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What’s behind Sen. Thompson’s flip flop on the Fair Tax? 29 December, 2007

Posted by David Anderson in Election 2008, Fair Tax, federal.
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Why has Senator Thompson sputtered in the polls? His campaign has been marked by a lack of aggressiveness and major missteps. The media noted his paradoxical statement on abortion even though he is the endorsed National Right to Life Candidate. There is another one overlooked my most. It is highlighted by ABC News.

Senator Thompson changed his mind on the Fair Tax without explanation. In fact he denied that he supported it when on different occasions he publicly supported it. This is a man who criticizes Gov. Romney for changing his positions. At least Mitt acknowledges and explains his evolutions.

Click the link and see the video of his endorsement of the Fair Tax. http://abcnews.go.com/Politics/story?id=3428541

This left Gov. Huckabee as the undisputed leader and his poll numbers began their second climb. The rest is history.

Why do you think he dropped the Fair Tax? Is it because the former Washington Lobbyist heard from his friends. The tax code is the main source of the power of the K Street elite. Earmark spending and a Byzantine tax code have given the K Street elite the power to reward or punish potential clients. They are the twin pillars of corruption in the American system. Sen. Thompson has proven that he is unwilling to push on thos pillars. Gov. Mike Huckabee is.

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1. Bruce Barnes - 29 December, 2007

Maybe Senator Thompson changed his mind on the Fair Tax after seeing this.

The Fair Tax Act of 2007 – HR 25/S 1025
For FY 2006, the IRS reports collections of 44.7% of Individual Income tax and 13.8% of Corporation income tax for the budget of $2.76 trillion. When employment taxes are included, individuals contribute 60 % to the budget while corporations only pay 28.5%. Income is not a measure of being rich, net worth is. Taxes should be based on ones ability to pay. Individuals have assets of $55 trillion and corporations have over $60 trillion. If corporations were paying their fair share, we would not have a budget deficit of 9%.

The wealthiest 10 % own 80% of all stock and 73% of all individual assets. Shouldn’t the wealthiest 10 % be paying 73 % of the individual income taxes? The wealthiest 1-percent make 25% of all individual income and the wealthiest 0.5 % make more than the lowest 50%. Does anyone really think that the poorest 50 % of taxpayers should or could finance 50% of the income tax budget? Our present tax system is not doing a good job.

America should not adopt this tax system, HR 25/S 1025, that is based on all retail sales for personal consumption of new goods and services, for the following reasons.

The tax base is not much more than the present system. The base is less than the Gross Domestic Product, (GDP) $14 trillion. A tax on net worth is 8 times more, $115 trillion.
The consumption tax will increase the tax on people about 28.5 %. Instead of individuals paying 60 % of taxes, they will pay 100% of the budget. In FY 2006, corporation income tax was 13.8 % of the federal budget and corporate employment taxes were 14.7 %. Under the “Fairtax plan,” businesses do not pay taxes. Corporations enjoy all of the privileges of persons except the vote. They benefit from infrastructure, employee public education, law enforcement and limited liability. If corporations do not pay taxes, their privileges should be revoked.
A sales tax is regressive. In a study of Texas sales tax, those who earn less than $22,000 a year pay 14.2 percent in state and local taxes, those who earn more than $60,000 wind up paying about 5 percent. Even with the rebate, wealthier people and older people that have already purchased most of their needs will pay less than 23% of their income.
Taxable property is what most of the people have. Intangible property which is not taxable is what the wealthiest people have the most of. Taxable property – any property (including a leasehold of any term or rents for such property), but excluding intangible property and used property. Intangible property – an asset that is not physical and not real property. It includes copyrights, trademarks, patents, goodwill, financial instruments, securities, commercial paper, debts, notes, and bonds. Taxable property or services purchased from a seller for a business purpose in an active trade or business, or for export from the United States for use or consumption outside the United States are not taxed. Purchases by consumers are taxed. Investments (property purchased exclusively for purposes of appreciation of income or the production of income) are not taxed. Used property – defined as property on which the federal sales tax has been collected already, and property that was held for other than a business purpose on December 31, 2008 (the day before the sales tax became effective). The term “used” relates to whether or not the sales tax has been paid previously, and not just to whether or not the item has been sold previously. It appears that almost everything will be taxed for the first few years.
Insurance will cost 23% more. All types of insurance: Life, health, property and casualty, liability, marine, fire, accident, disability, and long-term care will be taxed.
The consumption tax is not fair. When a company has a dispute with a customer, they may find themselves in a court that only the customer has funded and to add insult to injury, the customer has to pay his lawyer 23 % more than the company does.
Everyone will start their own business. If a business pays Fair Tax on items for business use, the owner can get that FairTax back. Investments (property purchased exclusively for purposes of appreciation of income or the production of income) are not taxed.
The FairTax Act will phase out appropriations for the Internal Revenue Service and then spend billions recreating bureaus to administer the Fair Tax. The IRS is uniquely qualified to administer the Fair Tax with people, computers, and facilities in every state and major city. The fair Tax Act will pay retailers to collect taxes and keep records for six years and pay states to collect from retailers. An administering state enters into a cooperative agreement with the U.S. Treasury Department governing the administration of the FairTax by such state. The Social Security Administration sends out the monthly rebates. The Secretary of the Treasury is given the authority to promulgate regulations, to provide guidelines, to assist states in administering the FairTax, to provide for uniformity in the administration of the tax, and to provide guidance to the general public. The Secretary of the Treasury is required to establish an Office of Revenue Allocation to arbitrate any disputes between states regarding the destination of sales for purposes of allocating sales tax revenue among the states. The Secretary of the Treasury and each state sales tax administering authority may employ persons as necessary for the administration of the FairTax and may delegate to employees the authority to conduct hearings, prescribe rules and regulations, and perform other such duties. Following due process of law, the tax administering authority can seize property, garnish wages, and file liens to collect FairTax amounts due. Each sales tax administering authority must establish, maintain, and adequately staff an effective, independent Problem Resolution Office to protect citizens from abusive administration. The sales tax administering authority must establish and maintain an appeals process that provides a full and fair hearing of any dispute regarding tax liability. The Treasury Department may use FairTax data in preparing economic or financial forecasts, projections, analyses, or estimates. The fair Tax Act establishes an Excise Tax Bureau within the Treasury Department to administer those excise taxes not administered by the Bureau of Alcohol, Tobacco and Firearms. It also establishes a Sales Tax Bureau to administer the national sales tax in those states where the federal government directly administers the tax and to discharge other federal duties and powers relating to the FairTax. Does a rose by any other name still smell as sweet?
More information on the fair tax act can be found at “Americans for Fair Taxation http://www.fairtax.org/.”

2. David Anderson - 30 December, 2007

Our corporate taxes are amoung the highest in the world..
As for the corporate wealth issue, who owns the corporations? We do. We pay the corporate taxes indirectly with higher costs and lower wages and returns. Soak the corporations and we get wet.

3. Bruce Barnes - 31 December, 2007

Our corporate taxes on AGI, Adjusted Gross Income, are among the highest in the world. Our corporate taxes on Gross Income are not among the highest in the world. Corporate taxes are only 28 % of federal taxes and corporations have more assets than all of the people. The USA allows more tax deductions and credits. So who is soaking the corporations?
As for the corporate wealth issue, the wealthiest 10 % own 80 % of all stock. The poor and near poor do not own stock but they do get stuck with higher cost and lower wages.

What should taxes be based on? Would you call someone making $50,000 a millionaire? If he has a net worth of $10 million, would you call him a millionaire? If someone has a net worth of $1,000.00, should he be required to pay $1 million in taxes? Should people be taxed on what they buy or what they can potently buy? Should taxes be based on wage earnings or total earnings? If corporations have the same privileges as people, should they be taxed like people? Should a single mother of 3 making minimum wage be forced to pay for part of a company jet? What are your morals? What is fair to you?


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