Tax Plan Aims for 25% Cap

WSJ - Politics ^ | 3/17/11 | JOHN D. MCKINNON

[xtinct]

The chairman of the House Ways and Means Committee wants to cut the top U.S. tax rate to 25% for individuals and corporations, and cut or eliminate many popular deductions.

View Full Image

Getty Images

The tax-overhaul plan form House Ways and Means Chairman Dave Camp, left, would be designed to be revenue neutral overall. .The odds of quick action appear slender. But the move, from Rep. Dave Camp (R., Mich.), is significant as a marker in what will likely be a multiyear debate over revamping the tax code. The plan also provides Republicans with a position to pitch in the 2012 election, a campaign that promises to focus heavily on the economy and jobs.

Mr. Camp told The Wall Street Journal an overhaul of the unwieldy tax code is an essential element in stimulating both economic growth and job formation.

"America needs a tax code that promotes, not prevents, job creation," he said. "Today's code is simply too complex, too costly and too burdensome for families and employers of all sizes to comply with.…We need to set ambitious goals and work toward those, because if we don't try that will be the biggest failure of all."

[pnh102]

That needs to be done anyway, to kick out the ones who aren't legally supposed to be here.

Which of course our government already isn't doing.

One body that emits 310K blackbody radiation and is legally entitled to be here -- one check for $X. Simple.

You're copying-and-pasting of your previous answer does not address the fact that under this scenario, people in high cost states will still get less value from a prebate than people in lower cost states.

The alternative -- X is taxed, Y isn't, Z is, etc ad nauseam -- would invite a circus of fraud ...

Except for the fact that this "fraud-prone" system works just fine for the states which impose sales tax. If this was so "fraud-prone" then states would not be using sales tax as a revenue stream.

Household with one person, one check. Household with two people, two checks. Household with three people, three checks. What part of this pattern eludes you? I think even the government can get that more or less right.

That's not how the FairTax works. It offers a different prebates for varying family configurations.

Why are you living in a high-cost state if you can't support yourself there?

Who are you to question the living decisions of private citizens? Why do you think the government is in the right to punish people based on their living decisions? Besides, if everyone moved to low cost states, those states would become more expensive to live in.

Obviously, your suggested maze of deductions is far more vulnerable to that problem (e.g. if the government doesn't approve of your food choices, those foods get taxed).

And again, your prebate punishes me when I choose to not participate in a certain government policy and the goverment threatens to yank my money from me for doing so. At least under my proposal, I get to keep my money before I have to go begging to the government for a prebate check.

[longtermmemmory]

nonsense, according to the law itself, the NuIRS determines what is or is not a family, DC decides what is or is not a “necessity” keeping lobbyists in the gravy petitioning for their clients products to be a necessity, AND you have a monthly ENTITLEMENT CHECK called a prebate which politicians determine how big (it will take democrats 1 second to demand a “living prebate”)

a tax cap is a good start and far better than the fairscam.

[JDW11235]

“I am not a constitionalist scholar “

Obviously.

[longtermmemmory]

you also have to cap state sales taxes and limit or prohibit state income taxes. NY state and NYC would convulse with no income tax or success penalties.

[TopQuark]

Obviously.

So much for substance, as expected. Snide remarks about grammar and spelling is all you can offer.

Beating yourself in the chest is so much easier than learning what makes your country work.

But don't let this little incident stop you: keep flapping your mouth about tariffs and opting out from purchasing public goods... Beats opening a book and learning something.

[longtermmemmory]

if you cap shrimp cocktails at parties you will eliminate jobs!

(/s)

[JDW11235]

I didn’t criticize your grammar or your spelling, I noted your lack of Constitutional basis for any of your commentary. I read your posts on this thread and a variety of others. I viewed the exchanges others had with you, on this very topic, and the way you responded to them, and then opted out of the “but, but, but ‘you don’t understand’” argument. Not taking the bite. Not worth my time! See ya around!

[pnh102]

If people in high-tax states want relief, they need to elect politicians who will lower their taxes.

I did not say high tax. I said "high cost." There's a major difference there. Put simply, $100 will buy you more in Manhattan, Kansas than it would in Manhattan, New York.

[pnh102]

So, your argument is "it must be a good idea because that's how the government does it".

Your solution requires far more faith in the government than mine. Please show me where states have screwed in their collection of sales taxes, to the point where this approach has been abandoned.

This is the third time I've asked you for solid facts to back up your arguments. Are you going to finally do this or not?

[TopQuark]

Thank you for a clarification.

Nobody was baiting you in any way. But what do you want to hear in response to someone suggesting that it is possible to opt out of a public good, when by the very definition of such good it is impossible to do so?

Considering that this, like electricity or gravitation, has nothing whatever to do with the Constitution, what can you possibly hear in response?

You completely right about one thing: it has become accptable on FR to just throw big words around, blame all sorts of entities --- Wall Street, the Fed, CEOs, oil companies, etc. --- without any understanding of what they do, and then to get upset when someone points that out. By all means, get upset with the messenger.

Thank you for your reply.

[TruthConquers]

“Nobody was baiting you in any way. “

Oh really? This isn’t baiting?

“So much for substance, as expected. Snide remarks about grammar and spelling is all you can offer.

Beating yourself in the chest is so much easier than learning what makes your country work.

But don’t let this little incident stop you: keep flapping your mouth about tariffs and opting out from purchasing public goods... Beats opening a book and learning something.”

You are such a liar there TopQuack. A real forked tongue of snake. Reminds me of liberals, trying to pretend to be conservatives, or liberals trying to hide their commie roots.

[SunkenCiv]

Thanks xtinct.

wants to cut the top U.S. tax rate to 25% for individuals and corporations, and cut or eliminate many popular deductions.

[Defend Liberty]

By increasing the cost of goods 20-25%. That is called insanity.

It doesn't increase costs at all on used items or items purchased by businesses. You also fail to understand embedded corporate incomes taxes, along with compliance costs passed onto the consumer, already amounts to nearly 23% of the price. The Fair Tax will remove those embedded taxes from the price and show that 23% separately on the receipt.

Moreover, price increases will vary by industry but any price increase will be approximately no more than 8% on domestic goods since employers will most likely not pass onto the consumer the savings of no longer paying the employer matching tax but will pass on savings of other federal taxes no longer collected by the employer. Prices will increase by the range you cite for foreign goods since they will currently don't have a consumption tax imposed on imported goods to the U.S. but will have it imposed under The Fair Tax. That will benefit U.S. firms who are at, on average, a 17% disadvantage with their foreign competition. Competition will reduce any price increase to some extent overtime.

Any price increase on domestic goods will be more than offset by the fact no longer will taxes be imposed on wages, capital gains, estates, interest on savings and used items.

It's insanity to oppose a system that will shift power away from the federal government and back to the people by allowing them to decide when and how often they are taxed based on when they make purchases.

[The Theophilus]

You also fail to understand embedded corporate incomes taxes, along with compliance costs passed onto the consumer, already amounts to nearly 23% of the price.

You fail to understand the existence of imports, and while you pat yourself on the back because you recognize some compliance costs, US industry is still hampered by massive regulatory compliance costs outside of the IRS. I also call BS on the 23% gross income corporate tax rate. If you have to tell a very large lie to sell your argument, you are likely selling something that no one wants.

The Fair Tax will remove those embedded taxes from the price and show that 23% separately on the receipt.

And that is where the "Fair Taxers" leave reality world and enter in to the same place static analysis Demoncats go when they think that they can raise taxes without consequences. Reasonable people see the 23% tax on everything and consider, theft, barter, fraud and the already burgeoning underground economy (you know, the one that can already buy and sell billions of $ in drugs, guns, services and other contraband without any tax oversight).

The Fair Tax is a foreigner's dream tax, and a citizen's nightmare tax. Only someone who is ignorant of this or hates America would advocate it. Let me briefly explain.

Shekar gets his H1-B visa and spends a couple decades in the US earning money tax free working in the tech sector. Spending as little as possible, he socks away his income with the intention of retiring to his native India. No taxes paid in the US, low sales tax in India. Win/Win.

José sneaks across the southern border and no longer needs to steal ID because who cares? He earns money no longer taxed with the eye towards retiring home in Mexico where the sales tax is low. Win/Win.

Sally has already worked most of her life in the US and has nearly 40% of her income taxed from her in the form of income taxes, and another "23%" in "embedded taxes" whenever she purchases something. Not some Jackass want to tax whatever wealth she has accumulated and already paid taxes on for her retirement at an initial 25%. Lose/Lose

Bill has worked 80hr weeks all his life, saved like a miser and now is worth tens of millions. All along he has had to drag along the burden of the current tax system. Now some jackal wants to steal his already taxed investment nestegg an additional 25% (initially). Bill won't take this lying down, he picks up and moves to Costa Rica, New Zealand, or any other swelling ex-pat community anywhere else on the planet other than the united States and takes his investment money with him. Lose/Wash

Basically, the Fair Taxers want to scare away all this nation's wealth, or at least the large sums controlled by people who know how to make and retain money and are mobile. Suckers who are left will see their already heavily taxed retirement vanish with yet another confiscatory tax brought on by lunatic Libertarians.

Corporations leave the united States for a myriad of reasons outside just the tax burden, since you correctly observed that they can pass on the additional tax. The US consumer market would shrink because everything now costs significantly more, so corporations would still be outside the US since that is where the growing market is. There would be an uptick in sales by those who have expatriated to tax havens rather than be raped here in the US. The vacation/travel industry would flat out die as a convention in Vancouver or San Saba is far more appealing with the new 25% penalty attached. The millions of government retirees would take all of that tax money collected and spend it outside the US. Why retire in American anymore, particularly with Obamacare promising the same if not worse health care then elsewhere. Speaking of healthcare, big ticket hospital visits are much cheaper in India, Mexico and Singapore - yet another reason, under the "Fair Tax" to enjoy one's wealth anywhere but the united States.

So tell me, how do you expect the US to survive if its only source of taxing flees the country? 80% tax on those who remain? 100%? Any limit?

[The Theophilus]

This statement merited its only reply.

It's insanity to oppose a system that will shift power away from the federal government and back to the people by allowing them to decide when and how often they are taxed based on when they make purchases

This is a fundamental misunderstanding of the relationship of the FedGov to the "people". Your complaint isn't really about the FedGov capriciously making up tax laws, that is absurd. Your complaint is that organized special interests, in effect, decide the tax code. The reason why we have a mortgage interest deduction is not because the Tax and Spenders had a rare moment of benevolence towards the serfs, its because the home real-estate industry worked the system to get it. Over a few generations of competing interests we have this convoluted mess of a tax code that is universally hated.

If anything, your Fair Tax could never be a reality because of the WTO and world courts. Lets say you had your wet dream of punishing the retirees and wealthy with double taxation and lets say every lie about how domestic industry would benefit were to be true. The countries with industry that competes with those in the united States would immediately file objection after objection with the WTO regarding an unfair market. Their argument, among many valid complaints is that the zero tax on industry is the equivalent of government subsidies of an industry, and the courts have always ruled against the united States in matters where this comes up. So you need to up your complaint to the WTO and UN since that is likely going to be the major obstacle.

You dream about not having a government inspect your income - we all would love that dream; but it is foolish to think that government tax regulators would be a thing of the past. Ask anyone who has to live under the burden of a VAT. Think about the sandwich shop or the diamond broker. In the former, each and every sandwich will have to be accounted for, audited and taxed. Unannounced and frequent inspections of books would be the rule. In the latter, how do you prove a diamond is "new" as opposed to "used", or a consignment? And who in hell would buy a diamond in this country with a 25% premium attached when one can pick up jewelry on the cheap during a cruise?

You are trading in one imposing government inspector for another. Furthermore, how does this work out for the majority of states that depend on an income tax at the state and often local level? Not only will the oppression continue on the sole proprietor for every nut and bolt sold at his hardware store from the sales tax inspector, but do we keep the same income tax auditor to make sure that he didn't deduct too much from his income statement?

Does the "Fair Tax" mandate an abolition of all income taxes in all states? What about the non-income income tax in Texas called the "franchise tax"? Is there a 10th Amendment anymore, or do these states have to tack on their 10-20% to make up for the lost income tax?

So it isn't really just the FedGod. Its will still be the FedGov, it will be the customs inspector who will demand an accounting of absolutely everything you take in and out of the country. Your bags will be relentlessly torn apart and searched for any valuable purchased elsewhere, any and all cargo containers will have to be heavily audited to make sure you didn't import a gray market car, or ship to yourself a plasma TV purchased outside the country. Organized crime will flourish in ways that would humble the days of Prohibition and government will of course accuse you, the peasant, of being a participant in the underground market where you will have to prove that absolutely everything in your home, at any given surprise inspection, was legally purchased and appropriately taxed.

Then repeat this at the State and local level.

You are trading in the evil IRS for a total Police State that can march in at any time and inventory/audit your home, your business and your vaults.

Who again is the insane one?

[Toddsterpatriot]

You also fail to understand embedded corporate incomes taxes, along with compliance costs passed onto the consumer, already amounts to nearly 23% of the price.

I've seen this claim multiple times but never any backup. Do you have any?

The Fair Tax will remove those embedded taxes from the price and show that 23% separately on the receipt.

Are you saying that after the income tax is eliminated and the Fair Tax is put in place, prices will be (roughly) equivalent?