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

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.

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

okie,

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


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.

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.

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.

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.

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.

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.

(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.)

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.

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, 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.

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.

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.

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.

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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.

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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.

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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.

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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.

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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.

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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.

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.