White House Floats Idea of Dropping Income Tax (altogether)

New York Times, Business and Financial Desk, Page 14, Column 5 ^ | 2/8/2003 | EDMUND L. ANDREWS

[Bigun]

White House Floats Idea of Dropping Income Tax Overhaul By EDMUND L. ANDREWS

WASHINGTON, Feb. 7 — President Bush, having already set off a firestorm over his proposals to cut taxes and revamp retirement accounts, suggested today that the time might be near to drop the income tax as a whole and replace it with some form of consumption tax...

[valkyrieanne]

If I'm putting after-tax income into my retirement plans (like a Roth?), won't it be double taxed if I'm using those postponed dollars under a NRST down the road? Isn't the promise of such plans that you're not going to be taxed down the road? Am I missing something? How do you fix that?

No, you're not missing anything, and I don't see how it could be fixed either. Actually, it works far better for younger people - they would get to save and not have their savings taxed. Older people with IRAs, savings, etc. would get royally shafted, because of double taxation. In other words, all the people who traditionally vote Republican would suffer MORE. Actually, that is a bit of a deja vu kicker, because as I recall the 1986 "tax reform" had the same effect. Imagine that.

[ATOMIC_PUNK]

FREE AT LAST FREE AT LAST THANK GOD OH MIGHTY WERE FREE AT LAST

Maybe!

[NotJustAnotherPrettyFace]

Down with the IRS!!!!!!!!

[unspun]

This is further evidence that our President W. is a thoroughgoing
(pragmatic, compassionate) c - o - n - s - e - r - v - a - t - i - v - e .

[Valin]

The tax code is an abomination

Understatement alert

[valkyrieanne]

According to recent work by Stanford University economist Joseph Kahn, those seniors with a net worth over $400 thousand (nearly four times the median) may see a reduction in their purchasing power. The largest decline in purchasing power, about 3.5 percent, is for those with net worth above about $700 thousand. The primary reason for this effect is that wealth spent for consumption purposes that is held in non-tax-deferred accounts like IRA's will be taxed when spent under a consumption tax and would not be taxed any further under current law. Seniors will be able to take comfort in the fact that their children and grandchildren will no longer be laboring under the yoke of the income tax, and will once again be able to see their own standard of living improve, one generation to the next.

Well, isn't that selfless of them, to watch all that money flow into the federal coffers. Sorry, I don't buy it. I would lobby heavily *against* this kind of "tax reform." The federal income tax should be replaced by a *flat tax,* not a consumption tax, unless people making IRA withdrawals get a *rebate.* Considering that the population is aging rapidly, and in 20 years there are going to be a LOT of "senior citizens," this seems to be a particularly bone-headed plan.

[Bigun]

What would be considered "consumption?" Obviously buying items at the shopping mall - but what about paying for college tuition? Buying medical insurance? Paying a doctor bill?

College Tuition is an investment and NOT taxed! The others you mentioned are items YOU counsume and would thus BE taxed.

[FreeTheHostages]

Good post.

[Bigun]

Considering that the population is aging rapidly, and in 20 years there are going to be a LOT of "senior citizens,"

And a great many of them are FAR more concerned about the country that will be left behind for their children and grandchildren than their own self interest! A GREAT many!

[aruanan]

Did we read the same story?

Yes, but the title on the thread now (White House Floats Idea of Dropping Income Tax (altogether)) is different from what it was when I initially responded a couple of hours ago (White House Floats Idea of Dropping Income Tax Overhaul).

[valkyrieanne]

College Tuition is an investment and NOT taxed! The others you mentioned are items YOU counsume and would thus BE taxed.How is paying college tuition "an investment?" There is a service available (class at College X) and you pay for it. After you pay, you get to "consume" the service.

Taxing people for seeing the doctor or going to a hospital is just fundamentally evil - *worse* than the system we have now.

[ovrtaxt]

know where I can find the black market? There's a hot one burning in NYC for cigarettes right now!

[Bigun]

How do you pay for a Dr.'s visit now?

I'll bet it is with dollars from which a MINIMUM of 47% has been confiscated before YOU ever see it!

[ovrtaxt]

" I truly don't understand why I have to come up with another chunk to pay an accountant to figure out my taxes."

Welcome to my nightmare. LOL!

[valkyrieanne]

And a great many of them are FAR more concerned about the country that will be left behind for their children and grandchildren than their own self interest! A GREAT many!

Everyone fundamentally works for their own self-interest, and there isn't anything wrong with that.

At bottom, when you tax consumption, you get less consumption. (This is another issue than the one of cheating.) Personally, I think less consumption has some good moral points to it - it's probably better if a man grows the wood, cuts it down, carves the table, and uses it in his own home, rather than buying one. But in reality slowdowns in consumption can *kill* an economy, especially at the present time.

We saw this with the "luxury tax" on yachts & expensive cars. As soon as the tax was lifted, sales shot up. When states have "no sales tax" days, spending surges.

So people decide to cut back on luxuries. Now you're left with the necessities - food, medicine, diapers, doctor visits, immunizations, hospitalizations. You really want to put a *consumption tax* on these things?

[demosthenes the elder]

dude, don't DO that without giving warning... only so many pairs of pants left, y'know?

[and the horse you rode in on]

Instead, all taxes should be collected by the states, or even by the counties and cities as they do in Virginia. Then, what the states don't need, they can send to the US government.

We already did that. It was called the Coonfederation of States and failed. We replaced it with the US Constitution.

[and the horse you rode in on]

The federal government wants to micromanage everything,

If we return to having Senators apointed by State Governments to represent the States instead of the citizens, all that crap can be stopped. The trouble is the states, as states, have no representation.

[ovrtaxt]

A 17% consumption tax is A TAX REDUCTION!! over what we have now!

And if it encourages savings, as savings grow, it will encourage investment. If that happens, this economy will be immune to China's long term plans of economic piracy. It will go the way of the Soviet Union.

[Bigun]

dude, don't DO that without giving warning... only so many pairs of pants left, y'know?

LOL! Consider me properly rebuked!

I'll TRY to do better next time!