Posted on 11/25/2002 11:04:36 PM PST by JohnHuang2
Legislation backed by national grass-roots efforts and constituent pressure on lawmakers over the next few years could lead to the replacement of the income tax in favor of a consumption tax, says the official spokesman for a noted tax-reform group.
"Patriotism, as it regards our American flag, is at an all-time high," said Herman Cain of the 420,000-member Americans for Fair Taxation, or AFT. "But there's also an analogy [regarding taxes] to the American flag that isn't so patriotic."
"When we get our paychecks with all the deductions of federal taxes, we see red," Cain, who is CEO of the Godfather's Pizza chain, told WorldNetDaily in a wide-ranging interview. "When we go to make a purchase, with the embedded, hidden taxes that are in the cost of goods and services, we see white. And then, on April 15, when we file our tax returns, we turn blue. Then, to make matters worse, when you die, your family sees stars" because of inheritance taxes, he said.
In short, Americans are getting taxed coming and going, say AFT officials, and most people aren't even aware how much of their income goes to government – local, state and federal.
With that in mind, Cain says, AFT, coming off its first-ever national convention, is perhaps the country's staunchest advocate for replacing the current income tax with a consumption tax. Says the group: "The current federal income tax system is broken. Patching up the existing code is pointless. It's time for a fresh approach, a fair approach. It's time for a fair tax."
And at least partially because of the efforts of Cain and AFT, serious tax reform is once again emerging as a core issue among some lawmakers and the Bush administration. Indeed, the Washington Post in October reported that some in the administration have begun to support fundamental tax reform and are eyeing a consumption-tax plan over the current income tax because, they believe, if implemented, a consumption tax would simplify the process and be a boon to economic growth.
In the interim, the Washington Times reported yesterday, White House analysts and advisers – emboldened by Republicans' historic midterm election gains – say they are considering presenting to the president economic stimulus packages containing, among other measures, new accelerated tax cuts.
Skeptics of the administration's reform plan, however, said last week that while they supported an overhaul of the Internal Revenue Service and what they described as the cumbersome, inefficient income-tax system, they were wary that Americans could ultimately wind up paying a consumption and income tax.
One skeptic, Rep. Ron Paul, R-Texas, said the government's fundamental flaw is that it is too big and as such consumes too much of Americans' paychecks. He worries that Congress' voracious appetite for earners' wages could mean Americans would end up with an income and consumption tax. And he says unless government downsizes, its desire for cash isn't likely to decrease anytime soon, regardless of the form of taxation used.
Cain said fundamentally he agrees that Washington's tax appetite is too large – Americans now pay the highest peacetime rates in history, say analysts – but he thinks downsizing government should come second to radically reforming the system of taxation.
"The radical idea isn't the national sales tax," he said. "The radical idea is staying with the screwed-up system we currently have. Because of the way our system works, I do not believe we can solve both of those problems at the same time."
He said addressing the waste, fraud, unfairness and abuse of the current code should come first before tackling "the second issue" of how the government spends tax money.
"People who are skeptical about change … are [also] skeptical about returning to people and workers more of the decision-making power that they would have over their own income," Cain said. "What can possibly be wrong with the U.S. economy unleashing its full potential? Nothing. It's win-win for everybody."
Asked if he believed lawmakers had the political will to overhaul the confusing labyrinth of rules, regulations and loopholes that comprise the current system of taxation, Cain said he thought a window of opportunity would present itself if voters made their presence felt at the polls.
"A threat to being re-elected coming from the voters in every district in the country" would force most lawmakers from both parties to revamp the system, he said.
"I'm convinced that the only thing that will cause major needed change is a groundswell of voter support," he said. And he believes AFT's plan is the most sound and most salable.
"The national consumption tax is a single issue that is very difficult for the powerbrokers to confuse people [about] by talking about the other related issues," he said. "[AFT's] single objective is to … educate voters about" why it is better.
The group's tax focus centers on legislation originally offered in 2000 by Rep. John Linder, R-Ga. Called the "Fair Tax Act," Linder's bill calls for the repeal of all federal taxes except excise taxes; it repeals all corporate and individual income taxes, payroll taxes, self-employment taxes, capital gains taxes, estate taxes and gift taxes, and in their place imposes a revenue-neutral national sales tax on all new goods and services at the point of final purchase for consumption.
The "fair tax," says Cain, is a truly voluntary tax because it hinges on taxing consumption, not income. Besides being more universal, he said it would also fully fund the federal government, including Social Security and Medicare. As an added benefit, you wouldn't need an expert to determine your federal taxes.
The fact that the administration is even considering such dramatic changes to the tax code is encouraging, Cain said, because "at least there will be a dialogue" about what to do and how to do it when it comes to taxation.
Consideration "leads to dialogue in the press and in Congress about not just reform but replacement," he said. "That's significant."
Indeed, since the Post article there has been increased dialogue about reforming taxes.
"Tax experts from universities and research institutes have trooped into Treasury Secretary Paul H. O'Neill's spacious office for months now," the New York Times reported Sunday. "Some come to feed his passion for overhauling the tax code, others to temper it. Some come bearing specific plans for achieving his ambitious goal, others with advice based on long experience in the political trenches, where the idea of making the tax code simpler, fairer and more economically efficient is as perilous as it is alluring."
On Nov. 7, Office of Management and Budget Director Mitch Daniels told Fox News that President Bush "wants a full range of options and he has commissioned a look at everything from a very far-reaching reform to simplifications of the code we have now."
Daniels said Bush had "not made any decisions" but said the president "just wants to know what his choices are."
On Nov. 17, columnist Nolan Finley, writing for the Detroit News, said Americans could be "richer" if lawmakers would "kill the income tax."
O'Neill "is quietly exploring a plan to do away with the income tax, that punitive system of taxation adopted in 1913 that spawned an un-American strain of collectivism," Finley wrote. "The income tax promotes the notion that the first fruits of hard work and enterprise belong to the government, not the individual."
The income tax, he said, "places a high price on success, hard work and risk-taking, and seeks to force equalization by confiscating a greater share as incomes rise."
Finley wrote that Stephen Moore, president of the Club for Growth in Washington, D.C., and a leading proponent "of nuking the income tax," believes "the goal of taxation should be to make the poor richer, not the rich poorer.
"A tax code designed to redistribute wealth can't accomplish that. But one that stimulates growth and investment can," said Finley.
Also, Michael J. Graetz, the Justus S. Hotchkiss professor of law at Yale University and a former deputy assistant secretary of the treasury for tax policy, says 100 million Americans shouldn't be paying an income tax.
"In his essay, '100 Million Unnecessary Returns: A Fresh Start for the U.S. Tax System,' published in the current issue of the Yale Law Journal, Graetz cites several reasons to reform the current U.S. income tax," says the M2 Presswire. "Among them are growing public perception that the income tax is unfair and overly complex; the trend toward aggressive tax planning and tax avoidance; and the increasingly unmanageable administrative burden placed on the Internal Revenue Service."
Graetz is proposing a value-added tax, or VAT, used by 120 countries. It is similar to a national sales tax, but it is collected at all stages of production rather than just from retailers.
"Between now and two years from November, AFT will engage in a massive voter-education effort to keep this issue on the front burner, along with the war on terror and, possibly, another potential war we're considering," said Cain. "The more we can bring visibility to this idea to the forefront in the next two years, within the next four years perhaps we can get some movement on it."
Of AFT's first national convention, Cain said, "it exceeded our expectations."
"Over 200 people paid their own money to come to the convention," he said. "In terms of the motivation people had when they left there, it was exceptional."
200 people showed up "paid their own money to come to the convention"?. Where'd they hold it? The Elks Lodge...It wasn't too long ago the sales tax shills claimed they were 500,000 strong and growing, what happened?
If all those 200 that showed up were from Congress it wouldn't be enough people to pass the bill.
Do I like the heavy tax burden, we have today ? NO. Do I want to see it changed ? Yes, I do. I prefer a flat 10 % tax.
In short, Americans are getting taxed coming and going, say AFT officials, and most people aren't even aware how much of their income goes to government – local, state and federal.
Just to make sure that Freepers aren't "most people."
According to the Tax Foundation, in 2001 the tax burden on the average American was 23.6% of his or her income in federal taxes, plus 10.2% in state and local taxes - 33.8% total.
Unfortunately that is just the beginning, The burden of government in this nation is much more than the federal revenue collected each year.
Dr. James Payne of the University of California, Reason Magazine '94; found that in addition to direct taxes we also pay huge, hidden taxes including:
- Tax compliance costs: record keeping, reporting, filling out forms, and learning about tax regulations.
- Costs of tax enforcement: resources expended in responding to the tax authority. Each act of tax enforcement--each audit, each notice, each levy--entails a burden for the citizen subject to it.
- Tax disincentive costs: the loss of production because of the discouraging effect of taxes on investment and labor.
"When the overhead costs are added together, (24 percent compliance costs, 33 percent disincentive costs, and 8 percent other costs), they total 65 percent of tax revenue."
And even that figure doesn't include the cost of import duties, license fees and other government regulations. For a typical U.S. family, the real cost of taxes and regulations as a percent of gross income is at least:
Federal taxes 23.6%(taxfoundation)
State & local taxes 10.2%(taxfoundation)
Overhead costs 21.9%(James L. Payne)
Regulatory costs 13.0%(M.W. Hodges)
More than 68% of one's income is now consumed by government through tax collections, compliance costs & regulation.
The bottom line:
Rep. Bill Archer, Chairman, House Ways and Means Committee:
- "A recent survey was done, in Europe and Japan, of the major corporations and I was astounded at the results. They were asked, 'If the US abolished its income tax and went to a sales tax, would that have any impact on your decisions?' Eighty percent of the corporations said they would build their factories in the United States of America. Twenty percent said they would move their international headquarters to the United States of America."
If Congress wants patriotism, I suggest they start looking to change government policies that have drive Americans away to safer harbors instead of attempting to squeeze that turnip any more.
The next step from corporate expatriation is to move the entire manufacturing base to nations that can appreciate the value of commerce and jobs that it brings to the people.
the baby boomers who have already had a lifetime of wages consumed for the liberals are now heading toward retirement (lower income) and are now going to get socked with more taxes !!!
Actually we get socked from both directions now. At least under the HR2525 version of the NRST, the hit will actually be lower due to the pre-payment to everyone for taxes up to the povertyline of expenditure.
DO YOU PAY YOUR INCOME TAX
AT THE SUPERMARKET?
by D. Sherman Cox J.D. L.L.M. Taxation
To use a short explaination about how the NRST deals with the problem,
| 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. |
That will be the likely result of all this Consumption Tax rhetoric. Congress will lure the voters with” Let’s pass the Consumption Tax now. We can then work to end the Income Tax.”
It will never get done.
Patriots and others are already paying lawful taxes WITHOUT limit. There is nothing limiting the increase in most taxes.
Big-spending William Donald Schaeffer (former Mayor of Baltimore and former Governor of Maryland) was once asked: “At what rate are taxes too high?” He refused to answer, because like many politicians, his honest answer would have had to be: “Tax rates are unlimited.” He now collects Maryland taxes as Comptroller of the Treasury.
When it was a young pup, most people did not pay the Income Tax, and those wealthy individuals who did pay, only paid a limited, miniscule pittance. The young pup GREW into a ferocious pit bull, OVER TIME.
Terrible news. Michael Graetz is a Republican tax expert who is highly influential.
How can they do this without pigdog?
I haven't seem him post here for many, many months.
I figured AFT donations must have fallen and he was downsized.
Funny you should say that.
"Given our current economy and the challenge of funding in a downsized, short-term focused world, Americans for FairTaxation has had to take a strictly volunteer approach in its efforts. We apologize for any inconvenience this might cause, but encourage you to keep your voice loud and clear about the need for a FairTax. We'll be right there with you."The wife of former Chiefnegotiator claimed he worked for AFFT at the time he met his untimely demise.
What if he wore a cowboy hat?
Spurs?
Diamonds on the soles of his shoes?
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