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DEL.ICIO.USFairTax, GREAT tax
The Atlanta Journal-Constitution
The candidate not yet in the race, Fred Thompson, indicates he’ll support the FairTax., In a letter to the national FairTax campaign, Thompson said the next president “should enact a fundamental overhaul of the tax code that makes it fairer, simpler, and more pro-growth.”
While there are a “number of ways to do that,” Thompson said the “principles and ideas found in the Fair Tax are a good place to start.” The FairTax would replace income and payroll taxes with a national sales tax. Five of the Republican presidential candidates and Democrat Mike Gravel support FairTax, but Mitt Romney and Rudy Giuliani have not taken positions.
In Georgia, House Speaker Glenn Richardson, a Paulding County Republican, is proposing a similar concept. His is called the GREAT (Georgia’s Repeal of Every Ad-valorem Tax) Plan. Georgia is first in the nation to consider eliminating property taxes on homes, land, commercial real estate, inventory, vehicles, boats and airplanes, said Richardson. Florida took a run at it with a special session in January, but instead wound up with a proposed constitutional amendment to exempt up to 80 percent of the property taxes on homes, but raw land is excluded.
As with the FairTax, there’ll be plenty of opportunity to debate the specifics of Richardson’s plan. Essentially, he’d eliminate most all of the existing 127 sales tax exemptions, groceries included. Grocery taxes of up to $3,500, taxes on prescription drugs and some other life essentials related to medical care, would be refunded on the state income tax. Sales tax exemptions for governments, agricultural products, raw materials used in manufacturing and business-to-business transactions would be retained.
The tax on income and sales would be 4 percent. The current top rate on income taxes is 6 percent.
To make up the income from lost property tax collections, the 4 percent sales tax would be extended to services: Dry cleaners, lawn, professional fees for medical attention and legal advice, hair care, and in general the full range of services consumers purchase.
One specific question here today: Is a tax on services a good idea, even if it comes in lieu of something else, the property tax, for example? Frankly, I’d have great reservations about introducing a tax on services. And why? For the simple reason that it’s an easy tax to raise, especially if marauding liberals can use it to punish a disfavored occupation or industry, as they’ve done with tobacco. A penny here, a dollar there on “the rich” and suddenly we’re back to unchecked government.
Comments
By TW
August 16, 2007 8:55 AM | Link to this
How come the only cars wearing a ‘flat tax’ bumper sticker are the one that cost over $50k?
By RCH
August 16, 2007 8:58 AM | Link to this
I would highly suggest that all of you read the book.
One major element that would be eliminated would be the lack of taxes on illegals. All of us racist, xenophobes, and nationalist would no longer be able to argue this point.I wouldn’t mind. Also all guests to this country would pay the tax, a new flow of income.
And the best deal yet, it would eliminate a large government bureaucracy,our friends at the IRS. ( I would miss them) LOL
I am curious if this program would encourage people to invest since capital gains would be eliminated? When the money is invested in any form, no taxes are paid.
By jbmlaw
August 16, 2007 9:00 AM | Link to this
Good morning all. I had not heard that my candidate, Fred, had embraced my tax, the Fair Tax, so this is an unusually happy column for me today. I am unacquainted with the specifics of Mr. Richardson’s proposal, and that does not really matter for the scope of the essay today.
Directly to Jim’s questions: Is a tax on services a good idea? Yes, not taxing savings or wealth is a good idea, as those taxes erode the nation’s investible capital. On the assumption that some tax is inevitable and necessary, a pure consumption tax is ideal from my perspective. All taxes work as a disincentive at some level, and I would prefer to see all of Leviathan’s incentives encouraging individual savings and discouraging spending.
I know our leftist friends have some visceral reservations about a pure consumption tax, but couple that with something like Friedman’s $1,000 for everyone (first popularized by McGovern in 1972 – ironic for guys like Curious Observer, isn’t it) and you can eliminate the basis for objections. Moral judgment by jbmlaw: the people who spend the most money ought to be taxed the heaviest, and a pure consumption tax accomplishes that purpose.
Jim expresses a fear for misbehavior by our overlords, in that they could alter taxes. I don’t know how that would be any worse under a consumption-oriented tax than under the present system, not that I allege that our solons ever play games with tax codes.
The only negative I can see is a personal one – such a simplified tax system would erode one of my product lines, since I have so many friends perplexed by the current tax codes. C’est la vie.
By Charles
August 16, 2007 9:00 AM | Link to this
I’m glad to see there is someone at the AJC who is objective when it comes to discussion on reworking the present tax system. Hopefully you can get Jay Bookman’s head out of the sand (I could have been mean like some Liberal posters here, but I wouldn’t want to lower myself to their level). But I’m afraid Jay’s hatred of anything that doesn’t promote big government and the Liberal agenda has blinded him from any rational thought process.
By Redneck Convert
August 16, 2007 9:00 AM | Link to this
I’m with Wooten. Put the taxes on the people that ain’t made it yet. Let the people that’s made it and has big savings and houses and cars and planes and boats alone. They don’t have to buy much with what they make so they can be home free. The people on their way to making it will appreciate it more if they pay taxes out the wazoo while they’re doing it. Then, when they become big shots, they can set back and watch the little people pay taxes on food and rent and all the things they buy. With no property or car taxes the people that has made it big can keep most all the money they make. It’s called Free Innerprize and it’s what has made America great.
If the poor or lazy people can’t pay all the sales taxes on things like doctoring they can just get second jobs or put other fambly members to work. Like, it won’t hurt the mother and the kids none to get out and mow the yards of the people that has made it. The mother could run the lawn mower while the little kids can use their toy rakes to sweep up the clippings or maybe pick up small sticks that has fell. Or maybe they could all clean the houses of the people that has made it. The mother could hitch a couple kids to the vacuum sweeper with a rope and let them drag it over the rugs while she is cleaning the bathrooms.
Anyway, this Richardson plan gives me hope that the state won’t be turning commie on us. We don’t need no giveaway programs for the people that has been too lazy and worthless to make big money. If God had of wanted them to use my taxes to pay for their doctoring or living costs he would of made them born into famblys that are rich. God has blessed the people that has made it because they are so hard working. So let’s put the taxes on the people that don’t work so hard and need to be prodded a little into working hard so they can get out of paying taxes too some day.
That’s my opinion and it’s very true. And God bless America and this Richardson guy.
By Van
August 16, 2007 9:06 AM | Link to this
One part of the Fair Tax that does not appeal to me is the pre-bate. Each month the feds would send out a check to cover the taxes on the basics of life. With the governments know track record of efficiency and competence, this really scares me.
Personally, I prefer a half and half approach. Every worker pays 12% income tax. This is taken from the pay check just like withholding is done today. No other paper work is needed.
Then everyone pays 12% sales tax on finished goods and services. If it had a sales tax before, then it is taxed.
This makes the burden not only just on the consumer, but also on the working man, woman or teenager.
For all intents and purposes, the income tax system in Georgia is the flat tax, a flat 6%. That is unless you are a very part time worker or still living at home, going to high school and work at the burger flipping place.
By getalife
August 16, 2007 9:11 AM | Link to this
The US Comptroller is warning of the collapse of this country so what does the gop do about it, cut taxes.
Ignorant as usual.
No thanks Jim.
Idiot.
By Charlene
August 16, 2007 9:12 AM | Link to this
Another red herring blog from Wooten? Smoke screen for Iraq? Running interference for the McRoves? A declaration of war on the middle class?
We aint nevah gonna git rid of the IRS and the complicated tax loophole system that employs every gotdang lawyer from here to Timbucktoo never never hardly ever!!
They estimate the cost of changing the tax system at 74 quintquadrillion dollars including penalties and interest. (but there’s a payment plan!)
Wooten knows this. Why is he titillating the tax deadbeats with the old shellgame about a fair tax, flat tax, and no tax?
To talk brass tacks, and to sum up wooten’s tacitly taciturn blogging tactics this summer: No Health Insurance for Nobody, and the IRS is alive and well and deep into your pockets.
By Janine
August 16, 2007 9:14 AM | Link to this
Overall, I like the concept of the Fair tax plan…However, I have already paid taxes on the money in my Roth IRA, and would pay tax again when I use the money. Also, my mother has significant savings in Certificates of Deposit [she saved before IRA’s were available and she is quite leary of more risky investments] and she also would be paying tax again when she uses the money. If that could be addressed, I think I would be in favor.
About tax on services…Have to think about that a little more.
By Dusty
August 16, 2007 9:19 AM | Link to this
Good morning!
By RCH
August 16, 2007 9:19 AM | Link to this
Janine The purchase of investment vehicles are not taxed, including the interest. Taxes are only collected when goods and perhaps services are purchased.
By jbmlaw
August 16, 2007 9:25 AM | Link to this
Dear Janine @ 9:14, I skated around the “services” element of Jim’s inquiry. At least in theory you could exempt any expenditure for anything other than a hard good, and you would still get all spending eventually. The theory is that whoever gets the money for performing a service ultimately buys something hard and taxable. So you could omit attorney fees entirely and still eventually tax it when I spend it.
By Curious Observer
August 16, 2007 9:26 AM | Link to this
Now that everyone feels free to propose a self-aggrandizing tax system, I am unleashed from my bonds of restraint.
How about a flat 30 percent tax on all income above $50,000, with a 50% surcharge on all gross income above $150,000? We would have plenty of income to repair bridges that are about to fall down and water/sewer systems that are overburdened and crumbling. We could easily afford health coverage for everyone, and we could pay off the national debt in five years.
To those who would moan that such a tax system would discourage investment and savings, I answer that the wealthy will continue to invest and save so long as there is one grubby, dirty penny to be made from doing so.
Besides, it will be salutory for greedy and selfish people like RCH and Van and jbmlaw to feel that they are at last contributing their fair share to the welfare of the nation. We can, of course, reserve capital punishment for instances in which they are caught trying to evade the taxes.
Need I add that I am sick of seeing Tom Price and Glenn Richardson and Neal Boortz and other well-heeled savants propose tax systems that just happen to favor themselves, while taxing the hell out of the working classes and the poor?
By Dusty
August 16, 2007 9:26 AM | Link to this
I am not sure about the pros and cons of this tax subject. But Jim’s last statement is scary.A penny here, a penny there on the ‘rich’ and suddenly we are back to unchecked government.
NO no no NO!
By Van
August 16, 2007 9:29 AM | Link to this
Another part of the FairTax that does not appeal to me is the annual Family Registration. Each family unit must register with the appropriate taxing authority each and every year. - Hey didn’t Caesar Tiberius do that a few thousand years ago??
HR 25 Sec 302(d) ANNUAL REGISTRATION.—In order to receive the family consumption allowance provided by section 301, a qualified family must register with the sales tax administering authority in a form prescribed by the Secretary.
By Smallpoxis
August 16, 2007 9:32 AM | Link to this
Fair tax would not eliminate the IRS. You people are so ignorant that it makes me sick.
It’s not fair that I have to share this blog with the galactically stupid.
I protest this abomination to my sense of self actualization, and I strenuously object to allowing any more ignoramantly stillborn minds, who were obviously dropped on their heads at birth by drunken midwives, to comment.
People just cant think things through. People are truly monkeys and apes, and that’s how W gets elected twice even though he has tangled Uncle Sam’s feet in a mire of meyhem.
“Duh, I like the fair flat tax cause it’s smooth and then the IRS would be flushed away, ha ha, duhhhhhh”
RETARDS!!!
By deegee
August 16, 2007 9:32 AM | Link to this
LOL, this is the funniest Wootang editorial I have seen in a long time. Who is this Richardson egomaniac with his “The GREAT Plan”? What’s great about it? Eliminate property taxes on homes, land, commercial real estate, inventory, vehicles, boats and airplanes. And then tax grandma on the way to the doctor and the beauty shop. What a sick bunch of a*******holes. BTW, you can thank marading(sic) liberals and high cigarette taxes for getting thousands of people to quit smoking, not that there’s anything wrong with smoking.
By RCH
August 16, 2007 9:37 AM | Link to this
Curious Observer
A great way to induce individuals not to better themselves. Punish those who excel. Socialism at its best.
By Van
August 16, 2007 9:43 AM | Link to this
Curious Observer,
Interesting rant - from the tone of your comments, I can guess that I paid more in taxes last year than you earned at the burger flipping place.
But then again, since the bottom 50% of workers paid only 4% of the total tax burden, I can see where you are coming from. BTW, how is that Earned Income Credit going for you.
By deegee
August 16, 2007 9:43 AM | Link to this
“HR 25 Sec 302(d) ANNUAL REGISTRATION.—In order to receive the family consumption allowance provided by section 301, a qualified family must register with the sales tax administering authority in a form prescribed by the Secretary.”
LOL, and you stupid bunch of Boortz-bots think that the IRS is going away? What do you think the “sales tax administering authority” is, you dunce?
By Adam
August 16, 2007 9:44 AM | Link to this
The Fair Tax can ONLY be considered with the simultaneous repeal of the 16th Amendment authorizing the present income tax. We should never trust the politicans with the power to have a dual taxing system.
By RCH
August 16, 2007 9:45 AM | Link to this
Van
Another part of the FairTax that does not appeal to me is the annual Family Registration. Each family unit must register with the appropriate taxing authority each and every year. - Hey didn’t Caesar Tiberius do that a few thousand years ago??
The reasoning for this is to gather the correct statistical data to apply the correct refund. By the way, households of illegal aliens would not be eligible. Maybe this would encourage legal immigration. I know my progressive brethren must hate this.
By Faques
August 16, 2007 9:47 AM | Link to this
Smallpoxis is correct. Who would administer the flat or fair tax? (IRS). The cost of removing the systems in place to collect taxes now would be prohibitive. (more than 5 years in Iraq).
Smallpoxis is too emotional, however, and should not claim unique expertise about the logistics of a tax code adjustment.
By jbmlaw
August 16, 2007 9:50 AM | Link to this
Dear Van @ 9:29, funny line, my compliments. The penalty for failure to register the family would merely be that you would not receive your subsidy check. That reminds me of another potential benefit of the idea, the deadbeat dad’s tax could be liened for benefit of the struggling babies.
By van's a nose picker
August 16, 2007 9:50 AM | Link to this
Van has been selling lemonade from a stand at the bottom of his driveway for years. He knows all about complicated tax issues even though his business is cash and he doesn’t report a dime of it to the IRS.
By jbmlaw
August 16, 2007 9:53 AM | Link to this
Apologies, omission, “the deadbeat dad’s tax CHECK could …” Our friend RCH and I are plowing the same field, so I’ll defer.
By RCH
August 16, 2007 9:54 AM | Link to this
Faques and Smallpoxis
Yes,the IRS would not totally disappear, but it would be a shell of itself with most of its power removed.
By Bushwanked
August 16, 2007 9:55 AM | Link to this
It’s nice Fred is going to support the Fair Tax and all, but hey, what about that hot wife of his!! Man, she’s hot. It’s no wonder he always looks so worn down. VaVaVaVooooom!
By Van
August 16, 2007 10:01 AM | Link to this
van’s a nose picker,
Hey, I wish, a straight 9 to 5 job would be a lot simpler.
Unfortunately, I get to work 50+ hours a week for 40 hours of pay, and thats a good week.
Anyway, the grand collective has spoken. Earning money is bad, getting money from the government is good. Making money by investing or saving is bad, getting a free check every month is good.
By Faques
August 16, 2007 10:04 AM | Link to this
Wooten’s explaination for his objection to a services tax is very revealing about his education, his attitudes, and his ability to analyze trends concerning statistically-derived outcomes of algorithmically-based behaviour patterns.
He objects with the hypothetical, which is the first clue he’s red the book about the 49 ways to secure power. (dont ask). He communicates with red herrings and the non sequiturs.
or he could just be trying to get a lively discussion by feigning a position.
either way.
it’s all good. lol
By ron
August 16, 2007 10:04 AM | Link to this
The only way I would support a fair tax is if it comes without any exemptions.None-zero.Every dollar spent by anyone or any entity is taxed exactly the same.No loopholes.You spend it ,you pay the tax.Come up with this plan and i’ll vote for you.
By Dee Dee Knile
August 16, 2007 10:14 AM | Link to this
Remember folks this is still Georgia.
Remember the last time Georgia was “first in the nation?”
Natural gas deregulation.
How many states have copied Sonny’s deregulation plan. ZERO
In fact Sonny’s plan was mostly responsible for ending the deregulation fad. Now the new conservative fantasy fad is the “Fair Tax.”
Georgians pay 35% more for natural gas which is fine, right? Can you imagine if we re-named it a tax increase?
Please Georgia , no more leading the nation.
By Southern Democrat
August 16, 2007 10:22 AM | Link to this
I think Ron & Janine have hit on some important concerns that I might have with a Fair/Flat tax in that I would want to see how it affects pre-tax and tax-free savings plans (in addition to Roth IRA/Roth 401(k) plans, 529 plans, etc.) Also, I am curious if it would remove tax incentives for charitable giving or if that has been explored?
I am all for simplification of the Code. As it is now (and Ron ably pointed out), those with access to information can easily manipulate the numbers to ensure that our tax burdens are far less than what they would appear to be.
I am incredibly ignorant in macroeconomics and the interactions between government taxation and overall economic growth or “stagflation” (one of my favorite words…it’s just fun to say), so I defer to Jbmlaw as a higher authority on these matters, but I have grave concerns about our current economic policies which subsidize pet industries (e.g., agriculture) while simultaneously pushing free trade/shirking our free trade responsibilities (we’re already attempting to arbitrate the Softwood Lumber settlement (!)), and I do not like the weak dollar with huge national debt and trade deficits. It’s not how I would run a business and definitely not how I would run a government.
By Faques
August 16, 2007 10:23 AM | Link to this
What did I just say? It would cost too much to change the tax system.
The IRS would be the ones who implement the change and monitor and collect the new tax anyway, so why bother?
And your wife would still be hitting it with your CPA when you’re away on business, so forget the whole thing.
nothing would change and it would cost a trillion dollars.
No new tax system. Put it out of your minds.
Period. End of discussion.
citizens just dont want to listen to nuthin’
By jm
August 16, 2007 10:31 AM | Link to this
well, like any “new” tax plan, unless government expenditures drop, sources of revenue will need to be maintained. If under the “new” tax plan (FairTax, flat tax or any of the others out there), one group of people ends up paying less in taxes, that means another group is going to have to pay more. The trick is figuring out which group ends up paying more.
By WTF
August 16, 2007 10:33 AM | Link to this
Since I admittedly know very little about this subject, I’m curious if anyone here knows if any other nation has employed a similar tax system and it has been a success or failure?
By RCH
August 16, 2007 10:36 AM | Link to this
**Faques88
Have you read the book? The IRS would be reduced to 3% percent of its current size. Taxes would be collected just as State taxes are. It could even be piggy backed on the current system.
Your wife would have to find somebody else to hit it with since the role of the CPA would be greatly diminished.
P.S.* Bushwanked* Who in the world would want to be President if they have that sitting at home waiting for them. If Bill Clinton had her for a wife he would have never left the White house.
By Faques
August 16, 2007 10:40 AM | Link to this
The IRS would grow larger under any new system.
Think for once in your life, think something through. You read a book about it? The author is a salesman. He’s selling the book, of course he’s going to describe Shangri la. Would you have bought it if it said, “new tax system and a bigger, meaner IRS?”
think it through: So all of a sudden everything will cost more. the economy will stagger. We’ll have sticker shock about the price of “post it’s”. Then, every business will get a windfall of cash receipts and who is going to make sure they turn it over?
The irs? You think? We’ll need a bigger audit staff for sure. We’ll need teams of IRS agents working aroung the clock at the Manhatten Project level in New Mexico.
But it’s never going to happen. It simply costs too much. We’ve got too big a beaurocracy in place.
It would be cheaper just to give everyone a year off from paying any taxes, and send the entire IRS to Hawaii for a year. (surfing lessons not included),
lets not get crazy.
bwa
By RCH
August 16, 2007 10:44 AM | Link to this
jm
One benefit from the plan would be the inclusion of groups that pay no tax at all, such as illegals who are paid cash, visitors from other countries on vacation etc. These groups would create new streams of revenue not available today.
By RCH
August 16, 2007 10:56 AM | Link to this
Faques
If you don’t like the plan for its contents thats O.K. But please put away the notion that the IRS would grow. The States collect sales tax with a lot smaller force than the Federal Government collects Federal taxes. If you wish you could even agree that the States would collect the Federal revenue for a token fee.
think it through: So all of a sudden everything will cost more. the economy will stagger. We’ll have sticker shock about the price of “post it’s”. Then, every business will get a windfall of cash receipts and who is going to make sure they turn it over?
You may also see a shock when people see their entire check. It will balance out. However, one good way of not paying taxes would be to save. Wouldn’t that be a good thing?
By Really RCH
August 16, 2007 10:57 AM | Link to this
Even if you make the erroneous assumption that all illegal immigrant workers pay no income and social security tax, do you think that Wal-Mart and every other retailer in the US are using some secret system where illegal immigrants buy their goods from them and get out of the store without paying sales tax?
By Katharine
August 16, 2007 10:59 AM | Link to this
The (Un)Fair Tax is the latest tax scam to be inflicted on taxpayers by those of the slave-owner mentality who think individuals owe the government a cut of their productivity. The Federal Reserve Act of 1913 essentially sold American taxpayers into perpetual economic slavery, by creating a debt-backed currency controlled by the bankers. We got the income tax the same year, to secure the debt. The (Un)Fair Tax would tax services, which is an income tax under a different name. It raises costs for both employer and worker, but neither derives any benefit from the tax they are forced to pay.
My attitude lately: I’m paying you to tell me what to do? You’re fired. There. I just gave myself a tax cut. Let’s see where else I can cut taxes.
By Curious Observer
August 16, 2007 11:05 AM | Link to this
One benefit from the plan would be the inclusion of groups that pay no tax at all, such as illegals who are paid cash, visitors from other countries on vacation etc. These groups would create new streams of revenue not available today.
What a lunkhead! Exactly how do illegals evade existing sales taxes? Do they go to another country to shop? And what about visitors to this country, whose home incomes aren’t subject to our income tax anyway? They still pay sales taxes on purchases they make while here.
The plan would merely increase the rate of sales taxes for everybody. What it would do is benefit high earners disproportionately. While you and other obese felines would be able to get by with paying taxes on only a quarter of your income, socking the rest away in tax-free investments, the poor and the lower working classes would pay them on 100% of income.
And you are truly obtuse if you believe the role of the IRS will be practically eliminated under the national Fair Tax plan. Audits of businesses would have to become commonplace, for the Fair Tax plan makes cheating on submissions of tax revenue collected more worthwhile. Suddenly, the automated IRS systems used to track monetary exchanges would become worthless as a means of tracking tax compliance. Do you really believe that a country that becomes dependent on sales taxes as its primary source of national income is going to be content with a “be honest, now” approach to monitoring compliance?
Well, I have burgers to flip, and I need to check the mailbox to see if my government check has come, so I’ll sign off now.
By jbmlaw
August 16, 2007 11:08 AM | Link to this
Dear Southern @ 10:22, well written. Since only us rich folk have Roths and related forms of nontaxable wealth, nobody really cares if we suffer on conversion of the tax system – the common view will be that we were playing a tax game and lost, much like the perspective we saw with the 1986 tax reform act. Personal interest notwithstanding, that should not preclude a change in the tax system if the change makes good sense for other reasons (e.g., simplicity, equity – whatever sings to one’s heart.)
Unrelated, thanks for raising another mutual point of blood-boiling, corporate welfare (“I have grave concerns about our current economic policies which subsidize pet industries…”) While all spending earmarks are a direct form of such corporate welfare (non-compete contracts for companies, that amazingly often turn into campaign contributors for their benefactors), and will require us to elect serious people to Congress to stop the practice, Jim’s Fair Tax would eliminate (at least initially) the same chicanery in the present tax code. In many ways “net” or “taxable” income are harder to define via courtroom standards than hard acquisition of a good.
Dear jm @ 10:31, broadly, big spenders will pay more taxes, and big savers will pay less taxes. Nobody in between will even notice the change, other than they will not spend a Sunday afternoon in February doing taxes. I think that means generally Hollywood will hate it, and Wall Street will love it.
Dear WTF @ 10:33, much of Europe has a Value Added Tax, which looks and feels much like the Fair Tax. Seems like those have been in place since the 1960s. I would not blame VAT for Europe’s economic travails, that is more directly attributable to level of spending and pre-emption by the central governments of those new feudal societies.
By WTF
August 16, 2007 11:10 AM | Link to this
I’m sure someone will be glad to correct me if I’m wrong, but under this proposed system wouldn’t it mean that those who live check-to-check would pay taxes on a higher percentage of their income (since they are spending it all) than those who have higher incomes and don’t rely on a weekly paycheck to make ends meet? No need to explain to me the dangers of living check to check, but it is a reality for millions of hard working people.
By RCH
August 16, 2007 11:12 AM | Link to this
Really RCH
You right they do pay State sales tax, but no Federal. This would insure Federal taxes are being paid. And if they are illegal and pay S.S, tax they are now guilty of identity theft for it is not their S.S. number.
By harold
August 16, 2007 11:14 AM | Link to this
harold cant wait for the fair tax. the day before it takes effect, harold will run up all the credit cards buying stuff harold will need for the next ten years at 6% tax and then pay them the cards off with money on which harold will have paid no income tax! yee haw! now THAT is what harold calls fair!!! no taxes for ten years!
By WTF
August 16, 2007 11:16 AM | Link to this
jbmlaw - Thanks for clarifying about the VAT in Europe and its similarity to the proposed “fair tax.” If that’s the case, then international visitors to the US would be able to recoup at least some of the VAT correct? Just as Americans can when traveling in Europe? So the fair tax wouldn’t be a boon, as someone earlier suggested, in new revenue from those visiting the US.
By Van
August 16, 2007 11:25 AM | Link to this
WTF,
No country uses the FairTax System, but many do use the Flat Tax System with great results. Russia and many former eastern bloc countries have gone to it with great results.
Many countries have a VAT in addition to a sales tax and/or income tax.
By RCH
August 16, 2007 11:28 AM | Link to this
* Curious Observer*
We are discussing Federal Taxes. Get with the program.
While many would place extra income in various savings programs, a great benefit would be derived by this. Capital would be available to create new business and employment creating an even bigger tax base. But may would still buy large homes and consumer items, again creating a large tax base.
Again, states place sales taxes on good and seem to have no problem monitoring that procedure. Piggy back Federal taxes on that system and share the cost of the compliance. ( At a fraction of the cost of the current IRS)
By jm
August 16, 2007 11:32 AM | Link to this
jbmlaw@11:08 - well, since consumer spending is the primary driver of the economy, if people consume less and spend less …
By deegee
August 16, 2007 11:46 AM | Link to this
I am going to read the Neal Boortz Fair Tax book right after I read the OJ Simpson If I Did It book. In both cases I would consider the source. Neal Boortz is a self-described BS artist. Nothing has substantially changed in his show over the last 30 years. It’s the same blah, blah, blah day after day. He is successful because he makes his listeners feel like they are a member of an exclusive club, like MENSA. He is very wealthy because a lot of lonely people like to feel like they are a member of the club. Neal Boortz is very wealthy because of his listeners. His listeners are not wealthy because of him, although Boortz can make them think they are. If Boortz’s listeners were even close to being in the same league as Boortz they wouldn’t be spending 4 hours a day listening to the radio.
By RCH
August 16, 2007 11:52 AM | Link to this
Deegee Who is John Linder?
By jbmlaw
August 16, 2007 12:03 PM | Link to this
Dear WTF @ 11:16, good observation, but it would depend on how we write the law. European countries wrote their laws to exempt international tourists, for fear of what the tax would do to the tourist trade. Since international tourism is not a fragile market for us, I cannot conceive of a reason to exempt foreign purchases.
Dear jm @ 11:32, I respectfully partially disagree. I do think moving to an exclusively-consumption based tax would damage sales at the margins. However, extraordinarily few sales are motivated day-to-day by comparatively low taxation; people buy food to eat, houses and furnishings to live in, automobiles to ferry them to work and play. None of that core motivation would be affected by the change in tax basis, except to the extent that present taxes create a disincentive to save. Such “I might as well spend it because the government will get it otherwise” spending would be greatly eroded by the change, but I think that only a small segment of total sales.
By Buy@life
August 16, 2007 12:18 PM | Link to this
Thank you, Keynes. Get that masters in economics did you?
For the last time. If we had started out and stayed with a national sales tax then and only then would we be able to write the history of the flat or fair tax in the USA. We’d know because we’d be living it.
Uneducated speculation and comparisons with other economies is fruitless.
One indisputable fact: It would cost too much to switch. Ask anyone economist. Any. Go ahead. I dare you.
Know what? You wont, because it’s so much fun to just yak and blah blah blah. Look at me, I’m smart! I know about tax systems and stuff, duhhhhh
RETARDS!!!
By jm
August 16, 2007 12:28 PM | Link to this
well, one of the biggest arguments proponents of the fair tax make is that it will increase capital in the market. In case anyone has noticed, until very recently, if anything there has been too much capital (chasing too few investment opportunities) in the market.
The real problem at the federal level has less to do with collection of revenues (taxes) but with expenses (spending). Until that dragon is slain, everything else is pointless.
By deegee
August 16, 2007 12:32 PM | Link to this
Who is John Linder? He is a very wealthy, ineffective Georgia politician, see stats below.
Rep. John Linder, worth $23.5 million. Says he earned in royalties from the book The Fair Tax, co-authored with talk-show host Neal Boortz: $500,000
Approximate tax owed on $500,000 book income: $147,206
Tax Linder would owe on $500,000 book income if his Fair Tax proposal became law: $0
Statistics: John Linder has sponsored 159 bills since Jan 7, 1997, of which 31 haven’t made it out of committee (Average) and 2 were successfully enacted (Average, relative to peers). Linder has co-sponsored 673 bills during the same time period (Average, relative to peers).
By @@
August 16, 2007 12:34 PM | Link to this
Fair Tax. A small price to pay for EVERYONE to support America and buy back OUR vote at the same time.
ml’s blog sux. All of the rational thinkers are here at your place Jim.
By Katharine
August 16, 2007 12:36 PM | Link to this
Hello Taxpayers,
Is any tax really fair? What value do you get for your investment?
If you read The Fair Tax Book, by Neal Boortz and Rep. John Linder, you will see what a poorly planned scam this is. First, it doesn’t even address the question of whether the government deserves the money it gets now.
Second, it adds a tax on services, meaning all plumbers, waitresses, and other service providers, will be taxed on the skilled services they provide.
Third, it talks about taxing “retail goods.” Well, at what point does an item become retail? If a large bread manufacturer can buy flour at wholesale rates, but a small, local, bakery must buy from the local grocery store, the small baker is subsidizing the wholesaler by paying the sales tax on the flour.
Fourth, the authors introduce a complicated rebate scheme for the underprivileged. This means an entire bureaucracy of people prying into people’s finances and determining whether they are eligible for the rebates, a system that could easily become as complicated and expensive as the income tax system.
Bottom line is the government is desperate to find ways to fund itself. It has taxed just about everything,except services (directly). Many things, like gasoline, are taxed multiple times before they reach the end users. Rather than consider new taxes, taxpayers should look at eliminating the oppressive tax burden we are already carrying.
I, for one, believe my tax money is being actively and consistently used to misrepresent me. The American Revolution was fought for less.
By RCH
August 16, 2007 12:38 PM | Link to this
Deegee
He is the co-writer of the book and the Ga, Congressman who is attempting to sponsor a bill in Congress to pass this in bill form. How convenient that you left this out of your Neal Boortz Statement.
By getalife
August 16, 2007 12:45 PM | Link to this
“I’m handling the job of saving the country. I really got it handled. If I need help, I’ll call for it.” — Rush, on how Oxycotin can help him save America”
Boortz is an idiot too.
Stop listening to idiots and drug addicts.
They are failed Americans.
Geez.
By deegee
August 16, 2007 12:59 PM | Link to this
RCH, how does it help your argument in favor of the fair tax that a wealthy and ineffective Georgia politician co-sponsored the book with Boortz? BTW, he isn’t attempting to sponsor the Fair Tax Bill, he DID sponsor it. It’s H.R.25/S.1025 for your information.
Why can’t we just simplify the present income tax code and at the same time hold congress accountable for every program and earmark that gets funded? Would that be too much work for us? It shouldn’t require a tax lawyer and an accountant for an individual or a corporation to comply with the tax laws.
By Jackie
August 16, 2007 1:01 PM | Link to this
The Comptroller General of the USA is warning of a financial implosion and we have folks that are proposing to reduce taxes on corporations. Have we lost the sense of each one of us paying our fair share for the structure built by government to provide a means of earning a living? If no taxes are paid, no money for roads, bridges, schools, police, fire, etc… What shall we do?
By jbmlaw
August 16, 2007 1:06 PM | Link to this
Dear jm @ 12:28, you write, “The real problem at the federal level has less to do with collection of revenues (taxes) but with expenses (spending). Until that dragon is slain, everything else is pointless.” I would be dishonest if I disagreed with your thesis, that runaway Federal spending is our greatest fiscal problem. Nevertheless, I do not agree that the “good” is the enemy of the “perfect.” Fair Tax would be such a substantial improvement over the current regime – simplicity, reduction in the necessary police (IRS) payroll – that it merits adoption even if we never break the backs of the big spenders.
By jbmlaw
August 16, 2007 1:12 PM | Link to this
Dear deegee @ 12:59, I’ll field that one. An idea is not responsible for its sponsors. If the idea is meritorious, it does not matter if Satan himself promotes it. Similarly, if an idea is stupid, it does not matter if St. Hillary suggests it. Evaluate the idea as an idea. The main reason that we cannot simply “simplify” the current income tax program is that you refuse. Well over 75% of the IRS code exists merely for the sake of progressivity. (Two family incomes vs single incomes, vs retirement incomes, vs children’s incomes, vs. nontaxable foundations, etc.) All of the limitations and restrictions exist primarily to preserve the “integrity” of progressivity. Having argued that, however, earmark reform is also a meritorious idea. Until you elect a bunch of hard-nosed libertarians like me, however, it is not going to happen.
By jbmlaw
August 16, 2007 1:15 PM | Link to this
Dear Deegee, I inadvertently chopped off my praise for your argument, the best of the day: “It shouldn’t require a tax lawyer and an accountant for an individual or a corporation to comply with the tax laws.” Until we get the rest of our friends to buy into that simple idea, no progress will happen - too many people have too much at stake.
By RCH
August 16, 2007 1:24 PM | Link to this
Thanks jbmlaw. Beat me to it. We have not even mentioned the possible lowering on prices of goods because of the repeal of corporate taxes.
By Disgusted
August 16, 2007 1:29 PM | Link to this
If the complexity of the present income tax system is the bogey-man, then simplify the system, rather than discard it. Eliminate all deductions for charitable contributions, state taxes, mortgage interest, etc., and use a reasonable set of tax rates according to income level. Government has no proper business in subsidizing donations to churches and charities, no matter how worthy the causes. It should not be using the tax code to encourage such behavior patterns as home ownership. And state taxation should not be a reason for a reduction in federal taxes.
Surely a libertarian cannot object to getting the government out of the business of fostering charities and churches, not to mention making tax liability dependent upon whether one owns or rents a home or whether one is married or single.
And let’s get rid of such dodges as trusts, including real estate investment trusts. In addition, eliminate the existing discrepancy in tax rates between earned income and investment income. Finally, get rid of personal exemptions. The government has no business in encouraging people to have more children. We’re not a new country that needs to expand our population.
We can have a form of flat tax with the existing national tax system. We don’t need an expensive, untried shift to a completely new tax system to achieve that.
By Buy@life
August 16, 2007 1:57 PM | Link to this
Disgusted, you copied your last comment (1:29) word for word from the preamble to the Uniblogger’s Manifesto.
I read it, and he felt the same way about our tax system and the dodge discrepancy (hey, I just renamed the dodge dart) and everything.
Simplify indeed.
We aint nevah gonna git rid of the IRS nor the unnecessarily-complex tax code or the lobby-induced loopholes nor the crony-sponsored unfairness of it all one whit!
We also aint nebah gonna pit toutta minaq neither.
just accept the world as it is. The real world, pal. That’s where I live.
By deegee
August 16, 2007 1:58 PM | Link to this
jbmlaw, philosophically speaking an idea should stand on it’s own merit. But we are talking about ideas emanating from a corrupt congress whose members are making public policy that benefits their own narrow self interests. Therefore it is important to consider the source. We should question our elected officials and never accept the party line.
Unfortunately accountants are running our corporations and lawyers are running the government. How many creative, visionary entrepreneurs run businesses and corporations today? They are run by accountants that are only interested in the next quarter’s balance sheet. What was the last great invention that came out of an American company? We are getting beaten by the countries that are fostering research and development in emerging technologies. Why does it take an MBA and a $12 million a year salary for some executive to come in and cut expenses? Where’s the creativity in that? We have lawyers so firmly woven into the fabric of our government that we may never be able to get our government back into the hands of the people. Question motives, accept nothing at face value.
By AmVet
August 16, 2007 1:58 PM | Link to this
Short of a lobotomy I feel there is no hope for the majority of the content, but would someone please suggest that our esteemed journalist use a frickin’ spell checker if he must!
Marading liberals, my arse.
These dunderheads in Washington can’t even agree on the most simple of issues to get much of anything worthwhile accomplished. And Wooten expects Fred Thompson to be the Grand Unifier and get this “fair” tax through?
Preposterous. The rich and powerful will never willingly divest themselves of their money, no matter how ill-begotten it MAY be.
Countless tax shelters and loopholes, new (and brilliant) GOP tax breaks, runaway CEO salaries, multinational shell games, sophisticated ways to hide money in P&L statements; the game is rigged.
How else can you explain the following?
The GAO study found that 71 percent of foreign-controlled corporations operating in the United States paid no taxes in those five years; nor did 61 percent of US-controlled companies.
The basic corporate tax rate stands officially at 35 percent. In reality, it’s far below that for most companies. And the importance of corporate tax revenues for Uncle Sam has shrunk. That’s shown by the numbers.
Corporate taxes have fallen from 5 percent of gross domestic product, the nation’s output of goods and services, in 1946 to 1.4 percent now.
As a percentage of all federal tax revenues, corporate tax payments have declined from 23 percent in 1960 to 13 percent in 1980 and 8 percent today.
Using data from the financial statements of publicly traded companies, the average effective tax rate was 12 percent in 2002, down from 15 percent in 1999, and 18 percent in 1995, according to a study by John Graham, a finance professor at Duke University’s Fuqua School of Business.
http://www.csmonitor.com/2004/0419/p16s03-cogn.html
And the share holders and especially the fattest of the fat cats at the top just love it. Screw America. Screw fair. I got mine.
As evidenced by this:
But members of the congressional tax committees have milked the tax code for years to obtain campaign money, he says. The corporate research and development tax credit, for instance, is only renewed for a year or two at a time. That encourages firms that benefit from the credit to continue to make party donations.
Among the ultra-rich, only Warren Buffett has the courage to try and expose the plutocracy in this country and the inherent unfairness of our insane tax code.
By harold
August 16, 2007 1:59 PM | Link to this
harold likes the idea of a flat tax
people are always clogging up the raods with their broke down cars
if they gets a flat, tax the hell out of them!
tax car tire repairs and new tires at 1000%!!!
By Van
August 16, 2007 5:03 PM | Link to this
Amvet
“Preposterous. The rich and powerful will never willingly divest themselves of their money, no matter how ill-begotten it MAY be.”
So, the only way to “get rich” is by ill-gotten gains
The so-called rich pay more than their fair share of taxes and when you tax a corporation, they just pass it on to the end user, whether a customer buying a product or a client using their services - what an ignorant person.
With tax revenues at all time highs, we get this.
By Van
August 16, 2007 5:17 PM | Link to this
In several states services are already being taxed.
In South Dakota they tax getting a hair cut. Lets say the FairTax rate is 20%, just to make it easier for those in mid-town to understand. I would pay 20% of $14 or $2.80 for a hair cut - John Edwards would pay 20% of $400, or $480 for his hair cut - hey, that sounds fair to me.
By Van
August 16, 2007 5:23 PM | Link to this
Folks,
I meant to say my hair cut would be $16.80 vs. $480. I just know the blog police will pick apart any typo
By Buy@life
August 16, 2007 5:36 PM | Link to this
No, there’s no blog police, and anyone who criticizes spelling errors is just that: a good speller, and let it be enscribed on their tombstone, “He was a good speller”, because that’s all they accomplish in this world: good spelling.
I’m so proud of them.
The shorts covered at the close today.