The U.S. Internal revenue code – unfairness defined By John Linder

SmallGovTimes.com ^ | 15 June 2007 | John Linder

[K-oneTexas]

The U.S. Internal revenue code – unfairness defined By: John Linder

06/15/07

"The FairTax will create a system that has no exemptions, no exclusions and no special advantages for one American over another."


EDITORIAL - In “The Republic,” Plato wrote, “When there is an income tax, the just man will pay more and the unjust less on the same amount of income.”

"The FairTax will create a system that has no exemptions, no exclusions and no special advantages for one American over another."

Even as we try to address this concern, I agree with Ronald Reagan who stated that “Most [tax revisions] didn’t improve the system, they made it more like Washington itself: complicated, unfair, cluttered with gobbledygook and loopholes designed for those with the power and influence to hire high-priced legal and tax advisers.”

This tax advantage phenomenon occurred in the past, it happens today, and it takes place across the globe. Just this past summer, the rock group U2, led by Bono, who has been outspoken about the need for his government in Ireland to contribute more tax dollars to Africa, showed how strong the desire to avoid paying taxes can be. When Ireland eliminated a tax break for royalties, the band moved their music publishing division to the Netherlands to avoid taxes. One member of U2 stated, “Of course, we’re trying to be tax-efficient. Who doesn’t want to be tax-efficient?”

There is nothing wrong with the desire to be more tax efficient. But it is clear that those who can afford to pay always benefit from having the power and influence to hire high-priced legal and tax advisers.

We all know that this occurs here at home as well under the U.S. Internal Revenue Code. And while the overwhelming majority of Americans pay their taxes, the tax code leaves itself open to tax avoidance of another kind: tax evasion. A recent Senate investigation found that more and more U.S. citizens are seeking advice on “opening offshore accounts, establishing sham trusts and shell corporations, hiding assets offshore, and making secret use of their offshore assets here at home.” The Senate estimates that Americans now illegally evade between $40 billion and $70 billion in U.S. taxes each year through the use of these tax schemes.

The Internal Revenue Code is driving people to make these decisions. While most Americans fret about whether they have correctly accounted for each wage, capital gain or dividend, the system allows others to utilize creative accounting to minimize their share of the tax burden.

We need a system that is fair for every American. The FairTax will create a system that has no exemptions, no exclusions and no special advantages for one American over another. Instead of being at a disadvantage to those who can choose a team of tax attorneys, every citizen is treated equally because everyone will pay as much as you choose, when you choose, by how you choose to spend it. Because everyone would be subject to the same consumption tax rate, with no special tax provisions, every American would be in control of their own tax efficiency.

Tax day comes every year. It should be just another enjoyable spring day – not just for some, but for every American.


Small government Congressman John Linder represents the Seventh Congressional District of Georgia in the United States House of Representatives.

[jwh_Denver]

Great idea, just like the Constitution.

[goldstategop]

Exactly. The poor would have to contribute as the rich now do. The Fair Tax eliminates free loaders. Of course, that's exactly why politicians love the income tax - they want to make some people dependent upon them and use it to punish those of whom they disapprove. The income tax is inimical to freedom. In a free society, the government shouldn't know how much you have. Its none of its business. In the last century, we have surrendered our privacy, our time, and our assets to satiating an ever growing government that never seems to be big enough. What's needed is to change the situation so we can be control of our personal affairs, decide how we want to spend our time and how we want to manage our assets. The Fair Tax allows to pursue both freedom and tax efficiency. Returning to the pre 1913 tax system would liberate America and unleash its talent and productivity and improve every one's quality of life.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[spyone]

I agree with some points of this article, but many are wrong. The top 2% of income earners pay 30% of income tax receipts. The top 20% pay about 65%. The bottom 50% pay just 4%!
A flat tax is the best system. 15% tax rate across the board. When Russia instituted this system, revenues skyrocketed as people stopped hiding their income. Hong Kong has had the system for decades.

[unixfox]

Considering that has been trashed to the hilt, I doubt the assclowns that are now in power will do anything about the income tax.

It's what keeps them in power, and they use it like the ole carrot and stick trick every time they get the chance.

The best way to get a new system in place is to have about 50 million people simply not file on April 15th.

That might get their attention.

[Turret Gunner A20]

A must read: The Fair Tax Book: Saying Goodbye to the Income Tax and the IRS by Neal Boortz and John Linder (Paperback - May 2, 2006) Buy new: $14.95 $10.17 58 Used & new from $6.89 at www.amazon.com

[spyone]

Of course they are not going to change it. Remember the president’s tax commission? Nothing done at all. There are at least 200,000 accountants and 200,000 lawyers who earn a good living working and billing on tax issues. Who would pay an accountant to figure out $50,000 x. 15= $7,500?
And regarding the left...the bottom 50% of income earners pay 4% of the national revenues...and the bottom 40% are net receivers of funds...why would they agree to a tax increase?

[K-oneTexas]

We'll have to agree to disagree. After 30 years in the taxation field the flat tax is a non-starter. It is a progressive tax and will change regularly, it eliminates deductions essential to fairness, it retains the withholding taxes (which must be added back on top of the so called flat rate), it is still an income tax and what is fair about that and last it raises no more revenue that the Fair Tax.

One problem with revenue it doesn't match spending, the other side of the equation that must be address regardless of which reform is chosen.

As for Russia last time I looked they also have a Value Added Tax (VAT) of 20% or so. So they have an income tax and a 'sales' tax both.

The Fair Tax at least repeals the IRS Code so you can not get an income and sales tax at the same time (or inheritance tax or withholding taxes), and it does away with the IRS. Yes you do need a separate measure to repeal the 16th Amendment. So you get a 23% or 30% (inclusive or exclusive look at the rate). But there is no chance of the income tax being reinstated without Congress finding a mass rebellion trying to reinitiate the IRS Code even if the 16th Amendment is not repealed as quickly as possible.

The Flat Tax leaves the IRS Code, all withholding taxes and inheritance taxes and the 16th Amendment must be in place to go here. The Flat Tax would not be at 15% as even the sponsors say 19% to be revenue neutral plus plus Social Security withholding (15.30% / 7.65% each from employee and employer)) and Medicare withholding (2.90% / 1.45% each from employee and employer) at current rates. You're back up there again at roughly 28%. Plus the way the Flat Tax is written you must 'opt into it', if not the old income tax is still in place. Dueling income taxes. Not very appetizing at all.

[ModelBreaker]

"The FairTax will create a system that has no exemptions, no exclusions and no special advantages for one American over another." Even as we try to address this concern, I agree with Ronald Reagan who stated that “Most [tax revisions] didn’t improve the system, they made it more like Washington itself: complicated, unfair, cluttered with gobbledygook and loopholes designed for those with the power and influence to hire high-priced legal and tax advisers.”

Great idea. But over time, Congress will fill the fair tax full of exemptions and exceptions. It's the nature of the beast.

[K-oneTexas]

For the Fair Tax the only exemptions (if you can call them that) on a sales tax are the items that are taxable, the tax base, when they are sold initially. Those goods and services that are taxed. Those entities that are exempt from the tax (government and religious, charitable and eleemosynary groups) are now taxed under the Fair Tax, increasing sources of revenue. You exclude goods an services or add entities that don't pay.

The problem in your statement actually only exists with the Flat Tax. Special interest groups will lobby for exemptions and exceptions as it is still an income tax and they will be pounding it for their benefit. Under the Fair Tax all the Special Interest Groups have no standing because they pay sales tax now; their goal was to shelter their money and their clients from the income tax, which they lobby now.

[EagleUSA]

It’s what keeps them in power, and they use it like the ole carrot and stick trick every time they get the chance.
:::::
Exactly — the Tax Code is the ultimate politcal tool and weapon of the Congress. Getting it changed or eliminated will take a major financial disaster (or another Boston Tea Party) to see any change. The pols are too dependent on this for leverage. The redistribution of wealth is the vote-getting tool of the socialists. Don’t expect anything with the word “FAIR” attached to it....

Actually a real staggering change could take place, short of just refusing to pay taxes by large numbers of the actual tax payers, is to ELIMINATE THE WITHHOLDING TAX!!! Can you imagine the revolt that would occur if these people had to sit down and write ONE BIG CHECK to the IRS each year??? And their state?? And their city???

Food for thought.

[philetus]

The best way to get a new system in place is to have about 50 million people simply not file on April 15th.”

10,000 would not file.
the other 49,990,000 would lie.

[lewislynn]

The FairTax will create a system that has no exemptions, no exclusions and no special advantages for one American over another.

FAQ #49:
Is the FairTax progressive? Do the rich pay more and the poor pay less as a percentage of their spending?

Absolutely, as you can see in Figure 6 below where the graph shows annual expenditures for a family of four and the corresponding FairTax effective tax rates. The poor actually pay less than zero-percent retail sales tax on their spending. Much like with the earned income tax credit of today, the rebate may give them more money than they actually spend on retail taxes. Especially if they are frugal and buy mostly used products. On the other hand, the wealthy approach a maximum of 23-percent retail sales tax on their spending.

Which one is the lie?

[lewislynn]

But there is no chance of the income tax being reinstated without Congress finding a mass rebellion trying to reinitiate the IRS Code even if the 16th Amendment is not repealed as quickly as possible.

Right, and as an example just look at how well that's working with the amnesty plan. It won't be an IRS Code just like the immigration bill isn't amnesty. < /sarcasm >

[K-oneTexas]

Neither are a lie. One speaks of the taxing all alike (rate, items, etc), while the second speaks to the 'prebate' and actual purchases.

The 'prebate' is for everyone, rich and poor alike. A specific amount depending on the family size. Rich or poor the 'prebate' for one person or two, or three, etc is the exact same amount.

So yes the poor pay less tax with the 'prebate' than the tax the rich pay even with their same 'prebate'. Why? Because the rich buy more. This is a sales tax and tax is due when taxable goods and/or services are purchased. Also only new items are taxed, not used items. Additionally the rich usually buy the high dollar items and not many used or second-hand items. That's why it says "Especially if they are frugal and buy mostly used products."

The lie occurs when people try to make others see a very limited piece of the picture causing confusion ... or when comparing apples to oranges.

[K-oneTexas]

If the IRS is abolished and the IRS code repealed then it doesn't exist. Now whatever the agency is collecting or administering might have their name applied to the code. All states have a Tax Code, as does the Federal Government.

It's just that Americans love the IRS so much they applied their name to the tax code.

[jwh_Denver]

My contention is that no matter what taxation system that’s put in place will soon end up right back where we are only worse. In these times the “new boss” will be far worse than the “old boss”.