Fair Tax?

[Dutchman3]

Winnet,

On another blog back in June of 2007, we had a discussion of Dr Walby's "clarification". I asked the following question at that time and didn't get a real good answer. Perhaps you could give it a try?

"Despite the very clear wording in the HR25 bill that section 905 deals with an income tax, and despite the fact that most of the tax treaties with our trading partners are called income tax treaties, the AFFT Director of Research, Dr Walby, wrote that it wasn’t an income tax after all, but a tariff. That’s fine with me, but it then raises a question as to just why Section 905 is needed at all. Why not just leave the present system of “tariffs” in place? Let the State Department negotiate the treaty terms, and let the residual IRS organization implement, monitor, and enforce the treaty provisions in just the same way they do today. The Fairtax does not propose to replace revenue sources such as excise taxes, tariffs, or customs duties. Why garbage up the consumption tax bill with these pseudo income tax provisions? It’s unnecessary, isn't it?"

[winnet22]

Originally Posted by Dutchman3

Winnet,

On another blog back in June of 2007, we had a discussion of Dr Walby's "clarification". I asked the following question at that time and didn't get a real good answer. Perhaps you could give it a try?

"Despite the very clear wording in the HR25 bill that section 905 deals with an income tax, and despite the fact that most of the tax treaties with our trading partners are called income tax treaties, the AFFT Director of Research, Dr Walby, wrote that it wasn’t an income tax after all, but a tariff. That’s fine with me, but it then raises a question as to just why Section 905 is needed at all. Why not just leave the present system of “tariffs” in place? Let the State Department negotiate the treaty terms, and let the residual IRS organization implement, monitor, and enforce the treaty provisions in just the same way they do today. The Fairtax does not propose to replace revenue sources such as excise taxes, tariffs, or customs duties. Why garbage up the consumption tax bill with these pseudo income tax provisions? It’s unnecessary, isn't it?"

Under current law, there is a 30 percent withholding tax on dividends, interest and other periodic payments to foreign individuals (non-resident aliens) and foreign corporations. Most foreign countries have similar taxes. However, the U.S. has entered into treaties with virtually every major trading partner. These treaties reduce this tax from 5 to 15 percent and in some cases to zero on a reciprocal basis. Thus, U.S. corporations and U.S. individuals investing abroad pay lower taxes to foreign governments and foreigners investing here pay lower taxes to the U.S. government.

If the FairTax were put in place, and there was no withholding tax on nonresident aliens and foreign corporations, foreign governments would be expected to withdraw from their tax treaties with the U.S. Retaining them would be of virtually no value to their residents or corporations and withdrawing would enable them to collect higher taxes on the U.S. residents and the U.S. corporations who have invested in those markets. The withholding tax gives them a reason to keep their tax treaties in place and their taxes on U.S. businesses low.

[ArmyGuy45]

So....


Safe to stay that 80 percent of the peeps on this forum would not mind changing our current tax system for the Fair Tax or something similar. Its also safe to say that majority of the peeps on here fall "right of center". So I wonder what the "left of center" would say about this?

[Liet-Kynes]

yes- because I'm self employed and get wallet raped every april by the IRS.