HUCKABEE'S FAIRTAX PROPOSAL

flaja wrote:

Then why did my mother have to pay estate taxes on her brother's estate? She had to fill out a tax return form for the estate and she had to send the IRS a check for taxes due. If it wasn't an estate tax what was it?

No doubt it was a simple 1040 income tax form. Just because a taxpayer dies doesn't mean that the income he earned isn't taxed. The executor of the estate (in this case, your mother) needs to submit an income tax return on behalf of the decedent for the income that he earned before he died.

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joefromchicago wrote:

No doubt it was a simple 1040 income tax form. Just because a taxpayer dies doesn't mean that the income he earned isn't taxed. The executor of the estate (in this case, your mother) needs to submit an income tax return on behalf of the decedent for the income that he earned before he died.

She had to submit a 1040 for her brother to account for his income in 2005 before he died. But the form she had to fill out for the estate was so uncommon that she had to go to the federal building downtown to get it because it wasn't available anywhere else in town.

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joefromchicago wrote:

flaja wrote:
Then why did my mother have to pay estate taxes on her brother's estate? She had to fill out a tax return form for the estate and she had to send the IRS a check for taxes due. If it wasn't an estate tax what was it?

No doubt it was a simple 1040 income tax form. Just because a taxpayer dies doesn't mean that the income he earned isn't taxed. The executor of the estate (in this case, your mother) needs to submit an income tax return on behalf of the decedent for the income that he earned before he died.

A 706 is prepared for at death by the executor. Any untaxed income earned in year of death is recorded as well as potential income taxes due from IRA's or other tax dferred property owned at death. Unless his net worth was in excess of statutory limits (2M for 2007) no estate tax was paid on his assets at the federal.

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flaja wrote:

Advocate wrote:
AN ESTATE TAX IS NOT AN INCOME TAX. IT TAXES WEALTH, NOT INCOME.

What is an estate if not the accumulation of a lifetime's income? The government taxed my uncle's income before he could spend it or invest it to generate more income, and then the government taxed that income again as part of his estate.

And don't forget that be it income or be it an estate it's still not the government's money to begin with. How much we pay in taxes is just as much an issue as what we pay taxes on is.

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YOU ARE BASICALLY CORRECT. WE HAVE THE OBLIGATION TO ESTABLISH OUR INCOME, CREDITS, AND DEDUCTIONS.

And if the IRS makes a clerical error that makes a taxpayer appear to be guilty of not paying his taxes the IRS can seize the taxpayer's assets in a heartbeat without indictment, trial or jury deliberations. I have absolutely no doubt that the IRS intentionally makes errors and sends taxpayers a bill knowing that many taxpayers either won't know any difference or will simply pay the bill because they are too afraid of the IRS to protest or question the bill.

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FOR WHATEVER REASON, SHE EFFECTIVELY RECEIVED A LOT OF TAXABLE INCOME IN A SINGLE YEAR. SHE HAD NO GROUNDS TO EXCLUDE IT FROM TAXABLE INCOME.

The income wasn't attributable to her in a single year. It was not a single year's income. It was paid out for a multiple year period and the yearly amount was not enough to be taxable according to what the IRS has told her. By all right the federal government should have to pay my mother interest for having the use of her money.

This is a difficult concept for most people to understand, but children have no rights to their parents property under law. When one dies, this propoerty becomes abandonded and our laws provide for probate of this property as a form of distribution. The givt is not in busiess to dispose of your property which is why there are intestate laws in each state.

However, the govt will tax the transfer of property if it exceeds certain amounts (2M per person in 2007) to minimize the concentration of wealth in the hands of the few.

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flaja, if the inherited funds were from IRAs or other tax-deferred accounts then the estate must pay taxes on those distributed funds. If your mother owed taxes on her brother's money, if was in all likelihood based on income paid to the estate prior to distribution to the heirs. At the levels you are describing, it was not an inheritance tax levied against your mother, but an income tax levied against your uncle's estate.

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JPB wrote:

flaja, if the inherited funds were from IRAs or other tax-deferred accounts then the estate must pay taxes on those distributed funds. If your mother owed taxes on her brother's money, if was in all likelihood based on income paid to the estate prior to distribution to the heirs. At the levels you are describing, it was not an inheritance tax levied against your mother, but an income tax levied against your uncle's estate.

My uncle's other nephew and I were the beneficiaries of his life insurance and one of his retirement accounts. That money came directly to me and my cousin and we had to pay personal income taxes on it. The estate paid no taxes.

But because my uncle died without a will and hadn't updated the paperwork for his IRA after his wife died, that IRA went to the estate and was taxable.

But the issue still stands: Both the income tax and the estate tax are immoral. They are penalties for working hard, saving your money and taking financial risks that help the economy to expand.

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IRAs are always taxable because the person contributing to gets a deduction for the money contributed. Therefore, to avoid a double benefit, the proceeds are taxable to the recipient.

BTW, taxes are the price we pay for a civilized society. Unfortunately, Bush is into big spending and just keeps cutting taxes, which runs up the deficits. Clinton insisted on pay as you go.

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Advocate wrote:

IRAs are always taxable because the person contributing to gets a deduction for the money contributed. Therefore, to avoid a double benefit, the proceeds are taxable to the recipient.

Why not simply do away with the immediate deduction and then not have to pay taxes on what your IRA earns?

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BTW, taxes are the price we pay for a civilized society.

Some of us aren't getting our money's worth.

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Unfortunately, Bush is into big spending and just keeps cutting taxes, which runs up the deficits.

There is ample real world evidence that low tax rates spur economic activity, which leads to increased tax revenue. Tax cuts do not cause budget deficits. Spending tax revenue and then spending some more is what causes budget deficits. As long as the president doesn't have a line item budget veto, he has no real say in setting spending priorities or spending amounts. The federal government cannot spend money except in consequence of a law and all laws to spend money must originate in the U.S. House of Representatives. The House and Senate pass a law for the entire federal budget and the president must either sign it or shut the government down.

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Clinton insisted on pay as you go.

Is that why Clinton forced a government shut-down- because he wouldn't sign a balanced budget when one was presented to him?

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flaja, you have the right to be wrong, but you abuse the privilege.

One can elect a Roth IRA, whereby you don't get a deduction for contributions, but can exempt all distributions, even earnings, if the Roth is held five years.

Supply-side doesn't work, which is the reason that the national debt has soared under Reagan and the Bushes.

Gingrich closed down the govt., for which he paid mightily.

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Advocate wrote:

Supply-side doesn't work, which is the reason that the national debt has soared under Reagan and the Bushes.

What did the Reagan and Bush tax cuts do to federal revenue? Did federal revenue go up or down after these tax cuts were implemented?

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Gingrich closed down the govt., for which he paid mightily.

You are a liberal fool. Gingrich and the Congress sent a budget to Clinton and Clinton vetoed it, thereby shutting down the government.

BTW: I am aware of the Roth IRA, but it is really unavailable to people like my mother who have poor health. If you are suffering from long-term illness that may cause you to lose your job or face costly medical expenses, you don't have the option of having any extra money tied up for 5 or more years for tax purposes.

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Flaja
As your a common fool I guess that Advocate cant take umbrage at your statement.

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rabel22 wrote:

Flaja
As your a common fool I guess that Advocate cant take umbrage at your statement.

Libs have a way of ignoring facts and thus they play the part of the fool. If anyone can produce documentation that tax revenue after either Reagan or Bush's tax cuts went down, they've yet to produce it no matter how often they are asked to do so.

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flaja wrote:

Libs have a way of ignoring facts and thus they play the part of the fool. If anyone can produce documentation that tax revenue after either Reagan or Bush's tax cuts went down, they've yet to produce it no matter how often they are asked to do so.

Well, maybe you haven't been asking the right people.

I've reproduced this graph elsewhere. It shows federal tax revenues after the Bush first term tax cuts and revenue projections without the tax cuts:

http://angrybear.blogspot.com/dynamic_scoring1.jpg

As the graph clearly shows, tax revenues went down -- way down -- after the Bush tax cuts. Furthermore, the Reagan tax cuts of 1981 were followed by three years of lower tax revenues. Federal tax revenues did not rise above the 1981 level until 1985.

So there's your documentation. I'm sure now that you will admit that tax revenues went down after both the Reagan and Bush tax cuts.

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joefromchicago wrote:

flaja wrote:
Libs have a way of ignoring facts and thus they play the part of the fool. If anyone can produce documentation that tax revenue after either Reagan or Bush's tax cuts went down, they've yet to produce it no matter how often they are asked to do so.

Well, maybe you haven't been asking the right people.

I've reproduced this graph elsewhere. It shows federal tax revenues after the Bush first term tax cuts and revenue projections without the tax cuts:

As the graph clearly shows, tax revenues went down -- way down -- after the Bush tax cuts. Furthermore, the Reagan tax cuts of 1981 were followed by three years of lower tax revenues. Federal tax revenues did not rise above the 1981 level until 1985.

So there's your documentation. I'm sure now that you will admit that tax revenues went down after both the Reagan and Bush tax cuts.

Economic projections are worthless since they cannot take into account all factors that could affect economic activity.

And no one has ever claimed that lower tax rates lead to immediately higher revenue. It takes time for the money that is no longer paid in taxes to either be spent by consumers (thus stimulating the economy) or invested (thus stimulating the economy in the long term).

Furthermore, the Bush tax cuts had little time to take effect before the economy was hit by 9-11. But even by your own admission, i.e., the graph you provided without citing a source, tax revenue has gone up since the Bush tax cuts took effect. By 2006 Bush's tax cuts were revenue neutral and following 2006 federal revenue has been over the levels that prevailed before the tax cuts were implemented.

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flaja wrote:

Economic projections are worthless since they cannot take into account all factors that could affect economic activity.

You asked for proof that tax revenues went down after the Reagan and Bush tax cuts. I provided that proof. A "thank you" from you would have been sufficient.

flaja wrote:

And no one has ever claimed that lower tax rates lead to immediately higher revenue.

Except for you, you mean.

flaja wrote:

Furthermore, the Bush tax cuts had little time to take effect before the economy was hit by 9-11. But even by your own admission, i.e., the graph you provided without citing a source, tax revenue has gone up since the Bush tax cuts took effect. By 2006 Bush's tax cuts were revenue neutral and following 2006 federal revenue has been over the levels that prevailed before the tax cuts were implemented.

As the graph that I re-posted demonstrates quite convincingly, revenues would have gone up after 2001 even if no tax cuts had been imposed. The only differences would have been the amount of money collected by the federal government and the amount of the deficit that resulted from Bush's tax cuts. Indeed, the general trend is for tax revenues to go up because of general economic and non-economic factors (e.g. a rising population), regardless of tax policy. Tax cuts lead to an immediate decrease in tax revenues, but those revenues will eventually return to the pre-cut levels as long as there are no further cuts. That, however, is certainly not proof that supply-side economics is correct.

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McGentrix wrote:

A FairTaxSM White Paper

The FairTax: Fundamentals and facts

These points address common questions regarding the FairTax plan:
- The FairTax is revenue neutral at $0.23 out of every retail dollar spent.
- The FairTax lowers the lifetime tax burden for most Americans.
- The FairTax benefits retirees who depend mostly on Social Security.
- The FairTax preserves the overall progressivity of the federal tax burden.
- The FairTax dramatically improves the U.S. economy.
- The FairTax improves the international competitiveness of American producers.
- The FairTax promotes home ownership better than the current system.
- The FairTax simplifies tax compliance, thereby reducing tax evasion.

read the rest by following the link above (pdf).

In the first place I think Huckabee is yet another corne pone huckster from Arkansas, distinguisable from his predecessor only in having the benefit of much less education.

In the second, I don't know of any serious Republicans who believe that progressive income taxes should be entirely eliminated in favor of a consumption tax.

Of the eight verifiable assertions about the "fair tax" above, three (#s 2,3,& 4) are patently and obviously false. #5 and #7 are arguable, unproven hypotheses - and there is substabntial reason to believe they are also false. For example - under a "Fair Tax" a flat rate of 24% or so of the purchase price of a home would be due to the Federal government the moment it is purchased. Given the deductability of home interest payments for most current income tax payers, it is very hard to conceive of any circumstances under which this hare-brained scheme would promote home ownership better than the current system. Finally, the efforts put into tax evasion are generally proportional to the rate of taxation. Even today with many state sales taxes above 7.5% there is a growing underground economy of barter and undocumented sales. A 33% rate (Federal plus State) would be a huge incentive to tax evaders who are genberally more alerty and agile than tax collectors.

Very hard to take these assertions (and those who advance them) seriously.

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joefromchicago wrote:

flaja wrote:
Economic projections are worthless since they cannot take into account all factors that could affect economic activity.

You asked for proof that tax revenues went down after the Reagan and Bush tax cuts. I provided that proof.

What you provided is "proof" that when given enough time tax cuts do lead to increased government revenue. By your own graph the government takes in more money now following Bush's tax cuts that it was taking in before the tax cuts were implemented.

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georgeob1 wrote:

under a "Fair Tax" a flat rate of 24% or so of the purchase price of a home would be due to the Federal government the moment it is purchased.

A 24% tax on the purchase price of say a $100000 home would be $24,000. I daresay that very few Americans could afford to pay $24,000 in one lump sum in taxes. Would the homebuyer have to borrow the tax money along with his mortgage? Would every homebuyer be able to qualify for a mortgage that is 24% higher than the value of the home he is buying? What would the homebuyer end up paying in taxes once he's paid 6-8% interest on the extra $24,000 in mortgage loan amount?

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Why don't we abolish all federal, state and local income and estate taxes and then replace them with:

A sales tax on goods and services (excluding food and medicine) that is limited so the total (federal, state and local) sales tax on any given item is no more than say 8%;

A tax on wages and salaries (with large personal exemptions) without allowing any deductions or exemptions so we can target the absurd pay of corporate execs, politicians, entertainers and athletes;

Excise taxes on things that we should be conserving (energy and recyclable materials such as paper, metal, plastic etcetera);

A federal tax on both consumer and corporate debt exempting the first mortgage on a primary residence.

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flaja wrote:

joefromchicago wrote:
flaja wrote:
Economic projections are worthless since they cannot take into account all factors that could affect economic activity.

You asked for proof that tax revenues went down after the Reagan and Bush tax cuts. I provided that proof.

What you provided is "proof" that when given enough time tax cuts do lead to increased government revenue. By your own graph the government takes in more money now following Bush's tax cuts that it was taking in before the tax cuts were implemented.

And my "thank you?" Where's that?

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