Tax Return 24,000 Pages Long

[zeb1094]

TAX RETURN 24,000 PAGES LONG

General Electric, one of the largest corporations in the world that produces everything from refrigerators to aircraft engines to locomotives, filed their tax return this month. Pretty boring news, actually...until you read the details: it was 24,000 pages long. To give you a little perspective, 'War and Peace' is only 1,424 pages long. The full line of Atlanta telephone books is only 5,288 pages long. So that's one big tax return. Do you have any idea how much it must have cost GE in terms of man-hours and direct expenses to prepare this 24,000 page tax return? GE is only one of millions of American corporations saddled with this burden year after year ... an every penny of the cost they incur is passed right down the line to the people who consume their products in the market place. Every penny.

Now imagine a world where GE's tax return and your tax return would be zero pages long. In fact, there would be no tax return. There would be no IRS. There would be no withholding. You don't have to imagine it...the plan is here now. It's called the Fair Tax. The plan is simple: the income tax is replaced by a national sales tax. You only pay it when you buy something.

Now that may sound like pie in the sky to a lot of you. But remember: throughout history, Americans do the same thing over and over and over again...just because that's the way they've always done it. It's only until someone stands up and says 'enough' do things change. The habit of filling out tax returns every April 15 isn't enough to justify the practice.

Not to mention the hours wasted filling out those forms. If you itemize at all, you know what I'm talking about.

 

[BlackShanglan]

One cannot help suspecting that GM's tax return is 24,000 pages long for the same reason that Enron executives' response to subpeonas for specific documents was to supply a tractor-trailer loaded with bales of paper representing every missive ever written in the company. It's not that that was what was requested, but that as helpful as it is to hide a needle in a haystack, it's even easier to hide it in a needle factory. Corporate tax law is the complex and tangled beast it is largely because of the loopholes and backhands that corporations themselves have lobbied into existence.

The chief difficulties with a flat sales tax, as I understand them, seem to be (1) a tendency to suppress spending and thereby potentially depress the economy and (2) an inability to remove the tax burden from people with the least income. It's fair in the sense that everyone pays the same percentage of income, but then, as I think Hugo observes, the law generally is fair in the sense that it bans the poor and the wealthy alike from stealing bread when they are hungry. There's also this; one of the things that we can do under the current tax system is to encourage people to do things that will be helpful to them in the long run, like investing in IRA's, by offering some tax benefits for doing it. That's not very practicable under a flat tax system. So I think it does have some disadvantages; the inability to ease the burden on those living in poverty is my chief objection, and one that doesn't seem to have a good answer.

A huge benefit, of course, and the one that often lures me toward the flat tax idea, is that it would eliminate at a single stroke an enormous amount of congressional and senatorial corruption under the guise of "lobbying" as corporations suddenly find that they have no loopholes to argue for. I wouldn't count on it lasting long, however; I'm given to understand that the current morass of corporate tax law is the result of a clean sweep some years ago and the gradual, incremental return of all those little complexities that allow this or that industry to thrive a bit more richly. It seems likely to me, too, that if we go to a flat sales tax, corporations will have strong incentives either to buy their materials elsewhere or to play games with what technically constitutes "sale." I predict interesting arguments involving claims that, for instance, GM doesn't actually "purchase" automobile parts from its manufacturers, but rather simply provides a service (assembly and shipping) and therefore is not required to pay any sort of tax at all.

Of course, one could always run the flat tax in the form of a value-added tax scheme; more paperwork, but it does distribute the costs all along the production chain.

Shanglan

 

[wazhazhe]

TAX RETURN 24,000 PAGES LONG

General Electric ...

On its face, this proposal doesn't sound bad. I would like to hear from people (economists, tax attorneys) that oppose it and their reasons why.

I think Medicaid should be included. Not all people who qualify for Medicare qualify for Medicaid.

 

[wazhazhe]

The chief difficulties with a flat sales tax, as I understand them, seem to be (1) ... (2) an inability to remove the tax burden from people with the least income.

I think the flat tax proposal should include a lower limit, so the poor aren't penalized.

 

[BlackShanglan]

I think the flat tax proposal should include a lower limit, so the poor aren't penalized.

I agree, but if one makes the tax a sales tax, that's difficult to do.

 

[wazhazhe]

Yeah, I don't know how it could be done either.

 

[zeb1094]

One cannot help suspecting that GM's tax return is 24,000 pages long for the same reason that Enron executives' response to subpeonas for specific documents was to supply a tractor-trailer loaded with bales of paper representing every missive ever written in the company. It's not that that was what was requested, but that as helpful as it is to hide a needle in a haystack, it's even easier to hide it in a needle factory. Corporate tax law is the complex and tangled beast it is largely because of the loopholes and backhands that corporations themselves have lobbied into existence.

The chief difficulties with a flat sales tax, as I understand them, seem to be (1) a tendency to suppress spending and thereby potentially depress the economy and (2) an inability to remove the tax burden from people with the least income. It's fair in the sense that everyone pays the same percentage of income, but then, as I think Hugo observes, the law generally is fair in the sense that it bans the poor and the wealthy alike from stealing bread when they are hungry. There's also this; one of the things that we can do under the current tax system is to encourage people to do things that will be helpful to them in the long run, like investing in IRA's, by offering some tax benefits for doing it. That's not very practicable under a flat tax system. So I think it does have some disadvantages; the inability to ease the burden on those living in poverty is my chief objection, and one that doesn't seem to have a good answer.

A huge benefit, of course, and the one that often lures me toward the flat tax idea, is that it would eliminate at a single stroke an enormous amount of congressional and senatorial corruption under the guise of "lobbying" as corporations suddenly find that they have no loopholes to argue for. I wouldn't count on it lasting long, however; I'm given to understand that the current morass of corporate tax law is the result of a clean sweep some years ago and the gradual, incremental return of all those little complexities that allow this or that industry to thrive a bit more richly. It seems likely to me, too, that if we go to a flat sales tax, corporations will have strong incentives either to buy their materials elsewhere or to play games with what technically constitutes "sale." I predict interesting arguments involving claims that, for instance, GM doesn't actually "purchase" automobile parts from its manufacturers, but rather simply provides a service (assembly and shipping) and therefore is not required to pay any sort of tax at all.

Of course, one could always run the flat tax in the form of a value-added tax scheme; more paperwork, but it does distribute the costs all along the production chain.

Shanglan

My Dear Shang,

Have you read HR 25? Oh, and by the way, the present tax system is a flat tax! It's just been amended and changed so much since it's inception in 1986 that you really can't tell anymore.

As for the concept the FAIR TAX would be difficult on the poor people, let me know that you have not read HR 25 or The Fair Tax book, it's out in paperback now and debuted at number 2 on the New Times Best Sellers list.

Read the bill or the summary on fairtax.org or read the book and get back to me.

 

[zeb1094]

I agree, but if one makes the tax a sales tax, that's difficult to do.

Yeah, I don't know how it could be done either.

The way it will be done is:

every household will be issued a pre-bate check/direct deposit/atm credit, etc. at the beginning of each month. A household of four will receive around $425 at the beginning of the month to cover the sales tax on necessaties.

Read the bill, or the book. It will tell you how it's done much better than I could.

 

[rgraham666]

There are major problems with this proposal.

First, large segments of the economy do not pass through patterns of consumption, per se. Do large orders of industrial goods count under the sales tax? No. Wholesale electricity sales? Probably not.

Much of the business world's activity would not fall under this idea, lowering the taxes they pay. And they already pay too little in my opinion.

Second is a matter of scale. If you're making $10 million a year and the tax is ten percent, you'll take home $9 million a year. Hardly a burden.

If you make $20,000 a year, the $2,000 you pay constitutes a huge burden.

Sigh. In a country with a half trillion dollar federal deficit, one whose infrastructure is eroding, people are trying more and more to wiggle out of their duty to help pay for the society they live in. They're protected by police and courts. They have a strong military. Its currency is stable. Their children are educated. Their air and water are looked after.

"But we're not paying for that," they say, petulantly.

 

[rgraham666]

Oh zeb, which tax are they talking about replacing?

The payroll tax? Which is pretty much flat. That is supposed to pay for Social Security and Medicare?

The income tax? Which doesn't become significant until your income goes well past the median level.

Or the estate tax? Which only affects estates once they pass the $750,000 mark. And of which most is paid by about 3,300 families each year.

My heart fair bleeds for GM, the poor bastards. Run into the ground by the communists running the government.

 

[zeb1094]

There are major problems with this proposal.

First, large segments of the economy do not pass through patterns of consumption, per se. Do large orders of industrial goods count under the sales tax? No. Wholesale electricity sales? Probably not.

Much of the business world's activity would not fall under this idea, lowering the taxes they pay. And they already pay too little in my opinion.

Second is a matter of scale. If you're making $10 million a year and the tax is ten percent, you'll take home $9 million a year. Hardly a burden.

If you make $20,000 a year, the $2,000 you pay constitutes a huge burden.

Sigh. In a country with a half trillion dollar federal deficit, one whose infrastructure is eroding, people are trying more and more to wiggle out of their duty to help pay for the society they live in. They're protected by police and courts. They have a strong military. Its currency is stable. Their children are educated. Their air and water are looked after.

"But we're not paying for that," they say, petulantly.

Rob, the plan is not tied to INCOME. It is not an income tax. It is a consumption tax. You pay the inclusive sales tax at the retail level and only at the retail level.

True the wholesale level will not really pay the tax in the end but...

You'll need to read the bill - HR 25 or the book - The Fair Tax Book.

The Fair Tax Org spent 11 million dollars on research. There is a letter to the president from most of the top ecomomists in the nation espousing the Fair Tax Plan, read it.

If the plan is put in place ALL income taxes, disappear. So those pesky imbedded taxes we all pay for stuff will be gone.

Oh! And no more IRS.

 

[wazhazhe]

The way it will be done is:

every household will be issued a pre-bate check/direct deposit/atm credit, etc. at the beginning of each month. A household of four will receive around $425 at the beginning of the month to cover the sales tax on necessaties.

Read the bill, or the book. It will tell you how it's done much better than I could.

OK. I read about the proposal at the link you provided but didn't read the bill. It's a bit early for that.

 

[zeb1094]

Oh zeb, which tax are they talking about replacing?

The payroll tax? Which is pretty much flat. That is supposed to pay for Social Security and Medicare?

The income tax? Which doesn't become significant until your income goes well past the median level.

Or the estate tax? Which only affects estates once they pass the $750,000 mark. And of which most is paid by about 3,300 families each year.

My heart fair bleeds for GM, the poor bastards. Run into the ground by the communists running the government.

All taxes on Income. Whatever the source. Social Security withholding and Medicare taxes will disappear also. The Fair Tax will generate enough to be revenue netural.

 

[zeb1094]

OK. I read about the proposal at the link you provided but didn't read the bill. It's a bit early for that.

Order the book, it's a lot clearer than the bill. This is a link to it in my post to Shang.

 

[rgraham666]

Zeb, the link doesn't tell me much. And it reads like propaganda to me.

It does not mention how this will affect the business community, only the benefits for individuals. As I said, much of the economy doesn't pass through consumption patterns. So it will be untaxed.

Getting rid of the IRS is a definite propaganda ploy. People hate taxes, although I don't know why, and the IRS is a symbol of this.

So who's going to be doing the bookkeeping for this if not the IRS? And who goes after the people who cheat, that is steal from the country?

The bookkeeping is very important. Most sales taxes now require businesses to keep track of such things. A drain on their time. And thus inflationary because they're wasting their time on non-productive activities.

And the IRS is important. Your country loses $30 billion a year in revenue because the IRS is too small to chase after tax cheats. These people are stealing from you, increasing your taxes because the shortfall has to be made up from somewhere. You wouldn't advocate getting rid of the FBI or any other law enforcement agency. Why the IRS?

Sorry zeb. This reads as a ploy for people who don't think they owe anything to your country, in spite of all that it provides. They're just selling it as a wonderful idea without mentioning who really benefits.

This is the last post I'm going to write on this as even thinking about these parasites pisses me right fucking off.

 

[zeb1094]

Zeb, the link doesn't tell me much. And it reads like propaganda to me.

It does not mention how this will affect the business community, only the benefits for individuals. As I said, much of the economy doesn't pass through consumption patterns. So it will be untaxed.

Getting rid of the IRS is a definite propaganda ploy. People hate taxes, although I don't know why, and the IRS is a symbol of this.

So who's going to be doing the bookkeeping for this if not the IRS? And who goes after the people who cheat, that is steal from the country?

The bookkeeping is very important. Most sales taxes now require businesses to keep track of such things. A drain on their time. And thus inflationary because they're wasting their time on non-productive activities.

And the IRS is important. Your country loses $30 billion a year in revenue because the IRS is too small to chase after tax cheats. These people are stealing from you, increasing your taxes because the shortfall has to be made up from somewhere. You wouldn't advocate getting rid of the FBI or any other law enforcement agency. Why the IRS?

Sorry zeb. This reads as a ploy for people who don't think they owe anything to your country, in spite of all that it provides. They're just selling it as a wonderful idea without mentioning who really benefits.

This is the last post I'm going to write on this as even thinking about these parasites pisses me right fucking off.

Rob,

ALL INCOME TAXES disappear! Individual and Corporate! Social Security and Medicade!

Try this link instead.

 

[wazhazhe]

Order the book, it's a lot clearer than the bill. This is a link to it in my post to Shang.

I have to buy a book to understand this?

 

[zeb1094]

I have to buy a book to understand this?

No. PM me your address and I'll mail one to you. I have several copies.

Or you can go to the link in my reply to Rob.

 

[wazhazhe]

Thanks. I don't have time to check it out now but I will this evening.

 

[wazhazhe]

Thanks. I don't have time to check it out now but I will this evening.

 

[Liar]

Um... wouldn't a tax system solely based on retail consumption be a highly sensitive thing, easily tripped into a downward spiral?

A lowering of the overall consumption level due to raised prices (like now with the oil, for instance) would hit the tax revenue hard. Peoples' consumption behaviour is the most trigger happy economy factor there is, short of coke snorting Wall Street day-traders from the 80's.

Are there tools in the proposal to compensate for the global economy fluctuations?

 

[BlackShanglan]

The way it will be done is:

every household will be issued a pre-bate check/direct deposit/atm credit, etc. at the beginning of each month. A household of four will receive around $425 at the beginning of the month to cover the sales tax on necessaties.

Read the bill, or the book. It will tell you how it's done much better than I could.

By introducing that pre-bate structure, the bill appears to undo all the good it could have done in simplifying the tax code. Surely we can agree that the first order of business in corporate lobbying will be to start changing the rebates? This doesn't really appear to create a monkey-proof tax code (I'm not sure that anything would); it's just as open to loopholes and perhaps even moreso, given that one's rebate could conceivably exceed one's expenditures. It just changes where the taxes are collected, which does not to me seem to do a great deal of good. At least the current tax rates, if they were simply applied rather than loopholed to death, would enact some sorto f graduated scale that spares the poor some of the burden. While recognizing that this proposed pre-bate structure might achieve that goal as well, that would be at the expense of the only clear gain I can see in this plan - simplification of the tax code and elimination of ares in which individuals or corporations can lobby for special treatment for their own financial benefit.

Once you've given that back, I don't really see what this system achieves. It might eliminate tax returns, but in some ways that simply makes it more difficult to see who is playing what games with taxes paid. I imagine that groups capable of lobbying for special tax loopholes would enjoy this, but I don't see what it offers the average citizen other than liberation from the 1040-EZ, which is really not that complicated.

Shanglan

 

[zeb1094]

Um... wouldn't a tax system solely based on retail consumption be a highly sensitive thing, easily tripped into a downward spiral?

A lowering of the overall consumption level due to raised prices (like now with the oil, for instance) would hit the tax revenue hard. Peoples' consumption behaviour is the most trigger happy economy factor there is, short of coke snorting Wall Street day-traders from the 80's.

Are there tools in the proposal to compensate for the global economy fluctuations?

Well as the bill calls for the abolishin of all federal income taxes, those corporations that have moved there hq's to other parts for breaks on income taxes will now be willing to return to the US. Also those companies wishing to avoid income taxes of their home country will now want to move to the US. So that is why the economy of the US is predicted to increase substanially after the Fair Tax goes into effect.

After it goes into effect the prices of everything sold at the retail level should remain at the same price. Some prices of thing, like homes, luxury cars will decrease slightly as the embeded taxes in those items are at a higher rate than the 23% of the Fair Tax. But all other products will remain esencially the same in cost to the consumer.

Read the FAQ at FairTax.org if you really are interested.

 

[BlackShanglan]

Well as the bill calls for the abolishin of all federal income taxes, those corporations that have moved there hq's to other parts for breaks on income taxes will now be willing to return to the US. Also those companies wishing to avoid income taxes of their home country will now want to move to the US. So that is why the economy of the US is predicted to increase substanially after the Fair Tax goes into effect.

Here's the problem that I see in this assertion. One of two things could be true about a point of sale tax: (1) it does require corporations to pay their taxes at an equitable rate or (2) it does not. If (1) is true, why would the corporations be flocking to a country that had worked out how to make them pay their taxes? And if it's (2), what will makes up the lost tax revenue, and why should corporations not pay taxes?

Shanglan

 

[zeb1094]

By introducing that pre-bate structure, the bill appears to undo all the good it could have done in simplifying the tax code. Surely we can agree that the first order of business in corporate lobbying will be to start changing the rebates? This doesn't really appear to create a monkey-proof tax code (I'm not sure that anything would); it's just as open to loopholes and perhaps even moreso, given that one's rebate could conceivably exceed one's expenditures. It just changes where the taxes are collected, which does not to me seem to do a great deal of good. At least the current tax rates, if they were simply applied rather than loopholed to death, would enact some sorto f graduated scale that spares the poor some of the burden. While recognizing that this proposed pre-bate structure might achieve that goal as well, that would be at the expense of the only clear gain I can see in this plan - simplification of the tax code and elimination of ares in which individuals or corporations can lobby for special treatment for their own financial benefit.

Once you've given that back, I don't really see what this system achieves. It might eliminate tax returns, but in some ways that simply makes it more difficult to see who is playing what games with taxes paid. I imagine that groups capable of lobbying for special tax loopholes would enjoy this, but I don't see what it offers the average citizen other than liberation from the 1040-EZ, which is really not that complicated.

Shanglan

Read the FAQ at Fairtax.org. I'm sure you will find it enlightening. As it states - Now the tax code can be manipulated by congress without you or I knowing anything about it as they just legislate loop holes.

With the FairTax they would have to directly change the law. To play with the pre-bate, which is tied to the poverty level, they would have to change the basic calculation. And if WE let them do that, shame on us. It will take our diligence from now on to keep them in line.

And yes your right, the pre-bate could very well be more than the households income. But as it is only 23% of the Poverty level, which is now @ $26,400. Therefore the pre-bate will be $506 for a family of four (two adults and two children) or $318 for a family of four(one adult, three children)