Discounted Taxes

[domtoni]

From a friend in Iowa.

Saturday, September 12, 2009

<!--Start Article Table--> Iowa taxpayers deserve a discount BY KEVIN MCLAUGHLIN <style> .floatimg-left-hort { float:left; } .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} </style>
Discounting income taxes in Iowa would be a simple, rewarding and marketable solution inspired by Steve Forbes' flat tax. It's also optional: file with all of your current deductions or at your new discounted rate. Nothing is taken away from anyone. And no one would pay more.

In 2006, with Forbes as honorary chairman, Iowans for Discounted Taxes researched an optional flat tax on earned income only. Social Security, retirement income, interest income and dividends were tax-free. The rate was 5.32 percent, or you could choose to pay with all your deductions.

Think about that. If your income consisted of Social Security, pension income and interest on your certificates of deposit, you could live tax-free under your discounted option.

The term "discount" is used because all voters are consumers but not all consumers vote. If we want all consumers to vote, we have to speak their language and offer them the one thing they understand and demand: discounts.

Put another way, if we demand discounts that are deep enough, then we can fill voting booths the same way Best Buy and Wal-Mart fill their stores in the middle of the night because their discounts are deep enough to attract large numbers of consumers.

That's the ultimate goal: Let citizens keep the largest amount of their money to win the largest number of productive people and businesses. If Iowa discounts now, we avoid going into the kind of debt that's destroying California. And we could rebuild flood-damaged Eastern Iowa with other people's money instead of raising our taxes. Think what that would mean for your children.

Does discounting grow the economy? In 1997, Gov. Terry Branstad and the Iowa General Assembly gave us a 10 percent across-the-board discount on state income taxes, and the economy grew. In 2006, The Beacon Hill Institute did our research and forecast 8,000 new jobs in the first year with the discount option.

But we need to discount property and sales taxes, too. Any less would open the door for other states to compete.

Discounting works because more people and businesses stay, and more people and businesses move to Iowa so they can keep more of what they earn. Tax revenues of all kinds rise when you attract more payers.

If I were running for office in Iowa, I would be asking my constituents these three questions:

1. Would you like a discount on your income taxes?

2. Would you like a discount on your property and sales taxes, too?

3. Would it be OK if everyone gets the same discount you get?

If you answered "yes" to these questions, then you are among a growing number of Iowans demanding discounts on their taxes.

Be an Iowan today. Demand your discount.

<table border="0" cellpadding="0" cellspacing="2" width="470"></table> <!-- Guest Book Display BEGIN -->

 

[Bill Musarra]

There is only one flaw here. Actually two. The first is alluded to in the post, "And we could rebuild flood-damaged Eastern Iowa with other people's money instead of raising our taxes." What ever happened to insurance, and how do you think those "other people" will feel about it. Your state should have put money away(rainy day fund) to help in times of emergency. It's call planning for the future.
The secoond and most important is that this is a flat tax. the federal government has already tried that and it has been amended 9000 times. If it is to work, you have to add the tag that it takes a super majority to change or ammend it. That is what the FAIR TAX http://http://www.fairtax.org/site/PageServer?pagename=about_main is all about. The FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue neutrality, and, through companion legislation, the repeal of the 16th Amendment.
Your flat tax can't do that.

Bill

 

[Simon]

"And we could rebuild flood-damaged Eastern Iowa with other people's money instead of raising our taxes"

And would Iowans be happy to pay for the rebuilding in other states?
"other peoples money" is great if you're not one of the other people!:stunned:

 

[domtoni]

The idea was not for national coverage and I think Kevin was pretty clear about that.

I made the post to raise the profile of his idea, and how he and other believe they can reduce the tax burden in their state, bring more retirees and business into Iowa.

 

[Simon]

I think maybe I should stay out of things I know bugger all about!

 

[domtoni]

Simon,

One of my friends (a UK truck driver) has been all around Europe and said that the economies which boomed were those that adopted the flat tax proposal. Countries like Ireland, the Czech Republic to name two. I can't comment on how these two countries are fairing today under the current economic conditions.

 

[Cliff Beer]

What happens when the state gives those discounted taxes to Iowans (an immediate loss of state revs) and it takes a few years for people and businesses outside of Iowa to catch on decide to relocate in Iowa? Or, worse yet, no new businesses/people come to Iowa because of the discount?

Most states don't run deficits because most states can't print money to cover the net shortfall....except for California of course, which feels free to issue IOUs (another form of money)

 

[mclaughlin]

Sir: The flat-tax and the fair-tax are going nowhere. People have tried to advance them for a decade or more, (I still have the book on the Fair-Tax, and I am a friend of Steve Forbes', whom I helped in both his presidential campaigns in Iowa).

I do not believe that Congress will ever repeal the 16th Amendment to protect us from both an income and a sales tax, nationally. But every American is a consumer, although many consumers do not vote because proposals are too complicated, or they do not recognize a direct and immediate benefit.

But everyone does understand that a discount benefits them, immediately. And everyone believes that everyone else is entitled to a discount on EVERYTHING, including taxes. So that is the place to start: would you like a discount on your taxes?

Illinois is raising their taxes and Californians are leaving because their taxes are too high, also. If Iowa discounts its taxes, (income, property and sales) right now, then Illinoians relocating their homes and businesses would likely move to Iowa from western Illinois, if our discounts are steep enough. They would benefit, not be hurt, the same way a store discounts its prices and the shoppers come to get the goods and save money at the same time.

Iowa did have a rainy-day fund, but it's gone because the damage was so enormous. But I do not want Iowa in the insurance business. It will hurt Florida badly and the damage has already begun.

I hope this helps and I thank you for your post. But please let me know if you have other comments, or questions. Something needs to break up this log jam on tax reform, and it needs to happen soon.I am a flat-tax advocate, and we can discuss the merits of each if you would like.

Kev

 

[domtoni]

Thanks Kev.

 

[mclaughlin]

"And we could rebuild flood-damaged Eastern Iowa with other people's money instead of raising our taxes"

And would Iowans be happy to pay for the rebuilding in other states?
"other peoples money" is great if you're not one of the other people!:stunned:

Sir: Iowa has been paying for the clean up here and in other states because our taxes have been too high: many of our residents and businesses leave and have done so for decades seeking to keep more of what is theirs' to begin with. Our population has not grown in 30 years and the average resident's age is rising steeply: a very bad sign for a variety of reasons. I

On the other hand, Ireland is an example of how well discounting works:Britain has been picking up the tab for improving the economy on the Emerald Isle based on the number of citizens and businesses that have been leaving your country. Virgin Airways moved a billion pounds to an Irish bank during the recent crisis. Will the company's HQ follow if things continue to decline in Britain, (although your recent elections speak to a revolution in progress that could be very beneficial to individuals and businesses alike).

I hope this response helps, and I thank you for your posting. The laws of economics can be brutal and both Iowa and Britain have been experiencing a lot of pain in the past 20 years. Hopefully, if you want a discount on your taxes, too, we can change all that.

Regards,
Kev

 

[mclaughlin]

The idea was not for national coverage and I think Kevin was pretty clear about that.

I made the post to raise the profile of his idea, and how he and other believe they can reduce the tax burden in their state, bring more retirees and business into Iowa.

Dom:

Actually, my goal is to get a discounting movement started in Iowa because all the presidential candidates have to come here to get traction for their campaigns. That's how it goes national and benefits Americans by letting us keep more of what's ours, and stops a government, out of control, from wasting our precious assets.

In the larger picture, America needs to remain strong and the world needs a strong America for the next 50-100 years until other emerging countries, such as India can begin to bear the responsibilityfor world order and the rule of law.

Finally, the elections in the 27 European nations recently gave all of us new hope that the continent from which western civilization was created and nurtured, will begin to take on more responsibility again, as its citizens elect conservatives who want working people to keep more of what they earn.

Our combining religious principles with a rewarding tax system and increasing productivity is what gives all of us the will to protect and defend each other and our way of life. And that's what will defeat the terrorist threats based on religious beliefs alone. Terrorists have to depend on extremists who don't mind living in poverty. If European economies begin to grow again at rates reflecting Ireland and Thatcher's England, then Muslims will find work and live better lives, as has been the case here in the U.S. Up to now, the Muslims in America like their standards of living and don't want terrorists changing the schools and economyto hurt them.

Make sense? Thank you for your posting and your interest in this critical and rewarding solution to tax reform.

Sincerely,
Kev
PS Please feel free to post this response.

 

[mclaughlin]

I think maybe I should stay out of things I know bugger all about!

Simon:

You're either going to be helped or hurt by the tax system under which you live. So you should have your say.

Think of it like going to shop for soup.

You go to one store and the soup is regular price, and you go to another store that offers you a discount so you get the same soup for less money and keep more for yourself.

Just as importantly, let's say you are in line to pay for your soup and there is a black woman in front of you who still has a job, and a white man behind you who is out of work. All three of you buy your soup and no one objects because everyone believes that everyone else is entitled to the same discount no matter if they are black or white, rich or poor, management or labor. It's a system that works well.

Now, let's say that the two stores are Ireland and Britain. And let's say that Britain discounts its taxes so they are less than Ireland's. You may have been thinking about leaving before Britain discounted their taxes, but now you are more likely to stay.

So if you think of states like they were stores, you will find that you really do know a lot about taxes. Politicians just don't use terms that are easy to understand which keeps a lot of good people out of the discussion. But the discounting concept is not only good for you, it forces governments to be more efficient with your money.

Again, I hope this helps. You might tell the next politician you meet that you want a discount on your taxes of at least 15%. It will be good for you and good for your government because fewer poeple and businesses will leave: more poeple and businesses will stay, and many people and businesses will come if the discounts are deep enough. And that doesn't count all the people who want to start businesses, and whose efforts will benefit the economy.

After all, we fill Wal-Marts and other stores here in the U.S at 3a.m. because the discounts are deep enough. You can fill voting booths the same way to elect officials who will get you your discounts.

Thank you for your posts.

Kev

 

[mclaughlin]

Simon,

One of my friends (a UK truck driver) has been all around Europe and said that the economies which boomed were those that adopted the flat tax proposal. Countries like Ireland, the Czech Republic to name two. I can't comment on how these two countries are fairing today under the current economic conditions.

Simon:

Your friend is correct: about twelve countries around the world have gone to flat-tax systems and their economies have grown, including Hong Kong after WWII, and Ireland, Latvia, Russia and Georgia more recently. No one has gone to a fair-tax, or national sales tax system because all the money has to go through the government's hands leaving room for lots of corruption.

Those economies are hurting like everyone else right now. But when taxes are so low, (Russia's at 13% I think and Georgia's at 12%), then they bounce back faster because people have more incentive to produce.

Make sense?

Thank you,
Kev

 

[mclaughlin]

What happens when the state gives those discounted taxes to Iowans (an immediate loss of state revs) and it takes a few years for people and businesses outside of Iowa to catch on decide to relocate in Iowa? Or, worse yet, no new businesses/people come to Iowa because of the discount?

Most states don't run deficits because most states can't print money to cover the net shortfall....except for California of course, which feels free to issue IOUs (another form of money)

Mr. Beer;

Iowans for Discounted Taxes used The Beacon Hill Institute at Suffolk University in Boston for research. It's probably the oldest and most experienced at it. They told us that based on our proposal we should set the optional flat-tax at 5.32% and tax only EARNED income, (interest, dividends, investment income, Social Security, and pension income would all be tax-free, creating a "finish line" for retirees). They estimated that we would make up in sales tax what we lost in income taxes due to retaining more residents and businesses, and that Iowa would get more than 8,000 new jobs the first year, alone due to residents and businesses that would move from other states.

I still have the study and can send it to you if you would like to see it.

I hope this helps and thank you for your posting. But we don't jump onto these things without researching our assumptions first. What we demand with our discounts is more efficient governement, which is what discounting forces them to do if you've ever been to a Costco, Wal-Mart or McDonalds.

Kev

 

[Bill Musarra]

I may be wrong, but didn't Ireland and probably most of the other countries just lower the capital gains taxes?? or corporate taxes?? That is what attracted the corporations there. Ireland if I remember correctly was losing population and not doing well with tax revenues due to high rates, when they decided to lower their taxes in those areas, which spurred growth and attracted industry. It seems that if one's country did just that it would stimulate growth without changing the entire structure of the tax code. The state of Ga. here in the U S did that and has picked up some growth in industrys moving to the state. There is more to the Flat Tax than has been discussed here and is not as simple as has been presented. No reflection on the presenters. It is a complicated issue. I still like the Fair Tax as it is simpler and gets the tax issue away from the politicians which in itself is reason enough for them to never consider it until the public makes it an issue. The Fair Tax Rallies that have been going on around the country have been gaining supporters everyy day mainly because it is so simple and does what it is supposed to do, eliminate the VAT that our system uses along with an income tax, and replaces it with a national sales tax(and is revenue neutral). This with the supermajority requirement keep the politicans in line so they can't slip one through on its citizenry.`Here is some info on the Flat Tax.

Flat Tax: From The Encyclopedia of Taxation and Tax Policy

and the Fair Tax.

Americans For Fair Taxation: Americans For Fair Taxation
Bill

 

[mclaughlin]

I may be wrong, but didn't Ireland and probably most of the other countries just lower the capital gains taxes?? or corporate taxes?? That is what attracted the corporations there. Ireland if I remember correctly was losing population and not doing well with tax revenues due to high rates, when they decided to lower their taxes in those areas, which spurred growth and attracted industry. It seems that if one's country did just that it would stimulate growth without changing the entire structure of the tax code. The state of Ga. here in the U S did that and has picked up some growth in industrys moving to the state. There is more to the Flat Tax than has been discussed here and is not as simple as has been presented. No reflection on the presenters. It is a complicated issue. I still like the Fair Tax as it is simpler and gets the tax issue away from the politicians which in itself is reason enough for them to never consider it until the public makes it an issue. The Fair Tax Rallies that have been going on around the country have been gaining supporters everyy day mainly because it is so simple and does what it is supposed to do, eliminate the VAT that our system uses along with an income tax, and replaces it with a national sales tax(and is revenue neutral). This with the supermajority requirement keep the politicans in line so they can't slip one through on its citizenry.`Here is some info on the Flat Tax.

Flat Tax: From The Encyclopedia of Taxation and Tax Policy

and the Fair Tax.

Americans For Fair Taxation: Americans For Fair Taxation
Bill

Dear Bill: I think there is only one tax rate for everyone in Ireland, corporations and invividuals alike.

Second, every new tax regime that has been adopted since WWII has been a flat-tax, with the exception of the countries in Europe who adopted a form of national sales tax along with their income taxes and a much lower rate of growth was one of the results.

That is the same problem we face. If you think Congress is going to do away with the income tax in the face of all the debt we are racking, up, I think that is a mistake. Besides, the politicians want our money as much as we do.

Lastly, the government has to collect all the taxes from your fair-tax system, which means that there will be an enormous federal agency to oversee the process and hold the money, not to mention that the fair-tax is regressive, hurting poor people the most.Not so with the flat-tax.

And these are just some of the problems with the fair-tax.

Going back to Ireland, why would citizens permit corporations to get a discount with a flat-tax and get nothing for themselves? It's the same as allowing our politicians to put us in a health care program that hurts all of us, but in which they do not have to participate: crazy.

The flat-tax as proposed by Steve Forbes would allow generous exemptions of up to $46,000 for a family of four, etc., before they even began paying any income taxes.

Does that help? I am not the expert that Forbes and others are, but I have worked on this for more than a decade and want a discount on my taxes because I know I benefit as does everyone else; no one is hurt as long as it is optional meaning you can file with all your current deductions if you choose; and it has worked in so many countries already, (about a dozen since WWII).

I hope this helps, but it will be a long time before I am sold on a fair-tax because the government agency that handles it will be so large and likely to become as corrupt as those in Europe. It's just human nature when that much money is in one place. that does not happen with the flat-tax because it never leaves your pocket, but again, I would like to get a simple 10-15% discount on my taxes, first.

Thank you,
Kev

 

[Bill Musarra]

Kev,
Rather than debate the Fair tax with you here on the forum. I will point you to the two books out on the Fair tax.The first is only 36 pages long. The second is an answer to all the nagging questions that you may have after the first. It isn't even that long as I remember. Just Google Fair tax and you should be able to find your answers.
As you state, the Flat tax has been tried many times. It probably would be a good deal, except the legislators just can't keep their hands off of it. If there was a supermajority attached to any changes to it, I might go along with it.
As to the beaurocracy, there would be virtually none. You would need a small froce to make sure the indigent didn't get lost in the mill and they got their Prebate. there would be virtually no way to get around it. Even the underground markets would be taped as well, although I am sure somne of the more industrious scammers would find a way. In fact it would stimulate the used category items as there would be no sales tax on them.

Bill