The Heritage Foundation has released a new Flat Tax plan.
The existing tax system is manifestly indefensible, especially in its complexity, its burdens on the poor and rich alike, and its drain on economic vitality.
Typically, tax reform proposals, such as the traditional Flat Tax, solve only a piece of the problem. The New Flat Tax offers a more coherent, more comprehensive reform.
Under the New Flat Tax, American taxpayers will pay a single, simple tax rate—roughly 28 percent. It replaces all federal income taxes, as well as the death tax, payroll taxes, and all excises not dedicated to a trust fund.
For non-seniors, it is as easy as one, two, three—one rate, two credits, three deductions. For seniors on Medicare, one of the two credits—for health insurance—is replaced by an extra deduction.
The New Flat Tax is simple, revenue-neutral, roughly distributionally neutral, and will allow America to achieve its full economic potential.
194 Responses to “The New Flat Tax—Easy as One, Two, Three”
It is sad to see a purportedly Conservative think tank like Heritage,
engage in such Progressive nonsense.
This is yet another confused consumption tax.
There are many unanswered questions about how it really works – I am in contact with its author.
It retains the pure welfare Earned income Tax Credit – for shame!
It goes out of its way to punish those evil “rich” people.
We are all doomed when Heritage accepts Socialism/Progressivism.
I agree! Here is my summary of what Dr Foster is proposing. I also have some questions you might get him to answer?
The New Flat Tax plan taxes all income after subtracting net savings at 28%. It reportedly leaves the distribution of tax burden unchanged. It replaces all federal taxes except excise taxes dedicated to a specific Trust Fund. Federal revenue raised will eventually be capped at 18.5% of GDP. Some details follow.
Individuals not retired:
1. A 28%, revenue neutral flat tax on all taxable income.
2. Taxable income = labor compensation plus net borrowing minus net savings.
3. two non refundable tax credits–$3500 credit for health insurance purchase, and retains the EITC.
4. Three deductions—charity, home mortgage, and higher education expenses.
5. Allows $100,000 maximum contributions to a Roth type after tax savings plan.
6. The combination of the EITC and the $3500 health insurance credit should untax lower income workers completely.
1. Senior income exclusions for Social Security benefits plus Medicare contributions. Phases out above certain incomes (TBD?).
2. A $10,000 wage exemption in order to encourage seniors to remain in the work force longer?
3. No $3500 health insurance credit.
4. 1/2 of HI (hospital insurance) benefits counted as taxable income.
5. The current government SMI subsidy of $4600 is counted as taxable income.
1. Taxed on net cash flow after deducting payroll and all purchases. (Note:) this allows immediate depreciation on capital purchases.)
2. A tax rate of 35% initially, decreasing by 1% annually for seven years to 28%.
3. Retains the R&D tax credits.
4. Border adjustable in that it lifts the tax on exports and imposes the tax on imports?
5. Businesses can choose to operate under current tax law for up to ten years if preferred.
6. The reason given for taxing businesses is the authors perception that the public would never accept any plan that didn’t retain a broad based business tax.
Dr Foster writes that:
1. Savings would be taxed when spent. Could he provide any details as to how he proposes to accomplish that?
2. The export tax will be lifted. How would that work?
3. Would Dr Foster agree that only people pay taxes?
4. Does he have any thoughts on what the income level would be for the phase out of senior exclusions?
5. The justification given for the 28% tax on individuals is based on a 15.3% payroll tax, and either a 15% or 25% tax bracket? I would suggest that the individual payroll tax burden is 7.65%, not 15.3%, and that it is incorrect to add tax rates and tax brackets. For instance, the current effective tax rate, including income taxes and payroll deductions, in the 15% bracket is really a max of 21.45%, not his 30.3%. And, in the 25% tax bracket, the current effective tax rate is 27.65%, not 40.3%. It would seem that 28% is too high, at least for the middle class workers.
I am not sure what items are included as taxable (investment income etc) nor is there point about net borrowings being “income” (what a starnge item to include in “income” (if you borrow to buy a hopuse, is the entire purchase price treated as “consumption” so that you pay a 28% tax on the amount of any new mortrgage? That should give a boost to new home sales – HAH!
Home mortgage intererest is OPTIONAL. My understanding is that if you & the bank elect, you can both either deduct/include or no dedeuction/inclusion.
The EITC – what a crock of Socialist poop.
Seniors: i did not focus on that credit. If seniors don’t get it, they get no credit for Medicare/Supp or other premiums -0 I will check with Foster.
Isn’t taxing 1/2 of HI benefits OUTRAGEOUS?
I had not focused on thge current $4,600 SMI benefit and need to find it.
Business – your 4-6:
I trhink its dumb to fail to make foreigners pay our income tax.
I think it is idiotic to mainatain the current system for 10 more years – it adds to taxpayer burdens for 10 more years because they must review BOTH options.
Yes, Heritage believes the public is way too stupid to understand that they pay cbusiness taxes via higher prices for goods.
I chided Heritage over their silliness that we don’t have to pay any tax, as lonmg as all we waqnt to do is fondle and count it. Their mechanics are not clear (even with Foster’s latest explanation that I had been waiting for – there were few details).
I will take up the rest of the issues you raised with Foster.
The rest of Heritages plans (other than their “Spending” Tax) is pure Socialistr nonsense.
SS & mdicare start immediately to become further means-tested so that they quickly become WELFARE programs (paid for by you and me). That is, the $1,200/mo (in current $) SS benefit does not begin to phase out until a single person’s income reaches $55,000 – thus one can have $67,000 in total income. Welfare just keeps getting more attractive all the time.
Dr Foster taks te attitude tyhat they have explained all they wil explain for now and that we musty re-read carefully the limited material they have put out (the 48 page booklet & his recent short paper).
He explains that buying a house is an “investment” (not “consumption” so that a borrower is not immediately taxed.
He also responded that it is a spending tax so that spending that exceeeds “income’ will be taxerd (and spending prior law savings are subject to the prior law for the next 10 transition years and then to the new law.
Mighty arrogant of Heritage to sy they are too busy to answer all the questions they are getting and that they will give us details over the next few years (likely, without our input).
I am a flat-tax “alumnus” and now a proponent of the alternative FairTax plan – and Heritage should be, too. Here’s why:
1) The FairTax Prevents the country from ending up with BOTH a consumption AND an income tax. The Flat Tax makes BOTH a consumption AND an income tax MORE LIKELY.
2) The FairTax Removes the institutions that make the new tax likely to morph back into today’s tax code. The Flat Tax is likely to morph back into TODAY’S TAX CODE.
3) The FairTax stabilizes Social Security and Medicare and moves its funding to a stable and growing tax base. The Flat Tax does nothing for Social Security and Medicare.
4) The FairTax un-taxes our exports and reinvested earnings. The Flat Tax taxes our exports and revinvested earnings.
5) The FairTax is easier to sell politically. Nobody is taxed on income or wages – period. Wealth is taxed when consumed. The Flat Tax is more Vulnerable to Political Attack – despite good reasons. Detractors point out that wealthy people, who receive primarily dividend and interest income and capital gains, escape taxation. Wealthy people also escape estate, gift and generation-skipping taxes under the Flat Tax, but WAGE INCOME, is STILL TAXED. Critics depict the Flat Tax as a tax break for the rich, and make that argument stick with large segments of the population.
6) The FairTax taps the underground and shadow economies. With the Flat Tax, the underground and shadow economies continue to escape taxation.
Heritage should abandon its support of the Flat Tax and go to the FairTax.
Nice to hear from you again, and don’t forget we have a $10 bet that the 111th Congress won’t have as many Fairtax House cosponsors as you had in the 109th (72).
“1) The FairTax Prevents the country from ending up with BOTH a consumption AND an income tax. The Flat Tax makes BOTH a consumption AND an income tax MORE LIKELY.” Jim, what is wrong with that? No one has been able to tell me just why having two federal tax revenue systems would be such a disaster. The States have two, and almost every nation in the world have at least two. What is your problem?
“3) The FairTax stabilizes Social Security and Medicare and moves its funding to a stable and growing tax base. The Flat Tax does nothing for Social Security and Medicare.” Jim, the flat tax approach is better. One of the big mistakes AFFT made was to include FICA on the list of taxes to be replaced. By doing so, the Fairtax plan forces retirees to resume paying for their SS benefits with their sales tax dollars. That boat will never float!
“5) The FairTax is easier to sell politically.” Come on Jim. If the Fairtax is such an easy political sell, why has it gone 12 years of inaction by the Congress?
“6) The FairTax taps the underground and shadow economies. With the Flat Tax, the underground and shadow economies continue to escape taxation.”
Jim, what makes you believe that the Fairtax won’t generate a ton of legal tax avoidance and illegal tax evasion? The studies I have seen seem to suggest that any sales tax over 10% or so will result in a significant increase in evasion.
This is just absurd. I wonder how the early income tax was set up. To think that this simple program will stay simple with the special interest groups and a congress that basically knows nothing about anything. this is just misguided nonsense.
To All: Here are my comments on Heritage’s 48 page booklet which explains their proposals broadly as well as a presentation they made in Sallas. I sent it to several Heritage top execs and am trying to extract their responses.
The author of Heritage’s Flat tax is J D Foster 202-608-6224 (I think he took offence at my questions/challenges). I was able to extract a couple of specific answers, but many all important details are hidden from my view.
Page 3. You note the Federal Govt is doing things it should not be doing but you fail to say it should be doing only those things the Constitution permits. Redistributing wealth, safety nets, welfare, etc., are NOT among the powers granted to Federal Govt by the Constitution or Federalist Papers.
Heritage’s plans exacerbate un-Constitutional welfare (wealth redistribution). Heritage should have outlined plans beyond 10 years and show that over (e.g.) years 10-40, welfare safety nets are gradually phased out (and private sector charity takes over).
Even the welfare reforms of the 90’s have been erased and welfare expanded, because Conservatives failed to place the proper Constitutional goals at the forefront of America’s consciousness. Instead Conservatives approved the concept of wealth redistribution and it was only a matter of time before those gains were erased – it did not take very long.
First, no-one who has paid into the SS system for many years should now be deprived of his benefits merely because they can “afford” to lose them – that is the superficial “Willie Sutton” rationalization for robbing banks. Most people earn little or no profit (after inflation) on their “investment” in SS, which is made even worse by an unjustifiable income tax on up to 85% of their benefits. To now take away their benefits would make SS a losing investment (i.e., a retroactive tax). We must transfer all prior SS taxes to an IRA’s for (say) those under 40 (and voluntary for all over 40) and continue the old system only for those over 40 who chose to remain in it.
You refer to this as an insurance program, i.e., against ending up life in poverty. Insurance involves people who have more or less identical risks and pay identical premiums. Insurance premiums are set so as to reflect the risk of loss. Instead, Heritage requires the “rich” pay very high “premiums” (while at virtually no risk) while the “poor” pay virtually no “premiums” but are at very high risk. Thus, Heritage’s use of the insurance sales-pitch is entirely inappropriate, disingenuous and deceptive.
Heritage says the changes would take place gradually, yet the means-testing of benefits starts in 2012????? On page 13, you explain that the new SS welfare benefit ($1,200/mo. in 2010 $) far exceeds the $857 (2009) poverty level for a 65 yr old senior. Why are you so generous? If this is a poverty program, then it should be geared to that poverty level of $857/mo?
A senior may earn up to $55,000 a year in order to be eligible to receive the full $1,200/mo so that his total income would be nearly $70,000 a year (some of which may not be taxable). We do not need to pay a welfare benefit to one earning $55,000 a year. Along with my first point above, the SS benefit should be not exceed the poverty level $857/mo and there should be a dollar-for-dollar reduction of that benefit for any other income resulting in no SS benefit when any income exceeds the $857/mo. Then, that minimum benefit must be phased out over time until the Federal Gov is out of the un-Constitutional wealth redistribution business, and the “poor” must rely only upon America’s Judeo-Christian charity, as contemplated by the Founding Fathers. Heritage provides a gratuitous, generous welfare program and no long-term pre-planned schedule to end it.
Heritage penalizes marriage, by allowing two single individuals to earn $110,000 (total $220,000) but a married couple only $165,000), thus encouraging seniors to live in sin (you do note they can qualify individually – what does this mean?).
People will be tempted to file for the early disability benefit pension and it would quickly become riddled with fraud, as it is today.
Queries: P 14, added 6% pension plan – no double tax??? is taxed only when spent? Is the contribution treated as “savings”?
P 15, 2nd benefit- aren’t SS/Medicare Taxes gone? ? what does this Second mean ?
First, no-one who has paid the 2.9% Medicare Tax on UNLIMITED amounts of income over many years (and up to $4,000 of currently means-tested Parts B & D premiums) should now be deprived of benefits merely because he can “afford” to lose them – again, that is the superficial “Willie Sutton” excuse. The new and expanded means-testing of premiums is outrageous. Heritage appears to take great pleasure in further punishing those who have the very highest Medicare taxes (and progressive income taxes) and currently means-tested premiums- Karl Marx would be very happy. From Heritage’s info it appears that only 9% of Americans will suffer a loss of benefits – I would guess that the total dollars of mean-testing “revenue” is relatively small and thus it would require only a small increase in everyone’s premium to reach a more democratic equal premium for all, which would eliminate Heritage’s un-Constitutional wealth redistribution (and mitigate some of current redistribution).
Heritage fails to outline a long-term plan (i.e., transfer to the private sector) for the Federal Govt to get out of the un-Constitutional wealth-redistribution-medical-insurance-business. Transferring Medicaid to the States with block grants still leaves the Federal Govt un-Constitutionally involved.
Heritage’s “Spending Tax”
Heritage retains, and thus states its approval of,”progressive” un-Constitutional wealth redistribution, thereby reinforcing “progressive” propaganda that the poor are “entitled” to the wealth of the rich.
Heritage’s attitude appears to be, that Americans will be able to fully enjoy the fruits of their labors ONLY by counting their earnings but not by spending them. That is, Dr. Beach says that we do not have to pay this tax if we don’t want to – all we have to do is to refrain from spending our money. He says we can save our earnings and pass them on to our children – who can then count them as often as they like without paying any tax. I guess Heritage considers unexpected medical bills to be voluntary (taxable) spending. I would hope by this point that you see the absurdity of Heritage’s arguments.
By the verbiage on page 39 of the Booklet, Heritage’s prejudice is revealed by its too-thinly disguised class hatred/warfare – it gratuitously reinforces Progressive hatred of the “evil rich” by announcing that it is plugging a loophole that those (hateful) rich people always seem to find (the precise method of doing so is not explained in Heritage’s paper of Dec. 12). Heaven forbid that rich people (who are forced, un-Constitutionally to support the poor) would ever be entitled to any relief from their burden – even those in prison get time off and parole. That targeted punishment further illustrates Heritage’s class warfare, anti-rich passion (and inefficiency). Apparently, those previously-not-Income-Taxed savings may be taxed at an even higher tax rate, i.e., the rate they would have been subjected to under the current Income Tax (but not also to the Spending Tax?). To do so, it appears that Heritage goes to the greatest lengths to punish those evil rich, by wastefully retaining the entire existing Internal Revenue Code (income, deductions, etc.) just to determine if the tax those evil rich would have paid (to determine if that tax is higher than Heritage’s Spending Tax – all merely to insure the rich do not get any slight benefit. It is not obvious to Heritage how its class hatred is made transparent by its targeted proposals to punish them.
Yet, Heritage is careful to insure that the poor are perpetually prevented from ever assuming any responsibility for their own upkeep. How can the Republic survive when half the people pay no tax, yet they can “community organize” into intimidating the selfish, frightened rabbits who represent us in Congress?
Heritage retains un-Constitutional pure welfare, i.e., the (largely fraudulent) Earned Income Tax Credit (EITC). Dr. Beach said in Dallas, “the EITC works”. What does that mean and how does he know that? A CPA tells me the “poor” stop working at $21,000, because earnings over $21,000 result n “giving back” the EITC. If the poor need “incentive” to work it should be the threat of starvation – we must stop the foolishness of putting a gun to our own heads and saying to the “poor”, “if you don’t work, we will force ourselves to pay you”.
Several questions and comments:
It appears that borrowings are included in the tax base, but not investment or other income?
– Thus, when a person buys takes out a mortgage to buy a home, they pay an immediate tax on unless the purchase price
is allowed as a deduction (as opposed to amortization) – at 80? at 100%?
Are gifts included in the taxable income?
P 37 gifts & transfers via inheritance are Deductible ?
Are all current items of “gross income” included in taxable income?
Are negative savings taxed: Income 50, spend 60 – what is the amount of taxable income?
Are medical costs a “taxable” expenditure?
Strange – why confuse the issue, i.e. income less Mortgage interest & college. Why not simply tax total spending, except college , mortgage, charity, work clothes, supermarket food, medical, 1ST $1,000 of rent, etc.
1st $10M salary – is not self-employment income ? – income for seniors is exempt (to encourage seniors to keep working). That benefit is of little value (while he will have the earnings but have to work for them) he will lose up to $1,200/mo in SS benefits but gain only a $200 in tax savings) – how to trace that – need ordering rule. Also need tracing rule for Roth income/spending.
p 39 last para is confusing, what does it mean?
p 39 2nd full para business tax – domestic sales – what about export sales – it says export sales are excluded (from tax base) and imports are taxed – are the cost not deductible for purposes of the business tax when they are resold in USA?
It appears from your new paper that one-half of SS/Medicare benefits are included in Taxable Income (for the rich). It amazes me how you continue to punish the rich – Dr. Beach talked about progressivity being a bad idea in Dallas, yet Heritage punishes the “rich” but gives to the “poor” at every opportunity.
Dr. Beach mentioned in Dallas, that there is a “low income allowance” – is there some additional benefit that I missed?
The Welfare State
I challenge Heritage to show me where in the Constitution/Federalist Papers, the Federal Govt was given the power to redistribute wealth.
Dr. Beach says that if I read my history I would learn that America had a well established phenomenon of “poor houses” at the time of the Constitution. First, the Constitution does not give that function to the Federal Govt, and thus it is reserved to the people and to the States. Dr. Beach also said in Dallas that welfare should be a local issue.
I am told that “poor houses” were maintained by local towns which had a “keeper of the poor”. This voluntary function was best handled at a local level where taxpayers had a better chance of knowing the true circumstances of those seeking alms. It is questionable that this was lawfully institutionalized at the State level, but certainly not Constitutionally taken over by Federal Govt.
Dr. Beach said in Dallas, “the wealthy have an obligation to invest”. Where does one find such obligation in the Constitution?
Heritage focuses on wealth redistribution – it proposes an advancement in the welfare state, while further punishing those who have paid the most for SS/Medicare. Heritage fails to call for a return to the Constitution as laid out by the Founding Fathers. Heritage sacrifices the Constitution for the welfare state budget – in doing so it acts as a stealth Progressive tool.
FDR failed to pass a 2nd bill of rights (and notwithstanding that a frightened Supreme Court approved SS, etc.), the Constitution gives no poor person the right or entitlement to anyone else’s wealth. Heritage makes far too great a leap from local town “poor houses” being the justification for massive Federal Govt welfare programs. The fact that progressives have undermined the country, does not justify nor prove “that we have come to accept the welfare state and its safety nets”.
First, Heritage should be championing the Constitution, and bearing that clearly in the forefront of America’s focus with disciplined consistency, Heritage should call for a long-term plan to return to the Constitution which would not unduly disrupt any American.
In failing to do, and by merely reinforcing Progressive propaganda, Heritage does Conservatism a harmful dis-service.
I look forward to your responses to these comments.
We may have a surprise for you on our bet. Anyway, I’ll tell you first what is wrong with having an income and a sales tax by asking a rhetorical question. If there is ice cream in the freezer, what happens to it? Answer: it is eaten. That is simply human nature.
As it is with ice cream in the freezer, so is it also with adding a source of income to the government. It is “eaten.” The notion that adding a VAT to a flat income tax permits Congress to lower the income tax is simply naive.
Including FICA among the taxes to be replaced was no mistake. It was a stroke of genius. The argument that seniors under the FairTax pay tax again after a lifetime of paying taxes erroneously presumes that Uncle Sam keeps his promises. If you think that Uncle Sam will keep his promise about Roth IRA’s, for example, look at the debt and the deficit.
Believe me, as a senior, you are better off with the FairTax. With the FairTax, your chances of continuing to collect Social Security and Medicare improve overnight. And as we seniors gradually die out, the argument loses its flavor. Our children and grandchildren will thank us for bringing them the FairTax.
Now let’s look at the political sell of the Flat Tax. If the Flat Tax is really easier to do, why did the Flat Tax have only have five sponsors at the end of the last Congress? Here is why. The Flat Tax looks and feels like a tax break for the rich – even if I don’t agree that it really is. What other tax would let Steve Forbes keep all of his investment income and pass his entire estate on to his kids. But yet the poor middle class “working stiffs” and “schlubs” who cannot create estates to pass on (so the Democrats would argue) have to pay both income tax and FICA tax on their wages. I’m waiting for the chorus of, “That ain’t fair!”
True, neither tax taps Tony Soprano when he sells his drugs and his “whatnot.” But when Carmela Soprano takes Tony’s earnings and goes to the Paramus Mall to buy her Gucci’s, Piaget’s and Christian Dior’s, the FairTax collects handsomely. The Flat Tax sits that party out. Indeed the FairTax makes taxpayers out of criminals, not criminals out of taxpayers.
If you are saying that the FT will fuynd us oldtimers’ SS benefits, but only if the revenues hold up and I say they certainly will NOT.
Secondly, Carmela Soprano is already paying appx 23% “embedded taxes” but she does not mind it because it is not tranbsparent so she does not know about it. When she sees the transparent 40% (combined MINIUM fed+state sales tax rate. she will make monthly shopping trips to Europe. Then consider all the formerly honest taxpayers (99%) who will now evade the FT.
Also, Tony Soprano pays some income tax today, because he needs to show enough income to support a reasonable approximation of his lifestyle
(think about him laundering money so he can show some income) – under the FT, that income tax is lost.
Revenues certainly will hold up. Consumption is 31% more stable than taxable income or wages (i.e., taxable income and wages are 45% more volatile than consumption) according to economist Ross Korves, who analyzed data from the Federal Reserve in St. Louis.
Furthermore, the 23% embedded tax savings claim is a myth. That is one of the few points on which Hank Van Gieson and I agree. Carmela Sporano will see the pre-tax cost of her Gucci’s go down 12.5% according to our economist, Dr. Karen Walby, and the after-tax cost rise 14%.
Carmela is free to make monthly shopping trips to Europe, but she will pay tax on whatever she brings back into the country through Newark Liberty Airport. Carmela’s taxes more than make up for whatever pro forma income tax Tony pays.
The point you miss (the one that economists who are NOT paid by the FT understand) is that SALES_TAXABLE consumption will drop dramatically and balck market consumption will rise dramtically.
Not only will Carmella spend, consume and enjoy her money oversear, but I have been told that travellers sometimes lie about the items they bring back into the country (Jewely, etc).
I thought Hank and I agree that prices have the POTENTIAL (not a bcretainty) of conoimg down by 0-10% and then fgo up by the full 30% so that retail prices will be 23.5% higher. More importantly, Carmel now sees the total Fed+State sales tax of 40% (embedded taxes were not obviuous to her) and she and ALL the formerly hopnest taxpayers now see red and reveolt – the sales tax collections will drop dramatically and never reacxh their projected totasl.
I won’t sleep a wink waiting for your “Spring Surprise”! And if you really do con seven more innocent Congresspersons into sponsoring HR25, I’ll gladly pony up that $10.
I don’t get your ice cream analogy. If we put a cap on the annual federal budget of say 18% of GDP, what difference if the revenue comes from one tax system or two? All State/Local governments have at least two, so what is the non ice cream problem?
Replacing FICA with the Fairtax was indeed a serious mistake, and brushing off my criticism, about forcing seniors to resume paying for their benefits with their sales tax dollars, with the cynical view of the full faith and credit of the US just doesn’t cut it! You know better, sir!
If I believed you that seniors would all be better off under the Fairtax, I’d be right up there helping you make it come true. But most middle class seniors are going to take it in the neck. Up to $100,000 gross income, taxes paid under the Fairtax exceed those paid under current tax law. For instance, a retired couple, living comfortably on two SS checks for $30,000 plus $20,000 from savings or investment income, pay zero income tax today. Under the Fairtax, their gross rises to $55,000 due to the prebate, they could pay up to $12650 in sales taxes, less the $5,000 prebate, for a net federal tax increase of $7650. Even if they could reduce their taxable spending to 75% of gross, (not easy), they would still pay net federal taxes of $4487. How on earth do you believe that they would be better off?
Regarding estimates for price increases, I have consistently used the BHI/Kotlikoff data from their 2007 Fairtax rate study which results in a 10% maximum business cost reduction and a 17% retail price increase after adding the 30% sales tax. (1.00 x .9 x 1.30 = 1.17)
Jim, I differ from Karen Walby’s 12.5% business cost reduction for two reasons. First, she used 2001 data for her study and I used 2007. Some of the differences could be due to that. But the largest difference is her use of the now obsolete IRS compliance cost estimating model. In 2006, the IRS switched over to a new IBM developed compliance cost estimating model which drastically revised individual and business compliance cost estimates. The Tax Foundation data was always suspect, but even with the new model, AFFT continues to use the old data. Shame on them! For instance, if you check out page 95 of the 2010 1040 instruction booklet, you will see that individual return compliance costs for 160 million returns in 2010 comes to $36 billion rather than the $110 billion found in the obsolete Tax Foundation tables for 2005. Therefore, I feel certain that my estimates are more accurate than those provided by AFFT.
Regardless, there should be no doubt that retail prices are going up, and I’m glad that Jim and I agree. Too many Fairtax enthusiasts still cling to the Fairtax “free lunch” myth about getting all our pay and retail prices remaining about the same. There is no free lunch!
If you haven’t already gotten his funding request, it turns out that our old friend from Boston U,, Larry Kotlikoff, has decided to run for President through AmericansElect. I’m sure he doesn’t support the Fairtax anymore, but I don’t think his Purple Plan is going to help him any? Stay tuned!
Its great to play with numbers, but economics is aqll speculation not like the science of (say) chemistry.
Also, its not how one group or another does better or worse under either tax system.
What is important is:
1) FT greatly expands ther welfare state – a terrible idea.
2) whatever the new higher prices aRE, THE POINT IS THAT PEOPLE WILL NOW SEE A VERY TRANSPARENT COMBINED FED+STATE SALES TAX OF AT LEAST 40% AND THEY WILL REVOLT.
And, if the Supreme Court upholds the constitutionality of the federal government taxing State and Local government operations, then 10-15% of the federal revenue raised will be included in S/L taxes of all kinds. How transparent is that?
Assuming the Court does the right thing, then it seems to me that the exclusive rate will rise to 43.5% and after adding an average State sales tax of 6.5%, the consumer would be looking at a 50% sales tax. Of course, consumers would never see that number because HR25 mandates that only the inclusive rate appear on the sales receipt. Does the word “disingenuous” apply here?
Its not at all transparent.
In your 43.5% “tax-exclusive” rate did you add in the phony tax to be “paid” by the federal govt? How about the hidden added federal costs of increasing SS benefits by the amount of the total price increases which will reflect
I have not yet seen any responses to my inquiry as to how anyone (other than Progressives/Socialists) can favor a large increase in the welfare state – before we ever get to these financial/economic issues?
// “How can any of you get past FT’s great expansion of the welfare state.” //
Call it what you will, but obviously none of us FairTaxers seem to believe the FairTax will create a “welfare state”. So tell me, Steven, being that “[e]mpirical evidence suggests that taxes and transfers considerably reduce poverty in most countries, whose welfare states commonly constitute at least a fifth of GDP” and that “[m]ost ‘welfare states’ have considerably lower poverty rates than they had before the implementation of welfare programs”, how is it that you see the FairTax being bad for America? If it makes America a better place, then explain to me how that is wrong.
I am one who believes strongly that if I cannot provide for my family, then I must try harder. When I was laid off back in 2002, it took me 6 months before I even attempted to claim my unemployment benefits because I didn’t want to feel like I couldn’t provide for myself or my family. Reluctantly, I had no other choice than to apply for my unemployment benefits because I had exhausted all other sources of funding; and luckily I found another job within 5 months (after being unemployed 11 months).
Personally, I think you’re blowing this whole “welfare state” thing out of proportion. Each current welfare program (pick any one; WIC, Food Stamps, TANF, AFDC, Medicaid, or any of the many many others) was created to help a specific group of people. And thanks to the lobbying power in D.C. each one of them is now a permanent fixture in today’s society. Each of those programs has certain criteria that only certain people in the US can reach. But sadly, it is because of those criteria that many other people feel the need to lie, cheat, or otherwise skirt the system in order to qualify for benefits they should not receive.
I know you’re well aware of this, but the only criteria necessary for the FairTax prebate are that you have a valid SSN, that you are not currently incarcerated for 6 months or more, and that you register for it. That excludes illegal immigrants (who often get Medicaid, TANF, Food Stamps, and WIC) regardless of the fact they are criminals; it excludes the millions of people in jails and prisons across the US; and it excludes the people who feel they would otherwise be “accepting welfare”. To follow along the same lines as your initial question, Steven: How can any of NOT get past how this is fair to ALL legal US citizens? It puts hard working Americans on a level playing field with the illegal immigrants and people who “work under the table” (i.e. tax-free).
I know this is pure speculation, but what’s to say that the $2,500 per year won’t move some of our current “welfare recipients” into a bracket that is unable to collect welfare? It’s got to happen to someone, right? We can’t shut down a program that (seemingly) benefits people. But if we remove the need for those benefits, can we then not abolish the program?
Another reason so many people are on these current welfare programs is because they have been forced out of work for a varying number of reasons. If the FairTax brings back any number of jobs (10 Million is what’s been estimated), then how will that not get some of those “welfare recipients” off of the current programs?
It seems to me like both Hank and Steven are not only against the FairTax, but they are FOR our current income tax system; a system that keeps our working poor, lower- and middle-class citizens in economic slavery. Every chance they get, they try to knock down the FairTax for reasons that will HELP our working class.
ANY income tax is straight from Hell. The FairTax is the ONLY solution that has any hope of fixing our current corrupt tax code because it completely eliminates it and replaces it. An income tax will just be lobbied and edited until it looks like our current system again.
Let me give you one more calculation for your hypothetical senior couple. My annual Social Security earnings statement tells me that Social Security is under-funded. Although the statement does not say so, the unfunded liability is due to the miscreance of Congress. Social Security was never set up in the first place by FDR as an actuarily sound program.
Unless the system is reformed, Congress will be able to pay only 75% of current benefits. There is no legal right to receive today’s level of benefits. Congress can take away whatever it gives.
If your hypothetical senior couple currently receives a benefit of $30,000, the couple presumably would pay $7,650 under the FairTax – if you are right and if they spend all of their income. But their Social Security benefit will be reduced by $7,500. They are hardly any better off.
Now what does all that have to do with the FairTax? The FairTax switches the tax base for Social Security to one that is stable and growing. And, yes, seniors have to contribute. I happen to care about what happens to my children and grandchildren, and so I am willing to contribute.
If we don’t fix Social Security now, my children and grandchildren, for good reaon, will call us inter-generatinal child abusers. I don’t want that.
To Point 18. If Americans revolt because the tax rate is too high, I like that! And so should you. The problem today is that most of the populace is lulled. Congress needs to feel the heat about spending.
The evasion problem is overstated. Hank, I don’t know where your get your 10% figure as the level over which evasion will run rampant. The German Umsatzsteuer (German for VAT) is, generally, 19% (tax inclusive), and I have not heard of problems with evasion. To the contrary, the VAT and the FairTax share many of the same controls. Under the FairTax, raw materials businesses and manufacturers are required to register as sellers. They cannot sell tax-free to a business until they see their customer’s registration certificate.
There are several other evasion-tamers in the FairTax, such as fewer collection points, the perception that the tax is fair, a concentrated number of major retailers, the availability of ex-IRS agents for employment without increasing the budget, and the relative difficulty of collusion.
You will need to demonstrate more to convince me of the evasion argument.
To your point about the Prebate and the welfare state. I heard that 70% of American households today depend on the federal government for some kind of a federal benefit. If we grow the list by 43%, we have the country covered.
If course the disappearance of the IRS is a partial offset. And there is another bennie. The IRS and Social Security no longer need to cross-check databases for Social Security numbers. Efficiency rises.
If it were up to me, I would consider doing away with the Prebate and making the rate 19% tax-inclusive (23% tax-exclusive). But then you know how loudly our Progressvie friends would scream. Let’s leave it at 23%.
You miss the point that the taxpayer revolt will produce far, far, fewer legal sales which will destroy our retail-sales-sensitive economy.
The nonsense about fewer collection points (i.e., that everyone continues to buy at Wal-Mart). When the FT kicks in, Wal-Mart is no longer the lowest price vendor. More importantly, what I have learned from a lifetime of doing tax work, is that when people see the (minimum) 40% combined fed+State sales tax, the will revolt and turn to the black market.
If you read my Paper on this site, you will see that every economist who is not paid by the FT sellers, believes that once the sales tax rate goes over 10% tax avoidance rises geometrically. Thus, the projected revenues will not materialize and the RATE will have to increase to compensate therefore.
Romney is currently under fire for his Bain Capital buying up failing US Companies and moving the jobs overseas. Is it his fault he had such an opportunity? No, but running for President and not offering the solution that will stop such is.
When we went to free trade, we keep the production tax. This article speaks to keeping the same tax, flat or not. Production tax places all tax expense into the price of the product produced, 22% average on goods and 29% on services.
If we are to get back employment, we need to change the tax structure, not tweak it as Heritage is advocating, just as if they are a think tank for the Establishment. Read this blogg and then go to the top of the blogg and find a link to another blogg on the flat tax v. VAT v. FairTax. The income flat tax proposed is simply the hitting of the reset button on the over 1,400 amendments to the IRS tax code for the purpose of selling the graft all over again by congress greed.
Evasion under a national sales tax is a major problem! A sales tax collects all the money from what is, for compliance purposes, the weakest link in the production and distribution chain–retail. Consumers have no incentive to make sure retailers are paying their sales tax, and retailers have no incentive other than the threat of an audit. In addition, consumers do have the incentive to inappropriately acquire business registration numbers to avoid the sales tax.
At rates below 10%, the risk/reward calculation is generally unattractive. As Alan Tait, a leading expert on world sales taxes, stated, “At 5%, the incentive to evade the tax is not worth the penalties. At 10%, evasion is more attractive. And, at 15-20%, it becomes extremely tempting.” Tait didn’t even consider the problems with a 30% sales tax such as the Fairtax.
You may choose to argue that the Fairtax evasion could be controlled for all the reasons you gave. But history is not in your corner. Only six nations have operated sales taxes at rates over 10%, and all of them have since switched to a VAT.
Speaking of the VAT, I’m not sure you completely understand the self policing nature of the VAT collection process? Under the credit-invoice VAT billing system, firms have an incentive to make sure that any other firm they are buying from has paid its VAT because otherwise they cannot claim credit for the tax remitted by their suppliers. Cheaters get dropped like a hot potato!
If we are to set up a national consumption tax, the VAT would be the way to go, despite the Senates ill advised vote to the contrary.
I do not share your pessimistic view of Social Security and the Trust Funds. A very famous NJ basketball player and Senator wrote a book in which he described five ways Social Security could be restored to good health. Bill Bradley believes that we could (1) increase the retirement age gradually to 70; (2) remove the cap on earnings; (3) increase the rate; (4) adopt the “chained” method of calculating cost of living increases; and (5) bring all State and Local government workers into the system. With the exception of (5), which would be unconstitutional, any of the other four would restore SS to good health for the next 75 years. Your gloom and doom outlook really isn’t warranted, imho.
A far more important discussion deals with the obvious attempt by AFFT to destroy the entire Social Security concept. Despite the Supreme Court’s insistence that it be called a tax, it is in fact a federal insurance program where premiums get paid for 45 years or so, and benefits are paid until death with no further premiums.
My criticism isn’t just that current retirees would be mistreated by forcing them to resume paying for their benefits with their sales tax dollars. Everyone will pay into the Trust Funds for all their lives, even while drawing their benefits. What a strange concept. You are taking a major step to a socialist welfare plan to provide everyone with a monthly stipend in retirement even while they still pay the “premiums”. FDR is rolling over in his grave! And, Congress would never approve such a move. AFFT and your executive Council would be well advised to drop any plans to include SS in your tax scheme. You have bitten off more than you could ever chew.
There is an important Fairtax criticism which hasn’t been clearly debated on this blog up to now as far as I can remember. My criticism is that the Fairtax would destroy the Social Security concept as we all know it.
AFFT denies any such complaint. Here are a couple of quotes from the AFFT online FAQ section:
“Social Security operates exactly as it does today, except that its funds come from a broad, progressive sales tax, rather than a narrow, regressive payroll tax.”
“The FairTax.org plan does not change Social Security benefits or the structure of the Social Security system.”
Both statements are patently false. Here’s why.
8% of the 23% sales tax will be allotted to the Trust Funds. Because sales taxes are paid for one’s entire life, everyone will be paying in from the youngest two year old buying penny candy to the oldest among us purchasing Viagra. You never stop paying into the Trust Funds, but you do start to draw retirement benefits at whatever age is appropriate. In effect, the USofA moves in a socialist direction where we all are guaranteed a retirement pension. Which means that SS does not operate exactly as it does today nor is the structure of the system unchanged.
I question just why we need the Trust Funds at all under this scheme? Just pay the benefits from the general fund. And, why do we need to keep track of lifetime earnings? What if someone doesn’t ever hold a job? Will they be cut off from their pension, which they paid for with their sales tax dollars their entire life. Isn’t it reasonable that everyone should get exactly the same pension amount?
It may be that many of you would agree with such a major structural change in the SS program. But, AFFT can not continue to claim that all that is changing is the revenue collection method. Nothing could be further from the truth. The Fairtax results in a major restructuring of one of our most successful government social programs. Comments appreciated.
The Fairtax will destroy Social Security as we know it!
Either none of you really care, or you are in shock? I’m going to try one more time to get your attention, and we will see who salutes.
What is Social Security as we know it. Despite the Supreme Courts decision to label FICA a tax, (in order to head off FDR’s threat to add nine more Justices), Social Security is a federal pension insurance program. (FICA stands for Federal Insurance Contribution Act) You pay your FICA premiums for the 45 years or so you are in the workforce, and at the designated age, you start to draw pension benefits and make no further premium payments. The amount of your pension is tied to your earnings level–earn more, get more.
What is the Fairtax Social Security concept. Everyone from womb to tomb pays into the SS Trust Funds with their sales tax dollars. From the youngest two year old buying penny candy up to anyone still alive, all contribute 8% of the 23% sales tax revenue to the Funds. Even when you start to draw pension benefits, you are still paying into the Trust Funds. In effect, the US is going to guarantee everyone a federal pension when eligible, but you will pay in as long as you are alive.
It will no longer make any sense to tie pension benefits to income, because the Fairtax taxes both income when spent and wealth when spent. Everyone contributes so how is a work history relevant? Would it not be fairer to simply assure everyone of an equal pension benefit? Also, why even have separate Trust Funds. Just pay the benefits from the general fund.
AFFT claims that the only change to Social Security is the method used to collect revenue, a regressive payroll tax or a progressive sales tax. That claim just isn’t true. Either on purpose or inadvertently, the Fairtax plan puts Social Security on a whole new path. Such a plan would be called Socialist in any other country in the world. Is that the kind of government social program we want?
Hank — I actually feel a consumption based tax would be better to pay for social security and medicare than our current system that taxes workers on their wages.
The demographics are against our current system. Soon there will be one retiree for every two workers; how (and why) should that worker be required to pay the pension and health care costs for retirees, when he (or she) might be unable to fund his own retirement plan or pay for health insurance for his family!
In a consumption based tax, the cost of the social security woudl be born, in part, by the very people who are receiving its benefits — i.e., retirees. They would still be subsidized by everyone else, but they’d be paying at least a portion of their own current benefits.
Is is fair to the folks who paid the payroll taxedn under the existing system? Probably not, though statistically current retirees will receive many more times in benefits than the amounts they paid when they were working, so it wouldn’t be completely unfair. But it will be much more unfair if Medicare (in particular) and Social Security go broke, which will happen under our current system unless we raise payroll taxes even higher.
Alternatively, I suppose, we could fund Social Security and Medicare by taxing ALL sources of income to pay for it, not just wages. That woudl mean that dividends, capital gains and interest income would all be taxed to pay for the retirement programs.
Will Social Security and Medicare change from what we currently know it as? Certainly, It will either become a welfare program, where only the poor get benefits, or it will be a universal system where everyone gets the same benefits regardless of what their incomes were. Personally, I would perfer the latter, but that will require increased tax revenues to pay for it. That’s just reality.
Of course, I don’t endorse the FairTax. What I believe it that we should have simplified income tax to pay for the needs of the government (i.e., defense, national parks, government functions, etc.), then a separate consumption tax (rather than the current payroll tax) to pay for retiree benefits.
Stephen, of course, believes this is socialistic tyranny and that we should eliminate social security and medicare entirely. I can sympathize with him to a certain degree. It would be more efficient and probably “fairer” if everyone were responsible for their own needs in retirement. But I know too many people who are totally dependent on SS and Medicare, and regardless of what is “fair,” those programs are never going to get eliminated altogether (even if Ron Paul were to get elected), so there’s no point in spending too much time on that topic.
I don’t often agree with you, but your last post is one where I do. Your comment that current retirees’ standing to receive many times more in benefits than they paid into the system is especially poignant. Years ago that point was true in spades, and I suspect that it still is.
I didn’t vote for Bill Bradley. Even though he was a good backetball player, he was too Bolshevik for me.
While this is getting away from the FairTax, I still do not love Bill Bradley. Most notably, Bradley cast the deciding vote against the Balanced Budget Constitutional Amendment. Some things I can neither forgive nor forget, and that is one of them.
Having said that, I underscore my agreement with you about consumption taxes. If FDR had set the system up under actuarial principles, I may have agreed with Hank.
The Social Security program from the very beginning was to tax current employees to pay for current retirees. Most notably there were never any reserves set up the way a private company is reuqired to do. People think they have a Social Security account in their name, but there is no such thing. If a private annuity company were run the way Social Security is, its directors and officers would be in jail. Perhaps members of Congress should be.
Anyway, Congress began to see the bulge of baby boomers. Along came the so-called Social Security”trust fund,” which for the first time began to collect more from current employees than was paid out to current retirees. This cash-flow surplus lasted from the early 1980’s until 2010. Beginning in 2010, the cash flow began to go negative. For a chart, go to the Peter G. Peterson foundation at:
But what happened to this “trust fund?” It was “walled off” in the early years, but then when crunch time came, it was “lent” to the general treasury to plug federal budget deficits. So now the Social Security Administration is sitting on a stack of IOU’s from the general treasury – that Moody’s has now for good reason downgraded.
The trust fund will be exhausted in 2036. Peterson, id. Then there’s a real problem!
Peterson, id., says that stabilizing the debt and the unfunded liability will require either permanently cutting the budget by 31% or increasing taxes 44%. SOURCE: Data from the Congressional Budget Office, Long?Term Budget Outlook: June 2011. Compiled by PGPF.
What Peterson does not appear to consider is the dynamic effects of these measures on the economy. Here is where the FairTax comes in. If discipline can be maintained, and the economy can grow, we might have a chance. The FairTax can help maintain fiscal discipline in our raucous democracy where people see how much their government costs (Yeah I hear you, what about taxing state and local governments? People will see their state and local taxes affected, too.).
My advice is: don’t listen to the likes of politicians such as Bill Bradley. Listen to the Peterson Foundation, who is not affiliated with the FairTax.
By the way, I worked for insurance companies for 13 years and for the Bankring and Insurance Section of the N.J. Attorney General’s office for two. Insurance companies are required to put up something that is foreign to the federal government – it’s called RESERVES. When you buy an annuity policy, the company is required to put a portion of your premium aside, representing a balance between the present value of the benefit you will receive, and the likelihood that the benefit will need to be paid in that year.
Unlike the government, the annuity company does not have the confiscatory power, or the right, to take from other policyholders to pay your benefit – or to take from you to pay benefits to others. That would be like me as a lawyer “borrowing” money I am holding in trust for Client A to pay Client B. What do you think would happen to me if I did that?
Congress did just that. It raided the Social Secuirty “trust fund” to help satiate its voracious spending appetite. There is a big difference between government accounting and private company accounting.
We can look to Chile as an example of how to do things right. Poor Chileans have more secure retirements than we do.
First of all, thank you for the Peterson link. A lot of good info I have been looking for.
As for the Social Security plan, no, I wasn’t kidding. And, you haven’t answered my question. How do you know FDR didn’t set up the plan on an actuarily sound basis at the time? And, short of the Trust Funds, what would you have done with the surplus generated over the last 25 years or so?
I’m in favor of getting rid of the SS plan and the six Trustees, and the Fairtax has shown us a better way. First a summary (again) of the differences between the current SS concept and the Fairtax SS concept.
(1) The current plan raises revenue by taxing only workers and businesses. The Fairtax raises revenue by taxing everyone with a 23% sales tax.
(2) The current plan pays benefits upon reaching retirement age, and, of course, payroll contributions cease. The Fairtax pays benefits upon reaching retirement age, but the sales taxes never cease.
(3) The SS benefits are a function of income over your work history. The Fairtax seems to say that income will continue to be reported in order to determine the amount of the benefits.
But, what has income got to do with benefits under the Fairtax? Everyone pays those sales taxes for all their life. What do you tell someone that never held a job? They paid the sales taxes, but don’t get any benefits? Nonsense. How long do you think it will take the government to realize that everyone should get a pension benefit regardless of their work history.
What is the need for the Trust Funds under the Fairtax? There is none. Pay the benefits from the general fund.
How much should the benefits be? Let me suggest that everyone get $800/month or $10,000 /year. With 40 million retirees, the annual cost would be $400 billion, less than half of the amount raised by payroll taxes today.
Or alternatively, provide this government pension to only those retirees with incomes at the poverty level or less. Peterson’s estimate for poor retirees is 16 million which would cost $160 billion annually.
Does anyone else begin to see what a possible solution to the SS unfunded liabilities might be? As Hayden suggested, simplify the tax code, get rid of the payroll tax, and replace it with a 5% or lower consumption tax to fund social benefits. I prefer a VAT for all the reasons we have discussed.
We owe a debt of gratitude to AFFT for showing us the way–inadvertently or otherwise.
(Relax, Stephen! I know this isn’t what you would prefer, but won’t you agree that it would be a move in the right direction?)
It’s very simple, and I did answer the question. To put it another way, if FDR had set up Social Security actuarally, there would be money to pay current retirees if future funding stops. What do you think would happen to your Social Secuirty benefit today if suddenly Uncle Sam were to tell younger people they no longer had to pay in? A private annuity company would be able to pay benefits. Not Uncle Sam.
And then politicians enhance the benefits without any attention to how they will be paid for. See for instance Social Security Disability, one of the most abused programs in our government entitlement inventory.
I’m sure FDR’s people knew how much they needed to take from current workers to fund current returee pensions, and they were able to project those figures a few years out. But that misses my point. Social Security should have been migrated to a funded program years ago. It is underfunded today by at least $6.6 trillion – and that’s the way the government accounts, not private companies using GAAP. See Peterson.
If the Social SEcurity plan had been set up actuarally, there would have been no need to set up a “trust fund” from 1980 to 2010, when the baby-boomers hit retirement age. The money would have been there already.
As to where to invest the money until needed, you can look at the portfolios of many life insurance companies. Some of the money was in US bonds, but some was diversified. Not the Social Security Trust Fund. Over the years, private yields were better than the Social Security Administration.
But that is just the point. Treasury did not want those government funds competing with the private sector. So, they established the trust fund and those “special” Treasury bonds which draw 5% interest, it seems.
Back to the Fairtax. Would you agree that the Fairtax will destroy the current Social Security system–for better or worse?
I agree that paying tax on wages has a degree of self-regulation to it. But I am willing to give that up as part of the bargain to put Social Security and Medicare on a more sustainable tax basis through the FairTax. The fact to which I must repeatedly return is, Social Security and Medicare are broke – despite what Bradley says.
By the way, courts agree with me when I say Social Security is not insurance but rather a statutory entitlement – that Congress can take away on a whim. In a bankruptcy context which is too attenuated for this discussion, the U.S. District Court for the District of New Jersey in In Re Mewborn, 367 B.R. at 540 (D.N.J. 2006) distinguished Social Security benefits from Unemployment Insurance Benefits. The court said that a state Department of Labor can recoup overpaid unemployment benefits in bankruptcy because the nature of its benefits are contractual. The SSA cannot. See Lee v. Schweiker, 739 F.2d 870, 875 (3d. Cir. 1984).
Ultimately, I would like to see privatization of Social Security, which could occur under the FairTax. I have not always been a fan of Bush, but I was his first cheerleader when he proposed privatizing Social Security – at least for younger people. Unfortunately the jackals and hyenas on the other side of the aisle shouted him down, and we are all poorer because of it.
The Prebate issue will go away if it is given as a credit good only for paying the FairTax, not as cash in any form. The poor still would have to earn every penny they spent – their Prebate would only cover the tax up to poverty level expenditures.
It could also thus go a long way towards resolving the Hank van Gleason Senior worse off dilemma by including an additional amount (good for the FairTax amount only of course) for SS check expenditures.
Rather than HR 25, which is merely called the FairTax, we ought to support the actual FairTax.
HR 25 violates three principal FairTax purposes:
1. To get the IRS out of our lives. (Sec. 102 makes the buyer liable, and auditable for receipts)
2. To remove hidden taxes. (HR 25 imbeds hidden state and local taxes)
3. To eliminate the income tax. (HR 25 includes an income tax)
Interesting comments at 51. HR25 is in order for the following reasons:
1. I think you mean Section 103. The seller is liable for the collection of tax. The two exceptions are importers and “taxable employers,” i.e., governments and employers of domestic servants. Section 101 relieves the person consuming taxable property where the person purchasing property and RECEIVES a receipt within the meaning of Section 509. If the person throws the receipt away, the person has nonetheless RECEIVED it. The person liable to remit taxes has to keep a record of the receipts. See Section 508.
2. You gave me a great idea! Every tax bill should include a statement by the state, county and local government of the allocable share of federal sales tax being passed through. That would solve the transparency problem. I am sure local governments would be happy to comply voluntarily.
3. If the “income taxes” you refer to are taxes paid by “taxable employers,” these are not really income taxes. They are taxes paid by government for the personal services of employees. They are little different from the tax you will be paying when you hire a lawyer for his personal services. True, you do not have the ability to tell the lawyer how to do his job as you do an employee, but in the case of governments, the government is liable for the tax, not the employee.
Yes, not 102 but section 102 (d)(1) IN GENERAL- The person using or consuming taxable property or services in the United States is liable for the tax imposed by this section, except as provided in paragraph (2) of this subsection.
`(2) EXCEPTION WHERE TAX PAID TO SELLER- A person using or consuming a taxable property or service in the United States is not liable for the tax imposed by this section if the person pays the tax to a person selling the taxable property or service and receives from such person a purchaser’s receipt within the meaning of section 509.
The person using or consuming (the buyer – that’s you and me0 is liable for the tax UNLESS they have a receipt.
ALL auditing MUST by law begin with the buyer, because that’s where the liability lies. The new IRS – the STB, or Sales Tax Bureau – will be on us auditing our possessions for proof that we actually bought what we have. We will have to have receipts for everything we own. If, and ONLY if we can show a receipt will the STB then turn to the seller.
There is simply no justifiable reason for making the buyer LIABLE – EVER. The selle must be the liable person. Think of the gasoline tax. Here, the seller (or distributor or other person) is liable. They pass the tax to the ultimate consumer, but the ultimate consumer is not legally, lawfully liable for the tax. Any tax shortfall falls upon relatively few sellers, nor hundreds of millions of buyers.
The only way to prove you have received a receipt is to keep it to show the STB when the show up at your door to audit you.
It is far easier and straightforward to simply not tax local and state governments. Just add it to the FairTax.
Section 905 retains the income tax. Foreign entities today – all of us later.
We must ditch HR 25 and introduce the FairTax instead.
I was so busy discussing the fact that the Fairtax destroys the current SS concept that I didn’t notice this exchange. Please tell me what the difference is between HR25 and the Fairtax. What Fairtax are you talking about?
HR 25 is not the FairTax as envisioned and developed by the original FairTax group. I can go into the many positions abandoned by the present FT AFFT group later if you wish, but here one very important one.
Originally, the FT was to give the wage earner all the money they earned. This included the full 15.3% payroll tax, which included ‘your’ share, and the so-called ’employer’s ‘share. Both parts were of course money justified by the worker’s productive effort. 7.65% went to the IRS directly from the employer, the other 7.65% appeared on the pay stub as having gone to the IRS from the worker. But both parts were generated by the worker’s efforts, that is, the employer justified paying those amounts based upon what he perceived to be a gain to his company.
The proof that this was the true AFFT position is in the Thumbnail Sketch of the FairTax posted for years at AFFT, as well as the research papers by AFFT economists Mastremarco and others who based their calculations (mortgage trade-offs with the FT vs the IT, etc.). They ALWAYS included BOTH parts of the payroll tax as being included in the paycheck after FT started.
I pointed out to Karen Walby that HR 25 had no provision to have the employer pay to their workers the so-called ’employer’s share’, instead of to the IRS, as was AFFT fundamental policy. I asked why AFFT is not seeking this fundamental change for HR 25.
Without comment, she changed the Thumbnail Sketch as follows:
Originally: “So, instead of paycheck-earning Americans paying 15.3 percent of their paychecks in Social Security/Medicare payroll taxes, . . .”.
Karen Walby secretly (that is, without a public notice to all of AFFT) changed it to: “So, instead of paycheck-earning Americans paying 7.65 percent of their paychecks in Social Security/Medicare payroll taxes, . . .”
Karen hasn’t yet altered all the archived web pages. You can still verify this change by seeing the original (fourth paragraph, third sentence) at
After the change, I was of course personna non grata at AFFT – ignored and despised.
For a long time, the Wisconsin FT retained the 15.3% in it’s Thumbnail Sketch. I raised the issue with the Ohio FT president. He verified the change, but dismissed it, lauding and endorsing the National cabal.
I haven’t checked to see whether Karen altered all the fundamental research papers after the fact. I would surprise me if she has not done so. It would be fully in keeping with her, and the present AFFT’s level of personal integrity.
Under HR 25, employers will usurp many many hundreds of billions of their employee’s dollars by keeping the ’employer’s share’ for themselves.
This is the sort of slick underhandedness and corruption of power that has plagued mankind over the millennia. We don’t need it with the FT, or any other program.
The counter argument “It’s the employer’s money! We can’t tell them what to do with their property!” is phony. As I pointed out, it’s a worker-justified expense no different than wages or any other benefit. All business has to do is give it to their workers where it belongs instead of the IRS with NO CHANGE TO THEIR BOTTOM LINE.
Simply following this money trail, it is clear that AFFT has been compromised by self-serving, greedy charlatans. A very sad day indeed.
Thank you! Absolutely fascinating stuff. However, as the senior rep on this blog, I am concerned over your position that workers ought to get a 15.3% take home pay increase. Stop and consider just what that would do to retail prices. Using 2007 data, if payroll remains the same, then businesses can only reduce costs to the tune of income taxes and compliance costs. For 2007, that amounted to 4.5%, and after adding the 30% sales tax, retail prices have to rise by 24.1% in order to keep the business community whole. I don’t know if it would be better to have workers get the money or allow/encourage businesses to reduce costs. Remains to be seen, and I realize that there will be no way, other than competition, to force businesses to lower prices.
By the way, the link you provided did give me a look at what was being said ten years ago. And, the same nonsense about getting all your pay and retail prices remaining about the same is featured. I really can’t believe that Dan Mastromarco bought in to that argument?
It is the position of the legitimate original AFFT and FairTax proponents that workers get their full pay. The ‘raise’ is just not having the payroll taxes deducted. There will be no change to the employer’s bottom line. The archived Thumbnail Sketch is the accurate true expression of AFFT’s fundamental FT payroll tax principle.
The full 15.3% is what the 10% or so of self employed will no longer pay, and fairness demands that ‘regular’ workers get the same. Do you suggest that self employees continue to pay 15.3% under the FT?
That equality has always been the real FT position – it’s not just a position I am making up, as you suggest.
Payroll taxes are merely part of what an employer pays his workers. It makes no difference financially whether he pays part of it to the IRS or to the worker that earns it.
So what if the final checkout counter price is, using your figures, 24.1% greater? This includes the 23/30% FT, but the income tax horror is gone (under the legitimate FT).
I suggest you read Mastremarco’s co-authored papers. They used to be in the AFFT references – haven’t checked to see whether Karen has altered or removed them as well.
Remember, the idea is to eliminate the IT and the terror of it. If your concern is that you and I, as old geezers, will have to pay more tax than we do under the IT, that’s a very small price to pay. Extending the probate, in the form of a credit good for the tax only, to cover SS checks would take care of most of it.
I’m fully for the FT, but strongly oppose HR 25 as it is.
I take it that you are a strong advocate of the IT, and an opponent of a RST in any form.
Whoa up, my friend. Under your Fairtax scheme, workers will not only get 100% of their gross pay but also a 7.65% pay raise if they get the employer share of FICA. I don’t know how you can claim that the employer share belongs to the employee. It would be a pay raise, and would adversely impact retail prices as I mentioned.
I am indeed concerned that retirees will have to pay more federal tax–a lot more. Get out your 2010 1040 Instruction booklet and you can confirm that a retired couple living comfortably on $30,000 from SS plus $20,000 from savings or investments pay zero income tax today. Under the Fairtax, their gross income rises to $55,000 due to the prebate, they could pay up to $12,650 in sales taxes, minus the $5,000 prebate for a net increase in federal taxes of $7650. That is an effective tax rate of 14%, versus zero. What is your definition of “a very small price to pay”?? Even if they could reduce their taxable spending to 75% of gross, (very difficult unless they drastically reduce their standard of living), they still would see a net increase in federal taxes of $4500.
Please rest assured that I do not support the IT, but the Fairtax is not a suitable replacement–in my opinion as well as in the opinion of the Bush Commission, as well as the current House W&M Committee. Now, if you want to discuss a VAT as an alternative or supplement to the income tax, I’m ready. Perhaps you can tell me just why a VAT has met such headwind in the US, while over 130 nations worldwide employ a VAT?
This discussion sounds like Medieval Scholasticists arguing over how many angels can dance on the head of a pin.
It is reasonable to assume that the employee, to start off, will receive his or her 7.65% withholding (or whatever temporary break-du-jour that Congress is giving) that he or she receives today. The employer has a contractual obligaton and cannot keep the employee portion.
What the employer decides to do with his or her 7.65% portion should be up to him or her. That portion was a cost of employee compensation under the old system. Over time, compensation levels are set by the market, and not by legislative fiat. If an earlier version of the bill required employers to give the employer portion to the employee, prices probably would have risen faster as a function of increased cost, but employees would have taken home more pay. Conversely, if employers get to pocket the 7.65%, employees take home less, but prices theoretically rise less. Macro-economically, it’s all a wash.
Tuerck says price levels are more a function of accommodation by the Fed than of cost. But Tuerck does acknowledge that prices drop in the absence of accommodation.
Bottom line: it really doesn’t matter, does it? The bill we have today is still the real FairTax.
Us old retirees have no problem with the number of angels dancing–the more, the merrier.
Once again, I think you are looking at things from the perspective of a worker, not a retiree. It would be great to get the employers share of FICA if you are a worker. But, as a retiree, the only thing that would do is raise retail prices. No additional income for retirees, except for the fuzzy wording in HR25 to provide a COLA if prices do increase. Stay tuned on that one!
I’m glad you raised the economist’s claim that prices can’t rise unless the Fed accomodates by printing money. I have discussed this claim endlessly with Tuerck, Kotlikoff, et al, and I still don’t grasp why the Fed has to do anything to support a retail price increase. Look, there is roughly $2 trillion in funds that previously went to the federal government, but would now be in the hands of the consumer. The federal government will still be funded by sales taxes, the consumer can afford higher prices (except for retirees?) and I don’t see where the Fed even has to get out of bed for prices to rise. Maybe you can clear up this Dutchman’s mystery?
I am wide awake, and also have my head out of the sand. We were talking about the true original FairTax, and how the present compromised, sold-out AFFT has hijacked it with HR 25. It is a discussion of truth versus falsehood, not a hypothetical case at all.
Hank, if you look at present payroll taxes as a pay cut to employees, then having them get that amount back is merely a restoration of the remuneration they well deserve. It is the employer who decided that the employee was worth their salary, benefits AND both 7.65% shares of payroll taxes. Will the employee no longer be worth the very same amount simply because HR 25 passed?
Remember too that this is the true AFFT position on the matter, not my dreamt up scheme. I also addressed the price increase dilemma, and offered a placate-the-seniors remedy – see above.
And Jim, you buy into the false argument deceptively presented by the current fiat AFFT that the falsely denoted “employer’s share” is money not now paid by the employer as a justifiable expense to have a person working for him. IT IS NOT THE EMPLOYER’S MONEY, but the employees’. This is the critical point. Simply calling it the “employer’s share” does not make it so. The original AFFT FT founders realized this, and made it the official policy of AFFT as I have clearly shown in the referenced archived AFFT Thumbnail Sketch. I addressed this in 55 above, too.
And, it matters very much that HR 25 is a bogus big government, big business, shaft the American Public fraud, not the FairTax. Simply calling HR 25 the FairTax does not at all make it the FairTax.
PS. Prices rise when demand rises. If the FED prints and distributes money without real production of goods or services, the extra cash in the hands of purchasers will end up as extra demand. Prices rise. Iran is a good example today of this folly. But, simply giving more money to people through the elimination of withholding and payroll taxes will not increase demand if those increases are simply taken in sales taxes. There will be no increased product or services demand – all the extra cash will go to taxes, not products and services.
Prices rise when demand increases, but prices also rise when costs increase, and that is what will happen under the Fairtax. The cost savings from eliminating federal tax related costs do not equal the increased cost of the 23% inclusive sales tax. Failure to raise retail prices would result in marginal businesses going out of business and thriving businesses becoming marginal.
Your response to the question of what is the difference between the Fairtax and HR25 doesn’t seem to track. You seem to be saying that the “Fairtax” came first and those wretched folks at AFFT wrote HR25 later, and changed many features of the original “Fairtax”. The first version of HR25 was introduced in 1999, and all those AFFT papers you linked me to are dated 2001. I think you have the chicken and egg reversed? Please tell me just what form the Fairtax was in prior to 1999?
Nothing in HR25 even mentions how the FICA taxes would be distributed, but you can not make a reasonable case that the employers share in any way belongs to the employee. In fact, many folks on this blog and elsewhere seem to believe that the employee share will go to the employer, including Dr Dale Jorgenson who did the 1997 embedded tax study for AFFT. As far as I know, you are the only one who believes that the employee will get it all. And, that isn’t going to happen!
The price increase you describe is the tax. The increased pay from the eliminated IT and payroll taxes offset at least a large part of this. We agree that it will not offset all of it. I have never said it would But, the full 15.3% would go further, with no added cost to employers, a point you do not acknowledge.
Goods and service providers will see no change to their costs by giving their employees the full 15.3% rather than the IRS. Can you accept this point?
I have shown you how the present AFFT altered (in secret, that is, without notification or explanation) the official position that employees should by right get the full 15.3%, just as will the self employed when the FT takes effect. This is, or was, the reason for the policy position.
The position was not altered until I raised the issue with the present AFFT. I, nor anyone else, had ever raised the issue before, with the original AFFT. You can verify that the 15.3% was the standard by actually reading Dan Mastremarco’s and other analysis papers. I found at least a dozen AFFT position papers citations that used the 15.3% figure.
I can and have made a very reasonable and clear case that the full 15.3% belongs by right to the employee. It is the same position made innumerable times by the legitimate AFFT. I have done it at least two times above in these recent posts. You have yet to even comment on it, let alone give any response, substantive or otherwise.
That HR 25 does not mention the ’employer’s’ share is precisely the point of this discussion. It should. The real FT demands it. HR 25 should simply say that the so-called ’employer’s share’ be paid to the employee rather than the IRS.
I do not at all, and have never said that the employee WILL get it all, only that reason and fairness DEMANDS that he get it. The AFFT is based upon that essential fact, as all the papers, and unaltered Thumbnail prove. Those in AFFT now, Boortz, and the Congress have a vested interest in seeing that employee’s DO NOT get the full 15.3%. You have yet to even acknowledge this fraud, or comment on it.
This is a prime example of the disconnect between HR 25 and the FT as originally envisioned. It’s disappearance is one major illustration of the arrogance and evil of the powers that be.
“But, the full 15.3% would go further, with no added cost to employers, a point you do not acknowledge.”
Of course it would go further, but it would also cause the retail prices to rise further. I don’t know if it would be a wash or not, but you will have a devil of a time convincing business owners that they should give all retail employees a 7.65% pay raise, a fact you don’t seem to acknowledge.
“Goods and service providers will see no change to their costs by giving their employees the full 15.3% rather than the IRS. Can you accept this point?”
No, if retailers give away their share of FICA, their net cost savings will be reduced and retail prices will rise. By my estimate, using 2007 data, prices will rise to 24%, not my original 17% estimate.
“the official AFFT position was that employees should by right get the full 15.3%, just as will the self employed when the FT takes effect. This is, or was, the reason for the policy position.”
Sure, self employed should get the whole 15.3%. But, that is no reason to give all the rest of the employees a 7.65% pay raise. Self employed didn’t get a pay raise. Why should non self employed? Where is your fairness argument?
“I can and have made a very reasonable and clear case that the full 15.3% belongs by right to the employee. It is the same position made innumerable times by the legitimate AFFT.”
No, you haven’t! I can make a better case that employees have no right to the employer share of FICA. And, I fail to understand just who you think is the “legitimate” AFFT? AFFT hasn’t changed leadership since their formation in the mid 1990’s, and HR25 was introduced in 1999. The Fairtax and HR25 are one and the same, and your position to the contrary is like tilting with windmills. Makes no sense to me.
Your suggestion that HR25 ought to clearly establish that retail employees should get a 7.65% pay raise also makes no sense. How can you possibly believe that Congress would mandate a pay raise. None of their business!!
Karen Walby initially supported employees getting the whole 15.3%, probably in support of the 1997 Jorgenson embedded cost study. But it didn’t take many years for her to recognize the folly of Jorgenson’s position, and no one except you seem to be clinging to that scenario. I don’t see anything underhanded or evil in an evolving position, but you can continue your rant if you wish. It will accomplish nothing, imho!
You raise a startling point. I has assumed that SS pensions were still to be based upon “EARNINGS FROM EMPLOYMRENT” (and thus required the “IRS” to audit payroll filings Form 941).
I do know that 1/3 of all FT receipts are being allocated to the (if you will excuse the xpresssion) “SS Trust Fund” but for total funding, i.e., not credited to each person’s account for purposes of everyone getting an SS pension whether they worked or not.
Please let’s review excatly how people become entitled to an SS pension under the FT.
Get your thinking cap on and consider what will probably happen to social network programs under the Fairtax. Because the funds come from a sales tax which is paid by everyone for all their life, it no longer makes any sense to base the benefits on earned income. As I wrote, are you going to deny a homemaker that never held a job his/her benefits after paying the sales tax for a lifetime.
My guess is that it won’t take government very long to phase in a standard individual benefit when the retirement age is reached. How about an individual poverty level amount which would be roughly $800/month or $10,000 per year. The only decision which needs to be made is if you means test the benefit or give it to everyone. In addition, it makes no sense to segregate the funds in a Trust Fund, just pay the benefits from the general fund. Nor would it be necessary to report earned income to the SSA, a feature many would cheer about.
No one has talked about this issue, and it could be a good thing in the long run. What are your thoughts–other than restating your opposition to any such government welfare program?
Let me reply to just one of the items first. Then I’ll address one others.
I believe you are looking at the total wage amount relative to the HR 25 amount, not the actual wage total.
There would be no pay raise at all with respect to what the employer shells out to the worker – just a change to whom the very same dollar amount all goes. The worker would see it as a larger paycheck, but the employer would not.
Giving employees the full 15.3% will make no difference whatsoever to employers’ costs with respect to present costs under the IT.
Under the IT, employers pay salary, benefits, but withhold 7.65% payroll tax plus ‘regular’ withholding to give to the IRS. They send the withheld amounts plus 7.65% additional so-called ’employer’s share’ payroll tax to the IRS. The total of these amounts are what the employer’s costs are to benefit from the productive effort of the employee under the IT system.
Under the legitimate FT, where the full 15.3% would go to the worker, the employer would pay this exact same total for having the worker, there would be no change to the employer’s costs to employ. It would just all go to the worker instead of part of it going to the IRS.
Since there would be no physical cash dollar amount change, that is, no increase in wage expense, there would be no added cost for the employer to pass on in the form of price increases. There actually would be a small savings since the employer wouldn’t have to mail in or make a separate deposit to the IRS.
The employer could still reduce prices, relative to the IT system prices, by passing along whatever IT costs are eliminated under the FT.
Hi I am for the Fair Tax. I was reading your reply to Hank Van Geison dated 1/25/2012. I believe a correction is needed re employer / employee FICA if you are talking about The Fair Tax. Presently employers with hold 7.65% from our paychecks and then they have the liability of matching that 7.65%. The entire 15.3% is then remitted to the Government under the present income tax system. When the Fair Tax is enacted employers will not have the liability of matching FICA so their bottom line is better by 7.65% per employee. They do not give the employee the full 15.3%. Employees will have an increase in their paychecks by 7.65% plus any income tax amount previously with held under our present system.
Well, that is somewhat clearer, but I still don’t agree with your position. How can you state on the one hand that the employee will see a larger paycheck, but refuse to agree that the larger paycheck is in fact a gross pay raise. And, why does changing the way the federal government collects revenue justify employers giving employees a 7.65% gross pay increase? Just because the employer sees no change in payroll costs doesn’t mean that he should give his employees a pay raise. He will need those dollars to try and hold his retail costs down. And, I certainly don’t agree that the employer share of FICA somehow belongs to the employee as a matter of fairness.
I’ve never run a business, but I would guess that there isn’t a businessman alive that would support your position. But, I’ve been wrong before, so stay tuned!
I have never refused to agree that if the employer gives all the money it costs him to have an employee TO that employee, that it would not be a bigger paycheck in dollar amount that the employee sees. I don’t know how you got the idea that that was my position. It never was.
To the employee, getting the full 15.3% looks like a pay raise. I’ve always taken that position and so stated repeatedly in these very exchanges.
The point is that it is not a payroll cost increase to the employee in dollar amounts from the employer’s perspective, only a distributional change. If he gives the full 15.3% to the worker, he pays exactly the same amount to have his employee whether he pays the same dollar amount to his worker instead of giving part of it to the IRS.
You are still looking at the employer as losing money by giving his employees a pay raise that costs him nothing. He is not, from his financial viewpoint. He will pay the same amount.
There will be no cost to “hold down.” It is not valid to say that the employer must have give himself the 7.65% as a windfall so he can hold down his costs. His costs will not go up! He can hold his costs exactly where they are with respect to the 7.65% ’employer’s share’ when he gives it to the employer instead of the IRS.
If the employer can justify having the employee under the IT for giving the worker X dollars in salary, and Y dollars to the IRS, he can justify giving X plus Y dollars to the worker under the FT.
My point is that the full 15.3% going to the worker is the basis for the original legitimate FT. Irrespective of the rationale for abandoning this essential principle by Walby et al, the secretive unannounced manner in which it was changed should be very disturbing to FT supporters. It represents a sea change in policy, and is not justified without careful debate and explanation. FT supporters are treated as kool-aid drinkers, and many of us are upset.
Remember, all the financial justifications and all the research papers used this 15.3% going to the worker as a basis for selling the FT originally.
The rational way to look at it is to realize that an employer sending the 7.65% to the IRS is really money that he could justify paying his employee. IF that tax were raised, he’d have to raise prices, reduce salaries, or eliminate people.
The fairness becomes clear when considering that a self employed person will get a 15.3% raise under the FT. Why should not the ‘regular’ worker get the same equal treatment? Maybe you ought to restate ‘self employed’ as ‘self employer’.
I am (or was) a businessman that fully supports this position. I’d much rather see my employees have the extra 7.65% than the IRS. I can afford to give to the IRS now, and I can certainly afford to give it to my loyal hard working employees. You most certainly can never have been a businessman with any respect for your workers.
Why wouldn’t a decent businessman give his workers a pay raise that cost him nothing financially to do?
I approach the whole matter from the aspect of doing the necessary fair things to get the IT repealed and get a true FT in place. The IT is so reprehensible – it must go.
There is no desire or effort in the FT community to see this happen.
Your opposition is that you will have to pay taxes that will be directed to SS, after you are retired and receiving SS money. LET’S SOLVE THAT PROBLEM, not throw out the FT baby with the bathwater. Easily doable.
You and others object to the ‘double taxation of savings and Roth IRAs. EASILY FIXABLE.
Stephen objects to a prebate generated welfare state. LETS CORRECT THAT WITHIN THE FT – easily done.
I object to being the one legally, lawfully liable as a buyer for the FT, when it should be the seller.
We can let the final rate fall where it may, but let’s end the IT in any form. All the Flat Tax proposals are flawed, in that compulsory self incrimination is required, giving the Federal Government too much destructive power and control.
I think we have worn out this subject and can only agree to disagree. But, I will suggest that if you, as an employer, give your employees an unjustified 7.65% pay raise, you will be out of business in a matter of months trying to compete with employers that don’t see it your way.
Why do you never address the core point once on any issue once it is clearly explained? You either change the subject, or belittle the other person with repeated falsehoods or ad hominems.
Again, you use the irrelevant term “unjustified”. If it is not economically justified to pay the very same total amount under the FT as is paid to have the employer now, it is not justified now under the IT.
This is simply not a rational point you repeatedly raise.
And your blandishment that I’d go broke while other employers who didn’t give the same payroll amount to their workers is irrelevant within the context I raised this issue (that is, if the legitimate FT rather than HR 25 had been the legislation) where employers simply give ‘their’ 7.65% to the worker instead of the IRS.
Just can’t seem to have a real discussion with you.
We can debate indefinitely whether the “employer’s share” of the payroll tax, as an economic proposition, belongs to the employer or to the employee. The employer’s share is a tax that arises on a condition precedent that the employer hires the employee. Under the “but for” analysis, “but for” the employee, the employer would not owe the tax. Failure to pay the employer tax does not expose the employee to tax liability. Failure to withhold the employee share may be a different proposition.
If you think the “employer share” should go to the employee, what about FUTA? FUTA, which also arises under the same condition precedent and “but for” analysis, also goes away with the FairTax. Should we use baseball bats to be sure that employers are also giving FUTA back to their employees under the FairTax?
The contra argument, as you observe, is that the employer made a business decision to hire the employee and incur the tax – both the “employer share” and FUTA.
The point ot which I inevitably return is that you raise a distinction without a difference.
Please remember that I’m discussing a principal issue of the original FairTax. The FairTax was to be fair.
Instead of from Hank’s “pay raise” aspect, consider that self employed workers will see 15.3% additional disposable money with the FT. Why should not other workers? Also please stay focused on the fact that there is no added cost to the employer. Also keep in mind that this is the true FT position before the clandestine change.
Another way to look at it that employers could easily pay their workers 7.65% more if there were no IT.
Self employed do not pay FUTA on themselves, so the FUTA example does not arise in this ‘equal fairness’ context. The FUTA should not go the the worker, (although it could with no added cost to the employer).
You overlook the simple point that the employer fully financially justifies paying all these taxes to have the worker now. These added tax costs all simply represent reduced wages or increased product or service costs passed on through higher prices. Prices could remain where they are, not rise as Hank suggests, if the tax amounts went to the worker instead of the IRS.
The false counter argument that “employer’s need these windfalls (getting the tax reduction benefit for themselves) to be able to lower prices” is no different than saying “employer’s need to reduce wages paid to reduce prices.”
And there is most certainly a distinct difference in 7.65% and 15.3%. If there were not, why did Karen Walby make the change?
Until the unexplained change in FT policy, the full 15.3% was intended in fairness to go to the employee. I have shown this time and again with factual documentation. This is not a debatable issue, but the reality and truth of the matter. This is not a “but for” idea – I’m just raising the factual issue of an unsubstantiated change in the basic underpinnings of the FairTax. I only want to make the FT groups aware that major changes have been surreptitiously made.
I want a FairTax, but the real FT, not the shady HR 25. The 15.3% issue in just one major flaw of HR 25.
Such a substantial change should at least make FT supporters curious. My goal is to see the FT pass, and workers are more likely to support it if they are treated equally with the self employed.
Well, I see where you are not yet willing to end this very strange discussion, so here is my position restated for your benefit.
(1) The employer share of FICA does not and never has belonged to the employee. Only employee FICA contributions and IT withholding belong to the employee.
(2) The fact that giving the employee the employer FICA share would not change employer payroll costs is not justification to give the employees a 7.65% pay raise.
(3) The fact that self employed would save 15.3% under the Fairtax in no way justifies giving employees that same 15.3% pay raise. After all, the self employed paid that 15.3% and deserve to have it all returned under the Fairtax. Regular employees do not.
(4) It is absolutely untrue that retail prices could remain unchanged if all taxes went to the employee. As I have shown, retail prices will rise by an average of 17% if the employer keeps the employer share of FICA, and retail prices will rise by 24% on average if the employer, for some unfathomable reason, gives the employer share of FICA to the employee.
(5) Your claims that AFFT and in particular Dr Walby have operated surreptitiously or in an underhanded manner are totally unjustified. Dr Walby can speak for herself, and I hope she will weigh in here, but it seems clear to me that early white papers on this subject were heavily influenced by the 1997 Jorgenson embedded tax study done for AFFT. Many years later, it became clear that employee FICA and IT withholding belonged to the employee, legally and contractually, not the employer. There was general agreement, including members of this blog, that rather than waiting for businesses to reduce their prices, it would be wiser to take the money and let businesses thrash out how and when to raise retail prices. I’m sure Morphh can turn up the extensive discussions we had at the time.
HR25 and the Fairtax are one and the same, and you are tilting at windmills to claim otherwise. (Sorry, but at my age, I’m not as patient or polite as New Jersey Jim.)
I understand your positions on this. I have clearly shown them to be incorrect several times. You have not even considered the discussions – you only summarily dismiss them without comment, and without rationale by simply repeating your position again and again with no justification.
This is particularly so with item (4), which is so totally off the wall as to be preposterous. Why will a manufacturer or service supplier have to raise prices 24% with no increase in costs whatsoever? This is so far beyond reason that I am stunned that it can be made over and over again. How are his costs greater with respect to payroll if he pays exactly the same amount before and after the FT starts? What costs rise if none increase? I cannot grasp your logic here.
Sorry you cannot – or will not – take time to rationally discuss this critically important issue.
We seem to be having difficulty dealing with costs and retail prices. I agree that costs under your scenario do not change. But I was talking about retail prices, not costs. Using 2007 actual data, businesses paid $291 billion in income taxes against $9 trillion in retail sales. That is 3.2% of sales for income tax costs. The Tax Foundation also reports that businesses paid $147 billion tops for compliance costs which is 1.6% of sales. Reduce costs by 4.8% and add the 30% sales tax and retail prices rise by almost 24% on average. (1.00 x .952 x 1.30 = 1.238) Simple math, and my logic is easily grasped by almost everyone–except you?
And, if business owners decide to keep their share of FICA, then retail prices rise by 17% on average. (1.00 x .9 x 1.30 = 1.17).
But you are tying the price rise to a zero change in payroll costs as I have presented the original AFFT position. Within the context of what I have been discussing, the price rise is irrelevant, yet you repeatedly bring up employer’s giving ‘their’ share to the employee instead of the IRS as the proximate direct cause for the price rise. The price rise I’d from the 23/30 % tax, not the zero change in payroll expense. It’s a red herring in this instance.
With respect to your last sentence in 74, you also unfairly equivocate.
When I say the original FairTax, I mean the one which I have proven to be the one originally developed by AFFT, not the one altered and distorted without explanation or notification that AFFT now presents as the original. I have made this point very clearly, and many times here.
I fully agree with you that the distorted, falsified present FT is the same as HR 25. But that is precisely what I have shown to be the core of the problem. The original FT is not the same as HR 25.
If it is your true belief that the present FT is no different that the original FT and that both are equal to HR 25, you are saying that 15.3% is one and the same as 7.65%.
Do you see this, as Jim does, as a distinction without a difference? Your comments indicate that you do – you do not acknowledge the change.
The responses are quite hostile to me in this, when I am simply pointing out original, documented, verified factual positions of the AFFT, which have been altered without explanation by the current AFFT. Rather than belittling and attacking the messenger, honest discussion demands investigation and explanation of this marked change in FT philosophy.
I am tying the price rise to the total disposition of employer and employee tax related costs when balanced against the addition of a 30% sales tax. On balance, the average price rise would be 17% if the employer keeps his share of FICA, and 24% if the employer share goes to the employee. The price rise is not a red herring, it is not irrelevant, and I certainly didn’t equivocate. All ancient history aside, the Fairtax is what it is as described in HR25. Get over it!
As for your belief that HR25 has been altered without explanation by those dastardly folks at AFFT, I’ll let Dr Walby explain what happened. Perhaps she would be willing to chime in and set the record straight. Stay tuned.
You are confusing how much the price can be decreased by the manufacturer or service provider, not how much either of them must raise the price. They do not raise their prices under the FT.
Neither does the retailer. A tax of 30% is added to price to make the final checkout total that much higher to the ultimate consumer. But the item price stays the same, possibly even reduced from FT system savings. The tax is simply collected by the retailer. The ‘price rise’ language is similar to the 23/30% language, a true distinction without a difference, but used to attempt to deceive through euphemism.
By equivocation, I mean that you assert that the original Thumbnail Sketch and present are one and the same. You continue to insist that the present AFFT/HR 25 position on the ’employer’s share’ has never changed. You dodge this reality like the plague. Why are you afraid to acknowledge or discuss it? I have shown you the original, yet you reject it without comment, not unlike Dr. Walby did.
“All ancient history aside” is a straw man as well. I’m not talking ancient history, but very recent history. From archive.org, the policy was altered in the thumbnail in December, 2005. When you set this aside as you do, you evade the very context in which I have raised the point.
Since you say you are dead set against the FT, you should be eager to examine the matter. But, your claim has no credibility given your arrogantly adversarial attacks without thoughtful discourse. What is your hidden agenda?
When I contacted AFFT for an explanation behind the Exclusion of any 15.3% in HR 25,, I quoted a dozen instances citing page, paragraph, and line from the AFFT research papers where the full 15.3% was justified and used in calculations. I’d cite them again for you, but facts are not persuasive to you. If other readers are at all curious, I will list them again (assuming Dr. Walby hasn’t also retroactively altered the authors’ words).
Perhaps because I favor a legitimate FT over the flawed HR 25, the hideously complex IT or your cherished but all but unworkable hidden VAT, you feel the need to so aggressively disabuse me and the factual data I have pointed out rather than intelligently discuss this?
This whole inane discussion has gone on way too long.
(1) “Neither does the retailer. (raise their prices) A tax of 30% is added to price to make the final checkout total that much higher to the ultimate consumer. But the item price stays the same, possibly even reduced from FT system savings. The tax is simply collected by the retailer.”
The item price does not remain the same at checkout. After adding the tax, the final price rises by an average of 17-24% depending on the disposition of the employer’s share of FICA. The sales receipt, as mandated by HR25, shows: (1) price exclusive of tax; (2) Tax; (3) price inclusive of tax; (4) Tax rate. (I would prefer to call #1 cost rather than price, but there can be no question that, #3, the consumer price, goes up significantly.
(2) As for your opinion about what happens to the employer share of FICA, it is just that–an opinion. Your detective work in turning up a ten year old AFFT paper that claims all 15.3% of FICA goes to the employee is meaningless. And, to use a 2005 AFFT paper that says only 7.65% FICA goes to the employee is equally meaningless. Both papers are AFFT opinions only, and have no basis in anything printed in HR25. To use that “revelation” as proof of underhanded and devious actions by Dr Walby in 2005 is insulting, and you owe the good Doctor an apology, imho. She has a right to her opinion as do you and I, but the final decision as to how to adjust pay is up to the employer, not the law. Competitive challenges will likely decide this issue, not you and I.
Phelbers, you need to move on to issues of substance, and cease tilting with windmills! Perhaps you might explain just why you believe a VAT is “all but unworkable”?
1) The derogatory term “inane” does not add to the conversation, but only insults me and the readers, and makes you look small. Lets be civil, and maybe we will all be enlightened.
2)To your point (1):
We agree on the price issue, but are not using the same definition for ‘price’. I explained clearly my meaning here. Again, I mean the dollar amount the producer decides he must have for the property being sold. You mean the dollar amount the buyer pays at the register. The caveat you use is “After adding the tax”, which I clearly detailed just above. If the retailer never sells an item, the price is what it always was. It is only this price from which the tax can at all be determined under the FT to come up with the total checkout dollar amount (what you call ‘price’, and I call final cost). I only reply to you on this to be fair, and try to have you treat me on this this equally so. We do not at all disagree on the dollar amount at the register, just as to the cause for the total checkout cost to the consumer. It is the tax, not any zero change in payroll dollar amount, that raises what the producer must have. I get the feeling that you believe, as I do, that a reduction in payroll costs can allow a reduction in price by the producer/provider. This is the only difference in our positions – we are in agreement except for terminology, so there’s no point in hammering me over an issue I do not raise (except in having to clear things up as I must again do here).
3) To your (2):
I have never given any “opinion about what happens” to the ’employer’ share. I have only pointed out the radical and fundamental change in AFFT philosophy regarding it. I have explored and expressed probable AFFT (I make no claim as to what was actually discussed by them) fairness rationales for giving this 7.65% to the worker – all of which you simply reject without comment. I in no way have asserted what happens to this amount, just what ought to happen based upon clearly demonstrated (original) AFFT stated position.
4) You have no rational basis in proclaiming “a ten year old AFFT paper that claims” (the paper – the Thumbnail Sketch, still on the website in altered form, is from April 2005 – not yet 7 years old) the full 15.3% goes to the employee as meaningless.The actual statement reads,
“So, instead of paycheck-earning Americans paying 15.3 percent OF THEIR PAYCHECKS in Social Security/Medicare payroll taxes, plus an average of 18 percent of their paychecks in federal income tax, for a total of about 33 percent,”
but now altered without explanation to,
“So, instead of paycheck-earning Americans paying 7.65 percent of their paychecks in Social Security/Medicare payroll taxes, plus an average of 18 percent of their paychecks in federal income tax, for a total of about 25.65 percent,”
Do you deny again that the text which specifically so states does not exist? The meaning is clear and present for all to see. There is profound meaning to these numbers. Your statement is not that of an intelligent, informed, honest person.
You also seem to be saying with “to use a 2005 paper that says only 7.65% FICA goes to the employee” is meaningless, do you mean the present altered Thumbnail is meaningless? Can’t follow this. You seem to say that because something is 6 to 10 years old, it is now meaningless. How old are you?
5) The present altered Thumbnail accurately reflects HR 25 in that the employee will benefit from the cancellation of 7.65% of FICA. That is far more than an AFFT opinion – or are you saying that what would happen if HR 25 became law as is is simply an AFFT opinion? Can’t see any rational thought here.
6) And I told you above that I found about a dozen position papers by many of the AFFT economists using the 15.3% figure in justifying the full range of economic benefits or no-harm effects of the FT over the IT, not just two. This principle is – was – universal in the AFFT. These represent core values and fundamental philosophies of the AFFT, far more than mere unbacked opinions. Your comment here is not reasonable.
7) As to Dr. Walby, she conversed cordially and helpfully with me on a few issues, and only when I innocently asked about the 7.65/15.3 question did she cease to communicate. Slam! Silence! What immediately followed was the unannounced and unexplained Thumbnail change. No comment, no explanation from her. Remember, I was a cash supporter of AFFT. I donated over 600°° – not a small sum to me, but I believe in a legitimate FT RST.
I have no respect for Dr. Walby’s personal integrity. Her treatment on this matter is reprehensible. She has every right to her opinion, but expressed none as to why the fundamentsl change in philosophy – she simply altered the Thumbnail. I feel very sorry for her – she has an issue of conscience. She is afraid of forthright explanation. She is the one that must apologize to the FT community.
8) This is a matter of extreme substance. Certainly one of the most important in the relatively recent history of the FT. It is no less meaningless that, say, a change in the Thumbnail from 23% as the FT amount to 40%, or a halving of the prebate amount with no explanation whatever. This is perhaps the most substantive issue recently raised here or anywhere about the FT.
9) Your insulting decree – are you in full charge of the thought process of any participant? – that I am ’tilting at windmills’ is in keeping of your ad hominem attacks, rather that informed honest debate.
Just to go on the FT Blog record as to what an honest reply might have been from Dr. Walby, here’s what I would have expected from her:
You are correct in pointing out that the twelve research papers, and the Thumbnail Sketch use the full 15.3% payroll taxes going to the employee as the basis and justification in the initial formulation of the FairTax. It is also true that HR 25 has no provision for employers paying both shares to the employee.
After consulting with the rest of the AFFT team, we have decided that it is not a workable position to compel employers to pay both halves of the payroll tax to their employees, even though, as you also correctly point out, will not increase their payroll costs.
Although we cannot change the basic assumptions in the many research papers, we nevertheless have decided to change the Thumbnail Sketch to reflect only 7.65% going to the employee, not the originally envisioned full 15.3%. While this is a fundamental change in AFFT position, we felt is was not politically doable to have HR 25 changed at this time. The employer will receive the full windfall of one half of the 15.3%.
We have also posted on the website a detailed explanation of the Thumbnail and policy change, and will re-evaluate our research paper conclusions and FairTax effects using the new 7.65% figure. We still believe that even this new modified FairTax will significantly benefit the country.
We thank you for your input, and for your very generous contributions to AFFT. Please do not hesitate to continue to contact me or to comment on the FairTax.
Dr. Karen Walby”
Something along these lines would have been the right thing to do.
First, I think wew agree that AT FIRST, SS benefits would still be basd upon EARNINGS. I understand what you see as the evolution of SS benefits to a standard minimum benefit of (SSI) $857/mo whic most politicians and others are saying should be means-tested.
In any event, thes eshoulkd NOT be means-tested as that is a pure redisatributioj of wealth which I will object to to my death as I do not admire Karl Marx.
Similarly, a lesser redistribution from the larger spenders to the smaller spenders is still Marxist wealth redistribution and thus not envisioned by our Founders.
Either we have principle or we don’t. Recall the story of the girl who would sleep with you for $1MM but not for $10.
I know that as a practical matter we will not see the govt get out of these Marxist programs during our lifetime.
However, what I propose is a very long term goal (over 30-50 years), WITHOUT HURTING ANYONE WHO HAS PAID INTO THER SYSTEM, the govt sets a goal to get out of these programs by shifting them to the PRIVATE SECTOR, where they belong. SS is a lot easier than Medicare.
While giving the ‘por” a Prebate of only the amount of FT thgey actually pay would be an inprovement, it still leaves many people paying no tax but retaining the right to vote. That is a formula for disaster.
The FT alreadxy provides a SS COLA for the net price rise (including FT), but as a generic provision, that isa not actually based on what each individsual purchases.
Without the ability to audit individuals, the FT will be robbed blind.
HR 25 also has a hidden “tax” for the federal govt’s portion of the FT.
I admire your research.
However, the “employer’s” share IS the employer’s money – it is not a sneaky trick for him to keep his own money. If the tax no longer exists, the employer has every right to keep it for himself (although many economists believe that it is viewed by employers as a “cost-of-labor” and employers would yield to worker pressure for higher wages if the tax were repealed).
(1) You are entitled to your opinion as to the importance of our exchange.
(2) It is the 30% tax balanced against any and all current tax savings which creates the Fairtax cash register consumer price.
(3) Isn’t AFFT entitled to change their position? Clinging to ancient history in no way makes your case. The AFFT position changed over time, and is irrelevant because nothing in HR25 deals with this issue. Nor should it. Congress won’t mandate a pay raise of 7.65% just because you think it would be fair.
(4) I don’t deny those words exist. Just that they don’t matter. What happens to the employer’s 7.65% of FICA will not be determined by you, me, or AFFT. That will be a business decision largely based on the competitive situation for each product line, and each business.
(5) There is nothing in HR25 that addresses the distribution of FICA. It is all opinions and as I have said repeatedly, nothing we say or do will impact the final outcome.
(6) Still just opinions! Get over it!
(7) Thank you! We finally get to the source of the “bee in your bonnet”. I don’t think it is worth getting heated up over, but it was your money, so flail away if it makes you feel better.
Finally, there is nothing substantive about this issue. Unless Congress revises HR25 to mandate just how FICA should be distributed, this is a non issue, subject to competing opinions that can have no outcome. And, Congress sure as hell isn’t going to do any such thing!
Goodbye, and good luck with the “real Fairtax”, whatever that is.
Since the only bill out there is HR 25 (a/k/a the “Fair Tax”) it is confusing to say that you are for the FT but against HR 25.
I suppose you are in favor of the Marxcist Prebate which doubles down on the welfare sate – the one that made Charlie Rangel (D) House W & M former Chairman choke when he discussed the giant new entitlement?
Just because an employers now pays 7.65% in tax to the govt, means he MUST give that money to the employee if the tax is repealed. Thus you alone will, decide how much the employer must pay for labor. Sorry Comrade!
How do you easily end the welfare state expansion brought on by the Prebate? Eliminate it entirely? Limit the Prebate to tax paid (cumbersome AND leave 50+% paying no tax but still voting — the Republic collapses eventually)?
This discussion is making my old haed spin. Hank’s point is that the FINAL PRICE to the consuer (FT included)_ will be 17+% higher. You seem to try to say the RETAILER’s price is lower and that only the FT makes the Total higher. So what – the total paid by the consumer is HIGHER!
When I became an AFFT and FairTax supporter, one fundamental underlying universally documented and published principle was that paycheck-earning Americans would get their full paycheck, including the so-called “employer’s share”. That this was official AFFT doctrine cannot rationally be questioned – the documentation is there for all to see.
This is not a position I made up – it is – was – that of AFFT. This plain fact cannot be changed as Hank believes he has eloquently done, by attacking the messenger and saying the documentation is meaningless. This is false and logically fallacious thought.
AFFT is very free to change it’s position. But, an enlightened and honest society requires candid forthright civil explanation of such a significant deviation from established doctrine.
Whether or not the full 15.3% will or should or ought to go as AFFT originally proposed is important, but tangential to this point. The secretive and unexplained change is.
I took the time to go back and read all the posts from #50 or so on. I suggest that I did not attack the messenger as you seem to believe, but I certainly attacked the message. Perhaps if you had laid out just what you expected to accomplish with your arguments, I could have been more supportive. But your attack on the integrity of Dr Walby seems to be totally unwarranted. As the former AFFT Director of Research and now Consultant, she is entitled to her opinions as are you. Move on!!
I see we still have a fundamental disagreement. The employee FICA contributions and IT withholding do not “belong” to the employee. That’s right. That money was taken from the employee to pay current retirees. Yes, your contributions over the years did nothing for you. They funded your parents’ retirement, and that of several million of their closest friends. If Social Security goes broke, you’re out in the cold. Congress can take it away from you on a whim.
That is the very point I have been making concerning the difference between Social Security and private annuities.
PS: I worked for Gerling Versicherungs A.G., Cologne, Germany and New York, and then for Colonia Insurance Company, New York Branch. I worked briefly in the Section of Banking and Insurance, Division of Law, of the New Jersey Attorney General’s Office. I now have a different assignment with the AG.
What you are saying is not really that the employeesd share does not belong to him (it does, it is subtratcted from his gross pay). The problem is that his + employers shares does NOT go into a real trust fund, but is being used by opur Ponzi govt to pay off prior “investors”. I do not think that Congress would ever cxheat the publ;ic out of their SS pensions (except for those “evil” rich people who can “afford” to lose it (on top of the higher SS/Medicare taxes they paid while they worked.
I had a colleage who worked for Gerling Global in NY, Peter Gentile.
In the context of does the money withheld from the employees paycheck belong to him/her or the employer, it belongs to the employee. Jorgenson screwed that up by proposing that the employer keep all employee IT/FICA withholding in order to minimize retail prices increases. But as I have often explained, there are legal, contractual and fairness reasons why that isn’t going to happen, reasons I’d be glad to review if necessary.
As for your scare story about SS going broke, that can’t happen either. Going broke really means only being able to pay 75-80% of the promised benefits. And, the shortfall is easily fixed by adopting a number of changes we have discussed. As the baby boomers die out, we likely will see a Trust Fund surplus again. Maybe by then the six Trustees will have figured out a better way to handle surpluses? You really need to stop frightening little children?
The FairTax was developed by businessmen, with employees, with the intent of seeing the full 15.3% of FICA go to the employee. On this fact there is no question, no debate whatsoever. I don’t know why or how they took this position. I just wonder why it was abandoned without recalculation of all the basic research developed to justify and validate AFFTs original FT based upon the 15.3% figure.
The FairTax as envisioned differs markedly from the stealthily changed present AFFT FT description presented in the altered Thumbnail Sketch and HR 25.
It is this radical departure from the original FT, and the absence of an explanation or reevaluation of the many research papers – still present on AFFT website – that is the issue.
“Inane”, “tilting as windmills”, “meaningless”, “rant”, “Move on!, “Get over it!”, “bee in your bonnet”, are attacks, by you, upon the messenger, me, to attempt to deflect what should have been a reasoned exchange on the substance of the matter with ad hominem.
Simply saying that the difference in 15.3 and 7.65 is “meaningless” is indeed, as you say in 99, attacking but in no way objectively discussing the message. When a debater is intellectually unable or otherwise compromised to be unable to challenge the issue with substantive argument, attempting to destroy the messenger is all that is left. It is difficult to understand why you are so unwilling to discuss the substance of the philosophy change by AFFT.
Remember, employees getting the full 15.3% is the original AFFT position, changed without comment. The AFFT supporters deserve a fair accounting of this radical change. A fair accounting of this change is all I ever wanted to accomplish.
Then, just ask Dr Walby. You have wasted enough of the time and energy of the folks that post on this site. It seems to me that if the 15.3%/7.65% issue was so important, HR25 would have included some appropriate verbiage. But it doesn’t, nor should it.
I am unwilling to discuss the substance of any so called philosophical change by AFFT because there is no substance to discuss. As I have written a number of times, the disposition of withheld income taxes and payroll contributions is a matter for each business to decide, and will be based on the competitive situation for each. There are legal, and contractual reasons why the employee share of both must remain with the employee. But no such legal or contractual reasons exist that cover the employer share of FICA. Opinions abound, but only the business owner can decide!
To 104, the Little Children could use some frightening. When Medicare goes broke, do you think the politicians are going to leave Social Security alone? You’re not going to get 75-80% of your currently promised benefit. Between Medicare and Social Security, Medicare is the bigger problem of the two, and it is guaranteed to pull Social Security down with it.
I agree with you that Jorgenson screwed up. which I am certain he does not often do.
Tying this all back to the FairTax, the tidy tethering of Social Security to wages – that makes people THINK it’s insurance – will come undone, but the FairTax is still the best hope of putting Social Security and Medicare on a sound footing.
Maybe you have been sleep walking and just don’t know it? The only way the Fairtax will put SS/Medicare on a sound footing is to totally destroy those programs as we know them. Instead of taxing just workers to pay for those programs, the Fairtax will tax everyone. Instead of collecting revenue just during a person’s work history, everyone will be taxed from womb to tomb. Even when retired and drawing benefits. Instead of basing benefits on average earnings, ??? Just what would you base benefits on? The Fairtax taxes both earnings and wealth. So, what is your new criteria for determining benefit levels?
It should be clear to everyone that a new form of social insurance will have to evolve over time. Perhaps a standard pension tied to the poverty level would work? And, if we move to a standard, one size fits all pension, then why bother to set up Trust Funds? And, why not fire the Trustees? Just take the pension funds from the general fund, like every thing else the government pays for.
Just for the sake of discussion, if the poverty level based pension for everyone was $10K per year, then the pension cost today would be $430 billion. Compare that to the $729 billion the 6.2% collects today. Even after adjusting for FUTA, the extra revenue might pay for Medicare/Medicaid?
You still cannot grasp the significance of the 15.3/7.65 question I raised. You simply dismiss it.
“Waste of time” is yet another personal attack.
There is dramatic substance to the abandonment of the FairTax founding principle that the full 15.3% should and by right ought to go to the employee. This is the issue I raise – not the details of to whom it will or will not go as you erroneously suggest.
I have indeed tried sincerely and politely to ask Dr. Walby about this, and silence, followed by the unexplained alteration of the Thumbnail as I have demonstrated was the result.
Here’s another instance of the original AFFT 15.3% position:
See page 8, first paragraph, fourth sentence: They pay $2,295 in payroll taxes (the employee share of the 15.5% payroll tax) and $2,558 in income taxes for a total of $4,853. When you add the rest of the payroll tax, which their employer with- holds from their paycheck, the total tax they pay soars to $7,148.
I think Peter Gentile was after my time. I left Gerling in 1986. The company was bought by HDI (Haftpflichtverband der Deutschen Industrie in Hannover), whose American headquarters is in Chicago. I will be getting a small pension from them soon. (I will pay FairTax on goods and services I purchase with this pension.)
That has nothing to do with FairTax, so I’ll give a quick FairTax lesson on insurance to tie this in. The tax is charged on the premium, but the benefit that the insurance company pays on a good or on a service is not taxed.
In insurance, everyone pay similar “premiums” for similar risks.
Under the FT only half the people pay all the “premiums” – the other half receives negative “premiums”.
The FT is just another way of redistributing even more wealth than we do today – a very bad idea.
I’m afraid I do not understand. Is insurance, except for how it is taxed, really any different under the FairTax than it is today? How do only half the people pay all the premiums under the FairTax?
O.K., now you have clearly defined your purpose and intent. You are concerned that some AFFT papers were changed to reflect a different distribution of the employers share of FICA without notification to anyone. You want to understand why Dr Walby made that change, a change you believe was made to a fundamental guiding principle of the “original Fairtax”. Your discussion has nothing to do with the original 1999 version of HR25, which does not mention this guiding principle, nor do you care to discuss the fairness of the original plan.
Given the above, why even raise this subject on this blog? Your focus should be on the managers at AFFT. None of us have the foggiest notion why Dr Walby made the change. We have opinions about the fair disposition of the employer FICA amounts, but these are just opinions.
If you aren’t getting any response from Dr Walby, write Chairman
Leo Linbeck a letter. Perhaps that will elicit a response to your satisfaction.
I thought you were analogizing the FT payments to insurance, hence my comoparison to why is is NOT insurance.
1/2 (or fewer) pay 100+% of the FT, due to the operation of the PREBATE!. Please see the brief Illustration of the PREBATE in my Paper, Replacing the Income Tax on this site – under Unpublished Papers” at the end of the “Fair Tax-Related Research list of papers. Let me know if you have any trouble finding it.
There you will see exactly how the FT greatly expands America’s welfare state by effectively putting today’s welfare Refundable Tax credits” on steroids to further narrow the tax base from today’s 1/2 down to an even smaller minority.
O.K., I now think I understand your concerns. Correct me if I am wrong, but the thrust of your posts is simply that you have observed that at least one AFFT position paper dealing with the distribution of the Employer share of FICA was changed in 2005 or so by Dr Walby. You have been unable to get an explanation of the reason for the change from AFFT.
Given the above, why even raise this subject on this blog? Your focus should be on the AFFT managers, because none of us have the foggiest notion why Dr Walby made the change. If you aren’t getting any response from Dr Walby, why not write Chairman Leo Linbeck? Perhaps that would elicit a useful response?
The thrust of my posts was to let the readers of this blog be aware that a founding principle of the AFFT, that the full 15.3% payroll tax should and ought to go to the paycheck-earning worker, was changed AND that Dr. Walby abruptly stopped communication with me when I asked why AFFT was making no effort to have HR 25 changed AND that AFFT changed changed the Thumbnail Sketch without explanation immediately after I raised the issue.
I reviewed my emails to Dr Walby, and she did not reply to the one I sent as soon as I noticed the alteration of the Thumbnail. Any contact by me to AFFT is simply ignored.
When the management of AFFT ignores any inquiry, what else can one do than reach out to others?
I have a very clear idea why Dr Walby and AFFT made the change. They kowtow to the congressional HR 25 powers that be, not wanting to ruffle feathers, to acquiesce to business interests other than those businessmen who founded the original legitimate AFFT FairTax.
It is clear that no one there is the least concerned with the change, except that they may be eventually called out on it.
Although you acknowledge that there was a change in the TS, and that 15.3 was the basis for the original FairTax, you believe the change to 7.65 is meaningless, and that any discussion is irrelevant.
For the sake of argument, I would ask, would the reverse be meaningless? If HR 25 were changed to have the full 15.3% go to the employee rather than 7.65%? Would this too be of no consequence?
Why don’t you ask Dr Welby why the unexplained change? You have seen several of the documents acknowledging the original position. See what she tells you. A second inquiry and response (or the absence of one) might enlighten us all. There is no question that the change occurred without explanation. AFFT cannot simply deny the change took place.
On the issue of price, I went along with your price rise argument at the time because it was not critical to core issue (the stealth alteration of core AFFT principle). I’d like to run a thought by you – I came up with a different figure.
Your figure of a required 24+% increase if the 15.3% went to the employee instead of 17% with just 7.65%, (which I felt ought to be characterized as allowing a 5+% reduction instead of 13%), would only apply if 100% of the price of the product was labor. This may be true in pure service without any materials involved, but it may not be so in general.
In manufacturing, where I was involved, labor was 5% of the cost of the product. So, if labor costs were to be reduced by 7.65% (under HR 25), price could only be reduced by 7.65% of 5%, or about 0.4%. While still a very large dollar amount, it would not allow the 7+% difference you estimated.
“For the sake of argument, I would ask, would the reverse be meaningless? If HR 25 were changed to have the full 15.3% go to the employee rather than 7.65%? Would this too be of no consequence?”
If HR25 mandated the distribution of FICA or income tax dollars, it would be of great consequence. But, my friend, HR25 never even mentions this subject. Nor should it! Congress would never mandate a 7.65% pay raise for all employees in a piece of sales tax legislation or anywhere else other than minimum wage laws. That is why I continue to use phrases in response to your posts such as “tilting with windmills”, “goosing a ghost”, “irrelevant”, “meaningless”, etc. AFFT, Dr Walby, you, or anyone else is welcome to their opinion about what should happen to the employer share of FICA, but opinions won’t make any difference.
The distribution of the employers share of FICA will be up to the employer and depends on his competitive situation. 7.65% may not seem like much, but imagine if all competitors kept the employer share of FICA and used the 7.65% payroll cost savings to reduce retail prices. Any business that gave that 7.65% back to the employees, and let payroll costs remain the same could be out of business very quickly.
As for retail price estimates, I have no data that shows that labor costs might be only 5% of total costs? From page 15 of the 2007 “What Rate Works” study, State and Local government wages were 41% of costs, and federal wages were 32% of costs. I know government wages tend to outstrip the private sector, but 5% just doesn’t look reasonable to me?
Here is my analysis of the Fairtax impact on prices. Again, I used actual data from that 2007 Kotlikoff/BHI report. In 2007, businesses paid $291 billion in income taxes against $9 trillion in retail sales. That comes to 3.2% of sales. Businesses paid $435 billion in payroll contributions or 4.8% of sales. And, according to the Tax Foundation, business compliance costs were $147 billion or 1.6% of sales. Add them up and business tax related costs in 2007 were 9.6% of sales. Remove all 9.6% of tax related costs and add the 30% sales tax and retail prices will rise by 17.5% on average. If all businesses gave the business share of FICA to their employees, tax related costs could only be reduced by 4.8%, and retail prices would rise by 23.8% on average.
Using a different years actual data might result in a different outcome, but probably not by much. I might add that Dr Walby believes that tax related costs are 12.5%, not my 9.6%. But, her data was from 2001, not 2007, and I suspect her compliance cost estimates are considerably higher than mine. But, a discussion of compliance costs is for another day.
We can all argue about how much, but there should be no question that retail prices on average are going up!
My only point was to underscore the extreme significance of the 15.3/7.65 difference. You readily admit that it is profound, but only in one direction. I say it is profound either way.
You still do not comprehend the thrust of my raising the issue, and again mention “But, my friend, HR25 never even mentions this subject.” This is the very statement I opened the discussion with! I pointed out that AFFT was founded upon the idea that the employee bore this burden, not the employer, but that HR 25 ignores it. Their deviation from this core principle, which you, without rational merit or justification relegate to mere opinion can’t simply be abandoned without reason. It is earth shattering in impact – both ways, not just one.
The idea that the full 15.3% is borne by the worker was a fundamental truth which their economists asserted in virtually every position paper to justify and economically validate the FT. This is far more than a whimsical and fleeting mere opinion, as you repeatedly insist.
I found a couple more such assertions in these AFFT reference papers:
Congress could, and might, if persuaded, indeed choose to mandate that employers continue to remit 7.65% payroll taxes, not characterized as a wage increase, but merely as a way to track payroll. They might have that amount put into an employee directed Roth style retirement account, private sector based, removed entirely from any governmental investment. This would properly transition from the failed SS system to an actuarially sound system.
It is interesting to note that the fairtax.org has not updated its DAQ’s How Does the Prebate work – they display only the 2010 Prebates.
Below is my short illustration using 2012 Prebates (remember “from each according to his means, to each according to his needs” (you know, the old Soviet non-party members were never made as comfortable as America’s “poor”):
POLITICS: Illustration – the 2012 Prebate: Smiths (no kids) Joneses (6 kids)
Spending (pre-FT) $ 100,000 $ 10,000
FT Gross -30% $ 30,000 $ 3,000 (up to) Less: “Prebate” (paid monthly) $ (5,138) $ (10,603) FT NET Paid or (REFUND) $ 24,862 $ (7,603+)
1) NET, Jones pays NOTHING, WE pay HIM $7,603 – $10,603 for 2012.
2) Each year we give Jones a raise for CPI inflation.
3) Jones pays not $1 more but gets free SS/Medicare – he paid $995 ($1,990 with employer’s share) under the old
system, but nothing under H.R. 25 – i.e., the rest of us pay for him.
4) We say to Jones, “For each new child you chose to have, we will give you an additional $911 yearly, increasing
yearly” (plus, we give him more food stamps and more of many other Fed/State welfare programs).
Jones may well receive more money from the Prebate than he receives under current law’s Refundable Tax Credits
(i.e., welfare). NOTE: the Prebate effectively extends Refundable Tax Credits to those currently ineligible for
Refundable Tax Credits, i.e., because they do not work.
If the probate was not cash, but only a credit good for the tax when buying items with cash, it would go a long way towards limiting the incentive to maximize welfare. The safety betters would have to actually earn more money to get more, not have bigger families and more disabilities.
The ‘poor’ would still have to come up with hard currency to get anything. The probate would only pay the tax, and could not be used to buy anything at all. This rebate change is essential.
Remember, we want to get rid of the oppressive yoke of federal agents, officers, and bureaucrats wielding total control over us as they do now with the income tax and get a workable retail sales tax, not fundamentally change the USA instantaneously back to an utopian welfare free Constitutional Republic state, which most of us eventually want.
Well, at least you seem to repel the huge profit the Prebate would deliver to the poor.
In some ways your suggestion would be an improvement over the currently proposed Prebate, but it is still misguided in its principles.
You improvenment would (even if it worked) limit the Prebate to the tax ACTUALLY payable by the poor. It would still leave a major portion of the population with no skin in the game (becuse they pay no tax and get free SS & Medicare if they work – until Congress eliminates this pesky requirement), but who are able to vote (a formula for disaster).
The new “IRS” wuld still be with us, with a more complex set of situations to audit.
We have tax-free welfare-role voters now. The FT is not proposed to reverse this, only to replace the IT.
There is nothing as misguided as the income tax. A FT with a tax-only prebate and seller liability (which would function like the gasoline tax now) would at least restore a level of economic freedom and individual incentive to improve one’s own lot in life, rather than sit by waiting for the safety net to provide.
You are right. HR 25 buyer liability will give us a new, much larger IRS on steroids, with total audit harassment power over individuals. Door to door audits, anytime. Lost or faded receipt? Levy, seizure, fines, interest, penalties, jail time.
I prefer the gasoline tax model with seller liability.
Even with a tax-only Prebate, I think it will still INCREASE the size of the population which is not paying ANY income tax. They will find a way to give the “poor” today’s Refundable Tax Credits (i.e., a welfare check paid via a tax credit).
A seller ONLY sales tax will NEVER work – you must be able to audit buyers. Auditing protects tax revenues – it can not be avoided (unless you accept my plan, YOUR SHARE).
I speak as a retired tax professional. I believe these to be the realities.
Those receiving safety nets will not look for work but will STAY in their safety nets. Only with safety nets removed will people be incentivized to work.
I’m not talking about a seller only tax. I’m talking about the seller being LIABLE (legally, lawfully) for the sales tax. The buyer still pays the tax, which is added to the price of the item.
The gasoline tax is the best example. No one can say that this tax will never work. It works very well, with zero auditing of the consumer. It is not necessary at all to audit gasoline buyers every time they go to Speedway. The same system will work for a legitimate FT/RST.
If the prebate cannot be used as cash in any way to purchase or barter for goods and services, but used only to pay the tax on items bought with hard currency, there will be far less chance for fraud compared to a cash prebate.
The tax only prebate could actually reduce the physical cash given to the safety-netters, replacing some welfare cash with a good-for-tax-only allowance.
Remember, a proper FT is not intended to instantaneously eliminate the welfare safety net state, but just eliminate the income taxes. Your Fair Share final solution gas oven deportation plan has been tried before. I prefer the plan that the Framers gave us, which worked very well for over 150 years – until we adopted Marxism.
You simply cannot control all the sellers of all products sold AND you cannot control the BUYERS (unless you can audit them. Have you never heard of the Ruissian mobs dealing in un-taxed gasoline.
I agree that if the Prebate does not provide cash in excess of actual expenditures, that would be better than the current Prebate that does so. Also, ffraud will arise in the sale of unused exccess Prebates. However, this still leaves far too many people paying no tax, but being able to vote – wqe will not survive that. Would you agree they lose their right to vote?
I do not even remotely suggest gas ovens. I lean to losss of vote over deportation but the latter is still attractive. What would the members of your condo do if you were very delinquent on your share of the annual maintenence – they would “deport” you from the condo.
The gas tax works flawlessly no buyers are audited. You are very adamant that buyers must be auduted to make any sales tax work. The gas tax shows this position to be ridiculous. The gas tax isa perfect model of hoe well a NRST can and does work with zero IRS intimidating oppressive presence in out lives. no other tax system can compare with that efficiency and ease.
It is far easier to control 15 million sellers than 250 million buyers, and that is the only sane way to go. why are you asserting that the present gas tax system is unworkable?
Unused tax only prebates could not be bartered, used, sold, traded, exchanged, swapped, or in any other way diverted from the person issued to to any other person. Cash prebates can easily and readily be so redirected. I favor the former.
I would never even consider a condo, but even so, if my condo neighbor was sick, lost his job, was in an accident, or robbed, I’d help him, not trow him into your cold winter street to die, as you seem to favor. The Fair/Your Share plan is flawed on a humanitarian basis, and the condo comparison is fatally flawed. Why do you summarily reject the founding principles of this country?
We all (that is, the non-Marxists of us) agree that the present Marxist SS Medicare Welfare state is hopelessly flawed, bankrupt, and failed. But, your plan throws out the American Founding Fathers and Framers Constitutional Natural Rights Rebublc baby out with the Marxist bath water.
The original legitimate FairTax – not HR 25 or the compromised AFFT FairTax – is the only hope for this country.
Yoyur intense reliance on the gas tax is unrealistic. There is untaxed gas (& cigarettes, alcohol). Tax authorities know that when you raise these taxes, bootlegging goes wild. Just imagine a 30-40% sales tax.
Look at your current state sales taxes. Much avoidance already take place. What what happens when the rate goes up to 30-40% and is in your face (you have no clue how much gas tax you are paying).
You have “excess” credits. I either impersonate you or take you with me to the store, youbuy -I reimburse-you.
Are you not aware of such trading in drug benefits, food stamps, etc.?
Whether you personally would buy a condo is not the issue. The issue is that we live in the American condo – we have a joint undertaking to enjoy our pursuit of liberty, but have maintenance costs (the military, mostly) which do nopt include welfare/walth redistribution.
Your personal reactions miss the point. If you wish to help someone who is cold & hungry, it is your personal fgreedom to do so (I have the freedom to do so or not to). You arte malking excuses for having the State make all of the (political) decisions (i.e., vote buying) and thus denying me the liberty of suipporting those the I ALONE chose to help. No rewligion FORCES its members to give charityu – they can only encourage. It is a matter between you and you god – NOT between you and your govt.
I don’t understand your comment that I am throwing out the Founding Fathers. I believe strongly in what they told us. Where in the founding documents do you find an imposition of a welfare state and where in the Constitution is the fed gov given the power to redistribute wealth. The Founders told us wisely to keep thet camel’s nose from getting into our tents. Whedre did they say that someone has a “Natural Right” to someone else’s money? We eachj have the right to PURSUE happiness not the right to demand that someone else goive it to us (same for basic necvessities of life).
The original & the current FT redistribute far more wealth than the current IT and are thus politically abhorrent to me – a no excess-Prebate is better, but not good (obvbiously you are in favor of at least perpetuating the 1/2 pay no tax but vote – very dangerous). Economically/finacially, FT would create a disaster for our economy. A financial/economic analysis of FT reveals to me that is is a scam (why don’t you read my full Paper on this site?).
The most essential item is to eliminate the income tax in any form. The IT, and Your Share – are direct taxes. Direct taxes are those that have armed agents and officers who extort payment at gunpoint directly from the population. History, as the Framers carefully documented, shows this form of taxation to be absolutely and with certainty ruinous of any nation, and unbearable. It is this that you ignore or reject, and by so doing, you reject America.
What you want is an absolute police state, which is what direct taxation assures. Your share is direct taxation on steroids – out of the question. This is what the Framers told us – twice – in the Constitution. With respect to direct taxes. You very much indeed do so reject summarily the Framers and the United States of America. direct taxes are the most anti- American idea, period.
The Framers – which Your Share rejects enthusiastically – believed wholeheartedly in seller liability excise taxes. These taxes made the country the greatest ever. They would never consider Your Share. It is exactly what they fought the Revolutionary War to escape.
I reject the welfare state. Only an excise seller-liable tax system (a legitimate NRST) has any chance of restoring any semblance of freedom. It will set the stage for its eventual elimination.
Evasion is rampant now with the IT. The late Senator Roth cited the IRS in his book that 17% of the American public simply does not pay the IT. I am certain that evasion will be as high or higher with a NRST. But, a seller-liable exise style NRST is the only option for freedom. The purity an perfection of Your Share is just another option for slavery.
While I agree the current IT must go, note that our Founding Fathers (who I embrace dearly) certainly did recognize Direct Taxation. The Constitution requires only that Direct Taxation be “apportioned among the States”. That’s a little puzzling to me because that has to mean it has to be apportioned to them by population, then it is ultimately apportioned to every person????? While ruinous and unbearable, we all “bear” taxes either directly or indirectly – do you think that you are not paying somehow? Why are you running away from paying your share of our nation’s costs.
Do you think that any condo board is arm of a police state and un-American. How about you landlord or anyone else you have to pay.
Do you think that our nation’s bill’s get paid by Martians.
I do not understand how you are so in tune with the Framers to know they would reject Your Share. I do believe that then and now, it would be difficult to get popular support because the numbers on NON_taxpayers now is so large, but that does not make me wrong in principle.
You just won’t accept the reality that a seller-only sales tax will nevewr work ona national scale. You will simply have to resie in your own world.
Youi claim Your Share is Slavery. Popopycock. I am simply asking you to pay your fair share of our common costs, allocated to each person via principles used by every condo/timeshare in America (those condo owners do not feel they are ensalved by paying their properlty allocated fair shares of the common costs). You just want someone else to pay your fair share.
Direct taxes were so odious to the Framers that not once, but twice in the Constitution, made them almost impossibly difficult to impose. The apportionment requirement was not as you erroneously proclaim an equal distribution to each citizen.
The amount each state paid was in the same proportion as the number of representatives they had. The slave states wanted it both ways – they wanted their slaves to be counted as whole free persons for determining representatives to Congress, but as non-persons for all other purposes.
Their goal was to have control of Congress to advance slavery, and tax the rich Northern states for their own gain.
So, men much smarter than you or I put direct taxation apportionment twice in the Constitution so no Your Share plan could ever be established (unless of course the Constitution would be amended or simply destroyed by evil men desiring something like Your Share).
If the slave states ballooned their population to get more representatives, they would have to pay a proportionally larger share of any direct tax, offsetting any gain that a Your Share direct tax plan might otherwise favor them.
They only reluctantly even included any capitation (Your Share is a direct capitation/ poll tax) direct taxing power at all as a means of last resort, in case of war or equally similar dire situation. They detested direct taxation, rightly so, because they were knowledgeable men fully aware of the unworkable evil of such malicious schemes.
Any kmowledgable appreciation of the Founders means total rejection of direct taxation.
Before you is 150 years of US history of unprecedented progress without direct taxation. Only direct taxation – the IT is direct taxation without apportionment, the same as Your Share – has let evil men destroy this nation with the welfare/SS/Medicare state we now have.
Direct taxation is incompatible with human life. Only tyrants and the uninformed would ever consider it over indirect taxation, like the gas or NRST excise type taxes which are benevolent in application and implementation.
Indirect taxes have a long proven record of success and acceptance by freedom loving Americans, and the Framers. these taxes had always provided more than enough money for government, until Marxism was introduced.
Direct taxation, like the IT and Your Share, result only in human misery and despair. Lives are ruined. People die, are imprisoned, or as you wish, deportation to God knows where. Will you send American citizens who are laid off or fall ill to Siberia? Afghanistan? Mars?
Best of luck selling YS to the human race – or maybe your Martians.
I choose the tax plan our Framers chose – indirect excise taxation.
An interesting and informative discussion of our Founders intent with regard to taxes. But, how can you support indirect taxes on this thread, yet describe the VAT as “repulsive to a free society” on another thread. A VAT and a national sales tax are one and the same other than the differences in the collection method. A 23% VAT and a 23% sales tax collect the same amount of revenue. And, a VAT has demonstrated it can function at rates over 20%, while a national sales tax has not. As I wrote on the other thread, only six nations have experimented with a broad based sales tax and all quickly switched to a VAT.
Come on over to the VAT thread and explain just why you have taken such an inconsistent and self serving position?
The current Income Tax system has been falling apart for years!
Even CPA’s and tax preparers do not understand the Income Tax system, as evidenced by the different answers you get to the same questions about how to report various income transactions.
Also just look at the enormous amount of tax court cases where people pay money to argue with their government over what is deductible, what is not deductible, what can be carried forward, what can be carried back, what are the facts and circumstances surrounding the income and/or deductions, etc. etc.
If this 75,000 page income tax code was clear and understandable, there would be very little arguments over much of anything!
So instead of people spending their time making money, they end up spending their time figuring out how to comply with the government’s bookkeeping requirements, which change every single year to support an Income Tax system that does not even work!
Either I failed to eaxplain properly or you misunderstood. I did not say an apportioned Direct Tax equals Your Share. I think it permits it, but I still do not understand how it differs from apportioing a tax to a State, based upon its population, can lead to anyhthing but that (I have seen suggestions of otjher results, but without any explanation of howm they reached that result).
Why do you hate Direct taxes so much? Do you think that if you are taxed INDIRECTLY that somehow you do not have to pay? That would be naive and foolish. I would much rather be taxed Directly and transparently so that I know exactly how much I am paying – YOUR SHARE does that best of all plans, on top of it being the fairest allocation of our common costs to each citizen.
Why don’t you tell you mortgage holder that it is enslaving to make you pay your mortgage directly and that the bank should collect your mortgage indirectly from all of its customers.
If it makes you miserable to pay your fair share then so be it. Everyone prefers that someone else pay his bills – big surprise. Our Income Tax has worked for 100 years and could last much longer if it was greatly simplefied – this is my short-term suggestion and YOUR SHARE is my much more distant goal.
Just like your condo which will forclose on your unit (or your bank will foreclose on your house) something must be done with those who do not pay their fair share. Before taking the final step of deporting them to Mars, the first step I would take is that all non-taxpayers lose their right to vote, thereby protecting the tax payers from the net tax takers (and those in Congress who pander to them).
And to insure that you are not using a common FT trick, whehther we ever adopt YOUR SHARE has absolutely no bearing on the idiocy of the FT (FT’s usually present the choice as a mandatory selection of 1 tax or the other).
The FT is is terrible concept and should fall. As I said above, a very flat income tax first and after many years, YOUR SHARE, notwithstanding that it is a difficult sell NOT because it it wrong or enslaving, but because the mass of people will resist paying their fair share and will have the votes to kill it, just as occured at the time of the nation’s founding. It will always be so – that does not make YOUR SHARE wrong, just politically difficult because of our human shortcomings.
Your Shareis an UNapportioned direct tax, not an apportioned direct tax. This is precisely what the Framers feared most for the US. That’s why they TWICE wrote that direct taxes must be apportioned. Apportionment IS NOT equal tax on each head. You do not understand this vital concept. You simply refuse to study history, or read of the first direct tax (about 1798 or so, I believe).
I dislike direct taxes because I love freedom. There can be no freedom with direct taxation. The Framers hated the direct taxation of Kings and tyrants, and so framed this country. Indirect taxation is what this country and freedom are all about. They worked for 150 years, and made the US the greatest nation ever. Direct taxes have ruined it.
In no way do I expect or want anyone to pay my way. Each will pay according to his need, and human need is unlimited. The Framers knew that a society would prosper not by a Your Share police state. They lived under that system of King George.
The income tax has not worked with respect to freedom. It is based upon compelled testimony of a witness that can and will be used against him in any criminal case. This is in direct contradiction to the Fifth Amendment prohibition against forced testimony. It is an absolute abomination.
I agree that HR 25 is a non-starter. It is called the FairTax, but just as Social Security is called “insurance”, calling something by a false name does not make it so.
But that HR 25 is idiocy gives you no basis to continue to call an excise style (seller liable) NRST idiocy. The gas tax is a far greater success than the Marxist IT. Excise taxes made this country. The Framers designed the USA on an excise tax basis.
You also use “fair share” often, just as does President Obama and all the Marxist liberals. That’s Marxist Liberal Big Government doublespeak for tyranny. Fair is NEVER defined, and Your Share redefines it upward only as you eliminate, imprison, or deport those who may come up a dolar short by adding their share ot the remaining few. It has never worked, and cannot but grease the slide to hell-exactly where we are headed.
Indirect taxation is the only hope for freedom, let alone the USA.
History is on the side of freedom and indirect taxation.
A flat IT is still an IT, requiring compelled testimony that can and will be used against us in any criminal case.
We must get rid of direct taxation in any form, not so someone can avoid their tax, but so everyone can pay as much tax as they can possibly afford.
The first step is to restore freedom by eliminating direct taxation. The Marxist welfare state cannot be eliminated until Marxist direct taxation is eliminated.
Of course, as an income tax attorney, you favor the IT. Any NRST means you are out of business, so naturally you prefer the IT, and the Mother of all Direct Taxation, Your Share.
History, the Constitution, and the Founding Fathers are on my side. Karl Marx and King George are your role models. The people did not vote direct taxation down at the founding of the nation. The Framers wrote it out of the Constitution EXCEPT ans UNLESS they were apportioned.
Until you take time to understand apportionment, you will wallow in the falsehood of Your Share.
I do indeed favor elimination of the vote, not to non-taxpayers, but to anyone directly or indirectly receiving government handouts, SS, Medicare, government employees, politicians, and so on, as they will and do vote themselves largess.
Local real estate taxes are the best example of direct taxation. Like Your Share, people are thrown out into the snow if they can’t pay every penny of their RE tax. 99.9% is the same as zero to the benevolent county government. The Sheriff comes, armed, and evicts the unfortunate at gunpoint.
It’s true that many of the taxes are escrowed into the mortgage payment. So, if the mortgage is late, so are the taxes. But very many people may have paid off their mortgages. There are no excuses to, or any compassion in government. A penny short, it’s over.
But unlike RE taxes, YS goes further. it both throws you out, and deports you as well. This is evil madness. Your assertion that the Framers favored this above all else flies in the face of rational thought. Nowhere in history is anything remotely resembling YS even discussed by the Framers.
The federal government will still have to levy and seize property to pay the YS tax the wretched evictee couldn’t.
Simply denying the vote to non-YS payers is useless. Most of the freeloaders do not vote now. These Americans would gladly give up their vote to take a free ride. Without absolute power of distraint, YS is ineffective, as are all direct taxes. The idea is flawed in every respect. The Framers knew this, as do most rational people today. It cannot possibly work, even theoretically.
California rebelled by passing Prop 13 some 30+ or more years ago to stop wholesale widespread evictions for exorbitant RE taxes. Government used high taxes to grab property through tax foreclosures for their own benefit. This would be the case with YS – total despotism, with the lawyers and power bureaucrats wielding the death axe.
The self-serving favor these taxing powers, and the income tax, and buyer liability. They will concoct any lie, any falsehood, any restatement of history to retain or create new direct tax schemes to pad their own nest at the benefit of those not as powerful as themselves. Freedom is thus forever lost.
First, I stated up fron that there are things about apportionment that I still do not yet understand. The first level of understanding is that it first means apportioned to the states, ACVCOREDING TO POPULATION. If that is true, what happens next? Does not an amopunt apportioned to a State basewd upon popuilatiopn next have to apportioned to its people EQUALLY? If not, the it SHOULD. Again, the onl;y rerason the Founders were against an un-apportioned direct tax is that there were too many people who did notr want top pay their fair share.
Yes, when the Great One uses “fair share” he means based upon your relative wealth. When I use tghat term, I mean the true definition of “fair share”. That is, if you and I have dinner, what is the amount of the bill that you caused and how much did I cause – that is our fair shares.
You acknowledge that you can be thrown out of your home by the govt for non-payment of not only property taxes, but also for non-payment of income or other taxes. Why should that be any different that the govt might be able to sieze any of your property for the non-payment of Your Share? I would not let you vote as long as your taxes were unpaid (I don’t understand why you would let all freeloaders who pay no tax vote , even if they are not getting any welfare – it is still a grave danger to the Republic). As a last resort,we should consider deporting you to Mars.
As a retired tax practitioner, I could not agree with you more.
However, that does not mean we must jump to the FT.
For now, we need to take a chainsaw to the Income Tax until we eventually reach YOUR SHARE (which is the ONLY plan which virtually gets rid of the IRS which would then only need to locate non-taxpayers.
It would be helpful if you were to provide some information regarding the precise meaning of the tedrm “unless aportioned to the states”. I could never locate much to illustrate exactly what that meant.
In any event, we have been functioning (albeit not too well) with a direct tax for nearly 100 years. I am not in favor of keeping it, just grossly simplefying it at first.
Direct taxes, although not politically popular because people just don’t want to pay, are nevertheless the only correct way to apportiuon to each citizen, his “fair share” of the costs of our American condo (our joint bundertaking). Fair share being defined corrcetly as that amount which reflects that person’s impact on the total cost of our common costs (just as your condo/timeshare allocates its common costs).
Direct taxation is the antithesis of freedom. Keep in mind what freedom is: Freedom from Government oppression and intrusion in the daily aspect of our lives. Direct taxes are the intrusive anti-freedom action of any government, other than Soviet/Syrian/Cuban/Iranian/North Korean style military extinction of citizenry.
Nothing government can do is more oppressive than the sending of armed agents to harass the population through direct taxation.
The Framers were intimately familiar with this fact, and it was this alone that drove them to found this country.
Your Share is as unAmerican as any plan could be. It is going to the extreme opposite direction of what the USA is all about.
Since you freely admit lack of understanding of direct taxation and its terrible history, even here in the US, only reading of that history can educate you on the basics of taxation. You have great experience in the unAmerican, unlawfully enforced income tax, but none in the nature of taxation, and the history of the two types of tax.
I have not made up this history. You have steadfastly refused to learn these facts and truths. Your mind is made up, closed to fact and truth.
This is a Pennsylvanian historian’s account of the Direct Tax of 1798. She simply reviewed the records as a way to gain info on PA houses and life at that time. But it gives a close look at the horrors of direct taxation, and the intolerance of the then working Americans to an oppressive direct tax.
If you believe that all Americans will love, laud, and support Your Share willingly, and enthusiastically allow themselves to be deported with no possessions to someplace you determine, just read this account where a tax of 20 cents drove the population to arms.
There was also the Whiskey Rebellion against the indirect excise tax on spirits in 1794. The rebellion ended immediately once the distillers were informed that the tax could be passed on to their customers, and that it was an indirect, not a direct tax.
Freedom can only be restored with an indirect tax plan, and a NRST, properly and legitimately designed, is the only workable plan.
And, YS will not get rid of the IRS as you erroneously claim above, but multiply it manyfold. The agents will have to deport Americans by the tens or hundreds of millions at gunpoint. And, we would be immediately at war with the countries to where you deport these millions. Is this your definition of freedom?
Why are you so opposed to the indirect taxes that work and have worked so well here, and had made the country the best in the world, until the Marxist direct tax – the IT? Why do you declare with such certainty that the present gas tax does not and cannot ever work despite its complete success? How can you decree that no NRST can possibly work when it has never been tried (even though many, many excise taxes do work flawlessly and efficiently?
You go to great lengths to demonize your opponents, but without merit. I am the most open-minded pderson you will ever meet. I have told you again and again, that i tried to find more written about Direct Taxation and Apportionment to the States but have never bneen able to find any deeper explanations.
In any event Direct Taxes are not per se evil. You just do not want to accept the bill for your own dinner (i.e., your fair share of our national common chaRGES, MOSTLY THE MILITARY). Somehow you concoct this bizarre idea that you should not have to pay the bill, but the restaurant must find some indirect way of raising money to pay fore your meal. That is absurd. You want FREEDOM FROM PAYING YOUR BILL.
The IT is Marxist because it is a device to redistribute wealth. Even a flat tax would do so (but less than the curent IT. YOUR SHARE is the only true democratic tax which a;;ocates to every citizen his “fair share” of the bill for our nation’s common charges. The IRS is eliminated from the lives of all taxpaying citizens – it focuses solely upopn the non-taxpayers.
You continue to ignore my statements that my step # 1 is to deny non-taxpayers the right to vote. Should we ever get to the last step of deportation, then so be it. Having lawful officers deport illegals IS A PROPER function. We cannot function without police protecting us from lawbreakers.
I never tried to swallow poison, but I just know it won’t make me healthier. I cannot help you further as you merely cling to the idea that the piddling gas tax (which is illegally evaded) system would work with a MINIMUM combined 40% retail sales tax on virtually everything you buy (and contains significant hidden taxes). Let’s stop this debate. Your mind is closed and it is fruitless to continue.
When the check comes for your next meal, just tell the waiter to collect from everyone else in the reasdtaurant on some indirect basis. Write your Congressman and tell him the federal govt should raise all the money it needs from a national bake sale.
Your fundamental error in thinking is your wrongful fixation on the idea that each person must pay exactly the same dollar amount in tax. This is not the wisdom of the Framers, as you assert, but the corrupt and evil despotism of Kings and other tyrants.
The analogies of the condo and dinner are absolutely flawed in that these are voluntary elections by individuals, not forced exactments by the state.
The Framers were wise enough to realize that a country would succeed with respect to individual liberty and progress (when all others to that time had failed miserably) if each person paid the maximum in tax that they could and still stay afloat, contribute to the economic growth, and improve their lot in life and most readily advance the nation
This system worked, now works, and will work as a legitimate NRST. You cannot simply proclaim that it will not work given its overwhelming success over the decades and centuries. Simply because you would evade the gas tax, does not mean I or everyone else would. Most of us are honest. Remember that a relative very few would be lawfully liable for an excise-like NRST, not many hundreds of millions under YS, making enforcement relatively simple.
Your claim that ” The IRS is eliminated from the lives of all taxpaying citizens – it focuses solely upopn the non-taxpayers” is bogus. The Gestaxpo would have to continuously audit taxpayers to verify that they did not have more family members than claimed; that their claim that family members had died were false; that they were non-residents, and so on.
It was never a matter of being a deadbeat, freeloader, or simply refusing or not wanting to pay a direct tax. It was, and is in the case of the IT, the directness of the tax that was and is objected to.
I have given many links and references to the Direct Tax Act of 1798. But you have not even looked at them, commented on them, or refuted my summaries of them. That is a closed mind, not my reliance on history.
I have not at all ignored the vote removal idea. I have repeatedly pointed out that the mere loss of vote will not matter in the least to a non-taxpayer. Only the maximum distraint of total property seizure and deportation or criminal punishment, or the threat of them, can enforce direct taxation. None of these draconian steps are needed against individuals for excise-style indirect taxes.
I have written my representatives, asking them to consider the FT, not HR 25 as-is. The real FT had no hidden taxes. My mind is completely open – but I reject the falsehoods of YS, theFlat Tax, and the IT.
I want to return to a US that has worked – we used to win our wars – without fiat currency, Ponzi/Madoff/SS schemes, and the IT. You want a dreadful police state, where we deport 100 million otherwise taxpaying (with an excise-type NRST) citizens.
Do you agree that if we have dinner, that your “fair share” is driven by the costs of what you ordered?
If so, then what is your impact on the cost of the militray relative to my impact onj the cost of the miloitary. They are identical – thus we should pay tyhe same dollars in “tax” (I.e., our share of that common cost). Anything other than that is a redistribution of wealth.
You iontyerpretatiopn of my analogies is grossly flawed and otyherworldly. You live in america VOL:UNTARLY. America has coommon costs which must be paid by ALL citizens on some properly allocated bvasis. I have used the most intuitively correct method of allocatiopn.
To say dinner and a condo is voluntary, but the govt isforced, ignores the reality that the govt is merely trying to collect your fair share of the costs that it incurs on your behalf. THESE ARE YOUR BILLS FOR THE MAINTENENCE OF YOUR COUNTRY – if you don’t want to pay, then leave.
I will go read your direct tax materials, but I know enopugh to understand that objections to it were political in that most people could not afford to pay it. Despite the Founders’ political decisions, I think a direct taxes best. WE are responsible for our bills, not someone else. The national bake sale idea should demonstrate the conceptual absurdity of indirect taxes. Why should any person pay more for the military than anyone else, when wqe all have the same impact on its cost?
It seems to me that you go to the greatest of lengths to have someone else pay your fair share of the national common costs.
You want the govt to provide you with military protection, but claim they are being tyranical to ask you to pay your fair share of that cost (there is something mssing there in your thinking. You don’t have to live here but if you choose to, you must pay your share of the cost of the military. The fact that the govt does way more than the military is a separate problem.
I am not fixated on equal tax dollars but have explained my rationale as to why it is the fairest sysytem.
I rteread your post # 139 and find more irrationality in it.
Youy just don’t seem top get it that it is not the few Wal-=marts that won’t cheat an NRST, but 300+million people will buy from black market sellers in order to avoid an outrageous 40% (minimum) sales tax. It is naive to think that susytem can wortk without auditing buyers. Let’s not argue about this any longer – you have your view and I have mine.
You twist my comment that the IRS will not have to audit taxpayers. Their only duty is to find people who are not paying tax. So yes, they would be able to see if you have children for whom you are not paying, but they will not otherwise delve into your affairs. It is grossly naive of you to think that any system can be made totally devoid of IRS auditing. YOUR SHARE creates the very least intrusive IRS than any other system. You must pay your share of the common charges and someone has to enforce your obligation.
You do not at all understand America as founded, or how human society advanced because of the indirect tax system we had. Your Share rejects freedom.
There is nothing more intrusive than armed searches of households looking for hidden people. The Nazis did this looking for Jews.
The military example is silly. How did we win WWII without YS? Maybe we actually lost it – should we surrender to Germany and Japan because we didn’t have YS back then? The victory HAD to be a mistake. It never happened! The equal dollar amount of YS is absolutely preposterous. You cannot grasp the reality that the US worked BECAUSE there was no YS. The maximum productivity, and thus revenue, is realized through freedom, not slavery.
The gas tax is totally devoid of buyer audits. I have never been audited, nor has anyone I know. This tax works flawlessly, and is the type of tax that we need if we want freedom from government (IRS) meddling as you prefer.
Your understanding of freedom is total government armed intrusion and home invasion. Mine is the seller-liable, or distributor or manufacturer liable system of the Framers that made this country great. The system you propose is that of Karl Marx, Hitler, Stalin, Kim Jung Un, and the rest of the YS believers. It is not intended as an insult – it is a fact.
I want no one else to pay my share. A person’s fair share is paying what he is able, at a RATE equal to everyone else. The Framers established in the Constitution that “all Duties, Imposts and Excises shall be uniform throughout the United States.” You praise the Framers, yet reject everything the stand for.
The point you miss on direct taxation is that each state is liable for their apportioned amount of tax:
1. The Congress assesses a tax total amount. This total is divided up to the states in proportion to the number of representatives. The Congress CANNOT pass, for example, a $10,000 tax on every person, as would YS. They MUST first establish a TOTAL amount to be raised. This is the first step of the Framers wisely chosen Constitutional direct taxation method.
2. Under apportionment, the states have to come up with their share of that total proportional to their number of representatives. If they take away the vote of 50% of their population because they cannot pay an impossible “fair” share, the state still has to come up with the same dollar amount from the remaining 50% that can pay. But the amount would double to each person, since half the number of people must come up with twice the money. This will continue to cascade, with more and more people becoming non-voting non-taxpayers. An equal dollar “fair” share payment system is absolutely unworkable.
3. The prevailing Framers, for whom you say you have the greatest respect, devised apportionment for this very reason – to discourage direct taxation in all its forms. The Democrats of their time – Adams, and the other federalists – quickly imposed the Alien and Sedition Acts, and direct taxation – the forerunner of YS. Jefferson, the Republican of the time, immediately did away with these.
If I go to a restaurant and can’t pay, I will be arrested, or be forced to wash dishes. You could, under YS, force people into slavery instead of taking away their vote or deportation, and have them work off their “fair” share, but remember that slaves consume 90+% of what they produce. They would be slaves forever, little or no money would go to the treasury, and the US would quickly disintegrate.
A NRST can work without auditing buyers because such taxes have and do now work extremely well. Keep in mind that sellers (or distributors or manufacturers) would be legally liable and fully auditable under this system. There is nothing irrational on building on successful excise-type sales taxes.
Cite for us official statistics that the gas tax is universally evaded at the pump because the IRS cannot hold gas buyers at gunpoint, drain their tanks, and demand paid receipts for the gas they have in their tanks. Show me the official government reports that the black market is 100% of US consumption by all 300+ million Americans, as you adamantly assert. Those will be the facts that convince us that YS is the only viable option for freedom, not unfounded assertions by you.
I still say, based upon history, reason, and fact, that we need the freedom of an NRST, not the slavery of an IT or YS.
You are entirely closed-minded and unjustifiably condsescending.
I understand fulol well aboput the founding of this nation. I understand the people did not want to pay direct taxes (a popular, but unfair notion) and the Founders limited direct taxes to those apportioned among the states by population (whatever that means precisely), solely in order to achieve a political compromise. Even if Your Share is an unconstitutional direct tax (the IT is a worse one) I submit that it is the correct system which most accurately refelects each citizen’s fair allocation of our common costs.
We progessed because of our industriousness and self reliance and the dream of persuing our own happiness. The indirect tax is not the driver-source of our success.
Your Share provides the MAXIMUM amounty of personal freedom, more than any other tax system out there. While I know that you steadfastly refuse to pay your own bills DIRECTLY, once you have paid your monthly SHARE of our common costs, you are free of the govt. No other tax plan leaves American so fgree to persue happines without govt interference.
For you to compare what the Nazi’s did to the Jews, Poles, Gays & Gypsies to a tax collector looking to identify non-taxpayers and send them a bill, is so very far beyond rationality, that I am tempted not to respond to you ever again.
I do noty grasp your train opf thopught about the military. Let me try to cvlear it up for you. According to the Constitution, the military is the single fuinction the fed govt is supposed to perform for us (i.e., it is supposed to comprise 93+% of all federal spending). Thus, I use military spending as the proxy for all the spending the fed govt is supposed to do under the Constitution. Then, you can see that our task in any “tax” system, is to allocate that common cost to each citizen. The only rational economic method of such al;location is EQUAL because ezch citizen has an equal relative impact on that total cost. I do not all understand your traion of thought. We could pay taht bill using any number of methods. We never had a Your Share – if we had Your Share from day 1, it would have worked beautifully to do its job. Again, we did not win the war because we had an indirect tax – in fact during WWII, we had a DIRECT TAX.
Thank you for that explanation of aportionment. I have never seen that explanation before. I see the Frameres’ political fear, leaving the dirty work to the States. But first, are you sure that the States had the power to deny the right to vote to those who could not pay/ If that is so, then YOPUR Share is clearly workable on a federal level. That isa, it is deceptive to make each state do what the federal govt is afraid to do. A national Your Share whith all those who can’t pay losing the right to vote should work just as well as your State system.
You offer slaveryas an alternative. While I have nothiong agaionst criminals having to work to pay their jail costs, this is not nalaogous. Thus, I reject the slavery option and favor loss of voting rights as my first option for non-taxpayers.
In any event, the Republic will not survive if politicians pander to non-taxpyers.
You continue to wear the bliders that would otherwise allow you to see what every economist and financial writer see – that the black market will flourish. Non-Wal Mart sellers will sell without the NRST in what will become the dominant US retail market.
Of copurse there is nop formal study showing all people cheat. I have read from time-to-time that mobsters, etc., traffic in un-taxed gasoline & cigarettes. Of course 100% of Americans don’t do this today, but put in an in-your-face 40% retail sales tax and stand back and watch how many law-abiding citzens cheat that system. You are in a very distinct minority of true bel;ievers who chose to ignore the realities of the real world.
I find it astounding that you rteach the conclusion that payiong your bills DIRECTLY is slavery. Does your mortgage lender enslave you. You chose to live in America which has to spend money to protect you – pay your bill like an adult. It is silly to tell the fed govt they need to go do a bake sale or some other indirect tax, just because you don’t want to be billed directly for that protection.
I am very completely open minded – that is why I only reject YS after careful study of it, and of history and the founding of this country. You understand NOTHING of the founding of this country, or you would accept the wisdom, reasoning and rational development of the Constitution, and in particular, the taxation clauses of the Constitution. They were established after considered, careful debate, not from a realization that the perfect, true, just and benevolent YS was just politically untenable at the time.
Direct taxation, particularly YS, is 100% guaranteed to prevent progress. Remember, direct taxation only results in levy, seizure, loss of property, imprisonment, or deportation.
You are dead wrong in saying “We progessed because of our industriousness and self reliance and the dream of persuing our own happiness. The indirect tax is not the driver-source of our success.” The ABSENCE OF DIRECT TAXATION is the true driver-source. Indirect taxation ALLOWS industriousness, self-reliance, and the dream of pursuing happiness. Do you truly believe deportation of 75+% of the population is the best way to pursue happiness and progress? Yes, you do if you believe YS is what the Framers chose. That is utter madness.
I do not offer slavery, but you do with YS, precisely and explicitly. I merely cite the YS slavery system to illustrate YS. You did not read this from above:
“2. Under apportionment, the states have to come up with their share of that total proportional to their number of representatives. If they take away the vote of 50% of their population because they cannot pay an impossible “fair” share, the state still has to come up with the same dollar amount from the remaining 50% that can pay. But the amount would double to each person, since half the number of people must come up with twice the money. This will continue to cascade, with more and more people becoming non-voting non-taxpayers. An equal dollar “fair” share payment system is absolutely unworkable.”
Do you disagree with this fact? How would Texas come up with it’s 6% of the total from 10% of its citizens, after the other 90% who cannot possibly pay are written off or deported? Texas cannot reduce its obligation to pay its apportioned share by simply deporting or de-citizenshipping most of its residents. It still has to pay the same amount.
YS slavery os the only option under YS, after taking away their vote, and all their property, to get at least some very very small amount of money from those who cannot pay their “fair” share.
I do not reach the conclusion that direct payment is slavery. I point out that YS direct taxation can only result in slavery for those unable to come up with the unpayable “fair” share. You offer no way to avoid YS slavery – loss of vote will not pay the YS tax.
A NRST is the only hope for freedom. I will pay my taxes under this system, and I would not use the black market. So would the very great majority of honest Americans. You would not pay, and would use the black market, and assume all others are also deadbeat tax cheat mafia black marketeers. But you forget that most of us are honest – understandably difficult for you to accept.
Facts, history, and the success of the American Constitutional republic under indirect taxation recommend a NRST. Dictatorships, slavery, guaranteed failure and misery suggest YS.
We should work together on correcting HR 25 flaws (hidden taxes, retained income taxation, double taxation, corrupt business windfall gains on their employee’s backs, infinite IRS expansion through buyer liability, and so on and on) to get the USA back on track to freedom. We should not destroy ourselves with medieval YS proven unworkable schemes.
How unjustifiably condescending your are to tell me I knmow NOTHING of our founding principles. I submit that you superficially reject DIRECT taxes without understanding that the Founders’ sort-of diversion awa from them was a meree political compromise from a populiust view in order to reach an agreement. Most people could not afford to pay and did not want to have to pay directly – what a shock. That’s one reason we have a Republic and not a Democracy. It was not wisdom BUT BASE POLITICAL COMPROMISE, just l;ike the 2/3 counting of slaves.
How can you make such a patently absurd statement that DIRECT Taxes GUARANTEED to [prevenmt p[rogress. Have we not progressed greatly under the IT for the last 100 years (not that the IT could not be greatly improved by MAJOR SIMPLEFICATION)? Yes Direct Tax results in levy, etc. but so what? We have had that for 100 yuears – the taxes MUST BE collected. If yopu don’t pay the IRS should levy etc. How outrageous to think ypou should suffer no seizure if you fail to pay what you owe. That is preposterous!
If you are true believer that INDIRECT taxes was the driver our success instead of our industriousness, then I cannot help you. I think tyhat is otherworldly and will not ever be able to get through to you. I don’t know why you keep insdisting that I am pushing deportation as my first option – I have repeated many times that my first option is loss of vote. Further, I never said that the Framers chose YS, but I do for reasons previously stated (actually, the Framers really did – that apportionment rule as you descxribe oit is really a thinly disguised YS).
I guess you view the current IT as slavery, if you can’t pay. I believe that view to be absurd. Somehow, you have to pay your share of the nation’s common charges. I don’t know which “fact” you are asking if I agree with. If TX collects its full share from only some of its citizens, then only those citizens who pay should be able to vote. You keep insisting on jail or deportation. Everyone must pay their fair share of the cost of the military. If you don’t want to pay, then you can’t vote. Why do I have to pay to protect your stingy hide – go to Cuba? Your condo would foreclose and throw you out, Why doesn’t America have that same right? Let’s start with you just losing your vote and leave it at that for now.
I know that loss of vote does not get the tax paid, but at least only the taxpayers get to decide how muchg the govt will spend.
Now you insult me by calling me a “deadbeat tax cheat mafia black marketeer”. Well all of the economists and financial writers (other than those paid by the FT) who do not know me personally, agree that human nature and anger will produce a gigantic black market. I guess you are in a very tiny minority and would never have joined our brave lads in dumping King George’s tea into Boston Harbor.
Why haven’t “Dictatorships, slavery, guaranteed failure and misery” resulted in the 100 years of the IT?
Trying to “fix’ the FT is like giving chicken soup to a dead person. Giving all the passengers on the Titanic bailing buckets will not save the ship. An NRST is insane. AS I believe a Harvard FT-paid economist said, something like, you can’t replace the IT and P/R taxes with an NRST – its just way too much for asn NRST to handle.
I agree that the military is a function the federal government is supposed to provide, but where in the Constitution does is say military spending is supposed to comprise 93+% of all federal spending? I just scanned through my copy and do not see mention of any particular amount.
A minor correction, slaves were counted as three fifths not two thirds.
It can be found in the Constitution’s sales documents, i.e., the Federalist Papers. In FP # 34 Alexander Hamilton tried to assure the people that the fed govt would function within its Constitutioonal limits, and to do so, he provided a numerical illustration. He said, in effect, that to illustrate this point we would look to the model of King George, who allocated his total tax collections to the military (15/16) and to all other activities (1/16). End of story, end of debate, judgment summarily granted to the taxpayers!
Unfortunately, I don’t think the Federalist Papers are not legally binding. Hell, the constitution itself is barely legally binding any more. So I don’t think it’s accurate to say that the military spending is supposed to be 93% of federal spending. While I’m all for the Federal government to shrink and do away with most of what it’s currently spending money on, I’m not sure I would be in favor of picking an arbitrary % military spending should be, regardless of how high or low that percentage is.
We mist assume the Constitution is still the binding law of the land, even though the scoundrel’s in Congress have trampled on it. The Federalist Papers are the very set of documents the Founders used to convince us to accept the Constitution – to overcome our great reluctance to give ANY power to the federal govt. The Supreme Court frequently cites the FP as their Constitutional authority and explanations. As the “sales documents” for the Constitution, they are extremely binding.
While not be insanely tied to a 15/16 strict formula, that FP illustrates in general FOR PURPOSES OF CONVINCING US TO GIVE THE FED GOVT SOME POWER, that its non-military enumerated powers are to be a tiny (1/16) share of its total expenditures (which frames the totality of its non-military functions). If we had a war and the military costs rise, then the 15/16 would necessarily INCREASE that year and for the years we pay off the war debt. However, it is the NON-MILITARY spending that must be kept within those (non-war-years’) budgets, so as to insure the fed govt does not grow beyond its originally limited powers. Note that I would guess that 1/16 to be about $50B but Obama is spending over $3T.
The FP illustration also helps clear away the 100 year Progressive fog and allows us to focus on the fact that our Republic is a cooperative. Each of us is free to pursue our own happiness, but we have these needed common costs (15/16 military) that we must allocate to all citizens, just like your condo does – i.e.,. on the basis of each person’s RELATIVE IMPACT ON THAT COST, which in the case of the military is an EQUAL DOLLAR SHARE, since no-one impacts the cost of the military more than any other person.
If we were able to lower our military budget (while increasing its effectiveness) a strictly monitored non-military budget might have to exceed the strict 1/16 limit. The focus is to insure that non-military spending does not exceed the SPIRIT of the clear (to me) words of the Constitution.
You ignore the history and clear fact that direct taxation was the least favored revenue raising method to the Framers. They cited Holland, where it was well known that any more than a 2% direct tax was absolutely ruinous.
To say that the Framers strongly favored direct taxation, but merely all but wrote it out of the Constitution on superficial political grounds is not credible. They were virtually unanimous in the complete rejection of direct taxation, having twice written that direct taxation must be apportioned among the states.
You harp on accusing us of “being worthless deadbeats because we want you to pay our tax.” This is not at all true. I expect everyone to pay as much tax as they can without ending up bankrupt and unable to pay anything at all. You definitely want all or nothing, and expect the remainder to pay for deportations. How wonderful and loving!
The US has failed miserably under the IT/Marxist state you so greatly admire. We are hopelessly bankrupt with 16 trillion in debt and 100 trilion in unpaid obligations. This is not success, but total defeat.
All vitriol and invective aside, we are in full agreement that the welfare safety net state is a failure. Half the US population pays nothing. We only disagree on the remedy.
I say let’s return to the proven success of indirect excise style taxation where each citizen pays as much as they can without total loss of their ability to live and improve their lot (and thus collectively that of the nation). This was the wisdom and genius of the Framers.
You prefer a totalitarian police state where those who come up a dollar short of an unplayable total are essentially put to death by seizure of all their belongings, eviction, and deportation. This is the disastrous authoritarianism of Kings, despots, and tyrants.
Let’s give you the benefit of the doubt.
Walk us through the complete wonderful world of the YS plan of implementation under the present Constitution.
First, tell us the total tax amount the Congress will levy.
Then tell us what each state must pay – use one state’s apportioned amount as an example.
Next, tell us upon what each state will place the tax, and how it will be collected. You seem to favor a capitation/poll tax.
Then, tell us exactly what each state will do the the deadbeats who may become ill, or have accidents, and comeup a couple dollars short. Make it clear how a family of four will suffer if they only come up with three “fair” shares.
Tell us how each state will make up their share if many or most of their deadbeats simply do not have the full amount and cannot pay.
How will loss of vote guarantee that the state will come up with their full federal share?
What will the states seize from the deadbeats? Who will make up the shortfall in the state?
Exactly where will you deport US citizens?
FT supporters (at least the real FT supporters, not necessarily the HR 25 folks) are today’s tea party. You have this wrong too.
With a legitimate FT/NRST, the tax will be largely offset by the increase in take home pay to the average employee. its Work
I never said the Framers wanted DIRECT taxation. Whetehr thye liked it or not, they knew that it was politically unfeaseable. While I agree that people do not want to pay their fair share (out of personal greed), I submit that DIRECT taxation is the right answer and Your Share is the right Direct tax. It does not ignore one’s fair share of the total cost, but faces it directly and transparently – in an honest and open way. Indirect taxes (where some pay more than others) do not properly apportion to each citizen his fair share of the common costs. I know you don’t want top pay your fair share, but that alone doesn’t make your answer correct, nor does the Founders’ dislike for Direct taxes (unless apportioned to the States based upon population). After all, we have had direct taxation (un-appoprtioned) for 100 years now and the Republic has proppered (until now) – without the UN calling us a slave nation.
Do you think you have the right as an American to walk into a nice restaurant, order a big meal and then tell the owner that you can only afford to pay for 1/2 of the meal? You are telling us that you have that right. You want a military to protect you but are willing to pay only what you afford. I say, go feed and defend yourself with whatever you can afford to spend. I don’t have a Constitutional obligation to feed or defend you.
There you go off again. I am the first to say thge IT must go. I merely countered your rant that the IT has resulted in no progess and slavery. It did not – we prospered in spite of a badly written IT. Again, I do not favor the current IT, but would like to replace it with something that makes more sense, easy to comply with, fair to all citizens, promotes economic growth and minimal compliance burden. In the short term, a greatly simplefied IT will do and in the long-term, the very best answer is YOUR SHARE.
You kjeep putting (incorrect) words in my mouth. I do want you to pay your full share eventually – actually, step 1 is getting EVERYONE to pay something. I don’t know why you keep insisting that deportation is my 1st step whwn I have told you that my 1st step is loss of voting rights.
The US has not gone under BECAUSE OF THE IT – is has gone under becaue of the lack of integrity of the people we have been electing to Congress. They have kept themselves in office by spending our money to buy votes.
You combine 2 thoughts in one. First, while I agree the welfare state is a failure, my objectionj to it is that it is NOT CONSTITUTIONAL – the fed govt is not empowered to redistribute wealth via the nearly $1T of pure welfare programs. The progressive IT also redistributes wealth and is thus un-Constitutional (the 16th amendment, notwithstanding). Congress’ vote-buying included taking all those people off the tax rolss – leaving the Republic in grave political and financial danger. I don’t know mhow you would end the welfare satate – I am sure my solutions will differ greatly from yours.
Exactly who is it that will decide how much you can afford to p[ay in taxes, you or me? Will you have independent juries to decide each case?
Phelbers, you do not come across as tghe least bit credible when you write “You prefer a totalitarian police state where those who come up a dollar short of an unplayable total are essentially put to death by seizure of all their belongings, eviction, and deportation. This is the disastrous authoritarianism of Kings, despots, and tyrants”. We have had an IT for 100 years withg the IRS siezing assets (and they should) and putting people in jail for tax fraud – I know of no deportations for tax fraud or non-payment. And you go way over the top to call this “essentially put to death”
The Tea Party’s ContractFromAmerica REJECTED HR 25 as one of its core 10 principles. It did not ask for your version of the FT. It opted for a 1 liner which asks for a tax which is simple and fairt and contains no more the the app. 4,500 words of the Declaration of Independence. Let me be sure I understand you version of FT – a credit only Prebate, Seller Liability only and employers are forced to give employees a raise for their share of the payroll taxes. Its economics are still hokum.
I would have YS function on a federal basis, EVENTUALLY. For purposes of discussion, consider using it immediately.
Obama’s budget (before huge increases in the future) divided by 320MM = $13,000 for every man-woman-child. You will see how quickly the population encamps itself in Congress to make get those rascals to observe the Constitution.
If they get the budget down to match current tax collections, that’s about $8,000 perperson – still too high. I guess aconstitutional budget of about $700B would create a $2,200 tax per person – certainly more manageable (and the economy would grow immensely).
Because YS is not expected to be voted upon in Congrewss any thime soon, I have not spent a lot of time thinking about what to do with non-full-payers. Step 1 is that those who do not pay their full share lose their right to vote.
Any shortfall in revenues have to be made up by the others (so at first an estimate of shortfall would have to be made and then adjusted later).
After re-reading your post, I would add that I am not suggesting that what Hamilton wrote in FP # 34 is a mechanical formula which must be followed LITERALLY until the end of time.
What I believe it means is that the SPIRIT of the Constitution is that, other than the military, the FED GOVT’s ROLE IN OUR REPUBLIC IS MIMIMAL! For that time 1/16th likely was sufficient. If it take a little higher/lower ratio today to complete the fed govts’s MINIMAL role, then so be it.
The SPIRIT, INTENT and DISCIPLINE of the Constituton must be maintained (not mechanical insistence on 15/16 and 1/16, but using those figures should be used as a principled suideline when overseeing (budgetin) the fed govt.
Direct taxation in the key to redistribution of wealth. Remember, redistribution starts with the federal government first taking wealth. Only then can it give it away as it does now to buy votes. YS guaranteed the first step.
I have already addressed the restaurant scenario. It is not a valid example I fully agree that I have no right to order a big meal and not pay for it. I would never do so. It is a crime of commission – malem en se. Inability to pay YS Direct taxation, on the other hand, is malem prohibitum, not a voluntary act committed, but rather in impossibility, even in your best case estimates.
The Framers realized that direct taxation was the key to ruin. They had witnessed it, and recognized it throughout history as a disaster. They knew the poorer states desired it to rob the wealthier states, and put apportionment in the Constitution to discourage it. Apportionment worked well to dissuade such redistribution schemes, until the fraud of the IT came into play.
The framers knew that direct taxation schemes, such a YS, would destroy the nation before it was even started. They had to have a plan where each person could contribute as able, and that taxation plan was indirect taxation. This worked exceptionally well, and allowed unprecedented advancement. Direct taxation, specifically the IT, has allowed the welfare state to flourish, as would the YS, even with a defense only budget.
You must work us through the entire YS scenario that accounts for deadbeat loss-of-vote, property seizure, eviction, and deportation (still, you dodge telling us to where and how you will deport, which is the only actual distraint you have) and sharp upward reassessment to those who are financially able to pay. vThis is the heart and soul of YS – you have to give us these exact details.
Spell this out precisely. Show us how each state would add the deadbeat amounts to the paying citizens’ tax bill, and inevitably cascade them into ruin in a runaway government seizure of all wealth. This IS YS – you know it, but are avoiding the reality of it.
YS would destroy a family that could only afford 8799°° of their 8800°° tax. Indirect taxation would keep these people, and allow them to contribute as much as financially possible. This is the wisdom of the Framers, not YS.
A legitimate NRST will end the welfare state. It will make earning a dollar no longer a crime. People will actually go do some constructive work, and receive money for it. When they spend some of that money, some of it will be taxed.
Further, if revenue was not realized, welfare would be impossible to pay in full, aiding its demise. But, knowing that they could earn and keep their money might encourage work.
Also please note that I never even hinted that HR 25 was supported by the tea party movement. HR 25 is badly flawed. But, a legitimate NRST, seller-liable excise style, non-cash prebate, and so on most definitely is viable and favorable to legitimate ‘tea party’ minded Americans. After all, it’s what allowed the US to prosper until the failure of the IT and the welfare state.
Also, it is you who advocate deportation. The IT only seizes assets, and jails those who come up short. YS is the plan that, in your very words, deports. The credibility is mine in quoting you, not yours by denying what you say.
Direct Taxes do not per se redistribute wealth (YS does not) – it is Congress that redistributes wealth via 1) welfare programs, and 2) “Progressive” taxation, benefits, etc. Congress can still trake all of your indirect taxes and throw them into even more welfare programs.
Your voluntary, willful acts consist of your continuing to live in America while knowingly being protected by the military – but, you don’t pay your fair share of the cost of that military.
I believe it is you who avoids reality and rationalizes the world in his own way, in a desparate attempt to avoid paying your bills. The total dollars necessary to run a Constitutional fed govt are available in the private sector, whichh (the top 1/2) currently pays for a federal budget which far exceeds Constitutional limits. It can be done.
I would not punish the guy who pays only $8,799 out of a total $8,800 share. Worst case, he loses his vote. Which auditing agency gets to decide on how much he gets to keep in your world?
How doesd an NRST end the welfare state/ We currently spend almost $1T on 70+ welfare programs – these are not repealed by HR 25. Then, what about thew Prebate’s giant new welfare program. It is beyond me that you sayu the welfare state is over.
Families can now earn upto appx $50,000 without paying IT. They must be incentivized to work by the ohase-out of welfare, unemployment insurance, disability, etc.
A shortfall of redvenues will not stop our weaklings in Congress from continuying to throw ever more of our money at the “poor” (incidentally, go look at Heritage’s site – article by Robt. Rector on the lifewstyles of trhe “poor”).
You are wrong and deceptive yet again, to say that the Tea Party (which clearly rejected HR 25) favors your still-fatally-flawed-modified HR 25. You have no authority on which to base that comment. I quoted you the ContyractFromAmerica principole that they want a “simple and fair tax with fewer words than the 4,500 words in the DoI” – how do you translate that into support for an NRST (I think that would still be much, much longer than 4,500 words.
You really argue with yourself alone. I keep saying (which you refuse to process) that loss of vote is my first step.
You insist that all I havce to say is deportation – this is tiresome. I don’t discount deportation, but only as a very last resort. Yes, if someone pays no tax, engages in criminal activity, etc, I might begin to consider deportation. Your condo will deport you from the condo if you don’t pay, more easily than I would deport you out of the country. If there were good reasons for youy not to pay, the people might consider letting you remain in the country (without a vote), but then again, the taxpayers must decide what to do with non-taxpayers. Being too lenient only enc ourages negative behavior. let those who pay tax decide on the fate of those who do not. Those who VOLUNTARILY chose to live in America while accepting the benefits of the military should pay for it.
Loss of vote – I have always fully and clearly acknowledged that you say it. I have never denied it, yet you repeatedly say I do. But, it is only your YS step 1 leading to destruction of lives and deportation.
But you will not tell us how loss of vote gets the cash to the federal government.
The federal government must still get the money.
Since you won’t walk us through the YS money trail, I will.
An all American family of four earns 45,000 per year. Rent/Mortgage = 12,000. 33,000 left. ObamaCare/Health Insurance = 14,000 per year. 19,000 left. Food, 10,000 per year. 9,000 left. Car, insurance, fuel 4,000 per year, 5,000 left. Clothing, 1000 per year, 4000 left. YS 8800 per year, -4800 in debt!
This family can only pay 4000. So, 4800 has to be paid by someone else in his state. Who will it be?
The government will then take away the vote from the two heads of household.
Will this suddenly get the other 4800? You are saying it will. It will not.
Multiply this by half the state’s population.
Will the state and the federal government not attempt to collect the full fair share?
Of course, they will. The good taxpaying citizens will not stand to have their ‘fair’ share suddenly be doubled!
They will demand that the federal and state government assess, levy, and seize the deadbeat two working parent families’ property. First, the car. Then the house. Wages will be garnisheed. Still no money next year – the family is destroyed, finished, unable to earn a dime.
The family will be homeless, lose their jobs, and still the state will get nothing.
They will be a drain on society.
Then, you will deport them to save the country from the costly drain of one hundred million other similar deadbeats (you still have not told us to where you will deport them – why not?).
The bottom line with YS is that it is the very antithesis of freedom. Freedom is freedom from forced government intervention in our lives. We can only have it with excise style taxation.
Remember, direct taxation means direct federal agent involvement in our daily lives. This is not freedom.
The legitimate bills will get fully paid with indirect taxation, with the possible exception of all out war, and of course, the welfare safety net state.
This was the case for the first 160 years of the US. It can be so again.
There is no need to throw out the Constitution because criminal politicians and judges lie about its clear text and intent. YS throws it out in wholesale fashion by rejecting the wisdom in taxation so carefully put there by the Framers.
They knew that indirect taxation has self-regulating effects. The present welfare state is only possible with direct taxation (the IT). The IT is the single major source of human misery in the US. The fear and expense of complying, under threat of imprisonment, makes us absolutely miserable each year. There is no freedom with the direct IT. “Flat” IT, or any other IT scheme, is just as destructive of freedom.
There can be no freedom with direct YS taxation either.
To say that a person born to US citizens has voluntarily chosen his parents, and has voluntarily chosen to be a US citizen is typical double-speak talk for a pro-IT / Direct taxation administrator/ ‘professional’.
These same double-speak IT direct tax lovers relish and adore the total power it gives them, and say we file returns ‘voluntarily, of our own free will, with no legal requirement.’ This is how the courts always rule so the government can use our testimony in them against us (because the Fifth Amendment absolutely bars such testimony if compelled by law, but not if it is given freely with no lawful mandate whatever) in any criminal case. This is Dark Age stuff, and direct taxation in any form is anti-American and against the Constitution.
Perhaps I was not clear enough for you. When I said “Loss of vote is a FIRST STEP”, I did not mean for you to infer that more steps will follow and that ultimately I would deport ALL people who don’t pay their fair share. In fact I would likely deport only those who do criminal acts(as I explained previously).
First your family (just like everyone else) needs to pay it fair share (your $8,800). Then whatever they have left over is what they have to spend on food, clothing, sheletr,. insurance etc. Our system would then properly motivate people to work harder to achieve the things in life that they desire. If they want more things, they need to work harder – what a concept!
Pick any country you like to be deported to. It is irrelevant which one – Mexico & Cuba come to mind first.
Again, I think the currrent IT is terrible, but it does not enable the welfare state – Congress does.
Indirect taxation does not at all prevent the welfare state. The govt can use its Indirect tax collections for new pure welfare programs, more easily because Indirect Taxes are hidden while Direct Taxes (YS) is patently obvious, while not aggravating taxpayers every time they buy something.
What it comes down to is that want freeddom from paying your fair share of our common costs (primarily the military). You somehow feeel that you are “entitled” to military protection, but not only do you not want to pay your fair share, you don’t even want to receive the bill directly (you want the govt to do a giant garage sales). This ignores reality – you are creating a fantasy world. I think it is pointless to continue this dialogue with you. You live in your own special world of fixed and impenetrable absolutes (Direct taxation is anti-freedom, etc) and you will not allow other thoughts in. Let’s just it at that – you think Direct taxes are anti-freedom while I believe YS is the most liberating tax system we could have!
The Framers were simply lying, they hated indirect taxation. You say they truly wanted and deeply desired YS, the perfect tax scheme, but just couldn’t convince the ignorant American public that perfection was so much better than freedom.
The United States did not at all succeed without direct taxation. we have been lied to all these decades. We did not at all advance better than the Belgian Congo, or Ceylon.
You are right. The framers are dead wrong. We need a police state, not freedom. Your definition of freedom I’d armed IRS agents at my door
The Framers were simply lying, they hated indirect taxation. You say they truly wanted and deeply desired YS, the perfect tax scheme, but just couldn’t convince the ignorant American public that perfection was so much better than freedom.
The United States did not at all succeed without direct taxation. we have been lied to all these decades. We did not at all advance better than the Belgian Congo, or Ceylon. We lost all our wars until the IT was fully in force.
You are right. The framers are dead wrong. We need a police state, not freedom. Your definition of freedom isarmed IRS agents at my door, levy, seizure, deportation to North Korea.
History is wrong, and should be ignored because Stephen Eldridge, IT, Framers corrector,and direct tax expert, says so.
I apologize for being deceived by written history and the Constitution. I was duped by the success of indirect taxation. We need a totalitarian state with YS. North Korea is the model. YS is North Korea. That is real freedom, no question.
There, there is no vote – they can’t pay NKYS – and Kim gets all the cash he needs.
You are intolerable. How dare you claim it there is “NO DEBATE that YS is DEATH”. There is no debate ONLY within the strict confines of your mind. You live in a world apart from the rerst of us (even if some people don’t like YS – the overwhelming majority of Tea Partiers to who I have lectured on tax reform have loved YS, particluarttly the realization that we can ULTIMATELY get the bill down to about $2,200 per person.
For you to continue to claim that I say the Framers wanted YS (after i have repeatedly said that is not true) to me reflects a mental abberation/defdiciency on your part. I don not know what else to say. My sense is that (whatever the Founders felt privately) they knew the public favored indirect taxes Z(which which make some pay more than others) and politically rode that bandwagon to reach an agrement.
The US succeeeded even more with Direct taxation. Indirect taxation did not prohibit our early success but it is simplistically incorrect to say it was the driver of our early success.
Your refusal to pay your share of the cost of the military and your unwillingness to receive a bill for it, strike me (in my humble amateur opinion) as emotionally hysterical avoidance of a reality that terrifies you so much that you can’t deal with it – receive your bill like an adult an pay it. This don’t-send-me my-bill-just-go-have-a-garage-sale concept is bizarre.
To me YS is the m ost liberating tax system we can find. I do think this is a better idea than that of the Founders.
Your jumping to North Korea demonstarates ranting hysteria – you need to get a grip.
We have had direct taxes for 100 years. While I don’t tlike the current IT, it has not yet impeded great growth (although it is currently and should be fixed). We do not have NK tyranny in this country. We must pay our share of comon costs and some IRS needs to be empowered to collect.
It is not only Stephen Eldridge but 3/4(?) of the States that voted to overrule the Founders and impose Direct taxation (without apportionment) – I agree with their principle of Direct taxation, but not with their motives and intent
(to punish the rich robber barons).
Similarly, they voted to overrule the Founders on elections to the Senate (I disagree with that decision).
I was driving today thinking further on your “passionate” defense of indirect taxation and offer the following.
I do not lnow offhand the size of the fed budget pre-1913, but I am sure it was al lot less than today’s budget, even AFTER accounting for inflation. My point is that no such system could function to accomodate today’s level of spending, collections or even a proper Constitutionally limited budget. It’s just too much of a task to ask of such taxes.
I believe we had back then excise taxes and import duties. Such a system compares to European style VAT but one which is NOT passed on to consumers as VAT, but as merely higher prices (equal to the pre-VAT retail price plus VAT). As such, it would be even less transparent than both VAT and today’s IT. Lack of transparency is a major point for me (the IT has lost a lot of its transparency because of IT WITHHOLDING).
Maybe you are not on the wrong track. Letting my imagination run free, I came up with a simple INDIRECT tax system that might work. To keep it simple, we would impose a large excise tax ONLY on food for human consumption. Thus everyone would pay tax on the food (or any edibles) they would need to survive. This keeps it simple in that no other product would be taxed so we could focus on food. We could also help people by having lower rates on good foods (fruits, vegetables, chicken, turkey, fish – especially those served broiled) and higher taxes on foods that are are bad for us (fats, sugar, meats – especillay those served fried). In that way, we would also be helping keeping medical costs down and improving peoples’ longevity. If you want to pay less tax, then eat less. As an alternative to this plan, we might tax every toilet flush in all homes and businesses (coin or credit/debit card enabled). Under either tax, we would need a way of finding taxable transactions of US citizens while they were outside of the US.
You ought to at least consider the wisdom of the Framers in their objection to direct taxation, and their strong favoring of indirect taxation.
You do not seem to understand that they realized, correctly, that the total cost to defend this country depended not upon each person, regardless of age, ability, health, property ownership, or right to vote, paying precisely the exact same dollar amount in taxes, but in the treasury getting a dollar amount in total sufficient to get the job done.
You would happily and readily deport the marginal producers (those who may by reason of lesser ability or lesser inherited wealth) who might come up a few dollars short of their YS fair share, to Cuba (after first, of course, in your benevolent and caring humanitarian gesture of denying them their vote). You also do not give us the cost of such a declaration of war on Cuba with a forced deportation in the 100s of millions. The entire world would come to Cuba’s defense.
The Framers knew history, and the evils of Devine right rule of royalty and their own YS slavery / feudalism, that this was the key to human misery. They knew that the genius of the people, given freedom from the tyrannical rule of direct taxation, could use their God given abilities and talents to advance their individual position in life, at their own pace and capabilities, and thus that of the nation collectively, by paying taxes at an equal RATE, not an impossible equal amount.
Indirect taxation is the only answer to the Marxist police state. YS is the sure path to totalitarianism, and the absolute end of freedom.
You again and again insist that I want to evade taxes. It is tiring, and false. I do not, and cannot see how you have rationally decided this. Your error is in having determined that the USA cannot survive unless every person here pays exactly the same dollar amount in taxes, or must be eliminated (deportation to Cuba is as much a death sentence as deportation to North Korea). I use hyperbole for effect only – it would cost too much for you as great leader to ship 100 million US citizens who came up a dollar short to NK, when Cuba is only 90 miles away.
If you are not simply using your own sense of rhetoric, I agree with you to some extent on your (not mine, I favor that of the Framers and the Constitution) indirect taxation scheme.
With a good-for-tax-only prebate, the items for which it could be used could be limited to healthful food, medicines, utilitarian clothing, and so on. This would give the lobbyists a field day with Congress, of course, and they would want Pepsi, beer, and lottery tickets (and tax attorney fees naturally) to be defined as ‘food or ‘medecine’, either for the body or the soul. (Pepsi, for example, even today is food stamp approved ‘food’).
You still reject the Framers wisdom of indirect taxation, falsely asserting that they most strongly favored YS but for an ignorant American populous wishing only to evade all taxation). It made this country by allowing all free persons to contribute to their ability, even though that may not have been exactly equal to yours. Your having earned a high upper class living by finding ways to minimize the tax that your wealthy clientele paid (or did you succeed so well by actually figuring out how to have them pay the highest possibe amount to ensure that the Defense Department got the most money it could?) has biased your thinking away from the obvious success of indirect taxation to the falsehood that only direct taxation, and the resulting need for highly paid tax attorneys, is best. You would naturally desire a YS system that let you glean high fees from preventing deportations.
The people did not favor indirect taxation, the Framers did. You claim to be able to read their minds, and tell us that they favored direct taxation, perhaps privately if not publicly, and that you are far more knowledgable and intelligent than any of the Framers because you favor YS, and they did not, despite your denial of this clear theme of your explicit statements.
Here your misunderstanding again is that no country can survive unless the exact same equal dollar amount is paid by every person regardless of age, health, ability, or inherited wealth.
You would deport a 2-year old to Cuba if their parents were a dollar short on the child’s ‘fair’ share. If that child cannot pay his equal share, what right does he have to remain under the protective umbrella of the US military? None! Send him to Cuba! Let him work in the cane fields to pay his way!
Since YS was not in full force and effect during WWII, we simply had to have lost. We have been propagandized ever since we lost to Germany and Japan. We are not speaking English – we only think we are! Wir sprechen nur Deutsch, oder, Nihonga wakadimas! You continue to sidestep this simple reality of indirect taxation’s success (the war IT was peanuts compared to it).
I give great consideration to the wisdom of the Founders. I do not discount the then practical realities of obtaining a compromise agreement – something they could get the people to agree to. However, that does not foreclose my challeging and analyzing what they said. Direct Taxation is more transparent than Indirect (YS is the most transparent) and can be made to be the fairest (YS).
I understand fully, the earlier costs of the war were of necseeity required of people according to ability to pay (and some charitably gave more than others by direct contribution to the thewar effort). That does not mean that going forward, some citizens must pay more than others for military protection. To so so is WEALTH REDISTRIBUTION – aprinciple antagonistic to our Republic’s intent to provide us with freedom.
Phelbers, I find it difficult and useless to try to communicate with someone who appears to be incapable of processing simple and clear statements. Perhaps you astre a Saul Alinsky radical who must demonize and mis-characterize your opponents statements. Yet again, to twist my very clear words. I have siad repeatedly and clearly thatdeportation is my very last resort and I would depose those who commit criominal acts, etc. For you to say that I would “happily and readily deport… those who comne up as few dollars short” is insane, dishonest, Alinsky-sh (may your intellectual integrity RIP). I even said, for them I “might” consider loss of vote. You inanley critize/mock my talking their votes away – OK genius, you go live in a place where there majority pays no taxes or a minority pays all of it,. but every deadbeat (and those wjho do not pay their fair share) get to VOTE – it won’t last too long (sadly that country is today America, which will not survive this current no-taxes but vote situation.
Have ewe invaded Mexico over the einvasion of 12 million of its citizens illegally into this country. Who said I would deport 100 Million people – YOU, not me. You are an intolerable Alinsky-ite with zero intellectual honesty.
As to your last blind point. You are incapable of looking at yourself. YOU refuse to receive a bill for YOUR fair share of the cost of the military that you voluntarily accept by living here.
You appear incapable of reading what I wrote – you add whole lot that I never said.
NO, NO, NO. I offer no PREBATE – EVERYONE PAYS HIS FAIR SHARE!
NO,NO, NO. I said FOOD, ONLY – we ust keep it simple (compliancxe and audit costs for Food, Only would still greatly exceeed YS, so don’t make it worse or more complex.
No matter what I say to the contrary you still insist that I claim the Framers favored YS. I think you need to get some neurological testing done. I don’t know if its dementia or what else.
My thinking is not at all biased. I believe that everyone living in America’s condo needs to pay their fair share of tghe national mantenance fees. If someone can’t afford it, thhe Foun ders intended for PRIVATE CHARITY (i.e., not the govt0 to help them.
I see that you missed the whole point. Under YS you don’t need tax attorney’s (nor would yopu need them in a very simplified Income Tax.
This is just more of your nonsense. I never claim to be able to look into the minds of the Frammers and never claimed they favored YS or Direct Taxes) – you in your Alinsky fog came up with that.
And there you ggo again saying I deport a 2 year old because his dad was $1 short.
I just realized that you never commented on my alternative indirect tax system – an excise tax on every toilet flush (with policing of non-pay-toilet-evacuations).
Phelbers, It appears foolish to continue a dialogue with you. You are either demented in general, Alinsky-demented or alternatively, you are just an imp trying to get people riled up. Hereafter, If I respond to your ravings, I will do so solely to point out the insanity or irrationality of your arguments, for the benefit of others. I wish you well.
I think you may be mistaken with your fundamental underlying premise that each person must pay the very exact same amount for the country to defend them.
The error is that it costs no more for the defense department to defend the US whether there are 300+ million people here under a NRST, or only 100+ million here under YS, after loss of vote and deportation to Cuba (actually, the argument can be made that the war with Cuba and the rest of the world that YS forced deportation to Cuba will declare will make it exponentially more expensive under YS).
There is no link between the number of people here and defense costs. To leap to the notion that each person owes an identical amount is not reasonable.
A better link would be to tie a persons net worth to their defense tax bill. The billionaire has far greater assets for the military to protect, and thus, he has a greater responsibility than the pup-tent or cardboard street dweller, or the average two-minimum wage earner family of four.
The very best way to make a wealth-proportionate equitable match is to readopt the indirect taxation of the Framers. That way, each person will pay taxes proportional to their expenditures for wealth accumulation as they buy things. Instead of getting zero from 150 million or so deadbeats (which is the case now under the direct IT), the US would get 25, 50, 75, or 90% or upwards from each of them. The Framers knew well this truth, and founded this country and wrote the Constitution in that very reasonable vein of thought.
It is you who brought up deportation to Cuba. I merely take it to the only rational conclusion. How will you get the deadbeat’s share unless you seize his property or garnishee his wages? Tell us please, how will vote loss and seizure of assets get the tax money from those who cannot pay the full ‘fair’ YS? Once his life is destroyed by this inevitable YS (or any other flawed direct tax scheme) necessity, you must deport, to, as the IRS says, “prevent further tax deficiencies”. The remaining good, honest, full YS taxpayers will demand no less. They will not pay for the deadbeats, shares.
I didn’t comment on the toilet flush tax, because I do not believe you are serious about it. Unlike yourself, I can take a little hyperbole, and laugh about it.
But, very tragically and sadly, you ARE serious about YS, so I concentrate on detailing its fatal flaws, in an honest effort to dissuade you (and hopefully others who may not have given it any real considered thought) from being transfixed into becoming YS bandwagoneers with its at-firat-glance appeal. YS simply ignores history, the Constitution, and the human misery of direct taxation so much in the forefront of the Framers thinking when they wisely all but wrote direct taxation out of the Constitution.
Your comparison of YS forced deportation to the illegal Mexican immigrants if not reasonable, nor at all applicable to the my well reasoned rejectability of YS. The Mexicans come here voluntarily, of their own free will, not because of an officially declared Mexican government deportation policy. YS would, ultimately and inevitably, force hundreds of millions of US citizens at gunpoint into Cuba (you give no alternative way that a YS government could come up with these deadbeats’ full ‘fair’ share), quite a different scenario.
Thank you for letting me know of “my error”, Master Phelbers. I am sorry that your financial/mathematical skilss are so deficient. Perhaps your accountant can help you to grasp the fact that even though it may cost no more to defend 300MM vs 100MM, that does not IN ANY WAY diminish the fact that each persopn’s fairly allocable share of that cost is equal because each of theem have the same impact on the cost (i.e., either equally zero or equally 100%). The more citrizens the better – each person’s fair share (as desribed above) share is smaller (but still equal).
We have been over this silliness before. Far and away, the most important6 asset the military protects is our individual FREEDOM. One’s net worth has no impact on the TOTAL COST – we are AL:LOCATING total costs.
YOU chose to be fixated on deportation for millions – I am NOT. I would deport only the worst of the non-taxpayers who also proivide other good reasons for deportataion (e.g., repeat criminal acts).
Not from , but somehow you got into your head and cannot get off the premise that I MUST get 100% from every citizen or deport them. IF a person pays as much as he possibly can, my plan is not to to the impossible and force blood from a stone – that shortfall would have to be made up by others (and society decides what to do with those who do not pay their full fair share).
The toilet flush is a (hopefully funny) but logical way to get everyone to pay tax in somewhat equal shares (but not nearly as simple, inexpensive and adminsterable as YS). My ALL-FOOD- ONLY excise tax (NO Prepbate, NO-Exemptions) is similar to the toilet flush excise tax (but not as funny).
Well, I am not surprised that you think your objection to YS are so “well reasoned” – I don’t. You summarily dismiss the many Tea Party people who liked YS as just a bunch of superficial morons, with skills inferior to your own – I will defend to the death, your right to dream whatever you like even if it is dead wrong!
It does not cost any more to defend Warren Buffet’s house than it costs to defend yours. Again, I believe in equal tax dollars for all BECAUSE EACH PERSON IMPACTS TOTAL COSTS THE SAME AS EVERYONE ELSE – a basic cost accounting concept – not some theoretical political ideology!
The consistent theme that I get from your opinions is that you want some rich person to pay a good portion of your fair share. Warren Buffet has to pay some of your bills just because he can afford it and you can’t.
You apparently suffer from Obama’s general demenetia (or utilize the same Alinsky deceptive word tactics) of “fairness’ and “social justice”, words we all come to understand as Socialist clap-trap to make wealth redistribution sound a little less objectionable (you delude yourself that your wealth redistribution springs from a “well reasoned opinion”).
Why are you so afraid/ashamed to look yourself in the mirror and and honestly admit what you are – a Karl Marx/Willie Sutton/BHO SPREADER OF WEALTH! Stop hiding in the closet of intellectual clap-trap. Be proud to be the Socialist you are. I know its embarrasing to admit one is a wealth redistributor (after all, it’s worked out so well historically, hasn’t it????), but if you stay within the large circle of Progressives in America, you will feel confortable and unashamed.
BTW, you never answered my question; Will you have a “people’s Committee” to decide how much each person can afford to pay in taxes? How much each person should pay for food, clothing, shelter, medical care, education, etc. The control over people’s lives would far exceed even Soviet Communism. Or would you try to simply put the entire burden on classes on people who can afford to pay taxes and eliminate the entire “lower” classes from responsibility to pay taxes (but still let them vote). Any system you come up with will have to make some soirt of value judgement as to how much each American can pay – and that Comrade Phelbers, is what scares me about you and your Socialist heart. YS does not fall into the political trap of vote buying (nor Socialist dementia).
At the Constitutional convention, Charles Pinkney of South Carolina moved to make slaves fully equal to whites for enumeration purposes, and that direct taxes be apportioned to population, not to the states. This was so the poorer southern states could more easily drain wealth from the slave free northern states using direct taxation.
His motion was defeated 8 to 2, with even Virginia and North Carolina, both slave states themselves, voting no.
They knew full well the danger of direct taxation, and in particular poll (capitation) taxes and that such taxing schemes had but one outcome – absolute despotism and loss of freedom.
PLEASE READ THIS NEXT PARAGRAPH CAREFULLY
Only those who stand to personally gain from such tyranny at the detriment of others, and freedom, favor direct taxation – the government officials, agents and officers, and the legal establishment who enforce and administer, or otherwise make their living upon inflicting direct taxation misery on others. At first glance, such treacherous power wielding is attractive to these so inclined, but ultimately will lead to their own destruction, and th.at of their country.
PLEASE REREAD THE ABOVE PARAGRAPH AGAIN
From your position as just such a person, it is easy to see why you would be so enamoured with a direct capitation tax plan. Your lifetime of intimate involvement with, and dedication to, the income tax explains it.
But, to favor such a ruinous idea is to ignore history, the reasoning and wisdom of the Framers, their clear and cogent recorded thought processes at the Convention, common sense, and the success of this country without direct taxation, and the freedom we once had with indirect taxation.
These essential facts are hidden only to those who do not read, or cannot comprehend, the history of this nation.
Indirect taxation does not create weath, it simply allows creative enterprise to proceed at its best possible pace by not placing the heavy yoke of direct taxation around the neck of the masses.
I pay far in excess of what you have dictated to be my ‘fair’ share. And, I would pay much more, happily, if freedom were again here. Nothing stops me more than the threat of armed officers, compelling testimony that can and would be used against me in any criminal case, should these government administrators so choose. This alone is a total abomination and violation of the Constitution.
A return to indirect taxation, which allowed freedom to once flourish here is what I desire, not the destroyer of freedom, YS.
You never asked the question, but I answer it as did the Framers. Freedom – which more precisely defined is freedom from direct taxation – will determine what amount of taxes we will pay, not armed agents who levy, seize, remove suffrage, and deport to Cuba. It does not take a committee. The Framers knew this. It only takes freedom, and indirect taxation of equal rates, not equal amounts, to guarantee both freedom and full funding of the legitimate needs of the country.
Your 1st para. makes no sene to me. If Pinckny wanted a direct tax by population (I assume you mean to each person) the slaves would have to pay tax but had no money to do so. Thus, I fail to understand your claim that the southern states would have been able to drain money from the northern states by such direct taxation?????? How would any shortfall have been made up – by the North???
Let me see if I understand your next point. 2 other slave states were worried about slaves losing their freedom by having to pay direct taxes???????
I thougfht the 3/5 rules was done for purposes of assigning each state a number of Representatives.
Phelbers, you truly reside in your own galaxy. You demonstrate the most arrogant ignorance when you demand and repeat that someone must read carefully, material which is nothing more than your ranting rhetoric which I evaluate to be baseless drivel.
My lifetime involvem,ent with IT (which I want to repeal) does not make me enamored with Direct Taxes. It has ADDED to the cost accounting portion of my accountiung training, to help me arrive at a simple fair tax system with fewer than 4.500 words (which is the least costly and intrusive system) – i.e., exactly and the only plan which meets the Tea Party’s ContractFromAmerica.
Freedom does not allow you to rob or kill someone else, nor does it allow you to avoid paying your bills. Surely, you have more freedom if you can kill, rob or avoid paying your bills, but there are proper limits on total freedom.
You say you pay more than what I define as your fair share (that’s $13,000/yr/pp which your friend BHO is currently spending). Doesn’t it make you angry that you are paying more than that – I would be very angry (I have had Liberals tell me they make so much money that they do not care how much tax they pay).
I don’t understand your sentence about what stops you (stops you from doing exactly what???).
Wouldn’t you be happier paying YS via a monthly debit to your checking account (no tax returns, everone pays, NO IRS, etc). You never ever have to spend aq lot of time considering the IT implications of any act, purcahse or investment. You pay less tax. Now you have the highest degree of freedom envisioned by our Constitution – that is, after meeting your individual responsibilities, you are totally free to enjoy the fruits of your labors with no govt (tax) interference.
That the states at the Convention dismissed direct taxation based upon the number of inhabitants, and wisely chose to apportion direct taxation upon the states is the point.
The objection to direct taxation was so strong to the states, that their representatives at the Convention made them all but impossible to impose.
The Pennsylvania legislature most clearly described the true odious nature dislike of destructive direct taxation in the statement of those opposition to the US Constitution”
“The power of direct taxation applies to every individual, as congress under this government is expressly vested with the authority of laying a capitation or poll-tax upon every person to any amount. This is a tax that, however oppressive in its nature, and unequal in its operation, is certain as to its produce and simple in it collection; it cannot be evaded like the objects of imposts or excise, and will be paid, because all that a man hath will he give for his head. This tax is so congenial to the nature of despotism, that it has ever been a favorite under such governments. Some of those who were in the late general convention from this state, have long labored to introduce a poll-tax among us.
The power of direct taxation will further apply to every individual, as congress may tax land, cattle, trades, occupations, &c. to any amount, and every object of internal taxation is of that nature, that however oppressive, the people will have but this alternative, either to pay the tax, or let their property be taken for all resistance will be vain. The standing army and select militia would enforce the collection.”
Their opposition was to direct taxation in its purest and perfect form (YS is such a tax). They correctly and accurately characterized such schemes in their true evil. They were mistaken only in that the Constitution made such destructive forms of direct taxation virtually impossible because they were imposed upon the states, not individuals except as buffered and redistributed by necessity at the state level.
There has never been a poll (YS, capitation) tax in the US. Why not? After all, it is the most perfect, true, fair, equitable, and loved form devised by despots, tyrants, and evil minds ever. Are the Representatives and people simply ignorant of these truths?
Other indirect tax schemes were failures, as is the IT, where the government has had to exempt now fully 50% of the population from it. Just as would YS, the cost of the tax cascades upwards from those not capable of paying to those still able to pay.
If you would take us through the imposition, and collection of the YS poll tax, maybe we would see the light.
Family A of four, multimillionaires with vast land holdings in several states pays their 8800°°. They are good people.
Family B of four, a two-parent minimum wage job holding working family, has a small mobile home. Because of illness of one child, they incur high medical expenses. They can either pay their ‘fair’ 8800°° share and not buy medicine for their child, or save their child’s life and pay only half their ‘fair’ share. These are deadbeats, bad people, and deserve nothing from the US government in the form of military protection.
Their mobile home is worth 4400°°. The IRS agents simply evict them, and seize their house to get the 4400°°. This is very ‘fair’ to them. Now homeless and bankrupt, they cannot pay ANY of next year’s ‘fair’ share. We MUST deport them to prevent such ‘fair’ share deficiencies.*
This is the ONLY scenario in capitation taxes. Is it wholesome and benevolent, and does it encourage each person to love their swarms of armed agents and officers, should they come up a dollar short through no fault of their own? Does it foster peace, and is it the truest form of liberty?
Is it far far better to destroy those not able to come up with the full perfect ‘fair’ share, or to have them pay taxes on their consumption at an equal rate and at the level of their ability to spend, and come up with a very reasonable part of the perfect YS ‘fair’ share?
Indirect NRST taxation – liberty as given us by the Founders and Framers,
YS – tyranny, despotism, and destroyed lives as rejected by the Founders and Framers.
*I would like to propose that you still deport to Cuba, but rather to Gitmo, Camp X-Ray, instead of the socialist state of Cuba proper. After all, such deadbeats are very bad people indeed, terrorists in fact since they will only destroy the country, incapable of earning many millions of dollars as can the rich good people. That would avoid having to declare war of Fidel and Raul, and keep the UN and the rest of the world off our backs.
Nothwithstanding these ancient diatribes against Direct Taxation (& pole taxes), I disagrre with their general rhetoric. I do not see that demanding that each person pay his fair share of the bill is at all despotic – rather it is despotic to force a rich man to pay the poorer man’s fair share.
Not to be a stickler for facts, but the Founders did NOT require that a direct tax be imposed ON THE STATES, but merely apportioned to the States based upon each State’s population. Also, you say “other indirect taxes” (the IT) have been a FAILURE. it IS A direct TAX NOT AN INDIRECT TAX.
You keep coming back to your basic Socialist, Kart Marx, Willie Sutton view that it is only FAIR that the rich guy pay a lot more JUST BECAUSE HE CAN AFFORD TO. Let’s leave it you think Socialism is the right answer – I don’t. We may see some Socialist societies still surviving, but they will all fail (sadly so will we but not because a Republic is fatally flawed in principle like Socialism is, but because a Republic is very difficult to maintain – i.e., politicians are un-principled and easily fall to using one citizen’sa money to buy the votes of many poor people).
I am not going top engage your ranting furher, other than to say that we cannot continue to survive with 1/2 the people paying nothing but yet being able to vote. You insist that we maintain that insanity!
With a propewr Constyitutional budget, each persons fair share is about $2,200. Most Americans should be able to pay that fair share.
Thanks for spotting my typo. Of course, I meant to say direct, not indirect.
The Framers did indeed very much establish with the Constitution that direct taxes be made upon the states. The state was the entity that had to come up with the cash to pay to the federal government in proportion to their representation, not inhabitants.
The final motion at the Convention, which determined the direct taxing clauses in the Constitution, was proposed by Elbridge Gerry, noting the failed motion to base direct taxes on the number of inhabitants would limit these taxes to poll taxes, earlier noted by Oliver Elsworth that if that were the case, and poll taxes were thus the probable only option, that there would probably be none (reflecting the complete opposition to them). He moved his original proposition, but varied it so as to make the “assessment of direct taxes upon the States”. All monies for supplying the public treasury by direct taxation shall be raised from the said several States” according to the number of representatives in the house. This is Constitutional apportionment of direct taxes.
The direct taxes were to be assessed at the individual level, but the states were liable for their share of the total tax amount established by Congress. Again, for example, if the tax was to be 700 Billion, and 10% of the representatives were from California, then California had to come up with 70 billion. How California came up with that amount was up to California, not the federal government. That was the genius of apportionment to the States.
I in no way EVER have even hinted that I favor the rich being required to pay more simply because they are rich. I am not at all socialist – the IT and those who make their living off the IT are the socialist/Marxists. Direct taxation is Marxist, as these taxes inevitably cascade upward – just as has the IT – so that the ‘rich’ pay the overwhelming burden of the tax. In our present miserable condition, the ‘poor’ stay here and vote, paying zero. Under YS the ‘poor’ are simply deported in the inevitable end, and the burden is added to the ‘rich’. The end is exactly the same.
Your definition of ‘fair’ is equal dollar amount, regardless of ability to pay. Mine is equal rates in accordance of ability and desire to pay. YS wants blood form turnips. Mine, and the Framer’s Constitutional system wants the golden eggs from the goose, not to kill the goose.
What do you not understand about direct taxation?
I favor what the Framers favored – each person paying taxes at an equal rate according to their personal desire for consumption. In their system, the only successful system ever, those not able to pay their YS ‘fair’ share could still live and prosper, improve their lot in life, pay at least some percentage of the nation’s defense bill, without jack-booted IRS and government agents and officers eating out their substance.
Direct taxation MUST distrain against a person’s livelihood. YS would eliminate any ability for those who cannot pay their full ‘fair’ share to survive, and the treasury would get absolutely nothing from them. A NRST would give the treasury meaningful amounts form these 100 million, even though it might be less than their ‘fair’ share.
The US prospered, where all other nations floundered in servitude and misery. Our success speaks for itself. You ignore completely this essential history, and would throw us back into medieval despotism of capitation taxes.
I have repeatedly pointed out that I fully oppose the present Marxism here. It is a complete failure. I want to return to the only system that has ever worked throughout history – excise style indirect taxation.
All capitation tax schemes have failed throughout history. All direct taxation schemes have or are failing.
You say ‘most’ would be able to pay 2200°° directly to the federal government. But, you do not spell out what happens to those who cannot due to illness, or accident. Loss of vote, no problem. The non-voter will be able to survive.
But from whom will the rest of his ‘fair’ share come? The state will have to make it up somehow. Warren Buffet will not pay it – you will not pay it, because you are good people who already came up with your ‘fair’ share. You and Warren will demand that the deadbeat’s property be seized and sold to get the cash. The deadbeat will lose his job, car, home, and become a drifter, living off the streets.
Worse, he won’t be able to come up with next year’s ‘fair’ share. You and Warren will then demand he be deported to Guantanamo. Is this liberty? You will get one year’s worth of the deadbeat’s ‘fair’ share through seizure, but have to make it up yourself (and Warren, too) from then on.
What dod you still not understand about the destructive nature of direct taxation?
We fully agree that we cannot survive with the present 1/2 non-taxpaying but voting public welfare citizenry. I oppose it far more than you. YS will ensure this situation forever, except that these people will simply be deported with the YS Final Solution.
We need to replace Marxist direct IT taxation NOW, not after we first throw out the Constitution. We need a NRST NOW. A NRST will end the welfare state – not instantaneously, but in a relatively short period of time by returning to the long proven success of indirect taxation that made the country.
As to your in-depth research into the Framers, I do not care to go down the pointless, bottomless pit of the Framers’ dislike for Direct (or Poll) Taxes. Even if they hated it, I disagree with the Framers (I am not intimidated by their geat wisdom) – I believe DIRECT responsibility for each person’s fair share of the nation’s common costs is the most freedom-granting system we can adopt. Anythink else (IT or your NRST) involves a redistribution of wealth, with pandering politicians making the decisions as to who can “afford” (Willie Sutton) to pay more. Thus, YS preserrves the Republic more than IT or NRST. Please let us agree to disagree on this point and move on.
In your 4th para you claim your NRST (with a tax-only credit) is NOT Socialist. How can you make such an outrageous statement. Once again, the top 1/2 will more than likely pay ALL the tax, while the other half has the right to vote. And, you wrongly state that under YS the poor are inevitably deported – maybe under YOUR version of YS but not under mine, where they merely lose their right to vote (thus preserving the Republic) and society as a whole decides when any citizen become an undue burden and should be deported. You know, I know people who emigrated to NZ – they first has to prove they are comfortably self-supporting and in good health before they were allowed to emigrate there.
YS defines fair the very same way your condo, timeshare, coop defines fair share in accordance will good principoles of cost accounting. Your definition is that of Comrade Karl Marx.
I would collect the tax the same way your bank will forclose on any debts you owe to it, in accordance with proper credit practices. As a practical matter, after all collection efforts are made (with societal imput as to the standards of the extent of such collection) a shortfall will be finalized (i.e., it should be estimated up front and adjusted later) and that shortfall spread equally to ALL paying taxpayers.
Do you tell your condo that you should have to pay only as much as you feel as you can afford to pay? They will forclose if you fail to pay your fair share. Yoyu seem to feel you are ENTITLED to military protection, etc but that you are not compelled to pay your fair share of its cost. I disagree with your sense of entitlement. If you want military protection, etc, you MUST pay your fair share – not the amount you feel you can afford.
I understand Direct Taxation – what is it about paying your bills for your fair share that YOU don’t understand.
You say DT distrain from a person’s livlihood. That persdon’s rent, food etc do so as well. We all have to p;ay our bills.
YS would collect something from almost evreryone, whereas your NRST leaves the bottom 1/2 or more payng NOTHING – your 100MM paying some tax is WRONG !
Virtually every civilized nation has a DT – this is not to say IT’s have not been misused to redistribute wealth. What is ruining these countries is the Socilaist wealth redistribution (including Progressive IT’s), and NOT DT itself.
Phelbers, I think you have ingested way too much Kool-Aid on this INDIRECT tax panacea, miracle snake -oil. I don’t see how keeping 1/2 or more off the tax rolls on your NRST will end welfare. We have grown to taking 1/2 off the taxpaying rolls and the number of welfare recipients has grown greatly during that period. Somehow expecting such magic is way too much “Hope and Change” for me to swallow (along with the impossibility of any NRST replacing Income/Payroll taxes , as Jorgenson noted, along with some of us).
“I would collect the tax the same way your bank will forclose on any debts you owe to it, in accordance with proper credit practices. As a practical matter, after all collection efforts are made (with societal imput as to the standards of the extent of such collection) a shortfall will be finalized (i.e., it should be estimated up front and adjusted later) and that shortfall spread equally to ALL paying taxpayers.”
Precisely. You finally admit to the truth about YS.
This vicious cycle will cascade and accelerate until there is not enough “ALL” to pay the added ‘fair’ share. Once the lower 150 million deadbeats, those unable for financial reasons due to accident or illness or low wages, have been fully and properly foreclosed, levied, and seized from into homelessness, you will never get another penny from them. The ‘good’ YS payers will have to, as you finally admit, bear their burden, which will drive more and more into destitution, and so on.
I’ve told you several times that I would NEVER have any part of a condo, timeshare, or coop. EVER. Why do you continue to raise this false comparison? These are voluntary agreements, not compulsory as is natural born citizenship.
You have nothing but contempt for the Framers. Indirect taxation IS the Constitution, with direct taxation only by apportionment. It was this alone that allowed millions upon millions of penniless immigrants over the first 160 years to go from absolute poverty to middle class success. YS would have turned them all away from Ellis Island – they were all deadbeats, unable to pay their ‘fair’ share. Stop pretending that you have any respect for the Framers – you do not, and you despise America and everything it stands for (except the IT and YS, of course). YS is the absolute proof of your hatred of liberty. YS is incompatible with liberty, it’s why the Framers broke from England.
History and truth are on the side of freedom and indirect taxation. The failure of direct taxation, from the kings and sultans to the IT are what you praise.
You claim I “finaslly admot” something, when I have said this before. I state a reasonable and necssary way to collect any unpaid tax and shortfall – which is just what we are doing today with the IT. What is your problem? The bank will take your house if you don’t pay – what is the big surprise here?
I don’t care if you NEVER buy a condo, coop or timeshare. I use them as a valid comparison to our joint undertaking of having a military to protect us (etc.) while we go about enjoying our freedom. Those costs must be allocated to all on the proper cost-accounting principles. No-one is entitlted to pay only that amount that he alone deems proper.
Thewre you go again sayinbg absolutely ridiculous things. I have the greatest respect for the Founders – I just disagree with them on this point.
At this point, it is clear that you are an INDIRECT TAX FANATIC for whom no amount of reasoned argument against it is EVEN THOUGHTFULLY CONSIDERED. Your PASSION for indirect taxes is overwhelming, not convincing, merely overwhelming. Like any good Alinsky-ite, you must demonize anyone who does not agree with your passion.
I have seen similar passion (fanaticism) from other FT jingoists and it is impossible to engage in intellectual exchanges with them. I believe we have come to the end of our attempt at an intellectual exchange.
Of course the bank will take a house from someone who cannot pay. That is the very point – you completely disregard the fact that the government will do the same. Then the deadbeat will be unable to pay from then on.
Once you have taken everything the deadbeat has, he’s destitute, done for, doomed, deported to die in Cuba. You will not get a penny, where you would from his otherwise productive efforts under indirect taxation. It’s either all or nothing with YS, and nothing is the only possible, certain result.
His ‘fair’ share has to be made up by the good people, added to their bill, and so on. With each destroyed life, more and more must be added to the good people. More and more fall short. Their ‘fair’ share will rise exponentially, geometrically, until there simply are not enough people to make up the needed total. This is the failure of all direct taxation, and the present IT is the best example, with the full burden on 1/2 the population.
This is the truth of the failure of direct taxation which you have finally agreed to and fully admitted, and it’s about time. But, even when you yourself acknowledge that YS direct taxation cannot work, you cling to the absurdity of it.
Was it Einstein who was credited with defining insanity as repeating the exact same failed effort hoping for a different outcome? You have convinced yourself that, even though every capitation tax has failed miserable, my YS will not because I’m much smarter, wiser, and better than the uninformed, misinformed, dead Framers ever were.
It is not at all ridiculous to point out to you that to reject all the reasoning, good judgement, knowledge of the Framers that all capitation taxes in history had failed and brought only human misery, and their foresight and wisdom that indirect taxation is always successful, is to reject the Framers themselves. You can’t have it both ways. You either accept their wisdom, and the successful nation they created with indirect taxation, or you don’t. YOU DON’T!
I am not in any way an indirect taxation fanatic – I am an American who has read and understood history and the wisdom of the Framers, and the great success of this country until direct taxation without apportionment – the IT.
I have cited history, the reasoned and careful dialog and votes of the Framers at the Constitutional Convention, and the success of indirect taxation. You, like Hank, dismiss rational thought by describing any factual citation of history as meaningless, nonsense, or “ancient”. You throw out the Constitution, justifying it because it is ‘ancient’. This is the debating of those who know they cannot intellectually debate on any factual basis – the clearest admission that they are dead wrong and know it.
Alert! Earth to Bully Phelbers – I do not agree with, did not say nor admit any of the stuff you falsely claim.
You say “This is the truth of the failure of direct taxation which you have finally agreed to [SCE- NO I DONT] and fully admitted, [SCE- NO I DONT] and it’s about time. But, even when you yourself acknowledge that YS direct taxation cannot work, [NO I DONT] you cling to the absurdity of it [SCE- MY PRINCIPLES ARE CORRECT – PRACTICAL DIFFICULTIES NOTWITHSTANDING.” It is impossible to have an intellectual exchange with you – you process what others say to you through your own tortured passion.
You say “You, like Hank, dismiss rational thought by describing any factual citation of history as meaningless, nonsense, or “ancient” [SCE- I have consistently said just the opposite – I admire the Founders and the Constitution greatly – I simply disagree on DIRECT TAXATION]. You throw out the Constitution, justifying it because it is ‘ancient’. This is the debating of those who know they cannot intellectually debate on any factual basis – the clearest admission that they are dead wrong and know it. [SCE- ONLY IN YOUR CLOSED, PASSIONATE, BULLYING MIND]”
While I must admit that I have not researched captitation taxes (nor am I aware of any society that attempted such taxes for ALL of their revenues), I believe they could and should work well – condos. coops, timershares all seem to function smoothley with such a “capitation tax” which allocates to each member their fair share of the common costs.
I believe that you are getting lost in the details of your research and have lost sight of the bigger picture. Nowhere in our Constutuition are you ENTITLED to have someone else pay your bills. While the CREATOR has granted you certain inalienable rights those rights do not include an ENTITLEMENT that another citizen will be forced to pay your fair share of the cost of defending your rights.
The Founders surely understood that the Republic could not survive with every citizen contributing only as much as felt like. Your answers are Socialist (an NRST with a tax-only credit) – I think the FOUNDERs were right when they (BF) said “If you let a citizen stick his hand into the pocket of another, he will” – you obviously think old Ben was an idiot.
THe Framers indeed did believe wholeheartedly that the republic could not only survive, but thrive with every citizen paying indirect taxes in accordance with their desire to advance their position in life. Rather than destroy them with unplayable direct taxes, and get nothing, thye knew they would derive money for the treasury at a level which they could afford.
We did indeed thrive with indirect taxation. In fact, in the late 1800’s the treasury was bursting with surpluses. Contrast this to the present hopelessly unplayable debt with direct taxation.
Benjamin Franklin’s quote is a direct reference to direct taxation. Those wishing to take from others by direct government force would vote for direct taxation, and have the federal government put its hand in others pockets for their benefit.
I have given several links and quotes on direct and capitation taxes for you to check out. It might be a good idea to do so before choosing such failed means for this country.
The Framers knew that the tyranny of direct taxation might be needed in very rare instances, but only to save the nation in time of declared war. To make it all but impossible, they put apportionment in place. John Adams and his Federalist allies tried a direct tax in 1798, autenssibly because war with France was a possibility. But, the tax was not necessary, and it’s odious nature resulted in only one or two other attempts – all failures.
It’s OK for you to insult me and attack me personally. That is called the fallacy of ‘ad hominem’ attack, which is Latin for “to or against the person” rather than against the argument, when not able to defeat the argument.
While, in general, I agree with your final comment, it is entirely inappropriate in this case because I was not insulting you (and have been trying very hard not to). I suggest to you that gross exaggeration and deliberate misstating of your opponents claims also undermines credibility and that oft-repeated lies never become real truth (although the lie may eventually be “believed” when repeated over a long period of time).
I will no longer respond to the rest of your words and ask that you kindly do the same.
The flat tax would be a disaster. What we need is a simple tax. No deductions, but lower rates. I am well into in the 25% bracket but my actual tax is around 10.5% after I get done with deductions. So in a simple tax plan I would expect the 25% bracket to be reduced to 10 or 11%. If I include Medicare premiums my rate is still only 13.4% . In general the problem is not that we are taxed too highly but that the system is too complicated. With a simple tax the IRS job becomes much easier and the IRS could devote far more resources to finding the tax cheats. If everybody paid the tax they owed we could balance the budget most years.
The Flat tax keeps everything that is wrong with the current system except progression.
Consumption taxes (excise) were the sole source of government revenue while we fought wars, tamed the west, built the transcontinental railroad, invented the telegraph, telephone, cured yellow fever, autos, airplanes and led the world in trade. Federalist Paper 21 explains concisely and clearly the manifest superiority of taxing consumption.
It disarms the class warfare propagators by taking away the argument of who is taxed more. A tax on new retail only stops the legal theft of using the law to take away from one group without permission or compensation and giving it to another who has no legal right to it. We give our permission by purchasing new retail, and we are compensated with new retail goods and services. It is be far the most transparent system because we see the cost of government on every receipt.
It benefits the poor and middle class the most, because they fell the affects of hidden taxes under our current system more than anyone else. Manufactuing, distribution and retail sales taxes and compliance costs are no longer rolled into every price they pay.
The residual “regression” if the “prebate” were dropped would be an incentive to produce more to decrease its affects. We need to incentize more production by regression. But alas the American people after 50 years of “state controlled education” cannot think critically enough to understand the natural truths contained here in.
Sorry for the typos, my 14 year old was talking while I was typing. Arrrrghh. blame it on the kid! That’s my story and I’m sticking with it.
I am for the FairTax simply because it is immoral to use the law to steal from others for one’s benefit. It is theft and theft is wrong regardless of altuistic intent. Taking a portion of my income, thereby decreasing my ability to survive, give to charity, invest or save and deeming another group more ‘worthy” of the fruits of my labor than me, is tyranny. Soft tyranny of economic serfdom, but so far the amount we have to support ourselves is GRANTED by government. Our founders said that we have a god given right to our property, that promise was broken in 1913.
It is intellectually dishonest for the heritage foundation to claim their flat tax is distributionally neutral compared to the present system. This is a continuation/extension of the kinds of policies that have meant the last 30 years virtually all against in assets have gone to to the upper 5%-with the lions share going to the upper 1%(i.e. the kinds of folks that give money to groups like the Heritage Foundation).
If the Heritage folks want to prove me wrong: put a rider that _guarentees_ that if the assets of the upper 1% or upper 5% grow faster than median assset holdings(around $70K/family) that we’ll gradually introduce asset taxation. I’d personally prefer fairtax to a flax tax as part of that mix-because of fairtax’s low overhead.
The thing is: the BIG money behind flat tax proposals and fairtax really want to make the rich richer-and their economists _know_ that so they smile and say what their rich backers want to be said.
It’s just plain dishonest for Foster to claim that this plan is simple and transparent. Sure, saying the rate is 28% is transparent, but 28% OF WHAT?!! As long as income is the base for calculating taxes owed, then you have the problem of “defining income”, and our present tax code is a history of how those with the means to lobby Congress have been able to “define” income to their advantage.
That’s why the Fair Tax is the only true simple and transparent alternate system.