You are wrong.
Please see Dan Evans’ Tax Protester FAQ for details.
Nope – the refund is a flat per-captia amount (an approximation of the tax someone would pay on low-end basic necessities for a year) in every proposal along these lines I’ve seen.
Er, the payroll taxes and corporate business and income taxes are a different thing from the individual worker’s income taxes. The 22% savings comes from eliminating the former, not the latter.
Again, if your employer could hire/retain people capable of getting the work done adequately for 20% less money, he would have already done so.
There are two separate issues here:
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Is the federal government allowed to have an income tax at all?
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Is the federal government allowed to use any and all methods to detect and punish failure to pay up?
The answer to question 1 is clearly “yes” (moonbat arguments to the contrary notwithstanding). The answer to question 2 is, just as clearly, “no” – the Sixteenth Amendment did not repeal any of the various protections pertaining to search and seizure, self-incrimination, etc (the IRS’ tendency to act as if it did notwithstanding).
As to your aruments that the IRS is "Outlaw’ and that it claims it tax system to be voluntary and it isn’t- I invite you to this page:
http://www.militia-watchdog.org/suss5.asp#voluntary
http://www.militia-watchdog.org/suss6.asp#enforce
The US does indeed use a “voluntary” system of compliance. But taxes aren’t voluntary at all- here is what is meant by "voluntary ":“to the extent that income taxes are said to be voluntary, however, they are only voluntary in that one files the returns and pays the taxes without the IRS first telling each individual the amount due and then forcing payment of that amount. The payment of income taxes is not optional, however, … and the average citizen knows that the payment of income taxes is legally required.") Not only that, but the Courts even go so far as to ridicule dudes who have your definition and understanding of the term “voluntary” as applied to US taxation: " He alleges he does not have to pay taxes because it is a voluntary system and he chooses not to participate. … the court came to the rather quick and obvious conclusion that the words coming from the Debtor’s mouth made no more sense than the words written on the Debtor’s pleadings.”
As to the IRS " routinely violates American citizen’s 4th and 5th amendment rights to due process of law, right to privacy, liberty and property."- again false. The GAO actually did a study, as opposed to a few scattered "lifeboat cases’ and has shown otherwise. But if you want “jackbooted thugs” try dealing with your average State tax agency- the CA BoE and FTB make the IRS look like Cub Scouts.
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I don’t see where they differentiate between re-sale or used items. And, if the collecting Retailer doesn’t fully comply we again have the risk of “substantial loss of property and liberty”.
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On every one of these systems, if it is indeed “revenue neutral” (which I doubt) then the Middle class MUST end up paying higher taxes, because the rich will pay less. Since I doubt the tax will be collected on $$ spent outside the USA, or on “buying” stocks or real property, the rich “spend” a much smaller % of their income that the middle class does. Thus, ispo facto- they will pay less, and thus- we will have to pay more.
The idea that prices will go down, thus we’ll actually nearly pay no taxes is silly beyong belief, and shows that whoever wrote that hasn’t even taken High Scool Economics. Complete fantasy. You, I, and 90% of the posters here will pay more. GWB & his rich buddies will pay less.
Also- there is a huge problem with Compliance. Already there is a nice booming black & underground economy that skips paying sales taxes at a mere 8% local/state rate. If that rate is now 30% or higher (22 or 235 + 8% or so State rate)- the complain problems will be enourmous. Dudes will sell at Fela markets and such, many will skip across the border and do the weekly grocery shopping there. Much stuff will be bought by mail from out of the country. (and the rich can evade these taxes easier). This will reduce tax collections, and they’ll have to raise the tax- to 30%? making the Sales tax alsmot 40%? And then compliance will be harder.
Finally the whole thing about the “monthly check to cover the tax on the cost of basics” is something which requires a huge beauracracy and massive recored-keeping on the part of anyone who want to get that check. If you read the actual proposal, you’ll have to file a tax return MONTHLY, and save reciepts for everything you paid sales tax on during that month. :eek: Good luck on that!
This begs the question – if they can find workers at the lower pay level, why haven’t they already done it?
Answer: Consumption is something that is natural to man; saving isn’t. I don’t think we need to worry about folks not consuming.
Raising the level of savings is not a panacea, but it is a huge step in the right direction. The next step after abolishing the income tax is to take away the FEDs power to manipulate interest rates, and let the market set the rates. The FED created the dot-com boom, by creating massive amounts of capital through the lowering of interest rates. Of course, as we now know, the whole thing was built on a foundation of paper (credit), which didn’t hold up, and eventually crashed–basically the same thing that happened to Japan. Heavy debt financing is the reason for most business failures. With a revitalized equity capital base, this will not be so much the case.
You mean you get the same amount regardless of circumstances. That seems unlikely. What if I live somewhere where the cost of living is higher, what if I have kids, what if I have special needs that increase the amount of sales tax I have to pay. Do I need a car, that would make a huge difference in the amount of sales tax I’d pay. If I’m at the top of the income range that qualifies for the refund, do I get the same amount as somebody at the bottom? If I’m at the top of the income range, should I take a raise that will make me not qualify for the refund. If I put a lot of money into savings, am I still rebursed for all the stuff I didn’t buy?
That might be the proposal, but the fact is that congress won’t be able to resist the pressure to pass a lot of complexity into this system that will need a large organization to monitor. It’s not only the poorest of the poor after all, that spend most of thier income on retail goods.
Also, this refund is supposed to deal with the regresstivity of the sales tax. I don’t have any numbers to support this, but my gut feel is that simply refunding people for their bare necessities is going to fall far short of making this a progressive, or even an income neutral tax.
The Payroll tax does come out of your income (thus the name) and goes to entitlement programs. If the employer keeps this money, then employees will indeed make less money, as Ravenman says. If they don’t then this tax will stay in the embedded tax.
Corporate taxes can be used to cut the embedded tax without cutting payrolls, but thats only one of three sources of the embedded tax and so I doubt it will make the 20% difference in final price the NST advocates are talking about. Also note that the entities who do pay corporate tax (share holders who recive dividends, and the company itself) will also have seen their expenditures rise due to the sales tax, and will either have to get used to being able to buy less stuff or will hang on to the extra money to compensate.
[QUOTE=DrDeth]
As to your aruments that the IRS is "Outlaw’ and that it claims it tax system to be voluntary and it isn’t- I invite you to this page:
http://www.militia-watchdog.org/suss5.asp#voluntary
http://www.militia-watchdog.org/suss6.asp#enforce
The US does indeed use a “voluntary” system of compliance. But taxes aren’t voluntary at all- here is what is meant by "voluntary ":“to the extent that income taxes are said to be voluntary, however, they are only voluntary in that one files the returns and pays the taxes without the IRS first telling each individual the amount due and then forcing payment of that amount. The payment of income taxes is not optional, however, … and the average citizen knows that the payment of income taxes is legally required.") Not only that, but the Courts even go so far as to ridicule dudes who have your definition and understanding of the term “voluntary” as applied to US taxation: " He alleges he does not have to pay taxes because it is a voluntary system and he chooses not to participate. … the court came to the rather quick and obvious conclusion that the words coming from the Debtor’s mouth made no more sense than the words written on the Debtor’s pleadings.”
Answer:
Where do you get this definition of “voluntary?” Webster defines the word thus"
" Acting by choice or spontaneously; acting without being influenced or impelled by another. Free, or having power to act by choice; not being under restraint; as, man is a voluntary agent; without destraint, compulsion or coercion. Proceeding from choice or free will."
If there is no choice in whether or not one files an income tax return then, according to the above definition, this is not voluntary.
What you are saying is that compliance is not really voluntary, but mandatory. Why doesn’t the IRS just say this, and all the confusion would be cleared up? Because if the tax was not based on voluntary compliance (by individuals) it would be unlawful. The 16th amendment gives the government authority to tax income (profit), not “sources” of income, e.g., wages, salaries, interest, dividends, rents, etc. This is well established in at least four landmark Supreme Court cases.
I never said that I don’t have to pay taxes or that I don’t pay taxes. What I’m saying is that the government’s present tax system is operating on a very deceptive and flimsy basis, and needs to be changed. As for the average citizen knowing the tax isn’t really voluntary: The last time I checked we were still a nation under the rule of law, not the mob, and the government and its various agents are not exempt from it.
One benefit to scraspping the income tax and replacing it with some kind of NST, is that this would put out of business the huge industry that exists to avoid taxes. For example, there are specialized lawyers and accountants who spend all day figuring ways to avoid taxes 9this is completely legal). There are also criminal enterprises that operate without paying taxes 9this is illegal). At one time , the Mafia owned and ran casinos, racetracks, hotels…all of which operated without paying taxes. The incomes of prostitutes, gamblers, and bribe-takers are also untaxed.
Does anyone have some real numbers of how much tax evasion and avoidance costs the economy? This is an activity that is essentially useless…it provides no benefit (except to those whose taxes it lowers).
I’d be willing to bet that lawyers groups (like the ABA and ATLA) are mightily opposed to a NST-it would put many of their members out of work!
[QUOTE=JMS@CCT]
The term “voluntary compliance” when applied to Taxation has a specific meaning.It means just lkie the Courts have ruled above- you “volunteer” to the IRS your income, deductiosn and then volunteer how much you owe. They do not -normally- tell you how much you owe first (of course, if your taxes are wrong, due to an audit, that’s different)…
The 16th Ad has been challenged many many times in court, and it has help up. Read that cite, why don’t you? I am not going to debate (for the Nth time0 the Legality of Income taxes. Cecil has already ruled on that, anyway.
ralph, the issue of tax avoidence doesn’t go away with a national sales tax. Prostitutes who don’t report income from their work, for example, are not going to report thier sales of blow jobs (hmmm…one word or two?) either. They’ll pay tax when they go to the grocery store, but that will be compensated by thier not having to give part of the price of their services up to the gov’t.
More generally, while some forms of illegal income will be taxed through sales, this will be more then compensated by blackmarket selling and unreported sales. In fact, I’d wager that it will be harder to monitor people for unreported sales then it will be for unreported income.
It is a rather large figure. But all this woudl do is replace those Criminals who don’t pay their taxes with everyday law abiding citizens who dn’t pay their taxes. Retail would slump, as many would buy their goods through the black market.
Hey look- right now I bet you can go to a “Flea market” or “Farmers market” andyou’ll find that few of the dudes there- many of whom do that full time- collect and pay no sales taxes. And that’s for what- 7 or 7%?? How much larger will that sort of market get if the tax is 30%?
I was wondering if this is supposed to be a pure retail tax. The article was vague. I don’t think that your going to raise enough money on a pure retail tax though. The Census bureau gives the total amount of retail sales in 2003 as 3.7 trillion. The national budget is something like 2.1 trillion. Therefore we need a sales tax of 57%.
Notice to that the retail numbers include somethings that might be exempt like pharmacuticals (163 billion), grocceries, gas (268 billion) and used cars (70 billion). Also note that it includes the purchases made by people that will be refunded their sales tax to attempt to make the thing progressive. It also includes retail that will probably be driven into fleamarkets, blackmarkets, bought overseas, etc. etc by the NST.
Also the federal budget will almost certainly grow relative to sales in the coming years, if for no other reason then that the gov’t will be paying its own sales tax on things, and will also have to raise social security payments to compensate the elderly for higher prices. In the end, I estimate you’ll be looking at a NST at close to 75%
In short, there’s no you can tax retail, come up with adaquate income to support the gov’ts expenditures and keep prices low enough to avoid having congress dragged out in the streets and shot during the ensuing tax revolt.
Which is why I say it needs to apply to ALL transactions, from a pack of gum to Disney selling ABC.
It happens every day. Walmart pays its workers less, and mom-and-pop stores are going out of business. Steel minimills don’t have to pay huge sums for health care and pension benefits for their workers, and the large US steel corporations are slowly drowning in their own red ink. If businesses didn’t have market pressures, I would but that most of them would be happy to pay their workers more; but that is just a fantasy world. Why do you think so many businesses oppose raising the mimimum wage?
What I’m saying, again, is that the eliminiation of income taxes would radically change the markets for labor. This is because the eliminiation of the income tax would mean that all workers would suddenly have a windfall of disposable income. I do not believe for two seconds that the labor market would sustain a system in which workers’ take-home salaries would increase by a staggering 20% overnight.
But there’s another aspect of the NST idea that’s dangerous. Most proposals I have heard so far have admitted that the poor would have a hard time paying a new sales tax since, as everyone knows, the poor currently pay very little in the way of income taxes. So, most proposals have it that each month, a poor person would get a check from the government which could be applied to necessities. A gigantic welfare program.
First, I don’t think it would take long for the same fiscal conservatives who support the NST to start complaining about the massive amount of welfare spending that the Federal government would have created. If fiscal conservatives don’t like welfare under an income tax system, why would they like it under a national sales tax system? It strikes me as an extremely hollow promise to create a welfare check for necessities at the outset of the program when there is consensus that it would be needed, but there is no way to guarantee that the welfare would not be cut down the line.
Second, the idea of Federal welfare payments in perpetuity to large numbers of Americans seems to have a fundamental fairness problem. Would low income folks in New York City receive the same amount as poor folks in, say, Redlands, California? The folks in NYC would certainly have higher necessity costs (groceries more expensive, more need for winter heat, etc) than those in outlying areas. Or would there be a complex system for determining the amount of welfare each time someone moves?
In short, it occurs to me that the income tax system is simple in conception and complex in execution. An NST might be simple in execution, but the more one examines it, is terribly, terribly complex in conception.
What about a flat tax system of some kind? Is it workable? I read Cecil’s article years ago with him blasting such a system, but could a modified system be used?
If not, exactly what kinds of changes to the tax code COULD be used to make the system easier, more fair and less cumbersome? Or is the current system as good as it gets?
-XT
Trying to make the tax law easy (simple) and fair is probably not possible. The complexity is created by the desire for fairness. The IRS doesn’t even expect people to figure out the correct Earned Income Credit.
Some provisions in the law are base on giving people options. For example, you can contribute to the IRA or the Roth IRA. You can deduct foreign taxes paid or take a credit for the foreign taxes paid. If you sell your comic book collection to a friend $200 per month for two years, you can recognize the income now or over the course of the payments. All these things create complexity in an effort to be fair.