CAVUTO REPORTS THAT BUSH CONSIDERING SCRAPPING THE IRS CODE!!!

Fox News Channel | November 6, 2002 | n/a

[Tree of Liberty]

Neil Cavuto just interviewed Mitchell E. Daniels, Jr., the director of the OMB, and Neil let it be known that he's hearing rumblings that Pres. Bush is considering a total re-write of the tax code and that SecTreas O'Neill is strongly pushing a national retail sales tax!

[patriot_wes]

I'M STILL HEADING TO WASHINGTON DC NEXT WEEK!

[palmer]

Thanks for your reply. You are very patient.

The only ones held liable for collection and remittence of the tax are sellers and they are required to save copies of reciepts issued for the goods they sell. It is up to the state tax authority to administer and enforce the povisions of the tax law and perform that level of audits and checks of operating businesses necessary to assure compliance.

The way I see it, there would have to be 100% auditing over a given reporting interval. For example if the retailer had to remit sales taxes at the end of each day, the auditors would have to buy all the merchandise from that retailer or observe every transaction, add up the totals for the day and compare to the reported totals.

At the flea market this would be difficult but not impossible. Like I said before, I have paid cash for negotiated prices for new merchandise. Many retailers won't negotiate on new merchandise and I can now understand why. But many have a mixture of new and used merchandise and none have any kind of cash register or other device to keep track of sales.

One example vendor sells bird houses. I have bought several. He could be tracked by noting the number of houses he brings to the flea market, the number he leaves with, and the average purchase price. Presumably the tax authorities would not have to do this all of the hundreds of new merchandise vendors, just enough to ensure compliance like you suggest. But they would have to ignore the 1000's of used merchandise vendors who slip new merchandise into the used. This is quite common with clothing. I have bought brand new shirts culled from racks containing many used work shirts. The price was negotiated.

Also for this type of auditing to work the gross receipts would have to be reported over short intervals (days, weeks or a month) in which all the merchandise flow was monitored.

[CliffC]

Hi William:

Please consider the following when analyzing the proposed FairTax (HR 2525) for tax reform:

1. There will be no payroll deductions from one's paycheck. Neither for Income tax nor for FICA.

As you know, the Soc. Sec./Medicare payroll deduction tax is the most regressive of all. It starts at dollar one and continues to $80,000+.

See this website: PAYCHECK!

2. A Study by Dr. Dale Jorgenson, Head of Harvard Business School of Economics indicates that prices of goods and services will drop from 20%-30% (avg 22%) after the FairTax is enacted. This is the amount of Income Taxes (and compliance costs) now 'hidden' in the price to cover the producer's Income Tax (and compliance costs).

3. The Family Consumption Allowance (FCA) provides for the 'necessities of life' to be acquired 'tax-free.'

Rebate via: Family Consumption Allowance!

Cliff Cofer - State Director, AFFT Iowa Volunteer Team

P.S. I have a number of websites dealing with various aspects of the proposed FairTax that you may want to visit: They are all Linked to this site: FairTax Facts!

[Nuke'm Glowing]

"If Bush got this done, he would go on Mount Rushmore."

The hell with Mount Rushmore, put him on the 20 dollar bill, immediately. If that were to happen our economy would start growing at a 7% clip almost immediately! I know that I would spend and invest more, that's for damned sure.

[palmer]

The business is responsible for collecting the tax. The purchaser bears no responsibility for the actions of the business. States do a competent job of collecting sales tax and watching over it.

See my previous posts for the difficulty of enforcement. I'm not sure how competent VA is at my flea market. I have bought many items that would be hard to track. One example is CD's and tapes, some of which are probably bootleg. I pick out a small pile, negotiate a price, the vendors puts them in a bag and puts my cash in his till. I don't know how many units he sells or buys wholesale. I don't know if he steals from the till or counts it accurately. How is the state going to know this?

My concern is not that they couldn't figure out a way to enforce this but that in the process of enforcement they would eliminate all "illegitimate" vendors and possibly eliminate my ability to buy anonymously.

[Principled]

I built a $80,000 airplane from a $16,000 kit, and a $250,000 house from $100,000 of materials.

It matters not.

If it's being sold for FINAL retail sale and never been taxed, it's taxed. Got it?

It doesn't mastter how much it cost you to build it, just how much it is sold to the final retail customer for. Business to business transx are not taxed.

Try harder.

[palmer]

$250,000 house from $100,000 of materials

I admire your abilities. I have not built much more than a small shed myself. No doubt the sales of your house and plane would be tracked by the tax authorities and you would be prosecuted if you failed to remit the taxes. The NRST proponents see this as a lesser evil than employers witholding income tax. I'm not so sure. What if you sold 3 planes built from 3 kits but reported sales of two? How would compliance be enforced without lots of material tracking, or spying on builders like yourself, or purchasers reporting their purchases?

[William Terrell]

Please do not call it a "Fair Tax". It is a national retail sales tax. The term "Fair Tax" is a presumptive description hidden in a label, and that kind of tactic has historically been used to decieve.

First, add up the fed and FICA for a pay period. Imagine everything you buy, except used goods, has increased in price by 30%, that is to say, everything. Does the amount you're not paying in fed and FICA cover what you're comfortable buying in that same pay period?

I checked out my son's numbers (he works as a shop floor manager in a start-up). No where near does it. It leaves him with a sizable deficit.

You next point quoted by economist, is how the proponents of an NRST answer that particular concern: the addendums businesses add to prices for income tax expenses will come out of the prices.

For one thing, the litter of economists that were dead wrong is legion acorss history. Next, what he claims is a theory, based on the public-service-minded and compassion of businesses, usually large corporations. This has hardly been a identifying trait of such businesses in the past.

Also, people will expect a 30% increase of the price they are currently paying. So why should a business voluntarilly remove the padding? The aregument there is that they will be forced to do it to remain competetative because other businesses will do it.

What evidence is there that that will happen, when we have a business-as-usual informal agreement among those in most industries to keep a price above a certain amount or at a certain level?

All this is much too iffy to base making such a vast change in the very structure of government, and destroy the last remaining separation of the state governments from the federal government. What if this theorized price reduction doesn't happen? There can be no law made to force it, you know.

Then you would have a majority of the population that will have to petition the government for returns on the sales tax, re-instituting the IRS to execute the laws on return, and a massive move to welfare because they can just barely afford to feed themselves.

I see not place in HR2525, and I've read every word of it, where anything new is tax free. The closest to it that comes is a form you can fill out monthly to beg a partial return of NRST. Which, as mentioned above, requires an IRS agency to enforce the honest filling thereof.

As far as I'm concerned the NRST is complete socialism waiting in the wings to happen. And for a number of reasons beside the small one of price reductions that won't materialze. I've seen to many economic promises and predictions that don't seem to materialize. Why? Because there is a level of interactive detail even in simple economies that is beyond any person's mind to grasp the working thereof.

No sir. The same glowing predictions were made in favor of the income tax back when an income tax was argued against higher tariffs. Look at what we have now. Only, an NRST can be limitlessly abused, whereas an income tax has limits.

[Intimidator]

I may be mistaken but don't the Russians have a national sales tax. I've heard their new tax system seems to be working well.

[Phantom Lord]

I support both the flat tax and the NRST. Both are better than what we have now by indescribable amounts.

But one thing that the NRST people fail to admit is that the IRS will still be needed. It will be greatly reduced from what it is today and will have far fewer powers. But it will still be needed in one form or another to assure that the taxes are being collected and properly paid.

You can NOT get rid of it entirely.

[Phantom Lord]

There is a HUGE black market for smokes in NY. People buy them in virgina by the truck load and sell em in NY.

Elliot Spitzer, NYs attorney general blames the problem on VA's low taxes. Wrong Spitzer, its because of NYs HIGH taxes.

[Intimidator]

If Bush got this done, he would go on Mount Rushmore

Got that right!. I won't hold my breath though, the Dems will figure out a way to demonize it and fillibuster

[iconoclast]

I'M STILL HEADING TO WASHINGTON DC NEXT WEEK!

If you just wait until something actually serious is done on this, you can probably get a seat and real good price on a flying pig.

[Principled]

I support both the flat tax and the NRST. Both are better than what we have now by indescribable amounts.

You got that right!

But one thing that the NRST people fail to admit is that the IRS will still be needed.

Why? There is no need to track income of any kind for any reason. The enforcement mechanism for sales tax is already in place- no IRS needed. Billions will be saved on defunding it.

States already collect sales tax efficiently. Under the nrst, they will be paid for collecting and remitting the tax.

Your opinion is valued, but your position is not cogent. Please explain WHY you believe the IRS will still be needed.

[4edm 4ever]

I've seen many post on here concerned with home deductions, evasion, state income taxes, etc. First of all, if you haven't reviewed the main NRST Bills, do so and many of your concerns will be answered. The FairTax, which I support replaces the Federal Income Tax, the Federal payroll tax, Capital Gains tax, gift and estate tax, with a single level National Retail Sales tax, only at the final level of sale and only on new goods and services. It does not hurt the poor. There is a monthly rebate to every family based only on the size of the family. The rebate equals the poverty rate times the tax rate and is paid in advance monthly. The only thing the Government needs to know is the size of the family. This is verified by the Social Security number so illegal aliens do not get a rebate. In effect, the rebate completely untaxes the poor. It has the effect of exempting the basic necessities of life for all of us without leaving loopholes called food, medicine, etc. (Item exemptions allow for abuse by changing the definitions of items).

The Home interest deduction is NOT a concern. It is only a habit. Today we only deduct interest on a mortgage, not the principal. To get this deduction, one must itemize and give up the standard deduction on their tax form. Most Americans DO NOT itemize so do not get the deduction. Those that do, still don't get the benefit of deducting all interest because they must simultaneously give up the standard deduction. But that is not the main point.

The fairtax (www.fairtax.org) only taxes new items. A home would only be taxed once, when it is new. When the fairtax is passed, existing homes would not be taxed. ONLY the principal is taxed on those new homes. Interest expense is not taxed. That is no different than under the income tax where you can only deduct interest. Not taxing something is the same as exempting it. But one big difference is, under the FairTax you have much more money in your paycheck to make the payment.

Some will say that new home construction would end, and everyone would buy used. That is not practical either. This bill has been endorsed by the Association of General Contractors of America. Why? It removes the embedded cost of the income/payroll tax from every nail, piece of board, drywall, and effort of labor that goes into construction. According to economists from Boston University, Harvard, Rice, MIT and Standford prices for new goods would drop in cost between 20 and 30%. The tax rate would be approximately 23% to be REVENUE NEUTRAL so prices in actuality would remain at their current level. There would be a 6 month to 1 year adjustment period because items in inventory will still be carrying the embedded cost of the income tax. Whatever the cost of new homes after the change, used homes will adjust in price. They will not be taxed, so if the cost of a new home drops in price and after the tax stays at the same level, used homes will also stay at the same level. That is supply and demand.

In one conversation on this topic, a bank officer asked me what made me think he would finance a new car for $20,000 plus an additional $5,000 for taxes. My first response was to ask him if he'd like to remain in business. In reality though, he is financing taxes today as the cost of taxation is throughout the value of the car. People just don't see it. Under an NRST, if I buy a new car for $20,000 plus $5,000 in taxes, drive it across the street, decide I don't want it and offer to sell it to an interested party for $24,000, that party will have two choices...go across the street and pay $25,000 or buy mine with less than a mile on it with a $1,000 savings. Prices adjust.

A final thought on home sales...in a 1996 study by Princeton Economics, the CEOs of 500 large corporations in Europe and Japan were asked how they would response to this type of change. Eighty percent stated they would build their next factory in the US, twenty percent would move their headquarters here. This would create a huge growth in the economy as well as making the US the savings capitol of the world. Why place tariffs on imported steel which increases prices, when you can simply attract the companies to America to provide the jobs?

Regarding State income taxes and evasion...45 states today have a sales tax. The Fairtax will be collected by the States. The mechanism is already there. It does not require a new bureaucracy. In America, 85% of the retail sales are made by 10% of the retailers (i.e. Walmart, Sears, etc.) I can't see Wal-mart conspiring with me to evade the tax. Comparing the rate of 23% to today. If you are in a 15% marginal tax bracket, adding in the employer and employee payroll tax brings your current marginal rate to 30%. If we go out of our way to avoid a 23% on what we spend, what do you think most Americans are doing to avoid a 30% bite or more on what they make?

Keep in mind there is no perfect tax system. In the late 1800s the average American complained about being enslaved by tariffs as they were used by business to keep foreign competition down and artificially keep prices high. There is no perfect tax system, but a tax system based on a man's production is akin to slavery. You can't retain freedom under a system that requires loss of privacy, intimidation and division of citizens. A flat tax at any rate will not change this. You still must report to Government the value of your labor and they will still lay first claim to your production. This is slavery, is is only a matter of degree.

The FairTax pays the State and the retailer to collect the tax, so we end the notion of involuntary servitude for businesses as tax collectors. The States that have an income tax piggyback on the federal system. Without a federal income tax, most people (including officials in my State) feel the State would also go to a broadbased sales tax. At any rate, it is much better to have 50 States to choose from than one abusive Federal Government.

The greatest benefit by far though is the visibility and accountability this bill would bring. Even though the rebate "in effect" untaxes the poor, they would still see the cost of government included on every receipt. Any Government expense could be quantified. As an example, there would be no Free Government Health Care. It would have to be related to a percentage increase in the rate. Americans could be united in decisions instead of divided into thousands of special interest groups. This will lead to smaller government.

For the sarcastic among us (I am frequently one) it is hard to imagine our elected officials passing something that takes such a huge part of their power. No one says this will be easy, but it is possible. It is up to all of us to convince our elected officials that they either give up this control mechanism or their job. Politicians love to jump in front of a moving parade. We need to form the parade. I have spoken to senior groups, business groups, unions, etc on this topic and can personally say that 95% of the people support this change, but are very skeptical and therefore do not get involved. That is the only thing preventing this from happening. If you're for this, START ACTING ON IT! Americans for Fair Taxation are holding their first annual convention starting tomorrow (Friday the 8th) through Sunday. Be there, or call 800 FAIRTAX to get involved.

Imagine a world with no more income tax forms to file. We could change the initials of the IRS to INS and send them to terrorize terrorists instead of Americans.

[Phantom Lord]

The IRS as it exists today will NOT be needed. But there will still be a need for an Revenue Service to insure that that state collection agencies are properly collecting, reporting, and sending in the sales tax as required by law.

There has to be a collection department to recieve the taxes and enforce the law. Just allowing the states to send in checks to the treasury will not work.

[proud American in Canada]

all I can do is repeat: WOW!

WOW!!!!! FANTASTIC!

If this happens I'm moving back to the States... my husband can like it or lump it!!!!!

:)

[Deuce]

Is there any site on the web that makes the following explicit calculations:

1. Demonstrates that 23% is the correct number to generate the $1.7T necessary to replace the revenue generated by the taxes it is proposed to replace.

2. A study that shows the projected NRST tax burden for each income quintile so that I can compare it to the current distribution of tax burden reported by the Joint Committee on Taxation on page three of this JCT Study

[longtermmemmory]

I don not like a national sales tax. It would amount to a tax on the internet. Since the tax is national then there is no cross state safe havens. Not good.

What happened to the flat tax?

[Deuce]

According to economists from Boston University, Harvard, Rice, MIT and Standford prices for new goods would drop in cost between 20 and 30%.

If true, this converts the NRST into a free lunch. Are there economists who disagree with these economists?