Campaign rhetoric in this presidential debate concerning
taxes is about middle class burdened more than the other classes. It is also an
argument against the Fair Tax Act,
which is untrue, and apparently, congressional members do not understand the
consumption flat tax system being proposed. This alternate to the unfair,
intrusive, and inefficient means of federal (and some state) taxation has been
proposed since 1999. A system analyzed and approved by leading economists in
the United States.
At the beginning of each congressional session, the Fair Tax
Act was re-introduced year after year since 1999. Georgia Senator Saxby
Chamberliss helped sponsor the bill in the Senate as Fair Tax Act of 2011 (S. 13) and Georgia
Rep. John Linder (who
co-authored a book on the subject) in the House (HR 25).
Still not passed after all that time with continued bickering over the income
tax system, sponsorship has been growing as voters have also began to look for
constitutionally minded politicians. Senator Chamberliss is also the senator
that has dispelled
the Obama myth that al-Qaeda
is on the run and we are winning the war against Islamic fascism. It is
a grab of desperation to depict accomplishment over the past four years of the
Obama team in the White House. As Front
Page Magazine stated:
Bin Laden may be dead, but Al Qaeda isn't.
The Fair Tax would repeal all taxes on individual and
corporate income, payroll, self-employment, capital gains, gifts and estates
and use a national personal consumption tax in its place. This requires the
repeal of the 16th Amendment. What should perk up American taxpayers
ears is that it would also abolish the Internal Revenue Service that would be
placed by a simple, less bureaucratic, less powerful collection-audit agency of
the executive branch. Passing the Fair
Tax Act would mean that Americans will keep their entire paycheck and only
pay federal taxes based upon consumption or purchases of goods and services. It
is a win for the taxpayer AND the government.
Under the current system, based upon income tax that has
progressive rates, the cost of compliance that includes audits, administration,
and enforcement, totals to more than $265 billion per year. This includes the
salaries of those hired to run the system that even they do not fully
understand. Complication is one of the main negative sides of this draconian tax
system. It is estimated that $350 billion per year in taxes is never collected,
so this adds to the cost of the system. The government also spends to collect
taxes that have been unpaid either inadvertently or purposefully. The system is so complex few understand it - and it constantly changes, which increases the complexity.
The other problem with the income tax system is that
millions of people contribute little or nothing in taxes by the year’s end –
receiving most or all of what was deducted from payroll checks during the
course of the year. Those who receive “earned income credits” and/or additional
child tax credits are the percentage of people who either pay no tax after
deductions, and in some cases, actually receive refunds larger than what they
paid in.
The Fair Tax closes loopholes that all citizens gain in
different tax brackets – including the wealthy. In the income tax system, it
all depends upon deductions as to what percentage of income is paid after
refunds. Legal deductions can allow a person who makes $20 million per year pay
less percentage of tax than a person who makes $500,000 per year. It depends
upon tax credits and deductions. Remember this: when a tax system is based upon percentage, it means the more one makes the more they pay in taxes, so there is no need for a "progressive" tax rate to make things "fair". If there are NO deductions, everyone pays the same rate except the poor income folks with the "Prebate" clause.
Another failure of the income tax system is not collecting
tax on the “underground economy” – wages earned and not declared; mostly by illegal
immigrants who work for cash so as not to be detected and who have not procured
fraudulent identification. It is estimated that up to $1.5 trillion is lost each
year. With the Fair Tax there will be an added estimate of 40 million foreign
tourists who would pay taxes into the federal system through purchases made
while visiting. That is not occurring with the income tax system.
The Fair Tax would be based upon a flat tax system that will
only be changed by a two-thirds majority of Congress, which is the same rule
applying to adding, changing, or rescinding an amendment to the US
Constitution.
Laurence Kotlikoff |
The thing that hurts getting more sponsors and people to
realize how much better the economy, more efficient the government tax
collection would be, and other factors is the proposed 23% flat tax rate. However,
those people do not understand the hidden or embedded costs presently in place
that calculates to just over 22% found through a study by the Beacon Hill
Institute in Boston. Laurence J. Kotlikoff,
a professor of economics at Boston University, worked on a number of papers and
studies concerning the Fair Tax. According to the research, each product sold,
like a vehicle, there are hidden embedded costs that increase the price of the
product. Those costs include payroll taxes for building the vehicle and taxes
on the shipment of and distribution of the product. Those hidden, embedded
costs would no longer exist under the Fair Tax system. That means that a
$10,000 vehicle, despite the flat Fair Tax, would cost the same under the new
tax system.
Another argument against the Fair Tax is that it is a
regressive tax that is claimed to be a burden on the poor or middle-income
citizens. That is why there is a Prebate
clause within the proposed Fair Tax Act bill. This is a way of reimbursing tax
cost for necessities of life like food. The Prebate is a monthly refund on
taxes paid out for those necessities. This is the same program for poor income
families presently getting annual refunds under the earned income credit. However, the Prebate pays out monthly, not at
the end of the year. Therefore, the rate of tax for poor and middle-class
income families would be 11.5% and not 23%. That is below the 15% tax bracket
they are paying out in income tax now.
I believe it would be less complicated if food were exempt
of ANY taxes, like here in Wisconsin, with housing purchase tax exempt as well.
Then there would be no need for a bureaucratic “Prebate” check.
It seems that the major concern of the Fair Tax among
citizens is based upon little trust in the government. Passing the Fair Tax Act
would mean the repeal of the 16th Amendment and opponents do not
believe that all the taxes based upon income would be repealed. House
Resolution 25 has a clause to prevent that from happening. During the six-year
limit required for the repeal of the 16th Amendment, the collection
of the repealed income tax is suspended. It is because repealing an amendment
to the Constitution is not an easy task, nor should it ever be. Repealing the
16th Amendment would require three-quarters of the states’ approval.
The people who are for passing the Fair Tax Act come from
all walks of life and transcend the political ideology consisting of liberals,
conservatives, libertarians, and others. It is because this legislation is not
about politics, it is about an American cause that would be better for
taxpayers, and unbelievably, better for government making its tax collection more
efficient and less costly to enforce. Another side benefit is that it puts more
government power back to the People, where it belongs and how its Founders
established it. It is a taxation that provides better representation – the invisible
schematics being removed that is within the complicated tax system in place
now. Instead of tens of thousands of pages for the tax system, there would be
less than 1,000; estimated to be less than 500 pages. That is the same pages as
a hardback novel.
With the increasing power and intrusion of the IRS agency of
the federal government, one would think that the phones at congressional
offices would be ringing off the hook to pass HR 25/S. 13. I believe it is
mostly because fellow citizens do not fully understand what the Fair Tax Act
would do, and that includes their representatives and senators within Congress.
The legislation was not put together overnight, hurriedly as
so many laws are passed in Congress, but went through committees with leading
economic experts evaluating it, as well as extensive research as described
above.
During this campaign year, Mitt Romney was accused of cheating in his annual tax configuration
for paying an effective tax rate (after deductions) of 10% to 13% over the
course of the past five years. They did not reveal the huge percentage of his
income going to charity, tax
deductible – far greater a percentage than his accusers. Obama and company lied
in 2008 and lied for four years.
It is not because he cheated. It is because the present tax
system allows it.
This class warfare, class jealousy rhetoric will no longer
be present in election campaigns once the income tax and its deductions are
GONE.
It is the same for corporate taxes. The highest present rate
is 25%, higher than any other nation in the world – but not ALL corporations
pay that rate, and a few have paid zero.
This is referred to as “corporate welfare”, and it is.
It is because of what the politicians call “incentives”. What
is boils down to is favoritism. The Fair
Tax will end all of that. Taxes will be paid on purchases, goods, and
services. No hidden tax and equal tax rates – no IRS looking over your shoulder. Your paychecks, money YOU earned,
will be yours. What you make “gross” will be what you take home, unless you
have payroll deductions YOU have sanctioned.
The Fair Tax will
also do away with invisibility of the present tax system – people will actually
see how taxes are paid. Employers will no longer have the added cost of being
an unpaid tax collector for the government; which means they will have more
funds to obtain better health care packages for their employees – another big
issue in this campaign for president and congress.
The Fair Tax will benefit ALL American citizens and will add
a tax base that is not under the present tax system as aforementioned –
tourists visiting the United States. It is a win for the People and a win for the
government, and once it is established, it will help the economy, not hurt it.
No more talk of raising taxes because it will not happen.
Which means there is another benefit: government will finally be forced to
budget as to what comes in instead of looking for new ways to tax or raising
those already in place. All those hidden taxes like those on your telephone
bill will disappear – with one flat tax added. You will see how much taxes are
and only have to watch how the government spends it.
That is probably why so many politicians are not jumping for
the chance to change the system. Those are the politicians that need to find another
job – and YOU the voter must ensure that they no longer sit in Congress. The
president is always solely blamed that is mostly the responsibility of Congress
to enact. We the People need accountability and efficiency in OUR government.
The Fair Tax is one way of doing so.
The other way is Congress demanding a complete audit of the Federal
Reserve System and taking charge of what the Constitution holds them
responsible for – our currency. [This
Week: Federal Reserve was recently an attack
site for terrorist]
Along with cleaning up our government, We the People need to clean up our society as well, like
strengthening the family structure through family values tried and proven
through ages of human history. This comes to my mind after reading an update on
the self-destruction
of Britney Spears. We the Parents are responsible for
future adults that will decide the fate and the quality life in America. It is
about time that parents take back control and raising their children responsibly,
and stop letting government and others influence and/or control them. They need
to be taught the basics virtues, understand and armed with knowledge of
Constitution and its amendments, and realize that those virtues provide the
most rewarding aspect of life. We cannot expect our government to reform if
society does not reform itself with it. Those people who we elect come from the
very same society. Corruption produces corruption and that spells disaster.
And that ends my soap-box moment for the day …
Your hero Kotlikoff admits Fairtax is not a personal retail sales tax, and it actually a massive tax on city county and states, Did you know that Kotlikoff said all city county and states would have to pay taxes to the fed government on all non-educational expenditures?
ReplyDeleteI suggest you read your hero a bit closer.
He also wrote that all city county and states would have to raise their tax rates to pay it.
Got that? Too complicated?
Now, you run back to Kotlikoff and have him show you the figures for your city and state. Go on -- go ask him to show you. He wrote the articles that had these amazing facts snuck in the fine print . He wrote it - not me. He said Fairtax taxes all city county and states on all wage, pension and benfit expenditures, AND that Fairtax taxes those same city county and states on ALL expenditures, other than education.
And guess who said all city city and states would have to raise their tax rates? Oh thats right, Kotlikoff did. yeah, but you have too read it closely.
Kotlikoff is right -- IF you get all city county and states to pay massively to the fed government, on TOP of the personal taxes, and you get all city county and states to raise their tax rates, AND you get all cancer victims and nursing home residents to pay massive taxes despite their poverty, Fairtax will work just peechy
YOu either get that thru your head or you don't. Go read his documents closely. Yes, he tries very hard to give the opposite impression, that Fairtax is a simple retail tax, but since he taxes all city county and states on all their expenditures, other than education, it's not a retail sales tax.
How much would your city have to pay? Oh,Kotlikoff forgot to tell you? What a surprise!! How much would your county have to pay? Oh, Kotlikoff forgot to tell you>
I offered 50 thousand dollars if anyone can prove Fairtax is a personal retail sales tax. Read what Fairtax taxes -- not the bull in the books videos or speeches but whats in the fine print.
Got that? too complicated? READ IT. They have massive taxes on city and states -- do you know how much your city would have to pay, in advance and otherwise? No you don't have a clue. All city county and states would have massive taxes to pay the fed gov.
When you realize how much your city and state would have to pay - - h ow many billions -- and how high your city and state would have to raise their tax rates, get back to me. Until then don't be so stupid to fall for bullship
http://fairtaxgoofy.blogspot.com/
First of all, John Linder, who initiated the bill in 1999 for submission in 2000, had a two-year study with leading economists examining it.
ReplyDeleteYou are the one that needs to examine "closely" the present tax system, which clearly points out the hidden taxes in the income tax system - federal, state, whatever.
Second, you apparently did not read the bill in Congress.
Thirdly, do you know more than leading economists?
And, last, but not least: Mr. Kotlikoff is not my "hero" - as far as economists, Thomas Sowell and Walter Williams are my favorite economists. To respect someone is not hero worship. Obviously, you have your own hero worshiping - like media misinformation and bias. I would not doubt that you voted for Obama.
The present economic situation is a result from those follow Keyes economics.
And, since you mentioned "stupid" ... "Stupid is as stupid does"
You are in error, big time. It is people like you for the reason why we cannot get rid of the income tax boondoggle and its gestapo and unconstitutionally powerful arm of government: the IRS.
Does the Fair Tax Act need to be scrutinized before passing - you bet. It is too important to mess up the details. The major problem with it passing is that the 16th Amendment must be appealed at the same instance (to prevent both being enacted, at least by law).
Where did he state this misconception of yours?
PS: I doubt you have $50,000.