House Bill 25 was introduced this Congress. It was sponsored by Representative Buddy Carter, and now has several co-sponsors. House Bill 25 institutes FairTax.org. One consumption tax that is paid by everyone on new goods and services. NOT USED GOODS (so it's green!). People who make less than $60,000 per year get a prebate and pay NO TAX. There are no penalties for making money if you are on a government program. Professor John Cochrane at his blog The Grumpy Economist has called for a consumption tax to replace the income tax and this is it.
This tax also gets rid of corporate taxes, retirement withdrawal taxes, income taxes, social security taxes, estate taxes and any other federal tax you can think of. Replaced by one simple tax that everyone pays, including the black market, illegal aliens, and since the wealthy consume the most they pay the most.
The fairtax site says that the prebate is not means-tested, everyone from homeless hobos to Elon Musk would get the same prebate- so no tracking of individual income would be needed at all. It's sort of a Universal Basic Income, but pegged so low that only a hobo could live off of it alone. Beats the hell out of welfare that penalizes people for getting a job.
It's not like UBI, because you still have to earn income rather than get a check from the government. If you are poor, you just don't pay tax and don't have a penalty for making more income.
"The FairTax provides a progressive program called a prebate. This gives every legal resident household an “advance refund” at the beginning of each month so that purchases made up to the poverty level are tax-free. The prebate prevents an unfair burden on low-income families. Learn more ."
Every_legal_resident with no income snooping- that's what makes it progressive. It's a modest check (tax rate times poverty line) but everybody gets it other than illegals. *Everybody* pays the sales tax, no exemptions, but only legal residents get the prebate. This rewards frugality and punishes illegal aliens, who get no prebate, pretty slick if you ask me.
There's a guy who wanders up and down California with a pack mule. His monthly living expenses are about $300/month and the prebate would make him wealthy by his own standards. But he is literally one in 300 million.
Oh, great, and I spent the last eight years doing Roth conversions. I thought the big risk was that the government would renege on Roths being tax free; it never occurred to me they would renege on taxing IRAs! Well, you win some, you lose some.
That's pretty interesting. Boy, AI sure can talk a mean streak. I guess it all makes sense, too. I've run a small business for almost 40 years, from a sole proprietorship to several small companies grossing in the $3M to $4M/yr range. I can assure anyone who is not in business for themselves that the amount of time spent with compliance (state, federal, insurance, etc.) can totally suck the fun out of what you love to do. I'll support political candidates that support tax simplification. To me, that's even more important than lower taxes. I can pay a little more for getting back lost time. Time is more valuable.
Another benefit of eliminating the income tax (I believe an earlier commenter hinted at this) is it removes another tool from the government control toolbox. My personal belief is that government should stick to making and enforcing the law. As long as your behavior is not illegal it's none of the governments business.
The government should not be in the engaged in attempting to guide or direct your behavior through financial incentives. Sin taxes, special tax zones, EV rebates, mortgage deductions - all attempts by government to channel our behavior in directions the elite prefer. Eliminating the income tax will limit their ability to exert control.
Now, many legislators seems convinced we put them in office for the express purpose of exerting social control. Also, tax power is a major reason bigwigs lobby legislators so elimination of the tax will very likely reduce political spending. For these reasons I expect congress to viciously fight to retain the taxing power.
In the early '90s I worked for an accounting firm in Seoul, Republic of Korea. My annual ROK tax return consisted, literally, of a post card filled out by our HR department. It stated my salary, less flat rate standard deductions to which I was entitled, and what the tax was on the net. ROK interest income, such as banks, was withheld at the source at 10%, so I didn't have to do anything about it. On the US side, my tax return situation was different. Much, much different. I never finished working a US tax season without feeling depressed by the vast waste of time, money, energy, and lost productivity that I'd just participated in. Stop the madness.
The income tax, direct election of senators, prohibition, and women’s suffrage - every last one of the early 20th century “progressive” amendments has been a disaster for the Republic! I’d settle for repealing the income tax amendment and the direct election of senators amendment…but watching liberal women’s mental health issues and hysteria do make a strong case for repealing women’s suffrage as well….
Yes! Repeal all the Constitutional amendments passed between 1910 and 1920. Well, Prohibition is already gone, but the income tax and direct election of senators. Women's suffrage would be lagnappe.
And all the OTHER laws enacted between 1910 and 1920. Eliminate everything that Racist Wilson ever did.
LOL, women's suffrage, really!? I know you are being a provocateur and not really serious. Good luck discussing that with your wife or on your next date night. Or were you just planning on eliminating women's votes if they register as Democrats? Give us a few specifics, it could be amusing - after all, when you are in a deep hole why not keep digging?
Well, I didn’t actually propose repealing women’s suffrage…. Probably the best case, though, is without women’s agitation we would never have had Prohibition, and without women voting we would never have had the welfare state in all of its nefarious forms.
Many people who file their Form 1040 pay absolutely ZERO income tax. In fact, by filing their return they are eligible for the Earned Income Tax Credit, the Child Tax Credit, etc. Their return becomes a big pay day for them and a pay out by Uncle Sam. How will these transfer payments occur? They are a relatively small encouragement for some couples to have children -- and Lord knows we need many more, and not fewer, children.
There is also the tax rate effect on investment. If a stock is held for less than a year and an investor wants to sell tax rates enter into the calculation. How many people end up missing an investment opportunity or lose out on keeping a positive return because tax considerations entered into the timing of the transaction. This is especially true for the small investor. Without personal income taxes the economy will grow faster and people will take more of a risk to start a business because the rewards would be greater or have the money to increase the business they already own. The next step is to make social security optional in the way they did it in Chile. When President George W Bush tried to change social security and allow for a private option I told my friends when I was already in my 40’s I would give up all the money I paid into the system to date for that opportunity. I would have been much better off today in my retirement. Even if I had to continue to pay a small part of the withholding into the system I would still have come out ahead.
I’m probably in a minority here, but I think a complete abolition of a Federal income tax is a bad idea because it would disconnect people from the cost of government, and enable deficit spending and a untrammeled government to act without reference to the popular will. Countries with a government that doesn’t need to tax its citizens have a government that doesn’t need to listen to them. See the petroleum autocracies like Saudi Arabia, Nigeria, or Russia. And the roughly half of our population that doesn’t pay income tax vote enthusiastically for more government goodies, since it doesn’t cost them. But most of the benefits Glenn describes would accrue from a much lighter, simpler tax. I would favor a flat 10% tax, minimal deductions, levied on all citizens regardless of amount of income. That would produce about $1 trillion revenue in a fair manner and be easy to administer and calculate.
One of my favorite advantages of removing the graduated income tax: The great contribution to the economy by the productivity of the persons involved in dealing with the income tax. We would welcome them to the productive sector.
13 hours per year figuring out the income tax forms? My wife spends triple that, and that's AFTER I've spend a couple of hours a month entering all of our finances into Quicken. But it's a game for her, finding EVERY legitimate deduction.
House Bill 25 was introduced this Congress. It was sponsored by Representative Buddy Carter, and now has several co-sponsors. House Bill 25 institutes FairTax.org. One consumption tax that is paid by everyone on new goods and services. NOT USED GOODS (so it's green!). People who make less than $60,000 per year get a prebate and pay NO TAX. There are no penalties for making money if you are on a government program. Professor John Cochrane at his blog The Grumpy Economist has called for a consumption tax to replace the income tax and this is it.
This tax also gets rid of corporate taxes, retirement withdrawal taxes, income taxes, social security taxes, estate taxes and any other federal tax you can think of. Replaced by one simple tax that everyone pays, including the black market, illegal aliens, and since the wealthy consume the most they pay the most.
The fairtax site says that the prebate is not means-tested, everyone from homeless hobos to Elon Musk would get the same prebate- so no tracking of individual income would be needed at all. It's sort of a Universal Basic Income, but pegged so low that only a hobo could live off of it alone. Beats the hell out of welfare that penalizes people for getting a job.
It's not like UBI, because you still have to earn income rather than get a check from the government. If you are poor, you just don't pay tax and don't have a penalty for making more income.
I think you're mistaken.
"The FairTax provides a progressive program called a prebate. This gives every legal resident household an “advance refund” at the beginning of each month so that purchases made up to the poverty level are tax-free. The prebate prevents an unfair burden on low-income families. Learn more ."
Every_legal_resident with no income snooping- that's what makes it progressive. It's a modest check (tax rate times poverty line) but everybody gets it other than illegals. *Everybody* pays the sales tax, no exemptions, but only legal residents get the prebate. This rewards frugality and punishes illegal aliens, who get no prebate, pretty slick if you ask me.
There's a guy who wanders up and down California with a pack mule. His monthly living expenses are about $300/month and the prebate would make him wealthy by his own standards. But he is literally one in 300 million.
https://www.facebook.com/3Mules
Yes!
What a wonderful world it would be without the income tax!
Oh, great, and I spent the last eight years doing Roth conversions. I thought the big risk was that the government would renege on Roths being tax free; it never occurred to me they would renege on taxing IRAs! Well, you win some, you lose some.
That's pretty interesting. Boy, AI sure can talk a mean streak. I guess it all makes sense, too. I've run a small business for almost 40 years, from a sole proprietorship to several small companies grossing in the $3M to $4M/yr range. I can assure anyone who is not in business for themselves that the amount of time spent with compliance (state, federal, insurance, etc.) can totally suck the fun out of what you love to do. I'll support political candidates that support tax simplification. To me, that's even more important than lower taxes. I can pay a little more for getting back lost time. Time is more valuable.
Another benefit of eliminating the income tax (I believe an earlier commenter hinted at this) is it removes another tool from the government control toolbox. My personal belief is that government should stick to making and enforcing the law. As long as your behavior is not illegal it's none of the governments business.
The government should not be in the engaged in attempting to guide or direct your behavior through financial incentives. Sin taxes, special tax zones, EV rebates, mortgage deductions - all attempts by government to channel our behavior in directions the elite prefer. Eliminating the income tax will limit their ability to exert control.
Now, many legislators seems convinced we put them in office for the express purpose of exerting social control. Also, tax power is a major reason bigwigs lobby legislators so elimination of the tax will very likely reduce political spending. For these reasons I expect congress to viciously fight to retain the taxing power.
In the early '90s I worked for an accounting firm in Seoul, Republic of Korea. My annual ROK tax return consisted, literally, of a post card filled out by our HR department. It stated my salary, less flat rate standard deductions to which I was entitled, and what the tax was on the net. ROK interest income, such as banks, was withheld at the source at 10%, so I didn't have to do anything about it. On the US side, my tax return situation was different. Much, much different. I never finished working a US tax season without feeling depressed by the vast waste of time, money, energy, and lost productivity that I'd just participated in. Stop the madness.
The income tax, direct election of senators, prohibition, and women’s suffrage - every last one of the early 20th century “progressive” amendments has been a disaster for the Republic! I’d settle for repealing the income tax amendment and the direct election of senators amendment…but watching liberal women’s mental health issues and hysteria do make a strong case for repealing women’s suffrage as well….
Yes! Repeal all the Constitutional amendments passed between 1910 and 1920. Well, Prohibition is already gone, but the income tax and direct election of senators. Women's suffrage would be lagnappe.
And all the OTHER laws enacted between 1910 and 1920. Eliminate everything that Racist Wilson ever did.
LOL, women's suffrage, really!? I know you are being a provocateur and not really serious. Good luck discussing that with your wife or on your next date night. Or were you just planning on eliminating women's votes if they register as Democrats? Give us a few specifics, it could be amusing - after all, when you are in a deep hole why not keep digging?
Well, I didn’t actually propose repealing women’s suffrage…. Probably the best case, though, is without women’s agitation we would never have had Prohibition, and without women voting we would never have had the welfare state in all of its nefarious forms.
I would be fine with eliminating women’s suffrage for all but head of household or property owners, for those to vote who have skin in the game…
Another benefit of eliminating the income tax would be watching the busy bodies and the central planners throw a complete fit.
The media meltdowns would be amazing.
What's not to like about that?
Many people who file their Form 1040 pay absolutely ZERO income tax. In fact, by filing their return they are eligible for the Earned Income Tax Credit, the Child Tax Credit, etc. Their return becomes a big pay day for them and a pay out by Uncle Sam. How will these transfer payments occur? They are a relatively small encouragement for some couples to have children -- and Lord knows we need many more, and not fewer, children.
There is also the tax rate effect on investment. If a stock is held for less than a year and an investor wants to sell tax rates enter into the calculation. How many people end up missing an investment opportunity or lose out on keeping a positive return because tax considerations entered into the timing of the transaction. This is especially true for the small investor. Without personal income taxes the economy will grow faster and people will take more of a risk to start a business because the rewards would be greater or have the money to increase the business they already own. The next step is to make social security optional in the way they did it in Chile. When President George W Bush tried to change social security and allow for a private option I told my friends when I was already in my 40’s I would give up all the money I paid into the system to date for that opportunity. I would have been much better off today in my retirement. Even if I had to continue to pay a small part of the withholding into the system I would still have come out ahead.
Don’t get my hopes up!
I’m probably in a minority here, but I think a complete abolition of a Federal income tax is a bad idea because it would disconnect people from the cost of government, and enable deficit spending and a untrammeled government to act without reference to the popular will. Countries with a government that doesn’t need to tax its citizens have a government that doesn’t need to listen to them. See the petroleum autocracies like Saudi Arabia, Nigeria, or Russia. And the roughly half of our population that doesn’t pay income tax vote enthusiastically for more government goodies, since it doesn’t cost them. But most of the benefits Glenn describes would accrue from a much lighter, simpler tax. I would favor a flat 10% tax, minimal deductions, levied on all citizens regardless of amount of income. That would produce about $1 trillion revenue in a fair manner and be easy to administer and calculate.
Imagine replacing progressive income tax with equitable treatment! That'll blow the Left's minds.
Well... You sure have a winner here.
One of my favorite advantages of removing the graduated income tax: The great contribution to the economy by the productivity of the persons involved in dealing with the income tax. We would welcome them to the productive sector.
13 hours per year figuring out the income tax forms? My wife spends triple that, and that's AFTER I've spend a couple of hours a month entering all of our finances into Quicken. But it's a game for her, finding EVERY legitimate deduction.