White House Floats Idea of Dropping Income Tax (altogether)

New York Times, Business and Financial Desk, Page 14, Column 5 ^ | 2/8/2003 | EDMUND L. ANDREWS

[Bigun]

White House Floats Idea of Dropping Income Tax Overhaul By EDMUND L. ANDREWS

WASHINGTON, Feb. 7 — President Bush, having already set off a firestorm over his proposals to cut taxes and revamp retirement accounts, suggested today that the time might be near to drop the income tax as a whole and replace it with some form of consumption tax...

[AntiGuv]

I'm trying not to get too excited about something which doesn't seem to have a prayer of passing. One can always hope though! More implausible things have been known to happen.. :)

[supercat]

I'll bite. What do you mean, double taxing of savings?

If someone saved money in a conventional savings account or Roth IRA, they've already paid income taxes on that money, in the expectation that they won't have to pay federal taxes on it again. Replacing the income tax with a sales tax would mean that people who buy things with borrowed money before the switch and repay the debt after would not pay any taxes, while those who save money before the switch and buy things after would get hit with both taxes.

[Libloather]

...that the time might be near to drop the income tax as a whole and replace it with some form of consumption tax...

The third rail?

[templar]

It would be more on the order of 17%.

I favor about 30% with the elimination of all other federal taxes. I think 30% would do it.

[ovrtaxt]

Drop the income tax, forget the consumption tax, and finance the legitmate functions of government with levies and tariffs.

You sound like you've been reading the Constitution again. Be careful! You might start having dangerous thoughts!

[Libertarianize the GOP]

If President Bush can pull off the elimination of the Income Tax he will top my list of the all time Greatest Presidents.

[SierraWasp]

"Instead, all taxes should be collected by the states, or even by the counties and cities as they do in Virginia. Then, what the states don't need, they can send to the US government."

Is this literally true and really going on? I proposed this in 1995 but of course couldn't get any traction as a newly elected local government official. If it's already being done somewhere... I want to know about it.

It just seemed to me that since Counties and Cities already had elected "Tax Collectors," why not let the power follow the money and devolve government the right way!!!

Please point me to information about Virginia's system if, indeed what you are saying is in fact the current truth. Thank You in advance.

[templar]

Let's see...let me guess...hmmm...could it be a "Value Added Tax (VAT)" that would replace the income tax?

I hope not. The tax needs to be limited to one level only, final retail sales, or it could be a nightmare.

[Enough is ENOUGH]

Check out the rates on the very first income tax return.

No matter what the rates would be on a sales tax type return you can bet they will continue to rise.

Any future tax change will probably look like the following one as long as we continue to have Big Government.:

==================================================================== Form 1040 E-Z:p

Department of the Treasury

Internal Revenue $ervice

SIMPLIFIED INDIVIDUAL TAX RETURN

======================================================================== Your first name________________________________
Last name___________________________________
Your Social Security Number ______________

1. Gross Income for Year ending Dec 31, 2003.........$ _______________

2. Send in amount on Line 1 now......................$ _______________

3. Check here if you have any money left.............

Yes........... No..........

(If "No", will you voluntarily submit to a lie detector test?....Yes____)

4. Do you wish to donate $10 to the Presidential Election? Yes

How about $1,000 to reduce your chances of being audited? ________

5. Provide names and addresses of people you know who are evading income taxes.

6. I would like to donate my social security benefits to a lockbox for (Check your favorite program): ___Bankers, Know your customers committee, ___The war on global warming, ___Lobby Groups in favor of Technology Transfers, ___Progressives for the dumbing down of America, ___Dart minnows are more important than citizen land ownership caucus, ___(Did we miss any?)_______________________________

========================================================================

Under penalty of punishment, I declare with my signature below that I am now legally obligated to send the full amount on Line 2 to the IR$ ASAP.

SIGN HERE ________________________________
Date_______________________
---------------------------------------------------------->

[inquest]

I think he might have been thinking of the 16th amendment. (not that eliminating the MTV/Clinton voting block wouldn't be such a bad idea either)

[Sabertooth]

I favor about 30% with the elimination of all other federal taxes. I think 30% would do it.

You're willing to pay 30%? That's confiscatory. Hello black market.

[FreedomCalls]

How could you be double-taxed? You will be just as taxed as everyone else, regardless of the source of your money, when you spend it.

I'm talking about the money I have right now. It has already been taxed at 30%. Let's say I earned $50,000. It was taxed as income at 30%. That leaves $35,000 left for me to put in savings. In the future when I spend it it will be taxed at let's say 10% sales tax to be generous. That means I will have $31,500 left in purchasing power from my hard work under the present system. If this bill passes and I spend the same $35,000 I will pay what, about 25% consumption tax? That will leave me with $25,250 in purchasing power for my hard work.

Compare that with a eyebrow-studded tattooed dood who after the passage of this bill will earn for instance, the same $50,000. He will pay no income tax on the money. He will spend it and pay the same 25% consumption tax and will have $37,500 in purchasing power. It's a great deal for him. But for me I will have to pay a tax TWICE on the same money.

[GovernmentShrinker]

What it does accomplish is to shift the spectrum, so that the proposal he has actually made for the immediate future has a better chance of passing. This is the first time any President has indicated support for the idea of eliminating the income tax, so the spectrum shift is huge, as it's no longer just an idea floated by a few residents of the political fringe.

[ggekko]

So is Ted Kennedy and the other crypto-socialists.

[supercat]

That is thre best feature of it, in my opinion. Imagine a big red "17%" at the bottom of every receipt. A tax-and-spend liberal's and lobbyist's nightmare!

I once bought an ice cream cone at an Oberweiss dairy store and at the bottom of the receipt was a line "High Tax $0.13" (i forget the exact amount). I asked the clerk if that was a commentary on sales taxes; the response was that it was merely descriptive, not editorial, as packaged foodstuffs were subject to a lower tax than ready-to-eat.

[nb: in England, many restaurants charge much less for take-away food than eat-in food, since the latter is subject to VAT but the former is not].

[templar]

For those who have savings it is double taxation.

but you wouldn't be paying tax on your interest, and would achieve much greater returns without restrictions on withdrawals.

[FreedomCalls]

You're willing to pay 30%? That's confiscatory. Hello black market.

The present income tax is over %30 for the higher brackets. Most people pay that amount if you count Social Security and Medicare taxes as well as income taxes.

[ovrtaxt]

It won't be equal. Every rich guy will create a personal corporation that every purchase he makes will the laundered through. There will be lots of sham "general stores" set up to launder certain people's purchases through. Those to poor to do so will have to pay, the rich won't.

It doesn't take much money to start a company. The savings in taxes more than absorb the cost. I submit to you that money isn't the limiting factor, it's foresight, discipline and intelligence. Those with a slave mindset will continue to be slaves no matter how we try to free them.

[Mustang]

Fantastic...!

Note to GWB and friends..just don't float this idea. Put some mega turns on this ship's screws. Full speed ahead!

Mustang sends.

[slimer]

And how would he gain the support of the fixed-income AARP crowd?

Just make them exempt or reduce the amount they have to pay for goods. Kind of like senior discounts that are widely available now.