White House Floats Idea of Dropping Income Tax (altogether)

I think I need to move. Here in Minnesota we pay property taxes, state income taxes, (about 8.5%), and sales tax, (6.5%).

Add in the sin taxes on gas, liquor, and cigarettes.

We are now the third highest taxed state in the nation.

bump

Bigun, I KNOW this is the best news I've heard on the financial front in my lifetime!

We can do this, but we need your help.

“I have sworn upon the altar of God eternal hostility against every form of tyranny over the mind of man.” [Thomas Jefferson, letter to Benjamin Rush, 1800.]

We will never be a truly FRee people so long as we have the income tax and the IRS.

Click here to help us scrap the Code, scrap the IRS and abolish the VLWC!

We will never be a truly FRee people so long as we have the income tax and the IRS.

You can also click here to sign a petition in support of Fundamental Tax Replacement.

We will never be a truly FRee people so long as we have the income tax and the IRS.

But for me I will have to pay a tax TWICE on the same money.

You already have too anyway:

The Individual Income Tax return(1040) that captures everyone's attention each April, is merely a partial VAT accounting sheet the government cons individuals, held at ransom, into filling out. Its misdirection puts blinders on the eyes of the electorate, and totally distorts their perceptions as to the real impact of taxation in their lives.

Every man woman and child in the nation, pays federal taxes through a VAT.

DO YOU PAY YOUR INCOME TAX
AT THE SUPERMARKET?
by D. Sherman Cox J.D. L.L.M. Taxation

The point of an NRST is to reduce taxation to once but only once of all goods and services at the retail point of sale.

Replace the current income/payroll tax system that every one pays, as a combination tax first on income and then through purchases, with a once only tax of around 23% of consumption:

The effect of an NRST from your perspective would be the same as you are slated to pay now in consumption expenditure of your savings.

I refer you to the section of the following article about the Income/Payroll tax system and its impact on our economy "A. Hidden Upstream Taxes. " paragraph 39.

"[39] Dr. Dale Jorgenson, Chairman of Harvard University's Economics Department, believes that the price of goods and services are inflated by about 20 percent or more by upstream taxes consumers ultimately bear. In a recent paper Dr. Jorgenson estimated the built-in taxes contained in the price of goods and services. /22/ In the chart above, he quantified the hidden component of tax, estimating that producer prices would fall on repeal of upstream taxes an average of about 22 percent."

Looking at the accompanying chart, the range of values from industry to industry appears to be about 12-25%.

Economists Gary and Aldonna Robbins of the Texas-based Institute for Public Policy examined the case of dry cleaning a shirt, with a particular eye toward uncovering the hidden costs of taxes in price.

The Robbin's attributed over 33.6% of "consumer prices" to be due to federal taxation passed on to the customer.

The Federal Tax System
http://www.cbo.gov/showdoc.cfm?index=2125&sequence=0&from=1#pt1

From the Table 1 we may extract the proportionate contributions of each sector of taxes as they contribute to consumer price for the year 2000.

Total revenues collected by Feds in '00 = $1945billion ( 33.6% of consumer price)

Those tax components which will not change prices as a consequence of enactment of HR2525

Individual Income Tax(Labor) = 945billions,
Employer half of Social Insurance = 653/2 = 326.5billions,
Excises = $68billion
Customs Duties = $19Billion
Miscellaneous = $40Billion

============================

Total constant price factors = $1358.5 billion
Remainder federal tax components affecting price = (1945-1358.5) = $586.5

Adjust for a conservative $600billion(1995 figure, AGCA '00, Payne '95, PillaBartlettNorquist '95 ) interest & cost of compliance effects.

Total tax related factors affecting consumption price = (600 + 586.5) = $1186.5billions

Estimated change in consumption prices as consequence of enactment of a National Retail Sales Tax, repealing all business income and payroll taxes:

33.6*(1186.5/1945) = 20.5% in consumption prices

Which compares well with the Jorgenson empirical study of 22% fall in producer prices.

The two sources are in reasonable agreement, and I see 20-23% a reasonable value to expect prices to fall not only for customers here in the United States, but in our exports as well making them far more competitive on international markets.

The fall in consumer prices in combination with a 22-23% federal retail tax would essentially leave total consumer payment at the retail register unchanged over what you pay currently, and federal revenues would be what it is under the current system.

In addition, under the Linder NRST:

H.R.25
SPONSOR: Rep Linder, John (introduced 01/7/2003)
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

All legal residents will receive a Family Consumption Allowence (FCA) equivalent to the FairTax paid on essential goods and services. The FCA will be paid in advance, in equal installments each month. The size of the monthly FCA will be determined by the government's Poverty Level for a particular family size, multiplied by the tax rate.

Every year, the Department of Health and Human Services [HHS] determine the "poverty level" for each family size.

The 2001 "FairTax" Family Consumption Allowance Figures
Family Size	HHS Poverty Level	Annual FCA	Monthly FCA
One	$8,590	$1,976	$165
Two	$17,180	$3,951	$329
Three	$20,200	$4,646	$387
Four	$23,220	$5,341	$445
Five	$26,240	$6,035	$503
Six	$29,260	$6,730	$561
Seven	$32,280	$7,424	$619
Eight	$35,300	$8,119	$677

1) Federal Register: February 16, 2001, Pages 10695-10697).

[ The monthly FCA for each adult is .23 * (HSS poverty level for a single person)/12 to assure no marriage penalty due to the manner in which the poverty level is dependant on family size. The monthly FCA for each child is .23 * (the incremental increase of HSS poverty level for a family with one child over no child) ] A. Geezer

A family of four, for example, could spend $23,220 per year free of tax because they will have received over the course of the year rebates totaling $5,341. $5,341 is the amount of sales tax paid on $23,220 in expenditures. A family spending double the "poverty level" or $46,440 per year will effectively pay tax on only half of their spending and, therefore, have an effective tax rate of 11 ½ percent or half the FairTax rate.

The beauty of the FairTax is that you can control how much you pay in taxes. If you happen to save, invest or spend a portion on used [previously taxed] items, you can get your effective tax rate below 9%.

[71] To illustrate the plan's progressive nature we can examine the tax burden that a family of four will have at various annual income levels (or in this case, annual spending levels).

Thanks for the ping, Nick. Enjoyed our dinner last Saturday night.

Watch the government budget. It is a good indicator of whether or not there will be a substantive tax decrease in the future. Laws, no matter how well worded and intended are no match for crafty politicians.

I see it getting worse and I'm not going to delude myself into thinking that politicians are going to stop demanding more taxes for their pork barrel programs so they can be re-elected.

We need to install term limits (get rid of fat a$$ed socialist life members like Ted Kennedy), fight for smaller government (lots of luck), turn down creeping socialism (which will increase your taxes even more) and provide jobs and create a business environment that boosts our economy instead of draining it (Our China Policy is very risky business considering China's belligerent attitude towards us and NAFTA has been a success only if you believe the rapid increase in illegal immigration over the border enriches our economy). Where is the money going to come from to finance war with Iraq and any of the other countries sponsoring terrorism or threatening us?

I'm sorry, but I don't share your enthusiasm in expectations of lower taxes for us. No matter what form, I see just the opposite.

5%? Where did you get that figure. I've always heard 15% to replace current revenue.

LOL!

Your CPA is thinking inside the income tax box, where the air is stale and unhealthy!

When the NRST becomes the law of the land, CPAs will live longer, happier, healthier and wealthier lives. And, they will have a better sex life!

The air outside of the income tax box is very, very healthy!

“I have sworn upon the altar of God eternal hostility against every form of tyranny over the mind of man.” [Thomas Jefferson, letter to Benjamin Rush, 1800.]
We will never be a truly FRee people so long as we have the income tax and the IRS.
Click here to help us scrap the Code, scrap the IRS and abolish the VLWC!
We will never be a truly FRee people so long as we have the income tax and the IRS.
You can also click here to sign a petition in support of Fundamental Tax Replacement.

We will never be a truly FRee people so long as we have the income tax and the IRS.

YOWZAH!

Consumption tax = Value Added Tax.= Rate * [Income - Savings]
A VAT is an invisible and insidious tax.

A single stage, single rate Retail Sales Tax is not a VAT(a specialized tax on business income at all levels of production), nor is it hidden as it is totally visible to the consumer(aka the Electorate).

H.R.25
SPONSOR: Rep Linder, John (introduced 01/7/2003)
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

Should this happen I predict you will be able to exempt a percentage of accumulated savings in a ESA or Exempted Savings Account.

GOOD to see ya up and around! ;>)

You are right about one thing in your post: The VAT is a bad idea.

England did not repeal their income tax before putting in the VAT. Furthermore, England has had a progressive income tax since 1894, which, by the way, is the exact same tax that was repealed in 1812. [But that is another story.]

The European Union REQUIRED its member states to impose a VAT, by Treaty! That is why all European countries have a VAT.

Those idiots trashed their own economies, just like the progressive income tax supporters are trying to do here in the United States!

With respect to the underground economy, the NRST will cause it to shrink, not grow. Think it through: when all taxpayers pay the same low rate, the incentive to cheat will go away for most people. There are some people who would live criminal lives if there were no taxes, but most Americans are, IMHO, honest.

Check out the NRST web sites and then re-think your position: http://www.salestax.org , http://www.votr.org , http://www.fairtax.org , http://www.cats.org .

Should have called this to your attention already!

Great thread, Bigun. Gotta go to bed now, but I'll be back in the AM. You and Geezer are doing a fine job.

Let's win this one for The Chief!

This might just be one way Bush might reel in my vote for 2004.

, Hillary Klinton doesn't know whether to sh-t or go blind.

ROTFLMAO!

Let's win this one for The Chief!

big bump there. gotta make sure to drive a steak through the heart of the irs, though.

there's an amendment to the constitution that must be repealed in order to accomplish this.

that MUST be accomplished. must, or the hillary cult will suck us all dry in the future.