Posted on 03/31/2002 1:15:58 PM PST by DennisR
Here's an excerpt from a proposed national sales tax legislation...(FairTax Hr2525).
SEC. 302. ADMINISTRATION OF OTHER FEDERAL TAXES.Then there's this excerpt from an econmists testimony who favors a sales tax.(a) IN GENERAL- Section 7801 (relating to the authority of the Department of the Treasury) is amended by adding at the end the following:
`(d) EXCISE TAX BUREAU- There shall be in the Department of the Treasury an Excise Tax Bureau to administer those excise taxes not administered by the Bureau of Alcohol, Tobacco and Firearms.
`(e) SALES TAX BUREAU- There shall be in the Department of the Treasury a Sales Tax Bureau to administer the national sales tax in those States where it is required pursuant to section 404, and to discharge other Federal duties and powers relating to the national sales tax (including those required by sections 402, 403, and 405). The Office of Revenue Allocation shall be within the Sales Tax Bureau.'.
Tax RatesBe careful what you wish for.Simulation analysis and a variety of empirical calculations suggest that the retail sales tax rate needed for revenue neutrality under the Fair Tax, assuming no decline in the real value of government purchases, would be roughly 30 percent when measured on a tax-inclusive basis. This tax rate could be expected to decline by 3 or so percentage points over time as the economy expands. Moreover, if the Fair Tax were structured to include the consumption of existing housing services in its tax base, the initial Fair Tax rate would probably be about 3 percentage points lower. This could be accomplished by assessing the tax on the imputed rent on housing, where the calculation of imputed rent is based on a fair market valuation of housing real estate. This valuation could be done by local municipalities in the course of appraising houses for local property taxes.
A tax-inclusive consumption tax rate of 30 percent translates into a tax-exclusive consumption tax rate of 43 percent. While the 43 percent rate sounds very high, proper comparison of the Fair Tax tax rate with the current payroll and income tax rates requires evaluating the consumption tax rate on a tax-inclusive basis. Even a 30 percent tax rate may sound like a high rate. But one needs to bear in mind that middle and upper income households in America are typically in combined income tax and payroll tax marginal tax brackets of 40 percent or more and that low income Americans are typically in even higher tax brackets once one considers the phase out of the earned income tax credit. Hence, given the state of U.S. marginal taxation, 30 percent is a low number.
In regards the Kotlikoff testimony above:
"Eliminating complexity and distortions would be cause enough for reforming the federal income tax, but there is a much more pressing reason: notwithstanding recent wishful projections about future government surpluses, our fiscal house is not in order. Indeed, getting it in order would require not cutting federal income taxes, as some in this chamber advocate, but immediately and permanently raising them by over 25 percent."
Kotlikoff, among other things, is pushing for his personal idea of a tax increase to over 30% of gross income (30% = 1.25* 24% current total federal tax rate on income).
HR2525 explicitly specifies a 23% tax inclusive rate on retail sales of new goods and services only(i.e. consumption expenditure). Nothing anywhere near the 30%(tax inclusive) of income that Kotlikoff is pushing in his presentation.
Secondly, Kotlikoff discusses Fair Tax as examples of the main proposals before the the committee. He is more notably aligned with the Flat Tax where his past studies and main sympathies have been for many years.
When he speaks of "consumption taxes", he is including the Flat Tax and its Vat components as well. His overall presentation is to compare consumption taxes in his economist's sense of such (Gross Income less returns from savings & investment) = Consumption. Most of his commentary when speaking of "consumption taxes" is related to his studies of the Flat Tax variety of tax systems.
"The retail sales tax clearly taxes consumption. But so does the Flat Tax. Just ask Robert Hall, one of the originators of the proposal, who describes his Flat Tax as, effectively, a Value Added Tax."
In short Kotlikoff is presenting his own views of the consumption taxes as class which includes his expertise with the Flat Tax/VAT systems and specific examples relating to the Fair Tax HR2525 which at no time does he mention the HR2525 tax rate.
The tax rates Kotlikoff cites in his testimony have nothing to do with HR2525 at all.
A half truth.
And as we both know "the old-age, survivors and disability insurance rate" and "the hospital insurance rate" is that sales tax rate that "shall be determined by the Social Security Administration. "
`(1) FOR 2003- In the calendar year 2003, the rate of tax is 23 percent of the gross payments for the taxable property or service.
`(2) FOR YEARS AFTER 2003- For years after the calendar year 2003, the rate of tax is the combined Federal tax rate percentage (as defined in paragraph (3) of the gross payments for the taxable property or service.
`(3) COMBINED FEDERAL TAX RATE PERCENTAGE- The combined Federal tax rate percentage is the sum of--
`(A) the general revenue rate (as defined in paragraph (4), and
`(B) the old-age, survivors and disability insurance rate, and
`(C) the hospital insurance rate.
`(4) GENERAL REVENUE RATE- The general revenue rate shall be 14.91 percent.
That would be good, but that's not what would happen with the Fairtax (HR2525).
What kind of receipt would that huge NEW tax show up on..`(2) CERTAIN WAGES OR SALARY- In the case of wages or salary paid by a taxable employer which are taxable services, the employer shall remit the tax imposed by section 101.
------
(12) TAXABLE EMPLOYER-
`(A) IN GENERAL- The term `taxable employer' includes--
`(i) any household employing domestic servants, and
`(ii) any government except for government enterprises (as defined in section 704).
---------
`(17) WAGES AND SALARY- The terms `wage' and `salary' mean all compensation paid for employment service including cash compensation, employee benefits, disability insurance, or wage replacement insurance payments, unemployment compensation insurance, workers' compensation insurance, and the fair market value of any other consideration paid by an employer to an employee in consideration for employment services rendered.
The sales tax shills claim government employee's are already taxed so the sales tax is a no brainer...what they fail to disclose is government employees pay taxes out of their pay...the sales tax ON wages, benefits, etc. is a NEW tax IN ADDITION to/ON their pay which amounts to an increase in the cost of government with a first year 30% increase in "any government" (city,county, state federal) payroll...Not to mention the sales tax on government purchases.
Any clues where the money for those hidden taxes would come from?
shall be that sales tax rate which is necessary to raise the same amount of revenue that would have been raised by imposing a 12.4 percent tax on the Social Security wage base
shall be that sales tax rate which is necessary to raise the same amount of revenue that would have been raised by imposing a 2.9 percent tax on the Medicare wage base
The NRST funds general revenues at 14.91%
And funds SS/Medicare at the same level of revenue that is generated by the SS/Medicare taxes it replaces.
Get rid of SS/Mediscare and the NRST rate will be 14.91%
Course if you don't like funding SS/Mediscare that way, you can go the Tauzin route and keep funding it at a rate of 15.3% of your wages instead of 8.09% of your spending. And pay 15% on spending for general revenues.
The alternative is to privatize SS/Mediscare right now if you think you can get it done.
Remember:
23%........... HR2525 (NRST) rate
14.91% ..... rate if Social Security and Medicare were privatized
14% .......... rate if Nat'l Endowment for the Arts were eliminated
11.9%........ rate if Dept. of Education were eliminated
10% .......... rate if welfare were eliminated
etc.
Your objection is noted and easily taken care of.
All you have to do is just repeal Social Security and Medicare.
And that pesky section goes bye-bye for you.
Bureaucrats at Social Security determining the sales tax rate(s) without a vote or oversight from Congress
The SS & Medicare rates are already fixed in law by Congres and as shown tied to the NRST rate by that same percentage.
Secondly, you appear to have missed a key factor for both SS & Medicare percentage:
The rate shall be determined using actuarially sound methodology and announced at least 6 months prior to the beginning of the calendar year for which it applies.
Lets see, NRST rate projected to increase, all them welfare mothers looking at paying more for their diapers scream at Congress Critters along with all the rest of us. Just the opposite of what happens today.
NRST rate projected to decrease and everyone is happy.
The wage base increases slower than the economy as a whole due to productivity increases. which are the rule rather than the exception for this nation. As a concequence those computed rates for the NRST will trend lower rather than higher .
Course there are those who want higher rates or no change in them lewislynn.
House Democratic Caucus hopes to be able raise total federal taxes
I would hope you are not among them.
what they fail to disclose is government employees pay taxes out of their pay
These are wages/salaries paid by the government for contracted taxable services instead of having the service provider collecting an NRST from the government then turn around and remitt it right back lewislynn.
Again you overlook the very explicitly stated intent of the bill and rules for interpretation. To tax once but only once lewislynn.
`(a) IN GENERAL- Any court, the Secretary, and any sales tax administering authority shall consider the purposes of this subtitle (as set forth in subsection (b)) as the primary aid in statutory construction.
`(b) PURPOSES- The purposes of this subtitle are as follows:
`(1) To raise revenue needed by the Federal Government in a manner consistent with the other purposes of this subtitle.
`(2) To tax all consumption of goods and services in the United States once, without exception, but only once.
`(3) To prevent double, multiple, or cascading taxation.
`(4) To simplify the tax law and reduce the administration costs of, and the costs of compliance with, the tax law.
Normal wages of normal employees are not taxed by the government lewislynn only in those special cases such as those of a taxable service provider that would normally collect the NRST from the government for remittence to the government does the government remitt the tax on behalf of the taxable service provider as part of its contract.
You would have known this if you had bothered to read and include the full section you extracted from lewislynn:
`(a) LIABILITY FOR COLLECTION AND REMITTANCE OF THE TAX- Except as provided otherwise by this section, any tax imposed by this subtitle shall be collected and remitted by the seller of taxable property or services (including financial intermediation services).
`(b) TAX TO BE REMITTED BY PURCHASER IN CERTAIN CIRCUMSTANCES-
`(1) IN GENERAL- In the case of taxable property or services purchased outside of the United States and imported into the United States for use or consumption in the United States, the purchaser shall remit the tax imposed by section 101.
`(2) CERTAIN WAGES OR SALARY- In the case of wages or salary paid by a taxable employer which are taxable services, the employer shall remit the tax imposed by section 101.
Don't take my word for it, it's better explained in Emancipating America from The Income Tax.
Government Services and PurchasesThe question of the proper tax treatment of government services--such as municipal garbage collection, utilities, visits to national parks, and rides on Amtrak--presents special problems. [56] To the fullest extent possible, a national sales tax should provide parity between government services and private services. Excluding commercial activities of the government from the tax base would provide a tax advantage when government is competing with private providers of services. Hence, when the government sells a good or service, such as public transit or publications, the sales tax should be imposed on the sale price. [57]
The complication is that most government goods and services are not sold in the marketplace. They are often given away and in many cases no market price exists for the services in question. Moreover, the recipients or beneficiaries of the services are unclear or unknown. For example, how would we allocate the benefits conferred on the public by national defense, the State Department, the Environmental Protection Agency, National Public Radio, or the White House?
Taxing this part of the economy is not as administratively simple under a sales tax as it is under an income tax. Government services are taxed by both the current graduated income tax and the flat tax--through the income tax imposed on government workers' wages and salaries (i.e., most of government value added). One conceivable way to tax government fully and equally under the NST system would be to impose a separate excise tax on government wages. That is the approach we have adopted in this study. [58]
The complication is that most government goods and services are not sold in the marketplace. They are often given away
Given away?....that shows what he thinks of the confiscation of our money to the government.
BTW, it's interesting they noted NPR as a government service in the same breath as the powerhouse agency's "national defense, the State Department, the Environmental Protection Agency, or the White House?"....All supported by taxpayers only to be taxed once again under your fraud...but of course before a sales tax is imposed those "services" are just "given away" aren't they?
Want another?
The most popular was the one introduced by the gentleman from Georgia (Mr. LINDER). He is touting this as a national sales tax, and the rate he pegged within the committee was 23 percent. Upon questioning, we found out that it is not 23 percent, it was almost 30 percent, on every good and service produced in this country, prescription drugs, funeral services, everything. We talked to the Joint Committee on Taxation, which is a scientific committee, to give us expertise. They said that national sales tax, to be revenue neutral, would have to be a 59 percent rate. Is that what you are going to replace the current code with?Interesting, I asked the gentleman a question. I said, Mr. LINDER, would the national sales tax apply to wages for municipal employees? He said, Oh, no, [Page: H2274] GPO's PDF no, no, no. Then one of his staff persons poked him on the back and said, it is in the bill.
It is in the bill. So the authors do not even know what their proposal is. As the questioning developed, your municipality would have to pay the Federal Government 30 percent of their municipal wage base, because it is a service. And where would your municipalities get the money from? They would radically increase the property tax. In the City of Milwaukee, that would be a very, very bad mistake, because property taxes are relatively high.
Sorry...You are wrong again as usual. "Any government" wages salary and benefits would be subject to your phony sales tax...and this further illustrates how mislesding your use of "sales tax" is.
It is in the bill. So the authors (and you) do not even know what their proposal is.
To suggest that government "services" like national defense or the White House or any other's for that matter would be funded by a sales tax only to be taxed once again as a "service" is nothing short of fraud, not to mention the HUGE increase in the cost of government.
Your plan starts with a lie in it's "sales tax" title, then continues the lie with the rate, then YOU have to lie because it can't stand on it's own merits.
Simply put, your plan sucks.
Those would be the ones crying "to save Social Security" wouldn't they?....You think any of them are bureaucrats in charge at Social Security? You know, the ones who would determine the sales tax rate?. I do.
I would hope you are not among them.
You worry way too much about me...Why is that? Do you fear the facts I've posted so much, you feel you have to make everything about me?...Is that your way of attempting to discredit, distract from, or spin the facts?...I think it is.
Those would be the ones crying "to save Social Security" wouldn't they?....
Who are those lewislynn? I don't support it, and will be glad to see it go right along with Mediscare, the NEA, DEA, and few other pieces of socialist garbage.
23%........... HR2525 (NRST) rate
14.91% ..... rate if Social Security and Medicare were privatized
14% .......... rate if Nat'l Endowment for the Arts were eliminated
11.9%........ rate if Dept. of Education were eliminated
10% .......... rate if welfare were eliminated
etc.
I would hope you are not among them.
You worry way too much about me.
Hmm! Hyperbole instead of an clear answer. Certainly I hope people are not looking for higher or the same tax rates we live under today. Even you lewislynn.
Good article, discussing the problems inherent in both income taxes and sales taxes as well. Mastromarco does an excellent job of clarifying the issues that need to be addressed. Everyone should read it in its entirety. I'm glad you pointed it out.
Another good paper by Mastromarco is here discussing the same subject in additional detail:
Everyone should read that as well.
As far as your other quote lewislynn, why didn't you give us your source so we all could find out who is speaking and in what context.
Here at least is a link you should have provided or at the source you should have cited.
Refer: 12. DATE CERTAIN TAX CODE REPLACEMENT ACT, House Congressional Record April 13, 2000 pages H2259-H2282; speaking of a memo regarding the Joint Tax Committee's assessment of the total Federal tax rate as a percentage of family consumption expenditures based on Clinton administration expectations for government growth in program funding.
I note from the Congressional record page H2273, the speaker you are citing is
"Mr. RANGEL. Mr. Speaker, I yield 3 minutes to the gentleman from Wisconsin (Mr. KLECZKA).
Mr. KLECZKA. Mr. Speaker, I thank the gentleman from New York for yielding me time."
Mr. Kleczka is Rep. Gerald Kleczka (D Wisconsin 4th district); Such a conservative fellow, You know, like in Republicans want to throw old people in the streets and starve babies DEMOCRAPS, arguing against throwing out the INCOME TAX.
Analyzing to statements of Rep. Frost(D-Texas) House Democratic Caucus chairman, Rep. Kleczka(D-Wisconson) and other House Democratic Caucus members, the House Democratic Caucus hoped to be able raise total federal taxes across 5 years to 59.5% of family consumption expenditures. That indicates a whopping 37.3% of gross family income, more than 1.5 times the effective total federal tax rate(24.2%) born by the nation's familys in 1999 as estimated by CBO.
59% over five years(11%/annum) is the increase in tax rates that the DEMOCRAPS (read Joint Tax Committee) wanted and you are supporting that?
It is not the tax rate of the NRST, nor will it ever be.
What Rep. Kleczka doesn't say is he and his Folks want to increase the income/payroll tax enough to ensure they have that much. The chart he is referring to reflects Democrap hopes for us.
Tell us lewislynn, if every voter is required to pay the same tax rate without exception, just who is going to support any Congress Critter with the temerity to propose a 60% tax rate on every person in the country?
Get real.
In response to your and the Chairman of the Democratic Caucus, Representative FROST (D), Charlie Rangle(D) and your MR. KLECZKA shall we see what the Republican, side of this issue is? Since we have clearly seen where the DemonCraps lie..
I believe we should hear "the rest of the story."
Rep Linder, a Republican supporting the repeal of the income tax, Refer: 12. DATE CERTAIN TAX CODE REPLACEMENT ACT, House Congressional Record April 13, 2000 Page H2266
"Mr. LINDER. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, the IRS has made criminals of us all, and it is time for it to go away. And that is what this is about, scrapping the code. This is real. Now, it may be a joke for Democrats, who have spent 40 years building up this monstrosity, but this is very real.
And there are some very real proposals to replace it, proposals that have been studied for years. My proposal, which has been ridiculed today, has been studied for over 3 1/2 years, with $15 million spent in universities from Harvard to Boston College to MIT to Stanford to Rice, and none of them came up with a 60 percent tax rate.
Guess who did? A committee whose members have their entire political capital invested, or their intellectual capital invested in the Tax Code. They would lie to get this thing defeated, because we have depreciated their intellectual capital if we get rid of all the income taxes and all the difficulties and the taxes are transparent and easy to understand. They will not be needed any more.
If we get rid of this Tax Code with a single transparent, straightforward, simple sales tax, Americans will know what it costs every time they buy something, what it costs for government. What they are not telling the American public is that currently, as the gentleman from Ohio pointed out, we know that 22 to 25 percent, according to various studies, of what taxpayers currently pay for at retail is the current embedded cost of this tax system.
They would rather have a hidden tax than a transparent tax because they know, if taxpayers saw how much government was costing them, they would rebel and ask us to reduce the role of government in their lives. We are currently paying it. It is hidden. They like that.
This income tax was originally intended and promised to only tax the top 2 percent of the income earners in America. That was the promise that was made in 1913. And indeed, if we think back to the last two tax increases, 1990 and 1993, the promise was made we are only going to raise the taxes on the top 1 percent. Well, guess what? In 1990, the top 1 percent paid $106 billion in taxes. And after the tax increase on them, the following year they paid $100 billion. Because rich people are often smart people, they can find ways to rearrange their income.
But each of these tax increases, that these folks so love, reverberates through the system and we all pay. We all pay. All we want is to get rid of a monstrosity that no one understands; that confuses every taxpayer and keeps hidden what the actual cost of government is, and then let us have a debate on what to replace it with. It may not be my tax bill; perhaps it will be the bill offered by the gentleman from Texas (Mr. ARMEY) or the gentleman from Ohio (Mr. TRAFICANT) or the gentleman from Louisiana (Mr. TAUZIN). But it will be simpler, more understandable, and it will be fairer.
One of my favorite stories about the 1913 debate on the 16th amendment to impose the income tax was that one of the Senators was ridiculed and laughed off the floor of the United States Senate for saying something absolutely
outrageous. He said this: ``Mark my words, before this is over, the government will be taking 10 percent of everything you earn.'' It was considered so outrageous by his colleagues that they ridiculed him off the floor of the Senate.
I feel certain that is what gave fresh meaning to my favorite country western song, ``If 10 Percent Is Enough for Jesus it Ought to be Enough for Uncle Sam.''
SEE: Democrats Planning for Rise of Total Federal Tax Rate to 37% from current 23%
It won't be a any Congress critter, it will be faceless, un-accountable, nameless, blameless, bureaucrats at Social Security and Treasury....Didn't you read your proposal?
Why else do you think they wrote it that way?...For the good of the taxpayer? LOL!
You're either extremely stupid, or naive....which is it AG?
"Any Government" wages are subject to a your phony sales tax, the 23% lie is only a teaser rate for the first year, then faceless, blameless, unaccountable, unelected Social Security bureaucrats will "determine" the sales gross payment tax rates..."Congress critters" (a rather childish term for an old war horse to use, don't you think?) would be unaffected by any increase in rates imposed by bureaucrats.
Those are the facts. All your spam, your links to what Democrats want to do, your shoot the messenger attempts, childish terms, and other meaningless nonsense directed at me as a distraction from the facts is moot.
Those are the facts.
Just the kind of "facts" Demoncrap numbers are based on Lewislynn. I'm surprised you haven't thrown this out in your attempts to demogogue the NRST:
"Don't Buy the Sales Tax" Policy Brief # 31, 1998,
by William G. Gale, the Brookings Institution.
It gives you a total 76% revenue neutral NRST rate to beat your breast over. Gale & Brookings after all are favorite sources used by Demograts to rationalize their speculations. You should use it to. Afterall any ole number good enough for one set of demogogues should be good enough for others.
Of course Gale recommends VATs and "Flat" taxes to achieve a revenue neutral replacement for the current system. Unfortunately he forgets to tell us all revenue neutral tax systems still have to come up with sufficient revenues to fund the government at the same size as now, @23.5%(taxfoundation) of gross family income.
The real question becomes where do they hide a 76%(60% in your belief) total revenue neutral tax rate when telling us we need only pay a "17%" revenue neutral rate in a flat tax, to achieve the same result as the 23.5% current income/payroll tax system.
I don't have to, as I posted before, your nrst can't stand on it's own merits. The facts are all derived from the actual legislation...if you don't like them you'll have to whine to someone else...
Demoncrap?...How can anyone be taken seriously when childish gibberish is being used in an attempt to make a serious point?...A little growing up on your part would go a long way AG.
How can anyone be taken seriously when childish gibberish is being used
Indeed lewislynn, Indeed.
Read the context. The work I reference is current work. I was responding to someone else's comment that read:
I think it is immoral to make every retailer in the country a tax collector.
My position, if you care, is that the current system is more than wrong. I concede your system may be less wrong, but my main point was for Pontiac to understand the current situation of employers as uncompensated tax collectors.
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