Skip to comments.Income taxes - The fool's game
Posted on 08/29/2004 7:17:58 PM PDT by det dweller too
Income Taxes - The fools game
The political season is heating up again and the politicians are busy playing the fools game of appealing to our darker instincts. They call on us to tax the rich and everyone cheers, except a few that are immediately labeled as selfish and thereafter ignored. In the end, the politicians usually get their way by convincing the majority to raise income taxes on the rich.
The reason it is a fools game is the sad fact that the income tax operates as a hidden fixed cost on domestic business. If you put a large income tax load on the business owners, even if you deduct 100% of the income taxes from the workers, the price of the products they make still goes way up. In the past this was met with a yawn and a shrug as everyone paid the new price, but today there are alternatives. The businessman today that loses profitability because of higher taxes simply can turn to sources outside the US for products that are beyond the reach of our income tax laws. In this way, the businessman can support the tax change voted in by the majority while at the same time maintaining his profit margin by switching to imported products that undercut the pricing from domestic businesses. As the domestic businesses try to compete, they look for ways to cut costs. Since the tax costs cannot be avoided, the only area left to cut is the cost of their domestic labor. In the end it is the majority who voted on taxing the rich that end up losing their jobs, benefits, and wages.
The only effective way to quit this fools game is to stop hiding the cost of income taxes in our domestic products. Instead of income taxes, we should consider a simple excise tax on all products sold in this market, regardless of where they are made. Note that this is not a sales tax or value added tax, which can be abused by taxing the same product multiple times. Taxing a product once when it is brought to market takes the cost out of the product itself and puts it into the act of marketing the product here. Import and domestic products marketed here would be taxed at the same rate and exports would not be taxed at all. This will remove the hidden cost penalty that have been causing the loss of jobs in the US and immediately improve US global competitiveness.
Fair Tax Act of 2003 (Introduced in House)
`SECTION 1. PRINCIPLES OF INTERPRETATION.
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 retail sales tax:
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.
The trouble I see with sales tax is that it rubs the tax in the face of each purchasing consumer at the point of purchase. There are people who will see that the taxes go to pay for our infrastructure and that is the price we pay for a civil society, but there is a very large group who will not see that, They will focus on the added charge to the bill in front of them and they will freak. they are typically democrats BTW.
An excise tax, on the other hand, we have had for over 200 years and is a much more digestable tax for the average citizen. Everyone knows at some level that there are large taxes on liquor, but nobody has the fact that the liquor bottle they are buying for $20 has about $18 in taxes in it. People have gotten used to the tax, they don't object too loudly to it and life goes on.
If you want to focus on a sales tax as the method, it will work and everything said in that video is true, except that it will never get beyond a pep rally of republicans, because the democrats will kill it every time.
I just want to be practical, and maybe see motion towards this concept before the parasitic losses to taxes destroys my kids America.
That is why I like it, I want every citizen to be fully aware of the cost of government because that is the best way to get them to try and reign it back in.
Look at the swift boat vets. Kerry tried to ignore them, but they struck a big nerve and eventually Kerry had to confront the problem they created. He still is dodging the issues, but he is having a hard time because they are hanging on their simple truths and not being drawn into a big fight that they would lose.
You have a good night. I gotta 5AM wakeup to go back to the daily grind.
Discussions with focus groups of Americans showed that what citizens want is a tax system that provides Simplicity, Uniformity, Visibility and Fairness. The FairTax achieves these objectives through:
Simplicity - one rate for everyone; no tax filings
Uniformity - all benefits, all regulations, all exceptions, imposed on all citizens equally
Visibility - any change in the tax rate shows on every cash register receipt
Fairness - it is progressive, protecting the poor through a tax rebate on the necessities of life; no loopholes, therefore everyone pays the same rate on every purchase
And in addition, the FairTax produces the following:
* It lets every worker keep their entire pay check - no payroll or income taxes
* It allows those at/below the poverty level to have zero or negative taxes
* It lets retirees keep their full pension or Social Security checks - untaxed
* It lets everyone keep their capital gains and investment income - untaxed
* It encourages savings & investment - creating greater national growth & productivity
* It encourages repatriation of wealth from tax havens
* It stimulates exports - leading to greater U.S. employment
* It stimulates economic growth and job formation
* It eliminates gift and inheritance taxes
* It taxes spending of gifted and inherited wealth more fairly
* It has a lower cost of enforcement
* It makes the federal tax rate very visible, and therefore, politically risky to increase
* It ends all personal and corporate income tax filings
* It eliminates the IRS and frees $8 Billion
* It frees the $250 Billion tax accounting/law industry for more productive employment
* It eliminates tax loopholes - no filings, no exemptions, no loopholes
nice list, Bad. i will steal it!!
"The trouble I see with sales tax is that it rubs the tax in the face of each purchasing consumer at the point of purchase. There are people who will see that the taxes go to pay for our infrastructure and that is the price we pay for a civil society, but there is a very large group who will not see that, They will focus on the added charge to the bill in front of them and they will freak. they are typically democrats BTW."
And just what is the negative aspect of making EVERY citizen aware of the cost of the entitlements they demand from the politicians? What is wrong with pointing out the blatant hypocricy of the moochers?
"If you want to focus on a sales tax as the method, it will work and everything said in that video is true, except that it will never get beyond a pep rally of republicans, because the democrats will kill it every time."
With all three branches controlled by "Republicans" why would this be an issue? Could it be because the Republicans are no longer conservative and are just as interested in bribery of the electorate as the Democrats?
The NRST is not only a tool to restore the freedom to enjoy the fruits of our effort, it could also be a tool to take back the Republican party! Vote for true Conservatives, and utilize HR25 as one of the identifiers available!
It completely untaxes the poor, saves SS/MC, and creates jobs.
But the repubs got hold of it first - so Dems automatically oppose based on politics (not the good of their constituents). Also, the measure would eliminate the class warfare weapon.
I can see most of what you're saying, however, how do you "untax" a group of people that are currently not taxed, and in fact benefit by receiving payment from the government in the form of the EIC?
The EITC is a horrible thing - it is in place to buy votes IMO. But those people are indeed paying invisible tax at the counter. The EITC should be gone. The nrst does eliminate it.
Those people pay no payroll taxes and often (usually) pay no income tax and are even at times are net tax recipients. They do, however, pay taxes in the prices of goods they buy whether they're necessities of life or not.
Taxes on necessity level spending should be gone IMO. The nrst does eliminate it.
Your point about the EITC is well taken. Nevertheless, the nrst prevents necessity level spending from being taxed.
You can view this in two ways - that it's bad to untax necessities or that it's good.
IMO it's bad b/c some people will not be net payers - this is mitigated by the fact that folks will have to cough up the cash at the register...so they will at least feel the cost of the beast. As it is now, they have no idea that they're paying tax and so clamour for more services.
OTOH it's good because it makes the nrst politically viable.If it were regressive it would be far more difficult to pass.
It's a bitter pill... increase the rate by 1.9% to make it possible to attain the vast improvement of eliminating the income taxes, payroll taxes, and withholding.
my 2 cents.
We're in agreement here. I think I'm leaning to the "good" side of the proposed payments, just because they are sent to everyone, regardless of social status, therefore eliminating the tool of class warfare. Plus it allows each individual to chose what is necessary, instead of allowing for special interest groups to lobby for their commodities to be classified as necessary.
One problem I have is the classification of "# of persons in a family" qualification. We all DECIDE what lifestyle to participate in(single, married, children, etc.) and we should all be responsible for those choices. I do, however, see the political cards that this gives to the NRST. I can accept the changes one step at a time........
I tend to forget about the imbedded taxes when initially looking at things, thanks to these threads I am changing the automatic responses to the logical responses (I think).
The idea is that that each person has a right to the necessities of life (in this case, defined by poverty-line spending) without being subject to tax. Minors are the responsibilities of the parents, so the parents are given the minors' benefits.
Also, consider it pretty much an exact replacement for the personal exemptions and standard deduction of the income tax (which take into account the number of dependents).
"The idea is that that each person has a right to the necessities of life (in this case, defined by poverty-line spending) without being subject to tax. Minors are the responsibilities of the parents, so the parents are given the minors' benefits."
I really don't know where to begin with my disagreement with the presented "idea" or explanation. I'm assuming that you don't perscribe to it, just that you attempted to explain it. Yes, I know the "idea" all to well. It really comes down to "its for the chilruuuun" explanations and such. If "minors are the responsibilities of the parents" how can they have benefits owed to them by the government that the parents have a right to assume?
Keep in mind that I am seperating the issues between the states and the feds. The Federal Government's only constitutional role is to offer security through the military. If we can reach agreement on that, then with a larger family there is more to protect, therefore costing the Fed more money. I could make the case that the parents should be paying more in Federal taxes than a non-parent. In fact, they certainly would be paying more under an NRST with no "# of persons in the family" check being sent every month.
In lieu of a solution that I can offer, I will accept the NRST with the rebate. The only other solutions I have seen open the door to wide for political favors or they close the door the the NRST all together.
But minor dependent children are assumed to not be providing for themselves, but rather to be the responsibility of one or more parents and/or legal gaurdians. This explains why the child's benefit is paid to the head of the household (and not the child), even though it is the child's benefit. Children's benefits are smaller than adult's because their necessary expenditure is lower.
Who gets to determine what is a "basic necessity" of life? Who gets to determine what cost level of these "basic necessities" is fair?
By accepting that we "have a right to have the basics of life untaxed by the government -- that's every man, woman, and child" then we accept that the government has the right to tax us on everything else. By accepting your reasoning, then we accept that the government owns all money and only allows us to keep what we want (or gives it back) based on what the government decides is "basic necessity" and what is an appropriate amount.
Show me where the right you describe has been defined?
CSM, you always beat me to the punch ! This is the way to make EVERYONE realize what they are paying. Then ALL will open their eyes and get envolved !
Principled is right on too! He always reminds me that even the moochers pay taxes when the buy goods! I always let that imbedded thingy slip my mind.......I guess it isn't imbedded far enough into my psyche yet!
By accepting that we "have a right to have the basics of life untaxed by the government -- that's every man, woman, and child" then we accept that the government has the right to tax us on everything else.
Actually the government has the enumerated power to tax us on everything else, and that as well.
- Article VI: "This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding."
- 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;
but all duties, imposts and excises shall be uniform throughout the United States; "
- Article I Section 8: "To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof."
Show me where the right you describe has been defined?
By carving it out through the essential limitation on the authority to lay and collect taxes by the exercise of the right to influence and choose representation that one may exert in the political process as a constituent/voter.
- "The power of taxing the people and their property is essential to the very existence of government, and may be legitimately exercised on the objects to which it is applicable, to the utmost extent to which the Government may choose to carry it. The only security against the abuse of this power is found in the structure of the Government itself. In imposing a tax, the legislature acts upon its constituents. This is, in general, a sufficient security against erroneous and oppressive taxation."
And the key words are: "to pay the debts and provide for the common defense and general welfare of the United States;"
The common defense is explicitly stated and agreed to by every American. Now, the "general welfare" statement is of the US, not of each citizen of the US. The entitlements are explicitely for the "general welfare" of specific groups of citizens to the detriment of other US citizens. Any entitlement that improves the general welfare of one citizen by harming the general welfare of another citizen can not be considered "providing" for the general welfare of the United States.
Mis-use of the words "general welfare" will be the key that Hillary holds and expects all Liberals to use to open the wallets of all the productive members of our society.
Any entitlement that improves the general welfare of one citizen by harming the general welfare of another citizen can not be considered "providing" for the general welfare of the United States.
The limit on that still resides in the hands of the electorate, exercising that "eternal vigilance" that is the price of attaining and keeping freedom.
The problem we deal with however is the disconnect between largess and the perception of its costs by large segments of the electorate.
The exercise of "eternal vigilance", is a bit limited with government imposed horse blinders on.
Walter Williams nails the essential:
"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?"
Don't perceive the cost, ... pigout
That's why I support the NRST, however, in the meantime I say we should pass legislation that requires all persons participating in any election be taxpayers. If a person does not pay federal taxes, then they should not be allowed to participate in federal elections. Same for all levels, state, local, etc. I would venture a guess that the budgets would be whipped into shape in no time if the moochers couldn't vote themselves pay raises!
I say we should pass legislation that requires all persons participating in any election be taxpayers.
I can agree with the sentiment, but a small impediment stands in the way, like getting 2/3rd of both houses of Congress and 3/4 of the states to agree with repeal what they did to that idea in the 60's:
Passed by Congress August 27, 1962. Ratified January 23, 1964.
The right of citizens of the United States to vote in any primary or other election for President or Vice President, for electors for President or Vice President, or for Senator or Representative in Congress, shall not be denied or abridged by the United States or any State by reason of failure to pay poll tax or other tax.
Hmmmm, the foundation for a socialistic form of government has been formidably laid! It just goes to show the hard work ahead to get back to the foundation we were originally built upon.....
It just goes to show the hard work ahead to get back to the foundation we were originally built upon.....
I nominate that as understatement of the year.
NRST is just the first small step on a very long road ahead.
"By accepting your reasoning, then we accept that the government owns all money and only allows us to keep what we want (or gives it back) based on what the government decides is "basic necessity" and what is an appropriate amount."
Actually, the Federal Reserve owns all the money (not the government or us) and we are only allowed to keep what they will allow (if you hoard too much they will consider you a threat to the economy, etc.).
If the NRST passes, my expectations for(not fear of or joyous anticipation of) a 2nd revolution will be greatly diminished. If that first step can be taken, then a seed of hope will be planted for the destruction of the socialistic principles without violence.
If not, then I fear violence will be the only resolution.
It's yours to steal, but I didn't do the list so I can only take credit for stealing it too. This is from the PA FairTax volunteer website. www.pafairtax.org
While you are there, can you take a few minutes and answer the poll questions?
If not, then I fear violence will be the only resolution.
I've just read through this thread and see that most of your questions have been answered by the real experts -- kevkrom and ancient_geezer. I've also note that the questions are legitimate and an attempt to learn as opposed to highjacking the thread.
What you posted above is more true than many are willing to acknowledge. If we can get this enacted, we will will have made huge strides down the path to liberty.
Thanks for your help in that journey.
I just wanted to thank you all for your efforts and your willingness to enlighten those of us that need it.
BTW, if any of you know about any coordinated efforts in southeast MI regarding a push for HR25, then please freepmail me some contact information.
I've certainly heard a mostly tongue-in-cheek thoery that you should get 1 vote for each $1 net you pay in federal taxes. It makes a perverse sort of sense in that the people paying most for the government ought to have the most say in how it is run.
I fear you are correct in that assessment.
What is most depressing is to run into those who argue that we should maintain the current system to force the nation into collapse and that violent revolution.
I suspect such folks have never experienced what real anarchy is all about.
I was having those thoughts not to long ago. Luckily, I realized that all is not lost already and if support can be gained for some real change, then that violence can be avoided. I have sent quite a few people to lurk on the heated discussion threads around the NRST and most of them are supportive of the effort.
I think a real grass roots opportunity is bubbling with this one. Yet, I am still trying to accumulate some "hard" assetts.......Just in case...
Send these folks an email and they'll put you in touch with people in your area. Thanks for your interest.
LOL, that's just abiding by eht Boy Scout's motto.
Every advantage you list about the NRST can also apply to a national excise tax; the excise tax would be even easier to administer since it could be paid at the distribution point instead of thousands of cash registers. We do excise taxes on cigarettes and liquor and gasoline now and it is not hard to handle. The excise tax also doesn't zing you each time you purchase something by showing you the before and after costs on the receipt. Many here think that is a good idea, but you do NOT persuade people by zinging them. The reasoned arguments can get some people to reluctantly go along. People will know that an excise tax is being included in the price, but it will just not zing them.
The original point in the article is that the current income taxes are hidden in our domestic business costs so that the average citizen doesn't realize he is paying them each time he purchases something, even if he pays 0% income taxes directly. The reason the politicians have been able topush them up so high, currently over $2 trillion and growing, is because it is so well hid. I think the first step in changing to either the NRST or an excise tax is to make the case to joe six-pack that he is currently paying the tax with his purchases and lately with his job because the switch to imports hits the lower wage people first.
You don't persuade people by hiding the truth from them either.
You point to the original article suggesting that an excise tax be put on the product when it enters the market. You are embedding the cost again, hiding it from the consumer who is the ultimate tax payer, and placing it on business. What's the point?
Be honest about it and the constant reminder of the cost will make it harder for politicians to raise the rate.
Remember, the tax isn't about the product's cost. It's about the cost of government.
I hope others who are more eloquent will answer as well.
You are embedding the cost again, hiding it from the consumer who is the ultimate tax payer, and placing it on business.At least 30% of the taxes that would be collected by the FairTax will not be paid by citizens at the cash register, it would be paid by the federal, state, and local governments. The citizen will only see this hidden, embedded tax in increases in their state sales tax, their property tax, and state income tax.
1. Its simpler. You would be collecting the tax from a small number of distributors or wholesalers instead of a very large number of small and medium size businesses That would drop the cost of administering it way down.
2. It would be far less intrusive. With a NRST every small businessman may be subject to audits. Also as individuals, if you sell your car or have a garage sale you may get a visit or a call by the IRS. With an excise tax, the tax is paid once at the distributor. That would also allow the IRS to get smaller. And therefore the tax is less "on business" than a sales tax.
3. It is flexible. A NRST would have ONE rate for everything. With an excise tax, as we do today, you can have different rates based on the comodity, high on sin taxes like liquor and cigarettes and low on produce and food.
Apparently, the price of products and services to government are immune to the laws of supply and demand. When the cost of the embedded taxes goes away, it goes away for government too. With the cost coming down, there is no legitimate reason for other taxes to rise to offset it.
Eternal vigilance is still required. Government mus still be held accountable.
The IRS processes 140 million individual returns now. The states, who will have primary responsibility for collection and auditing business, are already doing so in most states, so it's nothing new for them. How hard is it to process (sales X xx%)?
Under the FairTax, the IRS is gone. Under the FairTax, you can sell your car to anyone and no one cares because used goods are not taxable. No tax, no audit.
What you tout as a benefit is a huge detriment. Varying rates open up the system to what we have now -- political bickering, lobbying for favored status, vote selling and buying. The FairTax has no exceptions, no exemptions, no deductions.
Having one rate provides uniformity, fairness, and simplicity.
It seems that you are passionate about an excise tax. It's also probably a fairly good plan. Considering that the FairTax has been around and talked about for almost ten years and is gaining ground -- in the public and Congress; considering that there has been millions spend to study the effects, costs, and benefits of the FairTax; considering that 'our' plan has the support of House leadership; who do you know that can finance your plan until it reaches the level of acceptance than 'our' plan has? Who will champion it?
Do we really want to wait another 4 or 6 or 10 more years when this plan (which I think you'd agree is pretty darn good) could be passed in 2006 in the House? Bush will sign this plan. Will the next president sign your plan?
Finally, what rate would you have to charge to provide the revenue needed to run the leviathon? Will it cover the expenses needed to sustain the viability of the SS and M/C systems? How will it handle the regressivity that the demogogues will target as the reason to shoot your plan down? Do you exempt certain products or categories of products?