No tax on the first $34,000. 17% on everything above that. No deductions. Now THAT I can live with!
Isn't a retail sales tax kinda regressive since low income folks will spend a greater percentage of their income on stuff that will be taxed?
Regarding Mr Armey's plan: Looks good. What about capital gains? What about tax-free municipal bonds? They're needed to fund infrastructure.
Low income folks would probably be taxed less under a sales tax system because the essentials--food, shelter, utilities, etc. the stuff they really need would be exempt from the sales tax.
"A flat tax is still an income tax. It does not get rid of the IRS. You (and every other taxpayer) would continue to pay "protection money" to the IRS mob under the Flat Income Tax.
OTOH, the National Retail Sales Tax will abolish the IRS. You will no longer pay "protection money."
Here is the logic: You will pay taxes in accordance with how much you consume, not how much you earn. You will be in control of how much you consume. Therefore, you will be in control of the amount of taxes you pay:
Not the Congress. Not the IRS. You!
"No tax on the first $34,000. 17% on everything above that. No deductions."
"Now THAT I can live with! "
Yeah - right! All that means is that the IRS will just have that much more reason to attack the wealthy, giving the wealthy that much more reason to take their money (and the jobs it creates and the taxes they pay) and go elsewhere. There would be less money owed per wealthy taxpayer, so they would have to spend more time and energy attacking that economic group to achieve the same return.
No thanks.
The wealthy (top 5%) now pay over 55% of all personal income tax collected, though they are only responsible for 34% of earned income (Tax Foundation). Even with a flat income tax, they would still be responsible for 34% of the tax load. And frankly, I don't relish the idea of having to make up the difference, when they leave. (See Tick-Tick-Tick - The Economy Bomb.)
The wealthy are already leaving in record numbers. Let's not encourage them to leave even faster.
Rather than inflict us with a flat income tax that would encourage further and faster expatriation of wealth, we should be looking at a National Retail Sales Tax (NRST) that would not only slow down privacy induced capital flight, but encourage some expatriated wealth to return. Several studies also show that such a system would stimulate massive foreign investment in the US economy, with many large foreign companies indicating that they would move their home offices into the United States.
The flat income tax is just a way to get the votes of more people at the bottom if the income scale, without having to sacrifice the power and control that the IRS gives the federal government over individuals. The NRST takes that power and control away from the government.
If you had a malignant melanoma on your back and your doctor told you that rather than removing the cancer, he was just going to treat it with medication that would only slow it's growth until it finally killed you, would you accept that prognosis or would you write him off as the quack he is and find another doctor?
Well, trying to cure our tax problems by slowing down our economic demise with the medication of flattening the rates, without cutting out the cancer of the IRS that is eating away at our economy and will eventually destroy it, is just as ridiculous. Similarly, those in Congress, who propose such nonsense, should be treated as the quacks that they are and be voted out of office (Democrat or Republican).
The problem is not the method of tax collection or even the rates, though the rates can and do have an effect on the economy. The real problem, that most people are not aware of, is that the IRS's increasing intrusion into the private financial affairs of individuals and their progressively vicious attacks on the wealthy, who have commited the crime of being too efficient at taking all the deductions and allowances to which they are entitled, is actually forcing many in that group, who pay the lion's share of the taxes, to take their money and leave.
Don't fall for the Band-Aid philosophy of the flat income tax quacks. It is still a tax on income and will still require the IRS to enforce collections from individuals. Any tax system that leaves the cancer of the IRS intact will not stop native capital flight and may even increase it. Keep in mind that the top earning 1% are responsible for over 36% of all personal income tax collected (Tax Foundation). That means that if just that 1.2 million taxpayers should leave, you will have the dubious honor of supporting a 57% tax increase, just to stay even (Action America).
Above all, remember this:
Any tax system that leaves the IRS intact will have the
effect of rearranging the deck chairs on the Titanic.