No more pitting us against each other. Today’s hopelessly complicated tax structure unfairly pits one American against another. Marriage penalties, arbitrary annual extenders, and special-interest tax breaks typify a massively complex and inefficient tax code-and needlessly divide us.

Why not sweep all that away and replace it with a system that’s simple and fair to all? Under the New Fair Deal, distorting “credits” and deductions will be eliminated, today’s seven brackets will be reduced to just two, and taxation will be much more simple and efficient for everyone.

It then goes on to list some basics of the plan:

• Current circumstances call for bolder action.
• The Phase 1 Enhanced Plan incorporates the features of Phase One and gets us a step closer to Phase two.
• I call on the Super Committee to pass the Phase 1 Enhanced Plan along with their spending cut package.
• The Phase 1 Enhanced Plan unites Flat Tax supporters with Fair tax supporters.
• Achieves the broadest possible tax base along with the lowest possible rate of 9%.
• It ends the Payroll Tax completely – a permanent holiday!
• Zero capital gains tax
• Ends the Death Tax.
• Eliminates double taxation of dividends
• Business Flat Tax – 9%
  • Gross income less all investments, all purchases from other businesses and all dividends paid to shareholders.
  • Empowerment Zones will offer additional deductions for payroll employed in the zone.
• Individual Flat Tax – 9%.
  • Gross income less charitable deductions.
  • Empowerment Zones will offer additional deductions for those living and/or working in the zone.
• National Sales Tax – 9%.
  • This gets the Fair Tax off the sidelines and into the game.

Here are the principal elements:

• Health Care. The plan ensures universal access to affordable health insurance by restructuring the tax code, allowing all Americans to secure an affordable health plan that best suits their needs, and shifting the control and ownership of health coverage away from the government and employers to individuals.

It provides a refundable tax credit—$2,300 for individuals and $5,700 for families—to purchase coverage (from another state if they so choose) and keep it with them if they move or change jobs. It establishes transparency in health-care price and quality data, so this critical information is readily available before someone needs health services.

State-based high risk pools will make affordable care available to those with pre-existing conditions. In addition to the tax credit, Medicaid will provide supplemental payments to low-income recipients so they too can obtain the health coverage of their choice and no longer be consigned to the stigmatized, sclerotic care that Medicaid has come to represent.

• Medicare. The Road Map secures Medicare for current beneficiaries, while making common-sense reforms to save this critical program. It preserves the existing Medicare program for Americans currently 55 or older so they can receive the benefits they planned for throughout their working lives.

For those under 55—as they become Medicare-eligible—it creates a Medicare payment, initially averaging $11,000, to be used to purchase a Medicare certified plan. The payment is adjusted to reflect medical inflation, and pegged to income, with low-income individuals receiving greater support. The plan also provides risk adjustment, so those with greater medical needs receive a higher payment.

The proposal also fully funds Medical Savings Accounts (MSAs) for low-income beneficiaries, while continuing to allow all beneficiaries, regardless of income, to set up tax-free MSAs. Enacted together, these reforms will help keep Medicare solvent for generations to come.

• Social Security. The Road Map preserves the existing Social Security program for those 55 or older. For those under 55, the plan offers the option of investing over one-third of their current Social Security taxes into personal retirement accounts, similar to the Thrift Savings Plan available to federal employees. This proposal includes a property right, so those who own these accounts can pass on the assets to their heirs. The plan also guarantees that individuals will not lose a dollar they contribute to their accounts, even after inflation.

The plan also makes the program permanently solvent by combining a modest adjustment in the growth of initial Social Security’s benefits for higher-income individuals, with a gradual, modest increase in the retirement age.

• Tax Reform. The Road Map offers an alternative to today’s needlessly complex and unfair tax code, providing the option of a simplified system that promotes work, saving and investment.

This highly simplified code fits on a postcard. It has just two rates: 10% on income up to $100,000 for joint filers and $50,000 for single filers, and 25% on taxable income above these amounts. It also includes a generous standard deduction and personal exemption (totaling $39,000 for a family of four), and no tax loopholes, deductions, credits or exclusions (except the health-care tax credit).

The proposal eliminates the alternative minimum tax. It promotes saving by eliminating taxes on interest, capital gains, and dividends. It eliminates the death tax. It replaces the corporate income tax—currently the second highest in the industrialized world—with a business consumption tax of 8.5%. This new rate is roughly half the average in the industrialized world and will put American companies and workers in a stronger position to compete in a global economy.

Read more about the Roadmap for America at Paul Ryan’s site.

Due out in 2009, An Inconvenient Tax explores the history of the income tax and the causes of its many complexities. The film follows the tax through wars, economic booms, and significant presidencies in U.S. history. Noam Chomsky, Steve Forbes, Joseph Thorndike, Mike Huckabee, Charles Rossotti, David Walker, Neal Boortz, Michael Graetz, Daniel Shaviro, Leonard Burman, and others discuss not only the problems America faces in the tax code, but also give insights on how to move forward. In a time when many Americans are concerned about the future of the economy, rising deficits, and unfair tax treatment, An Inconvenient Tax attempts to provide a crucial, honest look at the income tax.

(Thanks to Todd for the tip.)

World Taxes Income Tax Rates Finance and Economy

When the Flat Tax’ers push their reform because “other Countries in Europe and elsewhere are using a flat tax and doing well”, remind them that most of those other countries also have a very high VAT tax working along side the Flat income Tax. This is a fact they almost always forget to mention in the Flat Tax debate. After their jaw drops, send them to the link above to see the exact costs of taxes in these countries. It’s amazing to realize how much in the way of taxes paid by consumers around the world are hidden from them in the price of goods and services. Hardly a Country in the entire world lets their citizens really see what their government cost them. It’s easy to see why the major world politicos would be against the FairTax passing in the U.S.A. It would be a trend toward honesty in government that could start a worldwide riot!

Ex from web chart: The U.K. has a 30% Corporate flat income tax (hidden in prices), a 0-40% personal income tax to everyone, AND a VAT tax of 17.5%, Do we really want a tax system like this?

Ex from web chart: Russia often used as the example for the Flat Tax by Steve Forbes, has a 24% Flat Income tax on corporations (hidden in price of everything), a 13% flat income tax on individuals AND an 18% VAT tax . As I see it, this equals 55% taxes on every citizen there. Boy and this is the best example the Club for Growth and Steve Moore can use?

Notice that the USA is one of the few countries that currently doesn’t have an “official” VAT tax, although one could call our current corporate taxes a form of VAT. We at least don’t have 2 forms of VAT operating at the same time.

Check out Germany and Indonesia for some real eye openers on their high taxes.

Then check Japan our biggest rival for world domination of the economic world who like us, doesn’t have a VAT officially.

No wonder there are so many imports into this country by these countries.

Due to the high taxes, most of their own citizens probably can’t afford to buy anything!

And to think this is what Steve Forbes, Dick Armey, Gingrich, S. Moore, Bartlett, Feinstein, N. Pelosi, Elizabeth Dole, and many others including many in Congress, want for Americans.

Marlene Tobin
PA State Director – AFFT (volunteer from McMurray PA)
marlene [at] pafairtax [dot] org / fairtaxsupportpa [at] aol [dot] com

www.pafairtax.org
www.fairtaxcalculator.org
www.fairtaxplan.org
FairTax-Flat Tax Comparison Charts – compares various aspects of both systems

ALEXANDRIA, Va., Sept. 14 /U.S. Newswire/ — Rather than consigning America to a global game of economic catch-up, U.S. policymakers should look to the winning performance of Eastern European nations that have adopted fundamental tax reform. That’s the conclusion of the latest study from the non-partisan National Taxpayers Union Foundation (NTUF), which found that in addition to the advantages of consumption tax systems, there’s persuasive evidence that flat-rate income tax systems can place countries on a solid competitive footing.

“In the increasingly fluid global economy, money and investment move across borders more easily than ever before,” said NTUF Associate Policy Analyst and study author Ryan Kool. “In order to attract and retain these vital infusions of capital, nations must find ways to remain competitive — and, as much evidence indicates, ditching old-style “progressive” income taxes in favor of a flat tax can provide such an edge.”

Kool’s in-depth analysis of countries at the vanguard of the flat-tax reform movement as well as recent adopters, uncovered significant economic trends toward increased tax revenues, accelerated Gross Domestic Product (GDP) growth, and improved levels of Foreign Direct Investment (FDI) since those countries have enacted flat-tax reforms. Among the findings:

– During the first five years (1995 – 2000) of operating its flat tax, Lithuania’s GDP jumped an average of 22 percent annually and has trended at 7.4 percent since 2000.

– In mid-March Slovakia, which has implemented a flat tax within the past year, announced 260 negotiations underway for inward investment. The 30 projects closest to completion are expected to bring in the equivalent of $1.9 billion – three times greater than the total FDI received by Slovakia in 2003.

– Despite a large “shadow economy,” Russia has experienced a 35 percent annual increase in government revenue since enacting a flat tax in 2001 – perhaps the most convincing case thus far that the simplicity and lower rate of a flat tax encourages compliance with tax laws.

Even as this pro-growth movement spreads across Eastern Europe (with ten countries having enacted or announced plans to implement a flat-tax, including five EU-member states), Western European countries faced with stagnating economies and skyrocketing unemployment levels have also been “forced to take note,” Kool said.

“As the flat tax continues to drive the tax competition movement westward, country after country is enacting serious tax reform in attempts to keep their economies from being on the losing end,” Kool concluded. “U.S. policymakers would be wise to enact fundamental changes to our tax laws now – and either a flat tax or a national retail sales tax would be a winning formula.”

NTUF is the research and educational arm of the 350,000-member National Taxpayers Union. Note: NTUF Policy Paper 157, The Global Flat Tax Phenomenon: Proving “Flat Earthers” in America Wrong, along with more information about tax reform, is available online at http://www.ntu.org.

From the announcement:

WHAT: Club for Growth’s Fall Economic Policy Conference
WHEN: Wednesday, September 21, 2005
WHERE: Jones Day Corporate Conference Center, located at 51 Louisiana Avenue, NW, Washington, DC.

We have an outstanding program planned including the latest inside news and analysis on tax reform and the 2006 economic and political outlook.

Special confirmed guest speakers include columnist Robert Novak, The Wall Street Journal’s John Fund, pollster Kellyanne Conway and economist Brian Wesbury. Stars in Congress include Senators Jim DeMint and John Sununu and Reps. Jeff Flake, Jeb Hensarling, Paul Ryan, and Cathy McMorris. Our keynote lunch speaker is former Senator John Breaux, who is vice-chairman of the President’s Advisory Panel on Federal Tax Reform.

We’ll also have a debate between flat tax advocate and former House Majority Leader Dick Armey and FairTax sponsor and Congressman John Linder.