National Sales Tax????

[KarlMarx]

Let's face it .... taxes by definition are not "fair", just like government isn't "fair".... they're both necessary evils.

The question really should be and has been asked.... "why are taxes so high"?

I've read estimates that state the national sales tax, if implemented today, would be around 25 to 33 percent. Why so high? Well.... you've already answered that one too.... the government spends too much money!

Here's the way I see it....
1. The government does certain things well (in industry .... it's called "core competency") and many things not so well. The analogy in the private sector can be readily seen. You don't see IBM trying to market pizza delivery, and you don't see Domino's Pizza trying to sell computers. So why do we expect the government to do everything? The government should limit itself to what it does well and get out of everything else. Those core competencies are defense, perhaps building the national highway system (or at least administering it's maintenance), the regulation of commerce (to a limited extent), the enforcement of laws. After that, it's a matter of debate.... I still think that the government should be involved in the inspection of food and of drugs, others may disagree.

2. As Cassius said to Brutus in the first act of Julius Caesar "the fault is not in our stars, but in our selves!"... same goes for the American taxpayer. The problem is that the American taxpayer expects government to solve all of life's problems. The problem is that government, like all institutions, does not have the power to solve all of life's problems. Life is imperfect at best, some things are going to have to be left unsolved or solved in some other way.

3. Politicians, being what they are, will promise extra services (at taxpayers' expense) to get elected. There is no free lunch. If a politician promises extra services, he actually is saying "I'm going to increase your taxes". On the other hand, if a politician promises tax cuts, he is actually saying "I'm going to cut your services"..... there isn't a third option.

4. Since the world can't be a fair place or a perfect place, then let's not fool ourselves into thinking that the government can create a utopia here on Earth. By abandoning this type of thinking, limiting the government's role in our lives, we will actually be better off. So while we might have to give up some things, in the long term and in the bigger picture, our lives and quality of life will actually improve.

 

[dilloduck]

Let's face it .... taxes by definition are not "fair", just like government isn't "fair".... they're both necessary evils.

The question really should be and has been asked.... "why are taxes so high"?

I've read estimates that state the national sales tax, if implemented today, would be around 25 to 33 percent. Why so high? Well.... you've already answered that one too.... the government spends too much money!

Here's the way I see it....
1. The government does certain things well (in industry .... it's called "core competency") and many things not so well. The analogy in the private sector can be readily seen. You don't see IBM trying to market pizza delivery, and you don't see Domino's Pizza trying to sell computers. So why do we expect the government to do everything? The government should limit itself to what it does well and get out of everything else. Those core competencies are defense, perhaps building the national highway system (or at least administering it's maintenance), the regulation of commerce (to a limited extent), the enforcement of laws. After that, it's a matter of debate.... I still think that the government should be involved in the inspection of food and of drugs, others may disagree.

2. As Cassius said to Brutus in the first act of Julius Caesar "the fault is not in our stars, but in our selves!"... same goes for the American taxpayer. The problem is that the American taxpayer expects government to solve all of life's problems. The problem is that government, like all institutions, does not have the power to solve all of life's problems. Life is imperfect at best, some things are going to have to be left unsolved or solved in some other way.

3. Politicians, being what they are, will promise extra services (at taxpayers' expense) to get elected. There is no free lunch. If a politician promises extra services, he actually is saying "I'm going to increase your taxes". On the other hand, if a politician promises tax cuts, he is actually saying "I'm going to cut your services"..... there isn't a third option.

4. Since the world can't be a fair place or a perfect place, then let's not fool ourselves into thinking that the government can create a utopia here on Earth. By abandoning this type of thinking, limiting the government's role in our lives, we will actually be better off. So while we might have to give up some things, in the long term and in the bigger picture, our lives and quality of life will actually improve.

Agreed and well put----the shift of personal responsiblity to the government is insane (and even cost ineffective). I think it's a sign of laziness and trying to maintain that sense that "Hell,if everything starts to REALLY go sour, the gov will come in and save me. They couldn't save Terri and they can't save you.

 

[Mr. P]

Let's face it .... taxes by definition are not "fair", just like government isn't "fair".... they're both necessary evils.

I don't agree. Taxes can be fair, that's what the Fair tax bill (sometimes refered to as retail sales tax) is all about. The size of the Gov. and how much is spent are differant issues.

 

[dilloduck]

I don't agree. Taxes can be fair, that's what the Fair tax bill (sometimes refered to as retail sales tax) is all about. The size of the Gov. and how much is spent are differant issues.

Whats fair about taxing people who spend money more than those who chose to save it?

 

[Fmr jarhead]

It's about personal responsibility and choice. If you choose to consume new products and services, you will be taxed. If you choose to live under your means, and buy used stuff when you want/need it, then you won't be taxed. It would encourage self discipline when it comes to economic matters, and offer you the choice of determining how much tax you want to contribute.

...if you read anything about the Fair Tax plan you will also see that the first 20K (roughly) is not subject to taxation, so that the poor will not be overtaxed, and will still be able to afford food and the other necessities of life.

I am sure Mr. P will correct me, if I am wrong, or have misstated anything.

 

[Mr. P]

It's about personal responsibility and choice. If you choose to consume new products and services, you will be taxed. If you choose to live under your means, and buy used stuff when you want/need it, then you won't be taxed. It would encourage self discipline when it comes to economic matters, and offer you the choice of determining how much tax you want to contribute.

...if you read anything about the Fair Tax plan you will also see that the first 20K (roughly) is not subject to taxation, so that the poor will not be overtaxed, and will still be able to afford food and the other necessities of life.

I am sure Mr. P will correct me, if I am wrong, or have misstated anything.

Nope, you're on the mark.

 

[manu1959]

Nope, you're on the mark.

pay as you go.....pay as you buy.....pay as you use it....

fair to everyone except those that want a free ride

 

[Mr. P]

pay as you go.....pay as you buy.....pay as you use it....

fair to everyone except those that want a free ride

That's it...

 

[Huckleburry]

Our tax code is a tool to redistribute wealth. From the wealthy to the poor. From the old to the young. From the unproductive to the productive, our tax code goes far beyond raising revenue for Federal and local governments. A national tax may be "fair" but is it wise? For decades, our tax code has promoted certain types of behavior (entrepreneurship) and discouraged other types of behavior (inefficient holding). In my view (and yes I pay taxes out the wazoo) these are positive things and we should be willing to pay for them.
Second. A national sales tax would raise the cost of consumption astronomically; moreover, it would not do so evenly. Wealthy people (with a lower MPC!!!) would be able to consume far more than their lower class counter parts. In effect, the poor would suddenly share far more of the tax burden than they are prepared to do. A sudden rise in the CPI that would result from the introduction of a national sales tax would have catastrophic effects on consumption. Real prices would increase dramatically and consumption would likely grind to a halt, thus sending the already shaky world economy into a tailspin.
The argument is often made that a national sales tax would not have such an effect because people will be retaining a great deal more of their income. Superficially, such an argument is convincing, however, if we dig deeper we find that the foundation is in fact rotten. Let us examine why this is so. Our tax structure is not flat. It is bracketed, with those making the most income paying the most tax, and those making the least paying the least tax. This in effect allows everyone to consume more. A national sales tax would not do this. Instead it would charge a flat tax and everyone would pay an equal amount. Yet this would have an averse effect on the economy because the people with the most purchasing power are already the people who are the least likely to spend. In essence, a national sales tax would shoulder the most robust consumers with an additional tax. A tax, which they can ill afford to pay.
A national sales tax may indeed be fair, it is not however wise.

 

[Annie]

I don't agree. Taxes can be fair, that's what the Fair tax bill (sometimes refered to as retail sales tax) is all about. The size of the Gov. and how much is spent are differant issues.

Mr. P, what's 'fair' about taxing 100% of the working poor's income, but perhaps only 10-20% of the wealthy? As you say, a built in incentive for saving, for those that have expendable income.

 

[Fmr jarhead]

I guess some people have not completely understood that the first 20K of income would be exempt from ANY tax...thsu allowing the low wage earner the opportunity to benefit from the lack of taxation, but retention in their benefits.

Huck...you have nailed it on the head, though....you don't get wealthy by spending your money....a national sales tax would create a market for second hand and recycled itmes...I already try and buy most of my goods and services second hand to avoid the ridiculous markup found in many cases.

It would encourage people to buy used or second hand, to avoid the taxation, and encourage the reduction of costs to more aggressively pursue the marketplace with new products for manufacturers. Of course there will always be those out there who have to buy new stuff, and those will be the ones who will pay tax (and who needs to eat more than 20K worth of food or other products that are necessities?

I am more a fan of a flat tax, with a 25K umbrella for those that don't earn as much, but I would opt for either option if given the chance.

 

[pegwinn]

I am part of the working poor. Meaning I make over 50K but less than 75k. I would be willing to pay more money out in taxes just to simplify stuff. I would support a 10-12% flat tax with no "prebates", rebates, exemptions, etc if April 15 became just another day and the IRS were redirected to other purposes like Immigration Restructuring Service.

Equality is fundamental. If I make a hundred bux and pay ten, then those who make a grand should pay a hundred. Claiming it is unfair to the poor is to in effect blame the not-poor for having money.

I like the NST because it assures that everyoen will pay into the system to include illegals and tourists.

Picture this. A ten percent flat tax to run the government. No loopholes or exemptions. Then a 2-3 % NST to pump up SS trust fund.

 

[Fmr jarhead]

What would we do with the 55,000 pages of tax code, and all the lobbyists on K Street? How dare you think of putting them out of business iwth your own selfish greed!

(I really like your idea, though!)

 

[Huckleburry]

fmr jarhead,
I like your idea about reusing things. I think that is a very strong point and need to think about this issue a little more for a while.
Also don't forget that there is alot more to the tax code then just income tax. There is corprate tax and estate tax and that is before we get into the thick of it. I agree that the tax code needs to be simplified and that many of the the loop holes need to be eliminated. But taxation is complicated and treating it otherwise is not only foolish but dangerous as well.

 

[Mr. P]

fmr jarhead,
I like your idea about reusing things. I think that is a very strong point and need to think about this issue a little more for a while.
Also don't forget that there is alot more to the tax code then just income tax. There is corprate tax and estate tax and that is before we get into the thick of it. I agree that the tax code needs to be simplified and that many of the the loop holes need to be eliminated. But taxation is complicated and treating it otherwise is not only foolish but dangerous as well.

Check the link I posted, Huck.
I think you'll fine it very interesting. Page 1 on thread I think.

 

[Fmr jarhead]

http://www.fairtaxvolunteer.org/smart/index.html Here it is, again....

good info, Mr. P.

Occam's Razor....the simplest of solutions is often the most plausible, and best solution! (I paraphrased, and took some liberty....excuse me)

 

[Merlin1047]

Some time ago I typed my fingers sore trying to explain the problems with the so-called "flat" tax and why it will do nothing to reduce the complexity of the tax code. I'm not going to do that again, but I'll simply hit the high point. Flat tax will not reduce tax code complexity because it will be just as difficult to define exactly what is income as it currently is to define which income will be taxed at what rate. For example - is the health care insurance provided by your employer to be taxed? If not, then what about the 15,000 sq foot Manhattan apartment provided rent free to the CEO of a major corporation? So the flat tax code will have a hell of a time nailing down exactly what is to be considered income.

But now to the sales tax. Kathianne has already pointed out that a sales tax is the most regressive of all taxes. She is correct. Simple math will prove it. Let's take person A making 24,000 per year and person B making 2.4 million. A spends his entire income on rent, food, utilities and clothing for his family. B spends 200,000 for the same categories and another 500,000 for fun stuff. Let's exempt rent and mortgage from sales tax. A spends 500 per month B spends 100,000 per year for the mansion mortgage.

So A spends 18,000 on taxable goods and B spends 600,000. A spends his entire income on necessities. He can only spend approx. 16,300 for his family's needs because the 23% sales tax will cost him around 1,700 dollars. B spends 500,000 for art, vacations, luxury cars, etc etc. and another 100,00 for gourmet groceries, utilites and so on. He saves or invests the rest of his income in his secret offshore bank accounts. He spends 488,500 and pays approx 111,500 in tax.

Those who support the concept of a national sales tax are probably gloating by now thinking I've shot myself in the foot. B pays 111,500 compared to A's paltry 1,700. What could be fairer than that? Well don't start celebrating yet. A spent his ENTIRE income on NECESSITIES and we taxed his ass off for that. The 1,700 dollars tax he paid represents 7.08 percent of his income. B paid 111,500 out of his 2.4 million dollar income which yields for him a percentage rate of 4.6%. Not only that, but those who were spouting phrases that "it's all about personal responsiblity" - where is your rationale now? A spent everything he made to support his family. B spent 500,000 on frivolous entertainment and status symbols yet his tax rate is far lower than A who purchased not so much as a single pack of cigarrettes or a movie ticket.

That, ladies and germs is what we call a regressive tax. It keeps the poor in poverty and makes the rich ever wealthier. It is a huge burden on the poor and middle class while exempting a gigantic portion of the incomes of the rich and famous "beautiful people" from any kind of taxation whatever. This is the stuff which is the basis for class warfare. It is a patently stupid concept.

Not only does a national sales tax pose the foregoing problems, but it poses another, even greater danger. Our economy is driven by consumerism. Now we're going to tax that. Twenty three percent for the feds? How long before it goes up to 25 or 30 percent? Now let's say that the states also opt to abandon their current income tax structure in favor of similar schemes. Current state sales taxes are already on average around eight to ten percent. If states adopt a 23 percent tax it will be in addition to current sales taxes since most of those go to city and county governments. So overall, you will see state sales taxes around 30 percent.

Add it up. AT LEAST 23 percent for the feds - and keep in mind this is just their STARTING ploy. No doubt a low-ball figure to make the scheme palatable to the unwary. Add to the fed 23 percent the state, city, county combination of 30 percent and you're looking at a whopping 53 percent rate. Know what? That STILL doesn't eliminate property taxes, license fees, gasoline taxes, federal excise taxes, and the cornucopia of hidden taxes we have the pleasure of paying.

What do you think this is going to do to consumerism in this country? We'll be in a monstrous recession faster than you can say Jimmy Carter.

And what about person B - you remember - the one making 2.4 mil a year? Well he simply moves his family to Belize. He purchases practically nothing in this country and as a result pays about one to two percent of his income in taxes.

Yeah. That's fair. You bet your ass.

(edited to correct math error. sorry about that. but it proves the point even more)

 

[dilloduck]

Some time ago I typed my fingers sore trying to explain the problems with the so-called "flat" tax and why it will do nothing to reduce the complexity of the tax code. I'm not going to do that again, but I'll simply hit the high point. Flat tax will not reduce tax code complexity because it will be just as difficult to define exactly what is income as it currently is to define which income will be taxed at what rate. For example - is the health care insurance provided by your employer to be taxed? If not, then what about the 15,000 sq foot Manhattan apartment provided rent free to the CEO of a major corporation? So the flat tax code will have a hell of a time nailing down exactly what is to be considered income.

But now to the sales tax. Kathianne has already pointed out that a sales tax is the most regressive of all taxes. She is correct. Simple math will prove it. Let's take person A making 24,000 per year and person B making 2.4 million. A spends his entire income on rent, food, utilities and clothing for his family. B spends 200,000 for the same categories and another 500,000 for fun stuff. Let's exempt rent and mortgage from sales tax. A spends 500 per month B spends 100,000 per year for the mansion mortgage.

So A spends 18,000 on taxable goods and B spends 600,000. A spends his entire income on necessities. He can only spend approx. 16,300 for his family's needs because the 23% sales tax will cost him around 1,700 dollars. B spends 600,000 for art, vacations, luxury cars, etc etc. and he saves or invests the rest in his secret offshore bank accounts. He spends 567,800 and pays approx 122,200 in tax.

Those who support the concept of a national sales tax are probably gloating by now thinking I've shot myself in the foot. B pays 122,200 compared to A's paltry 1,700. What could be fairer than that? Well don't start celebrating yet. A spent his ENTIRE income on NECESSITIES and we taxed his ass off for that. The 1,700 dollars tax he paid represents 7.08 percent of his income. B paid 122,200 out of his 2.4 million dollar income which yields for him a percentage rate of 5.09%. Not only that, but those who were spouting phrases that "it's all about personal responsiblity" - where is your rationale now? A spent everything he made to support his family. B spent 600,000 on frivolous entertainment and status symbols yet his tax rate is far lower than A who purchased not so much as a single pack of cigarrettes or a movie ticket.

That, ladies and germs is what we call a regressive tax. It keeps the poor in poverty and makes the rich ever wealthier. It is a huge burden on the poor and middle class while exempting a gigantic portion of the incomes of the rich and famous "beautiful people" from any kind of taxation whatever. This is the stuff which is the basis for class warfare. It is a patently stupid concept.

Not only does a national sales tax pose the foregoing problems, but it poses another, even greater danger. Our economy is driven by consumerism. Now we're going to tax that. Twenty three percent for the feds? How long before it goes up to 25 or 30 percent? Now let's say that the states also opt to abandon their current income tax structure in favor of similar schemes. Current state sales taxes are already on average around eight to ten percent. If states adopt a 23 percent tax it will be in addition to current sales taxes since most of those go to city and county governments. So overall, you will see state sales taxes around 30 percent.

Add it up. AT LEAST 23 percent for the feds - and keep in mind this is just their STARTING ploy. No doubt a low-ball figure to make the scheme palatable to the unwary. Add to the fed 23 percent the state, city, county combination of 30 percent and you're looking at a whopping 53 percent rate. Know what? That STILL doesn't eliminate property taxes, license fees, gasoline taxes, federal excise taxes, and the cornucopia of hidden taxes we have the pleasure of paying.

What do you think this is going to do to consumerism in this country? We'll be in a monstrous recession faster than you can say Jimmy Carter.

And what about person B - you remember - the one making 2.4 mil a year? Well he simply moves his family to Belize. He purchase practically nothing in this country and as a result pays about one to two percent of his income in taxes.

Yeah. That's fair. You bet your ass.

Thanks for explaining that again so well---I'll send ya something to take care of your tired fingers.

 

[Mr. P]

How does the FairTax protect low-income and lower middle-income families and individuals? Under the FairTax plan, poor people pay no net FairTax at all up to the poverty level! Every household receives a rebate that is equal to the FairTax paid on essential goods and services, and wage earners are no longer subject to the most regressive and burdensome tax of all, the payroll tax. Those spending at twice the poverty level will pay a tax of only 11.5 percent – a rate much lower than the income and payroll tax burden they bear today.

Under the federal income tax, slow economic growth and recessions have a disproportionately adverse impact on lower income families. Breadwinners in these families are more likely to lose their jobs, are less likely to have the resources to weather bad economic times, and are more in need of the initial employment opportunities that a dynamic, growing economy provides. The FairTax dramatically improves economic growth and wage rates. Retaining the present tax system makes economic progress needlessly slow, thus harming low-income people the most.

In contrast, the FairTax dramatically improves economic growth and wage rates for all, but especially for lower income families and individuals. In addition to receiving the monthly FairTax rebate, these taxpayers are freed from regressive payroll taxes, the federal income tax, and the compliance burdens associated with each. They pay no more hidden taxes on goods (averaging 22 percent) or services (averaging 25 percent), and used goods are tax-free.

I think you're wrong Merlin...
http://www.fairtaxvolunteer.org/smart/index.html

 

[Merlin1047]

I think you're wrong Merlin...
http://www.fairtaxvolunteer.org/smart/index.html

Nope.

While this does address those low income wage earners at or below the poverty level, the basic premise of regressive taxation and the fact that the rich can easily escape taxation remains unchallenged.

Also the adverse impact of this type of tax on the economy is not satisfactorily addressed.