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Congressman: Let’s Scrap Income Tax

Photo Credit: WND

Photo Credit: WND

The federal tax code is a complex, unintelligible mess, and America needs to embrace the simplicity of a national consumption tax known as the Fair Tax, according to Rep. Tom Price, R-Ga., who is just one of many conservatives touting the idea as Americans rush to meet the federal income tax deadline.

“PROBLEM: folks sacrificing precious time, money and peace of mind on a broken complex tax code. SOLUTION: the #FairTax,” tweeted Price on Tuesday. Fellow Rep. Jack Kingston, R-Ga., also tweeted support for the Fair Tax and the abolishing of the IRS.

Price said the first thing Americans need to recognize is that the current tax system is a disaster.

“Our current system actually punishes the things that we say that we want as a society,” he said. “We say we want hard work. We say we want success. We say we want entrepreneurs, risk taking, investment and all those kinds of things. Yet our tax system punishes every single one of them. So many of us believe that we need think more fundamentally and more creatively about it and come up with a tax system that doesn’t just massage what we currently have but puts in place a system that actually rewards those things.”

Listen to the WND/Radio America interview with Rep. Tom Price, R-Ga.:

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Americans Paid All-Time Highs In State and Local Taxes in 2nd Quarter

Photo Credit: AP

Photo Credit: AP

Revenues from state and local individual income taxes, general sales and gross receipt taxes, motor fuel taxes, motor vehicle taxes and taxes on alcoholic beverages each hit all-time highs in the second quarter of this year, according to data released today by the Census Bureau.

That means that in no quarter of any year since the Census Bureau first started tracking state and local tax revenues in 1962 have Americans paid more in each of these categories of state and local taxes then they did in the quarter that ran from April through June of 2013.

Americans paid a record of $114.032 billion in state and local individual income taxes in the second quarter of this year, according to the Census Bureau. That was up $7.787 billion—or 7.3 percent—from the previous all-time record of $106.245 billion in state and local individual income taxes that Americans paid in the second quarter of 2008.

Americans also paid a record of $82.212 billion in state and local general sales and gross receipts taxes in the second quarter of this year. That was up $1.85 billion—or 2.3 percent—from the previous record of $80.362 billion in general sales and gross receipts taxes American paid in the second quarter of 2008.

Americans paid a record of $11.254 billion in state and local motor fuels taxes in the second quarter of 2013. That was up $135 million—or 1.2 percent—from the previous record of $11.119 billion paid in the second quarter of 2012.

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IRS Pursuing ‘Stateless Income’ Tax Enforcement: Official

Photo Credit: ReutersThe Internal Revenue Service is pursuing tax enforcement cases against companies over the issue of “stateless income,” a senior agency official said on Wednesday in a reference to corporate profits that are not taxed by any country.

Erik Corwin, an IRS deputy chief counsel, said there were international tax disputes with companies, “most involving consequences of complex restructurings designed either to create stateless income or to affect a tax efficient repatriation.”

“So those are a family of cases that are in the pipeline and being looked at,” he told tax lawyers in a speech in Washington.

Asked by reporters later to elaborate on any litigation, Corwin declined to comment. But tax lawyers said the references to stateless income and profits held offshore could signal a new enforcement approach by the IRS.

“I have not heard the IRS use the term before,” Edward Kleinbard, who coined the “stateless income” phrase in a 2007 research paper, said in a telephone interview.

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One Hundred Years of Income Tax

Sunday, February 3, is the 100th anniversary of the ratification of the Sixteenth Amendment, which makes it the one hundredth birthday of the income tax. It has grown rather ill-tempered in its dotage.

Americans for Tax Reform commemorated the occasion by publishing a few fun facts about the income tax. Among other interesting statistics, the initial top tax bracket was only 7 percent, and it didn’t kick in until income reached a whopping $11.6 million in 2013 dollars. Only 358,000 people had to fill out 1040 forms at first, because the standard family deduction was an adjusted $93,000.

Over the past hundred years, the tax code has swelled from 400 pages to almost 74,000. The top rate is 39.6 percent; add in state and local taxes, and you’ve got the government soaking up over half of every marginal dollar earned by the Evil Rich. And the top bracket crashes down on those who earn over $450k, which is the new functional definition of a “millionaire.” Every new tax – from the income tax itself, to the Alternative Minimum Tax and its prospective stepchild, the “Buffett Rule” – is sold as a small levy on the vast wealth of millionaires. The AMT was only supposed to affect a couple of hundred people when it was implemented in 1969, but now it’s on the verge of grabbing 50 million taxpayers, if it’s not “fixed.” In the early years of the income tax, Americans were likewise assured that it would only slip a few dollars from the bulging wallets of the wealthy.

Allowing the government to sink its feeding tubes into the veins of American income has fueled astonishing government growth. That first itty bitty tax levy brought in a paltry $16.6 billion in revenue, adjusted for the past century of inflation. Today the income tax brings in $2.7 trillion. Government inevitably grows to fill, and exceed, the space made available for it.

Perhaps the biggest problem with this tax is the way it is collected. As we were all reminded during the row over presidential candidate Mitt Romney’s remarks about the “47 percent,” the “progressive” tax system has moved an increasingly large cohort of Americans out of the system entirely, while placing an ever-greater share of the burden upon a dwindling group of high wage earners. Remarkably, this group is perpetually accused of “greed” and refusing to pay its “fair share,” even though the relationship between its tax burden and the amount of income it earns has long since exceeded any reasonable definition of “fairness.” Even before the new Obama tax increases kicked in, the Heritage Foundation noted that the top 10 percent of income earners were carrying 71 percent of the federal income tax burden, even though they earned only 43 percent of all income. The bottom 50 percent, meanwhile, earned 13 percent of all income but paid only 2 percent of the income tax.

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Republican Governors’ Plan To Eliminate Income Taxes Comes Under Scrutiny

Several Republican governors are proposing an end to their state income taxes in exchange for closing loopholes including mortgage deductions — plans to make their states more competitive in the U.S. economy but already being criticized by Democrats.

Gov. Dave Heineman, Nebraska, and Bobby Jindal, Louisiana, earlier this week proposed eliminating the tax on residents and corporations.

Meanwhile, Kansas Gov. Sam Brownback proposed lower taxes for all residents in exchange for eliminating the tax deduction for interest paid on home mortgages.

Brownback’s mortgage-interest proposal is to help close a budget shortfall and was rejected last year by the state’s General Assembly.

He has been working for at least a year toward ending state income taxes and announced his plan Tuesday as part of his balanced budget proposal for fiscal 2014 and 2015.

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