GOP eyes abolishing income tax

[Rose Siding]

WASHINGTON - (KRT) - A once-quiet campaign by several top Republicans to abolish the IRS and replace the federal income tax with a European-style national sales tax has burst into the open, leading President Bush to withhold his blessing of the controversial proposal.

Yet the plan has strong backing within the GOP hierarchy, including House Speaker Dennis Hastert of Illinois, who has become its most visible advocate and said he has plans to push the idea strongly in the next Congress.

The speaker said in an interview that if Bush is re-elected and the GOP keeps control of the House and Senate, there is a "potential" Congress could adopt the plan during the next four years. "I think we ought to have a national debate on this," Hastert said.

"We have the opportunity if Bush wins and we hold the House of Representatives to really make a change to do this," he said. "I think we may have one chance in a generation."
...
Yet with congressional forces leading the charge, a strange debate has emerged about an idea that had, until earlier this week, lurked in Republican shadows for months. Hastert and House Majority Leader Tom DeLay, R-Texas, had both spoken in favor of the proposal, while the White House kept its counsel. Others in the GOP on Capitol Hill favor a so-called flat tax, or a single rate for all taxpayers.

http://www.sunherald.com/mld/sunherald/news/politics/9402856.htm

This is in many of today's late editions. Not a prayer, yet these cons keep talking it up. Oh, but it's not Bush's plan, wink wink. Maybe they know that SOME voters are going to hear "no income tax" and think it means "no tax".

[Cronus Protagonist]

1. More fog creation

And out of fog, one can spin anything, just like you pointed out.

SHOVE IT! - Drop Bush Not Bombs! - Hero Kerry AWOL Bush
http://brainbuttons.com/home.asp?stashid=13

[Tandalayo_Scheisskopf]

2. A blowjob for their base...

But, sadly, there will be no "release". Just a tease, flailing, desperation.

[snippy]

8. Well put. Bush's real goal is to exempt wealth and its accumulation

from any taxation. The elimination of the estate tax and the reduction and eventual elimination of taxes on investment income are steps toward that goal. The final step is the unlimited expansion of the deduction for Roth IRAs, which will result in the income tax becoming a form of a consumption tax.

[TahitiNut]

3. It's (again) official: The US is run by Banana Republicans

This is yet another abomination to dishonor labor and worship at the altar of greed and wealth.

[unblock]

4. this is a proposal to CREATE and MASSIVE tax on the middle class

this is a tax HIKE and needs to be protrayed as such.

[Mike Niendorff]

7. Another Republican Tax Shift Plan

Say it loud, say it often.

They want to shift the taxes of the well-to-do onto the middle class and the working poor. They want "deregulation" at the top, and "law and order" at the bottom -- cut law-enforcement for those at the top, and build prisons for those at the bottom. If it serves those at the top, it's "necessary infrastructure". If it serves anyone else, it's "socialist wealth-redistribution".

Same scam, a thousand different names.

Always shift the tax burden toward the middle and the bottom.
Always shift public services toward the top.
Wash, rinse, repeat.


MDN

[RUMMYisFROSTED]

21. I'll second that.

If it serves those at the top, it's "necessary infrastructure". If it serves anyone else, it's "socialist wealth-redistribution".

[pa28]

9. Exactly right

This is a massive new tax that results in a tax increase for working Americans.

[Catfight]

5. How about Kerry abolishing the payroll tax that REALLY hurts people

that work for a living and make under 200k a year? The income tax generates a lot less money than the payroll tax. Besides, if Bush wants to start now talking about real issue that's fine with me. Exactly what plan does Bush have to generate REAL jobs so more people can pay taxes? I know a lot of people who'd LOVE to pay taxes again instead of spending all their retirement to pay for a mortage that they'll eventually lose anyway because there are NO jobs! A vote for Bush is a vote for four more years of the downward spiral to hell. The loser president, loses jobs, loses his mind, loses the surplus, loses soldiers lives, loses the popular vote, loses more of our civil rights, loses clean air, loses OBL, loses WMD, loses credibility, loses two twin towers and not one person is held responsible, not even OBL! Big fat ZERO. Who's ready for four NEW years of possibilities, and hope?

The DREAM team vs. the Mean team, it's an easy choice America!

[Fovea]

6. How about an English style

TV tax as well, with an extra faux news/porn surcharge.

[guajira]

10. Kerry Should Jump on that Bandwagon

The quickest and best way to shut B* up on this one is to agree with him. Take the stance that the tax code needs a complete revision and that Kerry plans to look at several options - flat tax, sales tax, etc.

Truth is, the tax code is a mess and does need a major overhaul!!!

[neverborn]

11. Please do.

[struggle4progress]

12. kick

:kick:

[DeepModem Mom]

13. kick

[asthmaticeog]

14. Is this necessarily so regressive?

I'm asking, not arguing, here, as I'm approaching this from a somewhat ignorant perspective, but is this ALL bad? Rich people who hide money offshore and hire expensive accountants to find them loopholes won't be able to hide from a mandatory federal sales tax when they buy luxury autos and plush houses. The underground economy will start to fund the government, too -- gangsters and bookies and the like don't file tax returns because their businesses are illegal, but they sure do buy some expensive stuff. Would this be worth supporting if there were an exemption for groceries, for example, so the poor and middle-class wouldn't get quite so slammed? Why is taxing consumption automatically less fair than taxing earnings? From an environmental perspective, wouldn't it be a good thing to discourage excessive consumption?

Someone help me out here.

[truthisfreedom]

16. poor and middle-class people spend nearly all of their income and so would

be taxed on nearly all of their income. the rich spend a portion of their income but invest the rest... you can be sure they won't be taxed for investing.

[asthmaticeog]

17. Gotcha.

n/t

[RivetJoint]

19. What if housing and food were

exempted?

[AP]

26. Even if you did that, you still can't avoid the problem that poor people

tend to have consumer spending on items that depreciate in value.

The real boon to the wealthy would be that their consumer spending on items that hold or appreciate in value would further reduce their tax burden.

For example, say a poor person spend 10% of his daily income on a Timex watch, and paid a 20% sales tax on that. For that day, that person paid 2% of her income in tax.

A week later, you couldn't sell that watch. A year later, that watch breaks. You have to buy a new watch. So, you never recoup that tax.

Say a rich person pays .1% of his daily income on a Roley. That's a .02% tax burden. A day later that watch is worth more than you paid for it. A year later you secure a loan to invest in stock secured by that watch. Ten years later you sell the watch for twice what you paid for it. If you're not a retailer, perhaps the buyer doesn't even pay sales tax on it. You don't pay income tax on the sale, because there's no more income tax. So you may have paid 20% of the price of the watch in sales tax, but, 10 years later you sold it for 100% more, giving you an 80% profit on the sale, after tax. Effectively, you paid no tax, and you got the benefit of having an asset which allowed you to leverage your wealth in the interim.

[AP]

27. See my post 26 -- even the consumer spending by the rich tends to be

on items which hold their value or even appreciate in value. You don't buy a couch that you throw out after ten years. You buy one that becomes a collectible, or at least one that you can sell for a percentage of the original purchase price, recouping your tax burden.

In fact, presuming a 20% sales tax, if you can sell everything before it depreciates to 20% of the purchase price, you'd recoup your tax burden, reducing it to 0%. If you sell for anyhwere over 20% of the purchase price, you have a net gain. The rest of America would be subsidizing the rich. And how would that happen?

It would happen because poor people tend to spend a greater percentage of their income on things that rapidly depreciate to zero value. Poor people spend most of their money on things they throw out within a week (like diapers) or things which end up on the curb (like TVs and mattresses).

Rich people probably spend most of their money on consumer goods which don't depreciate to 0 very rapidly, if they depreciate at all. That's part of the great thing about being rich. You can afford better stuff -- stuff that last longers and holds its value.

[kori]

22. No a sales tax can be made into a very progressive tax

I would not trust Bush and company to do it right but it can be made into a very fair tax. How? You could immediately rebate to each family at the start of the year a portion of the tax they pay, say up to a 30,000 a year income. Assuming that first 30,000 will be spent on food, clothing and housing. You can do things like exempt rent, certain non cosmetic doctors visits, or the entire co payment oh health insurance.

We have a very unfair tax system now. Last season you could deduct up to $100,000 (without depreciation) for the purchase of a vehicle used in employment. Why should I be subsidizing some business owners to drive a Benz SUV?

The IRS uses it hammers on those least able to defend themselves, they have to go. This is a way to get them gone, the enforcement shifts from individuals to those collecting the tax.

Again I do not trust Bush's version, it will be very regressive, but a national sales tax could be a much fairer tax if done properly.

[AP]

24. That's not progressive. That's a flat income tax with 30K exclusion.

That's Steve Forbes's version of the tax code, and it's very regressive.

And it still doesn't deal with the fact that your effective tax rate would be a funcition of your net savings. If you're a person who spends all the money you make you have a high effective tax rate. If you save most of the money you make, you'd have a low effective tax rate.

That is extremely regressive. It's the definition of regressive. It taxes you more the less you have, and taxes you less, the more you have.

And, unlike an income tax, it even taxes you on money you don't have if you're going into debt year over year.

[AP]

23. This is all bad. Here's how.

Right now people in all quintiles pay aout 15-18% of all their income in tax. So, if you got rid of the income tax, say, you'd have to replace it with a tax that still generated the same revenue that we've been generation (or there will be a more severe reduction of government services).

So, you make it up by having, say, a 20% sales tax. Now, say you go in debt every year like the bottom third of America, or you don't make much more than you spend every year like the next third of America. That's a 20% tax you're paying.

Now, say you save 90% of what you earn every year (or you're able to convert it into buying appreciating assets), like a lot of rich people. You pay 20% on 10% of your spending. You're paying a 2% income tax, down from around 20%.

OK. So a 20% sales tax isn't going to make up for the revenue lost from getting rid of the income tax. You'll have to rasie the sales tax to 40%. So, now people in the bottom two thirds are paying 30-40% income tax, while people at the top are only paying 4% effective income tax.

Are you -- the person who spends most of what you earn each year -- better off? No. Is the super rich person who spends a small fraction of what they earn each year better off? Yes. You've doubled the effective rate of taxation from the low net income earner, and you've reduced by 75% the effective tax burden of the high net income earner.

[SoCalDem]

15. Real headline: ..."GOP Eyes abolishing Income"...

:)

[colonel odis]

18. aside from the fact that this is election-year horsesh*t,

a flat tax or national sales tax in lieu of an income tax would eliminate an entire profession -- tax accountants.

there's absolutely no chance something like this would happen, imho.

[truthisfreedom]

20. has anyone ever seen the percentage that would be necessary if we did have

a flat tax applied to personal income?

[AP]

28. See my post 23. And note that the UK has an income tax AND has 17.5%

sales tax.

I don't see how a country could have no income tax and get by with a sales tax that's much less than 25%. Today, most people pay around 16 or 17 percent of all their income in (total) taxes. So a 25% sales tax, for a person who goes into debt year over year would be a higher tax burden, and a 25% sales tax for a person who spends 10% of their income on taxable items would have a 2.5% tax burden which is 1/6 to 1/7th the tax burden they currently have.

[truthisfreedom]

25. anything and everything the rethugs want is suspect.

deny them everything.

[shanti]

29. didn't *ush backpedal on this one

last week after the initial furor? trial balloon?