Fair Tax of 2005

[dougcs]

Quote from TradingWise:

Do people pressing for a 'flattax' really want a flat tax? Or do you just want all the tax exceptions eliminated and be fine with 3 brackets of 20%, 30% and 40%? I don't think a flattax is very fair, research shows the lower and upper end will benefit at the cost of the middleclass.

The taxcode, not only in the US but also other countries should be greatly simplified, but eliminating the IRS is just a silly obsession from most people here (silly people ).

A consumption tax would also be favorable, but just to encourage saving. A 10% sales tax could be implemented and 3 brackets of 10%, 20% and 30% for incometax.

I'm with you, I don't understand the obsession over the IRS. As long as money comes to the Fed. govt, there will be an IRS, maybe it will have a "kinder, gentler name", but sure as hell, it will be there.

ONe thing the NST advocates don't mention is what bureaucracy will handle NST rebates to tourists from other countries. If you've been to Europe, you probably know about and have filled out a VAT rebate. You fill out a page or two, attach proof of purchases and send it to some govt agency and with luck in a few weeks a check rebating the amount of VAT you paid comes to you.

Guess what Fair Tax fans, the States ain't gonna do that nor would a foreign visitor want to file paperwork with each state they visit. It'll take a big govt agency just to handle the rebates that will go to the millions of foreign visitors who come to the USA each year. Or, if tourists don't get the rebate, I think foreign tourism will plummet. Of course, the xenophobes who post on ET will like that.

DS

 

[lpgregory]

I find it amusing that if you substitute "current IRS tax code" in his letter it applies much more accurately to his general descriptions. I see so many misquotes and inaccurate half quotes associated with rebutting the fair tax idea that is laughable.

The idea that the fair tax is going to add to the price of goods above the current value is mistaken. There is already so much "hidden" tax in the current price of goods that if the current income tax system is repealed and I repeat REPEALED, then the "allready "hidden" tax will go away, dropping the cost of goods to a level that when the sales tax is added back in it would be a wash (approximately the same cost to the consumer). The cost of taxes and compliance to taxes and accountants and lawyers hired to minimize the taxes are passed on to the consumer. The cost to people is not only the taxes they pay but also the cost of compliance. If you think that businesses pay taxes now you are sadly mistaken. Business owners pass on the costs, stockholders absorb the costs in lower dividends so every thing passes on to the people. The business does not pay the taxes the people/consumer does!! The fair tax system would save the average person immence time and money not having to comply with the convoluted tax code currenty in place. How much time and money do people spend trying to comply now? Billions in money and thousands in manhours. Some one mentioned that the sales tax would be hidden in the cost of the purchase. How much clearer could it be if it is a line item printed on every receipt? Can anyone tell how much they are currently paying in income tax without having to consult their accountant or dig out their tax returns or pay stubs? This is a waste of time and money and a drain on our economy.
The people who are going to holler the loudest are the ones that make it their business to twiddle the current tax system to suit themselves and the lobbiest that make millions on manipulating the tax system to suit narrow interests. The lobbiest are often high price lawyers and former politicians. Do you want these people to continue to adjust the income tax system to the whims of special interests?
It is a case of people being used to the "poop" that they are allready in and afraid of change. " It's warm, and it's mine so don't try to change it.

 

[dougcs]

Quote from lpgregory:

I find it amusing that if you substitute "current IRS tax code" in his letter it applies much more accurately to his general descriptions. I see so many misquotes and inaccurate half quotes associated with rebutting the fair tax idea that is laughable.

The idea that the fair tax is going to add to the price of goods above the current value is mistaken. There is already so much "hidden" tax in the current price of goods that if the current income tax system is repealed and I repeat REPEALED, then the "allready "hidden" tax will go away, dropping the cost of goods to a level that when the sales tax is added back in it would be a wash (approximately the same cost to the consumer). The cost of taxes and compliance to taxes and accountants and lawyers hired to minimize the taxes are passed on to the consumer. The cost to people is not only the taxes they pay but also the cost of compliance. If you think that businesses pay taxes now you are sadly mistaken. Business owners pass on the costs, stockholders absorb the costs in lower dividends so every thing passes on to the people. The business does not pay the taxes the people/consumer does!! The fair tax system would save the average person immence time and money not having to comply with the convoluted tax code currenty in place. How much time and money do people spend trying to comply now? Billions in money and thousands in manhours. Some one mentioned that the sales tax would be hidden in the cost of the purchase. How much clearer could it be if it is a line item printed on every receipt? Can anyone tell how much they are currently paying in income tax without having to consult their accountant or dig out their tax returns or pay stubs? This is a waste of time and money and a drain on our economy.
The people who are going to holler the loudest are the ones that make it their business to twiddle the current tax system to suit themselves and the lobbiest that make millions on manipulating the tax system to suit narrow interests. The lobbiest are often high price lawyers and former politicians. Do you want these people to continue to adjust the income tax system to the whims of special interests?
It is a case of people being used to the "poop" that they are allready in and afraid of change. " It's warm, and it's mine so don't try to change it.

I find it amazing that those who favor the NST, aka fair tax, don't explain why it will be different this time as it has failed and been replaced by VAT everywhere else it was tried, with I think one exception and that was under 10%. And it failed for many of the reasons listed in the letter you refernce although you do not cite which letter you say is laughable.

DS

 

[johnwk]

H.R. 25 is exposed for the socialist proposal that it is IN THIS POST at Hannity.com

 

[varelse]

1. 20% Flat Income Tax, no deductions except
2. A $40K exemption from taxes

The end of my zero-sum tax plan game...

Addenda if you want to get fancy:

1. Eliminate taxation for dividends at the corporate level.
2. Eliminate taxation on reinvested dividends.
3. Eliminate caps on corporate tax deductibility of executive salaries.
4. Expense options at exercise, not granting or vesting. Require stats on pending options and strike prices with quarterly reports.
5. Force Federal spending on states to the same uniform percentage of Federal revenue collected from each state.

Commence the special interest whining...

 

[varelse]

Quote from TradingWise:

Do people pressing for a 'flattax' really want a flat tax? Or do you just want all the tax exceptions eliminated and be fine with 3 brackets of 20%, 30% and 40%? I don't think a flattax is very fair, research shows the lower and upper end will benefit at the cost of the middleclass.

The taxcode, not only in the US but also other countries should be greatly simplified, but eliminating the IRS is just a silly obsession from most people here (silly people ).

A consumption tax would also be favorable, but just to encourage saving. A 10% sales tax could be implemented and 3 brackets of 10%, 20% and 30% for incometax.

Every year I figure out the zero-point where if there were a flat-tax with an exemption equal to the median US income, I'd pay the same taxes. That comes out to 16-18%.

I think Prohibition shows us what would happen with the Fair Tax: a huge black market and higher crime to support that infrastructure.

So you'll forgive me if I'm all in favor of a flat tax as long as it's applied across the board and stays below 21-23% or so.

I'm reasonably adept at deductions, but I could restructure my life to eliminate those deductions by channeling my investment money elsewhere. And in having done so, I'm happy to grapple with slightly higher taxation.

 

[johnwk]

Quote from varelse:

1. 20% Flat Income Tax, no deductions except
2. A $40K exemption from taxes

Only problem is, you never defined what the definition of "income" is in your flat tax. Can you give us a definition?


Regards,

JWK

 

[varelse]

Quote from johnwk:

Only problem is, you never defined what the definition of "income" is in your flat tax. Can you give us a definition?


Regards,

JWK

Wages, profits from sales of assets, interest, and inheritances. Pretty much everything that brings in the money if I missed anything.

 

[johnwk]

Quote from johnwk:

Only problem is, you never defined what the definition of "income" is in your flat tax. Can you give us a definition?

Quote from varelse:

Wages, profits from sales of assets, interest, and inheritances. Pretty much everything that brings in the money if I missed anything.

Seems to me your definition conflicts with the definition of income as stated by the SCOTUS which gave the characteristics of income as being a gain or profit, which means, one must deduct all necessary outlays and expenses from gross receipts in order to arrive at a gain or profit which then is considered “income”

I’m only bringing this to your attention to help you focus on the characteristics of income because all money which comes in if taxed would be a very extraordinary type of tax. For example, if one lends $ 50 to a friend and the friend repays that $50, taxing that $50 seems to be unjust.

In addition, your definition appears to be contradictory but may have been nothing more than a poor choice of words. In one instance you state wages are part of your definition of what is taxed, and then you say “profits from sales of assets” are to be taxed.

What I don’t understand is how does one calculate “profits from sales of assets”? Does the retailer deduct the wholesale cost of an asset from the selling price to calculate a taxable profit. How about the rent the retailer pays, is that deductible prior to taxation? And, in addition, how does a working person calculate their “profit” from the sale of their labor which is an asset? Do they get to deduct their transportation costs to and from work which is a necessary outlay in computing a “profit“? How about the food which fuels a working person’s body during working hours, do they get to deduct that expense? If not, does a cab driver under your proposal get to deduct the fuel which powers his cab during working hours? Does the cab driver get to deduct the cost of fuel, and, if so why not the wage earner?

In EISNER v. MACOMBER , 252 U.S. 189 (1920) the Court discusses the 16th Amendment and also defines the definition of the word income as it appears in the 16th Amendment. The Court states the following:

“…it becomes essential to distinguish between what is and what is not 'income,' as the term is there used, and to apply the distinction, as cases arise, according to truth and substance, without regard to form . . . The fundamental relation of 'capital' to 'income' has been much discussed by economists, the former being likened to the tree or the land, the latter to the fruit or the crop; the former depicted as a reservoir supplied from springs, the latter as the outlet stream, to be measured by its flow during a period of time. For the present purpose we require only a clear definition of the term 'income,' [252 U.S. 189, 207] as used in common speech, in order to determine its meaning in the amendment, and, having formed also a correct judgment as to the nature of a stock dividend, we shall find it easy to decide the matter at issue.
After examining dictionaries in common use (Bouv. L. D.; Standard Dict.; Webster's Internat. Dict.; Century Dict.), we find little to add to the succinct definition adopted in two cases arising under the Corporation Tax Act of 1909 (Stratton's Independence v. Howbert, 231 U.S. 399, 415 , 34 S. Sup. Ct. 136, 140 [58 L. Ed. 285]; Doyle v. Mitchell Bros. Co., 247 U.S. 179, 185 , 38 S. Sup. Ct. 467, 469 [62 L. Ed. 1054]), 'Income may be defined as the gain derived from capital, from labor, or from both combined,' provided it be understood to include profit gained through a sale or conversion of capital assets, to which it was applied in the Doyle Case, 247 U.S. 183, 185 , 38 S. Sup. Ct. 467, 469 (62 L. Ed. 1054).
Brief as it is, it indicates the characteristic and distinguishing attribute of income essential for a correct solution of the present controversy. The government, although basing its argument upon the definition as quoted, placed chief emphasis upon the word 'gain,' which was extended to include a variety of meanings; while the significance of the next three words was either overlooked or misconceived. 'Derived-from- capital'; 'the gain-derived-from-capital,' etc. Here we have the essential matter: not a gain accruing to capital; not a growth or increment of value in the investment; but a gain, a profit, something of exchangeable value, proceeding from the property, severed from the capital, however invested or employed, and coming in, being 'derived'-that is, received or drawn by the recipient (the taxpayer) for his separate use, benefit and disposal- that is income derived from property. Nothing else answers the description.” [/b][/I]

Sorry for rambling on but I thought the questions raised concerning your flat tax are important and need to be answered concerning its fairness, and, they raise the possibility of a flat tax being an arbitrarily type of tax with no real definition of what is being taxed.


Regards,

JWK

 

[johnwk]

Well, the self anointed fountain of the “painful truth“, Neal Boortz, [a radio talk show host who is promoting H.R. 25, the alleged fair tax] has revealed himself to be ignorant and void of truth when it comes to a knowledge of our Constitution!

Last week when a caller correctly asserted on Neal’s show our Constitution provides a rule that no religious test shall ever be required as a qualification to hold any office or public trust, Mr. Boortz was found to be totally ignorant of such a provision in our Constitution.

Likewise, Mr. Boortz also shows his ignorance of our Constitution in promoting H.R. 25 as a legislative act, which, if adopted by Congress and enforced, would violate another fundamental rule and protection of our Constitution. It would violate the constitutionally guaranteed fair share formula requiring a general tax among the states [which H.R. 25 is] to be apportioned among the states so each state contributes an amount of a total sum being collected under the tax in proportion to its allotted number of votes in the House of Representatives.

Our Founders Fathers agreed by their ratification of our Constitution that those states paying the lions share of the tax burden to fund the Constitutionally authorized functions of the federal government, would have a proportional voice equal to their financial contribution in determining how their money would be spent. Of course, socialists and the friends of big government dread the founding fathers’ fair share formula as it boils down to a rule requiring representation with proportional obligation!

H.R. 25 is “conceptually identical” to the Marxist income tax because it intentionally seeks to calculate the amount of tax to be paid from wealth, property and financial success within each particular state ___ a political philosophy advocating from each state according to its ability, rather than an equal per capita tax apportioned among the states as the founding fathers intended by our Constitution’s fair share formula articulated in Article 1, Section 2, cl. 3.

If Neal Boortz was a supporter of our Constitutionally limited Republican Form of Government as he repeatedly claims to be, and supports the concept of taxing consumption, then he, at the very least in promoting H.R. 25, would demand a provision be attached to H.R. 25 requiring the rule of apportionment to be observed when laying the H.R. 25 tax among the states. And, without such a rule being applied to the tax, he would have no alternative to not supporting H.R. 25 as it violates our existing constitutional rule of fairness___ it violates our Constitutional guaranteed fair share formula articulated in Article 1, Section 2, Clause 3.

For an example of Congress abiding by the rule of apportioning a general tax among the states see Act of Aug. 2, 1813 apportioning a tax of $3 Million and each state’s share of the tax. H.R. 25 violates this rule!
Regards,

JWK, a proud supporter of our founding fathers’ ORIGINAL TAX REFORM PLAN

"If the Constitution was ratified under the belief, sedulously propagated on all sides, that such protection was afforded, would it not now be a fraud upon the whole people to give a different construction to its powers?"___ Justice Story