Fair Tax to the Rescue?

[Frimp]

Which side was that?

Kind of hard to play the "I wanted more regulation in 2003" card when you are on the record saying "we need less regulation" in 2008.

The sarcasam went RIGHT over your head. 

[run_to_win]

Which side was that?

Kind of hard to play the "I wanted more regulation in 2003" card when you are on the record saying "we need less regulation" in 2008.

It was government regulation that caused the problem when Carter passed the Community Restoration Act.  Then Clinton piled on in 1998.  From 2001 on the other side warned about what was coming. 

Ignore the commentary subtitles and just listen to Andrew Cuomo explain it.
http://www.youtube.com/watch?v=ivmL-lXNy64

The banks didn't want to loan money to people who couldn't pay it back.  The government required them too.

[run_to_win]

There will be no elimination of the IRS, nor reduction in tax lawyers, because business-to-business transactions are untaxed.  And who do you suppose will be the government entity in charge of determining who is and is not legitimately conducting untaxable transactions?

One of us isn't grasping the simplicity of "business-to-business transactions are untaxed".  I admit, it could be me.

It's a shell game, pure and simple.

So is the current 67,000+ page tax code and it's all perfectly legal.  I'm not sure that you've raised a single issue that isn't already rampant. 


The IRS' budget request for fiscal year 2008 was $7,200,000,000. 


in 2005 Americans spent about 6,000,000,000 hours complying with the federal income tax at an estimated cost of $265,100,000,000.  In other words, for every dollar you pay, you pay, on average, an additional $.20 "compliance tax".


in 1982 this cost was between $17 and $27 billion, or from five to seven percent of the revenue raised by the federal and state income tax systems combined. About two billion hours of taxpayer time were spent on filing tax returns, and about $3 billion was spent on professional tax assistance.
http://ideas.repec.org/p/nbr/nberwo/1401.html

[Spider-Dan]

It was government regulation that caused the problem when Carter passed the Community Restoration Act.

I'm sorry, was there some massive real estate bubble from 1977 to 1997 that I'm unaware of?

Putting this on Jimmy Carter is beyond a reach, but when there have only been two Dem presidents in the last 30 years, I guess you takes what you can gets.

Then Clinton piled on in 1998.

And by "piled on," you mean, "failed to veto a bill that the majority Republican Congress wrote and passed."  Got it.

From 2001 on the other side warned about what was coming.

From 2000-2006, who was in control of both houses of Congress and the Presidency?  My memory must be fuzzy, or something.

One of us isn't grasping the simplicity of "business-to-business transactions are untaxed".  I admit, it could be me.

It is you.

Let's say that I'm the CEO of MegaCorp.  Instead of the $5 million salary I currently receive ($3.25m after taxes), I'll elect to receive 3 million in salary and 2 million in "company benefits."  So the company can buy me a company house, a company car, a company yacht and vacation house, all tax-free because it's all business-to-business transactions.  Then I get my 3 million.

Oh, and if I should ever decide to leave the company but I really like my house/car/whatever, no worries... it's all used now, so the company can sell it to me with no tax applied; after all, used items are also tax-exempt.  Whee.

Someone might make the objection here, "Well, obviously the government won't allow companies to get away with that sort of cheating."  This immediately raises two questions:

1) Which gov't entity is going to stop them?  The IRS version 2.0?

2) If there is some IRS 2.0 out there auditing for legitimate and non-legitimate business-to-business transactions, then won't businesses be stuck with the same cadres of tax lawyers they already have?  So where's the supposed savings from tax code abolishment?

[run_to_win]

I'm sorry, was there some massive real estate bubble from 1977 to 1997 that I'm unaware of?

Putting this on Jimmy Carter is beyond a reach, but when there have only been two Dem presidents in the last 30 years, I guess you takes what you can gets.

And by "piled on," you mean, "failed to veto a bill that the majority Republican Congress wrote and passed."  Got it.

From 2000-2006, who was in control of both houses of Congress and the Presidency?  My memory must be fuzzy, or something.

It is you.

With interest rates around 18%, it wasn't actually a "bubble" during the Carter admin.  The Community Restoration Act was the first step down the slippery slope.  As for Clinton, no need to take my word for it - click the link and listen to Clinton's HUD Secretary.   

Good point on the Republican Congress (did you watch the C-span link regarding the partisan 2004 hearings?)... which conveniently brings us to current the Democratic Congress.   

[Spider-Dan]

With interest rates around 18%, it wasn't actually a "bubble" during the Carter admin.  The Community Restoration Act was the first step down the slippery slope.

This is like blaming the FDR administration for the SEC's failures of today.

The link between the Carter administration and the real estate bubble is tenuous, at best.

As for Clinton, no need to take my word for it - click the link and listen to Clinton's HUD Secretary.

Good point on the Republican Congress (did you watch the C-span link regarding the partisan 2004 hearings?)... which conveniently brings us to current the Democratic Congress.

Whether or not Clinton was on board with the revised CRA, the plain and simple fact is: the majority Republican Congress passed it, so the best you can get away with is shared blame.

As for the Democratic Congress that's been in office since January 2007, I do hold them responsible for their lack of backbone towards Dubya, particularly on the Iraq War... but they assumed office far too late to do anything worthwhile about the bubble.  If current trends play out and we wind up with a Dem president and Dem-controlled Congress, I fully intend to hold them accountable for the laws they pass (or fail to pass).

It seems unlikely that they could possibly fail as spectacularly as the GOP Prez/Congress from 2000-2006 has, but I guess we'll see.

[Fau Teixeira]

This is like blaming the FDR administration for the SEC's failures of today.

i blame woodrow wilson personally

for this: http://www.federalreserve.gov/aboutthefed/fract.htm

[DolFan619]

  Let's see, an archaic, outdated, early 20th century tax code that nobody understands, and is also run by an organization riddled with corruption known as the IRS.  Or a simple tax that's paid at the point of consumption, and you get a rebate check every month.  Gee, that's a tough one.

[run_to_win]

This is like blaming the FDR administration for the SEC's failures of today.

Kind of like giving ancient Greece credit for defending/saving the democratic form of government that we enjoy today.  Oh wait, scholars actually do that. 

Huh.

[Spider-Dan]

Kind of like giving ancient Greece credit for defending/saving the democratic form of government that we enjoy today.

No, that would be like giving ancient Greece credit for creating the Constitution, or blame for enabling McCarthyism.

There is a difference between generalities and specifics.  If you wanted to lay the blame for a "culture of social entitlement" at the feet of Carter, that's your prerogative... but you'd need a lot more than the 1977 version of the CRA to do that.

[Spider-Dan]

  Let's see, an archaic, outdated, early 20th century tax code that nobody understands, and is also run by an organization riddled with corruption known as the IRS.  Or a simple tax that's paid at the point of consumption, and you get a rebate check every month.  Gee, that's a tough one.

If "new" and "simple" are your criteria for good tax law, why do you support the "fair tax" over Forbes' flat tax?

P.S. The "fair tax" would be simple if it were applied to all transactions equally, but since some transactions are taxable while others are not, that claimed benefit is not realistic.

[Dphins4me]

P.S. The "fair tax" would be simple if it were applied to all transactions equally, but since some transactions are taxable while others are not, that claimed benefit is not realistic.

What claimed benefit is not realistic?

[Spider-Dan]

The claimed benefit of it being simple.

In practice, it would not be simple at all, as everyone would be trying to find loopholes so that they can buy stuff under the business-to-business exemption, or the used-goods exemption.  If this law were passed, what's to stop me from starting a corporation tomorrow and buying everything I need under the company's name, tax free?  It's not like I'm going to be audited, right?

This is why this scheme fails.  You are creating a new system rife with potential for fraud at the same time you are doing away with the entity tasked with preventing tax fraud.  It's nonsensical.

[Dphins4me]

In practice, it would not be simple at all, as everyone would be trying to find loopholes so that they can buy stuff under the business-to-business exemption, or the used-goods exemption.

No expert here, but I would think a business license would have to be involved on both parties account. 

  If this law were passed, what's to stop me from starting a corporation tomorrow and buying everything I need under the company's name, tax free?  It's not like I'm going to be audited, right?

    How many people do you actually think would go to that extreme?  A few I'm sure.  However, I would think guidelines in what is considered a business.  Like a building to do business.

Might want to read the books.  They might answer the questions you have.

This is why this scheme fails.  You are creating a new system rife with potential for fraud at the same time you are doing away with the entity tasked with preventing tax fraud.  It's nonsensical.

  There will always be fraud, just as there is fraud today.  Some people will always cheat.  That is what gets some people off.

However, the benefit of missing a few illegal transactions does not outweigh the gain of not missing out of the billions missed every tax year on illegal trade.

[Spider-Dan]

No expert here, but I would think a business license would have to be involved on both parties account.

Generally speaking, everyone that I buy brand new goods from is already a business, so no problem there.  I go form a new corporation for a couple hundred bucks, and I'm tax-free.

How many people do you actually think would go to that extreme?  A few I'm sure.

If incorporating yourself = you pay no taxes, I think "a few" is a drastic understatement.

However, I would think guidelines in what is considered a business.  Like a building to do business.

I already live in a building, so that works out just fine.

Unless you're saying that small businesses without a separate brick-and-mortar don't count as businesses?

There will always be fraud, just as there is fraud today.  Some people will always cheat.  That is what gets some people off.

Yes, but today, we have a sizable gov't organization dedicated to catching those who commit tax fraud.  You propose to do away with this organization.  It is inconceivable that this will reduce attempts to defraud the gov't of taxes.