Posted on 07/07/2011 12:42:35 PM PDT by jessduntno
The current U.S. tax system is huge convoluted mess. The Internal Revenue Service (IRS) has six federal income tax brackets ranging from 10 to 35 percent. Our so-called progressive tax system punishes the most productive members of society with a higher tax rate. The current tax system is riddled with loopholes and biases that hurt individuals who save money for the future. Not only does our tax code treat citizens differently but it is hopelessly complicated. According to the IRS, the average taxpayer spends 26.5 hours preparing and sending in their taxes. The ever-growing Internal Revenue Code is now over 3 million words. It’s far too complex, intrusive and long.
We can all agree that we clearly need to fix the tax code. The two most common tax reform proposals are the flat tax and the fair tax. Which one is best? First, both the flat tax and the fair tax (if implemented correctly) would likely be better than the current tax system. As Cato Institute scholar Dan Mitchell says, “from an economic perspective, the flat tax and the national sales tax (or fair tax) are virtually identical. Both would junk the current system. Both would restore fairness by taxing at one low rate. Both would eliminate all forms of double taxation.”
FreedomWorks has long concentrated our efforts on implementing a flat tax. The flat tax is simple and would generate more economic growth than the status quo. Instead of our current multi-rate tax system, a flat tax would tax all individuals at the same rate. Under a 10 percent flat tax, someone making $100,000 annually would pay a $10,000 federal income tax. It’s a simple equation. It would not punish productive members of society with a higher tax rate.
I personally advocate the flat tax being as low as possible. Of course, any tax reform should be accompanied by significant spending cuts. The flat tax would remove special interest loopholes from the tax code and allow individuals to file their taxes within five minutes on a form the size of a postcard.
Fair tax advocates claim that it would get rid of the IRS but it would likely be replaced with another agency by a different name. The proposal promises that individuals under a certain income threshold would get some money back at the end of the year. Who would administer this? Unlike the flat tax, the fair tax as a replacement for the income tax has never been implemented in any country. We have no real world examples of what a fair tax would look like in action. Perhaps the fair tax isn’t as politically feasible as the flat tax. It’s important to remember that repealing a constitutional amendment requires the approval of 290 House members, 67 Senators and a majority of the legislatures in three-fourths of the states.
I prefer a flat tax, but I would take the fair tax. I’ll vote for a candidate that supports either.
I would take the flat tax. Anything with the work “fair” in it seems to be rooted in communism and socialism, and we know how that work.
We had no idea what a constitutional republic where the government had strictly limited powers and was subordinate to the people would like either. Not the best argument that can be considered. "The world" isn't the best place to derive ideas on government, taxation, or pretty much anything important.
I have heard that a 10% flat tax would give the government more money than they would know what to do with...if you can believe that. But.....I have also heard politicians also say that 20% or greater would be required. As for the IRS, it is complicated because the politicians want it that way.
Anyone that wants a flat or fair tax.. is just begging for a VAT... in the current environment..
In case one does not not know what a VAT is.. is begging for out of control taxation..
A VAT is taxation on everything that moves or doesn’t move..
AND after all taxation is done.. there will be a tax on completion..
The next stage is paying the goverment rent for everything making taxes obsolete..
LIKE: you know.. property taxes.. as an example..
Congress not IRS has the various tax brackets, loopholes, etc. IRS could be called XYZ and we would have the same brackets, loopholes and Congressional corruption as we have now. We need Congressional Reform more than a new tax system. There will be no new tax system because CONGRESS LINES THEIR POCKTH THIS SYTEM!
Tax COLLECTION is not the bigger problem. Revenue is already 19% of GDP and according to the Laffer curve, is about as much as can be gained by taxation.
The bigger problem is SPENDING. We are currently about 24% of GDP for spending and that needs to cut back to 18%. Anything else is rearrainging deck chairs.
Anyone that wants a flat or fair tax.. is just begging for a VAT... in the current environment..
You didn’t read the article...it covers that point. Quite well, I though.
US GDP for 2012 is projected to be a tad over $15T. So for simplicity, I will just go with a round $15T.
Flat tax chart
10% = 1.5 T
14% = 2.1 T
18% = 2.7 T
20% = 3.0 T
22% = 3.3 T
Total spending for 2011 = 6.2 T (estimated)
18% in Healthcare
16% in Pensions
16% in Defense
14% in Education
11% in Welfare
25% in Other
Without any spending cuts, the FEDERAL flat tax rate would need to be at or near 42%
This is a false choice. There should no Federal taxes period. Money equals power and FEDGOV has to much of it. They should be limited to the funds they raise from excises and duties. If they need more money they should hold a Jerry Lewis telethon or a bake sale. If the people think its worth it they’ll give their money voluntarily.
The Flat Tax would only smooth out the current tax system. The FairTax would replace all federal personal and corporate income taxes and do away with the IRS.
The current bill before congress would only allow implementation of the FairTax if the 16th Amendment is repealed. Both FairTax and income taxes cannot co-exist.
Because of the other features of the FairTax not listed here, it is far and away (IMHO) better than any flat tax. I don't think any posters here really understand the FairTax in its entirety. Read The FairTax Book by Neal Boortz to get a good understanding of the FairTax.
We had no idea what a constitutional republic where the government had strictly limited powers and was subordinate to the people would like either.”
And look how well that turned out?
I thought current federal spending was about $3.7T.
I prefer the Fair Tax or rather a consumption tax. A tax that is based on what you spend not what you earn.
Plus if everyone realized where all these taxes on the Corporations and all kinds of other places, if everyone could see that corporations DON’T PAY TAXES, they just pass on the cost to the consumer. So, everyone in everything we buy or services we purchase is paying a hell of a lot of taxes again.
So, strip all these taxes and put them on the side of consumption and you will see how much taxes you are really paying. And when everyone sees how much the taxes they really are paying, you will see more participation in the political arena.
Till now this congress has been able to hide tax increases by taxing the corporations and businesses and appealing to our class envy. All the while laughing at how stupid we all are.
The Fair Tax's biggest weakness is that it hits people a second time who have already earned money and paid taxes on it but saved rather than consumed at the time. Those who borrowed and spent will be essentially untaxed when they earn and pay off their debts. Also I think that untaxed black markets will pop up all over the place unless the IRS's replacement is stalking everywhere looking for untaxed sales.
Not to mention removing all the taxes off of the job creating side of the private sector. Think of all the savings businesses will be blessed with. No more lawyers to hire for tax savings from the IRS. No more having to worry about collecting the taxes from workers. How many people work for just these type of positions?
You talk about businesses freed to pursue what they are there for? Think of all the savings that will be passed on to the consumer?
Just take an item that you purchase then think of all the taxes that went into producing that product.
Oh baby, talk about a rip roaring economy. People will be stunned to see it happen.
My numbers came from this site: http://www.usgovernmentspending.com/
Re-value our dollar 1 for 10, go back to gold backing, close IRS. A loave of bread that costs 2.xx dollars now would cost 20 cents in new money. Wash. would get 23 pecent of the sale. The elimation of various costs would bring the price of a 1 dollar item DOWN to 77 cents or so. So figuring in the 23 cents for the govt. you still would pay 1 dollar for the item. But, with all our debt, this may be hopeless.
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.