1
   

Does Sean Hannity support H.R. 25, an alleged fair tax?

 
 
john w k
 
  1  
Reply Mon 22 May, 2006 08:55 pm
Re: Taxing consumption, the Founder`s way
Foxfyre wrote:

A consumption tax, which essentially a national sales tax would be, is attractive but is riddled with quirks and problems, many of which I have already noted, at least in my opinion. I prefer a system that does not discourage consumption but rather encourages prosperity.

If this does not adequately respond to your previous post directed to me, we can certainly discuss it further.


There is a very big difference between a national sales tax and taxing consumption as our founding fathers intended and practiced. I have a number of objections with a national sales tax. But those objection do not apply to the method of taxing consumption as intended by our founding fathers.

I don`t know if you read TAXING CONSUMPTION, THE FOUNDER`S WAY, but if you have, I think you would agree the founder`s method allows the market place to determine the allowable limit of tax on each article selected for taxation, which is, in and of itself, an important check upon Congress` power in laying such a tax

Do you have any specific objection to the founder method of taxing consumption?

Regards,


JWK
0 Replies
 
Foxfyre
 
  1  
Reply Mon 22 May, 2006 09:12 pm
Re: Taxing consumption, the Founder`s way
john w k wrote:
Foxfyre wrote:

A consumption tax, which essentially a national sales tax would be, is attractive but is riddled with quirks and problems, many of which I have already noted, at least in my opinion. I prefer a system that does not discourage consumption but rather encourages prosperity.

If this does not adequately respond to your previous post directed to me, we can certainly discuss it further.


There is a very big difference between a national sales tax and taxing consumption as our founding fathers intended and practiced. I have a number of objections with a national sales tax. But those objection do not apply to the method of taxing consumption as intended by our founding fathers.

I don`t know if you read TAXING CONSUMPTION, THE FOUNDER`S WAY, but if you have, I think you would agree the founder`s method allows the market place to determine the allowable limit of tax on each article selected for taxation, which is, in and of itself, an important check upon Congress` power in laying such a tax

Do you have any specific objection to the founder method of taxing consumption?

Regards,


JWK


So in your selective consideration of the "founders method', please elaborate on

a) Who decides on what is and is not a necessity?
b) Who decides on what product will be taxed?
c) Who judges on what is an is not an inequity and whether inequities spread across the realm balance each other out?
d) Who judges whether taxes so imposed shall not be punitive or provide advantage?

I think your assessment of intent in the founder's proposal is too narrowly defined and does not address the larger issues.

To fund the federal govenrment, I'll stick with a flat tax based on specific principles that applies to every body uniformly and without exception.
0 Replies
 
okie
 
  1  
Reply Mon 22 May, 2006 09:31 pm
Re: Taxing consumption, the Founder`s way
john w k wrote:

okie,

I think you would agree with TAXING CONSUMPTION, THE FOUNDER`S WAY[/url]


Regards,

JWK


If I could figure out exactly what it is, it would help. Instead of providing a link, can you summarize it in your words. I gather it might be taxing imported goods and/or perceived luxuries, but I'm not real sure.

To get other countries to fund all of us sounds too good to be true, and it probably is.

Until I know what it is and determine how it affects trade, how much money it would raise, and a host of other things, I don't know whether I think it has potential or not.
0 Replies
 
john w k
 
  1  
Reply Tue 23 May, 2006 06:19 am
Re: Taxing consumption, the Founder`s way
Foxfyre wrote:

So in your selective consideration of the "founders method', please elaborate on

a) Who decides on what is and is not a necessity?
b) Who decides on what product will be taxed?
c) Who judges on what is an is not an inequity and whether inequities spread across the realm balance each other out?
d) Who judges whether taxes so imposed shall not be punitive or provide advantage?

I think your assessment of intent in the founder's proposal is too narrowly defined and does not address the larger issues.

To fund the federal govenrment, I'll stick with a flat tax based on specific principles that applies to every body uniformly and without exception.


Well, I get the impression from you snappy response your aim is not a sincere discussion concerning tax reform.

Surely you know the answer to your above question is Congress, just as was done under our nations THE FIRST REVENUE RAISING ACT FOR OUR COUNTRY[/color]!

NOTE: those interested may use the PREV IMAGE and NEXT IMAGE buttons at the above link to study the bill___it is refreshing to study statesmen creating a revenue raising bill beneficial for America`s businesses, industries and labor force, as opposed to politicians acting in their own self interest and on behalf of internationalists who have no allegiance to America or any nation [the NAFTA/ CAFTA CROWD] !

Since you support a flat tax, please give the definition of income within the meaning of your tax. What are the characteristics which define income?

I must also point out, the founder`s plan also provides a specific method to extinguish deficits. Does you tax plan do that?

In addition, other than the tax to extinguish deficits, the founder`s plan allows the market place to determine the allowable amount of tax on each article selected for taxation. That, in-and-of-itself is another import check and balance upon Congress` power to tax.

Give me some specifics rather than sweeping comments.

Regards,

JWK
0 Replies
 
john w k
 
  1  
Reply Tue 23 May, 2006 06:49 am
Re: Taxing consumption, the Founder`s way
okie wrote:
john w k wrote:

okie,

I think you would agree with TAXING CONSUMPTION, THE FOUNDER`S WAY[/u]

Regards,

JWK


If I could figure out exactly what it is, it would help. Instead of providing a link, can you summarize it in your words. I gather it might be taxing imported goods and/or perceived luxuries, but I'm not real sure.

To get other countries to fund all of us sounds too good to be true, and it probably is.

Until I know what it is and determine how it affects trade, how much money it would raise, and a host of other things, I don't know whether I think it has potential or not.


It would be foolish for me to retype something here, which is already provided at the link I posted above.

But to answer one of your questions, the founder`s plan worked so well that by the close of the year 1835, the national debt [which included part of the revolutionary war debt] was completely extinguished and Congress enjoyed a surplus in the federal treasury from tariffs, duties, and customs. And so, by an Act of Congress in June of 1836[/u] all surplus revenue in excess of $ 5,000,000 was decided to be distributed among the states, and eventually a total of $28,000,000 was distributed among the states by the rule of apportionment in the nature of interest free loans to the states to be recalled if and when Congress decided to make such a recall.

Unlike present tax reform proposals, the founder`s plan provides various checks and balances to not only control the actions of Congress, but encourage Congress to follow sound fiscal policies, such a extinguishing deficits by a fixed formula. The founder`s method to extinguish deficits makes members of Congress immediately accountable to their state Legislature and Governor because members of Congress must return to their own state with a bill for their state`s apportioned share of a tax to extinguish a deficit created by Congress` borrowing. And, the Governors and Legislatures of each state are left with the responsibility of depleting their own state treasury to pay their state`s apportioned share of the tax. Accountability! Something which the founding fathers were keenly aware of and why they framed the tax plan they did!

Regards,

JWK
0 Replies
 
Foxfyre
 
  1  
Reply Tue 23 May, 2006 07:14 am
Re: Taxing consumption, the Founder`s way
john w k wrote:
Foxfyre wrote:

So in your selective consideration of the "founders method', please elaborate on

a) Who decides on what is and is not a necessity?
b) Who decides on what product will be taxed?
c) Who judges on what is an is not an inequity and whether inequities spread across the realm balance each other out?
d) Who judges whether taxes so imposed shall not be punitive or provide advantage?

I think your assessment of intent in the founder's proposal is too narrowly defined and does not address the larger issues.

To fund the federal govenrment, I'll stick with a flat tax based on specific principles that applies to every body uniformly and without exception.


Well, I get the impression from you snappy response your aim is not a sincere discussion concerning tax reform.

Surely you know the answer to your above question is Congress, just as was done under our nations THE FIRST REVENUE RAISING ACT FOR OUR COUNTRY[/color]!

NOTE: those interested may use the PREV IMAGE and NEXT IMAGE buttons at the above link to study the bill___it is refreshing to study statesmen creating a revenue raising bill beneficial for America`s businesses, industries and labor force, as opposed to politicians acting in their own self interest and on behalf of internationalists who have no allegiance to America or any nation [the NAFTA/ CAFTA CROWD] !

Since you support a flat tax, please give the definition of income within the meaning of your tax. What are the characteristics which define income?

I must also point out, the founder`s plan also provides a specific method to extinguish deficits. Does you tax plan do that?

In addition, other than the tax to extinguish deficits, the founder`s plan allows the market place to determine the allowable amount of tax on each article selected for taxation. That, in-and-of-itself is another import check and balance upon Congress` power to tax.

Give me some specifics rather than sweeping comments.

Regards,

JWK


The founders did not have quite the same issues as we have in the modern era and were still conscientious about curbing government corruption. Today, we do not have people either as principled or privy to the simplicity of society, commerce, industry, or government financing as they had then.

The questions I asked in response to your post were not intended to be 'snappy' but were serious inquiries into how the founder's proposal would work. By virtue of your response to Okie's inquiry, I can only conclude that you do not understand the founder's system any better than it was explained in the links you provided. Those links very definitely did not address my questions.

My whole concern with the tax system is that it be 100% fair and equitable across the board with minimal opportunity for self serving manipulation either by the taxpayer or the tax collectors. Okie seems to favor the sales tax route, and Okie and I have an honest difference of opinion as to what a flat tax actually is, and there are differences of opinion on that throughout the country. I think we could all arrive at a meeting of the minds with effort, however, and I do think a flat tax is the only way to go.

(P.S. The founders in their deliberations resisted any tax on income, and it was a lot of years before that was considered as an option when other forms of revenue raising became cumbersome and difficult to manage.)
0 Replies
 
okie
 
  1  
Reply Tue 23 May, 2006 09:39 am
Foxfyre, I realize we are philosophically on the same side, but perhaps we have a bit different take on this issue. To me, a flat income tax would mean a fixed percentage for all income brackets of all income, which for businesses, would of course be only on the profits after expenses to run the business are deducted. For wage earners, a percentage, say 10% would be paid to the government from $500 of wages or 5 million dollars in wages. For a business, it would be 10% or $500 or 5 million dollars in profits.

Now, one man's incentive is another man's loophole. The government over time began to make income tax progressive by allowing deductions for buying a home for example. Immediately, the tax is not flat, because this begins to reward choice in how we spend our money. Some people may choose not to buy a home for legitimate reasons. We also give deductions for the number of children. This also makes the tax non-flat. Then add energy saving incentives, retirement savings incentives (IRA's), medical expenditure deductions, education deductions, the list goes on. Then add in higher percentages above certain income levels because the rich are more able to pay; the government begins to play Robinhood, and most people agree, especially the poorer people as we now see the percentage of people paying no income tax is approaching half now.

I do not think the citizenry would tolerate a true flat tax.

As you pointed out, I don't think the "Founders Way" would work now that we have layer upon layer of entitlements and programs that the founders simply did not believe in or account for.

It does not seem to me that a national sales tax is any more punitive than an income tax. It is simply a different way to collect the money at a different point in the economic stream, by taxing spending rather than earning. If applied to all products, the tax would be flat, but as I've pointed out, the tax could also be made very progressive by exempting certain essentials in specific ways.

Part of the advantage of this system is that it has already been proven to work by states, counties, and cities, and the infrastructure to collect the tax is already in place pretty much everywhere. I think it would be more difficult to evade a sales tax than what we have now with many people evading through non-reporting and paying under the table. Bartering is a possibility, but with the mass production of goods we have nowadays, it would be less impact now in my opinion than a few decades ago. Under a sales tax, even drug dealers pay tax when they go to Walmart.

I read the Founders Way link, but I would still like to hear a concise explanation of it by JWK, as it would apply in today's world.
0 Replies
 
john w k
 
  1  
Reply Tue 23 May, 2006 04:19 pm
Re: Taxing consumption, the Founder`s way
Foxfyre wrote:

The founders did not have quite the same issues as we have in the modern era and were still conscientious about curbing government corruption. Today, we do not have people either as principled or privy to the simplicity of society, commerce, industry, or government financing as they had then.


What does this have to do with tax reform? It would be helpful if you would stick to the subject matter and be specific and not ramble on giving me your view of today`s world. Truth is, the nature of mankind does not change very much as time passes and our founding fathers designed their plan with this in mind.

Foxfyre wrote:

The questions I asked in response to your post were not intended to be 'snappy' but were serious inquiries into how the founder's proposal would work.


You asked:
Quote:

a) Who decides on what is and is not a necessity?
b) Who decides on what product will be taxed?
c) Who judges on what is an is not an inequity and whether inequities spread across the realm balance each other out?
d) Who judges whether taxes so imposed shall not be punitive or provide advantage?


Serious questions? Are you telling me you really do not know who, by our Constitution, is assigned the duties you mentioned?


Foxfyre wrote:

I think your assessment of intent in the founder's proposal is too narrowly defined and does not address the larger issues.


Another open ended comment without anything specific. Great way to discuss tax reform, be as elusive as possible, but continue to make glib remarks about our founding fathers plan.


Our founding fathers plan is based upon a number of principles which do not change with the passage of time. Just as the Ten Commandments are based upon a number of principles which do not change with the passage of time, so too is our Founding Fathers plan..

I would say a number of principals upon which our founding fathers plan is based are as valid today as when they were written into the Constitution. One such principle is the rule of apportioning a general tax among the states, and basing each state`s share of a total sum needed to extinguish a deficits created by Congress upon each states voting strength in Congress ___ representation with proportional obligation___ a principal which socialists and the friends of a big irresponsible spending government fear with a passion. Do you fear the principle of apportioning ?

How about excluding from taxation tools of production and supplies necessary to conduct business, is that a principle you disagree with?

How about a principle which excludes the necessities of life from taxation, is that a principle you disagree with?


Foxfyre wrote:

By virtue of your response to Okie's inquiry, I can only conclude that you do not understand the founder's system any better than it was explained in the links you provided. Those links very definitely did not address my questions.


More of your glib remarks. Truth is, the links I provided explain in detail, the founding father`s plan.
If you have a specific question, which is not intentionally meant to be rhetorical and an intentional waste of time and nothing more, than post it. I will try to answer it.

Foxfyre wrote:

My whole concern with the tax system is that it be 100% fair and equitable across the board with minimal opportunity for self serving manipulation either by the taxpayer or the tax collectors. Okie seems to favor the sales tax route, and Okie and I have an honest difference of opinion as to what a flat tax actually is, and there are differences of opinion on that throughout the country. I think we could all arrive at a meeting of the minds with effort, however, and I do think a flat tax is the only way to go.


As to a flat income tax, before one can discuss such a tax with any productiveness, a crystal clear definition of income must be established.

You might want to study the following S.C. decision which defines the characteristics of ``income``
EISNER v. MACOMBER , 252 U.S. 189 (1920)[/u]
Quote:
After examining dictionaries in common use (Bouv. L. D.; Standard Dict.; Webster's Internat. Dict.; Century Dict.), we find little to add to the succinct definition adopted in two cases arising under the Corporation Tax Act of 1909 (Stratton's Independence v. Howbert, 231 U.S. 399, 415 , 34 S. Sup. Ct. 136, 140 [58 L. Ed. 285]; Doyle v. Mitchell Bros. Co., 247 U.S. 179, 185 , 38 S. Sup. Ct. 467, 469 [62 L. Ed. 1054]), 'Income may be defined as the gain derived from capital, from labor, or from both combined,' provided it be understood to include profit gained through a sale or conversion of capital assets, to which it was applied in the Doyle Case, 247 U.S. 183, 185 , 38 S. Sup. Ct. 467, 469 (62 L. Ed. 1054).
Brief as it is, it indicates the characteristic and distinguishing attribute of income essential for a correct solution of the present controversy. The government, although basing its argument upon the definition as quoted, placed chief emphasis upon the word 'gain,' which was extended to include a variety of meanings; while the significance of the next three words was either overlooked or misconceived. 'Derived-from- capital'; 'the gain-derived-from-capital,' etc. Here we have the essential matter: not a gain accruing to capital; not a growth or increment of value in the investment; but a gain, a profit, something of exchangeable value, proceeding from the property, severed from the capital, however invested or employed, and coming in, being 'derived'-that is, received or drawn by the recipient (the taxpayer) for his separate use, benefit and disposal- that is income derived from property. Nothing else answers the description.



Foxfyre wrote:

(P.S. The founders in their deliberations resisted any tax on income, and it was a lot of years before that was considered as an option when other forms of revenue raising became cumbersome and difficult to manage.)


Really? I don`t recall any resistance to a tax on income being made by the founders during the deliberations when the founders framed our Constitution. Do you have any quotes, say from Madison`s notes? Truth is, their concern was direct taxation, which they provided a specific rule for ___ apportionment!


Regards,

JWK
0 Replies
 
john w k
 
  1  
Reply Tue 23 May, 2006 04:40 pm
okie wrote:


I read the Founders Way link, but I would still like to hear a concise explanation of it by JWK, as it would apply in today's world.


If you want a ``concise``text of the founder`s plan, then read those sections of the Constitution related to taxation. If you want to understand the intentions under which those provisions were agreed upon, then study the Federalist Papers, Madison`s Notes, Elliot`s Debates, etc., which record the intentions and beliefs under which the Constitutional provisions were adopted. If you want to avoid doing the above research, then read what I have posted.

And finally, how it would be applied today is the same way it was applied when first adopted. The founder`s plan, our Constitution, establishes rules which must be followed when laying taxes. Problem is, few people understand the rules as they were intended to operate. I have taken the time to provide such information, but I see few people are interested and prefer to ramble on with mindless table talk.

Carry on.

Regards,

JWK

A proud supporter of our founding father`s ORIGINAL TAX REFORM PLAN[/u]
0 Replies
 
okie
 
  1  
Reply Wed 24 May, 2006 04:45 am
Okay, here is my summary of your founders tax plan. Correct me if my interpretation is wrong.

Part 1 - Tax imports. Adjustments can be made where the imports are shipped on American owned ships, or I suppose now also airplanes.

Part 2 - If more tax monies are needed, tax luxuries, which will be decided on a case by case basis by Congress as to which products are luxuries, as well as the proper rate to tax each one of them. Necessities and other articles necessary to produce our basic livelihoods are to be excluded.

Part 3 - If the above tax raising methods are not sufficient to avoid deficits, then each state is to be billed for its apportioned amount of the debt. Upon receiving the bill, if the states do not or cannot pay the bill, then Congress can tax individual property owners in those states in order to collect billed amount of tax for each state.


Key questions that come to mind:
For Part 1, has anyone put a pencil to the above and determined the impact of the import duties and taxes on the trade situation, and the amount of money that could realistically be raised?

Part 2 sounds like a national sales tax or consumption tax on luxuries. In 1776, the variety of goods available would in no way resemble or compare to the millions of goods available now, so the question comes to mind, would it be possible or even practical now to agree on which article is a luxury and to what extent that article should be taxed, for each and every one of millions of articles for sale in this country? In fact, Part 2 appears to me to closely resemble my vision of the latest national sales tax or consumption tax proposals with the main difference being that my exclusions would be much more severely limited to only food, utilities/energy, and shelter to a chosen threshold, and the founders plan injects the factor of varying rates of taxation for various kinds of luxuries. So the question arises, how is the founders plan of a consumption tax more practical in today's world than other consumption tax proposals?

In regards to Part 3, what if states cannot pay the tax, and the federal government levies unpaid taxes onto the landowners to the extent that the many people begin to lose their properties over unpaid taxes?

In regard to the entire plan, has anyone put a pencil to the projected implementation of such a plan to determine approximately how much tax monies could likely be raised by the system to see if it would amount to anything close to our expenditures? I am not dismissing the plan out of hand, but I am simply asking if it is now practical? I think such a plan has never been seriously considered in recent times, so how are we to know it has any practical chance for actually working today? The scope and size of government is so much larger now, along with the expectations of citizens now being also much, much larger in terms of what they expect the government to provide for them, does the "founders plan" have any hope of raising the kind of money needed? If not, what is your practical suggestion then as an alternative tax plan? Or as an alternative, what would be your plan to successfully shrink government, not only the actually doing of it, but first convincing the people and the politicians to do it?

I would love to shrink government, but I have virtually concluded that as a realistic hope, I need not waste my time hoping because the citizens and their elected politicians do not appear to either have the will or the desire to even attempt it in any serious comprehensive manner. I will vote for any politician that promises to try, but they seem to be few in number nowadays in terms of any serious effort beyond some token little program cut here or there. So to pay for the government everybody seems to want, we need to be practical in terms of the tax system that can raise adequate funds in the fairest and most efficient economical manner.
0 Replies
 
Foxfyre
 
  1  
Reply Wed 24 May, 2006 08:22 am
John wk writes
Quote:
What does this have to do with tax reform? It would be helpful if you would stick to the subject matter and be specific and not ramble on giving me your view of today`s world. Truth is, the nature of mankind does not change very much as time passes and our founding fathers designed their plan with this in mind.


My comments have had everything to do with tax reform, and I (and I presume you) live in today's world and not in the 18th Century. Any tax reform has to address the realities of today, not then. If you have as good an understanding of the founders thought processes as you claim, you would know that they a) resisted taxing income or other property due to their profound belief in property rights and b) put nothing in the Constitution that would allow the government to dispense charity of any kind.

Since both are nevertheless today's realities we have to deal with things as they are and not as they were. I believe I have addressed your other points except for the ones that were....well....ramblings. Would it be possible to perhaps keep this a civil discussion? The snotty tone is not really necessary.
0 Replies
 
Foxfyre
 
  1  
Reply Wed 24 May, 2006 08:55 am
okie wrote:
Foxfyre, I realize we are philosophically on the same side, but perhaps we have a bit different take on this issue. To me, a flat income tax would mean a fixed percentage for all income brackets of all income, which for businesses, would of course be only on the profits after expenses to run the business are deducted. For wage earners, a percentage, say 10% would be paid to the government from $500 of wages or 5 million dollars in wages. For a business, it would be 10% or $500 or 5 million dollars in profits.

Now, one man's incentive is another man's loophole. The government over time began to make income tax progressive by allowing deductions for buying a home for example. Immediately, the tax is not flat, because this begins to reward choice in how we spend our money. Some people may choose not to buy a home for legitimate reasons. We also give deductions for the number of children. This also makes the tax non-flat. Then add energy saving incentives, retirement savings incentives (IRA's), medical expenditure deductions, education deductions, the list goes on. Then add in higher percentages above certain income levels because the rich are more able to pay; the government begins to play Robinhood, and most people agree, especially the poorer people as we now see the percentage of people paying no income tax is approaching half now.

I do not think the citizenry would tolerate a true flat tax.

As you pointed out, I don't think the "Founders Way" would work now that we have layer upon layer of entitlements and programs that the founders simply did not believe in or account for.

It does not seem to me that a national sales tax is any more punitive than an income tax. It is simply a different way to collect the money at a different point in the economic stream, by taxing spending rather than earning. If applied to all products, the tax would be flat, but as I've pointed out, the tax could also be made very progressive by exempting certain essentials in specific ways.

Part of the advantage of this system is that it has already been proven to work by states, counties, and cities, and the infrastructure to collect the tax is already in place pretty much everywhere. I think it would be more difficult to evade a sales tax than what we have now with many people evading through non-reporting and paying under the table. Bartering is a possibility, but with the mass production of goods we have nowadays, it would be less impact now in my opinion than a few decades ago. Under a sales tax, even drug dealers pay tax when they go to Walmart.

I read the Founders Way link, but I would still like to hear a concise explanation of it by JWK, as it would apply in today's world.


The problem I see with a sales tax is that everybody pays the same AMOUNT regardless of their income. In a flat tax everybody pays the same PERCENTAGE meaning that those of very limited means pay far less than those of greater means; i.e. 10% of $10,000 is far less than 10% of $100,000.

The exemptions I would see as allowed would be very clearly defined and unable to be manipulated. Exempting mortgage interest and taxes on the primary (not additional) residences for instance would provide that necessary incentive for private property ownership. Everybody would be entitled to it whether or not they chose or were immediatley able to take advantage of it, but it does make home ownership more possible for more people.

Exemptions for charitable contributions ensures that there will be sevices for the needy by virtue of poverty or other difficulties and the taxpayer will not be obligated to pay for these.

And yes, exemptions for the members of the immediate family in the household would appear to be more advantageous to large families than small, but those with smaller families could have or adopt more kids (dependents) if they wanted to. Again, the rule would be applied evenly to everybody across the board.

This is what would make it a flat tax with virtually no room for cheating or manipulation.

With a sales/consumption tax, however, the poor man pays the same amount of tax as the rich man, and this might make many niceties unavailable to anybody but the rich. This is why I think a sales tax is regressive and can even be counter productive by denying people the ability to purchase at all, and I think this would be hugely exacerabated by a national sales tax. The net effect on human behavior always has to be factored into such policies.

Also once you start deciding what shall be exempt from that tax, food or whatever, then the regulations start piling up again as to what is "food" or whatever.

When we lived in Kansas, for instance, the state sales tax exempted food, and it was a real nightmare for both the seller and buyer to figure out what was taxable and what was not. Cookies, for instance, were considered taxable; however you could buy all the ingredients to make cookies (flour, sugar, etc.) separately and these would be tax free. Then would the little candy sprinkles for the cookies be taxable? Candy was taxable.

And there goes any simplicity.

I do recognize that it is attractive to make even the thieves and scoundrels pay a sales tax.

But for all the reasons I have listed, I see a sales tax as regressive while a flat tax based on percentage of income would not be. You may be right that the American people would not accept this--the working poor who currently pay no taxes at all will no doubt resist it if it meant they had to pay something. But then the working poor are also going to resist a sales tax that would significantly increase their cost to buy stuff too.

But I also believe for every problem there is a solution. And if enough people want a solution, we'll find one.
0 Replies
 
okie
 
  1  
Reply Wed 24 May, 2006 09:41 am
Foxfyre wrote:


The problem I see with a sales tax is that everybody pays the same AMOUNT regardless of their income. In a flat tax everybody pays the same PERCENTAGE meaning that those of very limited means pay far less than those of greater means; i.e. 10% of $10,000 is far less than 10% of $100,000.


I will preface my comments here by saying that my interest in the sales tax is just that, interest. I am not totally sold. I am intrigued however and willing to consider it very seriously depending upon further study and information.

In your above statement, I think a sales tax and a flat tax both pay the same percentage, and I disagree that the rich would pay the same amount. They buy many more goods and more expensive goods, so they end up paying more. What people buy increases just as their earnings increase. We are simply taxing at a different point in the cycle of the economy, and in the case of the sales tax, I think it is easier to collect in terms of infrastructure and collecting from otherwise tax evaders.

Quote:
The exemptions I would see as allowed would be very clearly defined and unable to be manipulated. Exempting mortgage interest and taxes on the primary (not additional) residences for instance would provide that necessary incentive for private property ownership. Everybody would be entitled to it whether or not they chose or were immediatley able to take advantage of it, but it does make home ownership more possible for more people.

And yes, exemptions for the members of the immediate family in the household would appear to be more advantageous to large families than small, but those with smaller families could have or adopt more kids (dependents) if they wanted to. Again, the rule would be applied evenly to everybody across the board.

This is what would make it a flat tax with virtually no room for cheating or manipulation.

Anytime you place exemptions, you are placing rewards or penalties into the system, and in my judgement, the tax is no longer flat. The tax becomes progressive. For example, why should I be punished, tax wise, for simply choosing not to buy a home or adopt more children? Hey, I understand all of these things as to why they exist, but I am only simply pointing out how some people could argue their situation.

Quote:
With a sales/consumption tax, however, the poor man pays the same amount of tax as the rich man, and this might make many niceties unavailable to anybody but the rich. This is why I think a sales tax is regressive and can even be counter productive by denying people the ability to purchase at all, and I think this would be hugely exacerabated by a national sales tax. The net effect on human behavior always has to be factored into such policies.

Also once you start deciding what shall be exempt from that tax, food or whatever, then the regulations start piling up again as to what is "food" or whatever.

When we lived in Kansas, for instance, the state sales tax exempted food, and it was a real nightmare for both the seller and buyer to figure out what was taxable and what was not. Cookies, for instance, were considered taxable; however you could buy all the ingredients to make cookies (flour, sugar, etc.) separately and these would be tax free. Then would the little candy sprinkles for the cookies be taxable? Candy was taxable.

And there goes any simplicity.

Agreed, it is a little bit thorny, but some states have exempted food for a long long time, and it seems to work well now. With scanning procedures in place, it is totally automated as to what is food and what is not. And this could easily be checked by auditors that periodically monitored a purchase or by examining sales tax receipts from retailers. To be sure, a bureaucracy would be necessary to institute a sales tax, but I do not think it would be nearly as large as the current IRS.

Quote:
I do recognize that it is attractive to make even the thieves and scoundrels pay a sales tax.

But for all the reasons I have listed, I see a sales tax as regressive while a flat tax based on percentage of income would not be. You may be right that the American people would not accept this--the working poor who currently pay no taxes at all will no doubt resist it if it meant they had to pay something. But then the working poor are also going to resist a sales tax that would significantly increase their cost to buy stuff too.

But I also believe for every problem there is a solution. And if enough people want a solution, we'll find one.


In terms of the working poor resisting a sales tax, I suspicion the consumption rebate or whatever it is called in the proposals, could take care of that. Here again, another bureaucracy in place of the IRS, hopefully a much smaller bureaucracy, would be necessary to take care of that.

As I've said, I am not sold but I would like more information and true consideration of the plan. The advantages that I like are: ease of collection, inclusion of tax evaders, the unleashing of much more money into the peoples pockets to spend, the hopeful elimination of a huge bureaucracy known as the IRS, an even playing field for products in the market due to no income taxing upstream along with possibly lower retail prices before tax, and the full visibility to all citizens as to what percentage of their buying power is being spent on government. The last point might bring more accountability to the government in terms of expenditures.

I understand all of your arguments. Encouraging the buying of homes and other things have long been held as useful tools of social engineering done through the tax system. I see their value, but they only serve to complicate the tax system, and I basically believe people should buy things based on merit and competition. People would buy homes because it is the American dream to own your own home. There is enough merit and reason to do it without providing tax incentives. That doesn't change. Fact is for me, I use the standard deduction, so home mortgage deductions and other deductions don't help me anyway. To pay exorbitant amounts on tax deductions solely for the purpose of getting a tax refund strikes me as throwing money down a rathole in order to later dig some of it back out. If something is a worthy cause, it is worth spending on anyway. If it is a rathole, its not worth throwing money in just to hopefully dig a little bit of it back out later in the form of a tax refund.
0 Replies
 
Foxfyre
 
  1  
Reply Wed 24 May, 2006 12:07 pm
Okie!!! You're talking like a (gasp) liberal!!!

Conservatives put the best system in place that all who choose to or aspire to can benefit from it. It is usually liberals who take the view that if some or anybody is left out of the system, then nobody should benefit from it. The fact that you choose to take the standard deduction isn't pertinent. If you wanted to purchase a new home with a 30-year mortgage, you would be able to benefit from an exemption of the mortgage interest. The fact that you do not choose to do this should not translate that nobody should be able to do it. If you choose to stop at two kids and the next family has five, that does not affect your ability to have or adopt five kids as well. The fact that you choose not to should not translate that nobody should be able to have deductions for a lot of kids.

And as to the 'sameness" of sales tax versus flat income tax:

A man earning $20,000 with a wife and three kids with corresponding exemptions for dependents, mortgage insurance, and charititable contributions might owe a 10% flat tax rate on say $5,000; i.e. his annual taxes would be $500.

A man earning $100,000 with a wife and three kids with corresponding exemptions for dependents, mortgage insurance, and charitable contributions might owe a 10% flat tax rate on as much as $85,000 and his annual taxes would be $8,500.

Or with exemptions on food, etc. on a sales tax, the $20,000/year guy might have $10,000 left over for non-exempt essentials and would likely spend it all. The federal sales tax would have to be 5% or less to keep him from paying more than $500 in taxes.

The man earning $100,000 with a wife and three kids with exemptions for food and necessities, will probably have considerably more than $10,000 left over for non-exempt necessities and yes, will probably spend more, but he will also have the luxury of banking, saving, investing etc. that a sales tax would not touch. He also might have the ability to travel or otherwise spend a lot of money in places that the USA can't touch. Make that sales tax high enough, and it is a guarantee the US government won't see much of it because he'll do most of his spending elsewhere. It is possible that he could pay even less than $500 in taxes on a sales tax system.

At any rate, whatever the tax the less affluent person pays in sales tax is far more painful to him that whatever tax the more affluent person pays.

I still think the flat tax I described--and I do maintain that it is a flat tax--is the fairest system and provides the fewest opportunities for mischief either by the tax payer, the seller of goods and services, and/or the government. No matter where the person spends his/her money or what he chooses to do with after tax income, the federal government will get its fair share with a pretty good idea of how to budget for future years.
0 Replies
 
okie
 
  1  
Reply Wed 24 May, 2006 12:47 pm
Foxfyre wrote:
Okie!!! You're talking like a (gasp) liberal!!!

arrrrrggggghhhhhhhh! But I disagree. Actually, I enjoy this debate because it is civil, based on the subject, and I am interested in the tax system. I've always done my own taxes and I think I understand at least the portion that I deal with.

Quote:
Conservatives put the best system in place that all who choose to or aspire to can benefit from it. It is usually liberals who take the view that if some or anybody is left out of the system, then nobody should benefit from it. The fact that you choose to take the standard deduction isn't pertinent. If you wanted to purchase a new home with a 30-year mortgage, you would be able to benefit from an exemption of the mortgage interest. The fact that you do not choose to do this should not translate that nobody should be able to do it. If you choose to stop at two kids and the next family has five, that does not affect your ability to have or adopt five kids as well. The fact that you choose not to should not translate that nobody should be able to have deductions for a lot of kids.

Actually, I don't think all the tax code is either a conservative or liberal, as both types have furthered the mountainous tax code with their particular brands of tax incentives and thresholds for their constituents.

Quote:
And as to the 'sameness" of sales tax versus flat income tax:

A man earning $20,000 with a wife and three kids with corresponding exemptions for dependents, mortgage insurance, and charititable contributions might owe a 10% flat tax rate on say $5,000; i.e. his annual taxes would be $500.

A man earning $100,000 with a wife and three kids with corresponding exemptions for dependents, mortgage insurance, and charitable contributions might owe a 10% flat tax rate on as much as $85,000 and his annual taxes would be $8,500.

Actually, a man now earning $20,000 would pay no tax, and in fact would receive several thousand from the government because of the earned income credit and child tax credits under the current system. And actually, under your system, if the person pays tax on only $5,000 when he actually earns $20,000, your tax, by definition is not flat. The current system and your system is non-flat.

Quote:
Or with exemptions on food, etc. on a sales tax, the $20,000/year guy might have $10,000 left over for non-exempt essentials and would likely spend it all. The federal sales tax would have to be 5% or less to keep him from paying more than $500 in taxes.

I doubt that if you count his expenditures on food, shelter, and utilities/fuel, he would have $10,000 left. Figure at least $750 per month for shelter and utilities, another $400 per month on food, and another $150 at least for gasoline as conservative estimates and you have almost $16,000 spent already. It could be more. Perhaps we should exempt car insurance as well? How much more would that be? A person making $20,000 with a family hardly has any money left above the essentials, so he would not pay much sales tax at all. Give him a consumption rebate, and he will probably make money from the government, as he currently does.

Quote:
The man earning $100,000 with a wife and three kids with exemptions for food and necessities, will probably have considerably more than $10,000 left over for non-exempt necessities and yes, will probably spend more, but he will also have the luxury of banking, saving, investing etc. that a sales tax would not touch. He also might have the ability to travel or otherwise spend a lot of money in places that the USA can't touch. Make that sales tax high enough, and it is a guarantee the US government won't see much of it because he'll do most of his spending elsewhere. It is possible that he could pay even less than $500 in taxes on a sales tax system.

You make a good point about traveling out of country, but he needs to get there, so plane tickets could very well be taxed. Flying is not exactly a pastime of the poor. And it would not be practical or legal to go out of country to buy goods and services, more than purchasing a few souvenirs if you take a vacation.

Perhaps it would spur saving, but this can be a good thing in many ways as compared to people living on credit.

Quote:
At any rate, whatever the tax the less affluent person pays in sales tax is far more painful to him that whatever tax the more affluent person pays.
Agreed it is painful, but only painful when he can afford to buy things that are non-essential, and the good that happens here is that everybody sees the cost of government, possibly bringing more accountability. Also, the poorest earners could receive a consumption rebate so that the pain goes away, but they still retain the knowledge of how much the government is sticking everybody day in and day out.

Quote:
I still think the flat tax I described--and I do maintain that it is a flat tax--is the fairest system and provides the fewest opportunities for mischief either by the tax payer, the seller of goods and services, and/or the government. No matter where the person spends his/her money or what he chooses to do with after tax income, the federal government will get its fair share with a pretty good idea of how to budget for future years.


I disagree again that your tax is flat. I think what you mean is having a single tier percentage of tax on income, but you still retain your chosen tax deductions, exemptions, and thresholds. Not much different than now, but you remove many of the incentives built into the system. If you retain any incentives at all, such as buying a home, it is not a true flat tax.
0 Replies
 
Foxfyre
 
  1  
Reply Wed 24 May, 2006 12:57 pm
okie wrote:
Foxfyre wrote:
Okie!!! You're talking like a (gasp) liberal!!!

arrrrrggggghhhhhhhh! But I disagree. Actually, I enjoy this debate because it is civil, based on the subject, and I am interested in the tax system. I've always done my own taxes and I think I understand at least the portion that I deal with.

Quote:
Conservatives put the best system in place that all who choose to or aspire to can benefit from it. It is usually liberals who take the view that if some or anybody is left out of the system, then nobody should benefit from it. The fact that you choose to take the standard deduction isn't pertinent. If you wanted to purchase a new home with a 30-year mortgage, you would be able to benefit from an exemption of the mortgage interest. The fact that you do not choose to do this should not translate that nobody should be able to do it. If you choose to stop at two kids and the next family has five, that does not affect your ability to have or adopt five kids as well. The fact that you choose not to should not translate that nobody should be able to have deductions for a lot of kids.

Actually, I don't think all the tax code is either a conservative or liberal, as both types have furthered the mountainous tax code with their particular brands of tax incentives and thresholds for their constituents.

Quote:
And as to the 'sameness" of sales tax versus flat income tax:

A man earning $20,000 with a wife and three kids with corresponding exemptions for dependents, mortgage insurance, and charititable contributions might owe a 10% flat tax rate on say $5,000; i.e. his annual taxes would be $500.

A man earning $100,000 with a wife and three kids with corresponding exemptions for dependents, mortgage insurance, and charitable contributions might owe a 10% flat tax rate on as much as $85,000 and his annual taxes would be $8,500.

Actually, a man now earning $20,000 would pay no tax, and in fact would receive several thousand from the government because of the earned income credit and child tax credits under the current system. And actually, under your system, if the person pays tax on only $5,000 when he actually earns $20,000, your tax, by definition is not flat. The current system and your system is non-flat.

Quote:
Or with exemptions on food, etc. on a sales tax, the $20,000/year guy might have $10,000 left over for non-exempt essentials and would likely spend it all. The federal sales tax would have to be 5% or less to keep him from paying more than $500 in taxes.

I doubt that if you count his expenditures on food, shelter, and utilities/fuel, he would have $10,000 left. Figure at least $750 per month for shelter and utilities, another $400 per month on food, and another $150 at least for gasoline as conservative estimates and you have almost $16,000 spent already. It could be more. Perhaps we should exempt car insurance as well? How much more would that be? A person making $20,000 with a family hardly has any money left above the essentials, so he would not pay much sales tax at all. Give him a consumption rebate, and he will probably make money from the government, as he currently does.

Quote:
The man earning $100,000 with a wife and three kids with exemptions for food and necessities, will probably have considerably more than $10,000 left over for non-exempt necessities and yes, will probably spend more, but he will also have the luxury of banking, saving, investing etc. that a sales tax would not touch. He also might have the ability to travel or otherwise spend a lot of money in places that the USA can't touch. Make that sales tax high enough, and it is a guarantee the US government won't see much of it because he'll do most of his spending elsewhere. It is possible that he could pay even less than $500 in taxes on a sales tax system.

You make a good point about traveling out of country, but he needs to get there, so plane tickets could very well be taxed. Flying is not exactly a pastime of the poor. And it would not be practical or legal to go out of country to buy goods and services, more than purchasing a few souvenirs if you take a vacation.

Perhaps it would spur saving, but this can be a good thing in many ways as compared to people living on credit.

Quote:
At any rate, whatever the tax the less affluent person pays in sales tax is far more painful to him that whatever tax the more affluent person pays.
Agreed it is painful, but only painful when he can afford to buy things that are non-essential, and the good that happens here is that everybody sees the cost of government, possibly bringing more accountability. Also, the poorest earners could receive a consumption rebate so that the pain goes away, but they still retain the knowledge of how much the government is sticking everybody day in and day out.

Quote:
I still think the flat tax I described--and I do maintain that it is a flat tax--is the fairest system and provides the fewest opportunities for mischief either by the tax payer, the seller of goods and services, and/or the government. No matter where the person spends his/her money or what he chooses to do with after tax income, the federal government will get its fair share with a pretty good idea of how to budget for future years.


I disagree again that your tax is flat. I think what you mean is having a single tier percentage of tax on income, but you still retain your chosen tax deductions, exemptions, and thresholds. Not much different than now, but you remove many of the incentives built into the system. If you retain any incentives at all, such as buying a home, it is not a true flat tax.


Well I think we'll just have to agree to disagree on this one. I think your system would work, but we would still have tax creep, a giant bureaucracy to administer it, and you can just bet politicians would be falling all over themselves to tinker with the exemptions and/or consumption rebates to please this constiuency or that constituency. A flat tax--and yes it IS a flat tax Smile--with a few very essential deductions to encourage behavior advantageous both to the tax payer and the national revenues would require a tiny fraction of the administration of present day IRS and would make it virtually impossible for Congress to tinker with it without it being glaringly obvious.
0 Replies
 
okie
 
  1  
Reply Wed 24 May, 2006 01:10 pm
Thanks for the debate, and as I've said, I simply would like more numbers and more consideration of the sales tax, and my main worry would be ending up with 2 taxes, both income tax and a sales tax. I'm not on the sales tax bandwagon, but I could be pending more solid information of an actual proposal. I argued for its possible advantages, but I admit there are disadvantages, as you mentioned, plus others. And the final problem with it is the inability to know exactly how it would affect the economy until it was instituted.
0 Replies
 
Foxfyre
 
  1  
Reply Wed 24 May, 2006 01:21 pm
okie wrote:
Thanks for the debate, and as I've said, I simply would like more numbers and more consideration of the sales tax, and my main worry would be ending up with 2 taxes, both income tax and a sales tax. I'm not on the sales tax bandwagon, but I could be pending more solid information of an actual proposal. I argued for its possible advantages, but I admit there are disadvantages, as you mentioned, plus others. And the final problem with it is the inability to know exactly how it would affect the economy until it was instituted.


I enjoyed the discussion too. You made me really stop and think and I recognize that there are issues that have to be worked through for any system adopted. But just about anything would be better than what we are doing now.
0 Replies
 
 

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