Free Republic
Browse · Search
Bloggers & Personal
Topics · Post Article

Skip to comments.

Commentary: Doing away with the Internal Revenue Service (IRS) (Replacing With The Fair Tax)
helium.com ^ | Ken Hoagland

Posted on 02/01/2008 12:06:25 PM PST by Man50D

There has been much misunderstanding-deliberately promoted by income tax system defenders recently-about the effects of the FairTax on different income segments of the taxpaying public. Let's clear the air a bit.

The greatest benefits of tax reductions under the FairTax, according to respected economists, accrue to low income taxpayers (an average 14% reduction) then to the middle class taxpayers(an average 7% reduction) and then even to the wealthy (an average 5% reduction).

How can this be and still raise enough revenues to replace all taxes now collected under the income tax system? It's because the taxpayers base is dramatically broadened under a consumption tax by bringing in illegal immigrants, as consumers, and the $1.5 trillion annual underground economy. In addition, the very wealthy pay the full 23% rate on spending, which is an increase over the typical 15% capital gains tax now paid on dividends and stock gains when redeemed (Warren Buffet's recent complaint). In a nutshell, the more you spend under the FairTax, the more taxes you pay. Remember, too, that all the gimmicks that those with tax lobbyists and tax lawyers are able to exploit in the current 67,500 pages of income tax regulations also disappear (along with the role of tax lobbyists as there are no exemptions, loopholes or deductions).

The President's Advisory Panel on Tax Reform declared that taxes would go up on the middle class under a consumption tax when they ignored the definitions in the actual pending FairTax legislation and created their own flawed consumption tax. They quietly loaded it with exemptions they felt more "realistic", ignored the distributional effects of eliminating highly regressive FICA taxes (you know, the ones that represent the highest tax payments by low and moderate income taxpayers) and refused to examine the $22 million of FairTax research. They then declared a consumption tax (which many writers have wrongly assumed was the FairTax) as requiring a higher rate and punitive to the middle class.

The FairTax monthly prebate actually wipes out all federal taxes on the poor and a diminishing amount of taxes are reimbursed the further one is from the poverty line.

There is great resistance to the FairTax within the circles of those who profit from the complexities of the income tax code. Last year 53% of all lobby expenditures in Washington, DC were paid to tax lobbyists. It's big business that includes not only lobbyists and tax related think tanks and tax reforms groups (entirely devoted to tweaking the income tax code) but academicians who have built careers on understanding the arcane details of the code.

Add to that the center of resistance to a simple, transparent system without gimmicks-the Congressional tax writing committees themselves. In truth, Congressional Members from both parties are addicted to using the tax code to reward friends and contributors, punish opponents and inept attempts to manipulate citizen behavior through the code. In other words, our tax writing process is driven by all the wrong reasons.

This is the single biggest reason that our tax code is so complex that it costs taxpayers $265 billion a year just to complete tax returns. It is so complex that the IRS can't answer taxpayer questions right more than six of ten times. It is so complex, the IRS comes up $350 billion short of owed taxes every year (raising the average taxpayer bill by about $2,000 annually).

On the merits, the FairTax takes politics out of the tax code and the tax code out of business decisions. It is the politics that are tough because passage requires overcoming powerful institutional players. To this end, Mike Huckabee and a host of other candidates have joined 72 Congressional co-sponsors and a growing army of citizens who believe that the public can still drive public policy ( a novel idea first suggested by the Founding Fathers). Otherwise, we are stuck with a system that makes debt more favorable than wealth, puts the "Made in America" label at a severe competitive disadvantage and punishes labor and investment. It's a system driven by politics, power and profit instead of economics or fairness. It's a lucrative gig for those in Washington and a destructive torture for everyone else.

Instead of borrowing money from the Chinese to pay out rebates to American taxpayers (as welcome as they will be) maybe we should think about what happens to the American economy when we make the USA the most desirable "tax haven" in the world. We have lost at least $12 trillion in American capital to offshore locations in recent years. Economists who have studied the FairTax agree that this wealth and a lot more in foreign investment will rush to our shores once the FairTax is enacted.

As FairTaxers say, "Dare to Be Fair". The FairTax won't be perfect and the transition will require adjustments but compared to the badly broken income tax system that so bedevils taxpayers and damages our economy, it's well worth it.

The FairTax research-as well as a recent article on how the FairTax helps the middle class by brilliant Boston University economics chair, Larry Kotlikoff, can be found at FairTax.org


TOPICS: Government
KEYWORDS: fairtax
Navigation: use the links below to view more comments.
first 1-5051-100101-150151-200201-245 next last

1 posted on 02/01/2008 12:06:28 PM PST by Man50D
[ Post Reply | Private Reply | View Replies]

To: ancient_geezer; Taxman; pigdog; Principled; EternalVigilance; phil_will1; kevkrom; n-tres-ted; ...

Fair Tax ping!


2 posted on 02/01/2008 12:06:56 PM PST by Man50D (Fair Tax, you earn it, you keep it!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Man50D

I can only support a change to the Fair Tax if is requires a Constitutional ammendment repealing the income tax. Without that, there is nothing to prevent a future Congress from re-imposing an income tax.


3 posted on 02/01/2008 12:08:25 PM PST by ops33 (Retired USAF Senior Master Sergeant)
[ Post Reply | Private Reply | To 2 | View Replies]

To: Man50D

I am undecided about the fair tax. Someone did bring up the question concerning how you do the changeover. Lots of people who have made major financial decisions based on the current system could be ruined over night through no fault of their own.


4 posted on 02/01/2008 12:09:21 PM PST by Dr. Sivana (Not a newbie, I just wanted a new screen name.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Man50D

Even a fair tax has to have someone to collect it, which means the IRS remains.


5 posted on 02/01/2008 12:09:55 PM PST by aimhigh
[ Post Reply | Private Reply | To 1 | View Replies]

To: Man50D

Has Wesley Snipes been sentenced yet?


6 posted on 02/01/2008 12:11:40 PM PST by Republicus2001
[ Post Reply | Private Reply | To 1 | View Replies]

To: ops33

It’s in the bloody Fair Tax Bill!


7 posted on 02/01/2008 12:12:42 PM PST by wastedyears (This is my BOOMSTICK)
[ Post Reply | Private Reply | To 3 | View Replies]

To: Man50D
Never.
Gonna.
Happen.
8 posted on 02/01/2008 12:12:51 PM PST by elizabetty (John McCain Hates Michael Reagan...........John McCain Hates Me, too. The feeling is mutual.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Man50D
The greatest benefits of tax reductions under the FairTax, according to respected economists, accrue to low income taxpayers (an average 14% reduction) then to the middle class taxpayers(an average 7% reduction) and then even to the wealthy (an average 5% reduction). How can this be and still raise enough revenues to replace all taxes now collected under the income tax system?

It can't and it won't.

9 posted on 02/01/2008 12:13:41 PM PST by Always Right (Was it over when the Germans bombed Pearl Harbor?)
[ Post Reply | Private Reply | To 1 | View Replies]

To: xcamel

ping


10 posted on 02/01/2008 12:15:32 PM PST by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
[ Post Reply | Private Reply | To 1 | View Replies]

To: wastedyears

no it is not.

it is LEGISLATIVE not constitutional.


11 posted on 02/01/2008 12:16:19 PM PST by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
[ Post Reply | Private Reply | To 7 | View Replies]

To: wastedyears

Under HR 25 located at http://www.thomas.gov

SEC. 101. INCOME TAXES REPEALED.

Subtitle A of the Internal Revenue Code of 1986 (relating to income taxes and self-employment taxes) is repealed.

+++-—+++___+++

There is NOTHING stopping a reenactment of income tax on top of the 30% sales tax.

ZERO


12 posted on 02/01/2008 12:20:03 PM PST by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
[ Post Reply | Private Reply | To 7 | View Replies]

To: ops33

Name one position any of the candidates have taken that can’t be abolished by a future Congress.

The claim that a good thing can’t be supported because it could in the future be corrupted is poor reasoning.


13 posted on 02/01/2008 12:20:18 PM PST by Deut28 (Cursed be he who perverts the justice)
[ Post Reply | Private Reply | To 3 | View Replies]

To: elizabetty

but mike huckabee staked his ENTIRE CREDIBILITY ON THE IRS BOOGEYMAN!!!!!


14 posted on 02/01/2008 12:21:00 PM PST by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
[ Post Reply | Private Reply | To 8 | View Replies]

To: aimhigh

How did taxes get collected before the IRS?


15 posted on 02/01/2008 12:22:59 PM PST by Xenophon450 (I guess I'll never know, some things under the sun can never be understood...)
[ Post Reply | Private Reply | To 5 | View Replies]

To: Deut28

without a constitutional change this, giving all the claims as to revenue neutrality as a given assumption, does NOTHING to help taxpayers.

We are taxed too much, the IRS must go, this tax scam proposal does nothing but give us idiotic huckabee commercials.


16 posted on 02/01/2008 12:26:51 PM PST by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
[ Post Reply | Private Reply | To 13 | View Replies]

To: elizabetty
Never. Gonna. Happen

Love the optimism.

17 posted on 02/01/2008 12:32:39 PM PST by cowboyway ("No damn man kills me and lives." -- Nathan Bedford Forrest)
[ Post Reply | Private Reply | To 8 | View Replies]

To: ops33
I can only support a change to the Fair Tax if is requires a Constitutional ammendment repealing the income tax.

House Joint Resolution 16 has been introduced before Congress to abolish the IRS. It is the start of the process to repeal the 16th Amendment. Americans For Fair Taxation(AFFT) is working concurrently to have the 16th Amendment repealed. You can get involved by joining AFFT instead of waiting on the sidelines for other people to do the work.

Without that, there is nothing to prevent a future Congress from re-imposing an income tax.

There has been nothing to stop Congress from passing such legislation in the past except for one obstacle. Congress critters are painfully aware passing a consumption tax while maintaining a federal income tax would cause outrage from the people tantamount to the level felt when Congress twice attempted to grant amnesty to illegal aliens this summer. Congress quickly backed down after experiencing such anger. The last thing politicians want is millions of constituents flooding their offices with angry calls, faxes and emails.
18 posted on 02/01/2008 12:33:56 PM PST by Man50D (Fair Tax, you earn it, you keep it!)
[ Post Reply | Private Reply | To 3 | View Replies]

To: Your Nightmare; Always Right; lewislynn; lucysmom; robertpaulsen; Filo; longtermmemmory; ...

same old same old


19 posted on 02/01/2008 12:36:31 PM PST by xcamel (Two-hand-voting now in play - One on lever, other holding nose.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: aimhigh
How is the tax collected?

Retail businesses collect the tax from the consumer, just as state sales tax systems already do in 45 states; the FairTax is simply an additional line on the current sales tax reporting form. Retailers simply collect the tax and send it to the state taxing authority. All businesses serving as collection agents receive a fee for collection, and the states also receive a collection fee. The tax revenues from the states are then sent to the U.S. Treasury. ............................................................

Frequesntly asked Questions about the Fair Tax

http://www.fairtax.org/site/PageServer?pagename=about_faq

20 posted on 02/01/2008 12:39:11 PM PST by Turret Gunner A20
[ Post Reply | Private Reply | To 5 | View Replies]

To: cowboyway; Bigun

The nattering nabobs of negativism that show up on these tax threads certainly don’t display much enthusiasm for this brave attempt to redefine the relationship our government has with the citizens, does it?

One suspects that they are somehow bought and paid for by the tax lobbyists in WDC, doesn’t one?

Fer shure, their agenda is pro-big government and anti-FReedom!


21 posted on 02/01/2008 12:39:13 PM PST by Taxman (So that the beautiful pressure does not diminish!)
[ Post Reply | Private Reply | To 17 | View Replies]

To: aimhigh
How is the tax collected?

Retail businesses collect the tax from the consumer, just as state sales tax systems already do in 45 states; the FairTax is simply an additional line on the current sales tax reporting form. Retailers simply collect the tax and send it to the state taxing authority. All businesses serving as collection agents receive a fee for collection, and the states also receive a collection fee. The tax revenues from the states are then sent to the U.S. Treasury. ............................................................

Frequesntly asked Questions about the Fair Tax

http://www.fairtax.org/site/PageServer?pagename=about_faq

22 posted on 02/01/2008 12:39:29 PM PST by Turret Gunner A20
[ Post Reply | Private Reply | To 5 | View Replies]

To: Dr. Sivana
Lots of people who have made major financial decisions based on the current system could be ruined over night through no fault of their own.

People are be ruined now by the income tax. They have been making financial decisions with a system consisting of multiple taxation. The price of all goods and services includes embedded taxes at each stage of production due to businesses passing on the cost of their corporate income taxes and associated compliance costs onto the consumer. It only gets worse since investments are taxed. The Fair Tax eliminates all these taxes by abolishing corporate income taxes and taxes on investments.
23 posted on 02/01/2008 12:43:04 PM PST by Man50D (Fair Tax, you earn it, you keep it!)
[ Post Reply | Private Reply | To 4 | View Replies]

To: Taxman
Right out of the Alinsky playbook... Don’t defend your position, personally attack your opponent...

Most likely the number one reason the FT will never pass, because it attracts raging tax protesters like a bug-light out on the porch..

24 posted on 02/01/2008 12:50:07 PM PST by xcamel (Two-hand-voting now in play - One on lever, other holding nose.)
[ Post Reply | Private Reply | To 21 | View Replies]

To: ops33

Repeal of the 16th Amendment is part of HR25 the Fair Tax Bill


25 posted on 02/01/2008 12:54:58 PM PST by NCBraveheart
[ Post Reply | Private Reply | To 3 | View Replies]

To: xcamel; Your Nightmare; Always Right; lewislynn; lucysmom; robertpaulsen; Filo; longtermmemmory
Same old, same old. At least you trolls could try to get the facts straight. But, it's obviously so much easier to stay stipid and lie about things you know nothing about (and are too lazy to study up on).

How p[athetic.

You might at least coming up with a new lie once in a while -- you've gotten boring as hell.

26 posted on 02/01/2008 1:00:18 PM PST by Turret Gunner A20
[ Post Reply | Private Reply | To 19 | View Replies]

Comment #27 Removed by Moderator

To: NCBraveheart
Repeal of the 16th Amendment is part of HR25 the Fair Tax Bill

No, dissolution of the IRS regulations are part of the bill. The repeal of the 16th is a separate issue.

The implementation of the FT needs to be tied directly to the repeal or it will never fly.

Of course, the various other gaping flaws in the FT concept (re-taxing pre-taxed income, overburdening retirees and the like) will keep it from passage regardless.
28 posted on 02/01/2008 1:12:26 PM PST by Filo (Darwin was right!)
[ Post Reply | Private Reply | To 25 | View Replies]

To: Man50D

http://libertyunbound.com/archive/2003_04/welber-tax.html


29 posted on 02/01/2008 1:15:06 PM PST by Daveinyork
[ Post Reply | Private Reply | To 2 | View Replies]

To: longtermmemmory; wastedyears
From The Fair Tax Bill, HR 25:

"SEC. 301. PHASE-OUT OF ADMINISTRATION OF REPEALED FEDERAL TAXES.

(a) Appropriations- Appropriations for any expenses of the Internal Revenue Service including processing tax returns for years prior to the repeal of the taxes repealed by title I of this Act, revenue accounting, management, transfer of payroll and wage data to the Social Security Administration for years after fiscal year 2011 shall not be authorized.

(b) Records- Federal records related to the administration of taxes repealed by title I of this Act shall be destroyed by the end of fiscal year 2011, except that any records necessary to calculate Social Security benefits shall be retained by the Social Security Administration and any records necessary to support ongoing litigation with respect to taxes owed or refunds due shall be retained until final disposition of such litigation."

So, the IRS is defunded and the records are destroyed. How will an income tax spring back to life without considerable effort from the Congress? What do you think will happen to any Congress critter who suggests such a thing? Are we impotent? Did we not stop the shamnesty bill? Why do you think the American public will tolerate an income tax after they've tasted the freedom of the Fair Tax?

30 posted on 02/01/2008 1:16:11 PM PST by DivaDelMar (CRAm member-- (Conservative Republicans Against mcCain) Think you're entitled to my vote? CRAm It!!!)
[ Post Reply | Private Reply | To 12 | View Replies]

To: NCBraveheart

The FT legislation cannot repeal the 16th Amendment. It does defund collection activity.

The 16th merely authorizes an income tax. It doesn’t require one.

Repeal will require the same action as any other amendment.


31 posted on 02/01/2008 1:16:39 PM PST by PubliusMM (RKBA; a matter of fact, not opinion...)
[ Post Reply | Private Reply | To 25 | View Replies]

To: DivaDelMar

IOW the 16th amendment stays.

sorry no cigar+30% tax.


32 posted on 02/01/2008 1:24:12 PM PST by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
[ Post Reply | Private Reply | To 30 | View Replies]

Comment #33 Removed by Moderator

To: longtermmemmory

It makes sense to repeal the 16th, if for no other reason than telling future generations of its sinister implementation, and its abuses by elected slimeballs.

However, repeal will require a separate legislative effort. It can’t be done by simply enacting the FT legislation. Repeal will require another Amendment, adopted in the process of amending the Constitution.

However, by defunding collection efforts, and abolishing the IRS, the mechanism to re-enable an income tax could not happen overnight. And, just as we did with the shamnesty proposals last year, we can shut down any attempt to add another income tax.

Sorry, but this one rings hollow. We are ultimately responsible for our own political landscape...

Lock and Load.


34 posted on 02/01/2008 1:46:10 PM PST by PubliusMM (RKBA; a matter of fact, not opinion...)
[ Post Reply | Private Reply | To 32 | View Replies]

To: xcamel
They really shouldn’t let people with screws lose to post on FR

I agree! When are you leaving?

35 posted on 02/01/2008 1:49:03 PM PST by Bigun (IRS sucks @getridof it.com)
[ Post Reply | Private Reply | To 33 | View Replies]

Comment #36 Removed by Moderator

To: Taxman
Someone once said "It is difficult to free fools from chains that they revere."

He was right as rain!

37 posted on 02/01/2008 2:01:29 PM PST by Bigun (IRS sucks @getridof it.com)
[ Post Reply | Private Reply | To 21 | View Replies]

To: Bigun; Taxman

The chains of irrational rage seem to be the hardest to break..


38 posted on 02/01/2008 2:08:46 PM PST by xcamel (Two-hand-voting now in play - One on lever, other holding nose.)
[ Post Reply | Private Reply | To 37 | View Replies]

To: xcamel

Tell us what is irrational about hating slavery?


39 posted on 02/01/2008 2:14:38 PM PST by Bigun (IRS sucks @getridof it.com)
[ Post Reply | Private Reply | To 38 | View Replies]

Comment #40 Removed by Moderator

To: xcamel
Let's see now.

You work and someone else takes whatever portion of the fruits of your labor they currently want before you see a dime!

Yep! That's slavery!

41 posted on 02/01/2008 2:23:01 PM PST by Bigun (IRS sucks @getridof it.com)
[ Post Reply | Private Reply | To 40 | View Replies]

To: Bigun; All
Let's see, you work, eat, get shelter, raise a family, drive a car, and lose 30% to the taxman every time you open your wallet...

Now that's real slavery!!

42 posted on 02/01/2008 2:34:50 PM PST by xcamel (Two-hand-voting now in play - One on lever, other holding nose.)
[ Post Reply | Private Reply | To 41 | View Replies]

To: longtermmemmory

Read tagline.


43 posted on 02/01/2008 2:39:31 PM PST by unixfox (The 13th Amendment Abolished Slavery, The 16th Amendment Reinstated It !)
[ Post Reply | Private Reply | To 32 | View Replies]

To: Man50D
I found a mascot for the Fair(y) Tax

It is magic. Taxes, the IRS, fat, baldness, and bad breath all magically disappear.

44 posted on 02/01/2008 2:39:43 PM PST by Raycpa
[ Post Reply | Private Reply | To 1 | View Replies]

To: Man50D
"the taxpayers base is dramatically broadened under a consumption tax by bringing in illegal immigrants, as consumers, and the $1.5 trillion annual underground economy."

The only way the Fair Tax will bring in more money from this group is if this group collects and forwards the Fair Tax on their goods and services.

For example, the drug dealer will have to add 30% to his drug prices and forward that money to the government. Ditto the prostitute.

Now, they don't file a 1040 today. I doubt they'll register a collect the Fair Tax tomorrow.

45 posted on 02/01/2008 2:57:21 PM PST by robertpaulsen
[ Post Reply | Private Reply | To 1 | View Replies]

To: Raycpa
That's what they try to sell you..

This

...is what you get...

46 posted on 02/01/2008 3:00:23 PM PST by xcamel (Two-hand-voting now in play - One on lever, other holding nose.)
[ Post Reply | Private Reply | To 44 | View Replies]

To: Man50D

Thank you for your reply. If the 16th Amendment is repealed than Congress cannot pass legislation re-imposing an income tax. The reason why the 16th was passed is so that the government could get around the Due Process clause of the Constitution. That is the reason why the Civil War era income tax was ruled unconstitutional.


47 posted on 02/01/2008 3:04:11 PM PST by ops33 (Retired USAF Senior Master Sergeant)
[ Post Reply | Private Reply | To 18 | View Replies]

To: wastedyears

Thank you for your reply. I know that the legislation supporting the Fair Tax called for repealing the 16th Amendment but an amendment repealing the 16th Amendment must still be approved by the 3/4 of the state legislatures.


48 posted on 02/01/2008 3:06:41 PM PST by ops33 (Retired USAF Senior Master Sergeant)
[ Post Reply | Private Reply | To 7 | View Replies]

To: Republicus2001
Has Wesley Snipes been sentenced yet? p Jury Acquits Wesley Snipes of Tax Fraud

Friday, February 1, 2008

OCALA, Fla. - Action star Wesley Snipes was found not guilty of federal tax-fraud and conspiracy charges Friday, but was convicted on three misdemeanor counts of failing to file a tax return.

Snipes and two co-defendants, a delicensed accountant and a tax protest leader, were indicted in 2006. Snipes was also indicted on six counts of willful failure to file a tax return from 1999-2004, a period in which he signed two contracts for more than $10 million on sequels in the "Blade" trilogy. He was acquitted on three of those and convicted on the others. He could be sentenced to three years in prison after originally facing a possible 16 years.

Co-defendants Eddie Ray Kahn, the founder of a tax protest group, and Douglas P. Rosile, the accountant, were convicted by the same jury of tax fraud and conspiracy. Snipes sat expressionless until all of his verdicts were read. Then, defense attorney Robert Bernhoft put his hand on the actor's leg and Snipes nodded in relief.

http://home.peoplepc.com/psp/newsstory.asp?cat=TopStories&referrer=welcome&id=20080201/47a2a750_3ca6_15526200802011894705064

49 posted on 02/01/2008 3:08:43 PM PST by Turret Gunner A20
[ Post Reply | Private Reply | To 6 | View Replies]

Comment #50 Removed by Moderator


Navigation: use the links below to view more comments.
first 1-5051-100101-150151-200201-245 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
Bloggers & Personal
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson