Skip to comments.White House Floats Idea of Dropping Income Tax (altogether)
Posted on 02/08/2003 5:56:38 PM PST by 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...
(Excerpt) Read more at nytimes.com ...
Wow .. and a bonus too
If that is what we were talking about doing here I would agree with you! But it ISN'T! Not by a LONG shot!
PLEASE Go Here and LEARN!
hoo ah! now that kicks ass.
did I say that??? it flowed right out, too!
Boo-hoo. Where have I heard this whine "UNFAIR!" before? HMMMMmmmm...
Say you want to attend a baseball game. The seats you want are $35. No matter how much or how little money you earn, that seat will still cost you $35. If you can't afford that, you have 2 choices: Don't attend the game, or purchase a $15 bleacher seat.
That's why a consumption tax is NOT unfair to the "poor" (usually spendthrifts). If they don't SPEND, they don't PAY.
You Sir; catch on REAL fast don't cha!
I hate to be cynical, but the govt will NEVER give up the social control that the income tax gives them over the people. Without the income tax, the government would have no idea how much you are making or where it is coming from. Something as important as your income would essentially be outside the reach of the prying eyes of big brother.
By Edmund L. Andrews
The New York Times
WASHINGTON - President Bush, having already set off a firestorm over his proposals to cut taxes and revamp retirement accounts, suggested on Friday that the time might be near to drop the income tax and replace it with some form of consumption tax.
While we're at it, dump Medicare and Medicaid, and scratch any prescription drug boondoggles. Erase the departments of Health anbd Human Services, Energy, and Education and abolish unfunded mandates and matching fund money pits.
I'm uncertain whether that was directed specific to me, but I just posted the full article because of the other freeper's request. I don't think there's much of any chance the income tax will get replaced by a VAT scheme, for any number of reasons.
What about the double-taxing of my savings? This is a great plan for those in debt as the tax would not be applied to prior debt payments. For those who have savings it is double taxation.
You've got that right, brother. To the libs, the income tax is at the very foundation of all that is just and right in the world. It gives the govt unending streams of money, it allows the libs to punish the evil rich people, it provides endless opportunities for fund-raising (by selling tax clauses to special interests), and it provides govt bureaucrats with power to insert themselves into everyone's private financial affairs.
Bush will abolish the income tax when he pries it from the liberals cold, dead fingers.
Each year it costs us over $250 billion in record keeping and collection costs just to comply with the current code. This $250 billion in wasted paperwork is equal to $1000 every year for every man, woman and child in the U.S. The FairTax will raise the same amount of tax revenue but the cost to comply with it will only be about $10 billion annually. Thats equal to only $45 for every man, woman and child.
Not only is the current 45,000-page tax code wasteful of our money and time, it is so complicated that tax experts cant agree on how to fill out a given tax return. The cost to businesses to comply with the current tax code is passed on to customers and adds an average of over 22% to the cost of every good and service produced in the U.S. This hidden tax puts Americans at a 22% disadvantage when competing here or abroad with foreign produced goods and services. With the elimination of the current tax code prices will decline by an average of over 22% and result in companies and jobs returning to the U.S.
Our founding fathers saw an income tax as very dangerous to the freedom of citizens and twice forbade it in the U.S. constitution. In 1913 politicians amended the constitution and passed an income tax that started at 1% for the very rich. Today this has evolved to where the minimum federal income related tax that a low-income person can achieve is 47.3% (15.3% social security & Medicare taxes, 22% hidden tax discussed above, and the minimum income tax rate of 10% = 47.3%). This doesnt include gasoline, state income and property taxes, etc. The current tax code is very regressive because lower income workers pay a much higher percent of their income in these taxes.
Almost half of the lobbying in Washington is to obtain tax favors for the various interest groups at the expense of the rest of us. This perverts our representative form of government. NO amount of campaign finance reform will solve this problem because the lawmakers are enjoying the perks from the lobbyists. Those with vested interests in the current tax system will likely call the FairTax a risky or radical tax scheme. However, it is the failed 90-year-old radical income tax experiment that has proven to be as risky and dangerous as our founding fathers had predicted. What we need now is fundamental tax reform.
The FairTax is fundamental tax reform. It is a tax on consumption, which treats everyone equally, as our founding fathers intended. It is a simple 23% sales tax on all new goods and services. This sounds high unless we are aware of the 47.3% that people even the lowest income bracket are now paying. Extensive research shows that this 23% sales tax will raise the same amount of revenue as does the current tax code, but without the wasteful paperwork and invasion of our privacy. This research also shows that a sales tax will provide a more stable revenue source than the income tax. A key provision of the FairTax is that it protects the poor by providing for a monthly rebate to every citizen in the amount of sales that would be paid on basic needs purchases. Every household receives a check in the amount of 23% of the poverty level for a household of their size. In other words, the poor will pay no taxes. Also, no tax is to be paid on purchases of used items. There are also no taxes on savings and investment income, which will encourage savings that will then be available to finance investment, which will encourage economic growth and more jobs.
The FairTax is advocated by the Americans For Fair Taxation (AFFT), a national non profit, non partisan research group that has evolved into a volunteer grassroots group to bring about the enactment of the FairTax bill. AFFT has spent over $13 million for research performed by some of the greatest economists and market experts in the U.S., including the Chairman of the Economics Department at Harvard and top economists at Stanford, MIT, University Of Chicago, research think tanks, etc. The FairTax has been called the most researched public policy issue ever.
To learn more go to the FairTax website: FairTax.org or call (1(800) 324-7829. Studies have shown that 84% of the public supports the FairTax over other alternatives once they learn about all the alternatives. The Bush Administration has expressed considerable interest in replacing the current tax code with a consumption tax, like the FairTax. The FairTax is attractive to labor, business, rich and poor. It is unconscionable that we, as a free people, allow ourselves to be taxed in such an inefficient, coercive, and invasive manner. Just think: NO MORE TAX RETURNS!!!
|Heck, just wait and see what it does to Helen Thomas.|
If I'm putting after-tax income into my retirement plans (like a Roth?), won't it be double taxed if I'm using those postponed dollars under a NRST down the road? Isn't the promise of such plans that you're not going to be taxed down the road? Am I missing something?
How do you fix that?
Yes and it's enjoyable to watch. Just when he has their underwear in a knot...he gives them a big super wedgy!
I dunno. The liberals have blasted the last two tax cut proposals - in my opinion minor ones - with every ounce of class-warfare rhetoric they've got. And the first one got through, while this one its fate is unclear. If this one goes through though, it certainly marks the end of the effectiveness of that sort of rhetoric. And then what's the biggest obstacle to *real* tax reform? The opposition will be in complete disarray.
A consumption tax would leave investment income tax-free; investment income flows most heavily to wealthy taxpayers. Beyond that, opponents argue, a consumption tax is "regressive" in that the same rates apply to rich and poor people alike.
AS IF big business DOESN'T pass on taxes to the consumer...the next problem will be that people on the dole and receive federal hand outs will be tax AGAIN! I want to see a low FLAT income tax and quit punishing people for their purchases...
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's the same VAT scam that poeple use in Europe. Lots of phoney corporations that claim to do reselling that don't. Americans do a little of this now. How many FFLs do you know that skim off some of their stock for their personal collection? Stuff that has had no sales tax paid on. Does your local car dealer drive a tax paid car or does he drive a "dealer" tagged car that no tax has been paid on? This tax will be evaded.
Still, no one has figured out how not to double tax people who have savings when that saved money is spent.
Ah! But there certianly IS something in THIS Bill, currently in the House Ways and Means Committee, which would prevent that!
Check it out!
They don't plan on fixing that. They hope you will go away. You are in the minority of Americans who have savings. This plan is for people who are way over their heads in debt. Those are the ones jumping for joy.
Just imagine if everyone wanted to buy used cars to avoid the taxes.
Remember when some or other east coast state put a special tax on pickups? No pickups were sold until the tax was repealed! People bought cars, or went to other states for their truck purchase, or bought from private parties.
I predict that Detroit et al. will fight this tooth and nail.
To say nothing of H&R Block.
Because income and payroll taxes are embedded in the price of everything we purchase, it is unlikely that prices, even when they are calculated with the consumption tax, will increase. This is because pre-consumption-tax prices will fall once the income and payroll taxes are repealed. Nevertheless, the FairTax plan makes sure that the Social Security benefits indexing formula will be adjusted so that benefits will increase to the extent, if any, that the consumption tax results in higher tax-inclusive prices. The income tax imposed on Social Security benefits will be repealed under the FairTax.
The income tax imposed on investment income and pension benefits or IRA withdrawals will be repealed. Pension funds, IRA's, and 401(k) plans had assets of over $9 trillion in 1998. An income tax deduction was taken for contributions to most of these plans, and all beneficiaries and owners of these plans expected to pay income tax on them upon withdrawal but they will not be required to do so once the income tax is repealed.
Repeal of the corporate and individual income tax, and the estate and gift tax will have a substantial positive impact on the stock market. Those seniors who own stocks either directly or through mutual funds, Individual Retirement Accounts, 401(k) plans, or otherwise, will experience significant gains. More seniors own stocks than any other age group. In addition, unrealized capital gains that would have been subject to the income tax when realized will no longer be taxed.
The FairTax plan imposes a consumption tax on newly constructed homes, but exempts existing homes and other used property from any consumption tax. Currently, equity payments on homes must be paid from after-income-tax earnings (i.e., principal payments are not deductible). The purchase of existing housing is thus subject to the income tax. All owners of existing homes will experience large capital gains due to the repeal of the income tax and implementation of the FairTax. Seniors have dramatically higher homeownership rates than other age groups (79.3 percent for seniors compared to 66.3 percent on average in 1998). Homes are often a family's largest asset. Gains, which will not be taxed, are likely to be in the 20 percent range.
Under the FairTax, the estate and gift tax will be repealed. The need for small businesses and farmers to engage in expensive estate planning, involving attorneys, complex estate freeze transactions, and expensive life insurance plans in anticipation of future estate and gift tax liability will disappear. Heirs will no longer need to sell the business or farm out of the family or borrow heavily, putting the business at risk, in order to pay the estate tax.
A consumption tax will make the economy much more dynamic and prosperous. Consequently, federal tax revenues will grow, spending will be under less upwards pressure, and the deficit will decline. Budget pressure on entitlement spending, already significant, will become much more pronounced once the baby boom starts retiring in 2010, in just 10 years. The economic growth caused by a consumption tax will make it substantially less likely that federal budget pressures will result in Medicare or Social Security benefits cuts.
According to recent work by Stanford University economist Joseph Kahn, those seniors with a net worth over $400 thousand (nearly four times the median) may see a reduction in their purchasing power. The largest decline in purchasing power, about 3.5 percent, is for those with net worth above about $700 thousand. The primary reason for this effect is that wealth spent for consumption purposes that is held in non-tax-deferred accounts like IRA's will be taxed when spent under a consumption tax and would not be taxed any further under current law.
Seniors will be able to take comfort in the fact that their children and grandchildren will no longer be laboring under the yoke of the income tax, and will once again be able to see their own standard of living improve, one generation to the next.
If YOU think defunding the IRS and requiring the destruction of ALL their records is nothing (That IS in the bill!) I guess we will just have to disagree on that point!
That's it out with the old and in with the new!