June 10, 2005
Flat Vs Fair Tax
In the ongoing debate on tax reform, there are three basic proposals...
A. More of the same. (just tweaking rates and adjusting loopholes.)
B. Flat Tax (everyone pays the same flat rate, no loopholes)(and if you believe THAT, I have this bridge...)
C Fair Tax (moving to a consumption tax, rebates issued for basic necessities of life, no taxes on business, death, etc)
As far as A goes, thats what got us in the horrendous mess we're in now, and all the tweaking that can be done will only further sink us in it's stinking morass.
Option B would be better than we have now, but there are some problems from an economic growth standpoint.
Option C would be my choice, were I in the position to take the decision.
I wanted to compare B and C to show why I favor the Fair Tax Plan, but I found that Neal Boortz had already done the job for me, better than I ever could, so here it is:
AND WHAT ABOUT THE FLAT TAX?
Yes, I know. Some of the people that we would love to have supporting the FairTax have weighed in in support of a flat tax instead. So ... here's some flat tax vs. FairTax issues some of you may want to consider.
1) In 1986 the Congress reformed our tax code to essentially give us a flat tax ... a flat tax with two rates. Fifteen and twenty-eight percent. Most deductions were eliminated. Today's tax code is the result of that effort.
2) A flat tax leaves the IRS in place. You'll still have to report your income to the IRS every year, and you'll still be subject to audits.
3) Social Security and Medicare payroll taxes? Still there.
4) Do you get 100% of your paycheck? No. Withholding will still be there.
5) Business taxes? Still there .. and they'll remain embedded in the price of every good and service you buy, so you'll be paying them.
6) Corporate board meetings? They'll still spend an inordinate amount of time working on the tax implications of business decisions, rather than just basing their business moves on what's best for their customers and shareholders.
7) K Street lobbyists? They're still there too. They'll still be drawing their six-figure incomes while they game the new flat-tax for the benefit of their clients.
8) Bring American businesses back home? Nope. Business taxes are still there, so American businesses will still locate their operations overseas in order to escape our punishing business income taxes.
9) Death Tax? Gift Tax? Still there in all the flat tax proposals I've seen.
10) Will the flat tax bring American wealth back home? The latest estimates put $10 trillion of American wealth in offshore financial corporations. There is only one reason that money isn't back here working ... and that's our income tax structure. Will the flat tax bring that money back home? Nope. The FairTax? Yup.
11) What about the poor? They're not paying income taxes now ... will they pay the flat tax? No way! But politicians will still be looking for a way to raise taxes on the rich so that they can relieve the poor, poor pitiful poor of the responsibility for paying for their own Social Security and Medicare.
12) Will all Americans be able to buy the basic necessities of life without any federal tax consequences under the flat tax? No. The FairTax? Yes.
13) Will foreign visitors to our shores contribute to our Social Security and Medicare programs under the flat tax? No. The FairTax? Yes.
There's just a few points. If you have some good counterpoints, let me know! From my point of view, the flat tax pales in any comparison to The FairTax.
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There you have it. Your opinion?
Tinker(A). If you go with C you create a whole new group of people fighting for entitlements under the guise of 'rebates for necessities of life'.
Current tax system may be busted, but it reminds me of the old axiom: 'Be careful what you wish for. You may just get it.'
"If you go with C you create a whole new group of people fighting for entitlements under the guise of 'rebates for necessities of life'".
NO, you wouldn't, the rebates are figured out by the number of people in the houshold X the estimated standard cost of tax on what it takes to basicly live, and EVERYONE receives the same amount per person. NO loopholes.
Say it's determined it would take $100 in tax for a person to buy the basic necessities of food, shelter, etc. A family of three would get $300. a month rebate. Fam of 4= $400.pm and so on.
the taxes hidden in the cost of goods and services at the moment would no longer exist, so,even with a 23% sales tax, those goods and services would actually be cheaper than they are now.
The IRS would become nothing more than the accounting unit receiving the tax from business. Most areas already have sales taxes, so the system is already in place.
YOU would receive 100% of your paycheck earnings, and an automatic 7% raise, due to the employer no longer paying "his"share of payroll (SS/FiCA) taxes. Th is actually YOUR money, that you don't get now in your check.
Posted by: delftsman3 at June 11, 2005 09:06 AMMaybe I didn't make my point clearly. YOu create this new system. Fine and dandy. But, does the entitlement-expanding crowd just go away? I think not. You've generated a nice new way for them to get what they want enshrined in law by dressing it up as rebates('well, inner-city poor need cable too. it's a fundemental right to cable since it's the major way to get news now. Oh, and internet too. They need rebates for internet too.' That kind of thing.).
I'm not disagreeing to be contrarian delftsman, I'm saying that your plan would make it easier for people we both don't like to get their agenda in.