The official blog of the Libertarian Party
October 18, 2005
Presidential Tax Commission Gets Timid on Reform
President Bush formed a bipartisan panel in January to look at the problems of the existing federal tax code and devise possible alternatives. The last effort to reform the tax code occurred in 1986 during the Reagan Administration. Since that time, there have been 14,000 changes to the tax code, including many tax breaks for special interests.
While most people can agree that the federal tax code needs simplifying, there are major disagreements about which tax reform plan to adopt. Some people such as Steve Forbes and Dick Armey, advocate a flat income tax. Under such a plan, everyone would pay the same percentage in taxes and almost all itemized deductions would be eliminated.
Other tax reform plans that have been discussed are a European-style consumption tax and a national sales tax. A European-style consumption tax, also known as a value-added (VAT) tax, is similar to a national sales tax. However instead of collecting taxes at the point of purchase, it is imposed on the value added at each stage of the production process. The national sales tax plan advocated by nationally syndicated talk show host, Neal Boortz would only tax personal consumption and not business-to-business purchases.
President Bush's tax commission opposed replacing the federal income tax with a national sales tax. At this Tuesday's meeting, the panel plans to look at adopting the VAT tax, although some members have voiced opposition to the European-style consumption tax. Critics of the tax reform commission have complained that the panel is being too timid in advocating real tax reform.
Changes currently accepted by the tax commission would, in essence, not affect the current system. Ed McCaffery, a University of Southern California law professor stated, "If you keep the income tax pretty much as is, there will not be enduring, long-lasting reform. I think it's now clear we have to do something else. Will they do something else? We're certainly not hearing it."
Many critics of the current tax code say making incremental changes to simplify the current income tax system will not work, because Congress eventually will return complications to the tax code.
Posted by at October 18, 2005 03:30 PM
Reader Comments:
Has anyone ever figured out if we pay taxes on more things now than at the time of the Stamp Act? I know that the issues back then weren't so much against taxes as they were against England taxing us.
Under Bush, oh my G-d. I am afraid to ask.
Vast, over-reaching governments don't come cheap!
I can see it now. the whole country is government, clock in and clock out, report to government.
c-span.org had a link http://news.yahoo.com/s/ap/20051018/ap_on_go_pr_wh/tax_overhaul_6 to a Yahoo News AP story on today's meeting. The panel's official website http://www.taxreformpanel.gov/ is somewhat behind schedule on these reports.
Last week's meeting http://www.timesleader.com/mld/timesleader/business/12888775.htm looked at a blend of a VAT combined with tinkering with the current income tax system, in part to come up with revenue to replace that from eliminating the Alternative Minimum Tax, which eliminates various deductions such as state income tax and dependents for the highest income earners and which has not been indexed for inflation and is expected to snare more and more taxpayers.
While tinkering with various aspects of our current tax system can make it more attuned to (less discouraging of) promoting real economic growth while being nominally revenue neutral, there are many political considerations that have gone into the current systems. This panel is a prime example of the difficulty of making big changes in government, and these incremental changes are only at the proposal stage. There will be great opposition to the now minor changes proposed if they get as far as consideration by Congress.
The best reforms would include addressing externalities, such as diffuse sources of pollution (a carbon tax), and best of all reducing spending that increases the need for tax revenue in the first place.
Tax reformers need to be aware of the maxim that government gets less of what it taxes more, and vice versa.
In June of 2002, Bob Schulz publicly declared he has forever stopped paying income taxes or filing income tax returns, based solely on the content of this hearing and the government's refusal to answer the well documented legal charges that there is NO legal or constitutional basis for the federal income tax.
http://www.givemeliberty.org/
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Changing the tax system probably means passing a law; do we have somewhere a draft ready? I must admit that I am actually not sure how to proceed to dismantle the State. All taxes and spending cannot be cut right away! Which items would go first? Answers to that questions are critical because they may boost or sap our credibility and political appeal.
National sales taxes are a bad idea; regressive taxes are stupid for obvious reasons.
"Has anyone ever figured out if we pay taxes on more things now than at the time of the Stamp Act? I know that the issues back then weren't so much against taxes as they were against England taxing us." --MarkH
Not sure if we pay taxes on more things, but according to the folks at FairTax, about 22% of the list price of any given good or service is simply the hidden burden of corporate taxes, passed on to the consumer. Couple that with the 15.3% mimimum tax on income (given that the entire burden of FICA taxes falls on workers), and even the poorest of families are seeing a large percentage of their income go to the central government every year.
As much as I hate the national income tax, the panel would be wise to at least suggest a shift to a single proportional income tax structure, with no exemptions, deductions, or loopholes, and no other taxes whatsoever to fund the central government. If the Republicans chose to point out the "regressivity" of hidden taxation, not to mention the hundreds of billions lost on enforcing the current tax code, they might stand a fighting chance of getting something like that passed.
As for a VAT, I hope to God they don't seriously consider one. Not only would it be an administrative nightmare, but it would do little if anything to solve the personal privacy violations of the present system.
Urgent! Urgent!
Virginia's House of Delgates race is heating up. Libertarian Candidates have been getting fantastic Press coverage. A 13 term incumbent might be defeated. Folks! we might win one or two HOD Seats. We need your help.
Please go to www.lpva.com then click on our Candidates, and give your support.
Thank You
Bill Wood
Double roger 10-4 on Mr. Wood just said.
If you want to support 2 candidates worth supporting and both of them have a good shot at winning, head over to the LPVA site. Chuck Eby running for HOD just got a GLOWING review in a weekly paper in the area, with about a full page of coverage and 1000 yard signs. Donny Ferguson is even better positioned to join the ranks of LP officeholders.
http://www.eby2005.com/
http://www.donnyferguson.com/
Both of these guys deserve your support. Both have a real shot to win their races. Give em some money.
Also in Northern VA, don't forget the campaign of Scott McPherson, http://www.votemcpherson.org/. I've been helping all three of these guys with getting them volunteer help to drop literature, put up signs, and man the polls on Nov. 8th.
I'm also in the process of editing a short video for Chuck Eby, which I hope to release very soon. The idea is to get it passed around via email from voter to voter in Northern VA, similar to what the Robert Dean for Mayor campaign did in 2004 when he got 43% of the vote in Virginia Beach.
MarkH: you asked about taxes at the time of the Stamp Act. Not only do we pay MANY more taxes than were paid then, the amounts were also much less.
The Stamp Act was passed by the British Parliament on March 22, 1765. The new tax was imposed on all American colonists and required them to pay a 1% tax on every piece of printed paper they used. Ship's papers, legal documents, licenses, newspapers, other publications, and even playing cards were taxed. The money collected by the Stamp Act was to be used to help pay the costs of defending and protecting the American frontier near the Appalachian Mountains (10,000 troops were to be stationed on the American frontier for this purpose).
Without significant spending cuts, tax reform is simply a shell game to change who pays the most.
Instead of trying to get rid of loopholes (what Lew Rockwell calls "remaining freedoms") the LP should be pushing for more of them.
How about pushing for Unlimited Savings Accounts (USAs)? You could put any amount of money into these accounts for any purpose, and not pay income taxes on them. You could take the money out at any time with no penalty. Who would need Social Security if we had USAs? Sound extreme? This is what the country had up until 1913, when the income tax was passed.
Where will spending cuts come from? Here are the big budget areas, and all are popular politically:
1. Social Security
2. Defense
3. Medicare
4. Interest on the national debt
5. Medicaid
6. Non-defense discretionary spending
How about means-testing Social Security and Medicare? Why should the looting of young working families by wealthy retirees continue forever, just because they thought it would when their money was being taken?
Tim West Very good article on these Candidate to run in office. However I do not want people to search all over the blog, we need to put these people on the left hand side, so people can click and see who is running, nomination, etc etc. Just for this purpose
CAN'T SOMEONE UPDATE THIS SITE AND DO THIS so it is user friendly for candidate. PLEAAAAAASSSEEEEE
I like the fact he talked more on important issues that most people can agree on.
I am reading a lot about TABOR regarding taxes. This sounds good, but we do need overcrowed cities either. Keep this in mind. I want to move away from where I live because I feel like a stardine in a tin can.
Goldwater conservative: please explain how VAT
would be an administrative nightmare for business
compared to the calculation of a corporation income tax?
Lex: I like your idea regarding tax-free unlimited savings plans!
Means testing entitlements and such is surely a part of any LP strategy. I'm working on just that sort of thing, but it will take a while.
Nigel Watt says, "National sales taxes are a bad idea; regressive taxes are stupid for obvious reasons."
When people start throwing around such words as "regressive" and "stupid," they imply that the proposal so tagged will catapult us back to a previous, and lesser, state of "civilization," that society will be hindered by the thing in question. Suppose there were a national sales tax that exempted the things that lower-income people need and purchase most: rent, food, utilities, gasoline, etc. The actual mix of exempted items wouldn't be relevant, so long as, statistically, the total sales tax bite on lower-income people would be negligible, and far less than that of middle- and upper- income citizens. How would THAT be "regressive"? It might not be completely fair to the n-th degree, but the amount of residual unfairness in the scheme would be dwarfed by its simplicity and straightforwardness, which would save Americans huge amounts of time and money, while safeguarding their privacy. Right now, the system is HORRIBLY unfair, as well as being expensive on several levels. That must end.
Suppose that everyone were comfortable and rich in America, except that some were much more so than others. Would the concept of "progressive vs. regressive" tax have any real meaning then? Why couldn't we ALL shoulder a burden of, say, 5%, without exemptions? Would the less-rich whine that the more-rich were paying a smaller proportional share of their wealth under the evil "regressive" flat-tax? Probably, but who would listen?
I don't want to add to anyone's suffering, and I surely want the smallest tax bite possible. On the other hand, if taxes must be levied, what's wrong about asking everyone -- at least, everyone who has reached a level of relative comfort, by spending a larger portion of his or her income on "non-essential items" -- to pitch in?
My quick take on tax proposals:
* Progressive income tax we have now: Worst thing I have ever seen, wasting hundreds of billions every year in compliance and preparation, getting the state and federal governments' prying eyes into your personal business, manipulating your behavior toward political correctness (in order to qualify for tax breaks), and often keeping people from breaking through into new plateaus of wealth and comfort, because they cross an income bracket.
* Progressive income tax (few or no loopholes): Still bad, because the government is still privy to your income information and people nearing bracket lines are discouraged from trying harder. But better than what we have now, because cost (waste!) of compliance and preparation is drastically lower.
* Flat income tax: Bad, because it still requires you to report and verify income. If no poverty exemptions, this can also fall hardest on the poor.
* Flat sales tax (no exemptions): Better, but still requires merchants to be tax collectors, and poorer people may be adversely affected. (Would excise taxes on tobacco and gasoline go away? I would think that those taxes penalize the poor far more than any general sales tax would.)
* Flat sales tax (exemptions for "essentials"): Yet better, as the poor might end up paying little or no tax at all, but merchants are still collecting taxes for the government. Also, who decides what are "essentials," and by what process? Still, that process, political as it must inevitably be, would probably be less costly and onerous than the current cost of income tax compliance/preparation, and the current process of tinkering with the code.
* VAT: EVERYONE becomes a tax collector, because they must report and pay taxes on value received from anyone, for any reason. The old saying, "you get less of what you tax" seems appropriate. If you tax "value added," you'll get less value added. Do we really want this, and the proliferation of aggravation all along the demand and supply chain (including potential paperwork requirements -- maybe you can think of a way to impose VAT without excessive paperwork, but I guarantee you that politicians and bureaucrats cannot!).
Excise taxes, imposts, and duties: The primary taxation methods authorized under the Federal constitution (prior to the Income Tax amendment). These are similar to targeted "sales taxes" (also covering import/export, transfer, and production as well as consumption). I suspect that if the government restricted itself to these taxes, and that an Act of Congress was required to establish or modify each such tax, we'd all be a lot better off. Whenever excise taxes went so high as to become punitive, people would scream. If ever excise taxes were levied, so as to disproportionately tax one group, individual, or company over another, it is likely that they could be voided as unconstitutional. At very least, people could reduce their commerce in the taxed things, in order to lower the bite, as they can with sales taxes. About the only downside I can see is that the federal government might not get enough money to continue its free-spending ways. How bad could THAT be?
For Freedom, I agree that you should move away from where you live now. May I suggest another country entirely?
"Cutting taxes" is George Bush speaking. The libertarians should rather focus on cutting spending. Once spendings are cut, then it is easy to find a good tax system.
Just for the record, I ABSOLUTELY will not vote for ANY candidate who supports a national sales tax, PERIOD. I have opted out of federal taxes by not working and anyone who wants to opt me back in is not my friend!
you dont work? at anything? How do you support yourself?
you dont work? at anything? How do you support yourself?
Posted by: Timothy West at October 19, 2005 04:14 PM
Haaaa haaaa haaaa rofl
I spoke to one of the Candidate for Virgian, I wished him the best and told him his web page was great. I am glad he working on the important issues and I suggested a few things. He liked some of the ideas. So its up to him
Anyhow I hope he wins. Thumbs up.
"Just for the record, I ABSOLUTELY will not vote for ANY candidate who supports a national sales tax, PERIOD. I have opted out of federal taxes by not working and anyone who wants to opt me back in is not my friend!"
Here is an idea. Try holding a job, it's not that hard.
Another thing, you are already paying taxes. You may think you opted out of Federal Taxes, but you really have not. You may have opted out of the Federal Income Tax, but there are still embedded taxes that are passed on to the consumer.
"When people start throwing around such words as "regressive" and "stupid," they imply that the proposal so tagged will catapult us back to a previous, and lesser, state of "civilization," that society will be hindered by the thing in question. Suppose there were a national sales tax that exempted the things that lower-income people need and purchase most: rent, food, utilities, gasoline, etc. The actual mix of exempted items wouldn't be relevant, so long as, statistically, the total sales tax bite on lower-income people would be negligible, and far less than that of middle- and upper- income citizens. How would THAT be "regressive"? It might not be completely fair to the n-th degree, but the amount of residual unfairness in the scheme would be dwarfed by its simplicity and straightforwardness, which would save Americans huge amounts of time and money, while safeguarding their privacy. Right now, the system is HORRIBLY unfair, as well as being expensive on several levels. That must end.
Suppose that everyone were comfortable and rich in America, except that some were much more so than others. Would the concept of "progressive vs. regressive" tax have any real meaning then? Why couldn't we ALL shoulder a burden of, say, 5%, without exemptions? Would the less-rich whine that the more-rich were paying a smaller proportional share of their wealth under the evil "regressive" flat-tax? Probably, but who would listen?
I don't want to add to anyone's suffering, and I surely want the smallest tax bite possible. On the other hand, if taxes must be levied, what's wrong about asking everyone -- at least, everyone who has reached a level of relative comfort, by spending a larger portion of his or her income on "non-essential items" -- to pitch in?"
Posted by James Andersan Merritt
The definition of a regressive tax is one that charges the poor a higher percentage of their income than the rich. What you're proposing wouldn't be a regressive tax.
I just wanted to know what he does to live.
I have a rule that I live by "never trust politicians". My county govt several years ago promised to end property taxes and replace it with a sales tax. Of course the county voters approved it, but what they failed to realize is the county still had the power to tax property. So now not only do we have to pay county sales taxes. We also have to pay extremely high property taxes.
Be careful what you wish for. You may get the national sales tax and still have to pay federal income taxes as well. A nightmare scenario if you ask me.
I don't want to have one tax exchanged for another I want the tax eliminated period.
Tim West, Libertarian TV, For Freedom, and others here, Thanks guys, I know Chuck Eby, Scott McPherson and Donny Ferguson appreciate everything you are doing.
Chuck and Donny will be at the Loudoun County Libertarian Party meeting Tuesday Oct.25th 7:00pm, Nido Italian Cafe, 201 Harrison St. Leesburg, Va.
Thanks Again
Bill Wood
Ok now we got Libertarians working in Virginia, who else is running in surrounding areas? We need more libertarians. Who else is out there.
Who else is out there? YOU, For Freedom. Get into the ring and start making a difference instead of pushing for other Libertarians to do it.
What makes you think I am doing nothing. Huh.
You're always posting weird messages on here, that's what.
FOR MORE FREEDOM you act like a 12 year old please grow up.
obviously no one has taken the time to read the Fairtax Book
I've read the fairtax.org website Scott. That's all I needed to know that the idea is a crackpot scheme.
why do you think the fairtax is a crackpot scheme?
Just for the record, I am NOT on welfare, and take NO government handouts. I will say that I live a very spartan livestyle, and when I work for others, it's cash only. Those who DON'T know me may question my work ethic (in ignorance) and beyond that, my financiasl business is just that: MY business and none of yours! Or the government's. And I intend to keep it that way. And I will NOT support ANYBODY who who supports the regressive national sales tax.
I hate to tell you, if the government has it way, cash money will be obsolete, and credits might be in place or other means in order to keep track on you. Then what will you do. huh.
http://www.rense.com/general54/moreevi.htm
This website will show that peak oil is a scam and that oil wells that have went dry back in the early part of the last century have been uncapped an found to be full again. Check it out.
You can also rest assured that if either of our current two party system reforms the tax code, it will be a disaster for the american people.
Pasy: I believe you and I have been over this topic before, so I won't bother going into details again. If you want to read an article I wrote on the subject to get detailed criticism of the plan, visit http://www.libertariantv.com/articles/Unfair-Tax.asp
In general summary, I think the "unfair tax" (as I prefer to call it) is a crackpot scheme because it really uses nothing more than smoke-and-mirrors to con people into thinking that positive changes would ensue from its passing into law and that no one would lose under it, when the facts are otherwise. It really can't achieve what it's optimistic supporters claim it will achieve, and if the national LP becomes associated with it, I believe in the long run it will severely damage our reputation as THE small-government party.
Ted, you've raised an interesting point. I had never questioned the idea that oil is a "fossil fuel," so the suggestion that it is not created from decayed dinosaur remains is fascinating.
Here is another article which offers the same evidence as the one you provided. The difference is that this article was published at WorldNewsDaily, which has a considerably higher level of respect in the media world.
http://www.wnd.com/news/article.asp?ARTICLE_ID=38645
Apparently, there are also some books on the subject I found at Amazon that have attracted some respect in the scientific community. The theory is not currently accepted by a majority of geologists and related scientists, but its acceptance is apparently increasing.
The Bottomless Well: The Twilight of Fuel, the Virtue of Waste, and Why We Will Never Run Out of Energy (Hardcover), by Peter W. Huber, Mark P. Mills.
The Deep Hot Biosphere : The Myth of Fossil Fuels, by Thomas Gold.
Very interesting. keep the good work! substances that cure you: http://www.yahoo.co.uk , thins that excited you at 14 , substances that cure you
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Has anyone ever figured out if we pay taxes on more things now than at the time of the Stamp Act? I know that the issues back then weren't so much against taxes as they were against England taxing us.
Posted by: MarkH at October 18, 2005 04:26 PM