New Tax Reform Proposal

[Imran Siddiqui]

How can you say its not progressive when the poor are getting a big check every year from it?

It's not progressive. A middle class person who is juuust over the 'poor' line will pay the same percentage as Bill Gates.

[Colon™]

Dan: well yeah, the additional costs are arbitrary from an economic POV - they only exists because they're from another country - so that makes it a trade impedement.

Ozzy: the point (like with flat tax) is that you get rid of all the exceptions, which would tremendously facilitate administration and make abuse much less likely.

What I like the most about this plan that the number of returns would decrease by six-fold. I presume that would save big bucks on administration costs and make it easier to check up on firms who do not comply. (as Dan is fearing)

[Dinner]

Originally posted by Imran Siddiqui

Actually Congress DID pass a line item veto in Clinton's term and Clinton SIGNED it, but it was struck down as unconstitutional (I believe the case is New York v. Clinton), because under the Constitution a bill can only be approved or vetoed by the President. He can't modify law, which a line item essentially does.

What year was that? I never heard anything about a line item bill passing and getting struck down.

[Colon™]

Originally posted by Imran Siddiqui

How can you say its not progressive when the poor are getting a big check every year from it?

It's not progressive. A middle class person who is juuust over the 'poor' line will pay the same percentage as Bill Gates.

He'll only pay taxes on the sum above the threshold, so the percentage in fact is less.

[DanS]

The number of returns would not decrease by six-fold. Everyone would still file, despite what this proposal says. For one, we need to file returns because this is the technicality by which all of our criminals are prosecuted. For another, payroll taxes would still be based on income.

[Imran Siddiqui]

Oerdin, this is a good summary of the situation (and if you are skitterish of wiki, I'll vouch for the info ).

http://en.wikipedia.org/wiki/Line_item_veto

The President of the United States was briefly granted this power by the Line Item Veto Act of 1996, passed by Congress in order to control spending in supplementary clauses attached to appropriations bills that included vital spending measures, which had to be signed or vetoed in entirety. Under the line-item veto law, which took effect January 1, 1997, President Clinton became the first president empowered to veto specific spending or certain taxing provisions of legislation. The U.S. Constitution previously allowed a president to veto an entire bill only, perhaps containing many provisions of which he approved, in order to strike down one provision he opposed. It was used once before U.S. District Court Judge Thomas F. Hogan decided on February 12, 1998 that unilateral amendment or repeal of only parts of statutes violated the U.S. Constitution. This ruling was subsequently affirmed on June 25, 1998 by a 6-3 decision of the Supreme Court of the United States in the case Clinton v. City of New York.

[Dinner]

Increasing payroll taxes does sound regressive even if you off set it by eliminating income taxes since the poor already don't pay income taxes (or pay them at much reduced rates). This does sound like it would shift taxes off of the rich and onto the poor though I guess that would depend upon how much the rich consume.

[OzzyKP]

Originally posted by Colon
Ozzy: the point (like with flat tax) is that you get rid of all the exceptions, which would tremendously facilitate administration and make abuse much less likely.

Exemptions with a sales tax would be much easier (and less bureaucratic) to implement I think. You'd exempt certain products (food, medicine, etc). That seems pretty simple.

The rebate though would be the only thing that would require a bit more paperwork, but I think the benefit of it outweighs the hassles.

[Colon™]

Originally posted by OzzyKP


Exemptions with a sales tax would be much easier (and less bureaucratic) to implement I think. You'd exempt certain products (food, medicine, etc). That seems pretty simple.

The rebate though would be the only thing that would require a bit more paperwork, but I think the benefit of it outweighs the hassles.

If a fatcat goes on a $1000 binge at luxerious restaurant, would you consider it fair that's exempt from taxes? If people spend billions on valium and viagra, exempt from taxes, would that be fair? I presume not, so either you stuck up with it, or either try to classify certain products as "essential". In the latter case you'd run into arguments about what constitutes "essential" and you'd experience frantic lobbying by interests groups to classify a certain ware as essential.
Even if you do stuck up with it, you'd still have lobbying to extend the exceptions. If foodstuff and medicines are exempted, then why not clothes? Or fuel? Why not books? Or education?

It's this kind of slippery slope that has made many tax-system a byzantine nightmare, and the beauty of a zero-tolerance stance is the clarity thereof.

Nothing is simple when it comes to tax exemptions.

[Sava]

Originally posted by OzzyKP
This proposal, in some ways does function like a progressive tax. For example, many essential living necessities will no doubt be exempt from this tax (medicine, food, rent), spending that makes up a larger part of the expenditures of low-income families. Also low-income are more likely to buy used products, like from a friend or classified ad, which I imagine would be less likely to have this sales tax applied to it. So the burden is much less on them than it would be on wealthier folks.

Also, don't ignore the rebate thing, that's a big part of this. How can you say its not progressive when the poor are getting a big check every year from it? Heck, even if all of my first paragraph wasn't true, and all goods and services were taxed, then the poor still wouldn't be paying for it, due to the rebate.

The sad fact though is that many of you would rather a 'progressive' tax system where the poor paid 30%, the middle class paid 50% and the rich paid 80% over a system where everyone paid 20%.

You don't care about how much the poor pay, you just want to stick the rich.

if I had my way, everyone under the median income would pay little or no income taxes...

so take your libertarian nonsense and... well.. use your imagination

all this talk of abolishing the income tax is silly... the people want it and who really understand what it means are looking out for corporate and interests of the rich... the rest of the people that want this are ignorant libertarian morons who don't understand taxes, economics, and how the tax burden will affect people if this stuff actually happens...

the good news is, this is a wingnut proposal that will be defeated

[Kuciwalker]

Re: New Tax Reform Proposal

Originally posted by OzzyKP
Mr. Robbins, a former chief of the applied econometrics division at the Treasury Department, said the DeMint proposal would probably stimulate the American economy to grow by 10% to 15%.

Onion?