Posted on 10/23/2002 4:16:36 PM PDT by ATOMIC_PUNK
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There is no simple answer to this.
Let's just start by saying everyone has to eat and there's a certain minimum cost involved. Read that metaphorically.
As a matter of fact there is a simple answer that assures proportionate participation and exposure to the nation's tax bill while making certain that no one is taxed for that fundmental minimum cost involved.
A fixed rate, National Retail Sales Tax (NRST) containing a prorated payment to everyone based on their household size.
| Protecting the Poor from the Tax A common assumption about the NRST is that it is naturally regressive, since lower income individuals spend a greater percentage of their income in any given year on consumption of necessities. Because a sales tax is an altogether different paradigm of taxation, any judgment on the equity of the tax must be accompanied by a different analysis of regressivity. To examine how a national retail sales tax could address such concerns, a number of issues should be broached. First and foremost, taxing income at a graduated rate is not the only means of making a tax system progressive. Moreover, a tax on income, no matter how steeply graduated, does not necessarily make an income tax progressive. Even if progressivity is measured by the common standard of "ability to pay," the income tax is imposed only on productive labor and the return to capital and not on wealth. An income tax does not tax consumption of older accumulated capital, whereas a sales tax does. Equally important, using taxable income as the basis to determine progressivity is necessarily based on a year-to-year analysis where the ability to pay is measured as a function of income per unit of time. Consumption over the life of a taxpayer is in many respects a better measurement of the ability to pay taxes. Because people's incomes fluctuate throughout their lives, the lifetime application of a sales tax is much less regressive than it would appear to be when examining a cross-section of taxpayers in any given year. Since all income is earned for the purpose of eventual consumption, under a national retail sales tax, the taxpayer can defer taxation by saving his income. But he cannot forever avoid the tax. In any case, an NRST plan can be made progressive through a rebate mechanism that would shelter low-income people from paying the tax. One manner in which the NRST could be made less regressive would be to exempt certain necessities--such as food and clothing--from the tax. That approach would exempt, however, the most expensive food (lobster and caviar) and the most expensive clothing ($1,000 designer suits). It is a very inefficient means of providing tax relief to lower and middle income Americans and would necessitate a much higher overall rate. A more neutral and less distortive approach is to simply provide each family a level of consumption free of tax by providing a rebate of the tax on expenditures up to the poverty level. The rebate could work as follows: A family consumption refund would be established for each household at an amount equal to the sales tax rate times the poverty level. The poverty level is defined by the Department of Health and Human Services guidelines and should be raised by the sales tax rate. The family consumption allowance approach has several effects. First, it makes the sales tax applicable only to consumption beyond the necessities of life. Second, it makes the tax in effect progressive, not only because it is based on consumption, a better index of true ability to pay, but because--if one wants to continue to view progressivity through an income tax lens--it entirely exempts lower income workers. Third, unlike most state taxes, it does not undertake the complex and politicized task of determining what to tax and what to exempt, thereby minimizing administrative and compliance questions and economic distortions. The 23 percent NRST plan would have a highly beneficial impact on the U.S. economy and raise the standard of living of the American public. The tax compliance costs borne by our economy would fall sharply. And the degree of intrusiveness of the tax system in our lives would decline greatly. Once set free from the burdens of compliance with the current system and the punitive tax rates imposed on work, savings, and investment, the United States will become a more productive and more prosperous republic. A national retail sales tax is more compatible with the principles of a free society than any other alternative tax system. |
Any more questions?
I don't think you can conclude from anything I've said that I am unaware of the distribution tax. But, as usual, there are several ways in which to read and interpret statistics. For example;
That so large a percentage of our population earns so little and pays little or no taxes is a real problem. What solution do you propose?
HAIL to the Chief - he is sadly missed. I always enjoyed his NRST threads.
CHIEF may have passed on, but the NRST is still very much alive and will continue to be supported by those committed to a fairer and more constitutional system of taxation.
The current bills before Congress, though the numbers may change with re-introduction in the next session, ping on your congressional candidates people elections count:
Billy Tauzin offers one solution, a 15% retail sales tax that replaces all income taxes but doesn't touch SS/Mediscare payroll taxes, that comes close to meeting the essentials of what it takes to reverse trend?:
H.R.2717
Sponsor: Rep Tauzin, W. J. (Billy)(introduced 8/2/2001)
Title: To promote freedom, fairness, and economic opportunity for families by repealing the income tax, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
John Linder (R Texas) offers a more comprehensive bill to kill all income and payroll taxes outright, and provide a revenue neutral replacement:
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 & http://www.salestax.org
See Also: Fairtax FAQ (NSBU)
Other bills, moving in the proper direction are:
To get the ball rolling and focus Congress Critter's attention:
H.R.2714
Sponsor: Rep Largent, Steve(introduced 8/2/2001)
Title: To terminate the Internal Revenue Code of 1986.
A bill to prohibit he imposition of any tax by the Internal Revenue Code: (1) for any taxable year beginning after December 31, 2005.
To sunset some agencies we don't need and rein in their expenditures:
H.R.2373
Sponsor: Rep Brady, Kevin(introduced 6/28/2001)
Title: To provide for the periodic review of the efficiency and public need for Federal agencies, to establish a Commission for the purpose of reviewing the efficiency and public need of such agencies, and to provide for the abolishment of agencies for which a public need does not exist.
Modification then enact and ratify:
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.
What solution do you propose?
See replies #41 & 48 for what I support as well as many other conservative and liberal folks.
Get government out of our individual finances, and return to us our financial privacy and choices in our family economics.
Get government out of our individual finances, and return to us our financial privacy and choices in our family economics.
I know your reply wasn't to me, but what you say here makes a ton of sense - getting finances back into people's private lives where it belongs. Most of the government intrusion has resulted in policy based on jealousy, not necessity.
But I'm definitely no expert on taxes.
Hit
my [ http://www.freerepublic.com/perl/profile?u=16355 ] &
CHIEFnegotiator's [ http://www.freerepublic.com/perl/profile?op=show&user=CHIEF%20negotiator ]
FR home pages for links to FR discussions on tax issues.
PRO & CON flat tax, income tax, NRST virtually every tax you can imagine has been thoroughly debated acoss the last 5 years or so here on FR. They serve as a very complete review of this nations tax systems theory, practice and proposals to change it.
5.56mm
I'm signing off now. Reading about taxes will definitely not be easy. :)
Those figures would be much more meaningful than the per-capita breakdowns.
Replacing the graduated income tax with a NRST would set off a chain reaction of benefits.
Replacing the graduated income tax with a NRST is not an end all be all. It's but one of five key factors for collapsing a corrupt government while allowing a fair and honest government to rise in its place.
Those that actually pay for the cost of government, vote Republican.
Eventually, those that actually pay for this goverment will cut off their "free lunch."
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