Top Economist Says Tax Switch Simple, Fair (From Income to Consumption)

[Khephra]

WASHINGTON -- Basing the government's tax system on consumption rather than income is not as radical a change as it seems, President Bush's chief economic adviser said Thursday.

Bush's goals are tax laws that are simple, fair, promote growth and create jobs, said N. Gregory Mankiw, chairman of the president's Council of Economic Advisers.

Bush has said that he will make overhauling those laws a priority in his second term and will appoint a commission to make recommendations.

Mankiw, reviewing some of the options Bush will consider, said many economists believe that tax laws discourage saving and investment and that changing that could free up money for business investment.

Under a consumption tax, Mankiw said, "The result would be greater saving, increased capital accumulation and higher growth in productivity and wages."


http://www.newsday.com/news/politics/wire/sns-ap-tax-overhaul,0,2304548.story?coll=sns-ap-politics-headlines

[Eurobabe]

1. beware, this is the moron that said outsourcing was a good thing

n/t

[Supersedeas]

151. it's ALL GOOD, for cigar smoking fatcats.

[Sandpiper]

2. The result would be exactly what the GOP wants

A regressive tax system that shifts the burden from the rich to the working class.

Who spends a higher percentage of their income on consumption of goods?

That's all you need to know about the real aim of this tax.

[AP]

4. With about half of Americans spending every last penny they have and more

and with about the top 1% saving more and more (without having to work hard to get more and more) it's pretty obvious which direction the tax burden would shift with a consumption tax.

The rich are rich because they get so much more money than the spend. The poor (and middle class) are poor because they spend so much of the money they have.

This will shif the tax burden from the super rich to the middle class and to the poor.

[TexasSissy]

5. True. Such a system would be grossly unfair to the poor...or

grossly advantageous to the wealthy.

Two families using utilities, one being poor, one being wealthy. Yet they would pay the same amount in taxes on consumption of the utilities.

This is a disguised method of doing away with the progressive tax. This represents a major shift of money from the middle class and poor to the wealthy and better off.

What we're heading towards is an economic system like Mexico's, where there is no middle class to speak of. There, you are either wealthy or poor. Bush would like that. (No environmental regs to speak of, either.)

I get sick just thinking of this.

[private_ryan]

8. nonsense

the poor will still have the values, and no gay couple would ever get married.

[ooglymoogly]

222. lol i have checked out your post about 5 times now ready to lay in

but i end up just laughing again.

[Occulus]

244. Sad, isn't it?

But that's my response to almost everything anymore:

At least they gays can't get married!

:grr:

[AP]

9. I also think that people's discretionary spending is shrinking as their

spending on things like energy, communications, health care, and food and other things that they really need increases.

This guy thinks that a consumption tax will discourage spending and increase savings, but how much room do people have not to spend anymore?

I agree that people spend to much, thanks to credit cards. But if you have a sales tax of 17%, people will probably just buy 17% less shit, and go without a few small things. But they won't save anything because they're still spending the same amount of money.

And for those who really don't have any discretionary spending, they'll just be paying 17% more for the same stuff, which will put them further into debt, which will increase interest payments, which will be a big gift to banks, since they'll basically be making interest income off of people tax bill. Sick.

[CTLawGuy]

124. A sales tax of 17% would destroy the economy

The economy grows or shrinks based on whether, for example, you go to one extra movie this year or one fewer movie.

If you increase the price of everything by 17%, you decrease people's real purchasing power. Eliminating the income tax does not make up the extra money needed to cover the sales tax for the majority of people, since the poor use a greater percentage of income on consumption.

A 17% sales tax, because it decreases demand, would force companies to shrink production to adjust, causing the loss of jobs, which in turn makes people poorer, and makes demand lower, which makes companies scale back... and repeat...

[Ms_Mary]

131. These asses have no understanding or reality,

They have no clue what it's like to be working class or working poor. If you aren't making enough money to pay income taxes to begin with and then you add a 17% tax onto people who aren't even making it NOW...

Only profanity comes to mind right now.

[Name removed]

165. Deleted message

Message removed by moderator. Click here to review the message board rules.

[ooglymoogly]

178. i would say you are the one that needs a few clues

anyone who buys this hogwash is drinking bongwater and hanging upside down from high wires and melts in the sun. but just to pick a little point; lets say a little old lady who lives on ss of say $600 pays no income taxes and can not ever afford the bare necessities to keep herself alive and now has to pay an additional 17% or whatever, on whatever she buys shoes,etc. guess what? she is now going to starve to death, if she does not freeze first. oh well scrooge lets give the rich another tax cut and let little old lady pay for it. now thats real good bushit bushnomics. go find some real suckers to sell this garbage to. anyone buying this crap won't care if you are screwing them as long as gays aren't allowed to get married. i don't think there are many suckers on du.

[Ms_Mary]

186. Bite me. Go practice being intolerant. How does one propose tracking

spending for all of these people without implementing a very invasive and intrusive system, pray tell? Share your wisdom, O Great One.

[ooglymoogly]

188. we don't have to track them we can just let them eat cake

[Ms_Mary]

198. That seems to be the philosophy but I'd love to see some answers. nt

[jwnparadise]

206. From a lower post

Example:

Bill Bob spends 25,000(poverty line) a year and has a wife and 2 kids. His rebate would be equal to 25,000 X 23% = 5,750 in pre-bate. Divide that by 12 and Billy Bob will get $479 on the first of the month every month to offset his taxes. He will not pay taxes, not SS taxes or income taxes.

[Ms_Mary]

207. And the system to determine spending? Verification of that spending?

Does the IRS assume responsibility for this? I'm assuming one's spending would be documented in some way. Do you not find this horrifically invasive? It's my own business, not the government's. Others have addressed the issue of black market sales - how is that regulated without completely invading the privacy of consumers.

Do you think it's going to be a simple matter for people to foot the upfront cost of the sales tax and wait for reimbursement? Are you, or have you been poor or working poor? Do you know how strapped one can get just trying to buy neccessities?

How would you avoid the filing of income taxes? Income must be determined under this system of pre-bates you describe, so it must therefore be filed.

Do you think a monthly reimbursement of spending is somehow going to be less work than an annual tax return? It seems like quite a lot of work to me.

I have more questions, but I'll let you catch up.

Please, I'd like my clue now.

[jwnparadise]

220. The Bill

in Congress right now (H.R. 25) calls for the abolishment of the IRS. Truly though I think they would still exist, but basically as a collection organization only as there would be no tax return filing. Spending is not tracked though. The Pre-bate is based off of the poverty level. All spending for necessities(I call poverty level spending) is tax free. It goes like this.

Example:

Bill Bob spends 25,000(poverty line) a year and has a wife and 2 kids. His rebate would be equal to 25,000 X 23% = 5,750 in pre-bate. Divide that by 12 and Billy Bob will get $479 on the first of the month every month to offset his taxes. He does not have to wait for the gov to reimburse him. He will not pay taxes, not SS taxes or income taxes.

The black market collection aspect is just that drug dealers, pornography peddlers, and other criminal elements launder their profits and don't pay income taxes. Under a consumption based tax their spending would be taxed, regardless of how they accumulated their money.

I was born in Western Kentucky, so yeah I was poor pretty much my entire childhood and I am sure my parents could have used the extra funds to pay for food. My grandparents used to come for a visit and fill the trunk of their car with groceries. I definately qualify as working poor now even though my wife and I have a middle class income.

I have read many economists say that reducing the burden on corporations will cause prices to go down, which would offset the increase in sales tax. So if prices are the same as they were before the increase, and now I get all of my paycheck and the pre-bate, the burden on my family would be reduced greatly.

The other thing that makes me love this program is, wouldn't foreign business love to come to America if there were no corporate taxes? Outsourcing would be greatly diminished. I really think this would create an economic boom due to the extra spending power. The rate is able to stay low (23%) and still give the pre-bate is because consumption is almost twice income in this country. If you get a smaller rate across a broader base, you can collect the more revenue.

As far as it being harder to administer, I just don't see how it could be harder than complying with the current tens of thousands of pages of income tax code we have to today. Plus, since it is just cutting the same check, adjusted annualy for inflation, that will be going to everyone, that could be automated.

I swear if Daffy Duck was running on this I would vote for him, I'm convinced it makes sense. Plus big business hates this idea, which must be good.

Hope that answered your first set of questions, I need a smoke!

[ooglymoogly]

236. this argument is bogus

[jwnparadise]

241. I'm sorry you feel that way

Should I say ....nuh uhhh. Is not!

Check out WWW.FAIRTAX.ORG for yourself.

[pffarrell]

278. this fair tax crap has been around since 1998 at least

when some millionaires in Houston ponied up the money to get it started. If the whole purpose of this proposal (as it seems to be as it keeps getting trotted by everyone who backs this bs) is to get drug dealers and money launderers etc to pay taxes - well, I seem to recall that it was income tax evasion that put Al Capone behind bars. If the IRS really wants to make these pay income tax, I think they've got lots of tools a their disposal, and a total rewrite of tax law in the US is a but overboard. The 30-40% sales tax (not 23, as they say, that's a fallacy) would create a massive inducment to evade sales tax, especially coupled with state sales tax, and you would see an increase in the number of tax evaders. Either you really did drink the kool-aid, or you've got a lot more money than you're letting on. No sane and intelligent poor person backs a regressive tax like this.

[jwnparadise]

287. You got me...

I am a closet millionaire that spends all his time on bloggs. If it were only true.....movie stars, fancy cars.....

the rate will be 23% if the fairtax bill is introduce and only the rich will pay it. The pre-bate makes sure of that, see my other posts.

I now live in Florida(the other state with a sales tax only system), and we have a 6% sales tax only and that is about the average of all states. Texas's is 6.25, hardly oppressive. My wife works for the county we live in and they have a great pension plan. The election board sucks, but other that traffic in growth area and immanent domain issue in the glades, everything works well.

If you believe the IRS is an efficient organization or even an organization that can be fixed, then I don't have much else to say. They hold many innocent Americans hostage, IMO.

[dionysus]

243. sorry Freeper, that shit is stupid

"hey! I don't have any tax deducted from my check but i have to pay 10 bucks for a tube of toothpaste...."

get the fuck out of here with this moronic shit....

"I have read many economists say that reducing the burden on corporations will cause prices to go down, which would offset the increase in sales tax. So if prices are the same as they were before the increase, and now I get all of my paycheck and the pre-bate, the burden on my family would be reduced greatly."

If you believe that you're a fucking moron. Have a bad day :)

[jwnparadise]

245. TOLERANCE

Tolerance is a social, cultural and religious term applied to the collective and individual practice of not persecuting those who may believe, behave or act in ways of which one may not approve.

[Ms_Mary]

249. IT really doesn't.

(please note spelling is impaired by lack of coffee)

If the IRS is abolished, to whom does Bill Bob report his income?

I hadn't yet heard about the abolishement of SS taxes. I can't see any way on earth that would be beneficial. SS is going broke now. With our current situation, I do not believe that's going to work so well. Plus it clashes with Bush's privitization speal.

By what means is Bill Bob's spending determined? You say it's based on poverty level but your answer is very vague. Some organization has to know what he earns and what he spends. How? Who?

The black market collection aspect is just that drug dealers, pornography peddlers, and other criminal elements launder their profits and don't pay income taxes. Under a consumption based tax their spending would be taxed, regardless of how they accumulated their money.

No, my friend. Look further. People WILL work out under the table negotiation rather than pay a tax like that. In the abscense of some nightmarish Big Brother system to track each dollar one earn's and spends, it will be rampant. It opens the door to fraud. How many cheaters do you think would try to take the national sales tax for themselves by not entering transactions into the books? Think tax evasion on a national scale.

I am not as convinced about the altruisitic nature of corporations. They like to keep the money for themselves.

As far as it being harder to administer, I just don't see how it could be harder than complying with the current tens of thousands of pages of income tax code we have to today. Plus, since it is just cutting the same check, adjusted annualy for inflation, that will be going to everyone, that could be automated.

So we're firing the entire IRS and putting a lot of accountants out of work too...

And then there's the huge boost a lot of businesses get from annual tax rebate spending. The same amount of money diffused over the course of a year, if indeed it is the same amount, is not going to generate the same spending.

And a biggie is the handling of STATE and LOCAL sales taxes. I have yet to have a proponent of the "Fair" tax explain this to me.

[jwnparadise]

261. Fair enough

Thank you for kind reflections. There is a lot of support for this so we better get our act together so we can intelligently and effective argue.

The poverty line spending is calculated annually by the Department of Health and Human services.Billy Bob does not have to report anything
http://www.fairtaxvolunteer.org/smart/faq-main.html#3

As far as the black market spending, you could be right, but we have those shady people now and were not catching them, so at least we are changing it up on them. The IRS estimates that 40% of poeple are out of compliance with the current tax code. So if it works better than that were doing good.

Another benefit is that all tourist who come to this counry would be subject to taxation. No more free rides.

I agree, there is nothing altruistic about corporations, but market forces will drive down prices. In capitalism you only need 1 guy to cut prices to start a price war.

I agree with you totally on the people out of work issue, I think there should be a re-training program for other gov positions and other accounting professions.

Social Security is not abolished just the payroll deductions. The consumption tax base allows for more collection. The current payroll deduction will bankrupt the system in 10 +/- years. So either we increase the burden on the people with a higher deduction, or we try something different.

You raise some good points that need to be debated. Something has to be changed so the future is not grim. Bush may be in control but the minority can not be silenced.

I gotta go to work, more later.

[Up2Late]

225. You Go ! Ms_Mary!

Body Blow! Body Blow! RIGHT HOOK! RIGHT HOOK! Knock Him Out!!!!!

[ooglymoogly]

219. you can say that as many times as it takes to make it a useless statement

what happens to the millions and millions of people who do not pay taxes, who cannot afford to pay taxes. who can barely afford shoes or clothes or food or medicine. what happens to them under this idiotic proposition. now their bare living expenses rise by 17% or much more. are you for real? can you really be this stupid
if you cannot explain this you are nothing more than a usurious (fill in the blank).

[jwnparadise]

221. I am not sure

where the disconnect is? How about we try not to call each other stupid though, agreed?

If taxes are only collected on purchases, and that tax is given to the poor on the first day of the month to cover that same month's taxes, where are they being disadvantaged? They are still not paying taxes.

You realize I am taking about actual money going to the poor, right?

If they don't spend all of the money they can save it for a rainy day.

I am sorry if I am not getting through, I am just not sure how else to say it. It really is just changing how the tax is collected, not from whom.

[ooglymoogly]

224. that tax is given to the poor to pay that months taxes???????????

we are talking about people who don't pay taxes they do not have enough income to even qualify to pay taxes. yet now they are burdened with a use tax. riddle me this. is this really so hard to answer without obfuscation. they do not pay taxes so reducing their tax burden means nothing do you get it it means nothing. all that means anything is that now they have to pay 17% or more, more to pay for basic necessities. whats not to get here. THEY DO NOT PAY TAXES SO GIVING THEM A TAX BREAK MEANS NOTHING.

[Ms_Mary]

250. Okay...questions

If you are giving the poor "extra" money, which is what I think you may be saying, where is that money coming from? Is this money beyond their income? Because otherwise, you aren't giving them squat and they are still having to pay more. If you are giving them money beyond their income, that's a LOT of money to give away for free and I thought the point of the tax was to get more revenue for the government. If they get a rebate at the first of the month based on income and assummed spending, I just don't see where this is practical or workable.

[jwnparadise]

292. Numbers

First, I need to start with a disclaimer that I did not attend Harvard as the researchers for this did, so bear with me.

In 2001, the only numbers I could find, taxable income was 4.22 trillion. In that same year consumption was 8.54 trillion. So the consumption base is more than twice taxable income.

By 2003 consumption had grown to 8.6 trillion(an amazing fact considering 9-11 after affects and 2 wars, Americans are serious consumers) while the government collected 1.67 trillion (corporate,payroll,estate and gift) in taxes. If you divide the taxes by consumption you get 19%. Which is where you hear proponents of flat income taxes spout 20% tax rates. Flat taxes are regressive IMO and I do not advocate their adoption becuase they do not include the pre-bate which is what makes the fairtax progressive.

The additional 4%(from 19 to 23%) covers the pre-bate and shores up Social Security.

Seems to make sense to me.

[Ms_Mary]

302. You can keep throwing number at me, but I'm not asking number questions

I'm asking about the implementation. And the actual effect. I'm not seeking a dollar amount or number of consumers. Number without sound reasoning mean nothing. I've had data analysis and statistics (which I hated) but I know fully well that numbers can be manipulated to prove any point. What I want is how this would realistically be carried out. I had specific questions above and while I thank yor for the effort, that didn't answer them.

[jwnparadise]

303. "Lies, Damn lies, and Statistics" :)

I am not sure how to address your feasability argument but here goes.

The tax would be collected at the register just like state sales taxes are. The funds will be transfered to the US Treasury and the checks to the poor would be cut on the first of the month. I don't know how the inner-workings of the US Treasury work, but the funds would be used to cover all current government programs and shores up SS.

All payroll taxes are repealed so that plus the gov check should cover all their sales tax costs for that month giving them an effective tax rate of zero.

If you factor in market forces driving prices down after corporate taxes are repealed, then the poor would be in a positive position. More spending capital, and effectively increasing the standard of living. Even if the corp. piece doesn't pan out like they think it will, the working poor still get all of their money to make decisions for themselves.

All wage earners have taxes taken out of the paychecks, the poor just get it all back in the form of income tax refunds. What could be more regressive than holding the poors money for a year and the giving it back. Just doesn't make sense to me. Especially when the rich are exempted from this obligation on their income above 80,000 (sorry for the number). What is fair about that.

If I still didn't get it(did you see my Fair Enough post) then please restate you objections and I will try again.

Given the fact Bush is dead set of SS reform and tax reform, that makes this proposal pretty attractive. So lets hash it out and then we can contact congress with objections.

Objections I see so far:
1. Training programs for displaced gov workers and tax accountants.
2. Black market transactions - is there a non big brother way to attack this.

Are there more?

[Ms_Mary]

309. I see nothing attractive about it. Really, I don't. nt

[ooglymoogly]

237. bogus bogus bogus

[ooglymoogly]

217. there can be none in this pure and simple rob the poor scheme

to pay for the huge tax cuts that benefit primarily the rich

[mhr]

199. TAX REBATE - The Poor Have To Spend The Money First

Before they get it back. What kind of perverted logic is that?

If they did not have the money to begin with how are higher prices on everything going to benefit them after the fact?

You need to seriously reconsider your support for this misguided tax scheme.

[jwnparadise]

232. I apologize for the Get A Clue remark

Please read the The Bill post for an explanation of the NST. The poor get the pre-bate on the 1st of the month, before any cost is incurred.

[Ms_Mary]

251. And I did thank him for the apology. nt

[Starlight]

210. You are the one who needs to get a clue.

The "fair tax" is anything but fair. It's designed to benefit the wealthy. Period.

[ooglymoogly]

230. this is pure double talk "what

if you do not pay taxes, in other words below the poverty line, you still won't under this proposal have to pay taxes. oh glory day how kind. what you will pay if you are barely surviving, is a 17 to 25% percent premium on your bare necessities to survive, probably croaking you. and this 17 to 25% will go to new tax cuts benefiting the wealthy. so what does this mean. it means plainly we are robing the poor to pay for these idiotic tax cuts benefiting the wealthy. this is utterly shameful. how dare you think we are so stupid if you have some argument enlighten me

[ikojo]

185. Remember this 17% is just the FEDERAL portion...added on top

of that will be state and local sales taxes. In my area that's about another 7-8%...there you have a consumption tax of 25%. Nope, I can tell you that I would not be buying much, except at garage sales or flea markets and then only from vendors that don't charge sales tax.

You'd better believe that theft will increase because people will not be able to afford it.

[pokercat999]

255. A 17% tax will build the

underground economy. There will be "bootleg" everything and we will have created a huge underground and unlawful economy that will make the drug trade look like a mom & pop sundries store compared to wal-mart.

Life is sure going to get more interesting.

[shanti]

293. but don't you see

that's what they're aiming for. they want to make us another third world country....but most americans are blind to this fact.

[okieinpain]

270. what's funny is Tenenbaum of south carolina accused demint

her opponent of being in favor of a 23% sales tax. he was all over the place denying it. of course he got elected, so I wonder how the people in his state feel.

[The White Tree]

150. The difference is they'd have more money to start with

I'm not disagreeing with you. I was thinking the same thing as the point you are making but I think that is what they would argue (i.e. we're giving you the freedom to do what you want with your money).

What they seem to think is that everyone should be like Ebeneezer Scrooge, miserly watching over every piece of money you collect to determine it's best use. Sad and Ironic that someone would make statements like this at this time of the year when Charles Dicken's in that story wrote that the buisness of mankind should be our buisness.

[jwirr]

177. For those who really do not have any

extra money it will be worse than you think. Many of us down here already have problems buying food with the rise in prices this month. Many have quit driving a car. Many are forced to give up their homes in foreclosures. When there really is no discretionary money to spend it is not a matter of giving up something here and there - it is giving up the vital items in life. Pay attention to the soup lines, food shelves, foreclosures, bankruptcies, free clinics, used clothing stores, homeless shelters, deserted buildings. Here is where it is with the working poor.

As for this tax system it will not replace taxes - only income tax. For the embattled middle class there will still be social security taxes, property taxes, gas taxes, licencing fees, local sales taxes, etc. Of these the states will have to raise all but social security to maintain vital services that the feds are no longer contributing to. This is a very bad idea. Is there a good liberal organization that is fighting for fair taxation?

[AlinPA]

13. AARP may put up a stink about a consumption tax, given that seniors

will pay more taxes than they do now.

[54anickel]

49. Especially since many are living off of savings and investments that

they already paid income tax on when they first earned it! How about all those folks that have been piling money into Roth IRAs? Same thing, when they pull it out to use it - double taxation.

[Amigust]

85. AARP is a Repug Whore n/t

[PassingFair]

113. Bushit...

AARP is firmly in the throttling hands of the GOP. Remember their fearsome leader pulling for the medicaid scam? Many dems burned their AARP cards.

[MsUSA]

143. My husband burned his AARP card.......and I keep throwing my application

in the garbage. I sat up watching that Medicare vote on C-SPAN until 2:00am. Thought it was a no vote with 4 votes to go, all Repubs if I remember correctly, and when I wake the next morning, holy sh*t, the d*mn thing passed!!! We don't have anything to do with AARP now.

[girl gone mad]

164. We were celebrating that night on DU.

I'll never forget it. We had the votes, but they refused to drop the gavel. Minutes became hours until the Republicans finally bribed, blackmailed and cajoled enough members to fall in line.

A dark day for democracy.

[ooglymoogly]

179. now supporting home depot the redest corp on the planet

[Bono71]

18. Disagree...rich people certainly buy more expensive cars

boats, houses, etc. You could carve out exceptions for utilities and other services.

[el_gato]

21. but they only spend a small fraction of thier income whereas

poor and working class people have very little left over after spending for basic items

[thinkingwoman]

39. it would be easy

to exempt utilities, food, and clothing under a certain dollar amount.

[TexasSissy]

51. It would be easy to. But they won't do that. The govt will NEED

the taxes from clothing and other necessity purchases. It will need a guaranteed amount in taxes (like now).

Why do you think the wealthy want this tax system? Because it will be fairer to the middle class and the poor? No. Because they will pay less, percentage-wise, in taxes to the federal government.

But not much need to worry. It's not likely this tax system will pass. The conservatives have been trying to get this and other similar systems passed since Forbes ran for Prez years ago on the "flat tax" system as his platform. Any system that will get them away from taxes being based on income is what they want. They can carve out the details later, and decrease taxes generally later. But first, they need to get the progressive tax gotten rid of. And that, by definition, shifts a larger tax burden onto the middle class and poor.

[thinkingwoman]

90. whoa, hold on there

I didn't advocate for this change. I simply stated a fact.

It would be easy to exempt those items, and they very well might do so at the beginning in order to seduce the poor into thinking the new system is a good idea.

There is, however, one flaw with insisting that a national sales tax would have to be huge in order to keep the same amount of cash flowing into the govt:

I don't think they intend to keep the same amount of cash flowing in. I think they intend to de-fund vast numbers of programs and perhaps entire departments.

[jwnparadise]

166. FairTax

Under the Fair tax necessities are exempted by way of the Pre-bate. This is a monthly rebate to the poor to make the tax progressive. That is the whole point of the FairTax is to eliminate the whole loop whole problem. If you start exempting items you will get back to the same problem.

[flaminbats]

167. what whole loop whole problem?

:wtf: I'm holy confused

[jwnparadise]

169. Are you

saying that the Rich actually pay 34% income taxes on a annual basis? Of course they don't. They employ armies of tax accountants to make sure they they reduce their "burden". We spend 250 Billion annually on tax accounting. Whether it's offshore accounts or itemizations the Rich don't pay the taxes accorded by their bracket. The average guy can't afford to employ an accountant to do his taxes.

[flaminbats]

174. the top 5% pay 38% in the taxes...

if you're so concerned about the rich not paying their fair share in taxes, why not start with repealing Bush's tax-cuts?

How will Bush's tax cuts and higher deficits help low income workers with their tax returns? A better solution would be to require the IRS to help low income people complete their tax returns and take advantage of things like the Earned Income Tax Credit.

[jwnparadise]

176. I don't disagree

with you on that one. His tax cuts are BS and they have no hope of long term tax relief for the poor. The only solution is killing the current tax code and invigorating the economy with discretionary spending by way of repeal of all income taxes. Then the people will have all of their income to save, spend or do whatever with. Plus with the pre-bate and lower prices do to corporate taxation relief, the poor will have real hope of getting out of a hole.

I get the feeling you think I am a republican, nope. This issue is non partisan. It makes sense.

[jwirr]

181. One question: Will corporate tax relief

really stimulate the economy? Isn't that what bushie thought he was doing with his tax cuts for the rich? It might work if it as a relief for corporations the produce their products here only. The tax cuts for the rich only gave them more to invest overseas.

[jwnparadise]

189. It has

too because most economists believe that corporations don't really pay taxes, that include them in the cost of producing the goods. So taxpayers pay once at the checkout and again in the paychecks by way of SS taxes and income taxes. Once Corporations are freed from the tax burden prices will fall. In capitalism it only take one guy undercutting the market price to start a price war, it always happens. Once prices fall they will offset the increase in sales tax. Throw in the pre-bate on spending up to the poverty line, and the poor an average American has more spending power. The thrifty can save more, lowering the governments retirement burden, and the thriftless(most Americans) can purchase more. The economy will roar. Some economists, Jorgenson Harvard Economics, think GDP will increase 7-14% in the first years following the FairTax plan.

The other point you made is well founded, the goods will be produced here. Can you think of a better place to do business than in a country that has no corporate taxes. Out-sourcing will be a thing of the past. Countries producing goods over seas will be at a huge disadvantage.


This is not a Bush idea(he is too short sided to come up with this), it was conceived in a Blue State(MA)!

[flaminbats]

195. most economists don't think that...

a few economist think corporations don't pay taxes, but most corporate accountants and private sector economists live in the real world.

the way to lower the price of goods isn't by lowering the Corporate tax, but to balance the budget and reduce the debt. In the 90's this resulted in a stronger dollar and lower inflation, and it can happen again. Another longer term strategy should be a common currency with Canada.

Cutting taxes just can't happen when a nation is $7.5 trillion in debt!

[jwnparadise]

200. I am not

sure about which "real world" you in :) Just joking , but on a serious level, corporations include all of the costs of goods in the retail price, it only makes sense. Taxes a cost of doing business. I have read many economists that state that reducing the tax burden on business drives prices down.

I agree with you that you can't cut taxes with a large debt and in a war no less.

All we are talking about is changing where the tax is collected, not cutting taxes. If anything the NST will increase revenue due to the larger tax base for Consumption.

A stronger dollar has many reasons for occuring, only one of which is a balanced budget.

[flaminbats]

218. taxes just another cost of doing business?

sorry not buying this..corporate welfare, a well educated workforce, national defense, law and order, and public investment in infrastructure all helps business. Shouldn't businesses pay part of the bill?

"Ask not what your country can do for you; ask what you can do for your country"

[jwnparadise]

226. I tend to think

that the idea corporate taxes reduces the burden on the poor is a cruel lie. What large business wouldn't pass costs on to the consumer by way of lower wages and higher costs if they can get away with it. I am a defender of capitalism as the best form of economic system, but the caveat to that is that business has a lot of influence on market forces. A corporate tax only makes what the working poor buy more expensive, costs them jobs, lowers their lifestyle, or delays their retirement.

My example, although a little off, would be the tobacco industry. Taxes imposed as a punishment on the industry, really just punish smokers like myself with higher costs.

LOL. So my answer is yes and no. While I agree in theory that they should, IMO it is more productive for the economy and beneficial to the poor that they don't.

[flaminbats]

265. do you pass your income taxes onto your employer? good luck!!

at the end of the year after being paid 10,000 I need 10% extra on 7,000+ 15% on $300 extra say...whoops giving me..$15,255..but now I need 15% + 10% to make up for even more taxes...again giving us $16,848...ohhh nooo, when will it ever end??

[jwnparadise]

288. You favor a combo tax right?

Putting aside my feelings about lobbyists, how would that work? 17% sales and then 6% corporate and wiping out personal income taxes? Would you provide checks to the poor to cover the 17%? As long as we wipe out tax incentives to the rich and big business, I would be game.

[flaminbats]

294. I would start with repealing Bush's tax cuts..

then raise the Medicare tax high enough to make it universal, cover prescription drugs, and keep it solvent for all generations. Then I would implement a energy windfall profits tax, which was supported by President Carter. The proceeds of this tax would go to an energy security fund for low income families, public transportation, and the development of renewable energy sources.

If the budget surpluses could be brought back, I might then support phasing in something like the Nunn-Domenici USA Tax. This would be a fiscally responsible and bipartisan approach to tax reform, unlike H.R. 25!

[jwnparadise]

304. 3 Tax Hikes?

I assume most of those hikes would be geared at the rich while keeping all of their deductions. Well at lease it would repeal Bush's bs cuts.

I here Domenici may withdrawl his support for the USA Tax but I agree at least it is bi-partisan. I don't support everything in HR 25 but I think it is the best start. Just my opinion.

I'll admit I couldn't find anything but Cato "Institute" level crap concerning Carter's windfall profits tax, do you have a link I could look into?

[flaminbats]

306. everybody loves taxes, NOT!!

in a perfect world we all would be in favor of every something for nothing plan...

I support no tax hikes, only correcting the tax policies of the Reagan-Bush-Bush years. If we still had the tax rates in existence during the Roosevelt-Truman years, the Federal government wouldn't be $7.5 trillion in debt. As a result, over $300 billion of what we pay every year in Federal taxes is wasted just for making interest payments on the debt.

http://www.federalbudget.com/

One alternative to Carter's Windfall Profits Tax is the BTU tax, below are some links about both.
http://www.hawaii.gov/dbedt/ert/fueltax-act143.html
http://www.hendersondailynews.com/articles/2004/07/03/opinion/04opinionsun.prt

Why not start explaining what types of spending programs you would keep, and which ones you would abolish before jumping on the HR 25 bandwagon? One cannot ease or cut taxes without also radically changing or diminishing the size and scope of the government.

[Up2Late]

229. Duuuuuuuuuuuuude, You haven't gotta clue!!!

jwnparadise!

You need to put down the Kool-Aid, and step away from the punch bowl.

Slowly.........Slowly......

[jwnparadise]

231. That may be true

But it doesn't make me less correct. This is a progressive website isn't it? Shouldn't change be our calling, not just status quo?

[conflictgirl]

247. Change for the sake of change does not mean progress

As a self-defined progressive, my most important value in life is that everyone should have their needs met. A tax system that screws the little guy isn't progressive, no matter how many times you try to spin it that way.

I'm not so confident that the people below a certain income would get a prepaid rebate amount each month enough to cover the things they need. I just went through a 2-month fight to get a Pell grant that I totally qualified for, and I would not have gotten it if I hadn't been persistent. Just because people qualify for certain low-income assistance doesn't mean they'll actually get it.

[jwnparadise]

291. I fear government

as much as the next person. I am progressive on many issues and more libertarian on others. That is why I think this issue hits home with me. I can't stand the access big business gets from Congress, I think the IRS is one of the most intrusive gov. entities out there, and that while we are the most powerful Nation in the world not all citizens reap the benefits of that strength. This program deals with all of that.

I guess I can't guarantee that the pre-bate will cover the poor's need anymore than I can say the Student loan program is fair, so that is a fair argument.

At least the working poor will not have the payroll deduction and some assistance(pre-bate to the Poverty line)to all of the poor in meeting their tax need if the fairtax is implemented. I know the non-working poor don't pay income taxes now, but that isn't helping their current situation, is it?

I really don't think I am spinning anything but obviously that is a subjective statement.

[Up2Late]

269. FEHUUUUUUUWWWW!!!That one must have flown right past ya

I guess you missed the Jonestown Kool-aid cult (Guyana 1978) reference of my last post to you. Dude, you ARE quoting the status quo, that's the point of my post to you.

OK,OK,let me use another cult metaphor you might under stand...

You've got your Nikes on, you taken the pills Doe gave you, the Comet is coming, and you're about to have your balls cut off, but that doesn't mean the Mothership is really coming for you...

In other words, the ideas you are pushing here are BULLSHIT right-wing propaganda! Just because "The President" said it, doesn't make it true! In fact, because "The President" said it (or one of his lackeys repeated it) you can be about 98% sure that it is NOT true. The guy lies about almost everything!

In your words, GET A CLUE!!!!

[ooglymoogly]

235. oh well if we reduce taxes on the corps prices might fall

if we impose a tax on the poor via user tax, prices will absolutely and surely rise by at least 17%, what is wrong with this picture?

[Starlight]

214. None of the Repub tax cut programs help the economy.

Remember Reagan's "trickle down" program? Even he admitted later that it didn't work. You don't stimulate the economy by giving all the money to big businesses & the rich!!! If you want to stimulate the economy, forget the tax cuts & use the money to finance urban renewal & environmental programs. These projects not only stimulate the economy by creating jobs and putting more spending money in the hands of the poor & middle class, but they also improve our surroundings & make the world a nicer place for all of us. :)

[ooglymoogly]

191. maybe you are not a repulican but you think like one

[jwnparadise]

202. so now it is

name calling... huh. Come one can't we just discuss things?

[Ms_Mary]

203. Because 'Get a clue' is so constructive? nt

[jwnparadise]

205. Sorry about that.

[Ms_Mary]

208. Thank you. nt

[Ms_Mary]

187. By what system is this "pre-bate" caculated? By all means, do share. nt

[ooglymoogly]

233. we are talking about pie in the sky

to devide it up is just mental masterbation

[pffarrell]

281. small question

what about the people just over the 'poor' line - you know, the ones who make 25,001? They don't get this so-called pre-bate, but they're paying 40% more for everything. Or is there going to be a progressive rebate, based on income - in other words an income tax? I think the real reason this is being pushed is so that investment income (not savings, that's what us plebs have - I'm talking about dividend income, capital gains, all that passive income) is not taxed. They can just keep growing it bigger and bigger and bigger

this idea pisses me off so much, I can hardly express it - how can the US actually have poeple in it trying to push us back to Victorian times? I mean, I know history repeats itself, but this is going too far...

[girl gone mad]

173. There isn't a whole lot left to defund..

unless they plan to start cutting corporate wellfare and defense, which I can't imagine.

[ljaycox]

227. What are you talking about...

These fools have increased domestic discrectionary (non-defense) spending more than Johnson.

[ooglymoogly]

239. like social security n/t

[ooglymoogly]

238. things were far different then

the repukes did not control the entire government. beware this tax reform might well pass.

[54anickel]

56. Sure, they did that when they first introduced state sales tax, then

slowly they kept "exempting" exemptions. I remember when I was a kid and it first kicked in, they called it a tax on luxury items. My mother, being the "clean" freak that she was, was appalled to find that things like soap, shampoo and toilet paper were considered "luxury" items.

[thinkingwoman]

91. exactly!

I think the first phase will exempt a lot of things and then whittle down those exemptions just as you describe.

[American Tragedy]

127. There is no way they could draw enough revenue if they exempted those

[thinkingwoman]

161. as I stated in another post

they don't plan to continue needing the same level of funding.

They plan to bankrupt the country's social programs.

Also, on a side note, with no income tax there is no need for the IRS. That's a good chuck of cash right there that the gov't would no longer need to gather revenue for.

[flaminbats]

163. which makes the IRS pretty damned efficient..

using just $10 billion to raise more than $2 trillian in revenue for the entire Federal government, and it could raise more if not for Bush's taxcuts!

[thinkingwoman]

194. the IRS does not raise revenue

It collects and catalogues it.

And I certainly would not call it efficient, given the fact that its own operators can't correctly answer questions during tax season.

[flaminbats]

197. something worth spending money on..an IRS taxpayer service branch..

but Republicans don't believe in a progressive tax code, so why even bother with customer service for a bunch of dimwits like us?

[thinkingwoman]

258. I believe in a progressive tax code

as long as it is truly progressive (ie no additional loopholes that let the wealthy pay less than the poor).

But I don't advocate one more penny to the IRS and I would vote to disband it in a heartbeat.

It's corrupt and it tramples the rights of ordinary citizens with court sanction.

My opinion is shared by quite a lot of midwestern red staters and the Dems would do well to recognize this early on rather than handing the Repukes yet another wedge issue.

[flaminbats]

262. IMO it's the politicians writing the tax-law who are corrupt...

not the thinly paid civil servants just doing their job in the IRS, whom are to blame.

As long as a federal government is needed, an IRS will also be needed.

[thinkingwoman]

267. the politicians don't freeze bank accounts

and conduct audits.

As for your last sentence, when did the federal government start? And when did the IRS start?

[flaminbats]

268. good question..

and why was the IRS started? Could it be because we needed the revenue to pay for the Civil War and after that..World War I, World War II, the Cold War, Social Security, Medicare, and the growing interest on a $7.5 trillion debt? nah....:silly:

I agree the IRS could and should be more helpful to all hardworking taxpayers, and that is what this tax debate should be about..not leaving behind yet another growing, unpaid burden for the next generation of workers to pay in taxes!

[SammyWinstonJack]

260. You don't really expect that will happen, do you?

All I know is, if bu$hco INC. is pushing this, it won't be good for anyone but the richest among us. You can bank on that!

[TexasSissy]

42. They won't carve out exceptions for necessities. That will be

the BASIS of the new tax system.

As for the wealthy buying more expensive cars...they also buy yachts and other luxury items. All such purchases are discretionary. Utilities and household items and the like are necessities that MUST be purchased, whether one is poor or rich. If you don't tax consumption on at least the major necessities, it won't work.

Watch. You'll see.

Remember how the energy companies gouged California with huge hikes in the cost of energy in the middle of a crisis, coupled with natural disasters in California? Remember the phone tapes of the Enron reps laughing about all the old ladies in CA having to pay outrageous utility bills, and how Bush won't put a cap on the rates? Yes, Virginia, they will tax necessities. And the poor and middle class will pay a disproportionate amount of taxes (disportionate to the wealthy).

[lastliberalintexas]

47. Do you *ever* post anything which

actually comports with Dem/liberal/progressive thinking?

[AP]

58. Seriously. If you were just randomly posting opinions, you'd think that

a few of them would actually be lilberal. Law of averages, you know.

[Bono71]

61. Wow...thanks for policing my posts, you guys...I'll try to toe

the party line better.

By the way, I like free trade and so does my man Kerry.

[AP]

68. No. It's OK that you have conservative opinions. It gives everyone a

chance to talk about the issues.

[Bono71]

59. Hey...I vote dem almost every time...should I drink the

cool-aid if I don't agree with it...and while we're at it, go check out my posts on the war...

[aquart]

86. Exceptions for rent? Food? Medicine?

What kind of services did you have in mind for exemptions?

This system will destroy retailing, lead to a barter system. Our money isn't worth spit anyway.

The rich will stay rich, however.

[lumberjack_jeff]

87. the state of washington has the most regressive tax system

... in the country.

We have no income tax, and rely heavily upon a 8%+ sales tax.

The top 1% pay 3% of their income in state taxes. The poorest pay 15%+

http://www.itepnet.org/whopays.htm

Of course Bush wants it like this everywhere. Duh.

[conflictgirl]

248. It's similar in Texas too. nt

[papau]

98. when rich buy they do not pay the sales tax - except on minor items

that is why boats are bought off shore - hell - california even has a waiting period before you can dock in CA without paying a delayed sales tax - just to prove they are tough on the rich.

[trotsky]

107. Totally bogus.

Compare Poor Guy A and Rich Guy B.

A makes $20,000 a year. B makes $250,000.

Say your national sales tax is 20% (low according to most estimates). Then let's say A buys a used Pontiac for $2000 and B buys a brand new Lexus for $60,000 (I assume that's typical for a Lexus?)

A pays $2000 x .2 = $400 tax. B pays $60,000 x .2 = $3000 tax.

$400/$20,000 = A's effective tax rate = 2%

$3000/$250,000 = B's effective tax rate = 1.2%

B buys a much more expensive car, and yet only 1.2% of his income goes towards the sales tax on it. A buys a cheap car yet pays almost twice the percentage of B based on income.

SALES TAXES ARE REGRESSIVE AND UNFAIR!

[Sunbeam31]

122. Totally bogus indeed

er, try that math again:

Take rate: 20% (.20)
A: Makes 20,000, buys $2,000 car
B: Makes 250,000 buys $60,000 car

A: 2,000 * .2 = 400
400/2000 = 1.0% tax rate

B: 60,000 * .2 = 12,000 (There's your mistake)
12,000/250,000 = 4.8% tax rate

For B to only pay a 1% tax rate in this case, she'd have to buy a $12,500 car.

[trotsky]

130. Oops, you goofed too.

You divided 400 by 2000 to get a 1% rate?

Tax paid (400) divided by yearly income (20,000) = 2%
Tax paid (12,000) divided by income (250,000) = 4.8%

OK, you caught me in a slip up. But so did you. B, to pay the same tax rate as A (or less), would need to buy a car costing no more than $25,000.

Thus you proved for me that buying the same or similarly-priced goods will result in a much greater tax burden the lower your income.

I think my slip up was typing that B made $250,000 a year while calculating that he made $1 million. If you run that number, you will see that millionaire B pays roughly half the tax burden than poor guy A does, when A buys a crap car and B buys a fancy Lexus.

But thanks for trying, you ALMOST showed a liberal "the truth"!

[ooglymoogly]

234. gee i wonder if thats because they can easily afford them

and any tax that might be imposed with extravagant tax breaks. with this wonderful proposal they can have two of everything.

[American liberal]

157. and what about the corporate tax code? what happens to that?

[StClone]

3. Bush is a Radical

The Rich will relish this as they can off set spending by their total worth from what I understand. The poor and what is left of the middle class will carry the burden. If we want the society we had somebody has to be taxed. If we want Mexico's "few rich many in poverty caste system" we are on our way.

[Ms_Mary]

253. Yes, he is and I wonder why it's not obvious to his voters. nt

[wellst0nev0ter]

6. Wow, Once A Great Economist

Now a parroting Bush suckup. I wonder if Harvard will continue to let him teach Econ 101 to impressionable freshmen?

[aquart]

83. Uh, this fool was never great.

He got funding for saying what the rich wanted to hear.

[Az_lefty]

7. This only benefits the rich.

they hoard all the money they want without paying taxes on it.

[Bono71]

11. I disagree. How many poor people by luxury cars, boats

and other items? This might provide fewer loop holes for weathy people to exploit.

[AP]

20. A luxury car is a better investment than a Chevy Nova.

A lot of rich people will be able to recover their tax bill (or a big chunk of it) by selling their luxury car (TAX FREE!) to a rich younger person or a collector for a big percentage of the purchase price.

And a poor person who buys the Nova will drive their car to the ground, not recovering an part of the capital expense OR their tax bill.

And how many rich people spend a big percentage of the money they have. Even if you buy a luxury car, if that luxury car only cost you 1% of your tota annual income, than a 17% sales tax is really a 1.7% income tax. Meanwhile, if you're a poor person, and you only make 10K a year, but spend 10K on a Chevy Nova (think, Community College student), then just on the car alone, you've paid 17.5% of you income on taxes, and that certainly isn't going to be your only purchase that year.

Now, if that rich person sells that car for more than they paid for it, then they've cut further into their 1.7% tax burden. But the Nova driver will never cut into that tax bill (or the capital outlay). In fact, the Nova buyer will have to start again, buying another crappy car which will wear out faster, which will cost a big percentage of annual income.

See how that works? See why Bush wants this?

[Bono71]

29. With respect to your last paragraph, you make a good point...

(Not often seen on an internet message board). However, I beleive (though this is a hunch) the rich will spend far more money (maybe not as a percentage) than the poor, therby paying much more in tax.

[AP]

33. They spend more, but not as a % of inc, which dramatically reduces their

tax burden when you compare it to what they'd pay if there were a progressive income tax.

In fact, the richer you get, the more you reduce your tax burden, which is the opposite of a progressive taxation. And when you have regressive taxatioin, you shift more of the burden to the middle and working class, which destorys the foundation of our economy, which is very unwise.

Remember, wealth is what you have in asset value and cash after you've done your spending. Poor people are poor because they don't have much money left over and they don't have much asset value after they've spent (hell, neither do the middle class anymore). The rich are rich because there's a huge difference.

[Bono71]

38. I dunno...

I am uncomfortable with a progressive tax. Certainly, your point about a regressive tax is well taken.

Maybe a flat % tax then. That way, everybody pays the same amount (in terms of %). That seem smore fair than taxing someone 40% simply because they make a lot of dough.

[AP]

46. A flat tax is regressive.

Say you have person who makes 10K pays 40 bucks on their next 100 of income. Say they have to work a whole week of overtime for that extra 100 bucks. Compare that to a millionaire you gets another 100 bucks in income from savings account. That person pays 40 dollars on that income too. How is that fair? You have a person busting their ass, sacrificing their free time, and taking on the risks of having to show up for work, and you charge them exactly the same for all that effort that you charge a person who takes no risk and makes no effort to make the same amount of money?

Absurd.

That's why flat taxes are bullshit.

[Bono71]

54. Disagree...

The guy investing money is a very important part of the economy. The guy busting his ass down the street is being employed by investors who are willing to take risks by investing in business. By your own example, a person who sits behind a desk should pay less of a percentage than someone who has a more physically (or mentally) demanding job because they are "busting ass" despite the fact the two may make the same amount.

[AP]

63. You were doing better with "I don't know."

A savings account isn't an investment. There's no risk. The interest income is a function of having a lot of dollars already.

The more money you have, the easier it is to make another dollar. I'm just saying that the people with fewer dollars who have to risk and sacrifice more to make another dollar shouldn't have to pay the same rate of tax on an additional dollar than the person with a lot of dollars pays. They have dramatically different valuations of those dollars (measured by what it took to get those dollars) and charging them the same rate on the next dollar is actually charging the poor person more than the rich person.

Investment income (cap gains and dividend income) is another thing. I think that should also be taxed progressively.

In any event, you should tax a millionaire the same rate for another 100 bucks in income that you're charging a poor person. It isn't fair. It's shifting the burden on to the poor person, even though the rate is the same.

[Bono71]

67. You misread my post

I never said a savings account was a direct investment into a business...was talking about dividends.

The bottom line I suppose is there is no easy answer. Those who are taxed at a higher rate will continue to look to investments that will bring greater return. If we're not careful, that could be overseas. And the flight of money from this country would not be a good thing, no matter how much we dislike the rich.

[AP]

70. But I wasn't talking about dividends.

In any event, the more money you make, regardless of the source, the less you value an additional dollar. The less money you have, the more you value an additional dollar. By charging people the same for an additional dollare regardless of where they fall on the spectrum, you're actually burdening poor people more than rich people.

Tax is supposed to be impact neutural -- it's not supposed to burden anyone more than anyone else. That's why we have progressive taxation.

Tax is also supposed to encourage productive behaviour and discourage unproductive behaviour. Granted, investment can be very productive, work is the root of all wealth. When you shift too much of the tax burden on to work and off of capital, you're going to overburden work, and underburden capital. We've definitely crossed THAT line, and we're also crossing the line where the poor and middle class are overburdend relative to the rich.

So we're really killing the economy. I mean, this isn't speculative. You can see how the tax code is ruining things. Flat taxes and consumption taxes are just taking things more in the wrong course that we're already on.

[jmowreader]

79. There are no-risk investments

Investment means spending money with the goal of making money, not putting money at risk with the intent of making money. (The second is the definition of gambling.)

A savings account is a no-risk investment. So are savings bonds, or at least they were until Shrub stole the 2000 election. In exchange for safety, you lose returns--both have very low interest rates.

[Bono71]

141. The Rich did not get rich buying savings bonds.

[AP]

153. we're talking about how to tax them now that they are rich, and

not on the way up. That's the beauty of progressive tax bands. Your next dollar is taxed based on how many you have. When you had less -- when you were getting rich -- that dollar was taxed less than the one you get when are rich.

And the other side of this is that savings bonds are what really rich people buy once they got rich and they want a low-risk guaranteed income. Why tax the dollar of someone taking at a higher rate than someone who has no risk?

[Invalence1]

272. True. However,

many of them got rich by having the cleverness, foresight and willingness to take risks that caused them to insert themselves, by birth, into just the right family. Now that's entrepeneurial spirit!!!

[DireStrike]

64. The question is, how did that guy get the money in the first place?

My answer is luck and good societal benefits hauled him upwards. He doesn't really deserve it.

Are CEOs hundreds of times better people than the janitors in their offices?

I'm not a communist, but the wealth distribution in this country is obscene. And so is the fact that wealth easily creates wealth, and hard work does not. A society should work to remedy that.

[Bono71]

69. Wealth Easily Creates Wealth, eh? I'm not so sure about that...

Moreover, did you know that 20% of all "self-made" millionaires in this country were not from here? What does that tell you?

Don't get me wrong, if you start out with a trust fund, chances are you'll end up with a bigger pile than someone who starts with zilch. Them's the breaks.

[AP]

73. The more money you have, the easier it is to make one more dollar.

That's jut a fact. The less you have, the harder you have to work and the more risk you have to assume to make one more dollar.

[DireStrike]

81. Exactly. Perhaps "easily" was a bad choice, but...

There is always work, and risk. The more you have to start with, the less you have to work. And risk.

Chances are, if you start out with a trust fund you might eventually gain the freedom to control elements of your life, instead of hauling ass in to work every day, paying rent and bills, saving just enough to maybe take a nice, sanity maintaining vacation every few years.

[AP]

97. Also, the more you have, the less valuable an additional dollar is.

If you have a lot of money, would you bust your ass and take risks for another dollar? Maybe not. You have enough already. Time to take a vacation. Or retire early. In fact, you might become a little more careless about how you spend your money. You wouldn't think twice about putting extra postage on an envelope rather than take the time to walk to the postoffice to way your letter. You might not waste your time comparison shopping -- it's easier just to buy the thing you want at the first store you stop at.

For a poor person, another dollar could make a huge difference in your life, so you walk to the post office to weigh your letters, and you comparison shop, which eats into your free time. But if you work all the time, and you don't have time to do these things, you get screwed twice. You value your money, and you don't have time to save it. Oh, and you get screwed a third time, because you're paying a higher relative tax burden then rich people.

[Up2Late]

242. Where are they getting this crap?

I really like to know where this Bono71 person learned this crap! This Person and the poster jwnparadise are just NUTTS! I really think they are either collage students at some wacky Republican University, or they just watch too much Bloomburg TV or CNBC. Maybe you should call for everyone posting to state their age and if they are currently in school?

[Ms_Mary]

252. From a business standpoint, it takes money to make money

I run a small retail store. I don't have money. I have to squeeze blood from every penny to stock the items I have in the store. If I had the money to stock more items, I'd sell more. Picture a dog chasing its own tail. I feel kind of like that lately. Stupid economy.

[Up2Late]

263. Don't let the bastards get you down

Ms_Mary, You are putting up some great post, but I have a bit of advise, don't let the bastards get you down. They are not worth it.

Some of these people have been truly "Brainwashed" by what they are listening to in the media these days. If you ever want to see what I'm talking about, just turn on a "right-wing" talk radio show (easy to find on AM) and try to leave it on all day for a week, one of the worst is at <http://boortz.com/>. But this word of caution, have a few of your "lefty" friends (who are NOT also listening to these AM shows) check on you every few hours. Tell them to turn off your radio and give you a few hard slaps, if you start talking or thinking like a "right-winger." Hopefully, you have a strong enough grip on your "left" convictions that this won't be necessary.

I'm a Buddhist with fairly high realization, and through Buddhism, we are taught how to see the "macro" view of what's going on around us, and what I see going on is not for the common good. I grew up in one of the "Reddest" of the "Red" states (Indiana) and now live in one that is becoming redder every year (Georgia). In Indiana, I have recently learned through the gift of the Internet, the creek I played in as a small child, was a drainage ditch for a "Super fund" site, one of THREE in my town of 41,000 people. The other major one, was the Elkhart City water supply, in the city well field, 70% of them were deemed contaminated. The EPA didn't find this "problem" until 1981, one year before I left town to go to a Jr. collage. I don't think they ever bothered to tell the citizens of Elkhart that the city well field was a "Super fund Site" until people started finding that information on the Internet, 10 or 12 years later. I now feel this, was the major reason I struggled with a "learning disability" all through school.

It's really quite shocking how easily "they" have persuaded the less intelligent people in this country. This goes to the heart of my fears for "My America" (as apposed to George Bush's America). I truly fear the results of 8 years of "No Child Left Behind", the Republican de-funding of the Public schools, and the de-construction of EPA rules and laws. I fear these are all just small pieces of a much bigger plan. If the Bushies were honest, they would probably call it "Make America Stupid" or something like that. Just stop and think for a second, those kids, who were in 1st grade when George Bush grabbed power, will be in the 9th grade when he is finally gone, and those who where just starting High School (8th), will be struggling to finish collage, or will have been already working in some dead-end job for four or five years by that point.

Sorry this was such a long post. If you want to make it a new thread, I'd welcome this. I don't have enough posts yet to start my own thread. I'll reply to any real questions in later posts.

[flaminbats]

266. too much Dennis Miller,Pat Swindle, and Joey Buttafucco..

:spank:

[flaminbats]

93. actually wealth does create wealth...

ever hear of a loan? Maybe you've never had to start a business on borrowed money..


if you want Democrats to back a consumption tax, why not something which isn't regressive..but has support with both parties and the public?

http://scholar.lib.vt.edu/VA-news/VA-Pilot/issues/1995/vp950502/05020007.htm

[Bono71]

142. 2 things

1) I know what it means to build from zilch

2) I am all for democrats and the idea you espouse in the latter portion of your post

[flaminbats]

152. I'm glad we agree on something..

but why waste time defending a National Sales tax?

[Bono71]

156. Well...as far as a national sales tax goes,

if one could be implemented that didn't punish the poor, it might be a way to cut down on loopholes, raise revenues, and not punish people for earning/ building wealth. That sounds like pie in the sky and maybe it is, but I am at least willing to take a look at it before simply dismissing it as "Good for the rich, bad for the poor."

I think it was AP that posted above, that because of fixed expenses, poor people would be losers in this scenario. This very well may be true. But it might (through special exemptions, etc.) be possible to work around some of these issues. Then again, maybe not.

[flaminbats]

159. just enough holes to sink the boat..

isn't the aim of a National Sales Tax to eliminate the IRS and all special exemptions?

IMHO there is only one good argument for a National Sales Tax. It has nothing to do with tax simplification or eliminating the income tax. In order to raise adequate revenue to balance the budget, fight our wars, and pay for our entitlements..an IRS is needed to track down and audit tax evaders. Eliminating or reducing the income tax or corporate tax would be a huge mistake, what the government needs are new sources of revenue!

A better alternative would be implementing the National Sales tax to test and improve it. Then the revenue brought in from this new tax could be used to reduce the deficit and pay for expenses related to the war. Isn't it better for the market to rely on a variety of different sources of revenue, rather than to tax a single sector of the economy?

[jwnparadise]

168. So wait

Most of this discussion is the unfair action on the poor and now you want to keep the income tax and add a NST on top. That is regressive.

[flaminbats]

170. but I advocate a lower national sales tax..

and higher income tax rates for the rich and successful corporations. Together this would result in lower payroll taxes and income taxes for future generations, if we become serious about paying down the National Debt! I also advocate an immediate end to the war in Iraq..do you?

"The Outstanding Public Debt as of 03 Dec 2004 at 11:59:36 PM GMT is:
$ 7 , 5 3 0 , 8 9 7 , 5 3 1 , 5 3 0 . 0 5

The estimated population of the United States is 294,962,607
so each citizen's share of this debt is $25,531.70."

[jwnparadise]

175. Absolutely

to the Iraq piece. The problem with the combo tax is Congress! If they have choice in so far as exemptions, then their will be lobbyist, and when their are lobbyist their Omnibus Bills with incentives to use federal money to teach people to play golf! I love golf, but no sport should be federally funded.

If you combine them with the type of lobbying system we have now, the poor would become destitute.

The debt is a huge issue but it will never be paid down with income revenue because the tax base is too small, without braking the poor;s back. Consumption is almost twice income in this country which once the FairTax is implemented will generate more revenue.

[flaminbats]

184. another unmentioned danger of not taxing investment..

partnerships and sole proprietorships must spend a great deal when first getting off the ground. Every capital expense will be made unbearable by a national sales tax. Unlike established corporations, owners will not see income made from such investments exempted from a National Sales Tax. This would be a huge boost for established corporate monopolies, but another slap in the face to their competition.

What percentage of income does Bill Gates spend in a year, less than 10%, what percentage does Billy Bob spend in a year on just food and medicine...more than he makes?

Sorry...but a Sales tax will only work when it doesn't tax food and medicine, and that is only possible alongside the current federal taxes! In regards to loads of accountants...we already have software which does tax returns flawlessly.

[jwnparadise]

196. That is just not true

Big business do not pay taxes now. They pass along the costs to the consumer, some estimates say that 22% of the cost of goods sold is corporate taxes. If you drop that burden prices will fall. This lower cost of goods will offset the national sales tax. Plus with no Income deductions, entrepreneurs will have more funds to start business with or no tax burden for established small business will offset the capital deduction realized as income. I have help run a small business for many years and tax compliance costs are ridiculous and more stringent on small businesses than they are on Large corporations. FairTax* ends the economic stranglehold by big business on small business and foster competitiveness.

What does Bill Gates spend in a year, 100 million conservatively? That is 2.3 mill in taxes annually under the FairTax*. I doubt seriously he pays that much now. When he dies, do you think Uncle Sam will get any? Not if he leaves it to his wife. Under a FairTax the gov. would get 23% every time she buys a new car, house, boat, etc....

Billy bob will not pay taxes under the FairTax* plan. He will receive a rebate for all taxes spent up the the poverty line.

Example:

Bill Bob spends 25,000(poverty line) a year and has a wife and 2 kids. His rebate would be equal to 25,000 X 23% = 5,750 in pre-bate. Divide that by 12 and Billy Bob will get $479 on the first of the month every month to offset his taxes. He will not pay taxes, not SS taxes or income taxes.

As far as Quicken goes, your just paying Inuit's taxes for them.


*FairTax is H.R. 25 submitted to the House in 2003

[Ms_Mary]

201. And again, what invasive system gets put in place to track spending? nt

[jwnparadise]

204. None would be needed

Spending up to the poverty line is tax free. I think that is 25,000 annually. The rebate is 25K X 23% = 5,750 or 479 a month paid on the first on the month. You get the rebate regarless of you actual spending habits.

Sorry about the get a clue bit.

There is a lot of mis understanding about this concept and I should be more respectful.

[flaminbats]

212. Bob will not pay SS taxes?

how are we going to fund Social Security? How can we make Medicare available for every worker in America if you abolish the Medicare tax?

If businesses don't pay taxes, why do they hate filing tax returns? I support a fair tax, not H.R. 25..the crucifixion of the American worker!

[jwnparadise]

228. Bob won't pay any tax because

The consumption base is almost twice what the income base is. The 23% sale tax will shore up SS and medicare for the forseable future by taxing a larger base.

The American worker is better protected by the FairTax than any other form of taxation.

Big Business say they hate this idea because they think it will harm their profits ie bad for theeconomy. What they are secretly fighting for is their tax incentives and favors in congress.

[flaminbats]

264. then why are they using bribery to pass it?

why did they contribute so much to the RNC and cosponsors of this legislation? Does it also happen to be just luck that John Linder, the sponsor of this legislation, happens to represent one of the..most snotty, highest per capita districts in the country?

And just look at some of the bills Linder has sponsered...

One bill would make it nearly impossible for disabled or dying individuals with medical debts to declare bankruptcy. It replaces the presumption in favor of granting the relief sought by the debtor with a presumption that abuse exists if the debtor's current monthly income exceeds an amount determined according to a specified formula.

If you think Linder's a Christian, he sponsored legislation to reduce the tax on beer to its Pre-1991 level. Ironic for someone pushing a Consumption tax and the Balanced Budget Amendment, eh?

And not only does he want to abolish the Income Tax, he wishes to make it Unconstitutional!!!

He also supports the Reagan Dime Act, and another favorite...wishes to AMEND the Public Health Service Act to improve the AFFORDABILITY of health coverage for small employers...in other words, if you have a medical problem..time to bend over mate!!

click here for more on this humble lovable Christian American..
http://linder.house.gov/index.cfm?FuseAction=Legislation.Home

[jwnparadise]

289. Most Politicians are wealthy

and the wealthy tend to live in nice neighborhoods. So I don't really see the relevance to using the "per capita" argument as a determining factor when considering the soundness of legislation. They are all crooks.

As far as Linder, he is a putz and he could worship rocks for all I care. He even looks unstable on TV, don't know what that is all about.

When the Bill was introduced it had 2 Democratic sponsors along with Linder. They have since withdrawn their support, but I think it was a scare tactic to try and defeat republicans in the recent elections, we all know how that turned out.

the Fairtax guys gave money to the GOP because they are in power and they want to get this passed. If Clinton hadn't lost Congress, they would have flooded the DNC.

[flaminbats]

296. Two Democratic cosponsors...

who are they?
http://www.fairtaxvolunteer.org/scorecards/sponsors.html
I noticed Ted Poe and Ralph Hall listed as Democratic sponsors, but both of these Tom Delay DINOs switched parties last year! Collin Peterson also voted for Bush's tax cuts and the Iraqi War Resolution..didn't you even oppose this?

Does it please you that there are no groups like the Rainbow Coalition, Concord Coalition, or the AARP lobbying for this bill? I wonder why?

Finally..the per capita argument answers the question who do they represent? You say they are all crooks, I am more willing to trust the elected members of Congress than a President appointed by delegates from the Electoral College. I am more willing to trust a Congressman who represents working-class people than one who represents the richest and luckest in the country.

[jwnparadise]

305. Well that's what I get for Skimming the article.

I already said I didn't support Bush's cuts, still don't.

I'll admit I got caught in Kerry's boat as far as believing the Pres should have the power to act, not thinking he would act unilaterally. With all of the Un's issues, one day we are going to realize that only the voice of the World can wield military force. They do have to use that voice though. I am not a pacifist.

Your argument concerning the trustworthiness of Bush needs no qualification, I just don't buy that Democrats are some how above wealth and privilege. I mean how nice of a neighborhood is Beacon Hill.

This whole argument is about politics. My point in posting here is to discuss the merits of the legislation. I try real hard to look at things these days on the facts considering the level of partisanship. I am not saying you aren't. It just seems that this thread is about partisanship more than debate, IMO. I am a independent who usually votes for third parties because neither party hits home for me right now. I voted for Kerry this time despite those reservations because Bush acted w/o the UN, and we will pay for it for awhile. There, you've been wanting me to say that the whole time :) I'll add that for the most part I am very liberal and completely secular.

I honestly think that Rainbow, Concord, and the ARRP don't have all of the facts due to misinformation and a general dislike of Republicans, look at all the different positions just in this thread. I could be wrong.

I believe in this program partially because it is not Bush's idea. More than anything though, I think this is the most progressive form of taxation and the fairest to the working class. I think Bush has a huge ego and more than anything else, wants to be remembered as the Conservative FDR. Then when it works, solidify the GOP as the majority party for a long time, an idea I don't want to contemplate.

Groups like these do support it.

Citizens Against Government Waste
American Farm Bureau
American Taxpayer Union
(I don't have the skinny on these groups - they seem honorable to me)

For the record, thank you very much for the discussion even if we can't agree.

[flaminbats]

308. there is nothing progressive about HR 25..

if you really believe in progress..it would be better to help the people who can't pay their medical bills, have safety nets available for the disabled and unemployable, and to reduce the longterm tax burden by reducing government debt..not increasing it! More debt ultimately results in higher taxes for everyone, especially from those who can pay.

Regarding your points about the War, every war costs money. Even if you opposed the war, you should not allow our children to pay for it! F.D.R. supported tax increases and even rationing during WWII, and Wilson started the Income Tax in part to pay for WWI.

Unfortunately we began slashing taxes before the Cold War was complete, hence the beginning of our growing fiscal disaster. Every declaration of War should include another tax increase, for every new country that we deploy in..we should pull troops out in another. If the taxpayers are willing to win a war, then they better be willing to pay for it! The age of borrowing money to fight corporate wars is long gone.


Citizens Against Government Waste
American Farm Bureau
American Taxpayer Union
(I don't have the skinny on these groups - they seem honorable to me) But wait..you had the skinny on AARP and Rainbow Coalition, they must only hate all Republicans!!:evilgrin:

[SharonAnn]

279. No, work creates wealth. Somebody's got to do some work!

Wealth by itself just sits there.

[flaminbats]

295. strange...

then why do people work their asses off for decades, but never able to pay off their debts?

Luck, wealth, and good connections are suppose to create wealth! Hard work, patience, and useful skills only make it harder for the employers to justify fucking us when no longer wanted.:shrug:

[Redleg]

110. The old labor versus capital debate.

For some reason, Republican tax proposals always seem to benefit capital more than labor. I wonder why....

[Bono71]

144. No doubt, they both need each other

[gaia_gardener]

62. Not to mention that everyone has

fixed expenses - utilities, house, car, insurance. Some of these are more than others. So if you do a flat tax it will hit the poor the hardest. They cannot get their costs down to the point that it will be equitable.

So look at it this way:
Person A makes $2,000/month. By working very hard to economize they have managed to get their house payment down to $450, their car payment down to $150, their car insurance down to $80, their utilities (including phone) down to $150, food bill is $250, health insurance is $400. So their fixed costs are $1,480 or 74% of their income.

Person B makes $4,000/month. If they made the same economic choices as person A (and nothing is stopping them) then their fixed costs are 37% of their income.

Now if we wanted to talk about a flat tax on disposable income, then we might talk. If we could agree on a flat $2,500 exemption (because there are always things that pop up which is why someone who makes $2,000/month is invariably in debt) it might be halfway doable. But, it's still going to be somewhat regressive.

[American Tragedy]

128. You have a twisted idea of fairness. Let me explain.

I must confess something about myself that is likely to get me seriously flamed here on DU: my family is moderately wealthy, in large part due to stock investment and inheritance.

As I've been taught throughout my life, we don't work any harder or necessarily contribute more to society than others who bust their ass for comparatively little fiscal incentive. Nor indeed do many rich people, due to the types of activities that are most positively reinforced in our system, yet we live far better. Even if you raised our taxes ten percent or more we would still live a privileged and secure existence with exceedingly more disposable income.

How the fuck can you justify cutting taxes for us, which we certainly don't need, yet raising the burden drastically on police officers, teachers, soldiers, nurses, public servants, firefighters, janitors, etc.? Because however you try to sugar-coat it by calling it "simple" or "fair" or whatever bullshit spin you like, that is what you are recommending.

I suppose you think that poor people get what they deserve in the free market because they don't work hard enough, or they don't have initiative. I expect that attitude in FR, or in the Bush administration. I never thought I would see it here.

Incidentally, not only is this unjust, but it is impractical. When millions of consumers are unable to participate in the economy regularly, we all suffer for it. What good is it when massive corporations can produce millions of automobiles, if nobody can buy them?

[Euphen]

215. You make me sick.

Just kidding. :hi:

But seriously, I can't imagine that anyone here would actually flame you based soley on your wealth.

[Ms_Mary]

132. The poor don't have the money to spend. I'm lower middle and I don't. nt

[jwirr]

190. How much of that

money the rich spend will be overseas and tax exempt? Or on line marketing? There seems to be a way out of taxation for the rich no matter what you do.

[el_gato]

25. rich people only spend a small amount of thier income

thus the bulk of thier income will go untaxed

I mean you can only buy so many fancy cars.

[AP]

28. And fancy cars are more of an investment than an expense.

And luxury cars rarely decrease to zero, whereas cheap cars rapidly decrease in value towards zero.

[Bono71]

34. If you believe a "fancy car" is an investment, I have some

swampland to sell you in Flroida.

[AP]

36. Hello. A benefit of wealth is that even your discretionary spending...

...becomes an investment.

This is why we have Rolexes and expensive pens and furniture and rugs and art. It's because when you're rich, you don't have to waste money on things that depreciate in value to zero. You can buy things that are worth the same or more when you're done with them or you die.

[Bono71]

41. Hold on there...don't change the subject...

you were talking about cars...

The vast majority of cars (even the "luxury" items) lose value the minute they leave the lot. Moreover, the secret to wealth is cash flow (not necessarily appreciation). So, unless your car is winning races and generating money for you, you can keep that "investment."

As far as other speculative items, art, pens, and coins...yes they may appreciate in value, but they may not. There certainly is no guarantee. And again, the generate zero cash on cash return.

[AP]

75. The rate of depreciation of a luxury car is smaller than any other car,

and occassionally you get lucky and you get one that becomes more valuable.

And the money you lose as a percentage of your wealth is really small for the average luxury car buyer.

And a luxury car buyer can often drive their car longer than a cheap car buyer.

[Bono71]

134. Lol...

Hey I agree with some of your points...but if you are going to try to defend your statement that a car is an "investment," you're going to lose, and I think you know it. Yes, a luxury car might not depreciate at the same percentage as a yugo...but we were talking investments, and it doesn't matter if you lose 6% or 20%, you're still losing (and again, no cash flow is being generated). I don't know one business person that would describe an automobile as a good "investment."

[AP]

154. I said it could be an investment, and that it's more of an investment than

buying a car you know will depreciate faster.

What's your point in quibbling over the definition of investment? If it makes you happier I will say buying a luxury car can maintain more asset value for its purchaser than buying a crap American car of the kind that a lot of working poor have to buy, although 95 times out of 100 that luxury car will lose value year over year.

[Tempest]

148. Many luxury cars ARE an investment

Mercede Benz's actually appreciate in value if you keep them in good shape, which is what rich people do.

Try pricing out a 1960s M.B. and compare it to the selling price. You'll be surprised.


The same thing is true with Cadillacs from the 1960s and 1970s.

My mother sold her 1960s Caddy for $7,500 more than what she paid for it.

[AP]

155. Thank you.

[TahitiNut]

171. How about my mother's 1977 Monte Carlo with

:eyes: :silly:

[SharonAnn]

66. No help here. They'll just have a "corporation" buy it or use it for

"business" so they don't have to pay tax on it.

You can be sure that the rich have absoluely no intention of paying consumption taxes on anything they buy.

Remember the guy who was head of Tyco who bought a painting for $1 million or so and had it shipped as if it was from out of state so that he didn't have to pay sales tax on it?

"Only the little people pay taxes."

[Bono71]

135. I think the point of the tax reform would be to carve out these

kind of loopholes

[Ed C. Finley]

100. Right

The rich just send out their servants to the money tree in the back yard, load up on filthy lucre, and just stuff it in their masters matresses, where the government can't get to it, those unpatriotic bastards.

Everyone should pay for the cost of government, from Mr Scrooge Fuckthepoor in his 50 million dollar Mcmansion to Mr A. Cleveland Steemer eating his government cheese in the shelter.

Everybody pays.

End of messsage, nothing follows.

[starroute]

10. Radically unfair to the elderly and retired

The people who already paid taxes on every penny they earned and who are now spending it out again will get doubly screwed. Not to mention those who are living on Social Security.

Is there anyone with the expertise to work up some figures on this and get it out to the seniors' associations?

[Bono71]

12. That is a good point. I suppose you might have to grandfather

(no pun intended) in.

[lumberjack_jeff]

88. good point...

especially to anyone who invested in a roth ira. The basic point of them is to avoid future income taxes.

[Robert Oak]

14. where ever this guy went to school....don't go there

This guy got his PhD from Harvard...

so that tells you this school is a complete sell out to corporate interests.

This is the same idiot who claimed outsourcing is good for America..
our trade policies are good and now a regressive tax system
will be good.

Can you say at minimum complete idiot and at maximum corrupt as hell?

Oops...don't forget when they tried to classified fast food jobs
as manufacturing to make the employment situation look better.

Who all thinks that universities that teach bullshit should not be accredited?

[Bono71]

19. LOL...harvard a sell out to corporate interests? Just because

you (let me guess, you have a ph.d. in economics?) don't agree with one grad, you suddenly think the whole schools sold out? LOL!

[AP]

22. Acutally, Harvard does have a reputation for being corporate and...

...conservative on an institutional level, even if its student body has a fair share of liberals.

[Bono71]

24. Yeah those faculty members sure are conservative

[Kathy in Cambridge]

140. I grew up in Harvard Square and yes, there's quite a few conservative

economists at Harvard. The liberal ones are down the stree at MIT.

[Keirsey]

103. Harvard and Harken Energy

Molly Ivins tipped me off to the Harvard-Harken Energy connection.

In 1990, the US energy company Harken Energy entered into a business partnership with Harvard University which ultimately became the vehicle by which Harken Energy could transfer $20 million in debt to Harvard. Though made public, investors did not directly equate the transferred debt as a decrease in equity, allowing the share value of Harken stock to rise, and senior Harken managers liquidated their shares.

http://en.wikipedia.org/wiki/Harken_Energy


http://www.google.com/search?hl=en&q=Harvard+Harken+Energy&btnG=Google+Search

[SharonAnn]

120. Let's see, GWB has a Harvard MBA. Would you consider him a sellout?

I would.

[snippy]

15. What he means is that the republican party

considers it outrageously unfair that someone who has an income of $50,000 per year, all of which comes from interest, dividends, and capital gains, should have to pay the same amount in taxes that someone who has an income of $50,000 per year all of which comes from salary or wages. To the republican party it is obvious that the only fair system of taxation is for the first person in this example to pay no taxes at all on such income while the second person should pay taxes on the entire amount minus any amount saved.

[Bono71]

23. I'm not sure that is it. I think there are other reasons...

starting with the closing of tax loopholes for the rich. Secondly, with respect to dividends...the corporation has already paid tax on the money when it was earned. To tax it again as ordinary income amounts to (in the eyes of some) double taxation.

[el_gato]

27. your spreading alot of bullshit

More and more corporations pay no taxes at all in this country.
I guess you've missed out on the whole reincorporation process.

[Bono71]

31. Well...my corporation pays taxes. Besides, if other nations

offer a better deal, why not? The ultimate beneficiaries are the shareholders...and guess what? Not all the shareholders are wealthy people...ever hear of CALPRS?

[AP]

37. 50% of Americans own some stock. 90% is owned by something like 1%.

Low taxes on cap gains and dividends is a huge benefit for a very small group of Americans.

[Bono71]

43. Well, while we are throwing around statistics...

go look up the percentage of Americans that pay 90% of all tax revenue this country takes in. It might surprise you (it certainly surprised Al Sharpton during the primaries).

[AP]

53. There is no point on that graph where people who pay a percentage of the

total income tax collected are paying a greater percentage that the percentage of wealth they earn or control.

The people who pay 50% of the taxes collected earn something like 80% of the income. The people who pay 90% of the tax collected probably make 99.999% of the income.

There is no point where the top fraction of income earners pay bigger percentage of taxes collected than the percentage of wealth they earn or control.

[Bono71]

57. Go reread my question...that is not what I asked

[AP]

65. I think I answered it.

After you look at the number, tell me what percentage of all the wealth in America that percentile controls. It's going to be higher than the percentage of the tax burden they bear.

[Sunbeam31]

123. Numbers?

What numbers are you using? I don't know where to find % of wealth "controlled" but I dunno here...

From http://www.census.gov/hhes/income/histinc/ie3.html

Top 5% have 22.4% of the national income
Top 20% have 50.1% of the national income (meaning top 25% have more)

From http://www.irs.ustreas.gov/pub/irs-soi/01in03ts.xls

Top 5% paid 53.25% of total income taxes
Top 25% 82.90% of total income taxes

If we interpolate (not exact, but it'll have to do) for the Top 25% of income we uhhh...

<math>
fourth 20% of earners = 23% of national income
25%-20% = 5% => 5% = 25% of 20% => 25% of 23% = 5.8%
5.8% + top 20% of earners (50.1%) = 55.9%
</math>

So...
Top 5% of income earners gets 22.4% of the national income and pays 53.25% of the income taxes.

Top 25% of income earners gets 55.9% of the national income and pays 82.90% of the income taxes.

Looks like Bono's got a point.

[AP]

126. Your first source is only wages, but your second number is tax on all

sources of income -- cap gains, dividends, interest income, trust income, etc.

At least that's how I read these tables.

The richer you are, the less of your annual income comes from wages. Basically, you just have actors, athletes, musicians, doctors and lawyers who are high wage earners. The rest get their money from unearned sources (seeling stocks, dividends, inheritance, etc, none of which are covered in your first stat).

I've seen the the stats for both annual income (from all sources) and total assets, and in both cases the people who are in the top X% of income earners an the top X% of asset owners pay less than X% of the total tax burden.

[AP]

129. Check this out:

This whole article is interesting: http://216.239.57.104/search?q=cache:-FEh7vj_SGYJ:www.law.ufl.edu/faculty/publications/pdf/matt.pdf+CBO+study,+Effective+Federal+Tax+Rates:[phone]&hl=en

At page 27 it talks about wealth vs. income. Top 1% has 40% of the wealth, top 5% has 60% of net wealth.

[trotsky]

137. The other thing you ignore is taxes other than federal income.

Social security & Medicare, for instance, have a "cap" on what is taxed. Above a certain income (I think it's around $70-$80k), you pay a 0% rate.

Then there's sales taxes, state taxes, fees, etc., etc. and when you include all of that to formulate a TRUE tax burden, a very different picture emerges.

Not that Bill Gates, Richard Scaife, and Steve Forbes don't really appreciate you standing up for them, I'm sure. They love it when us working stiffs think that they have it rough.

[snippy]

146. These numbers are complete and total bullshit insofar as the fairness

of the income tax is concerned. The Tax Cut Monkeys love to fling these numbers along with their own feces as they financially rape their children and masturbate to images of Reagan cutting taxes. But the numbers are misleading at best and really are closer to outright lies.

The numbers cited by the Tax Cut Monkeys use "adjusted gross income" to determine the percentage share of income but they use the taxes calculated on "taxable income" to determine the percentage share of income tax. By not using taxable income the Tax Cut Monkeys include in the bottom 75% millions of people with less than $5,000 in total gross income, including millions with less than $2,000 in total annual income. Plus, all nontaxable income is excluded from the income percentage of the top 25%. That means that as much as half of the income of some wealthy taxpayers is excluded from the Tax Cut Monkeys' calculations.

[54anickel]

71. Yes, and getting a larger % involved in the ponzi scheme is the goal of

the ownership society and privatizing SS. Let's get everyone on the corporate bandwagon, giving their allegiance to the almighty corporate profit. Profits take precedence to all else. Rather than be driven by what is best for the society as a whole, the nation will be driven by what is best for the corporate bottom line.

[el_gato]

40. funny how corporations are allowed to avoid taxes by opening a mailbox

but if a wage earner tried it they would have thier house and anything else they own taken from them.

The fundamental issue with this tax scheme is that it will shift the tax burden downward. You can pretend otherwise but that won't change anything.

[Bono71]

48. I'm not necessarily arguing it wouldn't be a regressive tax...

I haven't seen it, so I don't really know...if it does indeed shift the burden "downward" then certainly this is not something I would be in favor of....

[lastliberalintexas]

72. ANY sales tax shifts the burden downward

It also interferes with a market economy much more so than that progressive income tax of which you are so disdainful. So our already fragile economy takes yet another dive southward, particularly when you consider the ever increasing interest rates promised by Greenspan and the higher energy prices- which also add to the price of goods. Deflates demand tremendously.


And I do have an econ degree, even if it isn't a PhD. But you are supposed to learn this kind of stuff in Econ 101, so a doctorate shouldn't be required for this discussion.

[Robert Oak]

89. Thank you

That's right it doesn't take a PhD to know the basics on regressive
taxes and why they are horrific for the nation as a whole,
never mind the middle class and the poor.

It's beyond studies, it's in every econ 101/102 Freshmen text.

[snippy]

45. Bush is going to create an unlimited tax loophole for the rich.

There will be an unlimited deduction from taxable income for money invested and no investment income will be subject to tax.

I agree that some dividends, though by no means all, are taxed twice. But the best solution for that, assuming a solution is necessary, is to give the corporation a deduction for dividends paid.

[SharonAnn]

121. Oh get real! The rich aren't pushing this to be fair. They're trying

to eliminate any taxes that they would have to pay.

THERE IS NO OTHER REASON TO DO THIS!

If we wanted to have fair distribution for payment of taxes we could start by eliminating a lot of loopholes that the wealthy and corporation take advantage of.

[girl gone mad]

193. If you think that modifying the tax code..

has anything whatsoever to do with closing loopholes for the rich, you are seriously deluded.

Here's what the richest American at the time had to say about the 1968 Presidential election.

"I am determined to elect a president of our choosing this year and one who will be deeply indebted, and who will recognize his indebtedness. Since I am willing to go beyond all limitations on this, I think we should be able to select a candidate and a party who knows the facts of political life....If we select Nixon, then he, I know for sure knows the facts of life." -- from handwritten memos by Howard Hughes, early in the 1968 presidential campaign


Things have only gotten worse since then. America is more of an Oligarchy under Bush II than at any time in our history.

[el_gato]

30. when they talk about taxes they always ignore payroll taxes

[lastliberalintexas]

76. That's because to a repub

the only tax which exists is the federal income tax- which is also our only *progressive* tax. They completely ignore Medicare, SS, state sales taxes, property taxes, and any city taxes or fees. But hey, those already disproportionately hurt the poor, so why should repubs worry about those?

[SharonAnn]

280. Repubs aren't on payroll. They don't care about it.

[dogman]

16. What will be exempt?

That is where it will really show how unfair it is. If low income are given an exemption and prices are actually rolled backit could be set up more fairly. I just can't trust the people in power to do the right thing. They never do.

[snippy]

80. It will be similar to what I described in #35. n/t

[Child_Of_Isis]

17. So, what happens

when people stop consuming? Or only consume the bare necessities?

[Anakin Skywalker]

26. Is this A$$clown a god?

"Top economist"? How the f*** does one get a title like that? Bestowed on by His Holiness King George the Turd, perhaps?

[bobbieinok]

32. sure wish all the poor and middle-income families could be told

HOW UNFAIR THIS CONSUMPTION TAX IS

totally regressive tax......punish the poor and middle-class for being stupid enuff to choose the wrong parents

BLATANT THEFT FROM POOR AND MIDDLE-CLASS

BLATANT GIFT TO RICH

[snippy]

35. What Bush wants to do is create a backdoor consumption tax out of the

income tax. Under his plan the income tax will remain, but there will be an unlimited deduction from taxable income for money which is invested. The only other deductions will be for home mortgage interest and charitable giving. In addition, interest, dividends and capital gains will be excluded from taxable income. The result of this will be an income tax only on salary and wages, and only on the amount of salary and wages which are spent.

[David__77]

44. Mankiw is a whore.

His own textbooks go against such a notion. This is ludicrous. He is ignoring the role of the distribution of wealth as regards investment. Sheltering investments but heavily taxing high incomes would also stimulate investment.

[Just Me]

50. Yup. This makes my head explode.

Let's just be something far, FAR below animals,...worse than a disease or virus,...and become the "consumption" of all life.

Unbelievable. We are taking the most incredible gifts of being human,...and becoming destroyers.

Oh, well. No one inherits nothing. We all end up in the same place.

[OneBlueSky]

52. well . . . now they're OFFICIALLY basing US economic policy . . .

on pure, unadulterated BULLSHIT! . . .

what we need is a return to progressive taxation, and re-regulation of corporations . . . including stripping them of their status as "persons" . . .

[gtar100]

82. The right answer...the wrong people to implement it

You are so right on:

* Progressive taxation
* Regulation of corporations
* Corporations not persons
(this last one would make individuals as owners
responsible for company actions in place of a
non-existent entity)

An era of prosperity would ensue.

But these greed-heads won't cut off their blood money, even though they'd live in luxury the rest of their lives without another day's work.

Digression:

True story - Qwest pays fine of $250 million because of past transgressions. But all the people that committed those transgressions are no longer with the company. They've left with millions of dollars in their name. "Qwest" doesn't exist as an entity itself that can be responsible for past transgressions. These occurred because of the actions of certain individuals who should be held responsible, but are not. Instead, hard working individuals who had nothing to do with it are stuck with the bill. If these executives worked under the risk of personal responsibility, well, they'd probably not be executives... and others with integrity would step up to the plate to run a company as it should be.

[FogerRox]

55. Athens tried some crap like that and blew the deal.

A Progressive tax system is --has --been the only way a democracy continues to function. Historically any deviation leads to a despot.
Anda lot of people dying

[Just Me]

77. Power corrupts,...an absolute power is corrupting,...absolutely,...

,...and they have NO compassion or PRO-LIFE agenda on their minds.

Only power.

BUT,...they, too, will fall.

Their fall will quench those of us who need the spring.

Just watch.

[Barrett808]

60. I thought consumption taxes were strictly regressive. Am I wrong? n/t

[sweetheart]

95. Yes your assumption is wrong

If a consumption tax is levied depending on the goods involved, or/and on the consumer, it can be made progressive. An example,
might be a person on minimum wage who pays no tax at all on food,
clothing and transport. Another wealthy person pays a hefty tax
at the restaurant, for the limousine, and for a designer handbag.

The european VAT is a progressive consumption tax. It can be done.

I don't know bush's vision. He likely wants a strictly regressive
system, given his impulse to destroy any hint of decency in the US.
That said, it is a presumption to think so, made by most in this
thread.... but as this is a bipartisan venture, i suggest that we
embrace it and demand that it be implemented "progressive".

[Barrett808]

108. Thanks. Didn't know that bit about the VAT. n/t

[Gothmog]

74. Regressive taxation is simply wrong

A consumption tax is inherently regressive and the proposed rebates do not really change this. The key thing is that this will be a massive shift in the taxation burder from the wealthiest individualts to the middle class. This is simply a bad policy.

[snippy]

78. It won't be an actual consumption tax, but it will be regressive.

Bush is going to allow an unlimited deduction from taxable income for any amount of annual income which is invested. Basically an unlimited IRA deduction. In addition, all investment income will be excluded from taxable income. The result of that will be an income tax only on that amount of earned income which is not invested. Bush's plan will be extremely regressive.

[flaminbats]

84. always believe the top con-artist

How does radically increasing federal taxes on goods and services along with deficit spending during a war result in "greater saving, increased capital accumulation, and higher growth in productivity and wages?"

[sweetheart]

92. progressive or regressive

As even "the economist" admits, the way such a tax is implemented
could make it progressive... so many of y'all are jumping the gun
to call it regressive without knowing the details.

I'm willing to put down my partisan banner and help reform this
disgusting tax code.... and i'm willing to consider a consumption
tax system, as i believe it is fairer and less burdensome, depending
ON HOW IT IS IMPLEMENTED. Taxation methods are just a technology,
and the dems, IMHO, should drop their kneejerk hatred of
consumption systems, and consider how they might be made useful
to progressives.

Granted, bush is regressive in his very nature, but given that this
tax reform is gonna happen regardless of whether democrats like
it or not, then perhaps the proper political akido is to move with
your opponent and make the tax work for progressives.

This hatred of a taxation technology is just infantile, and not
progressive in the least.

[girl gone mad]

213. I'll admit there may be a few benefits..

to a consumption tax system. For one thing, it would reduce overconsumption. Americans are wasteful. We buy too much, and often don't take good care of the things we own and are quick to throw them away because they are artificially cheap to acquire.

Such a system could also potentially make a dent in the illegal labor market, since it would be harder for people getting paid under the table to survive in America.

However, our economy completely revolves around excessive consumption. Any sudden shift towards becoming savers rather than spenders would create havoc.

The basic regressive nature of a consumption tax is troubling, and regardless of how it is implemented we would always need to gaurd against future attempts at simplification (further shifting the burden downwards). I think the only way to make a rebate program work would be to send rebates to every citizen, which would be problematic. I also think small and sole-proprieter businesses stand to be hurt more than big businesses, since small businesses won't see large benefits from investment tax cuts and there would be little we could do to rectify that.

[confusionisnext]

94. we didn't always have an income tax

Wall Street Journal, Feb. 27, 1989, p. B-1

Taft Clears a Path for Income Tax, 1909

The personal income tax was on and off the books in the 19th century, but the Constitution had to be rewritten before it arrived to stay. Abraham Lincoln used an income tax in 1862, levying 3% on incomes over $600 and 5% on those over $10,000. By 1866 it was bringing in $311 million, but with the return of peace the tax was dropped in 1872. Congress tried again in 1894, but the U.S. Supreme Court killed that one a year later.

Pressure for taxes geared to the citizen's ability to pay, however, kept building. Since the Founding Fathers, the U.S. had relied almost entirely on whiskey and tobacco taxes for internal revenue. From 1868 until 1913, in fact, almost 90% of U.S. revenue came from these two sources.

The father of income tax turned out to be Republican President William Howard Taft. In 1909, with the GOP holding only technical control of Congress (progressive Republican members, including powers such as Sen. Robert LaFollette of Wisconsin, often opposed the administration), and populist sentiment against the wealthy growing, Taft struck a deal. If congressional leaders would propose an amendment that would permit a national income tax, he would accept an excise on corporate net income. Both were swiftly passed.

In February 1913, Wyoming became the 36th state to ratify the 16th Amendment allowing Congress to tax incomes "from whatever sources derived." The effects were immediate. From 1903 to 1915, annual tax collections averaged $281 million. During the 12 years after 1915, they averaged $2.7 billion.

[snippy]

99. Or anti-trust laws, or labor laws, or evironmental laws, or civil rights.

Republicans long for those halcyon days.

[confusionisnext]

101. not saying it was better

I just thought it was funny that our federal government used to run on whiskey and tobacco.

Ironically, it was a Republican who pushed for the income tax. How far they've fallen....

[snippy]

102. I did not mean to imply that you were.

But republicans really do long for those days.

[BrightKnight]

96. This might be a tough sale to retailers and auto manufacturers.

Do we really need another huge tax break for the rich? Where are the tax dollars going to come from? The deficit is large enough. Perhaps we should fix that problem first.

This will eliminate the state income tax deduction.

[flaminbats]

106. Republicans are determined to lose power..permanently

if they can't piss off enough voters, try a few powerful interest groups

[FogerRox]

104. Remember the 1950's

top personal tax was 86%--Corps paid like 50%--60%
LAbor Unions were at the Zenith of their power, middle class was vigorous and healthy, we were the manufacturing capitol of the world.

[AP]

112. Those top rates were so high precisely because it was so easy to make..

...money when everything was groing so rapidly.

And why was everything growing so rapidly then? Because so much seed money was flowing down to the rapidly expanding and increasingly wealthy middle class.

The rates were a product of the growth. But we'll never have to worry about a growing economy with policies like Bush's. They're strangling the middle class. When it's gone, we'll have two classes: the fabulously wealthy who will never be at any risk of ever getting poor, no matter how lazy and useless they are, and then we'll have the wage slave laborers who create meager wealth but pass it all on where it accumulates in incredibly amounts to that small class of fabulously wealthy.

Think: Matrix.

[Lydia Leftcoast]

117. HIgh tax rates promote industrial growth because

they encourage businesses to reinvest earnings in things like R&D, modernizing plants, and employee wages and benefits, which are all tax deductible.

[AP]

119. Yes. However, I think they're still more a consequence than a cause...

Had all FDR's reforms not created so much fuel for growth, the feds never would have taxed hard to make money at those levels.

[Bullshot]

105. Any time an economist says something is simple, stay away!

It'll be the most complicated piece of shit ever contrived.

I think collectively, there isn't a group of people more devoid of common sense than economists.

[Invalence1]

274. As one who holds a degree in economics

and has made his primary living for over a quarter of a century in a decidedly "blue collar" world (electrical contracting) I'm reminded of an old axiom from my college days. "If you took all the economists in the world and laid them end to end, they wouldn't reach a verifiable conclusion." I'm inclined to agree.

[Invalence1]

275. Dupe. Sorry

[Redleg]

109. Notice the "increased capital accumulation" part

and ignore the part about growth in wages. Real wages have seen relatively stagnant growth over the last decade while productivity growth has been relatively robust. Bush's tax proposal is by the rich for the rich. It's just more of that good ol' supply-side gospel.

[Redleg]

111. Go to the Economic Policy Institute site to see what they have to say

about this. It's always a good place to start if you want the progressive view on these proposals.

[CindyDale]

114. Anyone who would suggest this type of system is either a fool or

seeking the destruction of the US.

IMO, these people are just sick, sick, sick.

The greater the disparity between poor and rich, the more governments tend to destabilize. Because the prosperity and prestige of the US derives from its stability, this whole conspiracy is a bad idea for all social classes in our country.

Every country that has ever destroyed its middle class has self-destructed.

Will Durant wrote a really good little book, the Lessons of History, which talks about the problems this would present.

These people don't love America; if they did, they wouldn't deliberately destroy it. They hate America, and they hate Americans.

Cindy

[CindyDale]

116. Of course, I was assuming the SOBs want a national sales tax . . .

maybe they only want to put a luxury tax on SUVs. You think?

Ha ha ha

[lanlady]

172. great points Cindy--

for the life of me I can't understand why so many prominent conservatives hate their fellow citizens. Something in their psychology utterly eludes me.

[genieroze]

115. This is how the tax burden stands now

2004 Rates

Lowest 20%
5.2%
Second 20%
11.1%
Middle 20%
14.6%
Fourth 20%
18.5%
Top 20%
23.8%
Top 5%
25.6%
Top 1%
26.7%

Share of Federal Tax Burden
Lowest 20%
1.1%
Second 20%
5.2%
Middle 20%
10.5%
Fourth 20%
19.5%
Top 20%
63.5%
Top 5%
35.9%
Top 1%
20.1%
Source: Congressional Budget Office, "Effective Federal Tax Rates Under Current Law , 2001 to 2014," Tables 2, 4.

[Ilsa]

118. Manufacturers of "luxury" items will get their products exempted.

They tried a luxury tax in the late 1980's. The yacht builders said a bunch of their orders were cancelled over it and they were going to go out of business unless the lux tax was repealed. It was repealed because the wealthy consumers put off buying those items as a threat. If they had kept the tax a little longer, I think the wealthy would have eventually given in and paid the tax, provided the businesses could stay afloat.

I hope they try and pull this shit on the public so we can throw it back in their faces in three years. This and everything else they are trying to cram down our throats.

[Strelnikov_]

125. Say Hello To The Black Market Economy

The regressive nature of this tax is the least of it's problems.

There will be a lot of transactions taking place off the books, and a lot of $1.00 purchases made. How they will collect more than a fraction of this tax is beyond me.

One thing about the income tax, it can be audited relatively easily.

[The White Tree]

149. That's a great point

There are a lot of off the books things that go on now especially in many small buisnesses, but the potential for abuse on this would be tremendous.

What would be required of a business to ensure tax compliance - full auditing of their inventories? Monthly inventory and tax accountability statements? I'm sure that will go over great in the Red states. Thought they wanted government out of their lives.

Somehow it doesn't sound as simple as they are making it out to be.

Also, what would states do to collect income?

[mmonk]

133. I have no problem with vat taxes

as long as there exists exemptions for food, medicine, and housing and that the revenues are not transferred to corporations in lieu of people or to finance ever increasing militarism or ever increasing deficit spending. Of course, that's alot of ifs that probably won't come true.

[sweetheart]

180. Its the sucker punch, i agree

These "tiny" exemptions turn a regressive tax in to a progressive one. Without this critical bit, that can always be lobbied away
at the last instant, there can be no bipartisan consensus, then it
is undeniably regressive in all schools of economics, and unacceptable to a person who is not cynical about the possibility
of all mankind living in a world free from strife.

I can't deny that my libertarian heart would love to see the IRS
abolished, and the ability to live in the USA and not pay for wars
by not buyinjg anything from a company that would involve the
VAT. This would allow people of true total consience who cannot
see an hour of their labour twisted in to a sick corporate invasion
of central asia, that those folks can protest by minimizing their
tax contribution to the petrol/oil industrial militarism.

[Bridget Burke]

136. Many more knowledgeable people have pointed out the problems....

with this scheme.

My own first thought--this is a Bush & co. proposal. What other ideas of theirs have done anything but harm to the vast majority of Americans? (& people in other countries)

Please let me know.

[bunkerbuster1]

158. the ONLY THING that matters is that it's a BushCo proposal.

therefore, it's shit, and must be fought vigorously.

[Lost4words]

138. Rich people need money more than poor people, silly.

poor people dont know what to do with extra cash. the government will be doing them a favor by eliminating the tedious thought process about what to do with the, (caution ...GOV SPEAK) OVERFUNDS!

The Rich folks on the other hand will make the USA stronger by spending their UNDERTAX cash on the French Riviera.


8643

[tsuki]

139. Has anyone considered that after a couple of years, we'll probably have

a consumption tax that does not work, so they'll add an income tax to supplement.

Taxes will have to be killer to get us out of the Spend-Freeperly Republican hole.

[The White Tree]

145. tax laws discourage saving and investment?

Does that even make sense?

Hmmm... I could buy food this month or I could invest in Enron. Well you know I'd rather invest then eat (it's my new diet program) those tax rates on investment are just so darn high. Oh well I might as well just spend the money. (Poor Sarcasm off now).

This sounds like the Ebeneezer Scrooge idea of what is wrong with taxes - i.e. Don't spend your money in anything but investments. These guys propose laws that assume everyone has an accountant on the payroll.

My wife and I save about 10% of our income each month thru 401Ks (which are attractive because of current tax laws) and private investments in addition to paying down the mortgage on our house. The rest goes to paying bills and the pursuit of hppiness (eating out, going to movies, travel, etc.) The only way we'd be likely to save more from this tax plan is by spending less then we do currently or if the price of goods dropped radically. One of these options is likely, the other is not.

And what good would all that savings be if the cost of everything that I was saving for was so much more.

[hatrack]

147. So if the income tax is replaced by a consumption tax . . .

What becomes of the mortgage interest deduction?

[snippy]

160. Bush doesn't want to replace the income tax with a consumption tax.

He wants to convert the income tax into an effective consumption tax on earned income only. Under his plan the income tax will remain, but there will be an unlimited deduction from taxable income for money which is invested. Kind of like an unlimited IRA deduction. The only other deductions will be for home mortgage interest and charitable giving. In addition, interest, dividends and capital gains will be excluded from taxable income. The result of this will be an income tax only on salary and wages, and only on the amount of salary and wages which are spent as opposed to invested.

[mbperrin]

183. Thank you! And with the mortgage deduction gone, so do the

dreams of home ownership for millions!

[sweetheart]

192. oh come on.

A consumption tax abolishes the IRS and the income tax. This means
a massive pay rise for working people... really massive +28%. This
is greater than the mortgage deduction saved. You're statement is
dramatic but ungrounded.

The cost savings across the economy of not having to pay tax laywers,
and fancy paper forms, filing, tax courts and an army of civil
servants would certainly act as a genuine powerful stimulus that
also stimulates your salary.

If the consumption tax is not on food, medicine, primary housing and
other life staples, would take the full tax burden off the poor just
as with other systems of progressive taxation.

Fact is, the next 4 years, this tax reform is gonna happen. Why
not spend a progressive mind on making the consumption tax work for
home ownership.

I'm willing to put down divisiveness for a moment, in this war with
george bush and his theocons. I'm willing to be open to
the consumpion tax that is bipartisan, and in the interests of all
americans. We marginalize ourselves by covering our ears and
disengaging, all the while preaching the liberal philosophy of
progressive engagement.

[girl gone mad]

216. Where on earth are you getting that 28% from?

Income tax was just a small part of my federal tax last year. The vast majority went to Self-Employment tax (payroll taxes). My income tax was nowhere near 28%.

[sweetheart]

277. federal top rate

The bottom rates don't determine tax take, the top one.

I challenge you, then, to go to the IRS website, and tell me that
the entire complexity is not redundant in this computer age.

When you use your credit card at the walmart, your identity is
known to secure finance networks, that can just as well treat your
tax deductions there, with progressive spending tax free. The cost
savings of removing the silly paperwork alone cuts the burden of the
taxes to start with. As well, an invasive police force and
clandestine court system that surveils citizens, can be put to rest.
The cost savings of ditching the income tax are huge, as we can
shift custom - made-for-taxpayer - consumption tax schemas that
are paperless, efficient, not invasive with no compliance issues
and no visible forms for the taxpayer to get frustrated with or
"reminded by". It makes taxation subtle, and finally lets me throw
away a pile of records from long-past endeavours, in favour of looking
forward towards my spending today.

A consumption tax is fair, for its faults. If you use oil, the tax
might punish you to pay for all the wars and whatnot. If you don't
use it, you would not pay any of the tax. This is what i like about
consumption taxation, it lets taxes naturally select within the
market economy, provided the public-costs are loaded in to the
economic VAT.

Most people who buy houses, as was this point on the spur of this
thread, are filing the more complex tax forms, and often employ
tax advisors to help optimize their take in the system of rules and
pork that is the existing tax code. I think the democrats should
come out with white papers on the progressive flat tax and take back
the initative with engagement.

There are sooo many ways to make such a tax much better than the
antique system. For all the people who are for tax reform, i'm
amazed that so few can find their tongues in this chat.

[mbperrin]

223. Actually, I didn't pay one dime of federal income tax last year

by using all legal deductions for rental properties. So this will save me nothing and in fact, any penny I pay will be an increase. The home mortgage deduction is one of the great subsidies that make sense - people end up owning a secure place to be instead of renting all their lives.

In Texas, we pay 8 3/4% sales tax now. Here's something to chew on: to maintain current federal funding of $2 trillion in an economy of $10 trillion GDP, the rate would have to be 20% NET, so regardless of how many deductions or exclusions were put in here and there, 20% still gotta come out. Add that to 8-3/4% and you get a 28 3/4% rate for Texans on what they spend. Since I spend every dime I make, that would be a 28 3/4% rate compared to the 8 3/4 I pay now.

Dramatic and true!

[jwnparadise]

240. I couldn't agree more

This is not Bush's baby anyways, progressive thinkers have been working on this for the last 20 years. The country needs this to stay competative and fund Social Security for the future. Otherwise our children will grow up with an terrible burden. If Bush gets the credit for this so be it, but history will remember that Democrats came to the aide of the country, even when a Bush was in office. Plus, if there any problems, we can blame it on Bush!

[Zynx]

271. 70% pay more in payroll taxes than income taxes.

Also, msot people don't touch tax lawyers and that other stuff like you were talking about. A consumption tax would hit most people right in the nuts.

[GOPBasher]

162. And so it goes. When our economy collapses,

the blood will be on the hands of the 51% (at least officially) who voted for him and, of course, Diebold.

[mbperrin]

182. Lower taxes kill risk-taking behavior. Ask your CPA.

Back in the 70's BR (Before Reagan), the top tax rate was 70%, making it imperative to do something with money rather than let it lie around as income. In Texas, many drilling packages were put together with that money because here's what happens if the venture fails: Uncle Sam is your 70% partner; you only are out 30% of your original investment, and if it comes in, yay!

After Reagan cut the top rate in half, drilling disappeared; Uncle Sugar is now only your 35% partner and you should 65% of the risk, not 30. Drilling just got more than double the risk heavier to you. Result? Rig count plunged from 4000 to 1000, about where it is now.

Cutting high tax rates kills risk-taking, does not encourage it. Active invesment (the kind that jobs are made of) disappears, to reappear as paper investment (like financing the federal debt, which does not do one thing for job creation - doubt it? Look around the last few years and see how many jobs have been lost, and how much money is tied up in T-bills now since Junior cut taxes last time.)

[w4rma]

209. Hahaha, they weren't quite able to kill the economy last time but this one

just might be the last nail in the American economy.

[GoBlue]

211. It's all about BUSINESS

isn't it. Phuck the people.

[Chicago Democrat]

246. TAX THE POOR, EXEMPT THE RICH!!!! BULLSHIT in ACTION.

Time to take control

[54anickel]

256. Hey Chicago Democrat -

Do you remember my post in SMW about that "other" economy? It seems Bushco understands that is going on - those self employed "entrepreneurs" Cheney speaks of.

As decent jobs become harder to come by, more people just say screw it and join that cash, barter, servitude to the rich system. That's a lot of untaxed exchange going on. This is the only way to get revenue from this new "other economy".

Just a thought. :shrug:

[Ms_Mary]

254. Imagine the immediate effect on small business

Just the implementation phase of this would probably put my business under because people are not going to want to spend the money for the sales tax. I know I'm not alone. With small business, one or two bad months can do you in. That's why such a high rate of SB's fail.

[GOPBasher]

257. Yeah, it's totally fair. It's a nice regressive tax.

The rich pay nothing compared to their income, everyone else pays a huge percentage of their income. Yeah, okay.

[Deja Q]

259. ROTFLMAO. Pity it's not a laughing matter. Mankiw must be incompetent:

The more a consumer has to pay, the less the consumer is going to spend.

Duh.

Less spending will hurt the economy as long as the economy is 70% dependent on us to buy things.

If they put in that tax, I WILL stop buying all products EXCEPT what I need. I will reuse what I can and stretch products longer.

Every patriotic American will have to do the same, should this atrocity get passed.

[Paradise]

273. I don't believe there is any way to know

all of the possible repercussions and/or benefits of a switch from income to consumption tax,
and for whom those bells toll.

[Invalence1]

276. Can't argue with that

Any more than I could argue that I would know "all of the possible repercussions and/or benefits..." of driving my car off a 300' cliff with you in the passenger seat. But I think I could probably make some pretty accurate projections as to the more immportant results to each of us. Ya think?

[Paradise]

299. Point taken. n/t

[ElsewheresDaughter]

282. IF YOU REPEAT A LIE OFTEN ENOUGH, YOU ARE A REPUBLICAN!

[SammyWinstonJack]

283. Didn't Sen Reid say on MTP

that the repukes wanted both a consumption tax, i.e. National sales tax, while still keeping the Fed. income tax? How many people will this throw out of work? How many small business' will go under? How many ways can bu$hCo, Inc. come up with to part us from our money? Cut taxes for the rich and raise taxes on everyone else, again and again and again. :argh:

[snippy]

285. I have seen several prominent Tax Cut Monkeys discuss Bush's plan

om several occasions and they all have said that Bush wants to turn the income tax into an effective consumption tax by creating an unlimited deduction for the amount of income invested each year and by excluding all investment income from taxable income. The effect of this would be a consumption tax only on salary and wages that are spent rather than invested.

[SammyWinstonJack]

286. Thanks for the info

So apparently not the same thing that Sen Reid was saying. Who to believe? :shrug:

[kineneb]

290. and if you are already at the bottom

of the economy, such I am, you are screwed. Hubby can't get insurance <"pre-existing conditions"> so we are now paying CA state $513/mo as "share of cost" for medical services/prescriptions. My annual income is $20k with no benefits. Do the math. Then tack on sales tax of CA's 7.25% + US 17%= 24.25%. Equals having to get food from charity, never mind the special diet Hubby needs for his health.

We are not optimistic about the future.

[bowens43]

284. Yes, let's shift more of the tax burdon

to those who can least afford. God I hate these bastards.

[Red State Rebel]

297. Have any other countries tried this?

Are there any specific examples of success or failure? Off the top, this seemed like it might be a good idea to me but after reading some of the posts on here, I'm not so sure....

[LynnTheDem]

298. Bullshit. Top Economist Is LYING.

COMMON bloody SENSE shows it;

A poor person.

A rich person.

Each have the identical grocery shopping list of necessary goods; milk, food, diapers for the baby.

Each one buys the identical articles in the identical amounts.

The poor person only has $200 for groceries.

The rich person has $2000 for groceries.

Each one buys $100 of groceries and both pay $40 on top of that for the flat tax.

Which one pays far more % of their income in tax?

The poor person.

No it isn't fair.

No it isn't simple.

But the bushCartel propaganda has begun!

[RawMaterials]

301. would buying stock's bonds and mutaulfunds be

considered consumption and be taxed the same way as other purchase?

if this is so then the rich person would end up getting taxed the same they would just have more to show for it in the end.

[Stuckinthebush]

300. No...

It would mean less consumption, fewer people seeking home ownership, and fewer people giving to charities.

The poor and middle class will suffer significantly from such a system, while once again, the richest in our society will get to keep more money for themselves while giving the finger to the rest of the country.

[EndElectoral]

307. How do middle class Americans fall for this crap?

[olddad56]

310. This could only work if ...

people were taxed according to how they choose to spend their money. For example. No tax on essentials such food and medicine. Reasonable tax on less essential items, cars, appliances, etc. Higher tax on luxury items like SUVs, jewelry, etc, huge tax on tobacco, alcohol, gasoline, pot, hard drugs. Decriminalizing pot and drugs would also kill the black market decrease the cost of the drug war by about $100 billion a year.

That would be a good plan if we had a democracy, However, since we live in a society that is governed by corporate fascist, nothing this obvious would ever be implemented. The CF's would find a way to increase the burden on those least able to afford it.

[The Judged]

311. It is consistent with the Dominionism and authorized by the Bible?

http://www.theocracywatch.org/av/video_dominion.ram