Posted on 05/26/2002 4:13:36 AM PDT by JamesParmelee
If I was a government interested in total control, I would insist on NRST and then, continuously step up "enforcement" to catch "tax cheats. It's just like gun control. Fail until you get the laws you want."
Hello? ... Is anybody home?
They already have the laws they want.
An income tax provides the government with everything that they want.
A recent national survey revealed that 58% of Americans fear the IRS more than they fear God. That is exactly what our elected officials want.
Why do you think that some of them are pushing the flat income tax? It gives them a way to "claim" that they are for tax reform, without doing anything that will actually cure the problems with the current system. They are afraid of giving up withholding, because it would mean many more citizens demanding accountability for every 1/2% tax increase, just as they are in Virginia. And, they certainly don't want to give up the ominous intimidation factor that the IRS gives them.
A National Retail Sales Tax (NRST) will take both of those things from government. Instead of the people fearing the government, the government will fear the people. As Thomas Jefferson said, "When governments fear the people there is liberty. When the people fear the government there is tyranny."
Furthermore, the income tax moles' baseless claims of tax cheating with the NRST are absurd. The NRST is collected as an add-on item, paid entirely by the consumer and collected by the retailer. The only company that would risk cheating on a sales tax is a company that is already failing and has nothing to lose if the feds should crack down on it. Think about it.
Is Walmart, Sears or Target going to risk a billion dollar business by cheating on a tax that is simply added on to their price and paid entirely by the consumer? In fact, any profitable business is not going to risk that business by cheating on an add-on cost that is borne entirely by the consumer. The only way that a consumer will be able to get around the sales tax is to buy used items. In other words, tax cheating will be a lot less of a problem with a NRST than with any type of income based tax.
But, the primary thing that the NRST will do is reverse the serious capital flight that threatens to send our economy into an irrecoverable downward spiral. Roughly 100,000 mostly wealthy Americans expatriated last year. The Forbes lists of wealthiest Americans and lists of worldwide billionaires shows that since 1999, the number of billionaires in the United States has dropped over 13%, with a corresponding drop in average net worth, while the number of worldwide billionaires has increased by over 80%. The wealthy are leaving and it's not because of the tax level. It's because of the IRS.
A multimillionaire expatriate friend of mine, who now lives on an island paradise, explained it to me as follows:
"I make $2 million a year. I could easily afford to pay half that amount in taxes and I would still make more in one day than I could spend the next. What I can't afford, is to have my entire fortune confiscated at one time."
That individual left the United States in 1997, shortly after the 1996 Health Insurance Portability and Accountability Act was signed into law (26 USC 877(a)(1)). That's the law that claims the right of the United States to tax the earnings of expatriates for 10 years after they have expatriated and have citizenship in another country. So, when my friend and hundreds of thousands of other wealthy individuals who have expatriated since 1996, did leave, they were forced to take ALL of their wealth with them.
Keep in mind that these people have serious accountants and lawyers to legally keep their tax bill at a fraction of what most people pay. It's generally considered by most upper income people, that if you pay more that 10% of your gross income in taxes, then you are overpaying. It's not the level of taxation that is driving them off. It is the fear that a single non-elected bureaucrat, in a federal agency with NO OVERSIGHT, could sign a paper and all of their wealth could suddenly be confiscated, regardless of where that wealth was earned or is domiciled and the burden of proof for them to get their assets back is on them.
If only the top 1% of taxpayers should leave (they pay over 36% of tax collected), then those remaining, would be faced with a 55% tax increase, just for the government to stay even. Well guess what. Almost 1/10 of a percent left last year. At that rate, how long will it take to lose most of that 1.26 million that comprise the top 1% of taxpayers? Think about it...
The capital flight situation is covered in much more detail in the article, "Tick-Tick- Tick - The Economy Bomb". This is especially serious now, with all of the news about companies like Stanley Tools and Cooper Industries expatriating. Those news items are drawing more attention to offshore opportunities for individuals, as well and could easily spark a sharp increase in expatriations. If you have not read that article, you really should take a moment to do so. It has lot's of links to source data and will shed a whole new light on the tax issue.
Even if you don't think that the NRST is perfect, the current level of capital flight and brain drain is so severe, that some version of the NRST must be passed soon, if this nation is to survive. Any attempt at tax reform that leaves the IRS intact will have the same effect as rearranging the deck chairs on the Titanic. At this time, the NRST is the only option on the table that will not only stop capital flight, but reverse it and that is critical.
They are pre-approving future spending for themselves.
The Dems don't have a clue as to the workings of capital in a free market.
For example, what is going to stop a farmer from selling a truckload of corn or whatever to a buyer tax free?
The more appropriate question is, "What motive would a farmer have for selling his corn or whatever to a consumer, tax free?"
Remember that the NRST is borne entirely by the consumer It is not an expense for the farmer. Here is another more appropriate question. "Why would a farmer risk fines that could put a successful farm out of business, to save a consumer (NOT himself, but the consumer) the cost of the NRST?" Furthermore, if the farmer claims to collect the NRST and then fails to turn it in to the government, he makes himself liable for criminal fraud charges, as well. That could send him to jail.
Really, now? What farmer do you know who would risk all of that to save a consumer the cost of the sales tax? Think about it... If you do, you will realize that all of those flat income tax sound bites that you are quoting make no sense at all.
If you had to pay sales tax on a $1000 purchase and it was really going to cost you $1222, would you not find a way around getting that extra $222 extorted from you?
I can certainly imagine that in the beginning, there would be some who would go looking for a business that would sell them a product without including the NRST. But, that would only last as long as it takes for them to realize that savvy businessmen are not about to risk their business and possibly their livelihood for the consumer's benefit. The risk in such a transaction would belong entirely to the businessman and the reward would belong entirely to the consumer. Only a very foolish businessman would enter into such a risky transaction, without a tremendous chance for significant reward.
As you surmise, some consumers might go looking for such deals, but it would be rare that they would find one. That's because any businessman that was stupid enough to enter into such transactions, would certainly make many other similar business mistakes that would soon sink his business.
The only thing we should agree to is a flat 10% tax on income with no deductions for anything, and everyone pays whether you make $10 million or $10.
On the surface, that sounds very attractive. However, there are two very big flaws in that concept.
The first flaw is that a flat 10% tax on income would not fill the legal requirement that whatever we replace the progressive income tax with, must be revenue neutral. Currently, the personal income tax collects between 23% and 31% of income, depending on who you listen to. A 10% tax is so far below seven the lowest number, as to be laughable. Granted, it would be very nice if we could get government down to that level. But until then, 10% just ain't gonna cut it.
The second flaw in your suggestion and by far the worst, is that being a tax on income, it will require the continued existence of the agency of the US government that is singularly responsible for more investment capital leaving the United States in the last 10 years than than any other cause of capital flight in the history of the world. In just the last year, roughly 100,000 Americans - almost exclusively wealthy - left the US. And, because of laws passed in 1996, to punish them for leaving, they had to take all of their wealth and the jobs that it creates with them. If you ask these people why they left, the very first reason that they give is to get away from the IRS - NOT the income tax or the level of taxation. THAT is the problem with any tax on income (flat or otherwise). If the people who pay the lion's share of taxes and provide investment capital continue to leave, the economy will eventually implode.
I work with many of these people and I can assure you that when you have that much wealth, two truisms emerge:
The amount of tax is inconsequential, in comparison to your privacy and risk. Regardless of where you live in the world, you are going to have to pay some tax. But, only the United States requires both individuals and businesses to report their worldwide finances to the government (IRS) every year. Only citizens of the United States risk losing all of their assets, regardless of where in the world those assets are domiciled or were acquired, simply on the signature of a non-elected bureaucrat (IRS agent), with no oversight. That adds up to NO financial privacy due to the IRS and total risk due to the IRS. Is it any wonder that most wealthy expats give, as their primary reason for leaving, the IRS?
When asked, each of the people that I mentioned above and many others who I know, have told me that their primary reason for leaving was the IRS - NOT the income tax or level of taxation. One of my friends likes to say that even if he had to pay 50% in taxes, he would still make more money in one day than he could spend the next. What he can't afford, is to risk losing it all because of an incompetent IRS agent's mistake or worse yet, because of a political vendetta that uses the IRS to attack him. He left the US in 1997 and has not been back since. When asked if he misses the USA, he is quick to respond that he could not possibly miss a country that treated him like dirt, simply because he had worked hard and finally made something of himself. That attitude is very common among wealthy expats.
What it all boils down to is that any changes in the tax system that leaves the IRS intact will have the same effect as rearranging the deck chairs on the Titanic. In other words, you only change the outward appearance, but the ship still sinks.
The only proposal that is currently on the table that will remedy this ominous situation is the National Retail Sales Tax (NRST). Also, since the NRST is not an expense for the retailer, as would be the flat income tax, it would likely have the added benefit of substantially reducing the underground economy.
There is one other thing that you might want to consider doing, if the income tax, in all its forms, and IRS is not abolished soon. Get a second passport. In that case, you'll need it.
You're informing many with it. You will be wasting time on a few on this thread- they're dead set against eliminating the income tax. But it's phun watching them try to defend it! More importantly, this thread gives lurkers some more insight in re the topic of tax reform.
It also makes so many chuckle at the ways some try to bad-talk reform options that stray from their beloved income tax!
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