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House GOP seeks to abolish IRS, replace income tax with consumption tax

Fifty-four House Republicans on Thursday reintroduced legislation that would terminate the IRS and replace the system of income taxes on people and corporations with a consumption tax.

The FairTax Act, from Rep. Rob Woodall (R-Ga.), would abolish the 16th Amendment, which was ratified 100 years ago this February. That amendment gives Congress the power to impose income taxes without having to spend the revenues evenly among the states.

Woodall's bill, H.R. 25, would replace the current tax system with a 23 percent consumption tax on all new goods and services. He said Thursday that this change would eliminate the need for a complicated tax code, and would be the kind of tax reform that helps reinvigorate the economy.

Read more: http://thehill.com/blogs/floor-action/house/275697-house-gop...

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A 23% Federal Consumption Tax...

added to a 10% state sales tax = 33%. Just the sort of number to incentivize the creation of HUGE black markets for almost all goods.

Yes, but...

... Don't forget that the income tax would be gone, hence resulting in a 20%-30% increase in your income (depending on the tax rate). So in the end from the final cost standpoint it probably wouldn't change much. But what I like about it is that the IRS and their intrusive ways would be gone.

Why can't we just tax Leveraged Income Earned?

In short, that taxes the fed, the banks that use fractional reserve banking, profits from stock traders and every derivative out there. Basically, if you profited from the use of money that wasn't yours, you pay a tax.

These are the PROBLEMS in our society so let's discourage their activity.

We could start out with a measly 0.5% or something just to get people to go along with it. My numbers actually show it would only take .75-1% tax to alleviate all our budget problems in about 2 years flat!

Wow, I believe you're way off base here.

"Basically, if you profited from the use of money that wasn't yours, you pay a tax."

I invest in stocks to give companies the ability to grow, increase market share, better compete and to create value for me, the investor. Because of this multiplication of effort and capital I can realize a rate of return that can handily beat returns on "dumb" investments that only react to interest rates and misbegotten economic policies. I trust that competition and self-interest will outperform all other forms of investment over time and my theory has been proven correct thus far.

The ability to leverage investments is essential to a healthy economy. You want to artificially limit and discourage creative forms of economic activity? Reward is impossible without risk! If one does not understand the risks, they should stay out of investing. There are far too many regulations as it is. The risks should be as great as the market will bear, so long as fraud, collusion and outright theft are still illegal and prosecutable.

Spoken like a true, book-smart economist

All hail the praise for the stock market and making profit from simply allowing other people to use your money. There are other ways and unfortunately for you, they don't require a company getting locked into a deal that keeps the company slave to that debt.

But, alas, this is not the profit I was referring to. By investing YOUR OWN MONEY, you would not qualify for the proposed tax. However, if your broker nakedly borrowed some of your shares and profited (while not owning them), then that profit would be subject. Same goes for them making insurance bets (derivatives) on the market. Tax 'em! Even the company using your money to make a profit would not qualify as they are simply using your money to pay expenses.

The big items that would be subject to these taxes would be the Federal Reserve and all fractional reserve lending by other banks.

Really?

Still no discussion? It doesn't seem to matter what I suggest on this damn site, no one ever seems interested in truly workable solutions.

This is a serious suggestion that, IMHO, is the ONLY way to both solve the problems and do it in a fair way that most of the people will support instantly.

You had me up to "House GOP

You had me up to "House GOP seeks to abolish IRS" but I'm not on board with the rest of it. As Ron Paul said, get rid of the income tax and replace it with nothing.

Ron Paul has said that while

Ron Paul has said that while he wants to abolish the IRS and replace it with nothing, he believes that the Fair Tax is a step in the right direction and would vote for it.

Why can't they see the light and just cut unConstitutional .....

spending first? I guess they are more aligned to politics than principles. Statists.

"Hence, naturally enough, my symbol for Hell is something like the bureaucracy of a police state or the office of a thoroughly nasty business concern." ~~C.S. Lewis
Love won! Deliverance from Tyranny is on the way! Col. 2:13-15

I HOPE this bill excludes food, medicine and water.

Even in Socialist Washington State there is no sales tax on those things.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

No, NOTHING that YOU would

No, NOTHING that YOU would buy is excluded, however, business to business purchases are excluded. So, they will eliminate corporate income taxes and not charge taxes to businesses when they purchase business to business. In other words, businesses no longer pay any taxes and all taxes will be passed on to the consumer directly, for EVERYTHING.

http://www.fairtax.org/site/PageServer?pagename=FAQs

Blessings )o(

No.7's picture

Now that's everyone paying their fair share

Don't want to pay taxes, don't buy stuff.

The individual who refuses to defend his rights when called by his Government, deserves to be a slave, and must be punished as an enemy of his country and friend to her foe. - Andrew Jackson

yeah, right. I'll just tell

yeah, right. I'll just tell my 81 year old Mom to skip her heart medications and the rest of her meds because she can't afford to pay the 600+/mo taxes on the stuff. In fact, why don't I just tell her to stop eating too?

Blessings )o(

The fair tax is alot like a

The fair tax is alot like a nice robbery.It's still theft.
I agree with a comment below,eliminating the income tax and the IRS would be a step in the right direction.Not starting another tax that will only grow like government over time.

Is every "new plan" directed at

making the rich richer and poor poorer? Seems like it is to me.

When are we going to learn that no one here actually elects anyone? They are selected.

Imo, this is all theater and giving us a false sense of "being informed." Again, imo, the problem is we aren't putting any politicians/judges/legislators in jail. We're slapping them on the wrist by making them resign.

It's time for arrests of the implicit. I promise, that will take care of the problem.

Is anyone ready to talk about a real solution here?

Lima-1, out.

If you don't know your rights, you don't have any.

No.7's picture

How?

First, how does a consumption tax make poor people poorer?

Second, how do we arrest?

The individual who refuses to defend his rights when called by his Government, deserves to be a slave, and must be punished as an enemy of his country and friend to her foe. - Andrew Jackson

Why should federal government get a bigger slice than States?.

The only way a federal consumption tax should be implemented is if it were linked to State sales taxes. If a State has a 6% sales tax, then a fair federal consumption tax would be a percentage of that sales tax. For example, 23% of the 6% sales tax goes to the federal government. If voters in a State raise the sales tax to 20%, then 23% of that 20% sales tax goes to the federal government. In this way the federal government can not surpass the income of all the combined States. If of course a State has no sales taxes then the federal government would get 23% of 0. This is a fair tax. Or of course another way would be to have the federal government get a fixed percentage of all State revenues.

grant

what a crock... 23% so I need

what a crock... 23% so I need new siding on my house. the job costs 10k. I will have to pay 2300.00 in fair tax? If it were 12 or 10% I might go for it.

It's Brilliant In A Way...

Sierrahpbt, It'd wake people up to the true nature of taxation.

It's more obvious to people when you have to actually PAY for the federal sales tax, rather than having their income taken directly from their paycheck. With withholding it's as though they never had that money to begin with so it does not bug them as much. It's "easier" for a dumbed down society to accept.

WE NEED PEOPLE TO GET ALL THEIR MONEY IN THEIR HANDS.

THEN HAVE GOVERNMENT STEAL IT FROM THEM.

THEN THEY'LL HATE IT.

It's better if people are given all of their money and will actually have to SEE, on a daily basis, the effect that a high sales tax has on them. I believe the vast majority will want those rates lower.. and lower.. and lower.. They'll want less government and the will to cut government will grow tremendously. It's not a perfect or ideal solution, but I do think it'd work better in terms of waking up the general public.

Without withholding that money becomes "THEIRS" again. They'll never want the income tax back and they'll start imagining a world without a sales tax.. In a way this is a genius approach to getting people more toward our side. Although it's initially going to be painful as you said.

I would go for it as long as

I would go for it as long as it gets rid of the 16th ammendment, the IRS and can never be resurrected. At least I can choose the tax I need to pay. Food should be exempt from the tax.

What you seek is in the FairTax bill

The FairTax bill is contingent on the repeal of the 16th amendment.

For anyone who says, "_____ should be exempt" there's the prebate for that, which essentially makes $11,000 worth of spending per year (on anything) exempt from taxes.

Does anyone remember

Romney's plan, "Repeal and Replace"?

We don't need to replace one bad law with a new bad law!
At the founding of our nation, it was never intended that we pay an income tax!
This is just more shenanigans from the corrupt GOP!!!

Any of you know about the Grace Commission?!!!
"100% of what is collected is absorbed solely by interest on the Federal Debt ... all individual income tax revenues are gone before one nickel is spent on the services taxpayers expect from government."
-Grace Commission report submitted to President Ronald Reagan - January 15, 1984

The real problem is SPENDING!

When Fascism goes to sleep, it checks under the bed for Ron Paul!

First of all, you work

First of all, you work incrementally toward your goal, or you get nothing done, ever.

Second, there's nothing immoral about sales tax. While I disagree with 99%+ of what the government does today, it does need to exist, and it does need to be funded. The problem with income tax is that it is theft, it is not a voluntary tax, it is simply taken out of whatever you earn, however/whenever you earn it. Meanwhile, purchasing new goods instead of used goods is a choice, and this is how tax should be.

I do agree that the final, ultimate problem is spending, but income tax is still immoral and needs to be replaced, and our complicated tax code leads to/aids a lot of the evil that does go on.

Freedom in our lifetime! - fiol.us

Used or New is not a choice

When it comes to sales tax. You pay tax on a car when you buy it and sales tax is collected again when it is sold. Thats what needs to go the same money is taxed over and over again. Get rid of double taxation. If you go to a casino and play with your TAXED money win or lose the money is taxed again. IRS will let you deduct losses upto the extent of your winnings but tax 100% of your winnings. How fair IS That.

Do your best have no expectations

Eh...

Either you are building a straw man argument or you don't understand the tax code that's being proposed.

Right now, when you buy a new product(and this is still a bit of a simplification):
-You pay sales tax (out of money you paid income tax on)
-Manufacturer pays income tax
-Seller pays income tax

Then you sell the car and:
-Buyer pays sales tax
-You pay income tax

All of these repeat every time money changes hands for anything (barring used goods between individuals, but including used goods from stores). The proposed tax works more like this:

New product bought:
-You pay sales tax.

Used product bought/sold (even in a store):
-No tax.

There is no double-taxation. That's a large part of the point of not taxing used goods. The other being, as I mentioned, to give you a choice. You can get anything used, so to say "new or used isn't a choice" just seems silly. I suppose an exception would be food, but ultimately this seems to be a pretty minor issue considering the overall improvement.

I think it's reasonable that the country a product was originally created in (and by that I mean the people who chartered the creation -- the actual end seller, not mass manufacturers) receive a small fee for the first time a product is sold within its borders, and that money be used to maintain the mutually agreed upon government (ie, based on the Constitution). I think you'll be pretty hard pressed to find anyone who thinks there can possibly be no tax whatsoever and still maintain a free and relatively nonviolent country.

Income tax is straight up theft, but if you believe all taxation is theft then you are essentially advocating anarchy, which I can't get on board with.

Freedom in our lifetime! - fiol.us

So then

you believe it's right that every time a car is sold, the govt get's their cut?!
Spare me your ignorance!

When Fascism goes to sleep, it checks under the bed for Ron Paul!

Is there a counter-argument

Is there a counter-argument in there somewhere? Nope.

Also, no. Not every time a car is sold. Just the first time. And I do think it's quite reasonable, especially compared to what we have now.

Freedom in our lifetime! - fiol.us

You're

wrong!
Each time the same car is sold ant hen re-sold, the govt taxes the sale!
What a racket!
Your problem is that you, like too many others, have come to accept what is wrong as normal!
High taxes are what fuels the out of control Govt!

When Fascism goes to sleep, it checks under the bed for Ron Paul!

*sigh* How can I be wrong

*sigh* How can I be wrong about my *OWN* tax plan proposal?! We are talking about a *NEW* tax policy, not the old one! You need to re-read everything, you are clearly completely lost.

Freedom in our lifetime! - fiol.us