NY Sun: "We could end up with both a national sales tax AND an income tax"

[Bush_Eats_Beef]

After the AMT

New York Sun Editorial
July 22, 2005

http://www.nysun.com/article/17419

Next week, on Thursday, members of the Ways and Means Committee will hear testimony from their fellow representatives about radical tax reform proposals. Some of the proposals will be radically rationalized versions of the current income tax, such as the "Simplified USA Tax" proffered by Rep. Phil English, of Pennsylvania. Mr. English proposes eliminating most deductions and exemptions, and then creating a three bracket progressive rate system.

Rep. Michael Burgess, of Texas, has introduced a voluntary flat tax that would still give people the option of filing under the old system. It bears a striking resemblance to Steve Forbes's famous flat-tax idea. Some will be radically different approaches to taxation.

One such is a proposal by Rep. John Linder, of Georgia, to abolish the Internal Revenue Service entirely and shift from an income tax to a national retail sales tax. The sales tax would differ from a European-style value-added tax because it would be assessed only at the register during the final sale to the consumer, as opposed to being tacked on at each stage of the production process.

Many prominent economists are lining up behind the idea of a consumption tax, and especially one such as Mr. Linder's that would use a system of "prebates" to make it progressive. Others are backing a flat tax on income. This would eliminate the complexities of the current tax code, without necessitating the creation of a new bureaucracy to process progressive prebate and rebate transfers under a consumption tax. It sidesteps what some see as a flaw with the consumption tax idea: Unless the Congress overturns the 16th Amendment ("The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."), we could end up with both a national sales tax and an income tax.

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Retailers Say National Retail Sales Tax
Would Make Every Day Tax Day

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

WASHINGTON, D.C., April 14, 2005 - As the nation marks the annual April 15 filing deadline for federal income tax returns this week, the National Retail Federation warned that a proposed new National Retail Sales Tax would create a huge new daily tax burden for U.S. taxpayers.

"April 15 is tax day but the National Retail Sales Tax would make every day tax day," NRF Vice President and Tax Counsel Rachelle Bernstein said. "Consumers would be slammed with a 30 percent tax on every purchase from toilet paper to new cars - even new home purchases, health care and prescription drugs. The NRST is a horribly regressive tax that would hit the poor the hardest and would double tax senior citizens as they spend savings that were already taxed. We think one tax day a year is bad enough. Supporters try to call this the 'Fair Tax' but it's really the 'Unfair Tax.' "

"A national sales tax would devastate the nation's economy for years before economic gains - if any - would be seen," Bernstein said. "The psychological effect of such a huge tax on consumer spending would be profound. Consumers would simply stop spending on anything but the barest necessities for a prolonged period of time. This would have a ripple effect throughout the economy far beyond the retail industry."

The key NRST proposal before Congress is H.R. 25, the Fair Tax Act, sponsored by Representative John Linder, R-Ga. The Linder legislation would replace the current federal tax system with a 30 percent national sales tax in addition to existing state and local sales taxes. A study commissioned by NRF in 2000 found that a national sales tax would bring a three-year decline in the economy, a four-year decline in employment and an eight-year decline in consumer spending.

Bernstein addressed a number of issues surrounding the NRST proposal:

* While the proposal is referred to as a "retail" sales tax, it would go far beyond traditionally taxed retail merchandise. The legislation pending in Congress specifies "all new goods and services" including big-ticket items like new cars and new homes and traditionally untaxed items like health care and prescription drugs.
* While supporters claim a 23 percent sales tax rate, the number is calculated under the "inclusive" method rather than the "exclusive" method typically used to calculate sales tax. In other words, NRST supporters count a $30 tax on a $100 purchase as 23 percent of the total $130, rather than 30 percent of $100.
* The congressional Joint Taxation Committee has estimated that it would take a 57 percent tax at the cash register to replace all federal tax revenue rather than 30 percent. That calculation assumes that all new goods and services are taxed. If popular exemptions like home purchases and health care are maintained the rate would go higher.
* A national sales tax would be regressive because lower-income families spend most or all of their income while upper-income families can save a much larger percentage of their income and would not have to pay tax on savings and investments. Supporters say this issue is addressed because taxpayers would receive a rebate tied to the poverty level. In fact, the rebate would provide a tax cut for families with less than $18,000 in annual income. But families with income between $18,000 and $100,000 a year - who need to spend a large percentage of their income on necessities - would face a large tax increase.

NRF has urged Congress and the Bush Administration to simplify the existing income tax system rather than enacting a wholesale replacement with an NRST, value-added tax or other form of consumption tax, all of which would create a tax cut for the rich and a tax increase for low and middle-income taxpayers.

The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet and independent stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.4 million U.S. retail establishments, more than 23 million employees - about one in five American workers - and 2004 sales of $4.1 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations. www.nrf.com.

[Bush_Eats_Beef]

1. Second NRF Press Release

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 National Retail Federation today announced that it has filed comments with the President's Advisory Panel on Federal Tax Reform urging the panel to reject economically risky proposals to replace the nation's income tax system with a consumption tax or to add a new consumption tax on top of existing taxes.

"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.

The NRF statement cited a study commissioned by NRF in 2000 that found that a national sales tax would bring a three-year decline in the economy, a four-year decline in employment and an eight-year decline in consumer spending. The study showed that similar results could be expected if other types of consumption taxes were enacted to replace the current system.

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.

NRF particularly urged the Advisory Panel to reject proposals to maintain the current tax system while adding a VAT or other new tax that would be used to pay for programs such as Social Security or health care. Doing so would amount to a tax increase rather than tax reform and would provide lawmakers with "a money machine" to finance increases in government spending, NRF said.

The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet and independent stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.4 million U.S. retail establishments, more than 23 million employees - about one in five American workers - and 2004 sales of $4.1 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations. www.nrf.com.

[roguevalley]

2. shit. we're all gonna die.

[Gay Green]

4. This is ridiculous!

Pubs seem to have a fine way of fucking everything up beyond repair. :mad: :grr: :nuke:

(edit: typos)

[punpirate]

3. And most of this can be traced back to...

... Democrats caving in to the right on effectively destroying truly progressive taxation, and repeated tax giveaways and subsidies to business, and not just in the last few years. This goes back to the `70s. Corporations now pay less than 1/5 of the percentage of taxes into federal general revenues than they did in the mid-`70s. In recent years, 60% of corporations paid no taxes at all. Many of those were, in fact, continuously profitable.

The wealthy continue to receive selective advantages in taxation of which most of the rest of the population cannot avail themselves.

Want to really fix the deficit problem? Bring the tax code back to what it was in 1972, with nominal tax rates adjusted for inflation.

The huge debt we face is due to only two things--tax giveaways to corporations and to the wealthy in the Reagan, Bush and Bush II administrations and defense spending which was excessive beyond all real need in the Reagan and Bush II administrations.

Let's keep one thing in mind. At the end of the Carter administration, the national debt stood, after 193 years, a civil war and two world wars, at $980 billion. The supply-side economics of the Republican right was a boondoggle to transfer debt to the middle class and tax revenues to the wealthy and powerful entities of this country, and has increased that debt level by over 700 percent in just twenty-five years. By the year 2000, the top 1% of the population had more accrued wealth than the bottom 90%. That distribution of wealth is the same as it was in feudal England.

The current plans will make that situation worse and/or will radically reduce revenues for social spending.

Period.