Posted on 08/14/2004 10:58:52 AM PDT by forest
Last week, Juliet Eilperin reported in the Washington Post(1) that "House Speaker J. Dennis Hastert (R-Ill.) would like to abolish the Internal Revenue Service and replace the current tax system with either a flat tax, a national sales tax or a value-added tax." As reported, Hastert suggests that a new tax system would increase productivity and "double the economy" over the next 15 years. "All of a sudden, the problem of what future generations owe in Social Security and Medicare won't seem so daunting anymore," The Post reports Hastert wrote.
"People ask me if I'm really calling for the elimination of the IRS, and I say I think that's a great thing to do for future generations of Americans," Hastert said.
Hastert is, of course, quite correct. We should abolish that overbearing IRS and all of the unruly tax code. Federal tax law is so complicated, no person in the IRS (or Congress) understands all of it. Yet, every citizen is expected to obey 100%. Truly, it is a corrupt system.
But, before we begin looking for any new "flat tax" proposal, perhaps we should take a quick look at a little history -- see what has already been on the table.
Back in June of 1998, the House actually passed a bill to abolish the income tax code by the year 2003. Albeit, there was one damning caveat: that Congress approves a simplified replacement tax system before then.(2)
That, of course, did not happen. Because, then Treasury Secretary Bobby Rubin -- who is a millionaire hundreds of times over -- immediately jumped on the bill, saying the bill should never became law. "If enacted, it would create enormous uncertainty which could well have a severe adverse impact on our economy, our workers, our businesses, our people. Families, for example, would not know what to pay for a house because they wouldn't know if their mortgage interest would be deductible."
Pete Stark (D-CA) did a good job of representing the whining of the tax and spend Social-Democrats: "With the Republicans in leadership having no understanding of the basic tenets of economics and leading this house in the most amateurish, asinine way, we will destroy this economy, destroy the values upon which the families are based."
Then House Minority Leader Dick Gephardt, (D-MO), said the bill "is yet another irresponsible Republican idea masquerading as a solution. They refuse to have a real debate on tax reform because they know what we know: That the average taxpayer would be worse off under the Republican plans."
That just goes to prove how far out of touch the Democrats really are with the American people. Also, they fear losing the control they wield over the American people via the tax code.
In March of 1999, then House Majority Leader Dick Armey (R-TX) announced that he was reintroducing H.R. 1040, a bill to scrap the current tax system and replace it with a flat 17 percent tax on all income.(3)
"Filling out an IRS tax form can be a frightening experience," Armey said. "The forms and instructions we must deal with are complicated and confusing. Millions would rather pay someone else to deal with their returns than face this frustration. But there's no reason that our system needs to be so complex. My flat tax proposal offers a simple, fair alternative. It allows everyone to file their returns on a simple, postcard-sized form." . . .
"The flat tax offers relief to an America that is overtaxed, and burdened by the current tax system," said Armey. "Millions would find their tax burden reduced -- or eliminated entirely -- under the flat tax. But the flat tax offers no breaks for special interests. No loopholes for powerful lobbies. Just a simple tax system that treats everyone the same."
Armey also reported that the U.S. income tax code is a monument to unnecessary waste. The income tax system is so complex, the IRS publishes 480 tax forms and another 280 forms to explain the 480 forms. The IRS sends out eight billion pages of forms and instructions each year which, if laid end to end, would circle the earth 28 times. Nearly 300,000 trees are cut down each year to produce the paper on which IRS forms and instructions are printed. The tax code does more than complicate people's lives during tax season and reduce living standards. It pollutes Washington's political culture.
As special-interest provisions have been added to the tax code, Washington's lobbying industry has flourished. Washington's lobbying industry, which is the largest private employer in the nation's capital, generates $8.4 billion in revenue each year. If the lobbying industry were its own economy, it would be larger than the economies of 57 countries. While the thousands of lobbyists in Washington have prospered in an environment of tax favoritism, the typical taxpayer has not.
And remember a bean counter named Steve Forbes with a very interesting flat tax plan? His table is still available.(4) Forbes said: "Start by scrapping the tax code. Don't fiddle with it. Junk it. Throw it out. Bury it. Replace it with a pro-growth, pro-family tax cut that lowers tax rates to 17% across the board and expands exemptions for individuals and children so that a family of four would pay no taxes on the first $36,000 of income.
Not one cent to the IRS on the first $36,000. Anything over that would be taxed at a flat, fair 17%. The flat tax would be simple. You could fill it out on a postcard. It would be honest. It would eliminate the principal source of political corruption in Washington. It would be fair. Millions of people would be off the federal income tax rolls. There would be no tax on Social Security. No tax on pensions. No tax on personal savings. It would zero out capital gains taxes. It would set off a boom by letting people keep more of what they earn and by lowering barriers to risk taking. "(5)
Let's not discount any of the above mentioned people. Dick Armey is now at FreedomWorks(6) and still fighting for lower taxes, less government, and more freedom at the grassroots level. Steve Forbes is also still available to lend a hand. Many other "flat taxers" are, too. They may all be quiet at the moment, but that could be for a very good reason.
It appears that House Speaker Dennis Hastert sent up a trial balloon in an election year for a reason. George W. Bush has also mentioned abolishing the IRS as we know it and replacing those many thousands of pages of federal tax law, rules and regulations with a flat tax. This may be the time for President Bush to formally announce that publicly.
As this article was being written, President Bush was addressing an "Ask President Bush" campaign forum in Florida. The flat tax was mentioned and President Bush called it "an interesting idea." Then, Bush came back with: "You know, I'm not exactly sure how big the national sales tax is going to have to be, but it's the kind of interesting idea that we ought to explore seriously."
Was that also a trial balloon? Sure; of sorts. Unfortunately, the media didn't pick up on it and so few Americans know of the statement. In truth, President Bush knows exactly how high any of the flat taxes would need to be. People in the White House and on Capitol Hill have been quietly running the numbers for a couple years. Now is the time for our input -- before the Social-Democrats start whining about the program.
Let's face it, President (candidate) Bush likes to play his cards close to the vest. His campaign committee knows very well that, if President Bush were to formally make such a flat tax proposal within the next few weeks, there just ain't enough Prozac available in the nation to calm down the Social-Democrats and their liberal media cheerleaders enough to be understood properly by the electorate before November.
1. <http://www.washingtonpost.com/wp-dyn/articles/A37806-2004Aug3.html>
3. <http://www.uhuh.com/reports/headsup/hu90.htm>
2. <http://www.uhuh.com/reports/headsup/hu126.htm>
4. <http://www.ctj.org/html/forbedis.htm>
5. <http://www.pbs.org/newshour/bb/congress/forbes_flat_tax.html>
6. <http://www.cse.org/armey/index.php>
Armey and Hastert say a flat tax filed on a postcard could double the economy in 15 years.
Forbes says junk it and eliminate source of corruption.
Washington's lobbying industry generates $8.4 billion each year.
Never going to happen.
Yay! I didn't think I'd see the flat tax so seriously considered within my life time!
Not all of the lobbyists' salaries and commissions would suck up all those bucks. So just who gets all that money?
Love the flat tax, and totally support abolishing the IRS, but 17% is a bit on the high side. 10% is more reasonable, and we could get it down to 5% (with no write-offs) if we did the right thing and cut the socialist/welfare state down to size.
You got that right!
Smart enough to get the loot to purchase the item, but too stoopid to figure out the payments? Just how many crack dealers are out there?
Sadly enough you are right to a point for as long as politicians are politicians as a way of life without term limits, the lawmakers will never give up their hold on the influx of government money.
If I have inferred the idea of greed and self promotion within government, I don't apologize.
This must be a good thing,the Demwits are squealing loud.
Government will NEVER give up it's "golden goose/favorite pit bull".
the goose gets them our wallets, and our property.
the pit bull enforces social policies at gunpoint.
never.
Just think of what it would do to the financial industry paper pushers like Deloitte and Touche. Billions in billable hours... gone.
Taxation and compliance issues via the tax-accounting industry are a substantial portion of america's GNP.
never will it happen.
but we can dream, no?
2. Stop employer witholding, make everyone pay their own tax on April 15
3. Move national elections to the first Tuesday after April 15
For many years conservatives have been calling for abolishing the IRS and instituting a flat tax. Most of the percentages for such a flat tax have fallen somewhere between 17% and 22%. Both figures seem a bit on the high side. One fact is certain. No matter what tax reform might finally be agreed to, it will have to include a method for lower and middle income Americans to keep deducting their mortgage interest payments. Under the circumstances, that shouldn't be a big problem. When you consider that in 1950 a typical family of four paid 5% to the feds, any tax reform would be worth the effort.
FMCDH(BITS)
This will never fly.
Sure, everyone hates taxes,
but value-added
is what Europe does,
and others amount to
abolishing tax
on corporations
and having citizens pay
the whole tax burden.
(And that crap about
"corporations don't pay tax
they just pass it on"
will get a horse laugh
in the real world.) Learn to love
our dear IRS.
bump
I wish it were true, but too many special interests rely upon the current system.
Heh. You are right about the 5% figure... especially considering how much growth it would generate would mean that the govt, in actual dollars, would have as much as it does not in under 15 years.
But lets get ANY GOOD flat tax or NST passed and fight the good fight on the other end later!
How is a flat tax going to help a couple with 4 kids who make $60K and take a standard decduction?
With a 17% flat tax, they would have huge tax bills compared to the one they now have (in the 15% bracket and with only half of their income taxable after standard exemptions and deductions, and recieving $4k in standard child tax credits)?
Two things.
With a 17% flat tax we'd be bankrupt as a nation. I'd like to see the numbers but I'm sure that the revenue the gov cleects would go way down.
Also, the politicos in Washington love the tax system we have now. Its their number one source of power. If they want to get us to do something - buy something, invest in something, etc. - they give us tax breaks to do it. If they don't want us to do something they tax the snot out of it. If they want to do a favor for a friendly corporation they get them a special tax break. Do you think they will give up all this power? I don't.
There already is a mechanism for helping lower to middle income families. Simply make the first 10,000 per adult deductable, first 5,000 per child deductable. Family of 4 would then only be taxed on money made over $30,000.
The flat tax is unlikely to come about anytime soon because of the populist rhetoric about it. But if the US went through a period of prolonged economic stagnation or recession like in the 1970's, it could easily happen, and it would be quite popular.
The day this happens, I will paint my ass red, stick two macaronis in my nose, put on a miniskirt and run around the block screaming poopee poope woope doby Gillis is cool.
I love a flat tax. 15% is fantastic. All accross the board.
BTTT
I think the Founders of this great constitutional republic would wholeheartedly approve rolling back any taxation efforts by the feds.
Tax every transaction, EVERY TRANSACTION 6 tenths of 1 percent. .006 for everything, cars, homes, meals, everything. Each side in the transaction pays .003%
Trillions of dollars would be generated for government and you could eleminate income tax, social security tax, Medicare tax, all of it.
That's about $340 a month in taxes. If we could eliminate Medicare and Medicade with this system, it's not going ot kill them. (I'm planning on our family being in this bracket soon, so, no, I'm not out to "tax the rich.)
The VAT is an administrative nightmare. Flat tax or national sales tax is the way to go. In the interim, get rid of withholding. Let the sheeple understand what they have to pay on April15th. Too many people never bother to look at their paystubs or their 1040 form. Then again too many people never look at all the "fees" on their phone bills, airline tickets, rental car receipts, hotel receipts... the list is endless.
I propose an experiment. The congresscritter's put their collective pins to paper..and make only HI...a flat tax state. Eliminate the I.R.S. as we now know it, for the state of HI....get all the kinks out of the new system, see if the results are what they/we are wanting...
Seems simple enough for my simple mind.
FRegards,
Yeah, when you are taking flak, you must be over a target.
I'm single, and I don't see why children should be "deductable". A significant portion of my income goes to pay for the health and education of other people's children as it is now. They have no right to take even more from me by paying less in taxes. I am subsidizing every "family of four" out there.
Make people pay for their own children, and keep their greedy, socialistic paws out of my wallet!
"I'm single, and I don't see why children should be "deductable"."
I was asked how the flat tax could be implemented without adversely affecting families with children. I was just giving a pragmatic answer. You of all people should welcome this idea. Right now the $1,000 per child tax credit is hurting single people more than almost any tax deduction would.
.006 is six one-hundredths of a percent, not six tenths.
We have a sales tax in our state right now. It's pushing 9%. Give the congress the power to institute a sales tax, and they have the power to raise it.
No way.
There already is a mechanism for helping lower to middle income families. Simply make the first 10,000 per adult deductable, first 5,000 per child deductable. Family of 4 would then only be taxed on money made over $30,000.
Ahh, a graduated income tax with two brackets(half the population voting for more bennies on the backs of the other half) an IRS, and does nothing to repeal SS/Medicare 15.3% tax on wages.
Hmm, something amiss here.
see:
Why Flat Tax Isn't A "True" Flat Tax
http://www.cac.psu.edu/ur/archives/BUSINESS/flattax.html
&
Flat Tax as Seen by a Tax Preparer
by Vern Hoven
"does nothing to repeal SS/Medicare 15.3% tax on wages"
So? You speak as though the Flat Tax and social security reform are mutually exclusive. I think they go hand in hand. They are both pro-growth. Letting workers invest their retirement money would be a huge boost to all of us, and it is extremely popular. I don't get why Bush hasnt touched this issue. I think our economy would be somewhat stronger today if he had.
Thanks for the explanation. I re-read it and see your point. I just get a bug in my craw every time the subject of tax deductions for people with children comes up, unless somebody is talking about eliminating them. It's amazing how many "conservatives" show up with their hands out when their children are concerned.
I absolutely support a flat tax. It's the most fair tax system that I've seen introduced. It's about time we junked the IRS.
Give the congress the power to institute a sales tax, and they have the power to raise it.
They already have that power:
Constitution for the United States of America:
A LAW DICTIONARY
by John Bouvier, Revised Sixth Edition, 1856:
EXCISES. This word is used to signify an inland imposition, paid sometimes upon the consumption of the commodity, and frequently upon the retail sale.
The only reason they don't is because it is too visible and everybody gets upset when legislators propose to raise the rates or monkey with it.
The article about the "True flat tax" seems to say that anything that doesn't transfer tax burden onto lower-income earners isnt worth doing. I don't get this mentality. Getting rid of taxes on capital gains and dividends would help the wealthy enough. I don't see the what's wrong with simplifying the tax code but not doing it in a way that would raise taxes on lower-income families.
I mispoke. What I was trying to say is:
Institute a national sales tax, and congress will raise it.
17% Flat Tax!!!!
You speak as though the Flat Tax and social security reform are mutually exclusive.
No just separate issues as far as any current proposals for a flat tax are concerned. The only legislation that proposes repeal of SS/Medicare taxes the HR25 NRST.
But even HR25, being a revenue bill, does not address SS reform, just the mechanism of how to fund it using retail sales taxes instead of payroll taxes, and establish a true "trust fund" in statute to pay monies into it.
I think they go hand in hand. They are both pro-growth. Letting workers invest their retirement money would be a huge boost to all of us, and it is extremely popular.
True, just as reducing growth of government and taxes go hand in hand however it is accomplished
I don't get why Bush hasnt touched this issue.
I suspect it has something to do with to much on the plate at one time, tax reform is extremely open to demogoguery, especially in an election year.
I think our economy would be somewhat stronger today if he had.
I'm not going to disagree there.
don't we have to get rid of the amendment that allows for the income tax first?
Actually .006 is six tenths of one percent or six one-hundredths of one. Per cent means per 100.
I don't see the what's wrong with simplifying the tax code but not doing it in a way that would raise taxes on lower-income families.
It can be done, but not with an graduated income tax. The problem with exemption is that it divides us into two artificial voting constituencies. Those participating in the tax system funding the government and paying the bills for they other half looking for more from government without perception of the burden imposed.
Think about it:
Walter Williams, World Net Daily, 10-25-2000
- So many Americans paying little or no federal taxes makes for a natural spending constituency. It's like me in the restaurant: What do I care about extravagance if you're footing the bill?
The Honorable James DeMint (R-SC)
United States House of Representatives
APRIL 5, 2001
- "There has been a shift in the relationship between individuals and government, he argues, such that fewer and fewer are paying taxes at the same time that more and more are receiving increasingly generous benefits. If it becomes the case that most voters do not bear a financial burden for this largess, then there will be little to restrain--and significant political incentives to encourage--the continued growth of government.
A retail sales tax on the other hand can be structured such that everyone must participate in paying the tax thus are sensitive to the burden that excess government lays upon us all, while at the same time assure that tax on expenditure up to the povertyline is covered by a demogrant paid to all households regardless of income or wealth.
Don't get my hopes up. The taxes in Hawaii are already too freaking high.
HI doesn't stand for Hawaii... It stands for:
HI taxes
HI cost of living
HI property values
And LOW pay... Damned liberals ran this state for too long.
Not a chance. Not under this president or this Republican party, and certainly not under the Democrats.
Institute a national sales tax, and congress will raise it.
When every voter pays that increase laid out in black and white for them on their grocery receipts? Think about it, state legislatures pay all kinds of h'll to get a retail sale tax hike and put their jobs at risk everytime they do, especially where if are no products exempt from the tax.
That is one of the problems with the current system. Half the tax bill is hidden from sight embedded into consumer prices. Exemptions and EITC makes a joke of the other half for lower income levels.
You have half the citizenry voting for more government on the backs of the other half. While complaining that high prices are all due to those nasty ole corportation paying income and payroll taxes.
| "As a matter of fact, what the income tax does — and this is the debate that I think we always try to get into in order to let you and him fight, see — and the people of this country are led down a path where the actual control of their resources, which in the end is the control over their will, is handed off to the government." . . . "The government then manipulates that will in order to destroy the freedom of our electoral system through the income tax structure, and we call the resulting slavery a free system." "In point of fact, it is not as the founders understood, and the only way to restore real freedom is to give people back control over the income that they earn so that they won‘t, at the voting booth and in other phony issues, be subject to that manipulation." |
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