Inching Away From Income Tax

Washington Post ^ | 10/31/02 | Jonathan Weisman

[Tumbleweed_Connection]

In the heart of the Treasury Department, their work deeply under wraps, tax-policy experts are hatching policy options for what could be the Bush economic team's first big idea: shifting the U.S. tax system away from taxing income, toward taxing consumption.

But taking what has long been an academic ideal and translating it into real-world tax policy would take a dramatic commitment of presidential leadership, a long education and political campaign, and a bipartisan convergence of political interests, tax-policy experts say. Few of them are holding their breath.

"It's true that you can write down a simpler tax system on paper than the one we have," said William G. Gale, a tax expert at the Brookings Institution and a critic of consumption-tax proposals. "But it's not necessarily true that you could get that tax system through the legislative system, or ensure it would stay that way once you did."

Officially, a year-long tax policy project at Treasury will merely present President Bush with tax-reform options, probably early next year. But economists and tax lobbyists close to the effort believe that Treasury Secretary Paul H. O'Neill is serious about elevating tax reform on Washington's agenda. If Congress is not prepared to act yet, at least the issue could underpin Bush's reelection campaign, they say...

[ancient_geezer]

If these numbers are wrong (which I suspect they are, but want to see where they came from) all bets are off.

You demand they be calculated for you, after having been provided the base data and invited to determine the same thing for yourself. No you bad mouth those who provide the result because you are to lazy to do the legwork.

From now on, do you own work and back up what you say with real numbers. No more of your guessing, or unfounded suspicionst, and other lazy escapes.

Put your data where your mouth is or buzz off.

[lewislynn]

with the current income tax system wind up in the prices charged for goods and services. ALL of that would go away under the NRST louie! ALL of it!

So in your plan, unlike other employees, people providing a "service" would not receive 100% of their paychecks?

[Bigun]

So in your plan, unlike other employees, people providing a "service" would not receive 100% of their paychecks?

Like I said before louie you obviously cannot read plain english!

NEVER said any such thing!

[Bigun]

THIS is what I said louie:

In our country today ALL costs associated with paying and complying with the current income tax system wind up in the prices charged for goods and services. ALL of that would go away under the NRST louie! ALL of it!

[lewislynn]

Maybe it's you who doesn't understand what you're writing.

with the current income tax system wind up in the prices charged for goods and services. ALL of that would go away under the NRST louie! ALL of it!

Maybe you know how you can pay service providers 100% of their wages AND reduce the service charges 20-30-40% at the same time.

I'm just trying to be of help to you.

[Bigun]

Don't help me louie! PLEASE!!!

WHY do you persist in leaving this part of what I said out you idiot!

ALL costs associated with paying and complying with the current income tax...

Who are you trying to fool other than yourself?

[lewislynn]

ALL costs associated with paying and complying with the current income tax...

FICA and income tax is a cost that won't be included in the "100% of their paycheck"? Complying with the income tax includes bookkeeping and reporting wages...so businesses won't keep books anymore?

As to compliance for reporting wages, here from your bill is the law:

`SEC. 903. WAGES TO BE REPORTED TO SOCIAL SECURITY ADMINISTRATION.

`(a) IN GENERAL- Employers shall submit such information to the Social Security Administration as is required by the Social Security Administration to calculate social security benefits under title II of the Social Security Act, including wages paid, in a form prescribed by the Secretary. A copy of the employer submission to the Social Security Administration relating to each employee shall be provided to each employee by the employer.

`(b) WAGES- For purposes of this section, the term `wages' means all cash remuneration for employment (including tips to an employee by third parties provided that the employer or employee maintains records documenting such tips) including self-employment income; except that such term shall not include--

`(1) any insurance benefits received (including death benefits);

`(2) pension or annuity benefits received;

`(3) tips received by an employee over $5,000 per year; and

`(4) benefits received under a government entitlement program (including social security benefits and unemployment compensation benefits).

`(c) SELF-EMPLOYMENT INCOME- For purposes of subsection (b), the term `self-employment income' means gross payments received for taxable property or services minus the sum of--

`(1) gross payments made for taxable property or services (without regard to whether tax was paid pursuant to section 101 on such taxable property or services), and

`(2) wages paid by the self-employed person to employees of the self-employed person.

What was that about compliance again?

Think of it as a bump for more support.

[Deuce]

You are trying to compare apples an oranges without recoginzing the differences in method of tax payment.

No I'm trying to find an apples to apples comparison (as everyone must) in order to determine whether they support or oppose the tax.

My apples to apples comparison requires:

1. Which existing taxes is NRST offered to replace?
2. How is the burden distributed with the current tax and what will it be with NRST?

I have looked briefly at the long links you have provided. I can see that they go into the issue in some detail. I assume you are reasonably conversant with the material. I don't mind being sent to a source that directly answers my questions. What, for example, is the source of the distribution information you provided? What is the answer to question 1 above?

[Deuce]

The NRST tax base is larger, because the income/payroll tax does not reach everyone who participates in the economy. Then income tax misses foreign nationals, criminals, and those to evade by not filing.

Non compliance applies to all taxes. I am not interested in pursuing the differences until I pursue the matters I’ve been trying to pursue since the beginning---unless the differences are very material and relatively indisputable.

Secondly, the individuals income available for consumption expenditure increases by the amount of taxes they would otherwise pay under individual income tax & FICA taxes.

It should be clear from what I’ve said of my perspective that this is totally immaterial.

Third the price of goods an services decline and/or income increases by the differential of tax compliance cost overhead inherent in the income/payroll tax system that is not present in a single stage single rate tax on retail sales.

I don’t understand what you are saying, here.

The differences do indeed result in a much broader base in both dollars and participants resulting in lower tax payment per individual overall.

Broader base in dollars is totally irrelevant to my concerns about distribution of tax burden. Broader base of participants would be relevant, if true. I know too many entrepreneurs who cheat substantially on state sales tax to believe this without evidence.

Too bad you have not paid much attention to what we have been saying all along.

You have paid little attention to my specific questions. You are promoting an idea. I’m willing to listen to answers to my concerns. After many rounds of your telling me to come up with my own answers (not good salesmanship) you have finally started to provide relevant info.

As I stated previously, to best understand the distribution of the NRST it would be best for you to do the arithmetic and put it together for yourself. Once you work through the NRST payment and rebate mechanisms on paper it becomes clear as a bell.

Okay. If you are sure you NOW understand what I am looking for, give me links to the data that directly answer my questions again. Thanks.

[ancient_geezer]

You will find the links to basic tax collection statistics back in reply #60, where you have been directed to go to at least twice before.

For the specific proposed legislation go to:

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.

For general overview & answers

Refer: http://www.fairtax.org & http://www.salestax.org

Do your own leg work, I am tired of dealing with your lack of scholarship.

[ancient_geezer]

The specifics on the FCA payment was provided for you in reply #178 above.

Good night.

[ancient_geezer]

If you are sure you NOW understand what I am looking for,

I have no idea what you are looking for, nor do I really care.

It is obvious that our goals are opposed, therefore my solutions apparently are not compatable to your objectives.

I have provided links to basic information so you can find whatever it is you are looking for for yourself.

[Deuce]

I have no idea what you are looking for, nor do I really care.

The former is a lie, and the latter is now abundantly clear.

The links you provide as sources for answers to my central question (any thinking person's central question) do not answer it. Some however, recognizing the centrality of this question they do not want to answer, spend pages and pages trying to misdirect and obfuscate those looking for such answers---Just as you do.

You have learned well, Grasshopper.

[ancient_geezer]

The links you provide as sources for answers to my central question (any thinking person's central question) do not answer it.

They are the same data sources I have gone to calculate the distribution you demanded.

Some however, recognizing the centrality of this question they do not want to answer, spend pages and pages trying to misdirect and obfuscate those looking for such answers

And some refuse to use their own resources to find their own answers, demanding that others do it for them. I have "obfuscated" nothing. I in fact have gone to great effort to determine the answers you have demanded rather than establish on your own, only to have my integrity impuned and be insulted for my efforts.

You have learned not at all, Beetle Bailey.

You are on your own.

[Deuce]

They are the same data sources I have gone to calculate the distribution you demanded.

Tell me where, specifically. I have confirmed that 95%+ of the sources you directed me to does not address my question. If it is in the other 5%, tell me specifically where.

I want to make the calculations for myself as you suggest. I will even use your sources as primary data. Direct me to the data you used. Your refusal to do so is curious. If your numbers are accurate, I will enthusiastically support NRST and carry the message to others.

[Principled]

get to know duece well and he may offer you a "pay no income tax" kit for $49.95.

[ancient_geezer]

Direct me to the data you used.

From Reply #60:

refer: What's so fair about a tax on income? by Dan Mastromarco LLM:

the Effective total federal tax rate as a function of expenditure under the NRST

 

Goto:

http://www.cbo.gov/showdoc.cfm?index=1545&from=4&sequence=0:

Compare Annual expenditure vs taxrate data above with family income quintile data from CBO tax tables.

Or for a computed answer of actual cummulative distribution: compute tax paid by income class instead using CBO tabular data above and sum tax payment calculations for the quintiles to determine the distribution curve.

For NRST

For each quintile, multiply #families * average income *.23 = tax paid at register.

Sum quintile tax estimates for total tax revenue.

Compute percent of total for each quintile. and for the top 10%

Compute FCA for family of 4 returned to each quintile as a percentage of total tax revenue. (#families in quintile * 5,352)/(total tax revenue)

Then sum results and chart as % cummulative distributions with respect to quintiles.

Estimates should closely reflect the shape and levels of the tax distribution curve, where tax payments are proportionate to personal consumption expenditure. A reasonable assumption as lower income quintiles have little excess for saving, and for upper quintiles business investments out of personal "income" cannot be expended for personal use or leisure and Old money(savings) tends to be spent on consumption in excess of current income which is why the personal savings rate is very low for higher income brackets as well.

If your numbers are accurate, I will enthusiastically support NRST and carry the message to others.

How is it that I rather doubt that you will determine my numbers to be accurate? The calculations are precise and based on CBO income distribution. Use the above methodology and the answers will be the same.

[Protagoras]

However, I believe that items such as healthy food and medicine should not be taxed.

ROTFLMAO, Ok, I'll choose which foods are healthy and also what constitutes a medicine. You just follow my instructions.

[Deuce]

Okay, I went to the CBO data you linked. In total that shows 116.8 million families with average income of $49,500 in 1995 dollars. I increased that by 9% to estimate 1999 average income in 1999 $ of approx $54.1K x 116.8 = 6.3 trillion. This corresponds with personal consumption expenditure of $6.2T that I find independently for that year. If I multiply $6.3T by .23, however, I get about $1.4T which is somewhat less than the $1.5T in individual income taxes and FICA. It does not cover, business income taxes, excise taxes and other miscellaneous taxes. Nonetheless, it would be a reasonable proxy for FICA and Income taxes if there were no FCA. However, if I understand your FCA the 116.8 million families will get back approx .6T. The net money raised therefore on a 23% NRST is about $.8T. This is enough to replace the individual income tax but not any of the other taxes. Am I missing something? Please comment before I continue with my calculation.

[ancient_geezer]

My guess is you have apparently missed EITC that is returned to the low wage earner to compensation for FICA witholding, That reduces the net of the Income/Payroll tax system and comes out of total tax revenues at refund time, the same as FCA is taken of the total NRST revenues on a monthly basis.

Through the action of witholding, taxes get paid and used by government, counted into totals. Tax witholding returns are not taken out total reported revenue take to a net amount.