Comment: You may have already received this but here it is again. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++ To: The President's Advisory Panel for Tax Reform From: inigmatus - administrator for the National Economic Stabilization and Recovery Act Discussion Board at http://www.thewordfiles.com/nesara/index.php "True tax reform is futile without reform of the current monetary system and its policies." - Dr. Harvey Barnard, Founder, NESARA Institute at http://nesara.org In following the guidelines for tax reform proposals to this commission, I submit the following: The National Economic Stabilization and Recovery Act as proposed by Dr. Harvey Barnard, PhD For a comparison of how NESARA stacks up against other tax proposals (such as the Flat Tax, Fair Tax Act, etc.) click here: http://nesara.org/comparisons/tax_comparison_chart.htm Dr. Harvey Barnard has his degree in Applied Science with his specialization in Systems Philosophy, and one who has demonstrated experience in systems theory application, he is more than qualified to present a sound tax and monetary reform proposal to this commission. Founder of the NESARA Institute which has been setup to promote his draft proposal, he has worked for more than a decade in garnering congressional support for his proposal. Some have called it too big of a change to implement, citing the times are not ripe for serious tax change; others have confused it with an internet hoax with the same name and thus have never bothered to look into it. Perhaps we should change the draft proposal's name, but at this late in the running of it, we want to get the idea proposed and debated first - name changes can come later, as Dr. Harvey Barnard is not looking to get credit, but for the idea itself debated. Unfortunately we (the supporters of this proposal, and even the NESARA Institute) suffer with a discredited acronym that has been synonymous with an internet scam calling for some insane resignation of our government, and the cancellation of loan and credit card debts. WE are NOT associated with that group. That said, we are supporters of the original NESARA proposal, a draft bill calling for good, positive, and revenue neutral changes to our current tax system and monetary system policies. The original draft of the National Economic Stabilization and Recovery Act can be found at http://nesara.org/bill/index.htm In following the Reform Guidelines, in short, NESARA proposes to accomplish the following: * Simplify the tax laws to just a single consumption tax. * Share the burdens and benefits of a progressive tax structure by keeping the tax flat. * Recognizes charity by providing for sales tax exemptions for charitable institutions. * Recognizes the importance of home ownership by abolishing compound interest on secured loans, and mandating that the principles of such loans be paid first before simple interest is collected by the lending institution. * Promotes long run economic growth by providing an additional monetary policy tool to control the rate of inflation, with a new body in charge of such tools to have a single clear mandate to stabilize the nation's currency by keeping aggregate national inflation to zero over time, so that a dollar at the signing of NESARA can be exchanged for nearly the same amount of goods and services in the future. * Promotes job creation by changing the rules for secured loans which will be invested in new business. * Effectively makes stock market day trading speculation a costly endeavor (because secondary sales of securities are considered property taxed by the a consumption tax - but at a lower rate than the national consumption tax), which has the effect of stabilizing the market, which encourages the wise implementation of long term investment strategies by investors in order to be successful and turn a profit with their investment. Initial issues of stocks and bonds are not subject to the national sales tax, making long term investment the strategy of choice for investors. * Promotes savings by virtue of the nature of a consumption tax. People will be less willing to spend on taxable non-essentials if the non-essentials of life are taxed. * Strengthens competitiveness in the global marketplace by making American goods cheaper, as the dollar maintains its purchasing value, and the hidden costs of income taxes and capital gains taxes are eliminated with a standard flat sales tax, allowing businesses to lower their prices and become competitive against imports which are also subject to the national sales tax. Business that left overseas for cheaper tax laws now have incentive to bring those business back, thus creating more domestic jobs. * Provides relief to low-income families by exempting for everyone the necessities of life from the consumption tax. The necessities of life include rents, leases, groceries from a supermarket, insurances, and medical services. These items are completely exempt from the consumption tax. There becomes NO need for an expansive, expensive, and intrusive government rebate program managed arbitrarily on a yearly basis. Just simple over-the-counter exemptions on the necessities of life available to all. National Economic Stabilization and Recovery Act I. Description of Proposal The tax base: 14% flat consumption tax. Exemptions, Deductions, Credits, and Exclusions: - Necessities of life such as groceries (from a supermarket), rents/leases (houses, apartments, cars, anything rentable), insurances (all types of insurance: medical, home, car, etc.), medical services (all non-cosmetic medical services, including reconstructive surgery); are exempt for everyone. No income restrictions on this exemption. Since richer people eat out more, it makes sense for them to pay a consumption tax for receiving prepared food from a restaurant's services, whereas groceries bought at a supermarket by a single mom on low income would normally does not eat out, should not be taxed at all. If the rich person wanted to buy groceries at a supermarket, then they would be exempt, likewise the poor single mom who decides to eat out would pay the consumption tax for eating out at the restaurant. Under this system, poor people, spending most of their money on the essentials pay little if any tax while the rich pay lots of tax. Benefit: No special classes are created, no forms to fill out, no expansive and government intrusive national rebate administration - just a simple set of over-the-counter exemptions on the necessities of life available to all. If people decide they to eat out, or buy a car, or buy a home, or buy breast implants, they should pay the consumption tax. It's simple. It's fair. Extremely fair. - Used homes are taxed at a lower tax base than new homes. New homes are taxed at the rate of 14% on the full purchase price, however used homes will have a lesser tax to pay since the tax base is lower, and therefore there is an increased the incentive for homebuyers to buy used homes rather than new ones. The taxable base for the used home will be the sales price minus the original purchase price. Thus for a house bought for $60,000 and sold for $100,000, the new buyer will pay a tax on the gain of only 14% on the difference of $40,000, which is only a sales tax of $5,600. A new $100,000 home would be taxed at 14% on the $100,000 which is a sales tax of $14,000. Urban blight becomes a thing of the past as used homes are more appealing to buy, own, and remodel, than buying new homes which use up our natural resources. - Charities are exempt from the national sales tax in any purchase they make that goes towards a nonprofit use. - Initial stock and bond issues are exempt from the sales tax. Only secondary sales of those issues are taxed at 10% of the current National Consumption Tax Rate. - Government purchases are exempt (also known as sales to the government), for the obvious reason that the government gets its money back anyway. Sales to federal, state, or local agencies acting in their official capacities are not taxable transactions. - Licenses, passports, visas, and all charges for public services are exempt, since there is no commercial competition for these services anyways and everyone is forced to pay the government for them, there should be no sales tax for these services. Tax Rate: Consumption Tax Rate: 14% With the elimination of the income tax which increases embedded costs by up to 30%, conservative estimates of the implementation of all NESARA proposals would favor a revenue-neutral consumption tax rate of 14% based on computer simulations of the economy under the NESARA proposal. As the cost savings of a flat and simple consumption tax is realized over time, the rate could significantly drop to a revenue neutral 7% rate. Secondary Sales of Securities: 10% of the National Consumption Tax Rate (1.4% actual tax rate in this example) Within the philosophy of a sales tax, taxing secondary stock sales is fair, largely paid by wealthy people just relieved of income and capital gains taxes. The tax is low enough to prevent capital flight out of the country, and high enough to raise substantial amounts of revenue. More importantly, this tax discourages market speculation. Long term investors are largely unaffected by this tax. Gaming Sponsors Gross Profits Tax: 8% 8% of gross gaming receipts less total gaming payoffs to chance purchasers and government entities. Since gaming is a government licensed activity that without license is illegal, and it carries a cost of doing business associated with it - in essence since the government is a partner in the endeavor with granting the license, the buyer of the ticket does not pay a sales tax, or tax on the winnings. Social Security and Medicare: still taxed as an income tax until Congress decides a better way to collect revenues for these programs. With NESARA implemented, it is believed the need for Social Security and Medicare would dwindle over time to a point where they are no longer needed as Americans begin to afford things for themselves under the increased prosperity its changes would bring within a generation. Distribution of Tax Burden: A simple list of over-the-counter exemptions for the necessities of life is fair to everyone. The list of necessities for life would be groceries, leases/rents, insurances, and medical services (excluding non-reconstructive cosmetic surgery from this category). The tax burden is evenly distributed as poor people buy more necessities than non-necessities for life. Rich people buy more non-essentials than necessities, so they share a greater consumption tax purchase with their purchasing decisions. If a miser wanted to buy only groceries from the supermarket, and rent an apartment, they would pay the same tax burden as a poor person, whereas a poor person deciding to buy cigarettes or alcohol, or any other non-essential for life would pay the same tax as a rich person would for the same item. With this system, there becomes absolutely no need to implement an intrusive, expensive, and expansive yearly national rebate program that some other tax proposals propose. Value added taxes only serve to do the same compounded damage to the national economy as our currently regressive national income tax does. NESARA is not compatible with a value added tax compromise. A flat tax is fair, simple, and is easily seen and computed in the purchase price of any retail taxable event. Treatment of Charitable Giving: Since income is not taxed, there is no income incentive to give to charities. Some of this loss is restored by issuing Credit Certificates to donors, which are applicable to national sales and use tax liabilities. The Credit Certificates are issued by the National Tax Service in amounts of 10% of all donations worth $250 or more and can only be used to pay tax liabilities. To be authorized to apply for Credits Certificates in the donor's name, the charitable institution must be a qualified registered non-profit institution. The Credit Certificates can also be sold and exchanged in normal taxable commerce. On the consumption side, businesses seek out doing business with charitable institutions since those sales are not taxable events. Giving to charity is not hindered under NESARA. Treatment of Home Ownership: NESARA eliminates compound interest for all secured loans, in exchange for a simple monetization fee based on simple interest. Principles are paid back first before the bank collects its monetization fee, so the overall cost to the buyer is less and the debt-burden decreased significantly. Banks recover their reserves faster and can make more loans in the same amount of time, recovering their profits and benefiting the community more as a result. Bankruptcies and defaults on secured loans nearly become a thing of the past as all debt-repayment plans eventually reach 0. Instead of legislating tougher bankruptcy laws that do little to help the public, congress should take a serious look at the monetary reform provisions of the National Economic Stabilization and Recovery Act. Easy-reading articles have been provided at http://nesara.org New homes are taxed 14% on the full purchase price of the home. Used homes are taxed 14% on the difference between the original purchase price and the current selling price. Thus the incentive is for the public to value older and used homes more than newer homes that consume our nation's resources. This slows urban blight, and in fact may reverse it as people start to value their home more and invest in remodeling it to make it more modern and competitive with other used homes for sale. Collection Methods: The mere act of initiating a taxable sale in commerce within the jurisdiction of the United States makes one an agent for the National Tax Service. No forms to fill out. Getting in is very easy. Just sell and make sure you keep a receipt of the transaction. To get out, remit the tax due in full at any authorized federal depository on or before the 10th day of the month following the month in which the taxable sale was made and do not initiate any more taxable sales. Keep the receipt. That piece of paper is all that is necessary to prove the seller's liability was discharged. The same holds true for the purchaser's receipt from the seller. The burden of proof falls on the National Tax Service to prove that a taxable event occurred and that the tax was not paid. Further investigation is merely a matter of an NTS agent of making a purchase from a seller and verifying the tax gets paid. Treatment of Businesses: Businesses are treated as agents of the National Tax Service. They collect the sales tax on the taxable goods and services they sell, and remit those payments by the 10th of every month following the month of the taxable event. Proof of liability discharge is nothing more than a show of receipts. Businesses have the opportunity to acquire secured loans easier as compound interest is eliminated, and only simple interest on the loan is collected only after the principle is paid back first, and new banking rules are implemented that makes it easier for banks to be more willing to work with their clients in preventing loan default. II. Impact of Proposal Relative to Current System Simplicity: A flat 14% sales tax on the non-essentials of life is simple, especially when compared to a confusing eight volume work of the current income tax code. Exemptions are over-the-counter and require no government program to administer, versus the current system of expansive, intrusive, and expensive government programs that collects data on your life, spends more money to investigate noncompliant lawbreakers than it collects from them, and is a confusing array of exemption rules and special-interest favors. Fairness: A flat national consumption tax that EXEMPTS the necessities of life such as groceries, leases/rents, insurances, and medical services (except non-reconstructive cosmetic surgery) is the only fair tax proposal ever proposed to this commission. Other proposals keep the hidden and regressive added-costs of multi-party transactions such as found in the current income tax system which ultimately taxes the poor purchasing the goods, more than it does the rich. The Value Added Tax, and Fair Tax proposals simply shift the multi-party transaction costs from the incoming producing side to the consumption producing side (no proposal has over-the-counter exemptions for the necessities of life) - in effect changing the name of the system, but having no net positive effect on the economy - and they are in fact just as expansive, and potentially confusing as our current income tax system. They may be revenue neutral options, but the net change in efficiency and costs and benefits to the American people also remain just that: neutral. Economic Growth and Competiveness: Reviewing the provisions of the NESARA proposal at http://nesara.org one can get the sense that if every member of congress took the time to read it, it would be passed within the hour. NESARA's benefit to the economy is just too great to measure. The monetary reform provisions of the proposal alone would eliminate $1 trillion of the national debt almost overnight, free up approximately $500 billion in bank reserves for new loans, and make the US economy so competitive that it is conceivable that other nations would either have to adopt a similar system to compete, or sink under the weight of the international investment drain to the United States. See http://nesara.org/wiifm/doubles_the_average_standard_of_living.htm for more details. NESARA's fiscal reform provisions are what have been mostly detailed in this paper. It is expected that the changes to the tax system alone as proposed by NESARA would make living that much more easier for the common American and working poor. Without the burden of income tax compliance, businesses can immediately begin to reduce prices, no longer having to pass on those costs. Estimates by experts place the hidden embedded cost of the income tax at approximately 30%. That means without that overhead, prices will fall. NESARA projects only a modest 2.5% gain in overall efficiency, but that in itself produces tremendous benefits. As American businesses reduce their costs with the elimination of the hidden-cost regressive nature of the current income tax, and as capital gains taxes are eliminated altogether, and as loans are easier to acquire and pay back, the competiveness that these measures reveal becomes obvious. Other nations will have to copy the United States just to keep up. The NESARA Institute computes that a modest 2.5% annual gain in national productivity as a result of the implementation of their proposals, is a conservative estimate. Multiplied out 20 years, that amounts to gain of 100% additional productivity - which is a productively gain equal to double within a single generation! Compliance and Adminstration Costs: NESARA provides a simple, straightforward administrative process in tax disputes. Under NESARA, should the National Tax Service (NTS) believe a tax has not been paid, the NTS merely prepares a statement of the alleged taxable activity and issues an Assessment/Preliminary Notice of Deficiency. That's all that is needed and the burden of proof stays where it belongs-on the government. Should an alleged taxpayer desire to dispute the alleged tax, the alleged taxpayer can certainly introduce his or her books and records as evidence to quash the allegations, but nowhere does NESARA authorize the tyrannical practice of continuing the madness of issuing summonses and conducting examinations, audits and fishing expeditions. Such practices are pure tyranny and invasions of privacy. The National Tax Service (NTS) will be relegated to a mere collection agency. There will be little for these people to do, and we suspect that within a short period, the staff of the NTS will be reduced dramatically. Administrative costs are only kept with the NTS to conduct investigations into sales tax evasion, and collection of the sales tax from the regional national banks. There is no expensive government agency or program to administer rebates, or audit individuals. III. Transition Tradeoffs and Issues Transition: The effect of the changes would become apparent overnight. Taxes would cause prices to increase dramatically by at least 14%, but at the same time, businesses no longer have to collect income taxes from their employees and so they pass on the savings to their employees who receive a larger paycheck. Prices for non-exempted items and services become temporarily inflated. Over time, as cost-reductions are realized, prices come back down slightly and stabilize. The costs for the basic necessities of life stay the same or become cheaper. The standard of living for the working poor increases almost immediately as a result since they are not largely affected the new national consumption tax, but are freed from the government intrusive income tax. New home sales will skyrocket before the bill becomes law. Once the bill becomes law, immediately the cost of buying a used home becomes immediately more appealing. NESARA's new loans equations become retroactive (a provision for NESARA to guarantee fairness when compound interest is eliminated on secure loans). Some homeowners who are in the 17-20th year of paying their home, under the NESARA equations that are applied retroactively, many may find themselves with their home completely paid for, or very nearly paid for. Immediately their discretionary spending increases. Supporting NESARA, obviously would be a very popular move for any politician. Banks will find that they have their reserves met faster as secured loans are converted to the NESARA secured loan equations. They all of a sudden have more money to lend. Some estimates place this amount at $500 billion nationwide. This new pile of cash can then become available for the community, for new loans, or new government projects if the voters decide to pay for them. If anything, the changes become deflationary, and the government will probably have to spend money the money to keep deflationary pressures low - further increasing national productivity if spending is increased. Administrative costs for the IRS become only transitory to a smaller system that is more easily managed by fewer people handling fewer responsibilities. In short, NESARA is a win-win solution to the country's current monetary and fiscal problems, and we would like representatives from the government to take a serious look at the NESARA proposal at http://nesara.org and feel free to ask questions about it at http://www.thewordfiles.com/nesara/index.php - or contact Dr. Harvey Barnard at the NESARA Institute at: NESARA Institute P.O. Box 70 Greenwell Springs, Louisiana 70739 (225) 634-3228 There are many more transitional changes that take place that have not been talked about in this proposal, however we have tried to focus on the fiscal reform side of the National Economic Stabilization and Recovery Act in accordance with the proposal guidelines. We believe NESARA is the best proposal to date that is fair, equitable, and revenue neutral, and we would not be doing our job if we did not let the President's Advisory Panel for Tax Reform be made aware of it. We hope that someone on that panel takes a serious look at it. Please check the proposed bill and its detailed summary explanation at http://nesara.org/bill/index.htm Thank you. Sincerely, inigmatus Administrator The NESARA Discussion Board http://www.thewordfiles.com/nesara/index.php _______________________________________________ |