Posted on 08/28/2005 5:21:54 PM PDT by Coleus
A taxing idea
Tom Wright envisions a world with no IRS, where Wal-Mart, Target, Macy's and the rest of the nation's shopkeepers are the federal tax collectors. And he says close to 600,000 Americans agree with him, including political leaders with the clout to make it happen.
Wright is the executive director of Americans for Fair Taxation (www.fairtax.org), a group backing legislation to replace all federal income, payroll and corporate taxes with a 30 percent national sales tax on all new goods and services. Supporters say the tax would free Americans from mountains of paperwork, eliminate loopholes and tax fraud, encourage savings and fatten paychecks. House Majority Leader Tom DeLay, R-Texas, likes the idea, and President Bush says he's open to the suggestion. It also has received a qualified endorsement from Federal Reserve Chairman Alan Greenspan, who believes the plan would increase Americans' savings.
"We're not raising taxes here," said Wright, a folksy Florida resident who previously ran a Texas advertising agency and spent part of his childhood in Saddle River. "We're just taking all of the taxes people are currently paying and making them extremely obvious at the bottom of their retail sales receipts. And nobody's taking anything out of their paycheck anymore." Wright said DeLay and House Speaker Dennis Hastert, R-Ill., have pledged to get the tax bill passed by the end of 2006.
"As far as we're concerned, we're in the endgame right now," he said.
But not if the nation's retailers have a say. They don't want the job of federal tax collector.
Do-or-die for retailers
The National Retail Federation argues that a national sales tax would cause "sticker shock" that would depress retail sales.
"This is a do-or-die issue for many of our member companies," said J. Craig Shearman, vice president for governmental affairs for the National Retail Federation. "If consumers look at a 30 percent tax and don't buy a product, the retailer is the first to lose, but there are a lot of other companies and workers behind that retailer that are also going to be out of business."
A study commissioned by the NRF in 2000 concluded that a national sales tax would cause a three-year decline in the economy, a four-year decline in employment and an eight-year decline in consumer spending.
The NRF also notes that a study by the congressional Joint Committee on Taxation found that a sales tax of 57 percent would be needed to replace all current federal tax revenue.
Other opponents of the sales tax proposal complain that it is part of a continuing trend to reduce the burden on the wealthy and shift it to everyone else. After all, the rich have the luxury of saving large amounts of money, meaning it would not be taxed; the middle class and poor have to spend a much higher percentage of their income on necessities.
The American Association of Retired Persons says eliminating payroll taxes would be unfair to senior citizens "because they don't pay payroll taxes. They've already paid them," said John Rother, policy director for the AARP.
And the National Governors Association has taken a stand against the tax, saying it would "intrude into a tax area that traditionally has been reserved for, and relied on by, state and local governments."
Gaining momentum
Sales tax proposals have been hovering around the fringes of the country's tax reform debates for two decades, but the idea has gained enough momentum in recent years to worry opponents.
"A year ago, this was something being promoted mostly by a rank-and-file congressman from Georgia," Shearman said. "Today, it's something where we have a presidential task force looking into it, and we have the chairman of the Federal Reserve discussing it in serious terms.
"That's a lot of progress in a short time," he said, "and reason for us to be concerned that this is more than just a hypothetical idea. This is something that's a legitimate threat to the U.S. economy."
If the bill, House Resolution 25, authored by Republican Rep. John Linder of Georgia, becomes law, Paramus would become one of the biggest federal tax collection sites in the country. Paramus generated more than $3.2 trillion in retail sales in 2004, the most of any ZIP code in the country, according to Claritas Inc.
That volume of spending would generate more than $960 million in sales tax under the Linder plan.
Services such as haircuts, manicures, massages and doctor visits also would be subject to the tax, along with new homes, new cars, food, medicine, gambling chips and lottery tickets. Used cars, previously occupied homes and antiques wouldn't be taxed.
The bill has more than 50 co-sponsors, including DeLay.
No New Jersey representatives have signed on as sponsors, and most of the state's 13-member House delegation hasn't yet taken a position on the bill.
Linder describes his plan as the equivalent of a 23 percent tax on income, because a $130 purchase would include $30 in federal taxes, or 23 percent of the bill. And to counter the unfairness argument, his sales tax proposal includes a rebate provision that would cover the sales tax up to the federal poverty limits.
Last month, Greenspan gave a partial endorsement to shifting the tax burden from earnings to consumption.
"Many economists believe that a consumption tax would be best from the perspective of promoting economic growth - particularly if one were designing a system from scratch - because a consumption tax is likely to favor saving and capital formation," Greenspan said March 3.
However, he cautioned that a consumption tax would create difficult "transition issues" as the economy adjusted to the change. He said a combination of income and consumption or sales taxes could be the solution.
Report due in July
Greenspan was speaking to a presidential advisory panel Bush created to make recommendations on how to overhaul the country's tax system. The panel is scheduled to issue its report in July.
Based on petition drives and Internet registration campaigns, Wright estimates that close to 600,000 voters are actively promoting the Linder bill. Louis Phillipine, a retired Lucent Technologies worker who now lives in Atlantic County and works at the Trump Taj Mahal casino, is among those who think it's a good idea.
"I'm no youngster," said Phillipine. "I'm 63. I've seen a lot. I'm not the sharpest blade in the drawer, but I'm not a dunce either. Just reading all the reports on income tax, and the past commissioners who say the federal income tax is just a jumbled mess that no one can understand, you have to wonder why we still have it. It's going to take a mass of people saying we've got to change it."
More than 70 economists have signed a letter endorsing the Fair Tax proposal, including two at William Paterson University.
Demissew Diro Ejara, an associate professor of finance at William Paterson, said the plan would thwart tax evaders who don't report cash income. "People who participate in the underground economy will still have to buy goods for consumption, and when they do, retailers will collect the tax from them too," he said.
Eliminating the income tax would have a bigger impact on New Jersey than other states, because New Jersey, being one of the highest-income states, pays more income taxes, said James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. He's doubtful, however, that such a radical change in the country's tax laws will happen anytime soon.
"To produce such significant changes like that - monumental changes, really - the odds are always against it," he said.
Also, the current troubles facing DeLay could help derail the tax proposal from the fast track. DeLay's endorsement, until recently, was seen as a sign of the bill's strong prospects. But he has lost political capital lately, amid charges that he traveled on lobbyist-funded junkets and used political contributions to pay family members.
Taxing ideas
The three favorite proposals of would-be tax reformers:
National sales tax - Replace all income, payroll and corporate taxes with a national "consumption" tax on all new goods and services, including necessities such as food and clothing.
Flat tax - The convoluted IRS code would be replaced with a flat percentage charge on income, with no exemptions for persons above a certain income level. Various supporters say rates ranging from 10 percent to 25 percent would generate enough cash.
Value-added tax - A sales tax that is paid in stages. For example, an automaker buys steel for $8,000 and pays a 10 percent tax, or $800. The auto dealer buys the car for $25,000 and pays 10 percent, or $2,500. The automaker takes an $800 credit for tax already paid and sends the remaining $1,700 to the government. A consumer then buys the car for $30,000 and pays $3,000 in tax. The dealer takes a credit for $2,500, and sends $500. The government ends up with a total of $3,000, collected in three stages.
National sales tax proposal (Provisions of the legislation being supported by Tom DeLay and other congressional leaders)
What you would pay:
A surcharge of 30 percent on all new goods and services, including:
What you wouldn't pay:
Fair Tax ping
If you would like to be added to this ping list let me know.
John Linder in the House(HR25) & Saxby Chambliss Senate(S25) offer a comprehensive bill to kill all income and SS/Medicare payroll taxes outright and replace them with with a national retail sales tax administered by the states.
H.R.25,S.25
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 for additional information:
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
The fair tax rate would actually be about 17 percent.
30 percent? never has the US government ever gotten such a high rate.
And the cheating! We would have substantial underground economy transactions. The Mob would be shunting untaxed gasoline into service stations even more than they do. Of course the crooked stations would have a few cents cheaper per gallon. Indian tribes would use their tax exempt status even more than they do.
I propose: the important thing to do is to have low tax rates, by a multitude of tax forms. Better 5 taxes at 5 percent than one tax at 25 percent. high tax rates provide a greater incentive to cheat. Lower tax rates have a lower incentive to cheat, and the balance of high penalties if caught to low gain if not caught promotes greater compliance.
Better would be a hundred sources of tax income, each at one quarter of a percent of the value of the transaction.
The fair tax rate would actually be about 17 percent.
30 percent? never has the US government ever gotten such a high rate.
And the cheating! We would have substantial underground economy transactions. The Mob would be shunting untaxed gasoline into service stations even more than they do. Of course the crooked stations would have a few cents cheaper per gallon. Indian tribes would use their tax exempt status even more than they do.
I propose: the important thing to do is to have low tax rates, by a multitude of tax forms. Better 5 taxes at 5 percent than one tax at 25 percent. high tax rates provide a greater incentive to cheat. Lower tax rates have a lower incentive to cheat, and the balance of high penalties if caught to low gain if not caught promotes greater compliance.
Better would be a hundred sources of tax income, each at one quarter of a percent of the value of the transaction.
""What you would pay:
A surcharge of 30 percent on all new goods and services, including:
Food, Clothing Prescription drugs, doctor and therapist visits,haircuts and other beauty treatments, New home and new car purchases, Lottery tickets and casino chips,""
did this person actually read Neil Boortz's book...there would be taxes on these items but every month you would receive a rebate check.
actually 23 percent....does this fool who wrote this editorial have an enail address??? i cant find it
actually the fair tax wpuld raise far more revenue because it would end up taxing gains from illegal activites....if youre suggesting tha tthe fair tax will create more corruption than the income tax, youre dead wrong
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
It's a horrible idea, one that will put IRS cops at every checkout lane.
It's a regressive tax.
And, it's incredibly recession-prone.
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
they should do a tax like that but make homes and food not taxable. the gov't will get less money that way, so its not like we should say its unfair. plus, the dems have to say its fair because its easier on the poor who would like buy food
Would they tax sales of stock? I can't see how such investment would be worthwhile, then.
"It's a regressive tax. And, it's incredibly recession-prone."
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
What do a shoe store and the gov't have in common? A large number of loafers!
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
How much tax would I have to pay to make congress go away?
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
If taking down the Berlin Wall had required an act of Congress, it might very well still be up.
Regardlss, Congress wasn't relying on the wall to fund its follies.
Abolish the Dept of Education and the federal highway and return control to the states on both matters.
A few flying pigs every now and then is a good thing. I'm wondering if there are any groups out there that advocate getting a completely flat income tax first before attempting to replace it with a sales tax or repealing that obnoxious amendment in the constitution that got us into this mess in the first place. Less risky approach, imho.
And never a mention in the article that the National Retail Federation had its study done on a plan that was markedly different from the FairTax and it's "studiers" (a commercial consulting group) were told to make every negative assumption they could in the evaluation ... which they did. That study has been refuted on the FairTax website.
Also not a mention that the supposed "57%" rate came from a liberal think tank whosse moving force, William Gale, has long been a vociferous FairTax opponent and in arriving at that number he drastically and disingenuously shrunk the FairTax base by a substantial amount. IOW, the 57% is BS.
I guess that passes for honesty in journalism these days.
How much tax would I have to pay to make congress go away?
The wages of sin are death, but by the time taxes are taken out, it's just sort of a tired feeling.
--Paula Poundstone
The article says you would keep the income tax for a while to address transitional issues. This is a major fault, the point being in Europe they have both a national sales tax (VAT) and an income tax...the worst of all worlds. Secondly say a person is retired and all his savings are from his income that was taxed under the income tax; it is double taxation to now subject his purchases to a 30% sales tax. One leftist economist likes the double hit says it adds to progressivity. This shows his hate of anyone who saves. This sales tax , I am convinced will only result in both an income and a sales tax.
Certainly they have ... and much higher. A few years ago the max income tax rate was 91%.
Cheaqting??? Are you under the grossley erroneous assumption that there is not ULTRA massive chaeting and evasion going on right now. For example, illegal aliens and drug dealers for starters - none of them contribute to the income tax base - we actually take up the slack for them.
Don't try to presume that the FairTax - administered by the states who are experienced with sales taxes - would be anything but a small - very small - fraction of the evasion at present.
Before you go off the deep end like that you should read the bill and see the provisions that apply.
Not at all.
The IRS (along with the income tax) is eliminater.
The FairTax is progressive (actually proportional).
It will give the economy a massive boost.
Aside from that, you're right on.
You might do that for some helpful information.
And, oh yeah ...
The article is wromng about that TOO.
One of the first things in the bill is the elimination of the income tax, the IRS, etc. Couldn't be more wrong and there will not be both taxes at the same time.
Savers under the FairTax may invest and receive income tax free. They are taxed only when they buy things at retail that are taxable ... and not everything is taxed. For example used card and used homes are not taxed since they have already beed taxed. Under the present system savers who buy things are paying a hidden tax in the form of embedded tax costs that are in everything and thereby raise prices. They will probably be even or perhaps slightly better off with the FairTax since prices will be lowered as the economy picks up steam which it will quickly do under the FairTax.
>"If taking down the Berlin Wall had required an act of Congress, it might very well still be up.
Regardlss, Congress wasn't relying on the wall to fund its follies"<
- Ouch! ;^D
I know. I know. I was going to get to it just as soon as I got around to reading the "Atkins Diet Revolution" book.
The Fair Tax rocks. It is the best idea that I have seen come along in quite some time.
Darn! We never dreamed an eagle eye like you would spot the fine print. There it is in Section 421.8.(9). a. (b). 231.
Each retail check out line or cash register or cigar box must have an armed uniform IRS agent on duty at all times to assure accuracy and to collect all retail sales taxes owed to the government. Upon check out, each customer will present their receipt to said agent who will then check all items purchased by the customer against the receipt and calculate the tax owed. If receipt is correct, said agent and customer will then sign the receipt and have in notarized by the notary on duty. At that time said agent and customer will then approach the cashier for the amount of the tax owed. The cashier must then pay in cash the amount owed to said agent. Each will sign a receipt for said cash and the customer will witness it. Then the notary must notarize the signatures. Upon completion of the transaction the IRS agent will turn the cash over to three (3) armed uniformed guards who will take it directly to an armored car. The armored car must be protected and escorted by a platoon of armed uniformed guards. .....
There is much more but you have captured the essence of the proposed law. We had hoped that adding so many new federal employees would entice the Democrats to go along with our scheme. Because the bill eliminated the Internal Revenue Service we renamed it the Irrepressible Revenue Security.
Too bad you uncovered us. We almost sneaked it past you.
>"The income tax was originally Karl Marx's idea to begin with."<
-Yeah, that's right, it was one of the main tenaments of his 1848 "Communist Manifesto".
>"Why any sane conservative would champion its continued existence is beyond me."<
-beyond me too...as Limbaugh would say: "it boggles the mind."
"...did this person actually read Neil Boortz's book.."
Obviously not - the article is dated 4-24 and the book came out around 8 - 1. However, the information about the rebate has been available for years now.
"It's a horrible idea, one that will put IRS cops at every checkout lane."
More than 40 states now have sales taxes. How many of those states have enforcement agents at the check-out lines?
"It's a regressive tax."
Incorrect. The rebate makes it progressive when based on consumption levels, which is the fairest way to judge that.
"And, it's incredibly recession-prone."
Actually, history indicates that consumption levels are less volatile during economic cycles that income levels.
Do you have any rational, fact-based objections?
"Regardlss, Congress wasn't relying on the wall to fund its follies."
Perhaps not, but congress relies on votes to stay in power.
"Also the lower the income, the greater the rebate."
That is incorrect. There is only one variable in determining the size of the rebate and that is family size. Bill Gates would get the same rebate amount as someone living in poverty. However, that rebate check to Gates would amount to far less relative to the taxes that he spends on his lifestyle than someone living in poverty. Therefore, the FairTax is progressive.
actually 23 percent....does this fool who wrote this editorial have an enail address??? i cant find itActually 30 percent when expressed the way sales tax are expressed. If a product costs $100 pretax, it would cost $129.87 after tax. The 23% comes from the fact that $29.87 is 23% of $129.87.
And never a mention in the article that the National Retail Federation had its study done on a plan that was markedly different from the FairTax and it's "studiers" (a commercial consulting group) were told to make every negative assumption they could in the evaluation ... which they did. That study has been refuted on the FairTax website.As usual, the AFT's rebuttal doesn't rebut anything. It's a lot of nonsense and the critical point is "rebutted" by using The Big Lie that prices can drop while take home pay increases.
Thass' funnee m-n-r!!
I thought you were the guy who was always bitching about others interpreting writings for readers ... yet here you do it twice in succession.
Guess it's OK if Squirrels do it - anything to help along the Status Quo Lover's cause, eh? Even a couple of untruths.
Even a couple of untruths.What untruths?
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