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OzzyKP
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Rockville, MD
Oct 1999
time: 00:34
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quote:
Bush Remark Touches Off New Debate on Income Tax
By EDMUND L. ANDREWS, The New York Times
WASHINGTON (Aug. 11) - A debate is flaring anew over the idea, most recently addressed by President Bush at a campaign stop in Florida this week, that the United States ought to consider replacing income taxes with some sort of national sales tax.
"It's kind of an interesting idea that we ought to explore seriously," Mr. Bush said in response to a question during an "Ask President Bush" session in Niceville, Fla.
Though the president's remarks were informal, he made them at a time when some of his advisers, though by no means all, are urging that his speech at the Republican National Convention include a proposal for a vast overhaul of the federal tax system.
Mr. Bush's comments were followed Wednesday by a conference call with reporters, arranged by the Bush-Cheney campaign, in which the chairman of the tax-writing House Ways and Means Committee, Representative Bill Thomas, Republican of California, said that he favored looking at "well-thought-out alternate tax structures" and that the committee planned to do so.
"We have one of the more regressive tax structures in the world today that basically is a 19th-century concept," Mr. Thomas said, adding, "We should get that revenue from people in the least destructive way possible."
Senator John Kerry, the Democratic presidential nominee, responded to the president's remarks by immediately accusing him of contemplating a step that would add to tax burdens on the middle class.
"The last thing we need is a national sales tax that would impose a whole new tax on this country," Mr. Kerry said. "Were the Bush proposal to be adopted, many Americans would be paying more than 20 percent in national sales taxes on top of state and local sales taxes."
Nor was Mr. Kerry the only opponent. At least one Bush adviser said there was a schism over the idea within the president's camp.
A concept that has surfaced from time to time, a national sales tax, or value-added tax similar to those in most European countries, would be a radical departure in the tax code. Its opponents argue that it would punish the poor and the middle class, who typically spend a larger share of their income than the wealthy on consumption. Proponents argue that it would be simpler and fairer than the traditional income tax, because it would not provide the opportunities for loopholes and sophisticated tax-reduction schemes that tend to favor wealthy taxpayers.
At his appearance on Tuesday, Mr. Bush stopped well short of proposing anything specific. But White House officials were careful not to rule out the idea, noting that he had long been in favor of fundamental tax changes.
"The president has always believed in lower taxes and a simpler, fairer tax code," the White House press secretary, Scott McClellan, said Wednesday. But Mr. McClellan added, "There's nothing more to announce at this time."
At another point on Wednesday, when a second White House spokesman, Trent Duffy, was asked whether Mr. Bush was contemplating a dramatic new tax proposal at the convention, he replied, "Stay tuned."
R. Glenn Hubbard, a former chairman of Mr. Bush's Council of Economic Advisers and now an adviser to the Bush-Cheney campaign, has long been a vocal supporter of fundamental change that would tax consumption rather than income from savings and investment.
"I don't think he meant a national sales tax per se," Mr. Hubbard said Wednesday. "I think what he means is a tax reform that might disadvantage savings and investment less."
08-12-04 12:58 EDT
Copyright © 2004 The New York Times Company. |
Interesting idea. Lets see if he has the balls to actually make an issue out of it.
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Kontiki
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Canada
Aug 2001
time: 00:34
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Hang on - is this meant to actually replace income tax or just help to reduce it? I think it's kind of assinine either way, but if it's the former, you'd need one hell of a sales tax to recoup the lost revenue.
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SpencerH
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Co-Ruler of my patch of land south of Birmingham Alabama
Feb 2002
time: 23:34
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quote:
January 20, 2001
Title: Bushwhacking taxes
Author: Alan Keyes
President Bush has repeatedly emphasized his resolve to enact the principal features of his tax plan quite early in the new administration. Government is an inherently blunt instrument, and the Bush administration may prove blunter than most.
So perhaps it is a good time to remember that we are often obliged to be satisfied if we can merely help steer federal policy more or less in the right direction -- for a decent approximation of the right reasons -- with results that are, for the most part, advantageous. The genial Bush doggedness on taxes seems likely to meet these fairly humble standards and is, accordingly, a welcome sign.
It is not, however, a sign that we can expect any progress toward fundamental tax reform.
No improvement of the income tax can take the place of the only agenda that will truly restore our freedom. Ultimately, we must abolish the income tax and replace it with the tax system that was intended by our founders when this nation began -- a tax system that leaves our people in control of 100 percent of their dollars and that gives to the earner the first use of every dollar that he or she earns. The income tax is a slave tax -- inherently incompatible with freedom. Abolishing it is therefore not just economically feasible, it is morally imperative if we are to meet our obligation to bequeath liberty to future generations.
The income tax should be replaced with the kind of taxes most people are already paying -- the taxes on things we buy and that we pay only when we decide to buy them.
This is what the founders intended to be our economic situation: ordinary citizens in the driver's seat of the economic patterns of their own lives.
Liberty from the income tax would mean, of course, liberty from the Internal Revenue Service. We would no longer have the IRS, because we would no longer have a tax code excusing the government demand that we report our income to its agents. Nor would federal law continue to permit the seizure of our homes and our goods and the destruction of our families' livelihoods in order to improve bureaucratic performance records.
We would no longer have our privacy invaded by a government that was interested -- officially and legally -- in burrowing about in our business to find out how much we make, where we make it and when we got it.
The income tax is a kind of universal solvent, dissolving the private and personal resolve each of us should have to control responsibly the actions we take in the acquisition and expenditure of wealth. Ultimately, the conservative movement must lead the American people to the abolition of the slave income tax, and for the right reasons. The question of fundamental tax reform is a test of the statesmanship of our politicians and of the quality of citizenship of our people.
But it is just as clearly a test that our national leadership is not going to attempt to pass in the next few months. Rather, we are being asked to support President Bush's plan for across the board reductions in marginal income tax rates. If we grant that, for the moment, there is no prospect of eliminating the income tax, substantial reductions in the marginal tax rate are the next best proposal, and deserve our support.
Reductions in the tax rate -- ideally including reduction of the capital gains tax rate -- are the heart of the Reaganomic, supply-side, tax policy which the Bush team is unwilling to call by those names. The Reagan tax cuts led directly to the decades of prosperity that the Reagan presidency began.
Low tax rates are a fundamental prerequisite to sustaining the natural inclination of free people to invest their time and treasure in risky and time-consuming attempts at the creation of wealth which they eventually offer to their fellow citizens in the market place. Confidence that such wealth creating activity will not be suppressed, and that the flow of new goods and services will continue to increase, is also the real key to avoiding or ending inflation.
It is particularly crucial that the marginal rates on large incomes and capital gains not be excessive. Confiscation of the wealth of the successful wealth creators -- entrepreneurs -- systematically directs the capital necessary for the next round of wealth creation away from the hands of those who have proven they know how to use it in creating the wealth that provides jobs, goods and services for us all.
Wealth creators are not our most important heroes but they are, in general, admirable and important people who reap only a small portion of the benefit of their effort. The rest is distributed -- in the form of jobs, goods and services -- to those who have the good fortune to live and work with the wealth creators of our free society.
Liberals ignorantly or demagogically defend high tax rates on the economically successful as an issue of tax fairness. The hidden premise of such a position is that wealth is not created by human beings but magically appears as a big pile to be distributed. The appropriate response -- and the true defense of lower tax rates for everybody -- is to point out that wealth is created by real men and women who do so, at least in part, in the expectation that they will not have their just portion of the fruit of their labors stolen from them. It should be a principal goal of our tax policy to encourage their crucial activity -- for the good of all. One of the simplest ways to do this is just to stay out of their way by not taxing them into submission to the liberal vision of sterile but equal inactivity.
For these reasons, principled tax conservatives should help President Bush move the tax system a bit more out of the way of the wealth creators. We should do so despite what might be a reasonable fear that improving the current system will delay its replacement with a tax system truly compatible with liberty. There are, indeed, times in political life when partial victories are the greatest defeats, but we can be reasonably confident that this is not one of them.
Certain kinds of compromise -- those, in particular, which are intended to facilitate the ultimate abandonment of principle -- are so dangerous as to justify opposition even to proposals that accomplish much of our real agenda. A tax reform proposal, for example, that greatly lowered our national tax burden, but newly established the principle that the government has first claim on our money would be a devil's bargain indeed.
Similarly, we should be wary of the path of partial victory at moments when there is real prospect of accomplishing our most important goals in their entirety. Suppose, for example, that an incident of poignancy on the national stage -- a famous pro-abortion crusader undergoing a change of heart in some dramatic circumstance, for example -- creates a moment of national attention and openness to the pro-life argument. At such a moment, the pursuit of a ban on partial-birth abortion alone would be surrender. Instead, such moments of possibility must be seized and put to the highest possible purpose.
There are times, then, when we must concentrate all our energy on the ultimate prize. And surely it is always true that our preeminent goal must be the eventual vindication of the original promise of American liberty.
But our national politics -- unfortunately -- present us with no such great opportunity on the issue of taxation, over the next few months, for the simple reason that there are no champions of fundamental tax reform on the national stage. In such a context, we should lend a hand in accomplishing the very real, if very partial, victory for liberty that the Bush plan represents.
Enactment of a general reduction in marginal rates will be a marginal victory indeed. But it will mean more liberty, more justice, and more prosperity for the American people. It will be, whatever euphemisms are attached to it, a partial reaffirmation of the Reagan economic spirit of encouraging the things that will bring abundance to our neighbors and of realizing that the abundance of my neighbor does not come at my expense. And, it will be a defeat, for now and in some measure, of the servile, jealous, and contemptible ambition of the liberal nanny state.
On the day that he signs the Bush tax plan into law, I would, for the moment, be content if President Bush says that cutting rates is good for all Americans and it is the people's money anyway. Not perfect, but something.
Former Reagan administration official Alan Keyes, was U.S. Ambassador to the United Nations Social and Economic Council and 2000 Republican presidential candidate. |
An argument from my candidate for president 
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DanS
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Kickball Capital of the World
Jan 1970
time: 00:34
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I think this should be seriously explored, even though I think our system now is a lot less worse than some other tax systems. As Hubbard has said, a lot of the positive economic features of the sales tax could be approximated through removal of capital gains and dividend taxes. Bush has already lowered these substantially.
Last edited by DanS on 13-08-2004 at 00:23
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Kontiki
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Canada
Aug 2001
time: 00:34
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Yeah, but if you exempt necessities (and what comprises this, exactly?), then you're left with insane sales taxes on everything else.
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Caligastia
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From Neal Boortz regarding the poor and the fair tax plan:
quote:
BUT WHAT ABOUT THE POOR*?
OK ... let's put on our sensitivity hats for a few minutes here and think of the consequences of the Fair Tax Act on our nation's poor, poor, pitiful poor. After all, they can hardly afford a 23% sales tax when they're living paycheck-to-paycheck in the first place, right? We're actually going to forget, just for now, that poverty is largely a behavioral disorder and consider how they would survive under the fair tax.
We begin with a reality check. Right now, for the most part, those whom we define as "poor" aren't paying any income tax anyway. In fact, many of them are getting checks from the government. The absurdly named Earned Income Tax Credit, for example. So right now the government is actually supplementing their income. How can they endure a 23% sales tax?
The implementation of the Fair Tax would fail in short order if, as the question presupposes, the net effect on the poor would be the that they would be paying today's prices for a gallon of milk or a loaf of bread, plus a 23% sales tax. But ... that would be far from the reality under the Fair Tax. Under the Fair Tax the poor won't only survive, they'll positively thrive! The Fair Tax could turn out to be the best poverty-fighting tool devised in this country since the concept of hard work.
Let's begin by considering two realities.
First, remember, please, that the poor, along with everybody else, will no longer have Social Security taxes or Medicare taxes withheld from their paychecks. Whatever they earn, they get on payday. For most of them this means an immediate 10 to 15% increase in their earnings.
Second. Don't forget the 22% in imbedded taxes. It's lurking there in virtually everything poor Americans have to buy. As soon as the competitive forces of the free market work their magic these people will be paying 20% or more less for virtually retail purchase, including the basics of food, clothing, shelter and transportation. Yes .. they'll have to pay the new national sales tax, but when you factor in the lower prices caused by the disappearance of the embedded taxes you'll see that the total price paid for consumer goods will remain very nearly the same.
So ... just considering these factors, the Fair Tax delivers a winning hand to people living in or near to what we call poverty. They get every penny they earn on payday, and when you factor in the Fair Tax and the lower prices, they're actually spending less of their money for a retail purchase than before.
Pull out the calculators. Say that a single mother with two children spends $45 a week on groceries. The removal of the 22% embedded tax would bring the price of those groceries down to $35.10. The sales tax would be $8.07. This brings the total price to $43.17. That's less than would have paid under today's tax system. This single mother, whom we'll consider "poor," has just received a 10% to 15% increase in her weekly paychecks, and she's paying less at the grocery story for her basic necessities.
Well, at this point you should be thoroughly convinced that the Fair Tax would actually benefit, rather than harm the poor. But, then again, maybe not. So, here's the clincher.
The Rebate
Under the Fair Tax plan every consumer will receive a check from the federal government every single month equal to the sales tax that person would be expected to pay on the purchase of the basic necessities of life for that month. The size of the monthly payment will be based on the government's published poverty levels for various sized households.
Here's an example of how the rebate payments would have worked in 2003.
Let's say you're a married couple with two children. The Fair Tax Act sets forth a formula for computing the poverty level, based on government figures, which negates any marriage penalty. Under the Fair Tax Act in 2003 you would have been granted an annual consumption allowance of $24,240. This is what the government would assume you would have to spend during that one year to buy the basic necessities of life for your family. The sales tax on this amount would equal $5,575. The government will rebate this amount to you in 12 equal monthly installments of $465. What about a single woman with one child? Her monthly rebate in 2003 would have been $232. The lowest payment would be to a single person with no dependents. That person would receive $172 per month.
Now ... bear in mind, this rebate isn't only paid to the poor. It is paid to everyone, rich and poor alike. The purpose here is to make sure that no American has to pay the Fair Tax sales tax on the basic necessities of life. Unlike the present income tax system, the Fair Tax treats each and every person in this country exactly the same. This, of course, presents somewhat of a problem to politicians who like to use the tax code to foment class distrust or outright warfare.
OK ... let's add it up for America's lower income citizens:
They get their entire paycheck.
Even with the sales tax, and considering the drop in prices, they'll be paying essentially the same for everything they buy.
They get a check from the federal government every month to rebate any sales taxes they had to pay.
Though their tax returns aren't that complex, let's also include the time these the poor (all of us, really) will save by not having to keep tax records or file tax returns.
So, my friends, if you're looking for some reason to oppose the Fair Tax plan, you're going to have to find a better excuse than its effect on the poor.
*Please note that I titled this chapter "But what about the poor?" and not "But what about the less-fortunate?" Look, I can't be expected to write this entire book without getting in a few digs at the language of political correctness, can I? To say that the poor are poor because of a lack of good fortune presupposes that those who aren't poor were just lucky. Sorry, but for the vast majority the benefits of an affluent lifestyle aren't a matter of luck, they're the result of attention to education, hard work and good decision making. Luck counts on the Las Vegas Strip, not Main Street.
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Kontiki
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Canada
Aug 2001
time: 00:34
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I think there'd be a psychological barrier, though. I mean, what's a typical total income tax take as a percentage of income - 25, 30%? Add that back to your income. Are you now more likely to go out and buy a car that has a 40% federal tax on it (in addition to any state and local taxes) because the government needs to make up the revenue?
I think most people would rather just not see the money in the first place rather than make 25-30% more and see the cost of every non-essential item skyrocket.
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12-08-2004 23:19
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