When I saw a link to “Republicans Plan Push For Elimination of IRS”, I got excited. Then I found myself on Matt Drudge’s site. He’s reporting that Speaker of the House of Representatives, Dennis Hastert, will push for the elimination of the Infernal Revenue Service in President Bush’s second term, so says Hastert in his book. Phooey. This is what Bush should be pushing instead of amnesty for illegal aliens.
IRS Going Bye, Bye?
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Odd that the President waits until now, when he’s in a tight race, to unveil this.
Read this article instead. It isn’t just a book plan. Hey, you’re a contributer to that site. Why am I telling you this?
GOP USA
Anyway, get your readers to get on the e-mail to the Reps and support the idea. The sooner they know we LIKE the idea, the more they’ll be willing to get behind it.
I don’t get the rationale behind this. Are taxes going to become voluntary? If not, who’ll make us pay?
And don’t suggest (in hushed tones) that the “private sector” will do the collecting. That’s what the Romans were doing in Jesus’ day (think Matthew and Nicodemius), and everyone hated them. Sometimes the government must do badly what the private sector simply can’t do at all.
And politically, this seems a dumb move. Democrats can use it to portray Bush as clueless about money and the national debt. And judging by the polls, that’s his real Achillies heel.
–Mike Perry, Inkling blog , Seattle
There you go again about that amnesty thing
Seriously, since Bush would be a lame duck, he might as well push hard for elimination of the Infernal Revenue Service and make those leeches find a real job while giving us a break. At least he’d deny Kerwards and cHillary the opportunity to grab our money thru sleight of hands and save thousands of trees in the process.
It reminds me of last year when discussing that topic with friends, I made a “simple” Excel sheet with a number of sliders and spinners and loaded it with data from World factbook, I was able to show that the sweetspot for a flat tax with all else being the same of around 18-20% would generate the same revenues.
This of course could not, without a heap of extra work, take into account the additional revenues from loopholes and shelters that would be eliminated from income taxes.
In fact, I’ll just go ahead and post it at Flat Tax Calculator so ya’ll can play with it
Like I said, it’s crude. But if anyone can point me at good data sources, I may just get around to inproving it, time permitting.
Getting back to the amnesty issue, the flat tax approach could further ensure that illegals pay their fair share, by mandating the X% be subtracted from payroll.
Talk about win-win
A consumption tax like a sales tax would help encourage savings. The VAT has the problem of hiding how much of the price of something is tax, but it sure makes shopping easier. Now that everything is computerized, the register can just print out the amount of tax for you. A statement at the end of the year adding it all up for you would be nice too.
The best part about this is that new (sort-of) ideas are what this campaign season has been sorely lacking. I’m really getting tired of the battle between a 4-month veteran and a guy who is afraid of offending anybody.
The dems can protray Bush as clueless about money and debt all day long, but they can’t knock his Havard Business School MBA
The entire concept of direct taxation ought to be questioned here. We could focus on revenue collecting pre-sixteenth amendment. The government in Washington could be funded through import tariffs (with an emphasis on revenue collecting, not protectionism). Any shortage would be collected from the states (apportioned).
I was skeptical at first, because it was on Matt Drudge’s site. However, Dennis Hastert is on “Hannity & Colmes” right now talking about it. Great idea. However, too many industries benefit from a complicated tax scheme, so they ain’t gonna go down without a fight.
Several Eastern European countries have the flat tax (and with lower tax rates than in USA), and their economies are growing fast. Like Jon says, it encourages savings too.
I’ve only been sayin’ this, like, forEVER! See my July 15th post.
http://arbiterofcommonsense.blogspot.com/2004/07/some-constitutional-amendment-ideas-to.html
It’ll take a Constitutional Amendment to repeal the income tax (Amendment #16), just like it was necessary to repeal the 18th Amendment (prohibition of alcohol) with the 21st Amendment. It’s an up-hill battle. I definitely do NOT want a sales or VAT tax without that repeal of the 16th, otherwise we’d be set up for double taxation out the wazoo.
It won’t happen.
Why?
Two words: Mortgage deduction
Ahhh… Sorry, Trub! (Though I’m not sure about the line-item veto)
I remain skeptical since the President suddenly comes up with this, when for the last four years he has oriented his domestic policy to amnesty, medicare expanding, campaign-finance reform, and the like. But still, its a good sign.
I think Bush didn’t mention flat-taxes in 2000 since he had other issues to campaign on and it was already an uphill battle. Although Reagan did try to bring it up in spite of the grief he got from Bush Sr for voodoo economics on supply-side principles.
However, the issue of flat-taxes got some heavy airtime on Hannity and several other talkshows last summer. As pointed out by Molotov and Jon, we now have some good sucess stories from Eastern Europe to serve as case studies for growth and savings.
To give the subject a fair shake, one would really have to lay aside pet deductions and look at it critically. The notion that savings would take off and shelters eliminated is not fanciful. By tweaking the percentage rate, much as the Feds tweak interest rates could see us hover at the optimal point on the Laffer Curve.
Most countries that use it hover at 15%. For us, it may well get that low, but I think due to Defense and a couple other budgets, it would hover at 17 -18 after a few years of serious dedication to the principle.
That is the crux, whether congress can restrain themselves from finding creative ways to sneak in other indirect taxes that keep us poorer than we ought to be.
Bottomline, no one should be able to target the “rich”, since we would all pay the same %, those below a poverty line excepted. How’s that for an equalizer?
I’m Canadian and it sounds like what is being proposed is a lot like our “GST” — a percentage we pay on all our goods and services — everything from clothes to postage stamps. Since we have the GST we pay more tax than we ever did –annual income tax plus the GST — and it was a HUGE tax windfall for the government.
Canadians threw out the government that brought in the GST, it was and is such a despised tax. Then a lot of politicians campaigned on promises that they would get rid of the GST. But whenever any of them got elected, they broke their promises.
So now, we just accept the GST as an unpleasant fact of life. We are reminded of it whenever we make a purchase …
Hope you are not heading down the same route.
boy these loons will stop at nothing. what do they want? a european VAT?
Does everyone have amnesia?
This was a serious subject of past campaigns. This is not new by any stretch. It was a serious subject of the Republican primary in 2000. What you have is a presidency that has been involved in the biggest restructuring since WWII. It’s called the Homeland Security Department. We are also engaged in two front war overseas. That kind of puts the brakes on any new initiatives as will this latest intelligence overhaul. I think it’s politically dead. What’s he going to do, put the CPA’s out of work as an election ploy? Take away corporate tax breaks in a soft job market? This is much more likely to be an issue in the 2006 Congressional elections. The Republicans have never been able to agree on whether we needed a sales or VAT tax. These can be quite different depending on how business is treated. In some cases business don’t pay sales tax. It’s quite complicated. If this comes up it will be a part of a budget plan to privatize a portion of Social Security. You really can’t talk about one without the other I don’t think. It is one way to take care of corporate welfare though. Then there is the question of how to treat mortgage interest. So Bush is going to talk about home ownership in record numbers and then take away the interest deduction? I think not.
Tort reform is the issue they need to pound home, especially with an ambulance chaser as an opponent for VP.
IKNOW!!! Makes me so mad…
“Tort reform is the issue they need to pound home, especially with an ambulance chaser as an opponent for VP.”
They better go this route. And then we can put that disemboweled little girl on TV and ask her what she thinks of “ambulance chasers.”
It’ll never happen because Bush AND Cheney will get assassinated by rabid liberals who think it’ll be the end of their dream-like socialist state.
And besides, what will happen to all the public schools who teach evolution and marxism, and what will happen to all the abortion clinics? Planned Parenthood will be out of business. Amen!!
The income tax is to be replaced by a VAT. World Net Daily has details at:
http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=39762
It’s absurd. Necessities, they say, won’t be taxed because the government will create some sort of rebate scheme to kick back the cost of them. Duh! Where do you draw the line between hamburger and cavier or between a second-hand denium jacket and new fur? How about Alaska versus Arkansas or a big city versus a farm town or perhaps a very cold winter driving up heating costs or someone who has to drive 50 miles to a job with rising gas prices and thus taxes. Result, multiplying exceptions and adjustments managed by a huge bureaucracy and regulations a mile long. Bad as it is, the IRS is better.
And the bit about VAT growing the economy is ridiculous. Europe has long had VATs and their economies are in a chronic mess. And for many services, VAT evasion is rampant. In France I went with a friend to rent a rototiller. There were two prices. Cash and no receipt was far cheaper than with VAT-creating paperwork. Result, virtually every American will get corrupted in a way the income tax never did and taxes on the honest will have to be far higher to make up for the cheaters. And the cheating will be a few dollars here and there all the time rather than one large sum. That’ll be far harder to enforce. What government wants to spend $10,000 prosecuting a $50 sale done off the books, a sale that might be very hard to prove.
And checks for everyone from the government each month to equal the tax paid on necessities? If that won’t create a huge boondogle and a giant bureacracy, what will? Fake birth certificates anyone? How about government inspectors that raid all of us, checking for cheats like they do people on welfare? (”You mean I can’t claim my cat as a dependent?”) One little slip filing your rebate paperwork, and you’re a criminal in the eyes of what will be a newer and nastier IRS. Then there’s lost rebate checks, forged checks, stolen checks, rent payments missed because a check went astray. I could go on. It makes no sense for the government to take with one hand (the VAT) and give it back with the other (the rebate). The IRS is much more efficient. It takes from employers in one big gulp and doles back the money one check a year.
It isn’t hard to see where this is going. Taxes will be simple and low for those who were always rich enough to afford a CPA. And since they invest (rather than spend) more money and spend more of it outside the US, their taxes will drop quite a bit.
But poor, single working moms will now need a tax lawyer to do the paperwork to get their rebates right. And the VAT won’t apply to what businesses buy, just poor working stiffs who have to feed their family. Imagine a tax-free business lunch for execs in a fancy restaurant while a carpenter sitting on a trash can pays a hefty tax on his bologna sandwitch.
Last but not least, a politican who believes that businesses will pass along their tax savings is a fool. Business will do what the did in Europe when the Euro allowed them to hide price increases. A few execs will pocket the enlarged profits and the price of everything will rise by the tax rate and more.
That, in fact, may be the point of all this. Not all the Democrat stereotypes about the Republicans being the party of ‘fat cats’ are wrong. Look at how eager some Republicans are to excuse Bill Gates and his nasty business practices? If Democrats publicy treat wealth as evil, all too many Republican politicians treat it as a measure of virtue.
Worst of all, this will put 200+ million Americans into a serf-like dependency, living from month to month, waiting their government rebate check to arrive just like welfare moms. We’ll have a giant headache as politicians compete to see who can up that rebate the most at the expense of our national debt.
A century ago, a ’single tax’ on land was the moonshine of tax reformers. More recently, it was “going back to the gold standard.” Now it is replacing the IRS for a VAT. Duh! How are you going to save money by substituting a bureaucracy tracking a single or double income per household with one tracking hundreds of sales transactions each year?
The Republicans have just given the Democrats a big campaign issue, if they’re bright enough to use it. To give but one example. Here is Washington, I already pay a sales tax that’s over 8%. This idea would push it to 31%. Paying 1/3 of the cost of everything I buy as taxes will not, as WND claims, “be immensely popular with voters.” They’ll seeth with fury every time they go to the grocery store. And when they return home, there will be Democratic ads on TV blaming it all on the Republicans.
Alas, this fits perfectly with a four-word description of American politics: “Democrats evil. Republicans stupid.” Here the Republicans are being unusually stupid, look for the Democrats to get unusually nasty about it.
–Mike Perry, Inkling blog , Seattle
I have read that the idea is to replace the IRS with a national sales tax and a flat income tax. That really worked for Forbes. Actually, this would be a boon to the Democrats.
Imagine the ads, Republicans want to raise the tax rates for the poor and lower the taxes for the rich. I’ll be frank, there will be no IRS when pigs fly and mules sire rhinos.
Mike, the reason fraud is prevalent in Euroland is that the VAT plus heavy Income taxes encourage cheating. When a single person in Germany sees only 48% of their income plus the 16% VAT, they will do anything to stretch their buying power.
I think it is workable if we talk primarily about a flat tax on income only, with no/min deductions. The funds will be collected as they are now, via payroll witholding.
Other ways of tweaking the flat tax can be something on the order of adjusting the percentage rate based on family size or moving the taxable threshold higher–better methinks. Establishing the percentage rate/taxable threshold would be determined by the IRS in advance of payroll deductions, then monitored/reviewed/revised on as needed basis or annually as warranted.
The sales tax is a totally different thing and needs to be evaluated on its own demerits. Bottomline, I don’t see why we need an army of bottomfeeders to process the collection of taxes and the thousands of pages of tangled tax codes. “Keep it short, simple & sweet, stupid”.
Expatise, Thanks for reminding me of Forbes. The flat tax was a major part of his campaign! I’m also reminded that in the late 90s, Russia imposed a 13% flat tax which encouraged people to come out of the black market, pay their taxes and become legitimate business people. Putin actually did a smart thing there.
I am all for abolishing the ‘progressive’ income tax. I think it might put some CPAs out of business, so they’ll be against it for sure. I’d like it to be replaced by a FLAT national sales tax, meaning everything is taxed the same, except food.
In the state where I live (Texas), we have a statewide sales tax and no income tax. We also have property taxes which are eating our lunches right now because “it’s for the children”, or in other words, the schools cannot manage their money properly and are begging for more. Don’t get me started on that one. lol
In Texas, we have a ‘tax free weekend’, which is right before school starts and when parents will flock to the malls to buy their children school clothes. Texas does not tax basic groceries, either. For example, they do not tax milk, but they do tax candy bars. The tax on a yacht is the same as the tax on a $15 dollar bracelet at the mall, 8.25%. A small price to pay to keep the state gov’t out of our incomes.
I think that its important to understand that Republicans are not opposed to paying taxes, we just do not want to pay exuberant taxes! I really feel that in Texas we have found a happy medium between tax payers and the gov’t. I understand that Tennesse and Florida do not have incomes taxes, either.
Also, an interesting side note. The Texas governor before GWB was Ann Richards, a Democrat. She proposed to the legislature a state income tax, and then Texans decided to launch GWB’s political career by ousting her and electing him to the governorship. Taxes is a very powerful issue!
RepJ. Thanks for the reminder.
I lived in Austin during the runup and transition.
I think it is an either or, not both proposition. I was trying to use a “progressive” flat-tax model based on income as a means to adjust for poverty and family size. But as in the case of Texas, the sales tax is the simplest of all–everyone, but the tax-exempt pays equally.
Off the top of my head, a sales-based national tax given our current revenues/expenditures would drop by 1/2 from the 18-20% for income-based taxes.
Darkstar, It took me a minute to figure out why you were talking about ‘mortgage deductions’. I guess you meant the tax deduction we can claim when we make mortgage payments. IMO, all deductions are a big scam. I’d take the national sales tax (w/the 16th amendment repealment) over a mortgage deduction anyday. I’m not sure that the itemization amount for most people would meet the standard deduction, and I’m not sure that the amount saved on the mortgage deduction could beat paying a single sales tax. I’m glad you brought it up.
“I think it is workable if we talk primarily about a flat tax on income only, with no/min deductions. The funds will be collected as they are now, via payroll witholding.”
So those who don’t work for their income don’t get taxed. great.
If you look at the numbers and factors, including the current sources of revenue that US takes in, an income based tax system is viable.
Sales vs income both have their pros and cons, and have been debated to no end by experts. Income taxes have the advantage of being progressive without having to deal with refunds and claims that would occur in sales based taxes.
Taxes aren’t my speciality, but I would love to have what is due to Ceasar taken out before I cash my check and be done with it.
No April 15 madness, no records to keep, no playing games and hiring CPAs. Just leave it to IRS and employer to figure out my rate based on family size and a couple other criteria and forget about it.
Evaluating employment opportunities is a simple matter of two pieces of info–my salary and my rate–which at most takes a minute to figure out with paper and pencil. That I’d like to see and experience.
A case for Income Flat Tax http://www.townhall.com/columnists/jackkemp/jk20031110.shtml
Took me a while to find it since I forgot who wrote it.
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