy: NRST advocates suffer from "marxist influence".
Fact: NRST economic projections are firmly rooted in free-market analysis. The costs of taxes embedded into the prices of products are backed up by the hundreds, if not thousands, of AFFT/NRSTA members who own and/or operate their own businesses. Wille Green's analysis is backed up only by Willie Green -- a person who apparently feels, from his incessant layoff watch, that every American worker is absolutely entitled to keep his or her job, regardless of the real financial situation and the employer's ability to stay in business.
To end tyranny you need to cut off its lifeblood - the humongous amounts of money which feed the bureaucracy.
1. Salary, wages and compensation for personal services
2. Dividends, interest, and annuities
3. Total (add lines 1 and 2)
4. Less $385 for each dependent
5. Income subject to tax (subtract line 4 from line 3)
6. Tax on item 5 (from Column A, B, or C from table on other side)
That's all there is to it. It should never have gotten to the point that you need H&R Block to figure out what to pay (actually we shouldn't be paying it anyway, wasn't it supposed to be 'temporary'?)
Only under a single-stage, single-rate system (and the NRST proposals are the only ones that meet that definition) do individuals truly see what the real burden is. Only then can they be convinced that cutting government is crucial.
Additionally, revenue collection and spending are separate issues. The amount of revenue to be collected depends (albeit somewhat loosley at times) on the spending, but the method of collection is independent of that. Income taxes, by definition, require an invasive government agency to monitor private financial information -- as long as the tax law requires a determination of "income", we're stuck with the IRS jack-booted thugs. An NRST would dramatically reduce the invasiveness of the system and simplify collections by reducing the number of collection points by a factor of 10. The NRST also does away with the social engineering performed by the tax code.
False. Corporate income taxes are only paid on corporate profits. Corporations only earn profits after they've generated enough sales volume to operate past the "break even point." Inflating the sales offering price to try to accommondate potential tax obligations would only extend the break even point higher while simultaneously depressing actual sales. Competitors who did not include the tax provision in the sales offering price would generate more sales volume and greater market share.
Corporate income tax is government confiscation of a portion of the corporate profit (if any). It is not a cost that can be "passed on" to the customer.
I post this to inform intelligent lurkers. NOT to persuade flying monkeys who spread bogus disinformation, such as yourself.
As someone who has actually set prices for a business, I can tell you without hesitation that taxes are taken into account when setting prices. Taxes, like any other potential expense, can be estimated.
Heating your building is a cost of doing business. You don't know exactly what your heating bill will be for the winter, but you can make a pretty good estimate. You use that estimate when setting prices.
The same is true for taxes. You may not know exactly what your taxes will be, but you can make a pretty good estimate. If that estimate says you're going to lose money and you won't owe any taxes, that is still taken into account when you set prices.
Just because taxes occur in the future doesn't mean you can't make an estimate of what they will be, and include that in you pricing structure.
Think of your own paycheck. When you do your household budget, is it based upon your total pay, or your take home pay? Your take home pay, of course. You won't know until the end of the year exactly what you will owe in taxes (if any), but the government has taken out an estimate of what you will owe from your paycheck. And it is usually pretty close.
For a business to not include potential taxes in their pricing is to leave themselves open to a huge risk. Not having enough money to pay their taxes. They really have no choice but to take their potential taxes into account when setting prices.
Trust me Willie, you have, over a long period of time, informed many intelligent lurkers that you generally have no idea of what you're talking about when it comes to economics.
However, I am heartened to see that you indeed can be taught. In the past, you have always insisted that prices were based solely on supply and demand, and called the NRST advocates liars when we said that competition would affect prices because if costs were cut across the board, prices would go down due to free-market competition because attempting to maintain the previous price would offer room for competition to undercut the prices.
But yet you basically said the exact same thing in your #3, just from the perspective of prices going up due to taxes imposed rather than down as a result of taxes being eliminated. (Of course, you neglected to take into account that the cost would rise across the board and not just for one company, but what else is new.)
Thanks for admitting that we have been right all along.
As an industrial engineer/MBA who is thoroughly familiar with corporate standard costing and accounting practices, all you've done is inform me that you're incompetent.
Heating your building is a cost of doing business. You don't know exactly what your heating bill will be for the winter, but you can make a pretty good estimate. You use that estimate when setting prices.
Heating bills are a fixed cost of operation that exists independent of sales or profit. It is applied to a product's standard cost as part of the overhead or burden rate. Of course, this cost may be overabsorbed or underabsorbed dependent on both the actual heating bills as well as whether the budgeted sales volumes on which the overhead rates were based.
Unlike heating bills, corporate income taxes are NOT a fixed cost. They are based on a percentage of PROFITS which is (simply) Revenues - Costs. Of course, since Costs can be broken down into both fixed and variable components, corporate income tax liabilities aren't incurred until AFTER sufficient sales volume has occurred to fully absorb the fixed costs of production (the break even point).
Corporate income taxes are neither a fixed nor variable cost. They are a government confiscation of a percentage of corporate profits. They CANNOT be taken into account in pricing strategy.
For a business to not include potential taxes in their pricing is to leave themselves open to a huge risk.
Planning for corporate income tax obligations DOES occur as part of the budgeting process, however, this is only to assure liquidity of cash flow when actual payment of taxes (if any) is due. While budgeting interfaces with corporate costing and pricing procedures, they are NOT the same thing and should not be confused.
Anybody who attempts to build corporate income tax into their pricing strategy is an inept moron.
Pay special attention to the lines where they list Profits BEFORE Income taxes and Profits AFTER income taxes.
You just might learn something about where corporate income taxes fall in the scheme of things.
(I doubt it, you sound just like the other moronic NRST flying monkey shills that infest this forum. But I trust that there are others reading this thread who aren't complete idiots, and they'll be able to figure out what complete whack-jobs the NRST flying monkeys really are.)
That is why his economic concepts are so screwed up. Marxists do not have a firm grasp of economic principles, at least they do not have a firm grasp of economic principles that work!
“I have sworn upon the altar of God eternal hostility against every form of tyranny over the mind of man.”
[Thomas Jefferson, letter to Benjamin Rush, 1800.]
Scrap the Code! Scrap the IRS! Abolish the VLWC!
We will never be a truly FRee people so long as we have the income tax and the IRS.
Do you own a buisness?.....I do....and i say you don't know what your talking about....TAXES are a consideration and do get figured into the sales price.
And you're opinion doesn't mean squat since you can't cite a competent methodology for making the calculation.
Guess that's why I run a successful buisness and you don't....the methodology is so simple my 12 year old daughter understands it. Go back to your tax dollar supported job and suck some more tit....
LOL! At least you're targeting the right mentality level for your NRST hype.
Nobody else would take you seriously.
The latest target of your elitist snobbery is an apparently successful business owner, as are many others who assert that taxes are indeed built into their pricing structures. You, despite flaunting your degrees (none in economics anyway ) only claim "familiarity" with corporate accounting procedures. But you've never run a company yourself. Is it just that you're jealous of those who do run their own businesses without having to subscribe to your pet thoeries learned from marxists economics professors?
Well that must put you at the level of an average 8-year-old, kevkrom. Because my discussion of corporate costing, fixed and variable costs, break-even points, etc. etc. apparently sailed right over your head.
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