Bush to Push for huge tax overhaul

[Chisoxfn]

As a licensed CPA, if they get rid of the tax code, us accounting people won't have a job!

 

 

Seriously, a flat tax is a BAAAAAAAAD idea.  I don't have a lot of time and I'm sure southsider will have a post fest on this tomorrow... him and I see pretty much eye to eye on this one.  (seeing as how we had the same profs in college... what an edumacation we got.)

Only if your on the tax end. If your in audit your still good. Sarbanes Oxley is creating a much great need for accounting jobs. Plus its forcing the big 4 to turn down business from firms it used to deal with, which then goes to the midtiers, so the mid-tiers get bigger, and some of the mid-tiers smaller clients slide to local firms, making them bigger.

 

Right now accounting is a great industry to be in. I agree with a tax overall and have long been a fan of the flat tax, but I think its going to be a very difficult thing to work in.

[bmags]

it seems to me this will be a radical overhaul for a four year period...

[DBAHO]

it seems to me this will be a radical overhaul for a four year period...

And then the next 4 years after that, will it be Bush's policy or Clinton's. Hmmm.

[Heads22]

I was gonna say those didn't osund like you Andrew....

[Rex Kickass]

I don't know the nuts and bolts of this proposal but I know that my tax rate falls between 10 and 15% federally depending on how many exemptions and credits I can get. I do live above the poverty level, which is in my opinion an absurdly low benchmark, so my tax burden would roughly double under this idea of a 23% VAT.

 

The question I have though, is would such a radical shift in tax policy create a larger short term deficit - which would then be passed on to the states? Where funded mandates become unfunded? Because we already deal with sales taxes by state - some as high as 9%. And state income tax which won't go away. Wouldn't an elimination of federal income tax be an incentive for state governments to raise their income taxes instead, creating a net tax increase rather than decrease?

 

Just questions from my not so econ expert head.

[NUKE_CLEVELAND]

I don't know the nuts and bolts of this proposal but I know that my tax rate falls between 10 and 15% federally depending on how many exemptions and credits I can get. I do live above the poverty level, which is in my opinion an absurdly low benchmark, so my tax burden would roughly double under this idea of a 23% VAT.

 

The question I have though, is would such a radical shift in tax policy create a larger short term deficit - which would then be passed on to the states? Where funded mandates become unfunded? Because we already deal with sales taxes by state - some as high as 9%. And state income tax which won't go away. Wouldn't an elimination of federal income tax be an incentive for state governments to raise their income taxes instead, creating a net tax increase rather than decrease?

 

Just questions from my not so econ expert head.

I also believe payroll taxes like Medicare and SS would go away under this plan so you can effectively double your exemption.

[kapkomet]

Only if your on the tax end.  If your in audit your still good.  Sarbanes Oxley is creating a much great need for accounting jobs.  Plus its forcing the big 4 to turn down business from firms it used to deal with, which then goes to the midtiers, so the mid-tiers get bigger, and some of the mid-tiers smaller clients slide to local firms, making them bigger.

 

Right now accounting is a great industry to be in.  I agree with a tax overall and have long been a fan of the flat tax, but I think its going to be a very difficult thing to work in.

S-O has created a whole new level of competency that is required. I know this, and it's too bad my company can't see the value of having a CPA in an analyst's role. But whatever.

 

I was just kidding about the tax thing and CPA's.

[southsider2k5]

Let the post fest begin!

 

I have stated on many occasions that the personal tax system at its core is perfect. The problem is that it has been corrupted by special interest exemptions. There are too many deductions, and the great majority of them are utilized by the upper classes. If you plug the loopholes, you fix the tax code, it is that simple.

 

The national sales tax would be a huge disaster. There is talk about an exemption for poverty, but I am not quite how you would do this? If the whole point is to streamline a government bureaucracy, then you lose that if you have an agency that exsists for poverty exemptions and the like. The national sales tax is also hugely regressive. You would start taxing people who are currently sitting with a negative tax rate. Unless there is somekind of minimum wage hike to match the loss in income, you could push a bunch of families into disaster. The first time it was mentioned I put up a large post about the regressive nature, and gave some numbers as an example, if anyone wants I can repost that.

 

The flat tax is only a step away from the national sales tax, because at least it is taxing income, and not spending. This would have the effect of being a little more hard on rich because it taxes your money before savings and not after it. The poorest people spend all of their money, so a flat tax or national sales tax have the same effect on them. A flat tax is a definate improvement over the national sales tax because it is at least marginally more progressive, depending on how much savings is done after taxes.

 

And to answer your question wino, it is supposed to be a revenue nuetral reform. In other words they want to collect the same amount of money, they just are trying to do it a different way. In theory it shouldn't have any effect on what the states are doing.

[southsider2k5]

A lot of you aren't getting the whole deal with tax reform. 

 

People below the poverty line would be exempted from paying anything and would no longer have money withheld from their paychecks.  That would be a huge boon to them.

 

Prices would be lower across the board because businesses would have their tax burden lifted lessening the impact of any tax imposed.  This has the added effect of helping to keep jobs here due to lower unit labor costs. Also foregin companies ( the japanese automakers come to mind here ) would want to locate more of their operations here.

 

The wealthy would also pay a lot more money.  Under a flat tax there would be no more deductions for anything, no more tax shelters, no more cheating the system.  In other words, all those rich people and corporations that hide their money offshore would no longer benefit from that and would have to cough up extra cash for their goodies they buy. 

 

I dont believe this is something we should rush into but both sides agree that the tax code needs reform and I think it's certainly a goal worth pursuing.

 

SS2K4 What's your take on this?

Actually even with exemptions, the poorest 40% would suffer a tax increase under this plan. Right now, because of the earned income credit, the poorest 20% are paying a negative 5.7% tax rate. All an exemption would do it stop you from paying taxes, all it would do is give them a 0% tax rate, which would be a 5.7% increase effectively. So it would hurt them.

 

http://www.nationalreview.com/nrof_luskin/...00408170858.asp

 

Also this has nothing to do with the corporate tax code. It would have nothing to do with prices imposed. Being a revenue nuetral proposition, it shouldn't have any affect on spending in theory.

[southsider2k5]

Let me answer your question.

 

Theresa Heinz-Kerry made upwards of $5Million last year and paid in at an 11% tax rate.

 

I'm firm middle class and paid over 20%.

 

No need for reform, eh?  No need to get rid of loopholes, eh? 

 

I couldn't disagree with you more.  The FACT of the matter is that low-income Americans will have a lesser tax burden due to the fact that all these folks with the money to find the loopholes will now be held accountable for their full income.  This will increase tax revenues and lessen the burden on those of us who can't afford to find those loopholes.

http://www.poorandstupid.com/2004_07_11_ch...974230990148021

 

Interesting write up on THK's tax situation.

[Texsox]

Even under a flat tax, the more money you make, the more taxes you pay.  Why should it be the more money you make, the higher percentage of it you pay?

Because we like the best in this country. If everyone was willing to accept less, less services, smaller military, fewer national parks, less government inspectors, less spying, less research, less FBI, less US Marshall, less federal roadways and maintenance, less natural disaster relief, less government spending overall, which GOPers claim is what grows our economy in slow times, we could lower our taxes.

 

Put a simpler way, someone making $20,000 per year usually lives in a much different home than someone making $200,000 per year. As a country, we are living in the country a $100,000 per year salary provided, take away the graduated tax rate and we will be living in the country $50,000 per year provides.

 

I've seen what a poor government can provide, I don't like it. I don't think we can jack up taxes on the middle class to lower the tax rate for the wealthy.

[Texsox]

All this presupposes that we need to actually collect enough in taxes to cover what we spend. According to the GOP, this isn't necessarily so. When we run deficits in the hundreds of billions, we grow the economy and somehow other people pay for the deficit. I wonder why we do not have a tax free year. Borrow the $1.3 trillion or so to cover the deficit and stand back and watch the economy really cook