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Offline mystery-ak

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GOP Ways and Means chairman unveils mammoth tax reform bill
« on: February 26, 2014, 03:39:00 PM »
http://thehill.com/blogs/on-the-money/domestic-taxes/199335-dave-camp-tax-reform-draft-long-overdue

February 26, 2014, 02:37 pm
GOP Ways and Means chairman unveils mammoth tax reform bill

By Bernie Becker

The House’s top tax writer rolled out a broad tax reform plan on Wednesday that would pare back tax breaks once thought untouchable and affect practically every part of American life.

The nearly 1,000-page plan unveiled by Ways and Means Chairman Dave Camp (R-Mich.) would pull back on the deduction for home mortgage interest used by tens of millions of home owners, and embraces some ideas touted by Democrats, like scrapping the “carried interest” tax break used by hedge fund managers.

Camp said a discussion on making the tax code fairer and a more positive force for the economy was long overdue in Washington, but the discussion draft, which included a summary that along ran almost 200 pages, quickly found detractors both on and off Capitol Hill, as trade groups and lobbyists found out who were the losers in the chairman’s outline.

Even before it was released, the top Republicans in both chambers had distanced themselves from the effort, with Speaker John Boehner (R-Ohio) scoffing at the possibility of a vote this year and Senate GOP Leader Mitch McConnell (Ky.) saying it would be better to do tax reform next year.

But Camp was defiant, arguing Wednesday that the average person was ready for a tax code no longer littered with “special interest handouts.”

“You’re going to hear a lot about one provision or another,” Camp told reporters at a news conference introducing his long-awaited draft. “The truth is people want a simpler, fairer and flatter tax code.”

The Michigan Republican said he meets that goal by getting rid of 227 sections of the tax code, or roughly a quarter of its current 70,000 pages.

With changes to tax breaks for mortgage interest, charitable contributions, and state and local taxes, Camp also says that around 95 percent of households would be able to use the standard deduction and avoid itemizing – down from around seven in 10 right now. The deduction for state and local taxes – which Camp outright eliminates – is especially prized in Democratic states like New York and California.

But the release from Camp also acknowledges that he fell short on the House GOP goal of reducing the top individual rate to 25 percent. Roughly 99 percent of taxpayers, Camp says, will pay 25 percent or less, while the rest will face a top bracket of 35 percent.

Camp did succeed in lowering the corporate rate to 25 percent, by chopping off 2 percent a year over five years. In the process, Camp makes the prized credit for research and development permanent, while also stretching out depreciation schedules and getting rid of an accelerated cost recovery system.

Still, Camp also acknowledged that he was at times hamstrung by the fiscal cliff deal hashed at the end of the last Congress, which raised the top individual tax rate to close to 40 percent.

He also noted that his vow to not shift any of the tax burden away from the rich – which he made with his longtime partner, former Senate Finance Chairman Max Baucus (D-Mont.) – also meant that some tax provisions that have entrenched constituencies and are popular among Republicans had to be changed.

Some Democrats, like Rep. Sandy Levin (Mich.), the ranking member at Ways and Means, said they would keep an open mind about the draft, with an eye toward how Camp’s plan tries to battle issues like income inequality.

But others, like Chuck Schumer (N.Y.), the No. 3 Democrat in the Senate, underscored the challenge in making progress on tax reform this year.

“Any proposal that eliminates the deduction for state and local taxes, as the Republican plan would do, is dead on arrival,” Schumer said in a statement.

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Offline Bigun

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Re: GOP Ways and Means chairman unveils mammoth tax reform bill
« Reply #1 on: February 26, 2014, 03:46:07 PM »
Just more tinkering around the edges of the problem.

The Tax code doesn't need fixing! It needs throwing onto the ash heap of history and replacing with HR25/S122, The FairTax bill!! Anything short of that leaves the IRS in place for use as a political weapon and THAT is unacceptable!

Offline jmyrlefuller

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Re: GOP Ways and Means chairman unveils mammoth tax reform bill
« Reply #2 on: February 26, 2014, 03:51:38 PM »
Just more tinkering around the edges of the problem.

The Tax code doesn't need fixing! It needs throwing onto the ash heap of history and replacing with HR25/S122, The FairTax bill!! Anything short of that leaves the IRS in place for use as a political weapon and THAT is unacceptable!
The FairTax also leaves in place the IRS. After all, every tax needs an agency to collect it in some form or another. Plus, the "prebates" must also be coordinated.
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Offline Bigun

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Re: GOP Ways and Means chairman unveils mammoth tax reform bill
« Reply #3 on: February 26, 2014, 04:08:20 PM »
The FairTax also leaves in place the IRS. After all, every tax needs an agency to collect it in some form or another. Plus, the "prebates" must also be coordinated.


You are absolutely WRONG about that! The FairTax specifically defunds the IRS and requires destruction of all of it's records!

You really should read the bill but for starters this will do!

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

Offline truth_seeker

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Re: GOP Ways and Means chairman unveils mammoth tax reform bill
« Reply #4 on: February 26, 2014, 04:26:47 PM »
Some citizen taxpayers might be impressed that Congressman Camp proposes to substitute for 70,000  pages with 1,000 pages.

How about just 100 pages?

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Offline Oceander

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Re: GOP Ways and Means chairman unveils mammoth tax reform bill
« Reply #5 on: February 26, 2014, 04:26:54 PM »
The FairTax also leaves in place the IRS.  After all, every tax needs an agency to collect it in some form or another.  Plus, the "prebates" must also be coordinated.

This seems to be one of the harder facts of reality to get across.

Offline Bigun

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Re: GOP Ways and Means chairman unveils mammoth tax reform bill
« Reply #6 on: February 26, 2014, 04:52:33 PM »
This seems to be one of the harder facts of reality to get across.


If you would simply READ THE BILL you would find out that the fairtax DOES NOT leave the IRS in place and in fact defunds the entire agency!

From the FAQ page:

"How is the tax collected?

Retail businesses collect the tax from the consumer, just as state sales tax systems already do in 45 states; the FairTax is simply an additional line on the current sales tax reporting form. Retailers simply collect the tax and send it to the state taxing authority. All businesses serving as collection agents receive a fee for collection, and the states also receive a collection fee. The tax revenues from the states are then sent to the U.S. Treasury."


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

There would also no longer be ANY federal deductions for taxes from anyone's payroll check. NONE!

« Last Edit: February 26, 2014, 05:02:30 PM by Bigun »

Offline Oceander

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Re: GOP Ways and Means chairman unveils mammoth tax reform bill
« Reply #7 on: February 26, 2014, 08:37:36 PM »
If you would simply READ THE BILL you would find out that the fairtax DOES NOT leave the IRS in place and in fact defunds the entire agency!

From the FAQ page:

"How is the tax collected?

Retail businesses collect the tax from the consumer, just as state sales tax systems already do in 45 states; the FairTax is simply an additional line on the current sales tax reporting form. Retailers simply collect the tax and send it to the state taxing authority. All businesses serving as collection agents receive a fee for collection, and the states also receive a collection fee. The tax revenues from the states are then sent to the U.S. Treasury."


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

There would also no longer be ANY federal deductions for taxes from anyone's payroll check. NONE!





Ahh.  Now that is a really, really cute rhetorical move:  there won't be any federal tax collector because, guess what, we're going to outsource the dirty work to the state revenue agencies.  to call that getting rid of the IRS is grossly disingenuous.  There are also two problems with that view:

(1) the federal government cannot dragoon the states into doing its dirty work for it.  If a particular state doesn't feel like playing the heavy so the feds can get their tax revenues, then the federal government cannot force that state to do so and, consequently, unless the federal government is willing to forgo all tax revenue from that state, it will necessarily have to have an agency of its own to go in and collect those taxes.

(2) state tax agencies are often orders of magnitude worse than the IRS when it comes to abusing taxpayers, particularly when it comes to enforced collections, and political corruption is even more rampant amongst those agencies than at the IRS.

There are also further problems - not addressed - that will dramatically drive the costs, and therefore the tax rates, up.  First off is the revenue leakage from the vigorish paid to businesses that collect the tax - that is a drain on revenue that has to be made up somewhere, and that somewhere is in the tax rates, which must necessarily increase.

Second off, even if they agreed to cooperate, the state tax agencies aren't going to do all of that hard work for free; they are going to demand as a quid pro quo for their participation federal funding for all of the extra work they'll have to do, including the massive number of new revenue agents they'll have to hire.  That means that the claims that there will be any savings to the US taxpayer from getting rid of the IRS are also bogus, because those costs will simply crop up in the form of some increased transfer payment to the state governments.  Even worse, having 50 different agencies, with at least 50 different ways of doing things, is radically inefficient and so the costs of collecting this revenue will exceed what it would have cost to have one federal agency collecting these taxes.  All of which means that the tax rates will have to be increased even further to cover all of these expenses.

In other words, the Fair Tax is bogus:  it uses shoddy rhetorical moves to give it the pretense that it gets rid of the IRS when it does nothing more than create a radically balkanized, radically unfair, radically inefficient system of tax collection.  It's authors are also guilty of one of those vices liberals perennially fall victim to:  only seeing one side of the balance sheet.  It is utterly disingenuous to claim that getting rid of the IRS will reduce federal expenses when those expenses - and then some - will simply pop up elsewhere on the federal budget as increased transfer payments to the states.

And - and this is one of my favorite little ironies of the unFair Tax - it will radically increase the number of tax attorneys the system requires because there will be 50 different tax agencies to deal with when representing a taxpayer against the government, each with its own little idiosyncracies and political pecking order, and so in place of one tax attorney who can handle cases against the IRS for taxpayers in multiple states, there will be multiple tax attorneys, one for each state in which one of those taxpayers has a problem.

Sounds like this should be called the No Tax Attorney Left Behind Act, and not the Fair Tax.

Offline Oceander

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Re: GOP Ways and Means chairman unveils mammoth tax reform bill
« Reply #8 on: February 26, 2014, 08:39:33 PM »
Some citizen taxpayers might be impressed that Congressman Camp proposes to substitute for 70,000  pages with 1,000 pages.

How about just 100 pages?



Reminds me of something the late Prof. Eustice said at the start of a class I took with him:  he said that when he started the LLM program at NYU, their first assignment, to be completed before the first day of classes, was to read the Internal Revenue Code - the entire Code - which at that time was more of a pamphlet than the two-volume monstrosity it is today.

Offline Bigun

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Re: GOP Ways and Means chairman unveils mammoth tax reform bill
« Reply #9 on: February 26, 2014, 08:56:54 PM »

Ahh.  Now that is a really, really cute rhetorical move:  there won't be any federal tax collector because, guess what, we're going to outsource the dirty work to the state revenue agencies.  to call that getting rid of the IRS is grossly disingenuous.  There are also two problems with that view:

(1) the federal government cannot dragoon the states into doing its dirty work for it.  If a particular state doesn't feel like playing the heavy so the feds can get their tax revenues, then the federal government cannot force that state to do so and, consequently, unless the federal government is willing to forgo all tax revenue from that state, it will necessarily have to have an agency of its own to go in and collect those taxes.

(2) state tax agencies are often orders of magnitude worse than the IRS when it comes to abusing taxpayers, particularly when it comes to enforced collections, and political corruption is even more rampant amongst those agencies than at the IRS.

There are also further problems - not addressed - that will dramatically drive the costs, and therefore the tax rates, up.  First off is the revenue leakage from the vigorish paid to businesses that collect the tax - that is a drain on revenue that has to be made up somewhere, and that somewhere is in the tax rates, which must necessarily increase.

Second off, even if they agreed to cooperate, the state tax agencies aren't going to do all of that hard work for free; they are going to demand as a quid pro quo for their participation federal funding for all of the extra work they'll have to do, including the massive number of new revenue agents they'll have to hire.  That means that the claims that there will be any savings to the US taxpayer from getting rid of the IRS are also bogus, because those costs will simply crop up in the form of some increased transfer payment to the state governments.  Even worse, having 50 different agencies, with at least 50 different ways of doing things, is radically inefficient and so the costs of collecting this revenue will exceed what it would have cost to have one federal agency collecting these taxes.  All of which means that the tax rates will have to be increased even further to cover all of these expenses.

In other words, the Fair Tax is bogus:  it uses shoddy rhetorical moves to give it the pretense that it gets rid of the IRS when it does nothing more than create a radically balkanized, radically unfair, radically inefficient system of tax collection.  It's authors are also guilty of one of those vices liberals perennially fall victim to:  only seeing one side of the balance sheet.  It is utterly disingenuous to claim that getting rid of the IRS will reduce federal expenses when those expenses - and then some - will simply pop up elsewhere on the federal budget as increased transfer payments to the states.

And - and this is one of my favorite little ironies of the unFair Tax - it will radically increase the number of tax attorneys the system requires because there will be 50 different tax agencies to deal with when representing a taxpayer against the government, each with its own little idiosyncracies and political pecking order, and so in place of one tax attorney who can handle cases against the IRS for taxpayers in multiple states, there will be multiple tax attorneys, one for each state in which one of those taxpayers has a problem.

Sounds like this should be called the No Tax Attorney Left Behind Act, and not the Fair Tax.

Totally and completely wrong on all counts!

No one will be able to harass individual taxpayers because they won't know who they are!

All but 5 states already have sales tax collection agencies in place and working so NOTHING has to be created in those states. In the other 5 they can either do it themselves and be compensated for it or let a neighboring state do it for them.

In any case I'll trade the Marxist mess we currently have for that system ANY DAY and twice on Sunday!

It is currently working well in Alaska, New Hampshire, Tennessee, Florida, South Dakota, Washington, Nevada, Texas, and Wyoming with very few problems. NONE of those states have a state income tax and are outperforming economically those that do by wide margins!
« Last Edit: February 26, 2014, 09:05:27 PM by Bigun »

Offline Oceander

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Re: GOP Ways and Means chairman unveils mammoth tax reform bill
« Reply #10 on: February 26, 2014, 09:39:16 PM »
Totally and completely wrong on all counts!

No one will be able to harass individual taxpayers because they won't know who they are!

All but 5 states already have sales tax collection agencies in place and working so NOTHING has to be created in those states. In the other 5 they can either do it themselves and be compensated for it or let a neighboring state do it for them.

In any case I'll trade the Marxist mess we currently have for that system ANY DAY and twice on Sunday!

It is currently working well in Alaska, New Hampshire, Tennessee, Florida, South Dakota, Washington, Nevada, Texas, and Wyoming with very few problems. NONE of those states have a state income tax and are outperforming economically those that do by wide margins!



Really?  Do you know what happens when a business fails to remit the sales taxes it collected (or was supposed to collect)?  Those taxes are assessed personally against the owners, managers, and other  significant players in that business.  Those liabilities, unlike income tax liabilities, cannot be discharged in bankruptcy, the interest rate that runs on those assessments is usurious (in NY the rate of interest on unpaid sales tax is 14%), and many states will not compromise on the amount of the original tax, only on penalties and interest.

Try this on for size:  I once worked on the case of a guy who, back in the 1970s, was a silent partner/shareholder in a corporation that owned a restaurant.  The restaurant went belly up and NYS assessed him personally for about $75k in unpaid sales tax.  He didn't participate in the management of the restaurant or in its accounting or finance operations, but he was a shareholder and a nominal director, and so he got tagged with so-called "responsible person" liability.  That was in the late 70s.  From then on NYS constantly harassed him, sniping at his bank accounts from the shadows (tax agencies seize the account first, then tell you about it later), ruining his credit with tax warrants, and generally making it hard for him to get any work other than as a super in a building.  By the time I got the case in 2010, by which time he was in his mid 70s, that $75k had blossomed into $1.8 million dollars.  Try that again:  one million, eight hundred thousand dollars (and change, but who's counting).

In the meantime, they had also from time to time harassed his wife, various other family members, and friends as they hunted for, and sometimes claimed to have found, hidden - aka fraudulently transferred - assets of his.

Also, are you aware of what a "use" tax is?  Everyone owes use tax unless they've paid sales tax, and although few if any states audit for use taxes, some will, particularly when it involves a particularly large item, such as a collectible painting.  Increase the amounts of revenue that can be collected via use taxes, and you'll have a huge uptick in use tax audits.

Quote
All but 5 states already have sales tax collection agencies in place and working so NOTHING has to be created in those states.

Really?  Funny, but as I read basic econ 101, for any organization to increase the amount of goods/services it produces, it must either increase the productivity of each of its current employees, or it must increase the number of employees.  Given the scale of the new tax regime and the extremely radical importance of making sure all of the revenue gets collected - after all, this is going to be the only significant revenue the federal government will rely on, so 100% collection will be a draconian mandate - the number of audits and examinations that will have to take place will increase dramatically.  Audit staffs at state tax agencies are not exactly sitting around on their hands all day playing solitaire; they are rather fully-booked in many states, which means that there is precious little extra productivity to get out of existing staff.  Thus, it will be necessary for even those state tax agencies in states that already have sales taxes to dramatically increase the number of agents they have.  Substantial new staff requires substantial new funds to pay for things like training, wages, office space, office technology, etc, etc, etc; so the costs of running those state tax agencies will increase dramatically, flatly contrary to your proposition.


What "marxist mess" are you referring to?  You must be referring to the Tory mess of the US income tax system, because the US income tax derives from the English income taxes first introduced by William Pitt the Younger in 1798/1799 (which was, incidentally, 19 years before Marx was even born).

Offline Carling

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Re: GOP Ways and Means chairman unveils mammoth tax reform bill
« Reply #11 on: February 26, 2014, 09:52:05 PM »
Some citizen taxpayers might be impressed that Congressman Camp proposes to substitute for 70,000  pages with 1,000 pages.

How about just 100 pages?

How about 2 sentences and a table.

Quote
Each citizen, licensed immigrant, or undocumented immigrant is obligated to pay 17% of the sum total on the following forms of income.

Quote
Wages and Salaries
Interest Received   
Dividends
Business Income   
Capital Gains and Losses
Pensions and Annuities   
Pensions – The General Rule and the Simplified Method   
Lump-Sum Distributions   
Rollovers from Retirement Plans   
Rental Income and Expenses   
Renting Residential and Vacation Property
Farming and Fishing Income   
Earnings for Clergy   
Unemployment Compensation   
Gambling Income and Losses   
Bartering Income   
Scholarship and Fellowship Grants   
Social Security and Equivalent Railroad Retirement Benefits   
401(k) Plans   
Passive Activities – Losses and Credits   
Stock Options   
Traders in Securities (Information for Form 1040 Filers)   
Receipt of Stock in a Demutualization
EBT income
Welfare income
Federal grants other than scholarship/fellowship grants

Pay it, or you will have your home seized by your neighbors.
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« Last Edit: February 26, 2014, 09:54:55 PM by Carling »
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Offline Bigun

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Re: GOP Ways and Means chairman unveils mammoth tax reform bill
« Reply #12 on: February 28, 2014, 12:15:52 PM »


« Last Edit: February 28, 2014, 12:17:07 PM by Bigun »

Offline Oceander

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Re: GOP Ways and Means chairman unveils mammoth tax reform bill
« Reply #13 on: February 28, 2014, 05:26:54 PM »
Your chart demonstrates its falsity with its second line item.  The income tax on wages does not require the 16th amendment, it never did and it never will.  Since the author of that chart apparently cannot fathom that rather straightforward point, the validity of the rest of his chart is substantially in doubt.

Offline Bigun

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Re: GOP Ways and Means chairman unveils mammoth tax reform bill
« Reply #14 on: February 28, 2014, 05:40:40 PM »
Quote
author=Oceander link=topic=130819.msg533116#msg533116 date=1393626414]
Your chart demonstrates its falsity with its second line item.  The income tax on wages does not require the 16th amendment, it never did and it never will.

Thank you for continuing to point that out! I have been saying this for years now and the last time you did so I used it to finally make a few people understand what I had been trying to get across to them for ages!

Quote
Since the author of that chart apparently cannot fathom that rather straightforward point, the validity of the rest of his chart is substantially in doubt.

BS!!! Since the Fairtax would repeal U.S. Code Title 26 Sub Titles A and B entirely and some of Sub Title C as well (all income taxes , Gift and estate taxes and the Social Security and medicare payroll taxes) the 16th amendment point is perfectly valid as is the rest of the chart!
« Last Edit: March 01, 2014, 09:15:28 AM by Bigun »


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