Tax reform: Russia - 1, U.S.

Well...for the time being, atleast one country gets it. Of course, until someone starts badmouthing.

tom daschle should be proud of himself for out commeying the ruskies!

Of course, until someone starts badmouthing.

He'll be along anytime now spamming the thread with irrelevant links and quotes from dead people.....

I always applaud countries that are more free than ours because, to paraphrase Ronaldus Maganus, it gives me someplace to move if things get too bad here.

simple and fair 13 percent flat tax.
atleast one country gets it.

If one likes what goes with it:

PART TWO OF THE RUSSIAN FEDERATION TAX CODE

It's a European style income tax with VAT on steroids, along with a 32% regressive Social Security tax plus 30-35% profits tax on individuals.

Nothing that is call a flat tax ever is.

Why Flat Tax Isn't A "True" Flat Tax
http://www.cac.psu.edu/ur/archives/BUSINESS/flattax.html
2-23-96
Charles R. Enis, Associate Professor of Accounting
Penn State's Smeal College of Business Administration

mark in bumplist

Under the flat income tax, there's still social security tax of 15.3% of wages, right? So it would be the flat tax rate plus social security taxes?

What about withholding? Does it continue under the flat income tax?

BTW is this just on personal income, or corporate income as well?

Personal AND business "income" (however it's defined) are taxed. And there will be 15.3% payroll tax to boot. And there is continued withholding.

The better alternative is a national sales tax. Check it out.

Under the flat income tax, there's still social security tax of 15.3% of wages, right?

Yep, in fact the so-called "17%" Flat tax is really 19%, which only replaces income taxes and not payroll taxes such as SS/Meidiscare, and keeps the business income taxes in place in all their glory.

Refer ---> HR1040 the flat tax legislative summary, and An article on the business side of the Flat Tax by Vern Hoven

It really is just a shell game moving tax burden to business (individual & corporate) where it is more out of sight of the electorate.

Figuring from the Armey Flat Tax HR1040 as written with its 19% rate on individuals plus the 15.3% wage tax for SS/Mediscare we end up with rates similar to the Russian tax system:

PART TWO OF THE RUSSIAN FEDERATION TAX CODE

Applying the numbers this is what we come out with:

under a "flat" tax a single person would pay:

15.3% ---- 15.3%(SS/Medicare) on wages/salary below $12,300,
34.3% ---- 19.0% + 15.3% on wages/salary and other income from $12,301-$75,000
19.0% ---- on wages/salaries and other income from $75,001 up.
0.0% ---- for those living on dividend & interest income alone, regardless of income amount.

Businesses (individual & corporate)would also pay,

19.0% --- on (Gross Receipts less allowed business costs);

on an expanded definition of business income.

Sure looks alot like that European income tax with VAT the Russians have don't it?

What about withholding?

Nothing done in the bill to remove it, no changes proposed whatsoever in spite of a lot of internet rhetoric running around claiming witholding would go away.

Refer ---> HR1040 legislative Text

Golly Geez, what's a tax reform proponent to do? What is the alternative to tax reform we should support?

Ask me a hard one why don'cha?

Ole Alan Keyes has the better answer for my money:

Alan Keyes refers to the income tax as the slave tax that should be abolished as a moral imperative, and replaced with a National Sales Tax, which applies to the "flat" tax as much as it does our current system. The only differences between the flat tax and the current income/payroll tax system is individual tax rate structure. They are both progressive income taxes with VATs.

Keyes on Taxes & Government Spending:

"The income tax in effect makes us vassals to the government – the politicians decide how much income we can keep. No mere “reform” of this slave tax, such as flattening the rate, can correct its fundamental denial of control over our own money. Only the abolition of the income tax itself will restore the basic American principle that our income is both our own money and our own private business - not the government's."

"Replacing the income tax with a national sales tax would rejuvenate independence and responsibility in our citizens. True economic liberty and moral revival go hand in hand."

"A national sales tax would also put the American citizen back in control of national fiscal policy. The best way to curtail government spending is to cut taxes, because they can’t spend what they don’t get. But with a sales tax, we could deny funds to a spendthrift government – and give ourselves a tax cut – whenever we make the private choice to alter our spending and saving habits."

Alan Keyes Interview with Des Moines Register:

Conservative commentator Alan Keyes said Thursday one of the first things he would do as president would be to replace the federal income tax with a national sales tax.

The Republican presidential candidate said he favors a national sales tax of about 23 percent that would also replace the payroll tax that pays for Social Security.

The intent of the structure of the individual income tax is for political and social control not revenue collection. The Individual Income tax is maintained to establish and hold every person in the country perpetual legal jeopardy.

It is long past time to end the Income Tax once and for all and get rid of the intrusive anal exam of family finances by government. Support the enactment of the only bills before congress that would actually achieve that.

To get the ball rolling and focus Congress Critter's attention:

H.R.2714
Sponsor: Rep Largent, Steve(introduced 8/2/2001)
Title: To terminate the Internal Revenue Code of 1986.
A bill to prohibit he imposition of any tax by the Internal Revenue Code: (1) for any taxable year beginning after December 31, 2005.

Kill the income and other related taxes outright, and provide a reasonable replacement:

H.R.2525
SPONSOR: Rep Linder, John (introduced 07/17/2001)
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
Refer: http://www.fairtax.org & http://www.salestax.org

the modification then enactment and ratification of:

H.J.RES.45
Sponsor: (introduced 4/25/2001)
Latest Major Action: 5/9/2001 Referred to House subcommitte.
Title: Proposing an amendment to the Constitution of the United States relative to abolishing personal income, estate, and gift taxes and prohibiting the Untied States Government from engaging in the business in competition with its citizens.

(Modified to prohibit all income, payroll, gift estate taxes as HR2525 calls for, or we will see European VAT style hidden taxes along with payroll excises to take over in the place of the of the current individual income tax(i.e. personal income tax) that Ron Paul amendment prohibits.)

And to keep em reminded that there is indeed a Constitution to pay attention to:

H.R.175
Sponsor: (introduced 1/3/2001)
Latest Major Action: 2/12/2001 Referred to House subcommittee
Title: To require Congress to specify the source of authority under the United States Constitution for the enactment of laws, and for other purposes.

lots of good info, geezer. Thanks... I'll do some research on the national sales tax at www.salestax.org and come back atcha with any questions I have, OK?

If former communists can make this reform, is it too much to hope that Congress can do the same thing?

Former communists can, it seems. However, it seems that more current ones in our Congress don't yet have the message.

Sounds good, I'll fit in answers as family chores let me :O)

IF YOU WANT THIS MAN – AND MEN LIKE HIM – TO REMAIN IN CONTROL OF YOUR ECONOMIC AND PERSONAL DESTINY, CONTINUE TO TOLERATE THE CURRENT MARXIST INCOME TAX SYSTEM.

ONE MORE TIME:

IT’S ABOUT P O W E R AND C O N T R O L!!

CHECK OUT HTTP://WWW.SALESTAX.ORG to find out how you can help!

Congress don't yet have the message.

Oh they have the message alright, it just a flat tax, isn't quite what the media and Congress Critters would have us believe it is.

The Flat Tax is the European income tax with VAT being slipped in under a different label.

refer --> PART TWO OF THE RUSSIAN FEDERATION TAX CODE

The Forbes/Armey Flat tax is still an income tax, still requires an IRS, and still taxes business passing on such taxes in higher prices to consumers, lower wages to employees, and lower returns to investors/retirees. It is, quite frankly a VAT combined with an individual income tax.

Collection of Value Added Tax

Issue: What Is the Best Way to Collect a Value Added Tax?
A value-added tax (VAT) generally is a tax imposed and collected on the value added at every stage in the production and distribution process of a good or service. Although a VAT may be computed in any of several ways, the amount of value added generally can be thought of as the difference between the value of sales and purchases of a business. (e.g. Revenues - Costs = Taxable Business Income)
Subtraction-Method VAT. Under the subtraction method, value added is measured as the difference between a business's taxable sales and its purchases of taxable goods and services from other businesses. At the end of the reporting period, a rate of tax is applied to this difference in order to determine the tax liability. The subtraction method is similar to the credit-invoice method in that both methods measure value added by comparing sales to purchases that have borne the tax.
The subtraction method differs from the credit-invoice method principally in that the tax rate is applied to a net amount of value added (sales less purchases) rather than to gross sales with credits for tax on gross purchases. A business's tax liability under the credit-invoice method relies on the business's sales records and purchase invoices, while the tax liability under the subtraction method may rely on records that the taxpayer maintains for income tax or financial accounting purposes.

The flat tax is a VAT. None other than the father of the flat tax, Robert Hall of Stanford University (along with Alvin Rabushka), in his 1995 Ways and Means Committee testimony said, "The Hall-Rabushka flat tax is a value-added tax."

Which was pointed out again in additional hearings in April of 2000:

http://waysandmeans.house.gov/fullcomm/106cong/4-11-00/4-11kotl.htm

"Robert Hall, one of the originators of the proposal(Flat Tax), who describes his Flat Tax as, effectively, a Value Added Tax. A value added tax taxes output less investment (because firms get to deduct their investment.)"
"The Flat Tax differs from a VAT in only two respects. First, it asks workers, rather than firm managers, to mail in the check for the tax payment on that portion of output paid to them as wages. Second, it provides a subsidy to workers with low wages."

The Flat Tax; Chapter 3, by Robert Hall and Alvin Rabushka

In our system, all income is classified as either business income or wages (including salaries and retirement benefits). The system is airtight. Taxes on both types of income are equal. The wage tax has features to make the overall system progressive. Both taxes have postcard forms. The low tax rate of 19 percent is enough to match the revenue of the federal tax system as it existed in 1993, the last full year of data available as we write.

Here is the logic of our system, stripped to basics: We want to tax consumption. The public does one of two things with its income—spends it or invests it. We can measure consumption as income minus investment. A really simple tax would just have each firm pay tax on the total amount of income generated by the firm less that firm’s investment in plant and equipment. The value-added tax works just that way. But a value-added tax is unfair because it is not progressive. That’s why we break the tax in two. The firm pays tax on all the income generated at the firm except the income paid to its workers. The workers pay tax on what they earn, and the tax they pay is progressive.

To measure the total amount of income generated at a business, the best approach is to take the total receipts of the firm over the year and subtract the payments the firm has made to its workers and suppliers. This approach guarantees a comprehensive tax base. The successful value-added taxes in Europe work this way. The base for the business tax is the following:

Total revenue from sales of goods and services

less

purchases of inputs from other firms

less

wages, salaries, and pensions paid to workers

less

purchases of plant and equipment

The other piece is the wage tax. Each family pays 19 percent of its wage, salary, and pension income over a family allowance (the allowance makes the system progressive). The base for the compensation tax is total wages, salaries, and retirement benefits less the total amount of family allowances.

CONSUMPTION TAX PROPOSALS; 1996 Deloitte & Touche LLP

One concern associated with the flat tax is whether the low advertised rates will produce the same amounts of revenue as the current income tax. A June 7, 1995, Treasury Department analysis of a flat-tax plan similar to the Armey proposal, concluded that a rate of at least 22.9 percent would be needed to make the plan revenue neutral, that is, it would allow the government to raise as much revenue as is currently raised. Although the proposal is designed to raise less revenue than present law, the extent of the shortfall will concern policymakers.

The Armey bill, H.R. 2060, would replace the current corporate income tax with a tax on business activities equal to 20 percent (17 percent after 1997) of business taxable income. The tax would apply to every person engaged in a business activity, whether an individual, partnership, corporation, or otherwise. Taxable business income would be gross active income (that is, income other than investment income) reduced by an array of business deductions.

This business activity tax resembles a VAT computed by subtracting the costs of inputs from gross receipts, except that H.R. 2060 allows a deduction for cash wage expenses. Note that, under the bill, cash wages are subject to tax at the individual level at the same flat rate applicable to business profits. Thus, the combination of the business activities tax and the individual tax is roughly equivalent to a VAT. In addition, taxing wages at the individual level allows a generous personal exemption that makes the personal tax more progressive. To ensure that compensation is taxed once, tax-exempt entities that pay compensation other than as cash or retirement plan contributions would be subject to an excise tax.

The Flat Tax is a VAT even as the current income/payroll tax structure now in place is a subtraction method VAT, in that it is a levy imposed on businesses at all levels of production, it is passed on to the consumer hidden in the price of goods and services.

As long as government is able to play a shell game with hiding taxes from the Voter(i.e. individual) it can rely on the old maxim:

A government which robs Peter to pay Paul can always depend on the support of Paul.
-George Bernard Shaw

and keep right on growing without bound.

Walter Williams has the game nailed:

Walter Williams, World Net Daily, 10-25-2000

According to the most recent U.S. Treasury Department figures, in 1997 the top 1 percent of income-earners (those with income of $250,000 and higher) paid 33 percent of all federal income taxes. The top 5 percent of income-earners ($108,000 and over) paid 52 percent, and the top 50 percent ($36,000 and over) paid 96 percent of income taxes. Guess what the bottom 50 percent of income earners paid?
If you're among those who pay little or no federal income taxes, what do you care about tax cuts? Moreover, if you think tax cuts pose a threat to government handout programs, you might be openly hostile and support Al Gore's silly "risky scheme" talk. So many Americans paying little or no federal taxes makes for a natural spending constituency. It's like me in the restaurant: What do I care about extravagance if you're footing the bill?

And the Armey Flat Tax just adds more to the 70% of the voting public clamors for more from government looking for the top 40% of taxpayers to foot the bill.

Only it looks for the Middle 40% to pay instead. See reply #10 above.

lots of good info, geezer. Thanks... I'll do some research on the national sales tax at www.salestax.org and come back atcha with any questions I have, OK?

Gee, I just love the sincerity of your posts since you have been promoting the NRST for over two years.

You're one of those "Flat" tax proponent's aren't you?

Gee, I just love the sincerity of your posts since you have been promoting the NRST for over two years.

Acting as if they aren't accomplices is all part of the con job....