Congress Must Pass the Fair Tax Act

CNSNews.com ^ | February 27, 2004 | Mac Collins (R-GA)

[esarlls3]

Congress Must Pass the Fair Tax Act
By U.S. Rep. Mac Collins
CNSNews.com Commentary
February 27, 2004

Past Congresses have moved in the wrong direction by making our tax laws more complex and expensive for business and individuals to comply with. To keep our economy growing, Congress needs to take action now.

My colleague, Georgia Republican Congressman John Linder, has sponsored the "Fair Tax Act" (H.R. 25), a national retail sales tax on new goods and services. It would replace all individual and corporate income taxes, payroll taxes as well as capital gains taxes, estate taxes and gift taxes.

The Fair Tax replaces the way we are currently taxed, which is based on our annual income, with a tax on goods and services. The Fair Tax, basically, is a voluntary "consumption" tax. The more you buy, the more you pay in taxes. The less you buy, the less you pay in taxes.

The federal government will continue to be fully funded, including Social Security and Medicare.

The Fair Tax will reduce the costs of goods and services by 20 to 30 percent. It will allow workers to keep 100 percent of their paycheck, pension and Social Security payments with the exception being state or local withholding

The Gross Domestic Product will increase by almost 10.5 percent in the first year after its enactment because real wages would increase and tax compliance costs for business would decrease by 90 percent.

The fair tax would also be good news for investors. Real investment will initially increase by 76 percent relative to investments that would be made under our present tax laws. While this increase will gradually decline, it remains 15 percent higher than under the existing tax structure.

American exports will increase by 26 percent initially and would remain more than 13 percent above present levels under the current tax system.

Studies of the Fair Tax have shown that many U.S. companies will choose expansion here in the United States versus abroad, and in turn the United States will become more attractive to many foreign owned companies looking for expansion possibilities.

President Bush, during his State of the Union address in January, said the economy is turning around because the American people are using their money far better than government would have. The Republican majority in Congress was right to return it to the American people and not keep it in Washington.

A fresh and a fairer approach to a Federal tax system is needed. Therefore, it is time for Congress to pass the Fair Tax (H.R. 25).

As a cosponsor of the Fair Tax Act, I have asked Chairman Thomas of the Ways and Means Committee to hold hearings on this vital legislation. I am hoping those hearings will get under way in the near future.

(Congressman Mac Collins is a Republican representing Georgia's 8th Congressional District. He serves on the House Ways and Means Committee and the House Select Committee on Intelligence.)

[esarlls3]

FairTax Bump

[GeronL]

We should also make it clear that its a retail sales tax and not a dreaded VAT tax.

[bolobaby]

I'm for it but I know it will never pass. :-(

[bolobaby]

I'm for it but I know it will never pass. :-(

[bolobaby]

I'm for it but I know it will never pass. :-(

[bolobaby]

I'm for it but I know it will never pass. :-(

[PurVirgo]

Interesting...

I, for one, like it. If the tax incentive of moving a business overseas disappears, maybe we can keep more jobs here. Of course, it's more complex than just taxes... But you have to start somewhere. Also, it may encourage more people to invest.

I would, but as a young person, really don't want a tax liability right now. If I pay all taxes up front, and eliminate the guesswoek, I would certainly be interested in investments beyond my simple savings account.

[ancient_geezer]

A Taxreform bump for you all.

If you would like to be added to this ping list let me know.

John Linder in the House & Saxby Chambliss Senate, offer a comprehensive bill to kill all income and payroll taxes outright, and provide a IRS free replacement in the form of a pure consumption tax:

H.R.25, S.1493
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

So that Sam Johnson's amendment to the constitution has a chance at enactment & ratification:

H.J.RES.61
Title: Proposing an amendment to the Constitution of the United States to abolish the Federal income tax.
Sponsor: Rep Johnson, Sam [TX-3] (introduced 6/24/2003)      Cosponsors: 5
Latest Major Action: 9/4/2003 Referred to House subcommittee. Status: Referred to the Subcommittee on the Constitution.

[null and void]

You can say that again!

[ancient_geezer]

I'm for it but I know it will never pass. :-(

You give up too easily,

Last session the Fairtax had only 7 co-sponsors, and no sister bill in the Senate, This congressional session it has 43 Co-sponsors, and has been introduced in the Senate along with an ever growing list of both new Senate as well as House prospective candidates up and coming.

Congress Critter's In the News

(43) HR25 Co-Sponsors and

FairTax - Congressional Score Card

Primary races for Senate

Steve Rauschenberger (Illinois)

Herman Cain for United States Senate, state of Georgia 2004

House

Dennis Umphress, libertarian (California 16th District)

Dr. Paul DeWeese, (Michigan 7th District)

Vernon Robinson, (North Carolina's 5th District)

Ben Streusand, (Texas 10th District)

Michael McCaul, (Texas 10th District)

Dave Phillips, (Texas 10th District)

John Devine, (Texas 10th District)

Pat Elliot, (Texas 10th District)

Bill Lester (Texas 11th Congressional District)

And finding more every day.

[ancient_geezer]

Better check reply #11 above.

It ain't over till the fat lady sings my friend.

[null and void]

Perhaps. But it would take away congress' #1 social engineering (Ghod I hate that term) tool, punishing "bad" behavior with taxes, and rewarding "good" behavior with deductions, and "really good" behavior with credits.

Taxes would merely be a means of raising revenue, not muscling everyone around.

How would the cliton administration bought silence without the threat of punitive audits???

[31R1O]

What can I do to get the message out?

[ancient_geezer]

If the tax incentive of moving a business overseas disappears, maybe we can keep more jobs here.

Actually it is incentive to do more than just keep jobs here.

Consider,

Repealing all corporate income and payroll taxes as this bill does along with individual taxes, allows domestic prices to fall 20-25%. That increases our competitiveness in international markets tremendously.

At the same time, where imports now come into this country will little burden in taxes, they will for the first time be assessed the same taxes as our own domestic businesses are. That will create a substantive advantage for domestic business over the trade situtation we now deal with.

As a consequence:

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."

Think about it.

[null and void]

*nevermind* Arkancide. Duh!

[ancient_geezer]

But it would take away congress' #1 social engineering

Who is congress dependant upon above all else. Try looking at yourself as a voter.

That is why the change will be, and is in the process of occuring. Your not alone in wanting to see and end to income and payroll taxes and HR25 offers an awful lot to everyone across the income spectrum. That is why it is starting to pick more steam as more people understand just what it would mean in their own lives.

Under the Fair tax, all legal residents will receive a Family Consumption Allowence(FCA) equivalent to the FairTax paid on essential goods and services. This provides for the essense of a personal exemption under the income tax, without excepting specific goods or services allowing everything to be taxed once but only once at the retail register and not require any income qualifications to provide an exemption. Everyone receives it right up to ole Bill Gates.

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).

H.R.2525 "The FairTax Act

Not only does every family receive a FCA based on family size, not income, but they will also receive 100% of their paycheck:

Fedup Smith makes $39K per year...once the FairTax is the law of the land he will receive an instant increase in pay of $200.00 per week. Since he has a family of four, he will receive a FCA of $445 per month, for a total of $1,305.00 additional income per month that he can do with as he sees fit

[PurVirgo]

imagine running into you here!

[null and void]

Try looking at yourself as a voter.

Oh, but I do. I've never missed an election in 32 years. I have yet to vote for anyone who won, though...

[ancient_geezer]

Taxes would merely be a means of raising revenue, not muscling everyone around.

Under the Constitution that is what they should be:

Article I Section 8: "The Congress shall have power to lay and collect taxes, duties, imposts and excises,
to pay the debts and provide for the common defense and general welfare of the United States;

It is up to us to see that we return to that standard. We do that by exercising our own muscle know as the vote, selecting those who will make the change over those who are not inclined to.

[FairOpinion]

I am all for that!

I hope that maybe in Bush's second term they can seriously address this.

I totally agree that the sales tax is the only fair tax -- and think of all the time we wouldn't have to spend working on the income tax, and all the bureaucrats we wouldn't have to pay.

[null and void]

BINGO! But power is a very seductive drug...

[FairOpinion]

Please add me to your taxreform ping list.

Thanks. I appreciate it.

[ancient_geezer]

Oh, but I do. I've never missed an election in 32 years. I have yet to vote for anyone who won, though...

Course one can continue to pick for perfection and get nothing.

But power is a very seductive drug...

LOL, I don't think you are in much danger yet.

[null and void]

Hmmmmm. I guess not...

[Rightwing Conspiratr1]

This will help stop the OUTSOURCING of AMerican jobs THAT IS BLEEDING THE COUNTRY TO DEATH! BUSH PAY ATTENTION!!!

[ancient_geezer]

What can I do to get the message out?

FR's a good place to start and to learn, followed up by informing family, friends, associates, anyone who will listen.

Check out these folks,

http://www.fairtax.org or http://www.salestax.org

Either will be more than happy to have you participate at any level suits you, they have materials, congressional mailing lists, phone numbers etc.

[ancient_geezer]

You're added to it :O)

[SeeRushToldU_So]

I wish, I wish , I wish..........

[FairOpinion]

Thanks!

I think the time is becoming ripe for some major overhaul of the tax system, and I personally think the best system is indeed the "fair tax" sales tax system.

[lewislynn]

The Fair Tax will reduce the costs of goods and services by 20 to 30 percent.

Bullshit, it's a lie and it's mathematically impossible.Taxes are imposed on gains and profits. Anyone still in business knows they aren't paying 20 to 30 percent of their gross in federal income tax.

Service employee's will get 100% of their paycheck(s) too, which part of a service will be reduced 20 to 30 percent?

What we do know is prices would go UP 30%..

"The federal government will continue to be fully funded, including Social Security and Medicare." and you'll be able to save your money like never before, prices will be reduced 20 to 30%, AND, in addition to all that pie in the sky BS, every household will get a magic check in the mail every month from the government to boot...right.

[lewislynn]

I, for one, like it. If the tax incentive of moving a business overseas disappears, maybe we can keep more jobs here

Why would the same administration praising the exodus of jobs as good for America want to stop them with a radical change in the tax system?

Don't you know the exodus of jobs will raise the standard of living for all Americans?...We're all gonna be CEO's soon...Let the little people worry about THEIR taxes.

[null and void]

Ghod I wish you were wrong, and an a-hole...

[ancient_geezer]

Bullshit, it's a lie and it's mathematically impossible.Taxes are imposed on gains and profits. Anyone still in business knows they aren't paying 20 to 30 percent of their gross in federal income tax.

You overlook payroll taxes lewislynn, which are also repealed under the NRST. The combination of repeal of both income and payroll taxes along with the reductions of the costs complying with those taxes make up the reductions in producer goods that make reduction in retail prices possible.

The following article covers the mechanism on how the current Federal tax system propagates and is embedded into consumption expenditure.

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

The 24% in the article considers only those factors actually paid to government out of imposititions on business in complying with the income, payroll, excise & tariff tax laws.

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 HR25

• Individual Income Tax(Labor) = 945billions,
• Employee 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) = $586.5billions

Adjust for the approximate reduction of interest & cost of tax compliance (

Adjust for a conservative $800 billion cost of tax compliance, Payne '95 estimates 65cents for each dollar of revenue collected, $1264billion) reductions .

• Total tax related factors affecting consumption price = (800 + 586.5) = $1386.5billions

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

33.6*(1386.5/1945) = 23.9% reduction in consumption prices

Which more than verifies the Jorgenson empirical study of 22% fall in producer prices.

The two sources are in reasonable agreement, and I see 20-25% a reasonable value to expect retail 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.

[Fledermaus]

Bad idea. If you think the income tax code is long and complex, just wait until politicians get a hold of a national sales tax code!

Don't believe me? Just look at the one in your state if you have a sales tax. The code is so full of meddling and special amendments it's not funny.

Does anyone really want Congress to decide what can and cannot be taxed as a product? Do you even understand the questions that would arise?

Do you tax food? Medicine? Women's monthly hygiene products? Hair care products for blacks?

All of those and even thousands more would be in play for changes in the rate, what should or not should be taxed, etc.

Then the Dems would want a "progressive rate" on "luxury items" and charge more sales tax for buying a BMW over a simple Chevy.

Believe me, you don't want 435 members of Congress making policy on this. It would make the income tax code look lame in comparison.

[Elliott Jackalope]

Actually, I could see this having a real chance of passing. Why? Because as incomes have dropped like a rock in this great economy, tax receipts have dropped as well. Meanwhile, people keep getting into debt and consuming like crazy. Since so many people don't have much of an income to tax any longer, the government will do what any robber does, and "go where the money is".

The government thinks just like Willie Sutton did, when asked why he robbed banks he replied "because that's where the money is".

[null and void]

His second post OTOH...

[null and void]

Believe me, you don't want 435 members of Congress making policy on this. It would make the income tax code look lame in comparison.

Yes, but it would be much fairer for decades. When it gets too bad we replace it with a simpler flat income tax...

[Fledermaus]

Sorry, I disagree. As I said, just go read your state's sales tax code.

It's not even close to "fair".

[null and void]

Yes, but the sales tax code has had decades of meddling on an originally simple and fair system.

Time to burn the system down and rebuild a new one from the ashes.

Any new system will start out simple, and stay that way for a while, before it, in it's turn, needs to be razed...

[ancient_geezer]

If you think the income tax code is long and complex, just wait until politicians get a hold of a national sales tax code!

Try reading the legislation before hyperventilatiing.

All goods and services are taxed at a single rate, no exceptions.

H.R.25, S.1493
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

 

Believe me, you don't want 435 members of Congress making policy on this. It would make the income tax code look lame in comparison.

The NRST is enacted with single rate and all retail products taxed.

Any change to exempt items increases the rate for everyone (not very popular among voters and added complexity will be fought by business tooth and nail), or with no change in rate gives everyone a taxbreak.

Unlike the sliding scales of today based on income, there can be no practical means to implement such scale as regards retail sales taxes.

Thomas Hobbes from Leviathan

• It is fairer to tax people on what they extract from the economy, as roughly measured by their consumption, than to tax them on what they produce for the economy, as roughly measured by their income.

I can live with that.

 

---

 

What I can't abide by is the government's continued intrusions into my family fincancial privacy, nor the continued legal jeopardies of the income tax system as lovingly administered by the IRS.

That is what the NRST, with repeal of all income and payroll taxes mean in the ultimate analysis.

 

[Montesquieu wrote in Spirit of the Laws, XIII,c.14:]

• "A capitation is more natural to slavery; a duty on merchandise is more natural to liberty, by reason it has not so direct a relation to the person."
  --Thomas Jefferson: copied into his Commonplace Book.

Slavery under the minions of Congress, (i.e IRS), or the chance to live as we should in a free society.

Patrick Henry, Virginia Ratifying Convention June 12, 1788:

• "the oppression arising from taxation, is not from the amount but, from the mode -- a thorough acquaintance with the condition of the people, is necessary to a just distribution of taxes. The whole wisdom of the science of Government, with respect to taxation, consists in selecting the mode of collection which will best accommodate to the convenience of the people."

[ancient_geezer]

Lewislynn is like a stopped clock, he gets it accidently twice each day.

He uses up his ration of good calls very quickly.

[Fledermaus]

I'm not hyperventilating...I know reality.

Your language changes nothing.

Besides, it's the most regressive tax we have...even more regressive than property taxes.

[Fledermaus]

It's never been fair. It's horribly regressive. Worse than property taxes.

[ancient_geezer]

As I said read the bill, There is nothing regressive about the NRST.

To illustrate the plan's progressive nature we can examine the tax burden that a family of four (with FCA for 4 persons) will have at various annual expenditure levels.

 

"The FairTax Act

[Fledermaus]

Sorry, I don't live in or believe in Utopia. Nice try but totally irrelevant since the plan will never, ever see the light of day.

You are delusional if you think anything close to the proposal you are pushing would ever be passed or the politicians wouldn't start gutting it, changing it, tweaking it, etc. for every whiney special interest group that demands their purchases be at a lower tax rate or exempt.

Baby diapers. Baby food. All food except for prepared food...oops, the AARP will fight for an exemption for seniors at Luby's. Medicine. Cable (exempt in many states) or Internet connections (the whole moritorium argument has nothing to do with collecting sales taxes on goods sold, it's about a sales tax on internet connections).

Ready of 20$ on cars? HA! That won't fly regardless of how many other taxes aren't being paid. So they'll create a tiered system called "progressive" and charge higher rates for more expensive cars.

Then they'll demand a rebate based on income level so you'll still have to report your income level to get the rebate.

I wish I could be as confident as you, but I live in reality and I know from the sales tax codes in each state that there is NO WAY the Federal Congress won't get involved in changing the system you propose. NO WAY!

Let's get real and pracital. It's no different than the flat tax proposals. Sound great but will never see the light of day once the politicians tweak the levels and rules and play the class envy card.

A national sales tax also opens up more social engineering with higher taxes on "fatty foods" or "potato chips" or "soft drinks" and you know the liberals and socialists will fight for those inclusions.

"For the Children", I'm sure.

[ancient_geezer]

Sorry, I don't live in or believe in Utopia. Nice try but totally irrelevant since the plan will never, ever see the light of day.

Do you always live in such a gloom? See reply #11 above. It will pass ultimately because it must.

Baby diapers. Baby food. All food except for prepared food...oops ...

Sorry to disappoint you, but no exceptions, necessity level expenditure is covered by the FCA See reply #17.

. So they'll create a tiered system called "progressive" and charge higher rates for more expensive cars.

No need for a tiered system already covered by FCA, See reply #17.

Then they'll demand a rebate based on income level so you'll still have to report your income level to get the rebate.

No need for rebate by income, already covered by FCA based on household size, See reply #17.

I wish I could be as confident as you, but I live in reality

No you live in utter fear in what you believe can't be done.

and I know from the sales tax codes in each state that there is NO WAY the Federal Congress won't get involved in changing the system you propose. NO WAY!

Sorry the NRST is totally unlike any state retail sales tax you have ever seen. Interesingly once in place, States moving towards the NRST methodology in encourage by incentive in the bill as well as how it would allow a lowering of State retail sales tax rates by broadening the tax base.

Let's get real and pracital. It's no different than the flat tax proposals.

Certainly the NRST is different. The flat tax proposals are all subtraction method VATs with a wage tax component. They require calculating and reporting income based on arbitrary rules, the NRST does not.

A national sales tax also opens up more social engineering with higher taxes on "fatty foods" or "potato chips" or "soft drinks" and you know the liberals and socialists will fight for those inclusions.

No more so than the current system, and there is not one single thing from their implementing such piecewise excises right now, on top of the income/payroll tax system in place. Your objection is without substance on that account alone. Not to mention that a retail sales tax already in place that taxes those things inhibits the addition of more excises on top.

The one thing the NRST does do definitively, and that is to repeal all income and payroll taxes, so we will be dealing with sales taxes alone, unlike the situation facing us today.

"For the Children", I'm sure.

Indeed, I want the NRST for my children and their children and everyone else as well.

[Fledermaus]

Again. I wished I could live in your perfect world.

You just can't understand the consequences which you don't want to see and you can't understand it would never, ever, ever, ever, ever, ever, ever, ever, pass.

It's just that simple. Personally, I like a simple flat tax with exemptions only for each individual equally...adult or children.

And no other exemptions. Thus, a family of four will pay NOTHING in income taxes on their first $40-45K earned a year and then about 17% on every dollar after with no rate tables.

Fair, simple, easily planned for.

As I've mentioned, if you think Congress isn't going to beat this to death with exemptions and changes and amendments to cover those concerns I mentioned (I don't care about your utopian version as an answer, it's just not going to happen. Period. Simple.) then you don't undestand the depth of tax loving jerks elected to our offices.

Income is defined with much smaller rules than consumption. And, again, there is NO WAY the Dems are going to vote for anything like your proposal given the class warfare they play with every other issue.

If you think you can seriously pass a NRST bill that doesn't have incremental rates to "tax the rich" and at the same time wipe out "targeted taxes" like Soc Sec, Medicare, fuel, etc. then I wish you luck over the rainbow.

[Fledermaus]

But we'll just have to agree to disagree.

[ancient_geezer]

You just can't understand the consequences which you don't want to see and you can't understand it would never, ever, ever, ever, ever, ever, ever, ever, pass.

LOL, you live in your world I live in mine.

Personally, I like a simple flat tax with exemptions only for each individual equally...adult or children.

Hmmmm! and who makes the rules for calculating that income on which the tax is based? I note your "flat tax" has two tiers to it, a 0% rate and some other rate. Just like the current income tax started out, and didn't last much more than one session of Congress.

And no other exemptions. Thus, a family of four will pay NOTHING in income taxes on their first $40-45K earned a year and then about 17% on every dollar after with no rate tables.

LOL, as I said two rates before even starting, now how do you determine what is income on which you pay that tax, who makes the rule. Is the money received from a loan considered as taxable in your consideration, no exemption remember. How about money being paid back to you after you loan it to someone, is that taxable as income in your plan? ...

Or are you just going to use the Armey/Shelby flat income tax, which purports to do what you claim.

Here's how tax rates come out for the Armey/Shelby Flat Tax, a flat individual/corporate income tax, leaving all SS/Medicare, Federal Unemployment, excise taxes and tariffs in place and unchanged.

http://www.library.unt.edu/govinfo/subject/vital.html

• "The chart below shows a hypothetical set of flat tax rates and allowances that would result in revenue neutrality. This model, produced by the Congressional Budget Office shows that all federal income tax revenues could be fully replaced by a system with a flat tax rate of 13.1 percent and no deductions. Allowing total deductions for a family of four to reach $36,800 (more than double the amount allowed in 1995) would require a 19.9 percent rate."

Joint Economic Committee

Revenue Neutral Tax Rates for Alternative Allowances and Exemptions Under a Flat Tax

Standard Allowances	Option 1	Option 2	Option 3	Option 4	Option 5
Single	$13,100	$13,100	$ 6,550	$ 6,550	$0
Joint	$26,200	$26,200	$13,100	$13,100	$0
Head of Household	$17,200	$17,200	$ 8,600	$ 8,600	$0
Dependent Exemption	$ 5,300	$ 2,650	$ 5,300	$ 2,650	$0
Revenue Neutral Tax Rate	19.9%	19.4%	16.8%	16.3%	13.1%

Source: Congressional Budget Office, 1995.

---

Under the Armey "flat" tax, as it is currently proposed,(HR1040 introduced 3/15/2001) a single person would pay:

7.65% ---- 7.65%(SS/Medicare) tax on wages/salary income below $13,600,

26.65% --- 19% + 7.65%(SS/Medicare) tax on wages/salary and other taxable income from $13,600-$75,000

20.45% --- 19% + 1.45% Medicare tax on wages/salaries and other taxable income from $75,001 up.

0% -------- on savings & bond income and stock dividends.

And that single person's business/employer pays,

19% ------ on earnings (Gross Receipts less allowed business deductions, exemptions and credits)

13.65% ---- 7.65% on SS/Medicare employment excises + 6% federally mandated unemployement excises levied on each employee's on wages up to $75,000.

7.45% ----- 1.45% on Medicare employment excises + 6% federally mandated unemployement excises levied on each employee's wages greater than $75,000.

Plus additional selective excises and tariffs dependant upon the nature of business engaged in.

Note: The base "Flat Tax Rate" is subject to meet revenue neutrality requirements under the Budget Enforcement act. The 19% rate stated in the Armey/Shelby Flat Tax proposal does not meet these requirements and would of necessity be adjusted upwards, and/or personal exemptions and business deductions be reduced to meet revenue neutrality criteria for enactment.

Further the Flat Tax is a VAT in the manner in which it transfers tax onto the consumer from business which is taxed at all stages of production and passed on to the consumer hidden in price of retail goods an services.

http://waysandmeans.house.gov/fullcomm/106cong/4-11-00/4-11kotl.htm

"Robert Hall, one of the originators of the proposal(Flat Tax), who describes his Flat Tax as, effectively, a Value Added Tax. A value added tax taxes output less investment (because firms get to deduct their investment.)"

"The Flat Tax differs from a VAT in only two respects. First, it asks workers, rather than firm managers, to mail in the check for the tax payment on that portion of output paid to them as wages. Second, it provides a subsidy to workers with low wages."

 

The Flat Income Tax (FIT) proposal, H.R. 1040, has two elements: a Flat Income Tax on an individual's earned income, and a VAT on businesses. The Flat Income Tax on businesses, is, by admission of Professors Robert E. Hall and Alvin Rabushka, who "wrote the book" on the FIT, a subtraction method Value Added Tax.

Quoting Hall and Rabushka ("The Flat Tax," Hoover Institution Press, 1995, pp55,56):

"To measure the total amount of income generated at a business, the best approach is to take the total receipts of the firm over the year and subtract the payments the firm has made to its workers and suppliers. This approach guarantees a comprehensive tax base. The successful value-added taxes in Europe work this way. The base for the business tax is the following:

Total revenue from sales of goods and services
less
purchases of inputs from other firms
less
wages, salaries, and pensions paid to workers
less
purchases of plant and equipment."

 

---

Fair, simple, easily planned for.

Better read:

Flat Tax as Seen by a Tax Preparer
by Vern Hoven

and disabuse yourself of those notions.

Income is defined with much smaller rules than consumption.

Sure. that is why there are so few pages in the income tax code.

Consumption is retail sales my friend. Price you pay for products, nothing more nothing less.

If you think you can seriously pass a NRST bill that doesn't have incremental rates to "tax the rich" and at the same time wipe out "targeted taxes" like Soc Sec, Medicare, fuel, etc. then I wish you luck over the rainbow.

One thing is for sure, it won't happen with folks like you helping it along.

No incremental are rates required, just needs one rate & an allowance paid to all households based solely on household size.

 

Refer reply #17 The tax burden that a family of four (with FCA for 4 persons) will have at various annual expenditure levels.

 

"The FairTax Act