KMA-628

Regardless of your political persuasion, I would guess that most of us here believe that our current system of taxation is in dire need of a change--replacement or otherwise.

So.....we have something that is broke....how do we go about fixing it? Do we repair it or do we replace it?

Here is my stance:

I throw my support 100% behind a consumption-based taxation system using the following parameters:

1) I am still playing with the numbers, but a rate in the 15-19% area is where my support falls. I have seen a few proposals of lower and a few proposals as high as 30% (I hear about higher proposals, but I haven't seen any). The obvious hope is that the rate will be reduced over time as gov't revenue increases.

2) The first $18,588 (poverty level) of spending is tax free for everybody.

3) The following taxes are abolished: Income taxes, Capital Gains Taxes, Estate Taxes, Gift Taxes and some excise taxes.

4) The IRS is gone. Management of the system happens at the state and retailer level, with reimbursement for management costs being paid by the fed.

Advantages? Well, in my opinion (I am writing a white paper on the topic), the advantages are many. The two biggest being a simpler system and how hard it would be to avoid (i.e. tax evasion and the undergound economy). I also think that there would be a huge influx of money into our economy from companies moving their headquarters to this new tax haven (some would be new and some would be returning). In an effort to be concise, I will stop here. The list of advantages could easily go on for pages. I will respond with more if the need desires. I did not post links because the above information came from my head. Yes, I used a lot of different sources to formulate my opinion, but none of them directly relate to my personal opinion of the idea. I found that The Cato Institute had many good articles going over the pros and cons of such a system.


What is your opinion? I welcome any comments from people that are against a consumption tax, because it helps with my research. However: First, tell me if you think the current system is broke or not. Then, give me a possible solution. Believe me, I have read many, many cases made by people that are against such a system so I am familiar with their points of contention (i.e. Pelosi and McIntyre). In other words, I would like to hear more than criticism of a proposal, tell me your ideas.

DelayedReaction

I believe that the sysytem is broke and a national sales tax would help, but would enjoy it if you posted more information supporting the switch.

What would happen if we simplified it to the most extreme level, and made the national sales tax the only tax? I honestly don't know much about tax law, but I would like to know why making the NST our only source of revenue would be a bad thing.

I would keep the IRS, but rename it to the Internal Return Service. Their job would be to provide the poverty level returns to people, as well as returns for charitable donations. People would like them a lot more, and it would continue to encourage donations to charitable organizations.

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D Rice

I think it sounds good

Sen

I'm becoming more and more a fan of the Fair Tax proposal. This is a consumption based tax that addresses many of the concerns of those who are affraid that a consumption based tax would be too regressive. In 2003 it was H.B. 25.

You can find more info at: www.fairtax.org

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Manx

The current system is broken. Maybe it can be fixed, maybe not.

Replacing it with a consumption tax is out of the question. First, I have read some analysis of such a tax system that demonstrates the rate would exceed 30%. Second, and more important, it does nothing but shift the tax burden to the lower-middle and lower classes. There are certain things in life that everyone purchases or are essential requirements. Low-mid and lower classes spend most of the income on these things. Upper class spend essentially none of their income of these things. Lower classes will then be able to afford less of these essential items while the upper classes will simply export their purchasing of high-ticket items, shelter those purchases in a business, or transfer ownership via some new loop hole.

Change the exemption level to somewhere around $100k or $200k and maybe you'll have something.

A progressive tax system is an absolute requirement in a capitalistic country due to the inherent money-based power structure of the political system (money buys you power - in other countries, we call that bribery, but since we're "great" we call it lobbying). The rich require higher taxes.

alansmithee

I hate the common man as much as the typical Bush supporter, but even I think a consumption based tax system is a little to much . Seriously, it's highly regressive as the higher your income, the lesser percent of your income you actually spend, as the poster above pointed out. I might check out the fairtax site, but I have yet to see an economically feasible consumption-based system.

edit- I read over the site, and checked out the FAQ, and from what I could tell, it is still very regressive. They haven't adressed the fact that somebody making $500,000 per year could easily pay the same in taxes as somebody making $100,000. Also, people might not bother doing grocery shopping in foreign countries, but I could easily see the very luxury goods they describe as being what rises the consumption of weathier people being bought out of the country. And since it seems from their description that they implement the tax at point of sale, it would be hard to keep track of such purchases. For instance, I live in MIchigan, if I'm buying a new car, I have no reason not to buy it in Canada, where it would be substantially cheaper. Same if I were to purchase the jewelry or filet mingnon they mention on the site. Honestly, the tax code might need some work, but I don't see this being the way.

flstf

Before we can propose a more fair tax system I think it is important to understand how much taxes we are paying now. The following was asked in another forum a while back and was never answered as far as I know:

As far as folks objecting to a national sales tax or VAT. Don't we pay something like those already? Doesn't all the income tax that people pay show up in the price of goods and services already?

How much of the price of a loaf of bread (or any other good) is there because of taxes?

Income and other taxes are levied on all the following and added to the bread's price:

The farmer, all the equipment he buys, etc.., the farm worker, the shipping company and employees, the dock workers, the baker and employees, the packaging company and employees, more shipping company costs, the warehouse and employees, the grocery store and employees, etc...

After all these folks add the taxes they pay to the prices they charge, how much of it shows up in the price of bread? I would guess that we are already paying about a 90% (sales type) tax. I could be way off, and would be interested if anyone has run the numbers on something like this.

scout

While our current tax system looks good on paper, in reality the rich pay a fewer percentage in taxes now than the middle and lower class because the current tax code has "loopholes" designed specifically for the wealthy. The wealthier someone is the less percentage of their income they actually pay. Everyone [well poor and destitute Democrats anyway] always wants to soak the rich and since most of our elected federal officials fall into that wealthy class you can bet your ass they engineered loopholes to benefit themselves. Currently you are able to shelter big purchase items in a business so nothing would change unless we remove that loophole.


Automobiles could easily be taxed at the licenses branch or whatever it is your state actually calls the place where you transfer ownership and purchase tags, much like it is currently. In addition if there was a huge penalty added, an import tax, it would discourage this type purchasing behaviour. You might be able to smuggle some small items such as jewelry or groceries but big ticket items could be easily taxed properly.

The current tax code sucks but it won't be changed simply because the rich would actually pay more taxes than they do now. As I stated above the people making our tax laws are considered wealthy and changing the tax code would cost them money.

The Prophet

Scout's quote-
The current tax code sucks but it won't be changed simply because the rich would actually pay more taxes than they do now. As I stated above the people making our tax laws are considered wealthy and changing the tax code would cost them money.

How true that is - Not unless it is at threat of revolution. Anyone ready to take this to the streets?

I prefer a flat tax for individuals. Allow a certain amount of money per household member, for basic living expences and above that tax every dollar earned - get rid of 90% of exemptions and all loop-holes.

As great a problem (or even greater) is government spending. Over a ten year period cut spending 25% across the board - including payroll and expenditures.

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moosenose

If the rich don't spend their money, why should they be taxed on it? What's the point in having money if you can't spend it? It's just pieces of paper that is worthless unless you can do something with it.

Stealing from the rich to give to the poor is a sure-fire way to ensure that there's large-scale animosity between the classes. And a man's hands do not belong in another man's pocket. It's also a recipe for disaster, in that the people realize that they can vote themselves "largesse from the public treasury".

moosenose

Who cares if they buy it out of the country? In order to bring it into the country, they'd still have to pay the customs tax, right?

Kadath

This is false, as well as grammatically incorrect.

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Ustwo

If we took away automatic withholdings on taxes (so you had to write a check), and had tax day on Nov 2, you would see a tax revolution in this country the following day.

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Locobot

The 20% national sales tax in lieu of income tax plan is being floated around in the media to see how people will respond. It seems like such a flawed plan, but one that I might personally be able to benefit from. A national sales tax would be a boon for the black market and a death knell for several established markets. Ebay and other internet commerce would see the most immediate effects, suddenly there would be no real advantage to ordering online--except for the true hermits and handicapped. Bartering would become commonplace--there's no effective way to tax this. I would also expect to see an influx of foreign currency into our everyday usage. Ready to figure out Euro denominations everyone?

Obviously there will still be tax shelters for the wealthy, but also there are people-like myself-who would altogether disappear from the tax rolls. I'm fairly certain that I could live off-the-books, could you?

What a lot of people, especially conservatives who are deathly afraid of the t-a-x word (shhhhh!), dont realize is that when the Republican congress and president decide to raise the national debt ceiling they are in effect raising taxes. National debt is directly tied to inflation, so the money we earn is now officially worth less, thank you Republicans!

aliali

If you have a comsumption tax, that will be on top of the sales tax, right? Will states then change their income tax to a consumption tax? 25% national, 8% sales, 6% states, 1% local--it starts to add up--of course we are all paying it already. With this system, how do you exempt a certain amount of income? Is it diff. for single, married, number of dependants, charitable giving?

KMA-628

What kind of information would you like about the switch? Are you looking for information about how the current system is taken down and replaced or do you want more reasons supporting the consumption tax itself?

The idea behind the consumption tax (and pretty much most NST proposals) is that it replaces almost all taxes (see the list of exactly which taxes are replaced in my original post).

In my opinion it wouldn't be a bad thing at all. It would be much more simple and has the potential to take in more revenue than our current system does (by the way, our current system is against the founding ideas of this country in that all people are not created-or treated- equally).

I disagree with keeping anything resembling the name IRS as the connotations regarding it are way too negative. There will have to be overseeing departments, but they wont even be remotely the size of the IRS.

Give me a little more specifics as to what you are looking for and I will post back.

KMA-628

This represents the classic opposition points that you will see against these type of proposals.

First, the 30% or higher number is bogus, in my opinion. I haven't found one shred of evidence to support this. The only time numbers this high come up is when a wacky plan is introduced (which means that the proposal won't even be considered) or in opposition to this plan (note: I already mentioned Pelosi and McIntyre which have published articles stating the exact points mentioned above). There are about 3-4 proposals being looked at seriously right now. Of those proposals, which ones have rates exceeding 30%?

Also, the main cruxt of the plan is that the rate will go down considerably over time because, in theory, more money will be brought in.

And, no, the poor and the middle class won't be hurt more on this plan. The numbers completely contradict any assertions like this. Changing the "free" number to $100,000 or over would completely negate the idea of this plan. That thinking is classic redistributionist and not a school of thought I even remotely belong to.

KMA-628

This is an excellent point regarding the switch to a consumption-based tax system.

Right now, out tax system hinders savings, at the personal level and at the corporate level. The rate of saving and economic growth are closely tied together. We need to remove the stumbling blocks to ensure a healthy future for our economy.

One of the ideas behind a consumption tax system is that you don't get taxed until you actually spend the money. Contrary to popular belief, money that is saved is not stuffed under matresses, it is put somewhere; stocks, bonds, accounts, IRA's, etc. or re-invested in a company to buy more land, more buildings, more people, etc.

Removing the components of our current system that hinder savings and investment will do nothing but help our economy. Not to mention the "new" money that companies and individuals will have because they are not spending time/moeny on tax compliance.

-6.1 billion man hours are wasted each year for tax compliance activities. This represents a true net loss to our economy. Anyone care to guess what this figure equates to in dollars?

KMA-628

Current estimates put our "total" tax rate at or near 50% or our income. This includes income tax, rocking chair, medicare, sales tax, property taxes, etc., etc., etc.

Yes, we already pay many consumption-based taxes. The idea behind this plan is to pretty much only have consumption taxes. As posted in the beginning, the following would be abolished: Income/Capital Gains/Estate/Gift/Some excise, etc.

The theory is (and it is only a theory because it hasn't been tried yet) is that the price of bread will go down on a NST or consumption tax. First, it should be noted, that most people don't pay taxes on bread. Second, you have to account for all of the money saved by a company not having to pay millions/billions of dollars on tax compliance. If costs go down, more than likely prices will go down, our economic system pretty much demands that this happens.

Look at it this way, using the loaf of bread as an example:

Cost of bread: $1.00
Taxes: $0.20 (using a number I am pulling out of my ass)

Remember: Your income will automatically go up once the plan is put into action, probably in the neighborhood of 18-22%. Also, the cost to make the loaf of bread could very feasibly go down because the manufacturer is wasting man-hours and money on tax compliance. Also, since they have "new" money, it could also be feasibly spent on machinery that will make the bread faster, cheaper, etc.

So:

In relative dollars, the new cost of the loaf of bread (including the consumption tax) could stay at the rate of $1.00--no real cost increas/decrease felt.

Also, your first purchases of $18,588 are tax free. That means, averaged over the whole year, the real cost of the bread could be less than $1.00--a decrease that would be felt by all consumers.

KMA-628

This should be done regardless of the tax system we use or implement.

I would like to see a Tax-Payer Bill Of Rights (TABOR) plan introduced where gov't spending is capped at a pre-determined rate. Unless tax revenue goes up, the spending cannot be increased. In other words, a spending increase by the government would, by law, equal the increase felt by the government in revenues--no increase in revenues, no increase in spending.

This is how most of us live, the gov't should do the same.

kutulu

KMA, you're talking out of both sides of your mouth. First you say that we are already paying a 50% tax rate because of all the "hidden" taxes. Then you say that a 30% consumption tax would be way higher than what the govt needs and in reality it would be under 20%? Right. Unless there is some drastic spending decrease it isn't going to work.

The man-hours spent on tax compliance are negligible when compared to raw materials, labor, and equipment costs.

The ideals progressive system are perfect. The implementation of it has been flawed. Once we close the loopholes that allow the rich to escape liability it will work much better.

KMA-628

The "free" tax level is set at the poverty level, which is different for individuals and families and already set: I think for individuals it is around $9K.

Here is an example, based on the levels where I live:

Current Sales Tax: 7.1%
Proposed Consumption Tax: 16%

Total tax: 23%

Understand, however, that while this looks like an increase in spending on your part of 23%, it really isn't. First, costs will go down, followed by price. Second, real income will increase dramatically, instantly.

The "real" increase felt by most consumers will not be much more than is already being paid out--and nowhere near near the level we are being taxed at right now. This is actually a tax decrease, as roughly 50% of your income won't be spent on taxes as it is the case right now.

As the plan takes effect and begins to bring in more money, the rate would go down, probably to the 10-12% neighborhood.

Manx

I don't understand this at all.

Why shouldn't the rich be taxed on money they receive but do not spend? There's nothing stopping them from spending it. If it's just pieces of paper that are worthless (which is nonsense, it's called collateral), they shouldn't have a problem handing them back to society.

kutulu

I love how supporters of the consumtion tax supporters say it isn't shifting the tax burden to the poor and middle class. Look at what it eliminates:

Let's look at these taxes:
Income: Under a progressive system the more you make the higher your tax rate is. Who stands to gain the most: The person who currently pays 15% or the one who pays 30%

Estate:
The only people who have estates large enough to really be hurt by this are very wealthy. Poor people are NOT splitting up $2M between their kids.

Capital Gains:
Poor people are not affected by capital gains taxes.

Gift:
Poor people do not give gifts over 10k. Rich people do.

Sure, we want to make it "fair" for the poor people. We've heard it before. No thanks.

Manx

Nonsense. 

KMA-628

Um, no I am not. I never said that the consumption tax would "be way higher", I said it would bring in more money. I am working my ass off to portray real information in a factual manner. I am also being very diligent to point out when I am asserting opinion or when I am referring to theory.

Note: see my previous post regarding spending, I completely agree with you there.

The 50% number is based on: income
Consumption tax is based on: consumer spending

Two different base number from which to draw percentages. It is not "talking out of both sides of my mouth" to say that the money brought in now (at the roughly (50% rate) would be less than the money brought in under a consumption tax.

Yes, the gov't will get more money by taxing spending than it does by taxing income.

The main reason: It is much harder to evade a consumption tax than an income tax (it is posiible, but harder).

Our current system does not and cannot collect revenue from tax evasion and the undergound economy (estimated to be over a trillion dollars). Consumer spending is roughly $7.7 trillion dollars.

Net revenue felt by our government right now would be less than the net result felt by the government by a consumption tax system. Plus, in theory, the amount of revenue felt by the gov't would gradually increease year after year as more companies expand, more companies move to the US, more jobs are created, "real" income goes up, spending is increased, etc., etc.

KMA-628

Hey Manx, thanks for your thoughtful and insightful post!

As I stated in my original post, show me don't tell me. I don't want to hear "nonsense" followed by nothing. What purpose does that serve? Answer: "nothing"

Let me try over:

I am telling you that your argument is false. I have posted the numbers to back up my claim.

Spouting out that "families will get hurt", the "poor will bear the burden" etc., are examples of the many, many points of opposition to this type of plan. You are not the first to see this, every redistributionist in the country says the same exact thing. Why? Because it goes against their beliefs. The problem is that they are bullet points and talking points without anything to back them up. I would be more than happy to post links to some of my information (not all of it is online), but it would be a very, very long post, with nothing but links. Nobody would bother to read it as it represents hundreds and hundres of pages of reading.

If a specific point is being refuted, I will post where I got the information (if it is possible) along with page numbers and paragraph numbers so that the information could viewed easily.



Anyway, your post was not accurate, in my opinion. If you have something more to add than "nonsense" I would love to discuss it. As I mentioned earlier, I would love to hear thoughtful opposition to this proposal. I do not want to hear regurgiatation of fear tactics that are based on nothing.

If there is real points of contention to this proposal, I want to discuss them and have asked to.

Manx

I did show you. Your response was "No". Without any refutation. I responded to that in kind.

kutulu

Based on the 2004 Federal Budget, the govt spent 2.3T. In order to get 2.3T out of 7.7T consumer spending, the tax rate would be 29.8%. That is if you tax EVERYTHING.

You still said nothing about how all of the taxes that would be repealed affect the rich way more than the poor. I wonder why.

Ustwo

Without a progressive tax system and inciting class envy how could the modern democratic party survive as anything but a marginalized party?

As such any change in the tax system would be fought with the same half truths, and outright lies that fuel their political campaigns. The tax cuts for the rich mantra would be repeated add-nauseam and the laughable concept that somehow the poor are going to pay for the government spending will be put forth as fact, with said facts unchecked by a main stream media which has been laid bare as a spin machine instead of a news outlet.

The concept of a fair tax system for ALL Americans is foreign to the thinking of the left, and while they claim to target the 'mega-rich' such as John Kerry, in reality it is the people attempting to get rich who suffer in such an atmosphere of fiscal repression.

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kutulu

Regarding people who avoid taxes by recieving cash, the amount of taxes they avoid is insignificant compared to the amount of taxes taken in as a whole. The majority of these people are tipped employees and day laborers. These people don't make much more than $30k/yr. 95% of the money the govt gets comes from people who make over 120k.

kutulu

Sure, the party that make a killing with the "tax and spend liberal" bashing would lose nothing.

KMA-628

All right Manx, I'll bite.

In my original post, I stated that spending equal to the level of poverty is tax-free.

You stated that the poor and middle-class get hurt on this plan.

I then said no, rather than repeat what I had said already.

So, that being said, how do the poor and middle-class get hurt as per year claim, taking into account the information that I have already posted?

Kutulu - I am responding to all three of your posts next, so hang on a minute.

Manx, I will probably respond to your assertion in a little more detail next as some of your points match Kutulu's.

Manx

Indeed. Close the loopholes on the rich and corporate tax. And then we can lower the tax rate across the board.

flstf

I suspect that the current taxes we pay are a lot higher than 50% when you factor in the amount of hidden tax added to the price of all the goods and services we buy. Every business involved in getting that bread to the store is taxed and those taxes are passed on up the ladder until the consumer buys it at the grocery store (and then we pay a sales tax on top of that). That's where the saying (businesses don't pay taxes, people do) comes from.

So the current estimate of 50% should be added to the additional cost of goods and services we pay because of the taxes being passed on to us and added to the price. If the amount of that hidden tax is 75% (my wild guess) of the price and if you buy $20,000 worth of goods each year you would be paying an additional hidden tax of $15,000 on top of the 50%.

That's why I asked how much of the price of goods is included there (in the price) because of all the taxes added in by all the businesses involved.

KMA-628

O.K., this is going to be a long one as there is a lot to respond to:

How are 6.1 billion man-hours negliglble? Not only is this a huge economic loss for EVERYBODY, the future economic reprecussions are huge taking into account the opportunity cost of tax compliance. It is a huge waste of time that benefits nobody and costs all of us millions and millions of dollars. I would argue that tax compliance activities are hardly negliglible on any scale.

Closing the loopholes will leave over a trillion dollars untaxed--the underground economy. Closing the loopholes will not help a broken system that hinders savings, investment and growth--true variables when considering economic growth of today and the future.

Why are corporations moving their headquarters overseas? Reason: taxes. We are losing millions and millions of dollars because companies cannot afford to prosper in our economy. I guarantee you that with a consumption-based taxation system, you will see a sudden influx of capital from companies moving their headquarters back to the US and new companies seeking the tax shelter our system would provide. That represents real money in terms of new business, new jobs, more money, etc., etc.

The first $18,588 of spending is tax free, for everybody. How many poor people spend more than $18K a year? If they do, they aren't poor they just aren't reporting their income correctly.

How much more than $18K does an average middle-class family spend a year? On consumer items, not too much more than $18K (I have no facts for this, I am guessing based on total spending averages for the middle-class, minus spending that wouldn't be taxed). For arguments sake, let's say that the average middle-class family spends around $26-28K a year.

1 - The first $18,588 is tax free, so that drops the tax burden to $8-10K a year.
2 - With the implementation of this system, take home wages for middle-class people will instantly in crease around 20%. That is 20% more in their pocket, right away. On average, that will equate to an additional $5-9K of additional money in the middle-class' pocket.
3 - If spending stays the same, the poor will continue to pay in taxes what they are already paying - nothing. The middle-class will probably pay close to or less than they were.

Unless my math is wrong or my information is wrong, how do they get hurt? How is this shifting the tax burden? I just don't see it.


O.K. What did the government bring in? $1.95 trillion (this number includes all forms of taxes received by the government), gross, not net. In other words, we spent WAY more then we received from taxes. Especially since the $1.95 trillion number is gross--I haven't found a good source for net revenues yet, without doing a ton more research than I already have.

Granted, the first few year of this system, we would continue to run deficit spending. Given enough time, the benefits of the system would be seen and we would no longer take in less than we spend (as long as spending is capped--we have to control spending first, no tax system can maintain the kind of spending sprees we have seen over the last several decades).

Also, with the influx of money and jobs into our economy, the "poor" people that want to do better, can. Maybe some of these people will no longer be counted in the "poor" column.


Conservative estimates of the underground economy (which includes the people you reference) is over a trillion dollars, with some estimates considerable higher. I hardly think waitstaff and day laborers make up any sizable portion of this estimate. The unique thing is that people that are receiving money un-taxed (i.e. thieves, drug dealers, contractors that work "under the table") would be fairly taxed under a consumption system. Our current system has no way of doing that, other than by spending millions of dollars on prosecution and then settling for pennies on the dollar.

Anyway, what percentage of waitstaff and day-laborers earn more than $18K? They won't be taxed under this system, so they won't be hurt. In fact, they will bring home more than they are doing not.

A consumption tax (with the floor set at $18K) is ideal, because everybody spends and everybody spends according to their means. A millionaire spends much, much more than I do, so they would pay much, much more than I do on the consumption tax. A poor person spends a fraction of what I do and their burden would be 100% less than mine, i.e. zero.

The trick is to not hinder growth by being anti-savings and anti-investment. Savings and investment are key to our economy doing better as a whole. Without it, we will dwindle to nothing.



First, you must understand where I come from. I am not "redistributionist" in any way, shape or form, nor am I rich. Our country was founded on the idea that all people are equal. How is taxing one person more than the next equal? It isn't. If you are a redistributionist, then this tax plan will not appeal to you as it doesn't serve your purpose.

However, based on the evidence and the studies, a consumption-based taxation system could work and it could work very well. And, in a sense, it promotes your ideals because the burden of the "poor" is either zero or negligible. Granted, there is no "free money" for them under this plan (i.e. EIC).

Also, there is a very good possibilty that our economy could flourish under a system like this. This will help the poor, the middle-class and the rich. I don't want to give anybody hand-outs. I want a system where a person can make more money and be more properous, based on their motivation level.

kutulu

Assuming 40 hour work weeks, that is about 2.93M people or about 1.5% of the population. If you assume only half of the people work in the county it's still only 3%. I'd say 3% is neglibible compared to the other 97%.

Another thing, do we want to put 3million people out of work? Not just losing their jobs but having their primary skill set made completely obsolete?

I'll get around to the rest when I can.

KMA-628

Good points. That is why I think the overall effect of a consumption tax would be less of a burden than the current system places on us.

It would be hard to prove, but one could theorize that the price of goods would go down as much or more than the rate of the consumption tax. The real effect could be that we pay a higher tax on lower priced items, equalizing the equation.

alansmithee

I don't see how income would rise. On the fairtax.org site, they were stating that prices would most likely remain neutral. This being the case, why would businesses bother to raise wages? Many large companies are currently opperating with excessive capital, and to my knowledge not one of them has decided to increase the workers' wages. Microsoft is one I can think of who have had excess cash for awhile. Instead of raising pay, they gave it back to shareholders in the form of dividends. They also have put forth a plan to buy back approx. 3 billion shares of stock in the next 3 years in an effort to raise the value of their stock. Remember, corporate decisions are based upon whats good for the shareholder, not the employees. Most businesses would likely consider the lower taxes on wages offset by lowering the price of their product (so that when the NCT kicked in the point of sale price is the same) to be enough of a benefit for consumers/employees.

KMA-628

O.K., I will give you your point. However, the man-hours wasted on our current system is just one of the many arguments for abolishing it.

Here is another one:

Money magazine compiled 46 tax professionals for a test. The test was for each "professional" to individually prepare a hypothetical return for a hypothetical middle-class family.

The results?

46 different responses from 46 different tax professionals with the dollar amounts ranging from $34,240 to $68,912

-Source: Joan Caplin, "6 Mistakes even the pros Make", Money, March 1998.

And another one:

The GAO reports that more than half a million taxpayers lose more than $300 million per year because of incorrectly filed tax forms.

Source: GAO, "Tax Deductions", April 2001, http://www.gao.gov