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Taxes!
Topic Started: Oct 8 2005, 08:43 AM (789 Views)
cmoehle
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Chris - San Antonio TX
Company I work for did well last quarter and we all got bonuses. Seeing as these are live checks, everyone opened them to look. Normally people direct deposit and don't really look, so you can image the irritation as plans to do this or buy that changed quickly. Good old Uncle Sam claimed nearly 25% of each bonus. Keep your grubbing hands off!

Time to roll out the Fair Tax argument again! And why not throw in Flat Tax as a contrast.


Point-Counterpoint: FairTax vs. Flat Tax
Quote:
 

FairTax
by Neal Boortz

There are essentially three tax reform proposals being considered by Congress.  There’s Rep. John Linder’s (R-GA) FairTax, the flat tax, and the politically (though not popularly) preferred method of incrementalism.

Before we dwell on the differences between the flat tax and The FairTax Book co-authored by John Linder and myself, let’s acknowledge one political reality illustrated by the success of both The FairTax Book and Steve Forbes’ Flat Tax Revolution:  the people of the United States are ready for bold and decisive tax reform NOW.  They don’t want the incremental approach.  The FairTax Book would not have debuted No. 1 on the New York Times Bestseller List if people were disinterested in wholesale tax reform.

Pleasantries aside, let’s illustrate the superiority of the FairTax plan over a flat tax. Flat tax advocates propose a flat 17% tax on all earned income with just a few allowable deductions.  Nice try, but we’ve been there --- done that.

In 1986 Congress passed what was essentially a flat tax.  The main difference between the 1986 effort and that proposed by Dan Mitchell, Steve Forbes and others was that the earlier effort set forth two flat tax brackets: one at 15% and the other at 28%.  It’s now 2005, some 19 years after this attempt at a flat tax … and the tax code has been amended nearly 10,000 times.

A flat tax leaves politicians room to tinker, to manipulate the tax code for the benefits of large campaign donors or specific constituencies.  As we’ve seen, with a flat tax it is all too easy for the political class to decide to add just a “small” surcharge to high income taxpayers; after all, the surcharge will only affect a small percentage of taxpayers, and the money can be used to buy votes from an even larger percentage!  Under the FairTax, the national retail sales tax, there is no way to raise the tax rates on the rich, or to favor any one particular business group.  The FairTax treats each and every citizen exactly the same, playing no favorites among people or business entities.  You can’t raise the rate without raising it for everyone, nor can you offer one particular product a break since the tax is applied universally.  Nobody, rich or poor, has to pay the FairTax on the basic necessities of life, because the prebate* is applied universally.

The FairTax would constitute the largest transfer of power from government to the people since the Revolutionary War.  The flat tax takes no power from government.  The FairTax is a revolution.  The flat tax is an idea that’s been tried before, and found wanting.

*Prebate?  Read The FairTax Book … you’ll love this idea.


:yes:


Quote:
 
Flat Tax
by Daniel J. Mitchell

The internal revenue code is a disgrace, both morally and economically. In a competitive global economy, America can no longer afford a loophole-ridden, class-warfare tax system.

There are two main contenders to replace the IRS – the flat tax and the FairTax.
Both are great ideas since they are based on the principle that all Americans should be treated equally, meaning no loopholes or special favors. Indeed, they are different sides of the same coin. The flat tax grabs a slice of your income, but only one time and at one low rate – when it is earned. The FairTax, meanwhile, grabs a slice of your income – but only one time and at one low rate – when it is spent.

But while both tax reform plans are theoretically equal, the flat tax is politically superior. First and foremost, the flat tax is more popular. A recent poll showed the flat tax is almost twice as popular as the national sales tax – and the same poll showed that the sales tax is tied with the current system.

Moreover, I'm concerned whether a national sales tax is politically viable.
Senator Jim DeMint had an unexpectedly tough race in South Carolina last year because his opponent demagogued against the fair tax. Republicans also may have lost the Colorado Senate race because their candidate was zinged for supporting a national sales tax. And the GOP lost a Senate seat in Louisiana back in 1996 because the candidate backed the wrong tax reform plan.

The flat tax, by contrast, is battle-tested and has been implemented in more than 10 countries. The FairTax cannot match this real-world track record of success. Indeed, there is not a single jurisdiction in the world that has ever replaced an income tax with a sales tax.

This is not just a question of which plan is more politically popular. We also have to think about the long-term impact. Many Washington politicians desperately want a national sales tax – but only as a source of additional revenue, not as a replacement for the income tax. I don't want them to pull a bait-and-switch on us, which is why America should not adopt any national sales tax (or value-added tax) unless the 16th Amendment is repealed and replaced by an ironclad provision that unambiguously prevents an income tax for the rest of time.

Europe's experience should make us very cautious. Politicians promised to lower or eliminate other taxes when they adopted national sales taxes, but in every case they kept their income taxes and used the sales tax revenue to expand the welfare state.

Moreover, it is very difficult to amend the Constitution. We can't even get a two-thirds vote for a watered-down balanced budget amendment. Does anyone really think we can get the votes to permanently preclude an income tax? And how about the challenge of getting 38 states to ratify such a proposal?

There is a downside to the flat tax, of course. Politicians in the future could change the system and we could degenerate back to what we have now. While this is a possible outcome, it is not nearly as bad as the downside of having a national sales tax added to the current income tax!

The FairTax is a great idea. I have testified in favor of a national sales tax, written in favor of a national sales tax, and debated in favor of a national sales tax. But if we actually want to get rid of the IRS and adopt a simple and fair tax system, the flat tax is the only horse that can make it to the finish line.


:no:
Politics is the art of achieving the maximum amount of freedom for individuals that is consistent with the maintenance of social order.
--Barry Goldwater
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roscoe
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Bonuses ? You should give it back and thank your employer for the job.
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cmoehle
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Chris - San Antonio TX
I'm an owner, small piece of the rock.
Politics is the art of achieving the maximum amount of freedom for individuals that is consistent with the maintenance of social order.
--Barry Goldwater
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Jelly Bean
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feel that way about overtime too...figured the time off was more worth it
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cmoehle
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Chris - San Antonio TX
But taxes?
Politics is the art of achieving the maximum amount of freedom for individuals that is consistent with the maintenance of social order.
--Barry Goldwater
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pentax
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Kamloops - BC Interior
Jelly Bean
Oct 8 2005, 01:50 PM
feel that way about overtime too...figured the time off was more worth it

Right on - when I worked, OT would nail you at about 40% in tax. You might get a little back after filing, but still... :cool:
I far preferred to get extra days off, just to be away from the place.
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"Kirk to Enterprise - Very funny, Scotty.... now beam down my clothes!"
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cmoehle
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Chris - San Antonio TX
Ah, I see. Bear, isn't it. Taxed for working, extra. What an incentive!
Politics is the art of achieving the maximum amount of freedom for individuals that is consistent with the maintenance of social order.
--Barry Goldwater
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brewster
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Winemaker Extraordinaire
We have a flat tax in Alberta, and it's one of Ralph's more popular moves... It's more difficult to tinker with than Sales Tax, which has proven an accountant's Get Rich dream of glory in every country it's been tried - every lobbyist has his/her agenda.

The way the flat tax is set up, the only tinkering allowed is the set point where it kicks in, or overall percentage. The law as written would take a huge majority to change to "get the rich", and nobody except Ralph ever gets those kinds of majorities.

And you don't get the percentage jump for working O/T - although companies then try to encourage more work out of each person, using that as part of the justification.
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Bow Valley Provincial Park, Kananaskis Country, Alberta
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Jelly Bean
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cmoehle
Oct 8 2005, 03:13 PM
But taxes?

more you make, more it takes
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PRT
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The higher you get in the food chain, the more you feed it - until you get high enough to get a really good accountant :)
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cmoehle
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Chris - San Antonio TX
Flat tax is not fair tax.


" more you make, more it takes"

Disincentive, no?
Politics is the art of achieving the maximum amount of freedom for individuals that is consistent with the maintenance of social order.
--Barry Goldwater
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brewster
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Winemaker Extraordinaire
Chris, It's far more fair than a tax which allows the government to decide what your priorities are going to be, by raising taxes on stuff they don't want you to have.

We've had this discussion before, but unless you can tell me what POSSIBLE mechanism you're going to have that prevents lobbyists from taking over, keeping in mind nobody in the world has ever found one, you're dreaming in Technicolor to think it could ever work.

On Edit: Even if you found one, I would still prefer to have the money in my pocket to be MINE!!!
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Jelly Bean
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cmoehle
Oct 8 2005, 06:18 PM

" more you make, more it takes"

Disincentive, no?

For me yes, others nooo
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cmoehle
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Chris - San Antonio TX
"It's far more fair than a tax which allows the government to decide what your priorities are going to be, by raising taxes on stuff they don't want you to have."

Oh, but I agree. Such is income tax.

"keeping in mind nobody in the world has ever found one"

So you offer no solution? Yet question this?

" I would still prefer to have the money in my pocket to be MINE!!!"

Good, if you could vote, then you should vote for the Fair Tax.


Now, let's deal with your request to address lobbyists. Yes, we discussed this before, and it was addressed. But let's be direct in repetition:

FairTax: Frequently Asked Questions
Quote:
 
Finally, exempting one product or service, but not another, opens the door to the army of lobbyists and special interest groups that plague and distort our taxation system today. Those who have the money will send their lobbyists to Washington to obtain special tax breaks in their own self-interest. This process causes unfair and inefficient distortions in our economy and must be stopped.


Fair Tax removes the choice from politicians and puts it in the hands of consumers.
Politics is the art of achieving the maximum amount of freedom for individuals that is consistent with the maintenance of social order.
--Barry Goldwater
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PRT
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cmoehle
Oct 8 2005, 08:18 PM
"more you make, more it takes"

Disincentive, no?

I don't understand why that would be a disincentive. You still end up with more than you had last year.
If you invest wisely, make profits, sell stock, you pay tax on capital gains - but you did make money at it.
You can keep the money under the mattress...or you can write off losses for several years ;) At least there are choices.
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