Join me as I discuss and spread information about the tax system in the United States.
Join me in an effort to force the US Congress to implement and pass true tax reform.
It is something that you are not hearing from any candidate running for President of the United States, except Ron Paul; and little heard from those running for office in the US Congress. The only rhetoric heard about taxation is accusations coming from Democrats untruthfully declaring that Republicans (Romney) are going to strap the middle class with all the taxes, imposing less tax upon the “evil” rich. That is impossible with a system that uses percentage rates, yet people do not think for themselves using math they should have learned in the public, government- and union-controlled school system to show they are blowing smoke up the People’s rectum.
It is as Daniel J. Mitchell, a leading expert at the Cato Institute, (and Heritage Foundation) think tanks stated:
Sadly, tax reform is an uphill battle …
He provides four major reasons:
- Politicians don’t want tax reform since it reduces their power to micro-manage the economy and to exchange loopholes for campaign cash.
- The IRS doesn’t want tax reform since there are about 100,000 bureaucrats with comfy jobs overseeing the current system.
- Lobbyists obviously don’t want to reform since that would mean fewer clients paying big bucks to get special favors.
- And the interest groups oppose the flat tax because they want a tilted playing field in order to obtain unearned wealth.
The Founders of the United States – Alexander Hamilton, George Washington, James Madison, Thomas Jefferson, Benjamin Franklin, and John Adams had wise views about taxes as well as how governments should operate. Most of the issues plaguing Americans today, courtesy of those operating OUR government are that politicians increasingly turn away from the common sense ideas and the established articles of the US Constitution. This involves all the problems faced today and especially taxation. Consider what the Founders stated:
The democracy will cease to exist when you take away from those who are willing to work and give to those who would not. [Government redistribution of wealth & income]
To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical. [Taxpayer funded abortion]
Alexander Hamilton [first Secretary of Treasury]:
If Congress can employ money indefinitely to the general welfare … The powers of Congress would subvert the very foundation, the very nature of the limited government established by the people of America.
The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence.
As a man is said to have a right to his property, he may equally said to have a property in his rights. Where an excess of power prevails, property of no sort is duly respected. No man is safe in his opinions, his person, his faculties, or his possessions. [The IRS can take away your property and take over your financial accounts before you appear before a court for judgment in a legal trial. Who gave them that authority? Certainly it is not entered into the Constitution of the United States.]
If Congress can do whatever in their discretion can be done by money, and will promote the General Welfare, the Government is no longer a limited one, possessing enumerated powers, but an indefinite one, subject to particular exceptions.
There are more instances of the abridgment of the freedom of the people by gradual and silent encroachments of those in power than by violent and sudden usurpations.
No taxes can be devised which are not more or less inconvenient and unpleasant.The basis of our political system is the right of the people to make and alter their Constitutions of Government. But the Constitution which at any time exists, ‘till changed by an explicit and authentic act of the whole People is sacredly obligatory upon all.
I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor is not making them easy in poverty, but leading or driving them out of it. In my youth, I traveled much, and I observed in different countries that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less done for them, the more they did for themselves, and became richer.
FAIR TAX ACT
As the FairTax organization states:
It is not a Democrat or a Republican issue: It is an American issue.
The FairTax proposal is the only proposed tax plan that includes elimination of government taking funds out of your paycheck – forcibly. No individual, organization, or government has the right to confiscate from your income earned. With FairTax, you will:
- Receive money earned and decide how it will be spent.
- It is a consumption tax, based upon a flat rate, where you pay as much tax as you spend.
- No rhetoric about wealthy paying more – the more one makes the more one spends.
- No more tax evasion and “underground economy” – cost of levying tax for government is also reduced. With no deductions, everyone pays the same rate and because it is a percentage, the more one spends, the more one pays.
The FairTax also provides a program called a prebate, which provides every legal resident household an “advance refund” at the beginning of each month so that purchases made up to the poverty level are tax-free.
No taxes will be levied upon essentials, such as food and housing.
Social Security & Medicare Funding:
Benefits will not change. [except for cost-of-living increases] The FairTax actually puts these programs on a more solid funding foundation. Instead of being funded by taxes on workers’ wages, which is a small pool, they’ll be funded by taxes on overall consumption by all residents. … Employers continue to report wages for each employee, though, to the Social Security Administration for the determination of benefits. … Social Security/Medicare is no longer triple-taxed as under the current system: 1) when payroll taxes are initially withheld; 2) when those withheld payroll taxes are counted as part of the taxable base for income tax purposes; and 3) when the promised benefits are finally received.
Instead of your employer being an unpaid tax collector (or Social Security/Medicare payments), the retail businesses collect the tax from the consumer, as states collect sales taxes in 45 states. Retailers send the collected tax to the state taxing authority and all businesses serve as collection agents who receive a fee for their participation, as well as the states who collect the fee. The tax revenue for federal government is sent from the states to the US Treasury.
The FairTax replaces an outdated, unfair, and intrusive tax system that is more efficient and does not force private entities (or state governments) to be unpaid tax collectors.
The Rebate System:
Under the FairTax, all Americans consume what they see as their necessities of life free of tax. While permitting no exemptions, the FairTax (HR 25/S 13) provides a monthly, universal prebate to ensure that each family unit can consume tax-free at or beyond the poverty level, with the overall effect of making the FairTax progressive in application. This is not an entitlement, but a rebate (in advance) of taxes paid – thus the term prebate. Everyone pays taxes at the case register. [See Chart] … For example, a person spending at the poverty level ($30,260 for a family of four) has a 0% effective tax rate because of the annual prebate of $6,960 refunds all of the taxes they paid. Whereas someone spending at twice the poverty level has an effective tax rate of 11.5%, and so on. Annual spending would have to be in excess of $14 million per year to reach the statutory rate of 23%.
The only complexity of the Fair Tax Act is its rebate clause; the chart linked above should explain it in more detail.
The major item about the Fair Tax Act, for many Americans, is the fact that the IRS will be extremely downsized and no longer have the power it has today.
The Fair Tax Act is something new, while the concept of flat tax is not.
FLAT INCOME TAX SYSTEM
The Flat Tax is an alternative to reformation of the present tax system , keeping the income tax system. The major consensus as to the rate of the flat tax is 17%. In either tax program, the tax rate cannot be changed without a majority (2/3 vote) vote of Congress, just as introducing a new amendment, rescinding or repealing an amendment.
The Flat Income Tax would eliminate most deductions/exemptions and loopholes which has made the system so complex that even IRS representatives cannot explain it or administer it correctly or understand it. Annual tax forms will consist of a simple postcard. The most notable element of the Fair Tax Act is that it would abolish Federal income and corporate taxes, as well as the Internal Revenue Service. Something the Flat Income tax system would not do.
Taking from what is spent is far better than taking from what is earned; the prebate in the Fair Tax system would ensure that poor citizens would not suffer.
It has been established by the Tax Foundation group, which does not align itself to either plan, argues that …any problems with transition to the new system are worth the benefits each would produce.
Neither tax reform plan has enough support in Congress, and while citizens have demanded something be done, congressional members continue to shelve it – ignoring it.
Further Information and Reading:
Thumbnail Sketch of the FairTax, September 12th 2008.
A Brief Guide to the Flat Tax, Daniel J. Mitchell, Ph.D. – Heritage Foundation, July 7th 2005.
As you can see by the dates of the references, there have been members of Congress and think tanks who promote one of the two proposed system – yet, the American people are still harnessed into an unfair, intrusive, and often unconstitutional problems usually caused by IRS actions and its unconstitutional power.
One system suggests a 23% flat rate, while the other suggests a 17% flat rate. Rep. John Linder, author of the Fair Tax Act suggests that 23% is not too much. That rate would be acceptable for first year, but the rate should be lowered over a specified time until it reaches 10%. One of the objects in reforming the tax system would be to force the government to budget properly and efficiently. It would also make the system more visible to the American taxpayers. Daniel J. Mitchell, an expert on tax reform at Cato Institute favors the Flat Tax, stating that:
No country in the world has implemented a consumption tax without retaining its income tax. Phasing out the income tax will never happen.
What is needed is a “top-to-bottom” income tax reform that deletes payroll income taxes. It certainly worked well for Hong Kong and Singapore. Hong Kong has generated 13% of its GDP in each revenue year with a top tax rate of 16%. It provides efficiency and ensures compliance – one of the major problems of the existing system today in the US. Reduced spending must also be initiated along with the new tax system.
One problem foreseen is that many states already have an income tax, averaging 9.6% in 2010. If the feds add to this, a consumer would have to pay a total of 39.6% at the time of sale. In addition to sales tax, many states also have an income tax (double taxation as with federal government).
The gist of the issue of solution lies within the fact that the US Congress has continually set aside any proposals for tax reform onto the back burner – which equates to getting nothing done. This national election of 2012 is like too many other elections – tax reform is briefly mentioned or not at all, which is a travesty considering that it is such an important major issue that has to do with a good national economy and taxation fairness, as well as efficiency.
See Comparison Charts.
You decide which system you want to replace the present tax system – and then present it to your representatives and senators of your state. In the process, you should make them aware that those elected By the People must perform their tasks according to the Constitution and its amendments – and the will of the people or find another job. Political party is of no concern … what the individually elected official does and how he or she performs their job they are paid to do by taxpayers, as well as adhering to their oath of office is what matters.
In 1913, those in favor of an income tax stated that no one should worry because the tax rate would never be above 10%. We all saw what happened with that: You give government a little amount of power that ends up giving government a lot of power. You give government a little bit of an entrée into your personal affairs; you’re giving government a blank check to know everything about you. It is not a good idea.
MUST VIEW YouTube Video List:
The Global Tax Revolution (since this video was made, five more nations have adopted the flat tax system).
Tax Haven Speech, Dan Mitchell, Capitol Hill, Part 1.
Taxes and Spending – Cato Response to 2012 State of Union Address, Daniel J. Mitchell.
Flat Tax Will End Corrupt Corporate Tax Loopholes, Daniel J, Mitchell.
Internet Taxation, Daniel J. Mitchell.
Value Added Tax: Hidden New Tax to Finance Bigger Government, Daniel J. Mitchell.
How Government Tax and Spending Policies Undermine Savings, Daniel J. Mitchell.
Taxing the Rich, Daniel J. Mitchell.
Taxes on Businesses, Daniel J. Mitchell.