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Levin and a New Isolationism 11 August, 2009

Posted by David Anderson in Fair Tax, federal, President Obama, Tax Hikes.
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Some in the administration and the Senate would put America behind a wall of taxation is the new isolationism. The excuse is trying to prevent people from being able to hide income off shore. The truth is the largest forms of tax evasion are local. What this is doing is locking American investors out of the hottest economies in the world. The Levin bill has the backing of the administration which is hungry for new revenue streams.

While it is advertised as punishing countries that use banking laws to shield anonymous investors. Its sweeping language would punish countries that don’t tax dividends and capital gains like Hong Kong and Singapore. It would be a form of economic imperialism. They are responding by threatening to ban U. S. investment. The damage done to their economic system by losing investment of Americans would be far smaller than the damage of hurting both local and global investment by adopting Democratic tax policy.

If other nations follow suit this could be as damaging as Smoot Harwley Act. If we are to ever have a sustained economic recovery, it has to be based upon sound policy not failed ones.

America needs fundamental tax reform designed by clear thinking, real world, economists. We need policies which encourage American production not flight of production. Levin is right that it starts with the tax code. He couldn’t be more wrong about the solution. Maybe would should take a page from the growing economies instead of closing the book on learning.

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Plurality of voters favor National Sales Tax 4 June, 2009

Posted by David Anderson in Economic Policy, Fair Tax, federal.
6 comments

Fair Tax Supporters have to take note. They are actually winning. 43% to 38% would eliminate the income tax and impose a national sales tax. By about two to 1, 48 % to 26% of the people think a national sales tax would be fairer than the income tax. Democrats are undermining their arguments against the FAIR tax by talking favorably about a VAT. Only 18% of Americans favor adding either a VAT or national sales tax to an income tax.

Is it time for tax reform or what? 1 April, 2009

Posted by David Anderson in Fair Tax, federal, Taxpayer rights.
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Governor Kathleen Sebelius made a mistake on her taxes. She deducted mortgage interest payments that she had to continue to make because her house was under water when she sold it. The other alleged mistakes where not mistakes. Some minor documentation was lost over the last 3 years including 3 letter from charities out of 49. First I am happy that we finally have an Obama official who actually gives to charity. Second, why couldn’t she deduct the mortgage interest? Our tax code is too complex. The administration is making it even more so. When 6 administration nominees including the Secretary of the Treasury as well as the former head of the tax writing Finance Committee can’t get their arms around what the tax code mean, it is time to simplify it not complicate it. The Governor should not be confirmed because she is radically pro-abortion rights. This tax stuff is really a difference of professional opinion and the natural loss of a couple of letters during moving. It really is a non-issue. What isn’t is the fact that the IRS puts average people through the hoops for the same thing. I am willing to give the benefit of the doubt to some of their people; I call on them to strap their proposal for hyper enforcement of the tax code and give us the same.

Maybe the admistration should actually study the Fair Tax.  Then again expecting fairness from this administration may just be April 15th fools.

The Best Plan to Rejuvenate the Economy 7 February, 2009

Posted by David Anderson in Economic Policy, Fair Tax.
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The Fair Tax is compared to the current system and Obama plan by experts. The winner is….

Well, Follow the Link.

Snipes persecuted to warn the rest of you. 24 April, 2008

Posted by stoptaxing in Fair Tax, Taxpayer rights.
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Wesley Snipes was involved in the misguided movement which says the income tax is unconstitutional and argues that you don’t have to pay it. It is based upon a controversial ratification vote in one state which put the 16th Amendment over the top. I don’t know whether it was legitimate or not, but what I do know is that after 95 years, the courts will not revamp the entire way we run our government. That horse should have been corralled at the time if the accusation is true. The movement makes many other arguments which sound good to a lot of people so good that three people actually convinced juries to go along with them. These rare cases give even more ammunition to the leaders who have cost a lot of people their livelihood, freedom, and reputation.

What I have a problem with is the prison sentence. Snipes will be a political prisoner. Willie Nelson owed a similar amount and did not go to jail. Snipes is being sent to prison for 3 years on a misdemeanor charge of not filing his tax returns. The only reason given is to make an example of him. Where is the justice in that? He should pay what he owes not a pound of flesh. Judge Mathias pointed out that we are the only western country which uses prison for such offences. Child abusers get less time than the political prisoner. Snipes and the protest movement are being persecuted not for what they have done (millions are just sent nasty letters and collection procedures for the same offence), but for what they believe. That is as unAmerican as the tax code.

Let’s end this insanity. Let’s have a the fair tax. Then we will be a free country again.

April 15th 15 April, 2008

Posted by David Anderson in Fair Tax, federal, Taxpayer rights.
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Is time for us to recommit to ending the insanity of the American tax code.  It inhibits our freedom, manipulates our lives, muzzles our churches, drains hundreds of billions from us just to figure out how to comply, inspires fear and loathing over inspiration, subsidies the export of our jobs, and siphons the life out of our corporations.  If the British would have proposed our tax code on the founders, they wouldn’t have even bothered to send envoys to negotiate.  They would have just declared the King and Parliament mad.

The tax code is corrupt.  It is not based upon sound economics.  It is based upon the sound made by the chatter of lobbyists.  In a global economy in which other countries are migrating to simple, flat taxes, we can no longer afford this anchor on our economy.

We don’t need to reform the tax code.  We need to abolish it.  We need to replace it with a simple, fair tax system which encourages investment in America.  We need to take the power from Washington D. C. and return it to the people.

My word on Feb. 5th 1 February, 2008

Posted by David Anderson in Election 2008, Fair Tax, federal.
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I can hardly wait for the opportunity to vote for Governor Mike Huckabee in the primary on Feb. 5th . He speaks of hope and optimism. He speaks of faith and family. He spent his early life building people not wealth. He is a man from mainstreet in the mode of Lincoln.

To understand Gov. Huckabee, you have to watch him. Go to his web site. He is intriguing. He relates to people and taps into the concerns of middle America. He is following the Gingrich model of Republicans winning. Speaker Gingrich points out how a member of the ruling party won in France because he was the agent of change. Governor Huckabee is a change agent even though his party is the incumbent party. He is not afraid to propose big ideas like the FAIR Tax which has recently been endorsed by 80 influential economists including Delaware’s own Eleanor Craig. He wants to challenge the status quo and focus the nation on a real energy policy not one made by the big energy corporations. He is a solid opponent of earmarks and unnecessary deficit spending (he balanced 10 budgets in a row and took the state from a deficit to a surplus). He is unabashed in his desire to move the nation back to its heritage of protecting the sanctity of Life and the very definition of marriage.

Some Republicans are uncomfortable with the idea of adjusting the appeal of the party. President Reagan had the same problem with the party. He brought “Joe Six Pack” to the country club. Reagan was right then. Huckabee is right now. The Republican party has to be the party for all of the people.

The best hope for America this year is the other man from hope.

Guest Post from Congressman John Linder 22 January, 2008

Posted by David Anderson in Economic Policy, Election 2008, Fair Tax.
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By John Linder

Sunday, January 20, 2008

I was first elected to the Georgia House of Representatives 34 years ago. I have watched this party change for a long time. Some changes have been better than others.

Two years after that first election, I went to work on the Reagan campaign for the Republican presidential nomination. I was one of the leaders of that campaign in Georgia, and my friend, Paul Coverdell, led the establishment’s efforts to nominate President Ford.

It was the typical establishment-versus-interloper campaign. Most of the friends I had made in the party were in the establishment. Most of them thought the nomination of Ronald Reagan was not only impractical, but would destroy our party.

Reagan had just served two terms as the governor of California. His record was not all that conservative. He signed the biggest tax increase in the history of the state. He got the best he could get with a Democrat-dominated general assembly. He signed a bill legalizing abortion. But governors have different challenges than presidents.

Frankly, most of the establishment couldn’t have cared less about abortion. They thought the discussion of it was, well, tacky. But we were, at the time, the party that Barry built, and the new foot soldiers cared about abortion.

Their concern with Reagan was that he just wasn’t up to it. What did he know about foreign policy? How could he stand up to the Soviets? Did he understand detente?

During that campaign, as in all campaigns, the establishment sat at the head table, and the rest of us milled around the small round tables below.

Coverdell approached me, after Ford had won the first several primaries, and urged me to switch sides. Paul was convinced that Ford had the best chance of winning. Paul recited all of the reservations mentioned above and then said, “John, Reagan cannot win. No one will take him seriously.” That was also the consensus of the Republican writers and commentators.

I said, “Paul, I think politics is all about what you believe. I know what Reagan believes. I have no idea what Ford believes. But you need to watch Reagan connect with the people. He is the best communicator I have ever seen. He is bringing new people into the party. And these are folks you won’t be meeting at the club for lunch. They carry a lunch bucket to work.
Or a brown paper bag.”

Four years later, I worked again for Reagan and Paul worked for George H. W. Bush. Again, the Wall Street crowd sat at the head table, and the Main Street crowd sat at the small round tables on the floor.

The same arguments came from the establishment. His tax cut idea was a “riverboat gamble.” In fact, his tax cuts doubled the size of the economy and doubled revenues to the treasury. Unfortunately, they spent that and more.

Reagan didn’t understand that the world is a dangerous place and dealing with the Soviets required a more “understanding” policy. It also required a willingness to sign more treaties. They didn’t know that Reagan had no interest in understanding the Soviets. He wanted communism consigned to “the ash heap of history.”

It was a neverending series of put-downs until New Hampshire. Then it was over.

Reagan won that election with the support of Larry Lunch-bucket and Betty Brownbag. They were called the Reagan Democrats. When we celebrated that victory, I asked some of them why they chose to join us. They said, “When he talked, we felt that he was talking to us.” The Reagan Democrats believe they have been ignored since 1988.

The establishment doesn’t like change. They have always felt that their seats at the head table were threatened by those new to the club. The establishment that so ardently opposed Reagan’s nomination in 1980 crawled all over each other to chair his 1984 race.

Today they now see themselves as those who put Reagan in power. His presidency was their presidency. They believe they are the keepers of the flame.

Today’s establishment includes elected officials, consultants, lobbyists and even conservative writers and commentators. Unless you allow them to write the rules and approve of your positions you are unwelcome. Anyone who does not genuflect before their altar is “not conservative.”

When you look at the many fine candidates seeking the Republican nomination for president, who do you believe can best speak to those Reagan Democrats?

I believe that candidate is Mike Huckabee.

When Reagan became president, one of his first moves was to reduce income taxes from 70 percent to 50 percent and ultimately down to 28 percent. As pointed out above, both the size of the economy and the federal revenues doubled in eight years.

Huckabee doesn’t want to lower income taxes. He wants to abolish them -along with the IRS, the most intrusive, coercive and corrosive federal agency ever. Mike would replace those taxes on income with a sales tax – the FairTax. Every American will become a voluntary taxpayer paying taxes when you choose, as much as you choose, by how you choose to spend. How conservative can one get?

Rep. John Linder, R-Duluth, has served in the House of Representatives since 1992.

80 Influencial Economists Sign Endorsement of the FAIR Tax! 11 January, 2008

Posted by stoptaxing in Economic Policy, Fair Tax.
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80 well known business and university economists including Delaware’s own premier economist, Eleanor Craig of the Associate Chair of the University of Delaware Economics Department, signed the following endorsement of the Fair Tax which concluded the tax code can’t be fixed and the cost of keeping it is outweighed by the benefits of the Fair Tax.

An Open Letter to the President, the Congress, and the American people

Concerning Reform of the Federal Tax Code

Dear Mr. President, Members of Congress, and Fellow Americans,

We, the undersigned business and university economists, welcome and applaud the ongoing

initiative to reform the federal tax code. We urge the President and the Congress to work

together in good faith to pass and sign into federal law H.R. 25 and S. 25, which together call

for:

Eliminating all federal income taxes for individuals and corporations,

Eliminating all federal payroll withholding taxes,

Abolishing estate and capital gains taxes, and

Repealing the 16th Amendment

We are not calling for elimination of federal taxation, which would be irresponsible and

undesirable. Nor does our endorsement call for reduced federal spending. The tax reform plan

we endorse is revenue neutral, collecting as much federal tax revenue as the current income tax

code, including payroll withholding taxes.

We are calling for elimination of federal income taxes and federal payroll withholding taxes.

We endorse replacing these costly, oppressively complex, and economically inefficient taxes

with a progressive national retail sales tax, such as the tax plan offered by H.R. 25 and S. 25 –

which is also known as the FairTax Plan. The FairTax Plan has been introduced in the 109th

Congress and had 54 co-sponsors in the 108th Congress.

If passed and signed into law, the FairTax Plan would:

Enable workers and retirees to receive 100% of their paychecks and pension benefits,

Replace all federal income and payroll taxes with a simple, progressive, visible,

efficiently collected national retail sales tax, which would be levied on the final sale of

newly produced goods and services,

Rebate to all households each month the federal sales tax they pay on basic necessities,

up to an independently determined level of spending (a.k.a., the poverty level, as

determined by the Department of Health and Human Services), which removes the

burden of federal taxation on the poor and makes the FairTax Plan as progressive as the

current tax code,

Collect the national sales tax at the retail cash register, just as 45 states already do,

Set a federal sales tax rate that is revenue neutral, thereby raising the same amount of tax

revenue as now raised by federal income taxes plus payroll withholding taxes,

Continue Social Security and Medicare benefits as provided by law; only the means of

tax collection changes,

Eliminate all filing of individual federal tax returns,

Eliminate the IRS and all audits of individual taxpayers; only audits of retailers would be

needed, greatly reducing the cost of enforcing the federal tax code,

An Open Letter to the President, the Congress, and the American people

-2-

Allow states the option of collecting the national retail sales tax, in return for a fee, along

with their state and local sales taxes,

Collect federal sales tax from every retail consumer in the country, whether citizen or

undocumented alien, which will enlarge the federal tax base,

Collect federal sales tax on all consumption spending on new final goods and services,

whether the dollars used to finance the spending are generated legally, illegally, or in the

huge “underground economy,”

Dramatically reduce federal tax compliance costs paid by businesses, which are now

embedded and hidden in retail prices, placing U.S. businesses at a disadvantage in world

markets,

Bring greater accountability and visibility to federal tax collection,

Attract foreign equity investment to the United States, as well as encourage U.S. firms to

locate new capital projects in the United States that might otherwise go abroad, and

Not tax spending for education, since H.R. 25 and S. 25 define expenditure on education

to be investment, not consumption, which will make education about half as expensive

for American families as it is now.

The current U.S. income tax code is widely regarded by just about everyone as unfair,

complex, wasteful, confusing, and costly. Businesses and other organizations spend more than

six billion hours each year complying with the federal tax code. Estimated compliance costs

conservatively top $225 billion annually – costs that are ultimately embedded in retail prices paid

by consumers.

The Internal Revenue Code cannot simply be “fixed,” which is amply demonstrated by more

than 35 years of attempted tax code reform, each round resulting in yet more complexity and

unrelenting, page-after-page, mind-numbing verbiage (now exceeding 54,000 pages containing

more than 2.8 million words).

Our nation’s current income tax alters business decisions in ways that limit growth in

productivity. The federal income tax also alters saving and investment decisions of households,

which dramatically reduces the economy’s potential for growth and job creation.

Payroll withholding taxes are regressive, hitting hardest those least able to pay. Simply

stated, the complexity and frequently changing rules of the federal income tax code make our

country less competitive in the global economy and rob the nation of its full potential for growth

and job creation.

In summary, the economic benefits of the FairTax Plan are compelling. The FairTax Plan

eliminates the tax bias against work, saving, and investment, which would lead to higher rates of

economic growth, faster growth in productivity, more jobs, lower interest rates, and a higher

standard of living for the American people.

(more…)

So you think you know about the Fair Tax. 30 December, 2007

Posted by David Anderson in Fair Tax.
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I have long been a skeptic of a national sales tax.  I tended to favor the flat tax. There are many advantages to a national sales tax.  It would encourage investment and savings.  It would be simple and fair and it would eliminate government manipulation of our lives by the tax code.  The disadvantages are that sales taxes are regressive and tend to dampen consumption.   

The Fair Tax eliminates the negatives while keeping the positives.  Every negative evaluation done has been of other proposals of the National Sales tax.  The positive evaluations are of the Fair Tax in HB 25.  Toss out what you think you know.

Let’s start from the beginning.

Imagine a tax system that:
• Allows you to keep 100 percent of your paycheck, pension, and Social Security payments.
• Frees up the time wasted on filling out cumbersome IRS forms.
• Wipes out the income tax code and shuts down the IRS.
• Makes taxation of income unconstitutional by repealing the 16th Amendment.
• Exempts all taxpayers from federal taxation up to the poverty level, through a monthly rebate.
• Ensures that all Americans pay their fair share of taxes.
• Dramatically lowers tax rates for low-income and middle-income Americans.
• Makes taxes visible by eliminating hidden income and payroll taxes in consumer prices.
• Enables families to save more for home ownership, education, and retirement.
• Protects and ensures the funding of Social Security and Medicare.
• Leaves unchanged the amount of money raised by the federal government.
• Makes American products more competitive overseas.
These are the features of the FAIR Tax.  This tax system is the most researched, and I think, the best tax reform plan.

The Fair Tax rate would be 23% or so.  It would feature a monthly prebate of around $500 to eliminate all consumption up to around $24,000 from the tax.  This makes the Fair tax progressive.  It would be like a monthly earned income tax credit. It would also encourage savings by allowing all savings and investment to be tax free.  It would encourage education by not taxing education.  It also stops penalizing domestic corporations and production and taxes imports at the same rate to produce a level playing field

Why do we need to change? The problem is the current income tax code.  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. 

Quoting the Fair Tax website.

The current tax code is unfair, costly, and unreasonably confusing.
• Because the tax code is so complex and easy to evade, many of us pay more in taxes per year than we should! The IRS estimates that over 40 percent of Americans are out of compliance with the current tax code! This makes the rest of us pay about 30 percent more in taxes.
• Over half of American taxpayers seek professional help simply to prepare their returns. And according to Money magazine, chances are 99 percent that you will pay someone to file an incorrect return!
• Compliance with the tax code is not only very difficult and complicated, consuming a total of 6 billion hours, but unreasonably expensive as well. It is estimated that it costs taxpayers $265.1 billion for tax filing, tax record keeping, and tax reduction advice. That’s just shy of $900 for every man, woman, and child in America! We have taxation without comprehension!

Now let’s deal with the critics.  It is often said that the Fair Tax rate would need to be 30% not 23%.  This is false because this analysis is based upon post tax dollars not what you actually earned.  It is not how taxes are currently figured.  If you earn $1250 and $250 is the income tax you pay, you have a 20% rate not a 25% rate.   Since the other taxes would be eliminated, you would not be spending current after tax dollars, but pre-tax dollars.  This 2006 Treasury department “error” has been widely denounced and disproven, but it still lives. 

And most important of all, The Beacon Hill Institute at Suffolk University and Laurence Kotlikoff, Professor of Economics at Boston University, have teamed up to provide a sound methodology for estimating the FairTax base and computing the FairTax rate.4 Their paper demonstrates that the 23 percent rate specified by the Fair Tax Act (HR 25) is eminently feasible and suggests what led Gale5 and the President’s Advisory Panel on Federal Tax Reform6 to reach the opposite – and incorrect – conclusion. (Paper available at http://www.fairtax.org/PDF/TaxingSalesUnderFairTax.pdf.) Beacon Hill Institute and Dr. Kotlikoff estimate the FairTax base for 2007 to be $11,244 billion. Implementing the FairTax rate of 23 percent on this base would generate federal tax revenues of $2,586 billion – $358 billion more than the $2,228 billion in tax revenues generated by the taxes it repeals. Because the FairTax prebate makes spending up to the poverty level tax free, the FairTax base needs to be adjusted for this. Likewise the FairTax base must be adjusted for the administrative credit paid to states and businesses collecting the FairTax. These adjustments to the base total $1,889 billion, resulting in a net FairTax base of $9,355 billion.In 2007, spending at current levels is projected to be $3,285 billion. Revenues from the FairTax at a 23 percent tax rate ($2,586 billion), plus other federal revenues not repealed by the FairTax, are estimated to yield $3,209 billion – an amount $76 billion less than the current CBO…. (http://www.fairtax.org/PDF/Excerpts_from_response_to_tax_panel-103006.pdf) (more…)