Saturday, August 20, 2005

The Revenue from the Current System we need to Replace

The Congressional Budget Office (CBO) does a wonderful job of keeping and publishing historical budget data. In particular, they publish tables of government revenue by major source. If you look at the 2003 numbers in this table you will find (in billions of dollars):

Government Revenue by Source (billions of dollars)
YearIndividual Income TaxCorporate Income TaxesSocial Insurance TaxesExcise TaxesEstate & Gift TaxesCustoms DutiesMiscellaneous ReceiptsTotal Revenues
2003793.7131.8713.067.522.019.934.51,782.3


The FairTax repeals the taxes for the columns highlighted above in green. So the FairTax must replace the $793.7 + $131.8 + $713.0 + $22.0 = $1660.5 billion dollars in revenue. I will not discuss in detail the source of the $22.0 billion in gift and estate taxes, because it is so small.

4 Comments:

At 4:32 PM, Blogger Matt P. said...

You say that the national sales tax will be revenue nuetral. Meaning it will take in the same amount of revenue as we take in now.
Then you must be envisioning continued enormous deficits FOREVER. That seems kind of stupid. Why not add on another 4% to the 23% and then we can stop borrowing billions of dollars every year. And stop paying interest on all that debt. And then, as a result, when the debt starts to come down we can keep lowering the sales tax rate every year.
Do you want this country to borrow money forever? And a lot of it from foreign countries?

 
At 4:33 PM, Blogger Matt P. said...

You say that the national sales tax will be revenue nuetral. Meaning it will take in the same amount of revenue as we take in now.
Then you must be envisioning continued enormous deficits FOREVER. That seems kind of stupid. Why not add on another 4% to the 23% and then we can stop borrowing billions of dollars every year. And stop paying interest on all that debt. And then, as a result, when the debt starts to come down we can keep lowering the sales tax rate every year.
Do you want this country to borrow money forever? And a lot of it from foreign countries?

 
At 4:51 PM, Blogger quadrupole said...

matt p.

The issue of *why* we are running deficits is a whole different issue than fundamental tax reform. For example, I happen to believe that our deficits are a spending side problem, not a revenue side problem. I would gather from your response you feel the opposite. Frankly, I'd rather not argue with you about that in this context. It doesn't really have any bearing as to whether the FairTax is a better way of raising revenue and should be adopted.

By making the FairTax revenue neutral, you effectively move all the other contentious points about the size and scope of government off the table. Those questions are important, but they are *different* questions than what form our tax system should take. You and I can disagree substantially about government size and scope and still agree on the FairTax.

 
At 5:38 PM, Blogger Matt P. said...

The main reason I'm against the national sales tax, which you call the Fair Tax, is it is not fair. It is very unfair that all the people out there who didn't pay tax on their salaries that went into 401Ks and IRAs get off free. I, and many others, paid tax on all our income. So should others. They got that income tax free and are supposed to pay taxes on it at retirement. That's fair. I seen one guy, about a year ago, on C-SPAN who said the sales tax was unfair, but, if it passed he would benefit because he would get over a hundred thousand a year tax free from 401Ks. Not fair. You should add into HR 25 a section where all 401Ks and IRAs would be converted to Roth IRAs in the last year of the Income Tax.
Spending is not the main culprit in the deficits. When Bush came into office, we had a surplus. Within seven weeks, the adminsitration was into deficit financing. Tax cuts, financed with borrowed money, is the culprit.
Okay, Bush comes into office with a surplus. Five years later, with several large tax cuts, and we have five huge deficits and the national debt ceiling raised five times. And he dares claim to be a conservative.

 

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