Posted on 03/04/2004 10:31:36 PM PST by scripter
An effort to do away with federal income tax and replace it with a national consumption tax is gaining steam, as activists strive to get at least 100 members of the House of Representatives on board by Independence Day.
"We think we'll be at 100 co-sponsors by July 4," Tom Wright, executive director of Americans for Fair Taxation, told WND.
Wright noted the House bill, H.R. 25, added its latest co-sponsor this week – Republican Rep. Barbara Cubin of Wyoming – bringing the total to 44.
"We're working with our grass-roots people across the country" to get to the goal, Wright said. H.R. 25, the Fair Tax Act, is sponsored by Rep. John Linder, R-Ga., who has sponsored similar legislation for the last several years. The latest version of the bill was introduced Jan. 7, 2003.
"The current federal income tax system is broken. Patching up the existing code is pointless. It's time for a fresh approach, a fair approach. It's time for the FairTax," says the group's website.
"From its humble beginnings, the income tax has grown like a cancer by taxing our hard work and discouraging savings and investment."
H.R. 25 would eliminate the federal income tax and replace it with a 23 percent consumption tax paid by the end user. That means business-to-business purchases for the production of goods and services would not be taxed. The organization estimates consumer prices will drop by an estimated 20-30 percent as a result of the change.
The group's website describes how the bill's rebate function works. It assures that those living in poverty would not pay any tax.
"Under the FairTax, no American will pay taxes on necessities. The rebate will be equivalent to the tax paid on essential goods and services. The rebate will be mailed before the tax is actually paid [and] will be paid in equal installments at the beginning of the month. The size of the monthly rebate will be determined by the federal poverty level for a particular household size."
Wright touted the support of the American Farm Bureau. The organization has been educating its membership on the bill, and many state chapters have given the bill legislative priority.
Dumping the income tax has become a campaign issue in many political races this year, Wright says.
"All over Texas, House candidates are supporting it," he said, mentioning races in other states as well.
Wright noted the bill's cause is helped every time Social Security reform is discussed, since, under the plan, the entitlement program would be supported by the consumption tax instead of what he calls the "regressive" Social Security tax.
Americans for Fair Taxation says the first year the plan goes into effect, revenue to the federal government would remain the same. From there, the group claims, revenue will grow due to increased economic activity.
H.R. 25 is pending in the House Ways and Means Committee and has not had a hearing. Once the sponsorship level grows to 100, however, Wright thinks Chairman Bill Thomas, R-Calif., will take action on the bill.
The bill's Senate version is S.1493, sponsored by Sen. Saxby Chambliss, R-Ga., which was introduced in July.
WND columnist Neal Boortz is a supporter of the plan. In an August column, he addressed the issue of why the idea hasn't been enacted already.
"And just why hasn't it passed?" he wrote. "Because the idea is so bold that many politicians, while personally praising the concept, just assume it can't pass.
"It can pass, my friends. It can pass if the people of America learn the details and then let their elected officials know that they want some action."
Previous stories:
Income tax to end within few years?
National sales tax gains momentum
Group plans 'fair tax' convention
Congress to consider 'fair tax'
Part of the process of implementing the Fair Tax is the revocation of the 16th Amendment killing the Federal Income tax.
I don't know all of the details yet, but this has been in the works for 10 years already and while it may not be perfect, (what is?) if it gets rid of the IRS anal exams and the manipulation and control by Congress, then it's the way to go. The Social Security tax will also be gone. One tax on items purchased. You keep your whole paycheck.
You don't spend, you don't pay tax. Period.
And what you have to remember is that EVERYONE - whores, drug dealers, foreign tourists - EVERYONE will pay tax.
It seems that in reading prior posts from you that you are a sane and rational person so I'm a little perplexed at this bit of rambling.
There will be no 'marketing' of the tax. You buy, you pay. Period. From 25 years in the car business, I can tell you that (Unless you buy your car from Crooked Motors) the car business has never ben more transparent. Disclosure is almost to the point of being ridiculous.
I ask you to put aside your fear. Read up on the plan. Look at all the good that will be done by driving a stake thru the heart of the IRS and the tax code.
Okay?
I will be happy to eat my words but I don't think I will need to.
The only products that won't drop in price are products insulated from competetive market forces. Like anything having to do with the government, for example, or any other de facto monopolies.
If you would like to be added to this ping list let me know.
Try this out-- the manufacturers no longer have to comply with the IRS. No more employee withholding. Their steel, paint, robot repairs, oil, everything you can think of, becomes subject to competition at lower levels. Their cost drops.
When the car makes to the showroom, it's cheaper, and the sales tax puts it right back where it is now, more or less.
The difference is--- now you have a choice. If you buy it, you pay taxes. If you don't, you don't pay.
The politicians no longer have control, you do. They no longer hold you in a perpetual state of economic jeopardy, with the threat of an audit.
Beyond that, the concept of taxing productivity and success goes away, and the concept of taxing expenditures by individual choice comes about. The first is Marxist, the second is just and fair.
DO YOU PAY YOUR INCOME TAX
AT THE SUPERMARKET?
by D. Sherman Cox J.D. L.L.M. Taxation
The full impact of the federal tax system(taxes in gross wage/salaries & other compensation + business income/payroll taxes) added onto the base(taxfree) price of retail consumption goods and services is 36% for federal taxes alone.
Here's another good reason to support a NRST-- you are extremely aware, as everyone in TN is, of your tax rate. You are reminded of it everytime you make a purchase.
The lying is evident.
Politicians have no room to deceive you with a single sales tax rate.
A tax code book more complicated than an ACME atom smasher owner's manual leaves lots of room to hide and obfuscate.
Again, less control to DC, more control to you.
I would need to see more evidence than one Harvard professor, because if prices did not drop as they say, the 23% would be very costly -- indeed, crippling.
Here you go Scott:
The following article covers the mechanism on how the current Federal tax system propagates and is embedded into consumption expenditure.
DO YOU PAY YOUR INCOME TAX
AT THE SUPERMARKET?
by D. Sherman Cox J.D. L.L.M. Taxation
The 24% in the article considers only those factors actually paid to government out of imposititions on business in complying with the income, payroll, excise & tariff tax laws.
I refer you to the section of the following article about the Income/Payroll tax system and its impact on our economy "A. Hidden Upstream Taxes. " paragraph 39.
"[39] Dr. Dale Jorgenson, Chairman of Harvard University's Economics Department, believes that the price of goods and services are inflated by about 20 percent or more by upstream taxes consumers ultimately bear. In a recent paper Dr. Jorgenson estimated the built-in taxes contained in the price of goods and services. /22/ In the chart above, he quantified the hidden component of tax, estimating that producer prices would fall on repeal of upstream taxes an average of about 22 percent."
Looking at the accompanying chart, the range of values from industry to industry appears to be about 12-25%.
Economists Gary and Aldonna Robbins of the Texas-based Institute for Public Policy examined the case of dry cleaning a shirt, with a particular eye toward uncovering the hidden costs of taxes in price.
The Robbin's attributed over 33.6% of "consumer prices" to be due to federal taxation passed on to the customer.
The Federal Tax System
http://www.cbo.gov/showdoc.cfm?index=2125&sequence=0&from=1#pt1
From the Table 1 we may extract the proportionate contributions of each sector of taxes as they contribute to consumer price for the year 2000.
Those tax components which will not change prices as a consequence of enactment of HR2525
============================
Adjust for a conservative $800 billion cost of tax compliance, (Payne '95 estimates 65cents for each dollar of revenue collected, $1264billion) reductions .
Estimated change in consumption prices as consequence of enactment of a National Retail Sales Tax, repealing all business income and payroll taxes:
33.6*(1386.5/1945) = 23.9% reduction in consumption prices
Which more than verifies the Jorgenson empirical study of 22% fall in producer prices.
The two sources are in reasonable agreement, and I see 20-25% a reasonable value to expect retail prices to fall, not only for customers here in the United States, but in our exports as well making them far more competitive on international markets.
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