John Snow: Bush "teeing up broad-based tax reform" (N.S.T.) in Crawford

[Bush_Eats_Beef]

http://www.theage.com.au/news/Business/US-economic-growth-on-Bush-agenda-Snow/2005/08/09/1123353290586.html?oneclick=true

Bush's meetings at his ranch in Crawford, Texas, have become something of an August tradition as the administration tries to keep the economic recovery from the 2001 recession on track.

"That will tee up the next major issue for the president - broad-based tax reform," Snow said.

Snow said the economic team and Bush would be reviewing recent upbeat economic data, including Friday's report that the economy created 207,000 jobs in July, the best showing in three months. That followed reports that the economy expanded at a solid 3.4 per cent rate in the April-June quarter.

"From the point of view of the economy, we are in a good spot," Snow said. "It is a broad-based recovery, touching all parts of the country, every region, touching virtually every sector."



Here's what Bush is "teeing up" at the pig farm:

The national sales tax
Bruce Bartlett (archive)

May 3, 2005

http://www.townhall.com/columnists/brucebartlett/bb20050503.shtml

According to columnist Robert Novak, House Majority Leader Tom DeLay, R-Texas, is adamant about replacing the entire federal tax system -- payroll and income taxes -- with a 30 percent national retail sales tax (NRST) collected by the states, such as that in H.R. 25, sponsored by Rep. John Linder, R-Ga.

I have written many times before about what a dopy idea I think this is. Following is an effort to summarize the key arguments against it that appear over and over again in the scholarly literature.

Services are by their nature much more difficult to tax than goods. For this reason, no state makes any effort to tax more than a few of them. Yet the NRST would tax 100 percent of services, including medical services and government services. Every time you go to the hospital, you will have to pay 30 percent on top to the federal government. And local governments will also be taxed by the federal government on services they provide, which will sharply raise property taxes.

In order to offset the regressivity of the NRST, it would establish a massive new government entitlement program costing hundreds of billions of dollars that would send rebate checks to every American on a monthly basis. This system would be based on the poverty level income established by the Census Bureau. People would get 23 percent of this amount annually in 12 monthly installments based on their family status. Quite apart from the massive complexity of this proposal, it would clearly require an enormous enforcement mechanism to avoid fraud and would undoubtedly be manipulated by politicians. It would be very tempting to change the formula to aid the poor and penalize the rich, just as the current tax code does. Every serious analysis has concluded that a NRST would have massive evasion. Taxing the spending of drug dealers and others not currently paying income taxes will not come close to compensating for the new evasion opportunities that will be created. Since it is not in the interest of either retailers or consumers to pay the tax, and because all of the revenue is collected at the point of final sale, it will be too easy for tax-free deals to be made with producers and wholesalers.

[asianmale]

1. Not to worry

it will never happen.
Even if it was a good idea for taxpayers it is a bad idea for big money, big power, big politics. The current tax code is such HUGE business that it will never go away. More complex in the future, yes. Go away. Never. Just one guy's opinion.

[Bush_Eats_Beef]

3. The National Retail Federation looks ahead to the backlash...

First things first: WELCOME to DU, asianmale!

:patriot: :toast: :patriot:

http://www.nrf.com/content/default.asp?folder=press/release2005&file=NRST-comments.htm&bhfv=2&bhqs=1

Retailers File Comments Urging Rejection of Consumption Tax: WASHINGTON, D.C., June 13, 2005

"The United States should not experiment with a brand new tax system that will put our economic future at risk," NRF said. "It is better to engage in substantial reforms of the income tax that are designed to eliminate some of the major complications in the current Internal Revenue Code and stimulate economic growth without causing major economic dislocation."

NRF's remarks came in response to proposals for tax reform that were presented to the Advisory Panel during a series of hearings this spring. The panel asked for public comments on the proposals last month.

NRF on Friday submitted a detailed statement outlining the dangers of various consumption tax proposals. The statement addressed the National Retail Sales Tax proposed by Representative John Linder, R-Va., plans for a Value Added Tax similar to those used in Europe, and other consumption tax proposals.

NRF argued that consumption taxes are inherently regressive because low-income families spend virtually their entire incomes while wealthier families have larger percentages of unspent income that would go untaxed.

[sendero]

6. And I agree..

.... Congress is not about to give up the biggest carrot and stick they wield, special favors in the tax code.

This, like SS reform, is so much bullshit that is going nowhere. One wonders who they are fooling, the population or themselves.

Oh, and welcome to DU :hi:

[RobertSeattle]

2. Let's just call this Rube GoldbergTax Reform

"a massive new government entitlement program costing hundreds of billions of dollars that would send rebate checks to every American on a monthly basis. "

[gokar]

4. National Sales Tax is a terrible idea...............

It is very regressive, hurts low income the most.
I would go for a simple 3 step flat tax.

Family annual income 0-$30000 ======= No tax
30001-75,000==== 12% flat
75001 & above=== 20% flat

No deductions, no exemptions, $1000 tax credit for each child.
All income, including cap gains, dividends etc etc taxed at the same rate as earned income.

It will take 15 minutes to prepare your tax return on a postcard.

Tax brackets to be adjusted for inflation, but not %

[Hissyspit]

5. Welcome to DU gokar!

Of course it hurts the low-income the most. It's a Bushco idea.

[skids]

7. HelllOOOooo. Can you say SMUGGLING?

The regressive nature of a NST is horrible, yes, but let's not ignore the real problem here:

Any time taxes go up over 10% both organized and amateur criminals get into the act. They do it with cigarettes, and they do it with booze (ask any longtime NYCer how the liquor store system works there.)

Can you imagine the sheer volume of schemes that will be cooked up if tax dodging can get you a 30% payback on any damn old commodity, and worse yet, service? Almost EVERYONE wants to shaft the government these days.

Now, can you imagine the government's response to this? Instead of a bunch of bookworm IRS agents, we'll go back to the days of the Revenuers. That's right, the tax man will be an armed spy for the government poking and prodding into every little thing you do to make sure no product changes hands without a tax being payed.

Small government. Simplified code. My goddamn ass.