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From: tvoivozhd <tvoivozd AT roanoke.infi.net>
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Grandad wrote:

>         Since there are five positions called "captains" of industry (called
> Mining, Manufacturing, Transportation, Wholesale, and Retail)  involved
> in the movement of raw materials to distributed consumer item and each
> of these captains either pays production tax or pays the labor involved
> in the process enough beyond his required wage to pay the income tax, is
> it unreasonable to assume that nearly 40% of the cost of any retail item
> is hidden production tax?  It has been estimated that a 25% consumption
> tax would replace the current IRS collected production tax.  After tax
> cost of most items then would decrease by at least 15%?
>
>         Rather than lament the success or failure of some corporations to
> minimize their payment of tax on production, let's talk about how we
> might save this booming economy from dissolution and extend it a few
> years or a decade by reorganizing this ill conceived and irregularly
> enforced tax on production.
> --
> >From mailto:grandad AT grandadsfarm.com and
> the Home of Grandad's Farm Magazine
> in the beautiful suburbs of Columbia, Missouri
> http://www.grandadsfarm.com/

tvoivozhd---

a.  In any taxation system ever devised (at least 
as far back as recorded history)
the tax collector goes where the money is.  Ours 
is slightly modified in that the
middle class is larger and more prosperous than 
in antiquity, so they all receive a
visit from TC via the mails, with the mailed fist 
of the IRC enforcer out of sight,
but not out of mind.  Most corporations and the upper class also receive an 
IRC
visit, and pay more total tax on income than a 
waitress, but less as a percentage
of income.  As Warren Buffett points out, he pays less taxes as a percentage 
of
income than his secretary.

The biggest pools of money lie in the 
megacorporation treasuries.  They sell their
product to consumers.  If they are taxed at the 
source, they pass along the cost to
said consumers in the form of raised price.  If a 
consumption tax is substituted it
effectively raises the price of their product.  Same end result.  Either route
reduces consumption, and if consumption is 
reduced, so is production.  That is why
Henry Ford wanted the price of labor raised, to increase consumption and his
production (and profits).

However, in our economy, not all corporations are 
born equal.  Those that cannot or
do not bribe Senators sufficiently do not have tax exemptions written for 
them.
Those who pay a higher rental for a Senator have tax exemptions written for
them---the list is too long and tedious, but 
Archer Daniels Midland has to be near
the top, and the Fanjul Brothers, darlings of 
both Republicans and Democrats for
their impartial and nearly equal bribes, have 
blocked sugar imports and tripled the
price of sugar for decades, to the disadvantage 
of food processors and consumers
alike.

So the collection of corporate taxes is 
capricious and should not be---there is no
economic or social reason for permitting a 
corporation to escape taxes levied on a
competitor, large or small.

As you point out, corporate dividends are subject 
to double taxation, however the
income is surrounded with protection and tax exemptions individuals lack.  If,
AFTER paying the double tax, the corporate form 
did not still offer a substantial
economic advantage, there would be no corporations.  And these advantages keep
piling up with every legislative session in 
response to corporate bribes.  The most
recent, which hasn't occasioned much comment in 
the press, is, beginning in Florida
and rapidly spreading, a court judgment in favor of individuals that is large
enough to bankrupt a corporation must be struck down by the judge or heavily
reduced.  Individuals are not treated so gently, 
another individual, bank, Monsanto
or Novartis who gets a judgment against you is 
entitled to and will get everything
you own---a situation that results from the fact 
that individuals lose out in the
competitive bribery race run daily in the halls of Congress.

I do not see any direct correlation between taxes 
as a cost and prices , any more
than the many other costs, raw materials, labor, insurance, electric power,
transport, advertising, communications, heating, cooling, lighting, janitorial
services, paper supplies, ad 
infinitum.  Corporate taxes have been declining for
decades, which has not translated into lower 
prices for corporate products---except
the farm commodity anomaly where prices are dictated by a handful of large
processors and retail chains who are trending toward contract sales to replace
auction sales---and the latter are rapidly 
switching to charge processors for shelf
space rather than making any investment in products for resale.

Prices are basically dictated by what the market 
will bear.  Costs of any kind can
and do rise and fall, but corporate prices go up, go down, or remain the same,
depending upon the marketplace price of same or similar products produced by
competitors here and abroad..

For example, there are still NBC, ABC, CBS, CNN, 
FOX broadcasting networks, plus
some smaller players around, who recently got a 
gift of  $70,000,000,000 from the
taxpayers---free broadcasting spectrum that will 
be worth trillions.  With their
cost diminished by billions of dollars, did the price for your broadcasting
services go down?  Did the quality improve?  Hell 
no, to both.  Change hats for a
second---call the gift a tax reduction.  Would 
that change their prices?  Hell no
to that too.  Their prices depend upon what the market will bear.


Only if taxes are a principal component of production costs do they have any
appreciable effect, and that only if a 
competitive market permits.  Corporations
are well-schooled in tax avoidance in any event.

Some pertinent excerpts:

.

               Study: Dozens of Corporations Pay Little or No
               Income Tax
               By Curt Anderson
               The Associated Press

               WASHINGTON (AP) - Dozens of America's most profitable
               companies enjoyed tax-free years during the 1990s largely
               because of legal tax breaks, an independent study released
               Thursday found.

               The report by the nonprofit Institute on Taxation and Economic
               Policy found that 250 companies 
paid an effective tax rate of 20.1
               percent in 1998, down from 22.9 
percent just two years before. The
               federal income tax rate for corporations is supposed to be 35
               percent.

               Of the 250 companies studied, 41 
enjoyed at least one year of no
               income taxes or an actual rebate from the federal government,
               despite pretax profits of $25.8 billion from 1996-98.

               If all 250 companies had paid the 
full 35 percent on $735 billion in

               pretax profits, the study 
estimated the total income tax would have
               come to $257 billion. But tax breaks put into law by Congress
               lowered those companies' tax bills by $98 billion over the
               three-year period.

               Companies getting tax rebates in 1998 alone included Texaco,
               Chevron, Pepsico, J.P. Morgan, Enron and General Motors, the
               report found.


               The study's chief author, Robert S. McIntyre, said companies
               lower their taxes through such 
breaks as depreciation write-offs,
               tax credits for research and 
development and deductions they take
               when employees exercise stock options.

               "We hope our findings will encourage lawmakers to re-examine
               this important area of taxation," McIntyre said.

               The report also found that the 
petroleum industry paid the lowest
               tax rate from 1996-98, at 12.3 
percent, followed by electronics at
               13.1 percent, forest and paper products at 13.9 percent and
               transportation at 14 percent. At the other end of the spectrum,
               publishing and printing companies paid 31.6 percent, gas and
               electric utilities paid 28.1 
percent and retail and wholesale trade
               companies paid 27.6 percent.

               "Anyone who worries about our economy's long-term growth has to
               wonder why the tax code is being used to favor some industries
               and some kinds of investments over others, rather than letting
               market forces decide," McIntyre said.

               ----

               On the Net:

               Institute on Taxation and Economic Policy site:
               http://www.itepnet.org




International Financial Services

[IMAGE]Offshore corporations can be utilized to obtain benefits in
the areas of tax minimization, asset protection and preservation of
confidentiality. In general offshore corporations are used to
minimize taxes by transferring profits and other taxable events from
a high tax jurisdiction. A frequently used example of this is what is
known as "upstreaming of profits" or "transfer pricing". This
involves using an offshore company as an intermediary in a business
transaction between parties from two high tax jurisdictions.

In certain circumstances substantial tax saving can also be achieved
by interposing an offshore company as an intermediary in an
inter-group loan or other financial arrangement. An offshore finance
company with legally separate, beneficial ownership can be used, for
example, to obtain tax relief on interest that would otherwise not be
obtainable if the same arrangement were made directly between members
of a company group. This is particularly applicable for jurisdictions
such as in the U.S. where relief on interest can be disallowed when
considering the debt-to-equity ratios it determines that an
inter-group loan is an improper substitute for equity funding.

In addition, acquiring property, whether real or personal, in the
name of an offshore rather than a domestic entity can provide
significant long-term savings in Income Tax, Capital Gains Tax and
Inheritance Tax. Interest income earned by an offshore company on
investments for mortgage loans is not taxable in the U.S. provided
these loans meet the portfolio mortgage loan requirements.

A person not domiciled in the U.K. who wishes to buy investment
property in that country may minimize income taxes on rents earned
from the property if, rather than purchasing the property personally,
the person purchases through an offshore company and uses an
appropriate ratio of debt to equity financing.

Also, Belize offers an extremely efficient and cost effective ship
and yacht registry with an excellent reputation for integrity and
reliability. An offshore company may be registered as a ship owner in
the International Marine Registry of Belize (INMARBE) as well as in
other popular registries such as Liberia, Cyprus, the Bahamas and
Panama.

Individuals or corporations in high-tax jurisdictions may realize
significant tax advantages by selling their ownership of copyrights,
patents, trade marks, licenses or franchises to an offshore company
usually in a single-payment purchase. The ownership of the offshore
company in this structure may be vested in an irrevocable
discretionary trust. The offshore company can, in turn, exploit the
copyright, patent, trade mark, license or franchise by entering into
agreements with licensees wishing to utilize them. The income,
subject to any withholding tax, is accumulated free of tax in the
offshore company.

Performers, movie stars, actresses, musicians, sportsmen, engineering
and financial consultants can gain considerable tax advantages by
entering into contracts with independent employment companies,
incorporated in appropriate jurisdictions, which sell their services
outside the individual's country of residence. The offshore
employment company will not have to pay taxes on its earnings and
payments to the individuals are structured in a way which minimizes
their tax liability.


Back to changing the tax system.  Neither a flat tax or consumption tax would
affect the existence or size of the IRS to any great degree.  Simple taxes are
easier for the taxpayer to compute and simpler 
for the tax collector to verify, but
they will be evaded in any form, and evaders 
pursued by tax collectors as always,
ergo the IRS, like death and taxes will always be 
with us---if for no other reason
that it increases the likelihood of Members of 
the House and Senators getting their
paychecks regularly and on time.

The only saving from a flat tax or consumption tax is the cost imposed on the
collector/administrator/forwarder.
That would be significant as compared to  the 
present system, and could lower the
tax total---I am inclined to agree with your 15% estimate in lowering prices 
at
retail, however there are other less desirable 
consequences neither a flat tax or
consumption tax could address, the hereditary 
accumulation of wealth unrelated to
recipient labor or ingenuity---welfare for idlers..

A flat tax or consumption tax would increase the dangerous disparity between
superrich and rest of society.  It has been probably arrested by a progressive
income tax, but not enough.  In 1976 the richest 
2% owned 20 percent of  national
wealth.  In 2000 the richest 2% owned 40 
percentof national wealth.  That is the
point at which the French monarchs were 
decapitated.  Human memory tends to have
recourse to personal experience rather than history books, so I expect the 
next
general decapitation to come as the same 
unpleasant surprise to the new aristocracy
as it did to a socially indifferent Louie XIV and 
Marie Antoinette.  Neither of us
will be around when this happens---I think.

One of the major reasons for complexity in a tax 
system is the rich opportunity it
offers to bribers and bribees to create loopholes, exemptions and subsidies.
Taking that away from your friendly Congressman isn't going to happen. It 
makes
political fundraising easier if instead of 
hitting the huskings back home for $25
contributions, lobbyists come to him, hat and blank, signed checks in hand.

No tax system can be improved until campaign contributions are sized to fit 
the
average taxpayer's purse and corollary 
expenditures from any source are severely
limited or halted.  I don't think this is going to happen either unless the
membership of the Supreme Court is drastically 
altered and as inclined to legislate
as this one, except in the opposite direction.  Don't hold your breath.




Warren Buffett's suggestion:




          ESSAY

          Spectrum Squatters

          By WILLIAM SAFIRE

                 ASHINGTON - What powerful
                 special interest strikes terror in the
          heart of both parties in Congress, and turns
          both Al Gore and George Bush into quavering
          sycophants?





          The Billionaire's Buyout Plan

          By WARREN E. BUFFETT

               MAHA — For five decades, I've looked for undervalued stocks.
               But if I'd been interested in the 
biggest bargain around, which I
          wasn't, I would have bought political 
influence. For many a year, it was
          far cheaper than anything to be found 
in the stock market. A relatively
          modest contribution — say, $25,000 — was enough to make the donor
          a V.I.P. in the political world. And really big amounts? As a
fund-raising
          senator once jokingly said to me, 
"Warren, contribute $10 million and
          you can get the colors of the American flag changed."

          Markets correct, though. Politicians began exploiting the soft money
          loophole, and pricing became more 
efficient. Soft money contributions
          jumped from $86 million in the 1992 
election cycle to an expected $360
          million in the current one. That's a growth rate worthy of Silicon
Valley:
          20 percent annually.

          And the game has barely started. For 
most supplicants, cost still lags
          ridiculously far behind value. 
American business spends $200 billion a
          year on advertising to influence consumers. In many industries —
          communications, tobacco, banking, pharmaceuticals and insurance
          among them — political influence can sometimes be of similar
          commercial importance. It also matters 
critically to such professionals
as
          lawyers, doctors, and teachers. Absent 
reform, these interest groups will

          continue to ante up for political 
influence, accepting the soaring prices

          that the vendors demand.

          These vendors, however, maintain that 
it's all O.K. They argue that a
          contribution may buy access and empathy but are shocked — shocked!
          — at the thought that it could influence their vote.

          Perhaps. But let me suggest a fanciful 
thought experiment to test their
          position. Suppose that a reform bill 
is introduced, raising the limit on
          individual contributions to federal candidates from $1,000 to, say,
          $5,000 but prohibiting contributions 
from all other sources, among them
          corporations and unions. These entities could still encourage their
          employees, stockholders, or members to 
contribute personally, but could
          do no more — a ban, incidentally, that 
applied to them until the "soft
          money" dodge was introduced in 1978. Such a bill would be far from a
          panacea for all campaign finance ills, 
of course, but it would at least
be a
          start.

          Why should this bill stand a chance in 
a Congress enraptured with the
          status quo? Well, just suppose some 
eccentric billionaire (not me, not
          me!) made the following offer: If the 
bill was defeated, this person —
the
          E.B. — would donate $1 billion in an allowable manner (soft money
          makes all possible) to the political 
party that had delivered the most
votes
          to getting it passed. Given this 
diabolical application of game theory,
the
          bill would sail through Congress and thus cost our E.B. nothing
          (establishing him as not so eccentric after all).

          The beauty of this plan is that it would highlight the absurdity of
claims
          that money doesn't influence Congressional votes. What a $1 billion
          promise would buy here is a "counter- revelation" among legislators,
          who'd be induced by the offer to shift 
their position on campaign finance

          by 180 degrees so as to prevent the 
money from being delivered to the
          opposition party. When the roll call 
began, Republicans and Democrats
          alike would, in this scenario, 
suddenly find merit in a reform that they
had
          previously classified as somewhere 
between repulsive and un-American.

          This hypothetical exercise, it should be noted, does not expose the
          legislators who now oppose reform as evil or corrupt — but only as
          human. How many of us push for laws 
that are clearly injurious to our
          self-interest? I can assure you that 
I've never looked for ways to make
          retention of my job less secure. Why should legislators?

          Would a system that allows an E.B. to influence legislation by a $1
billion
          promise make sense? Of course not. And neither does a system that
          allows an anything-but-eccentric individual, corporation or union to
          achieve similar influence by a large 
check. Only individuals vote — and
          then just once per election. Let only individuals contribute — with
          sensible limits per election. Otherwise, we are well on our way to
          ensuring that a government of the 
moneyed, by the moneyed, and for the
          moneyed shall not perish from the earth.

          Warren E. Buffett is chairman of Berkshire Hathaway Inc.




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Grandad wrote:

>         Since there are five positions called "captains" of industry (called
> Mining, Manufacturing, Transportation, Wholesale, and Retail)  involved
> in the movement of raw materials to distributed consumer item and each
> of these captains either pays production tax or pays the labor involved
> in the process enough beyond his required wage to pay the income tax, is
> it unreasonable to assume that nearly 40% of the cost of any retail item
> is hidden production tax?  It has been estimated that a 25% consumption
> tax would replace the current IRS collected production tax.  After tax
> cost of most items then would decrease by at least 15%?
>
>         Rather than lament the success or failure of some corporations to
> minimize their payment of tax on production, let's talk about how we
> might save this booming economy from dissolution and extend it a few
> years or a decade by reorganizing this ill conceived and irregularly
> enforced tax on production.
> --
> >From mailto:grandad AT grandadsfarm.com and
> the Home of Grandad's Farm Magazine
> in the beautiful suburbs of Columbia, Missouri
> http://www.grandadsfarm.com/

tvoivozhd---

a.  In any taxation system ever devised (at least 
as far back as recorded history)
the tax collector goes where the money is.  Ours 
is slightly modified in that the
middle class is larger and more prosperous than 
in antiquity, so they all receive a
visit from TC via the mails, with the mailed fist 
of the IRC enforcer out of sight,
but not out of mind.  Most corporations and the upper class also receive an 
IRC
visit, and pay more total tax on income than a 
waitress, but less as a percentage
of income.  As Warren Buffett points out, he pays less taxes as a percentage 
of
income than his secretary.

The biggest pools of money lie in the 
megacorporation treasuries.  They sell their
product to consumers.  If they are taxed at the 
source, they pass along the cost to
said consumers in the form of raised price.  If a 
consumption tax is substituted it
effectively raises the price of their product.  Same end result.  Either route
reduces consumption, and if consumption is 
reduced, so is production.  That is why
Henry Ford wanted the price of labor raised, to increase consumption and his
production (and profits).

However, in our economy, not all corporations are 
born equal.  Those that cannot or
do not bribe Senators sufficiently do not have tax exemptions written for 
them.
Those who pay a higher rental for a Senator have tax exemptions written for
them---the list is too long and tedious, but 
Archer Daniels Midland has to be near
the top, and the Fanjul Brothers, darlings of 
both Republicans and Democrats for
their impartial and nearly equal bribes, have 
blocked sugar imports and tripled the
price of sugar for decades, to the disadvantage 
of food processors and consumers
alike.

So the collection of corporate taxes is 
capricious and should not be---there is no
economic or social reason for permitting a 
corporation to escape taxes levied on a
competitor, large or small.

As you point out, corporate dividends are subject 
to double taxation, however the
income is surrounded with protection and tax exemptions individuals lack.  If,
AFTER paying the double tax, the corporate form 
did not still offer a substantial
economic advantage, there would be no corporations.  And these advantages keep
piling up with every legislative session in 
response to corporate bribes.  The most
recent, which hasn't occasioned much comment in 
the press, is, beginning in Florida
and rapidly spreading, a court judgment in favor of individuals that is large
enough to bankrupt a corporation must be struck down by the judge or heavily
reduced.  Individuals are not treated so gently, 
another individual, bank, Monsanto
or Novartis who gets a judgment against you is 
entitled to and will get everything
you own---a situation that results from the fact 
that individuals lose out in the
competitive bribery race run daily in the halls of Congress.

I do not see any direct correlation between taxes 
as a cost and prices , any more
than the many other costs, raw materials, labor, insurance, electric power,
transport, advertising, communications, heating, cooling, lighting, janitorial
services, paper supplies, ad 
infinitum.  Corporate taxes have been declining for
decades, which has not translated into lower 
prices for corporate products---except
the farm commodity anomaly where prices are dictated by a handful of large
processors and retail chains who are trending toward contract sales to replace
auction sales---and the latter are rapidly 
switching to charge processors for shelf
space rather than making any investment in products for resale.

Prices are basically dictated by what the market 
will bear.  Costs of any kind can
and do rise and fall, but corporate prices go up, go down, or remain the same,
depending upon the marketplace price of same or similar products produced by
competitors here and abroad..

For example, there are still NBC, ABC, CBS, CNN, 
FOX broadcasting networks, plus
some smaller players around, who recently got a 
gift of  $70,000,000,000 from the
taxpayers---free broadcasting spectrum that will 
be worth trillions.  With their
cost diminished by billions of dollars, did the price for your broadcasting
services go down?  Did the quality improve?  Hell 
no, to both.  Change hats for a
second---call the gift a tax reduction.  Would 
that change their prices?  Hell no
to that too.  Their prices depend upon what the market will bear.


Only if taxes are a principal component of production costs do they have any
appreciable effect, and that only if a 
competitive market permits.  Corporations
are well-schooled in tax avoidance in any event.

Some pertinent excerpts:

.

               Study: Dozens of Corporations Pay Little or No
               Income Tax
               By Curt Anderson
               The Associated Press

               WASHINGTON (AP) - Dozens of America's most profitable
               companies enjoyed tax-free years during the 1990s largely
               because of legal tax breaks, an independent study released
               Thursday found.

               The report by the nonprofit Institute on Taxation and Economic
               Policy found that 250 companies 
paid an effective tax rate of 20.1
               percent in 1998, down from 22.9 
percent just two years before. The
               federal income tax rate for corporations is supposed to be 35
               percent.

               Of the 250 companies studied, 41 
enjoyed at least one year of no
               income taxes or an actual rebate from the federal government,
               despite pretax profits of $25.8 billion from 1996-98.

               If all 250 companies had paid the 
full 35 percent on $735 billion in

               pretax profits, the study 
estimated the total income tax would have
               come to $257 billion. But tax breaks put into law by Congress
               lowered those companies' tax bills by $98 billion over the
               three-year period.

               Companies getting tax rebates in 1998 alone included Texaco,
               Chevron, Pepsico, J.P. Morgan, Enron and General Motors, the
               report found.


               The study's chief author, Robert S. McIntyre, said companies
               lower their taxes through such 
breaks as depreciation write-offs,
               tax credits for research and 
development and deductions they take
               when employees exercise stock options.

               "We hope our findings will encourage lawmakers to re-examine
               this important area of taxation," McIntyre said.

               The report also found that the 
petroleum industry paid the lowest
               tax rate from 1996-98, at 12.3 
percent, followed by electronics at
               13.1 percent, forest and paper products at 13.9 percent and
               transportation at 14 percent. At the other end of the spectrum,
               publishing and printing companies paid 31.6 percent, gas and
               electric utilities paid 28.1 
percent and retail and wholesale trade
               companies paid 27.6 percent.

               "Anyone who worries about our economy's long-term growth has to
               wonder why the tax code is being used to favor some industries
               and some kinds of investments over others, rather than letting
               market forces decide," McIntyre said.

               ----

               On the Net:

               Institute on Taxation and Economic Policy site:
               http://www.itepnet.org




International Financial Services

[IMAGE]Offshore corporations can be utilized to obtain benefits in
the areas of tax minimization, asset protection and preservation of
confidentiality. In general offshore corporations are used to
minimize taxes by transferring profits and other taxable events from
a high tax jurisdiction. A frequently used example of this is what is
known as "upstreaming of profits" or "transfer pricing". This
involves using an offshore company as an intermediary in a business
transaction between parties from two high tax jurisdictions.

In certain circumstances substantial tax saving can also be achieved
by interposing an offshore company as an intermediary in an
inter-group loan or other financial arrangement. An offshore finance
company with legally separate, beneficial ownership can be used, for
example, to obtain tax relief on interest that would otherwise not be
obtainable if the same arrangement were made directly between members
of a company group. This is particularly applicable for jurisdictions
such as in the U.S. where relief on interest can be disallowed when
considering the debt-to-equity ratios it determines that an
inter-group loan is an improper substitute for equity funding.

In addition, acquiring property, whether real or personal, in the
name of an offshore rather than a domestic entity can provide
significant long-term savings in Income Tax, Capital Gains Tax and
Inheritance Tax. Interest income earned by an offshore company on
investments for mortgage loans is not taxable in the U.S. provided
these loans meet the portfolio mortgage loan requirements.

A person not domiciled in the U.K. who wishes to buy investment
property in that country may minimize income taxes on rents earned
from the property if, rather than purchasing the property personally,
the person purchases through an offshore company and uses an
appropriate ratio of debt to equity financing.

Also, Belize offers an extremely efficient and cost effective ship
and yacht registry with an excellent reputation for integrity and
reliability. An offshore company may be registered as a ship owner in
the International Marine Registry of Belize (INMARBE) as well as in
other popular registries such as Liberia, Cyprus, the Bahamas and
Panama.

Individuals or corporations in high-tax jurisdictions may realize
significant tax advantages by selling their ownership of copyrights,
patents, trade marks, licenses or franchises to an offshore company
usually in a single-payment purchase. The ownership of the offshore
company in this structure may be vested in an irrevocable
discretionary trust. The offshore company can, in turn, exploit the
copyright, patent, trade mark, license or franchise by entering into
agreements with licensees wishing to utilize them. The income,
subject to any withholding tax, is accumulated free of tax in the
offshore company.

Performers, movie stars, actresses, musicians, sportsmen, engineering
and financial consultants can gain considerable tax advantages by
entering into contracts with independent employment companies,
incorporated in appropriate jurisdictions, which sell their services
outside the individual's country of residence. The offshore
employment company will not have to pay taxes on its earnings and
payments to the individuals are structured in a way which minimizes
their tax liability.


Back to changing the tax system.  Neither a flat tax or consumption tax would
affect the existence or size of the IRS to any great degree.  Simple taxes are
easier for the taxpayer to compute and simpler 
for the tax collector to verify, but
they will be evaded in any form, and evaders 
pursued by tax collectors as always,
ergo the IRS, like death and taxes will always be 
with us---if for no other reason
that it increases the likelihood of Members of 
the House and Senators getting their
paychecks regularly and on time.

The only saving from a flat tax or consumption tax is the cost imposed on the
collector/administrator/forwarder.
That would be significant as compared to  the 
present system, and could lower the
tax total---I am inclined to agree with your 15% estimate in lowering prices 
at
retail, however there are other less desirable 
consequences neither a flat tax or
consumption tax could address, the hereditary 
accumulation of wealth unrelated to
recipient labor or ingenuity---welfare for idlers..

A flat tax or consumption tax would increase the dangerous disparity between
superrich and rest of society.  It has been probably arrested by a progressive
income tax, but not enough.  In 1976 the richest 
2% owned 20 percent of  national
wealth.  In 2000 the richest 2% owned 40 
percentof national wealth.  That is the
point at which the French monarchs were 
decapitated.  Human memory tends to have
recourse to personal experience rather than history books, so I expect the 
next
general decapitation to come as the same 
unpleasant surprise to the new aristocracy
as it did to a socially indifferent Louie XIV and 
Marie Antoinette.  Neither of us
will be around when this happens---I think.

One of the major reasons for complexity in a tax 
system is the rich opportunity it
offers to bribers and bribees to create loopholes, exemptions and subsidies.
Taking that away from your friendly Congressman isn't going to happen. It 
makes
political fundraising easier if instead of 
hitting the huskings back home for $25
contributions, lobbyists come to him, hat and blank, signed checks in hand.

No tax system can be improved until campaign contributions are sized to fit 
the
average taxpayer's purse and corollary 
expenditures from any source are severely
limited or halted.  I don't think this is going to happen either unless the
membership of the Supreme Court is drastically 
altered and as inclined to legislate
as this one, except in the opposite direction.  Don't hold your breath.




Warren Buffett's suggestion:




          ESSAY

          Spectrum Squatters

          By WILLIAM SAFIRE

                 ASHINGTON - What powerful
                 special interest strikes terror in the
          heart of both parties in Congress, and turns
          both Al Gore and George Bush into quavering
          sycophants?





          The Billionaire's Buyout Plan

          By WARREN E. BUFFETT

               MAHA — For five decades, I've looked for undervalued stocks.
               But if I'd been interested in the 
biggest bargain around, which I
          wasn't, I would have bought political 
influence. For many a year, it was
          far cheaper than anything to be found 
in the stock market. A relatively
          modest contribution — say, $25,000 — was enough to make the donor
          a V.I.P. in the political world. And really big amounts? As a
fund-raising
          senator once jokingly said to me, 
"Warren, contribute $10 million and
          you can get the colors of the American flag changed."

          Markets correct, though. Politicians began exploiting the soft money
          loophole, and pricing became more 
efficient. Soft money contributions
          jumped from $86 million in the 1992 
election cycle to an expected $360
          million in the current one. That's a growth rate worthy of Silicon
Valley:
          20 percent annually.

          And the game has barely started. For 
most supplicants, cost still lags
          ridiculously far behind value. 
American business spends $200 billion a
          year on advertising to influence consumers. In many industries —
          communications, tobacco, banking, pharmaceuticals and insurance
          among them — political influence can sometimes be of similar
          commercial importance. It also matters 
critically to such professionals
as
          lawyers, doctors, and teachers. Absent 
reform, these interest groups will

          continue to ante up for political 
influence, accepting the soaring prices

          that the vendors demand.

          These vendors, however, maintain that 
it's all O.K. They argue that a
          contribution may buy access and empathy but are shocked — shocked!
          — at the thought that it could influence their vote.

          Perhaps. But let me suggest a fanciful 
thought experiment to test their
          position. Suppose that a reform bill 
is introduced, raising the limit on
          individual contributions to federal candidates from $1,000 to, say,
          $5,000 but prohibiting contributions 
from all other sources, among them
          corporations and unions. These entities could still encourage their
          employees, stockholders, or members to 
contribute personally, but could
          do no more — a ban, incidentally, that 
applied to them until the "soft
          money" dodge was introduced in 1978. Such a bill would be far from a
          panacea for all campaign finance ills, 
of course, but it would at least
be a
          start.

          Why should this bill stand a chance in 
a Congress enraptured with the
          status quo? Well, just suppose some 
eccentric billionaire (not me, not
          me!) made the following offer: If the 
bill was defeated, this person —
the
          E.B. — would donate $1 billion in an allowable manner (soft money
          makes all possible) to the political 
party that had delivered the most
votes
          to getting it passed. Given this 
diabolical application of game theory,
the
          bill would sail through Congress and thus cost our E.B. nothing
          (establishing him as not so eccentric after all).

          The beauty of this plan is that it would highlight the absurdity of
claims
          that money doesn't influence Congressional votes. What a $1 billion
          promise would buy here is a "counter- revelation" among legislators,
          who'd be induced by the offer to shift 
their position on campaign finance

          by 180 degrees so as to prevent the 
money from being delivered to the
          opposition party. When the roll call 
began, Republicans and Democrats
          alike would, in this scenario, 
suddenly find merit in a reform that they
had
          previously classified as somewhere 
between repulsive and un-American.

          This hypothetical exercise, it should be noted, does not expose the
          legislators who now oppose reform as evil or corrupt — but only as
          human. How many of us push for laws 
that are clearly injurious to our
          self-interest? I can assure you that 
I've never looked for ways to make
          retention of my job less secure. Why should legislators?

          Would a system that allows an E.B. to influence legislation by a $1
billion
          promise make sense? Of course not. And neither does a system that
          allows an anything-but-eccentric individual, corporation or union to
          achieve similar influence by a large 
check. Only individuals vote — and
          then just once per election. Let only individuals contribute — with
          sensible limits per election. Otherwise, we are well on our way to
          ensuring that a government of the 
moneyed, by the moneyed, and for the
          moneyed shall not perish from the earth.

          Warren E. Buffett is chairman of Berkshire Hathaway Inc.