Federal Tax Withholding Repeal Act (H.R. 3409)

Rep. John Hostettler (R-IN) is sponsoring the Federal Tax Withholding Repeal Act (H.R. 3409), which would repeal the law allowing the federal government to withhold federal income and Social Security taxes and implement a quarterly-payment system.

This proposed piece of legislation would remove the option of federal withholding from our paychecks, instead having individuals make quarterly tax payments to the government.....If people actually realized how much they were paying to the government by forcing them to write a check four times per year, people's general attitude about social security, Medicare, and other federal taxes would be completely different.

blog.paulschafer.com...

I'm not quite sure if this is insanity or a brilliant idea. It will try to raise awareness to try to start a tax revolt against the current system. I agree that most of us do not really realize how much the federal government is actually taking. I'm also not too thrilled about the idea of having to pay such a large sum of money all at once.

I'm sure there are those who would love this, so they can put it in an interest bearing account before handing it over to the government. I wonder how many will actually use the money on themselves, loose it in the markets, refuse to pay, or try some type of scheme to get out of paying.

What are your thoughts on this? For or against? Pro or Con?

PS. This is legit, and I first heard about it from Citizens Outreach Chuck Muth's News and Views. I just used this blog site since it didn't have any petitioning on it. I tried to find a netrual one that explained it well in lay men's terms.

[edit on 2-9-2005 by Mystery_Lady]

It sounds to me like a load of more government double speak.What we really need to do is abolish the income tax,IRS and other wasteful parts of the infrastructure.I have long been a supporter of the Fairtax Movement.This plan makes a lot more sense.

It abolishes the personal and corporate tax structure and imposes a federal sales or use tax to be collected by the states.Manypeople do not realize the vast dollars collected in unseen taxes already imposed on the products we buy today.This would put an end to them and lower the cost of production.

While it is true that the proposed National tax will be 20-25% the reduction in manufactured cost will offset that amount a great deal, and we will not be paying much more over the counter in the long run.

The majority of the taxpayers would see a substantial increase in their buying power,while payong much less out in taxes.This would encourage more spending and thus an improvment in our domestic economy.Not only an improvment by more buying, but because of the reduced costs of manufacturing, employers will be able to grow their business and hire more people.

The entire broadside for the movement is too long for this venue but if interested you can google on "fairtax" and get to a couple of places.

My concern with a national sales tax is that the corporations would not reduce the price of the product to compensate for the higher sales tax. The corporation would have to pay any and all sales tax for anything bought to make the product and to run the corporation itself. They would be paying taxes for everything from machines to office supplies. Then they would price the product to cover those taxes. There would be those who would take any profits from not having to pay corporate income tax and run.

I do believe there would be some honest corporations who would do as you suggested and lower the cost of the product and hire more employees. Would there be enough of them that would lower the cost of the products as not to put any extra burden on those who would actually be increasing the amount of taxes they would have to pay.

It will be hard to convince people who are in the 10% and 15% income bracket, or those who actually recieve a return instead of paying, that it would be better for them to pay 20-25% in federal sales tax insead of their precieved lower income tax or recieving a tax return.

Also the consumer is looking at state and local sales tacked on to that. If the federal national sales tax was 25% with a state and local sales tax of 7%, I would be looking at 32% total in sales tax. Talk about a tough pill to swallow.

I would not mind at all if the feds did something like a national sales tax or a flat tax across the board somewhere between 10-15%, and made it so they could not raise that at all in any time in the future once it is implemented.

The income tax I see taken out right now is 12%, and you are right I don't know what other hidden taxes are being taken out on the corporate side except that the employer has to pull out more social security that I believe is not seen on the check. My family is one of those who does recieve a tax return. I also realize that a fair tax needs to be implemented without any loopholes for the wealthy.

Let me break this down, I believe there are rich people and then there are wealthy people. The rich live in very nice homes and drives around top dollar cars with luxuries that they may or may not be able to afford. There are not many loopholes they can use since they mainly work as employees, self-employed, and possibly small businesses. I would classify these as in 100,000's range possible hitting one million.

The wealthy are those who would be considered super rich are the ones who own the large businesses, corporations, the fortune 500 club where spending 100,000 in a weekend is a drop in the bucket for them. These are the ones who have the most loopholes to take advantage of. They are the ones who can hire the attornies to find creative ways so they do not have to pay hardly any taxes if any at all.

I would be against any type of tax that would hit small business harder than the current income tax guidelines though. It doesn't take much to break these businesses.

One other problem I can see if they try to impose a use tax. Sales taxes on a national scale, shouldn't be a problem. It shouldn't matter where the people live, since the same tax will be collected no matter what. If they try to impose some type of use tax, it will create nightmares for the IRS (might not be a bad thing), because no one reports use tax now as it is. Or they will have to develop a system where stores and others can collect the correct taxes, and send it to the correct places. Either way including any type of use tax is logistically nightmarish.

Have they thought about dealing with under the table deals especially on services. Many could report just enough to make it look good, while agreeing with other customers not to report anything. Some offering their services can say the tax in included in the fee, and then not report any taxes at all. This could be done with gardeners, house cleaners, beauticians, contractors, and just about any service performed. The service industry could create a very large tax advoidance segiment in society. There are already people doing under the table work, and that will get worse.

There will be a hard hit group of people. Those who sell antiques and second hand goods for a living like my parents do. They will not get any breaks or be able to reduce the price of what they are selling. They do not have any unseen taxes they could save on. They will have to add the new tax on top of the price of the item. That would turn away many of their customers. The only thing that would help them is the people's buying power going up enough to afford the extra 20% in sales tax. People's buying power going up will be very ify. Corporations could just get greedier or other expenses crop up where they can't reduce the price of the product. Any offset may actually not be enough to give people any more buying power, or at least not as much as you think.

This isn't too great an idea...a lot of people will spend all their money and have nothing left to pay the tax and the end of the quarter.

Originally posted by djohnsto77
This isn't too great an idea...a lot of people will spend all their money and have nothing left to pay the tax and the end of the quarter.

As much as I personally would benefit from an alternate tax system, I have to agree with djohnsto77. There are too many people who are so irreponsible that they would just go blow it if it was up to them.

If they can't come up with some kind of national sales tax then they need to leave the withholding system like it is. Otherwise, the IRS or whoever will have to go after millions of people for tax evasion.

Holy crap, this is what I get for having 6 windows open at once. Anyways my post had nothing to do with taxes, move along.

[edit on 21-9-2005 by Full Metal]

I agree with djohnsto77 also most working class in the inner cities in American live from pay day to pay day, these people often do not last long in their jobs and most of the time are in financial troubles.

Giving the responsibility of paying quarterly taxes may work for the more affluent working class.

But for the lest privilege is going to put them put them in debt when the money is not there to pay.