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Posted: 10/7/2005 12:58:44 PM EDT
.21-.23 cents on the dollar is to high in college courses I took it was suggested 17cents was needed and that was with State taxes included, it also dissolved the IRS and hadf exemptions on housing?  Furthermore if businesses collect taxes why do we need an IRS or eeven a Department of treasury?
If you dissolve the IRS that is half of Gov. employment, would the Gov. not operate more efiiciently?
Flat Tax is simple thus not really needing explaining.

Link
Posted on Tue, Oct. 04, 2005

COMMENTARY


Burdens and benefits of a national sales tax

By MICHAEL S. STACHOWSKI

Guest Columnist


Some people think the right thing to do about the current income tax system is to replace it with a national retail sales tax.

The goal would be to encourage investment, job growth, and wealth accumulation by making investment and savings totally tax-free.

Well, the Bush administration is currently looking into this idea.

The problem is, in order to generate the current level of revenue, this rate would be high, and no one would like the thought of a high sales tax rate.

So, what they are talking about is having both a flat tax and a national retail sales tax.

In other words, you would pay your federal taxes whenever you purchase a product or service and also a flat income tax.

In order to use a national sales tax, a 21 percent to 23 percent flat tax would be needed so it would generate as much revenue as the current income tax system does now.

In addition, a national sales tax would require a 25 percent rate to match what the individual and corporate income tax brings in as revenue to the federal government.

If the 21 percent to 23 percent flat tax were used, it would apply to individuals and businesses. If that were the case, there would be higher standard deductions, approximately two and a half times larger than what is currently in place.

The personal exemptions would also be doubled. For a married couple filing jointly with two dependents, the first $38,600 of income would be tax free. Interest, dividends and capital gains would be nontaxable for this flat-tax system.

Businesses would be able to expense all assets purchased during the year they were originally purchased.

Even though you would have higher standard deductions and personal exemptions, there would be no itemized deductions.

The itemized deductions such as real estate and personal property taxes, home mortgage interest and charitable contributions, just to name a few, would not be deducted in a flat-tax system.

With a flat-tax system, you could also say goodbye to the child dependent-care credit, the child tax credit and the education credits. If you get sick, you will pay the national sales tax on your doctor and prescriptions bills, too. All employers provided fringe benefits (health insurance and contributions to your 401 (k) plan) would be taxed as additional income.

The alternative minimum tax, also known as AMT, would be repealed for individuals and businesses. Congress knows the AMT will affect millions more filers in 2006. The principal reason for this increase is that, beginning in 2006, the AMT exemption levels revert to the levels in effect prior to 2001 and certain nonrefundable personal credits are no longer allowed against the AMT.

The president’s advisory panel notes that a 1 percent federal sales tax would completely offset the revenue lost from repealing the individual and business AMT. The 1 percent sales tax solution is a long shot but cannot be ruled out yet.

The flat-tax system has brought much disagreement, starting with the elimination of the deduction for home mortgage interest and charitable contributions.

Charitable organizations would probably see a substantial decline in charitable contributions given the fact that the contributor would give without the benefit of an income tax deduction.

In addition, a simple national sales tax would actually punish people at the lower end of the income scale. Those people generally consume almost all of their income in order to live in this world, while the wealthy would be taxed only on whatever part of their income they spend. Some economists believe this national sales tax will actually hurt the economy. If people are taxed heavily on their consumption, they’ll be inclined to consume less. According to this theory, businesses would be forced to produce less.

Although this is an interesting concept, it probably won’t happen anytime soon. Few would disagree that a world without the Internal Revenue Service would be a wonderful world indeed, but the issue is a lot more complicated than that.

Link Posted: 10/7/2005 1:01:11 PM EDT
[#1]
The tax system is largely controlled by a small number of very wealthy people who, quite frankly, like the fact that there are lots of tax loopholes to take advantage of.
~
Link Posted: 10/7/2005 1:03:03 PM EDT
[#2]
The sales tax would have generated MORE revenue than the current system in 17 of the last 18 quarters (that's 4 1/2 years) and would have only missed the mark by less than 1% in the other quarter.

I like the idea.
Link Posted: 10/7/2005 1:08:29 PM EDT
[#3]

Quoted:
The tax system is largely controlled by a small number of very wealthy people who, quite frankly, like the fact that there are lots of tax loopholes to take advantage of.
~




Okay who?  I like the fair tax idea just not at .23cents.  Furthermore why would the IRS be required in an age of wire transfers.  Why not just do transfers from business strait to the treasury seems far and away more efficient and virtually 0 cost of collection relative to current system and no tax return process.  
You only pay tax on what you buy, and businesses dont get hit with taxes which you pay in extra product price.
Investment grows as interest will not be taxed.
Subsidies will know doubt be cut also, a true open, sellers market.
Link Posted: 10/7/2005 1:18:05 PM EDT
[#4]
Fair tax proposal as it is, is to complicated and still invasive they are keeping income tax beyond the $39,000 income bracket.  Needs a simpler more straightforward proposal, no tax process period beyond paying at point of purchase.
Link Posted: 10/7/2005 2:32:04 PM EDT
[#5]
A more likely (although still improbable) solution is a modified flat-tax, like the one introduced by Dick Armey when he was in the house.

It gives every individual a tax-free amount of income (like $5K for a single person, more for married, more for with kids, etc.)

Thus income taxes are still progressive, the curve just isn't as steep.

I did a thesis on this in college, and those in higher income brackets actually would pay more taxes than they do now, but they would also make more money.

The biggest reason all this won't happen is everyone who is in a business that provides services to those around taxation (ie lawyers and accountants) will oppose it and have powerful lobbyists to make sure it doesn't pass, which is sad.
Link Posted: 10/7/2005 2:58:04 PM EDT
[#6]
I love the fair tax proposal, but there are just too many politicians, tax accountants, government wonks and so on to go from the present system to a sensible one.
Link Posted: 10/7/2005 9:26:05 PM EDT
[#7]

Quoted:
I love the fair tax proposal, but there are just too many politicians, tax accountants, government wonks and so on to go from the present system to a sensible one.




Yeah politicians are worried about these people trying fo find other work.  But if the "Big Brother" age is truly coming it will likely be a cashless society.  With money moving only electronicly a fair/sales tax is the best way.  When you make a transaction it would split 2 ways business and gov treasury.
Link Posted: 10/9/2005 10:04:49 PM EDT
[#8]
More????
Link Posted: 10/9/2005 10:13:05 PM EDT
[#9]

Go back to the way it was intended.

Each state is charged it's proportional share (based on congressional representation) of the Federal Budget and it's up to each state legislature to determine how it will pay that bill.

The Federal Gov't should not directly tax people.


Link Posted: 10/9/2005 10:16:48 PM EDT
[#10]

Quoted:
Go back to the way it was intended.

Each state is charged it's proportional share (based on congressional representation) of the Federal Budget and it's up to each state legislature to determine how it will pay that bill.

The Federal Gov't should not directly tax people.





And no more withholding.  Make everyone right a check at the end of October, right before the election.
Link Posted: 10/10/2005 6:55:55 AM EDT
[#11]

Quoted:

Quoted:
Go back to the way it was intended.

Each state is charged it's proportional share (based on congressional representation) of the Federal Budget and it's up to each state legislature to determine how it will pay that bill.

The Federal Gov't should not directly tax people.

And no more withholding.  Make everyone right a check at the end of October, right before the election.


And if you don't pay your taxes that year, you can't vote.

No representation without taxation.


Link Posted: 10/10/2005 7:01:17 AM EDT
[#12]
Link Posted: 10/10/2005 7:13:25 AM EDT
[#13]
You'd have to convince the same people that react to property tax increases with the brilliant statement "It don't affect me! I Rent!"
Link Posted: 10/10/2005 7:17:42 AM EDT
[#14]
Early in the George W's administration, the White House wanted the IRS to enable tax return preparers to prepare and e-file their returns on the IRS website for free.  Despite the IRS's poor history of IT implementations, that was a fairly straightforward idea to have the IRS implement an established ASP model.  The proposal would have saved joe taxpayer money if not time.  

The multi-billion dollar tax return preparation industry killed that proposal.  They said the IRS shouldn't compete with private industry.  I usually agree with that philosophy, but not when the private industry in question only exists because Congress and the IRS have made the tax code so complicated you need software and/or a professional to prepare and file your tax return.  

The 1998 tax act requires the Secretary of the Treasurer to look at "return free filing" (i.e. determining tax liability based on information reported to the government without requiring you to file a return).  CA, MI and other states have explored and/or begun implementing return free filing.  That proposal freaks out the industry as well.

You can bet the tax preparation industry will oppose any tax simplification that reduces the complexity that is their bread and butter.  Again, it is a multi-billion dollar industry.  Lots of people work in it and tax prep businesses are generally small businesses - a political holy cow.

There is more information on most of the current proposals for tax reform at The President's Advisory Panel on Federal Tax Reform.  The site is worth exploring if you are interested in this topic.
Link Posted: 10/10/2005 7:35:40 AM EDT
[#15]

Quoted:
Early in the George W's administration, the White House wanted the IRS to enable tax return preparers to prepare and e-file their returns on the IRS website for free.  Despite the IRS's poor history of IT implementations, that was a fairly straightforward idea to have the IRS implement an established ASP model.  The proposal would have saved joe taxpayer money if not time.  

The multi-billion dollar tax return preparation industry killed that proposal.  They said the IRS shouldn't compete with private industry.  I usually agree with that philosophy, but not when the private industry in question only exists because Congress and the IRS have made the tax code so complicated you need software and/or a professional to prepare and file your tax return.  

The 1998 tax act requires the Secretary of the Treasurer to look at "return free filing" (i.e. determining tax liability based on information reported to the government without requiring you to file a return).  CA, MI and other states have explored and/or begun implementing return free filing.  That proposal freaks out the industry as well.

You can bet the tax preparation industry will oppose any tax simplification that reduces the complexity that is their bread and butter.  Again, it is a multi-billion dollar industry.  Lots of people work in it and tax prep businesses are generally small businesses - a political holy cow.

There is more information on most of the current proposals for tax reform at The President's Advisory Panel on Federal Tax Reform.  The site is worth exploring if you are interested in this topic.



I will never go to another accountant again. Turbo Tax is easy, cheap, and fast. Yes I know its for profit, but if the IRS could establish a program like that and gfive it out for free, whooo hoo.. But I still like the idea of a federal sales tax.
Link Posted: 10/10/2005 7:44:41 AM EDT
[#16]
Sales Tax is unconstitutional because that would mean that the Federal Government has the right to regulate state commerce, but they only have the right to regulate interstate commerce.
Link Posted: 10/10/2005 7:45:36 AM EDT
[#17]

Quoted:
Adding 20% to the price of an expensive car or home isn't going to work. I had to write a check for over $3000 to the governator for my last car. With this new tax it would have been over $6000.



Yes, but the car would cost less, because all the embedded taxes that come from the current system that are added to the cost of the car before you even see it. So you would have paid $4000 or so in taxes, but the car would be $4000 less to begin with.

Read the book, it explains it better than I can here, or there is plenty online.

One interesting factor few people see with regards to the fair tax is the effect on imports. The costs of domesticly produced goods would drop 20-25% when all the embedded taxes are no longer in the retail price, but the price of imports would stay the same! Imagine if the government gave all domestic manuafcturers a 25% advantage in the market just by reforming the tax system!
Link Posted: 10/10/2005 7:50:32 AM EDT
[#18]
The feds should only collect money from state governments and through tariffs on foriegn made goods. The feds should not have the power of direct taxation on the people.

The federal government needs to have its branches trimmed. Get rid of all the LEO, FDA, and all those other bullshit govt agencies that states already have their own of. All the feds business should be is dealing with international commerce, defense, immigration and the issueance of new money.
Link Posted: 10/10/2005 7:55:30 AM EDT
[#19]
Flat tax would be the fairest way to fund the government.  The problem is that the current tax system is the way that the government excerts its influence\control on the economy.  It is a lot more complex than just reforming govenment. In addition to the jobs created by the IRS, there is an entire industry/economy that relies on the tax code being so screwed up.   If we'd wanted to change, we would have done it a long time ago.  There are bigger players in this than the government.  Its all about money.
Link Posted: 10/10/2005 11:43:16 AM EDT
[#20]

Quoted:
Adding 20% to the price of an expensive car or home isn't going to work. I had to write a check for over $3000 to the governator for my last car. With this new tax it would have been over $6000.




The rest of your taxes outside of state taxes would not exist.  That is the point no direct garnishment of your paycheck for S.S. and Income tax.  The fair tax is an alternative, just for me .21-23cents is to high and their is no exemptions for home ownership.  

The model I was shown in college was this.

1.  No IC. Tax or SS or tariffs or interstate commerce tax, only taxes on items sold
2.  17cents on the dollar, state tax included
3.  Exemption for home buying, to encourage home ownership
4.  Dispanding the I.R.S. as we know it today, replacing it with a minimal number of people for collection
also cutting total Gov workforce by 1/2
5.  Discontinuing tax return process
6.  Removing any taxes on investment returns and death tax
 

Truth be told you would not even need any signifigant #s of employees to collect funds it could all be gathered electronicly making it even more efficient
Link Posted: 10/10/2005 11:58:44 AM EDT
[#21]
Total Est. GDP=11.75 Trillion  Total Est. Gov Revenue=2.338 trillion

Workforce=147.4 million  Vs.  Unemployment rate=5.5%


I like it, bare in mind if the IRS ceases to exist Gov. expenditure goes down
The IRS total budget request for FY 2003 is $10.418 billion and full-time equivalent employment (FTE) of 101,080. The request is $482 million more than last year´s $9.936 billion budget. The increase maintains momentum in the IRS Business Systems Modernization projects with $58 million and provides $40 million to fund legislative proposals in the President´s budget request. The remaining increase is just 3.9 percent more than last fiscal year´s financial plan and is necessary to improve customer service, compliance and meet workload increases

Economy - overview:  
The US has the largest and most technologically powerful economy in the world, with a per capita GDP of $40,100. In this market-oriented economy, private individuals and business firms make most of the decisions, and the federal and state governments buy needed goods and services predominantly in the private marketplace. US business firms enjoy considerably greater flexibility than their counterparts in Western Europe and Japan in decisions to expand capital plant, to lay off surplus workers, and to develop new products. At the same time, they face higher barriers to entry in their rivals' home markets than the barriers to entry of foreign firms in US markets. US firms are at or near the forefront in technological advances, especially in computers and in medical, aerospace, and military equipment; their advantage has narrowed since the end of World War II. The onrush of technology largely explains the gradual development of a "two-tier labor market" in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits. Since 1975, practically all the gains in household income have gone to the top 20% of households. The response to the terrorist attacks of 11 September 2001 showed the remarkable resilience of the economy. The war in March/April 2003 between a US-led coalition and Iraq, and the subsequent occupation of Iraq, required major shifts in national resources to the military. The rise in GDP in 2004 was undergirded by substantial gains in labor productivity. The economy suffered from a sharp increase in energy prices in the second half of 2004. Long-term problems include inadequate investment in economic infrastructure, rapidly rising medical and pension costs of an aging population, sizable trade and budget deficits, and stagnation of family income in the lower economic groups.  
GDP:    
purchasing power parity - $11.75 trillion (2004 est.)
GDP - real growth rate:    
4.4% (2004 est.)  
GDP - per capita:    
purchasing power parity - $40,100 (2004 est.)
 
GDP - composition by sector:  
agriculture: 0.9%
industry: 19.7%
services: 79.4% (2004 est.)  
Labor force:    
147.4 million (includes unemployed) (2004 est.)
 
Labor force - by occupation:  
farming, forestry, and fishing 0.7%, manufacturing, extraction, transportation, and crafts 22.7%, managerial, professional, and technical 34.9%, sales and office 25.5%, other services 16.3%
note: figures exclude the unemployed (2004)  
Unemployment rate:    
5.5% (2004 est.)  
Population below poverty line:  
12% (2004 est.)  

Household income or consumption by percentage share:  
lowest 10%: 1.8%
highest 10%: 30.5% (1997)  
Distribution of family income - Gini index:  
45 (2004)  
Inflation rate (consumer prices):    
2.5% (2004 est.)  
Investment (gross fixed):    
15.7% of GDP (2004 est.)  
Budget:  
revenues: $1.862 trillion
expenditures: $2.338 trillion, including capital expenditures of NA (2004 est.)  
Public debt:    
65% of GDP (2004 est.)  

Agriculture - products:  
wheat, corn, other grains, fruits, vegetables, cotton; beef, pork, poultry, dairy products; forest products; fish  
Industries:  
leading industrial power in the world, highly diversified and technologically advanced; petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food processing, consumer goods, lumber, mining  
Industrial production growth rate:    
4.4% (2004 est.)  
Electricity - production:    
3.839 trillion kWh (2002)  
Electricity - consumption:    
3.66 trillion kWh (2002)  
Electricity - exports:  
13.36 billion kWh (2002)  
Electricity - imports:  
36.23 billion kWh (2002)  
Oil - production:    
7.8 million bbl/day (2004 est.)  
Oil - consumption:    
19.65 million bbl/day (2001 est.)  
Oil - exports:    
NA  
Oil - imports:    
NA  
Oil - proved reserves:    
22.45 billion bbl (1 January 2002)  
Natural gas - production:    
548.1 billion cu m (2001 est.)  
Natural gas - consumption:    
640.9 billion cu m (2001 est.)  
Natural gas - exports:    
11.16 billion cu m (2001 est.)  
Natural gas - imports:    
114.1 billion cu m (2001 est.)  
Natural gas - proved reserves:    
5.195 trillion cu m (1 January 2002)  
Current account balance:    
$-646.5 billion (2004 est.)  
Exports:    
$795 billion f.o.b. (2004 est.)  
Exports - commodities:  
agricultural products (soybeans, fruit, corn) 9.2%, industrial supplies (organic chemicals) 26.8%, capital goods (transistors, aircraft, motor vehicle parts, computers, telecommunications equipment) 49.0%, consumer goods (automobiles, medicines) 15.0% (2003)  
Exports - partners:  
Canada 23%, Mexico 13.6%, Japan 6.7%, UK 4.4%, China 4.3% (2004)  
Imports:    
$1.476 trillion f.o.b. (2004 est.)  
Imports - commodities:  
agricultural products 4.9%, industrial supplies 32.9% (crude oil 8.2%), capital goods 30.4% (computers, telecommunications equipment, motor vehicle parts, office machines, electric power machinery), consumer goods 31.8% (automobiles, clothing, medicines, furniture, toys) (2003)  
Imports - partners:  
Canada 17.1%, China 13.7%, Mexico 10.4%, Japan 8.8%, Germany 5.2% (2004)  
Reserves of foreign exchange and gold:    
$85.94 billion (2003)  
Debt - external:    
$1.4 trillion (2001 est.)  
Economic aid - donor:  
ODA, $6.9 billion (1997)  
Currency (code):  
US dollar (USD)  
Exchange rates:  
British pounds per US dollar - 0.5457 (2004), 0.6139 (2003), 0.6661 (2002), 0.6944 (2001), 0.6596 (2000); Canadian dollars per US dollar - 1.3014 (2004), 1.4045 (2003), 1.5693 (2002), 1.5488 (2001), 1.4851 (2000); Japanese yen per US dollar - 108.13 (2004), 116.08 (2003), 125.39 (2002), 121.53 (2001), 107.77 (2000); euros per US dollar - 0.8048 (2004), 0.8866 (2003), 1.0626 (2002), 1.1175 (2001), 1.08540 (2000)  
Fiscal year:  
1 October - 30 September  
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