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National Sales Tax in America?

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This little ditty crossed my screen being part of the many business sided emails I get daily.

Now, I am *NOT* a conservative by any means. More moderate in nature with a few scant objections that would only serve to inflame one side or another.

But thought enough of this article to share. I know there are other countries that use a national sales tax or European VAT for that matter. I’d like other opinions about the following article before making my own conclusions. Yes, its fair game, right wingers! Show me the error of my ways! Go!

http://www.theconservativevoice.com/articles/article.html?id=7277

– beads

Topic

Rhetoric

In reply to National Sales Tax in America?

Wow!!!

This is the same kind of rhetoric that has caused a lot of people nationwide to end up in Federal prison for not paying their taxes.

So far, I have heard only one argument for a NST that has merit.

A NST would capture more revenue from imported goods than the present system.

However, taken as a whole ANY general sales tax is the second least fair method of taxation.
Only a fixed levy property tax with no adjustment for an individuals income is less fair.

A sales tax is a family unfriendly tax. The 18 years that your children are living at home is when you spend the highest percentage of your income on “things”.

A sales tax is a shift of taxation from the rich onto the middle class. While the rich may buy more expensive items than the middle class, they spend a much lower percentage of their income on “things”.
A sales tax in exchange for a progressive income tax is the ultimate tax shelter for the rich.

Sales tax revenue is the least stable form of government income. When the economy is weak and people stop spending money is exactly the time when the government needs to spend the most money. Government spending for needed services does not drop when the citizens spending drops.

Some claim that a sales tax will capture income from the drug trade and other illegal activities.
Just how much of what a drug lord makes is spent in traditional retailers?

Even if we capture some revenue from illegal transactions, any gain would be more than offset by a new barter economy that a 17 percent or larger sales tax would encourage.

Now, a mix of taxation, say a 5 percent NST in exchange for a reduction in the national debt and after the Federal budget is solvent, a reduction in the income tax rate might be worth looking at.

Chas

NST

In reply to Rhetoric

Chas;

Now, a mix of taxation, say a 5 percent NST in exchange for a reduction in the national debt and after the Federal budget is solvent, a reduction in the income tax rate might be worth looking at.

This is where I starting thinking that it might, just might be a good thing to do. It would eliminate some of the whining from states about loosing tax revenue from Internet sales and replace some monies lost, albiet to the Federal government instead.

But unless there is some very specific language placed to limit the time frame and purpose of such a tax it would be next to impossible to wean the Federal government off the tax base in the first place.

How many bonds have been sold by municipalities to build roads, tolls roads included, bridges, parks and all the rest only to see the “bond” extended.

The Federal government has oversold bonds as well, increasing our national debt to well over a trillion dollars. I know something has to be done but not sure this is the ultimate answer.

What I found most shocking was the number of people opting out of the tax system in general. Hope they never need the Social Security safety net or Medicare as they age.

– beads

I agree with Chas. . . .

In reply to Rhetoric

.
….on the merits of this article.

When it said:

“…..The current system is totally VOLUNTARY (otherwise it WOULD be unconstitutional). Every IRS commissioner through they years has agreed with that, and has said publicly, “ours is a system of voluntary self assessment and compliance” or “this system is not based on distraint,” or etc…..”

…it totally lost me. That is, as Chas suggested, a bunch of nonsensical rhetoric that has landed many-a-people in jail for buying into it. The rest of the article simply lost credibility and wasn’t deemed worthy of serious attention after that.

HOWEVER, since it was brought up…….see my next message.

Which part do you have a problem with?

In reply to Rhetoric

That the “rich” don’t pay enough, or the “poor” pay too much?

This is a “use” tax, and you pay according to how much you use. This also collects money from travelers, to help pay for the MANY public services that they use.

On thing about the current tax scheme, the higher your income the more you pay on. You ALSO pay at a higher rate than lower income. A double wammy. Why is a higher rate on a higher amount fair?

NOTE, after the Bush tax cuts that were going to ruin our economy according to the Dems, has brought in MUCH more revenue than estimated. We cut taxes and got more tax revenue. Just like when Reagan did it. Go figure. The fairer the tax laws, the less likely people are going to cheat on their taxes.

Chas– check out Fairtax fine print and their goofy explanation for it

In reply to Rhetoric

http://fairtaxfineprint.blogspot.com/

FairTax ……. HR-25 & S-25

In reply to National Sales Tax in America?

.
HR-25 and S-25 is a bill proposing the elimination of all income taxes, and replace it with a national sales tax system.

This will eliminate ALL taxes on ALL income, in essence giving everyone a “take-home” pay that is EQUAL to his/her gross pay; it would eliminate ALL corporate taxes, as we all know that corporations don’t really pay taxes, they simply pass it on to the consumer; it would eliminate the Internal Revenue Service, thereby saving a couple-hundred billion in processing costs; and it would repeal the 16th amendment.

However, it would result in the government taking in THE SAME amount of revenue, so no spending cuts would have to be implemented. It would simply change the way taxes are collected. (Although I support spending cuts as well. But that’s another discussion entirely.)

I like it because people who earn under the $27,000 range would literally pay no taxes whatsoever. And I further like it because people would have more control over their tax obligation — you spend money on NEW things or services (not used items), and you pay taxes. If you don’t spend and choose to save instead, you pay no taxes.

Before you rush to judgement on this, however, and judge it on appearances, do yourself a favor and read all about it. This really is a great plan.

If you have any comments, concerns, or questions, ask away. I’ve read a lot on this bill, and will try to answer any questions. For example, one of the first questions might be, if this is a national sales tax, it will hurt the little guy more; and how can you say that income under $27,000 won’t be taxed if it’s assessed on sales, not income?

The answer is here:

http://www.fairtaxvolunteer.org/smart/faq.html

The Home Page is here:

http://www.fairtax.org

Read all the documents. Follow the links. Tell me what you think.

This one is legitimate, folks. It has some serious study behind it; and it has some serious backing with it.

And it has support on both sides. . . . .

In reply to FairTax ……. HR-25 & S-25

.
As of today, for example, Trent Lott, a Republican Senator is leaning towards supporting this bill; and so is Harry Reid, a Democrat Senator. I will acknowledge, however, that the other 20 Senators who are either in support or leaning towards support are all Republicans. Out of the 14 Senators who are against this, 7 are Democrats and 7 are Republicans. But the 58 undecided Senators might indicate that the jury is still out on this one.

Look at the list of Senators who support or oppose this, and how others are leaning. You might be surprised to see who’s supporting this. Robert Byrd, for example, is undecided. I suppose I’m rather shocked that he’s not solidly against it. (I suppose it doesn’t matter where the money comes from, as long as he gets to remain the king of pork.) And Elizabeth Dole is against it — another surprise to me. Perhaps it’s time I send Libby a letter.

Taking me awhile to digest…

In reply to FairTax ……. HR-25 & S-25

With 40+ entries, its taking me a bit to digest this new information.

One thing that sticks out so obviously is the failure to mention the outright appeal of the 16th Amendment. Though I understand this would undoubtedly be a next step it would have to be done before the NST could be put into place, for somewhat obvious reasons.

This maybe one of those things that is so simple its difficult for me to understand, Max. So bear with me while I try to find some group opposed to the NST as well. Always good to hear both sides of the story – even when the argument is completely irrational. This of course happens on both far sides of the table.

Excellent research, Max. I commend the information… so far.

– beads

Overly Optomistic

In reply to FairTax ……. HR-25 & S-25

Max,

I think the people who generated and compiled the information on the “fair” tax are grossly optimistic.

First off, unless I missed something, this only replaces all Federal Taxes with a NST.

States are still free to levy whatever taxes they deem necessary.

I find it contradictory that the states that rely the most on sales tax revenue had the greatest loss of tax revenue in the 2000 2001 recession. Those states that rely on property and income tax had the least impact.

Perhaps since each recession has had primary impact on different sectors of the economy, the national average spending is less impacted than in individual states.

I think it is foolish to assume that a significant portion of any cost reductions will be passed on to consumers or employees.
I predict that 95% of any cost savings will go straight to the executive compensation package.

I also predict that most companies will reduce R&D spending, along with charitable spending.
Tax credits just factor too heavily in R&D spending decisions. Without tax credits, the returns from R&D spending are just too long term for the average company.

As to any assumptions about savings growth, that is an economists wet dream.

We live in a consumption driven society.
People are just not going to make the connection that putting money in savings prevents it from being taxed.

Under a NST, I predict that IRAs and other similar long term savings plans will receive so little new investment that institutions will cease offering new accounts.

Similarly, the average person will drop their 401K contribution to the employer match level. If they stay in the plan at all.

I still cannot comprehend how anyone can describe a sales tax as progressive and an income tax as regressive.

Or, why it is a good idea to shift the federal tax burden from the rich to the middle class. Primarily by increasing the costs of starting a family.

In actuality, I myself would likely break even, or come out ahead under this plan. Still, I don’t want my children burdened by the high costs of starting their lives that a NST would bring.

There is one aspect of a NST that I do like, even though it conflicts with some of my other statements.
A NST would place a high burden on the upper class wannabes that are building the McMansions.

Another issue that concerns me, is the impact of the gross economic upheaval that this change to the tax system would bring.

Unless the 2 systems are phased out and in, the radical change in our economy could be very devastating.

Even with a phased transition, an effort of no less than was put forth to prepare for Y2K will be undertaken by the accountants, MBAs and lawyers.

Chas

State Tax – From the FairTax Web Site

In reply to Overly Optomistic

.
How are state tax systems affected, and can states adequately collect a federal sales tax?

No state is required to repeal its income tax or piggyback its sales tax on the federal tax. All states have the opportunity to collect the FairTax; states will find it beneficial to conform their sales tax to the federal tax. Most states will probably choose to conform. It makes the administrative costs of businesses in that state much lower. The state is paid a 1/4 of one percent fee by the federal government to collect the tax. For states that already collect a sales tax, this fee proves generous. A state can choose not to collect the federal sales tax, and either outsource the collection to another state, or opt to have the federal government collect it directly. If a state chooses to conform to the federal tax base, they will raise the same amount of state sales tax with a lower tax rate ? in some cases more than 50 percent lower ? since the FairTax base is broader than their current tax base. States may also consider the reduction or elimination of property taxes by keeping their sales tax rate at or near where it is currently. Finally, conforming states that are part of the FairTax system will find collection of sales tax on Internet and mail-order retail sales greatly simplified.

Corporations – From the FairTax Web Site

In reply to Overly Optomistic

.
Will corporations get a windfall with the abolition of the corporate tax?

Corporations are legal fictions that have not, do not, and never will bear the burden of taxation. Only people pay taxes. Corporations pass on their tax burden in the form of higher prices to consumers, lower wages to workers, and/or lower returns to investors. The idea that taxing a corporation reduces taxes on, say the working poor, is a cruel hoax. A corporate tax only makes what the working poor buy more expensive, costs them jobs, lowers their lifestyle, or delays their retirement. Under the FairTax plan, money retained in the business and reinvested to create jobs, build factories, or develop new technologies, pays no tax. This is the most honest, fair, productive tax system possible. Free market competition will do the rest.

Differences

In reply to Corporations – From the FairTax Web Site

We agree that corporations and businesses do not pay taxes as and of themselves.

We agree that eliminating taxes on business income is a good idea.

Where we disagree is the presumption that savings from eliminating corporate taxes will get passed on to the consumer.

First off, except for direct credits, no job was ever directly created from any tax cut.
Any properly run business only hires people when they need more staff to produce their goods or services.

Unless the changes from income to sales tax results in increased demand for US produced goods and services, no jobs will be produced.

Prices in the US are NOT determined predominantly by costs. Prices are determined by what the market will bear. Since most US based companies have very little US based competition, the mere fact of reducing a cost (taxes) will not result in lower prices.
It will result in higher profits. Based on recent history, increased profits go directly to top level executives in the form of bonuses.

We have lost free markets in the US by allowing companies to buy up their competition.

Chas

A Narrow View

In reply to Differences

.
I think you look at economics and American business (as well as a lot of other things) through a keyhole.

Why do you presume to be correct, while presuming scores of reputable economists are wrong?

Reputable economist actually trash Fairtax – check it out

In reply to A Narrow View

Actually Fairtax is goofy nonsense. The “experts” they list don’t support it. I contacted about 20 of these guys, and only ONE — a guy who is paid by Fairtax, claimed support for it. ONLY ONE.

Most didn’t respond, but those who did respond said they never looked closely at Fairtax and never read the fine print. Several admitted they should have looked at the fine print/

YOu should look at their fine print too – and then YOU decide for yourself

http://fairtaxfineprint.blogspot.com/

Find your Question – From the FairTax Web Site

In reply to Overly Optomistic

.
http://www.fairtaxvolunteer.org/smart/faq.html

You disagree with some “heavy hitter” experts

In reply to Overly Optomistic

An Open Letter to the President, the Congress, and the American people Concerning Reform of the Federal Tax Code

Dear Mr. President, Members of Congress, and Fellow Americans,

We, the undersigned business and university economists, welcome and applaud the ongoing
initiative to reform the federal tax code. We urge the President and the Congress to work
together in good faith to pass and sign into federal law H.R. 25 and S. 25, which together call
for:

? Eliminating all federal income taxes for individuals and corporations,

? Eliminating all federal payroll withholding taxes,

? Abolishing estate and capital gains taxes, and

? Repealing the 16th Amendment

We are not calling for elimination of federal taxation, which would be irresponsible and
undesirable. Nor does our endorsement call for reduced federal spending. The tax reform plan we endorse is revenue neutral, collecting as much federal tax revenue as the current income tax code, including payroll withholding taxes.

We are calling for elimination of federal income taxes and federal payroll withholding taxes. We endorse replacing these costly, oppressively complex, and economically inefficient taxes with a progressive national retail sales tax, such as the tax plan offered by H.R. 25 and S. 25 ? which is also known as the FairTax Plan. The FairTax Plan has been introduced in the 109th Congress and had 54 co-sponsors in the 108th Congress.

If passed and signed into law, the FairTax Plan would:

? Enable workers and retirees to receive 100% of their paychecks and pension benefits,

? Replace all federal income and payroll taxes with a simple, progressive, visible, efficiently collected national retail sales tax, which would be levied on the final sale of newly produced goods and services,

? Rebate to all households each month the federal sales tax they pay on basic necessities,
up to an independently determined level of spending (a.k.a., the poverty level, as
determined by the Department of Health and Human Services), which removes the burden of federal taxation on the poor and makes the FairTax Plan as progressive as the current tax code,

? Collect the national sales tax at the retail cash register, just as 45 states already do,

? Set a federal sales tax rate that is revenue neutral, thereby raising the same amount of tax
revenue as now raised by federal income taxes plus payroll withholding taxes,

? Continue Social Security and Medicare benefits as provided by law; only the means of tax collection changes,

? Eliminate all filing of individual federal tax returns,

? Eliminate the IRS and all audits of individual taxpayers; only audits of retailers would be
needed, greatly reducing the cost of enforcing the federal tax code,

? Allow states the option of collecting the national retail sales tax, in return for a fee, along with their state and local sales taxes,

? Collect federal sales tax from every retail consumer in the country, whether citizen or
undocumented alien, which will enlarge the federal tax base,

? Collect federal sales tax on all consumption spending on new final goods and services,
whether the dollars used to finance the spending are generated legally, illegally, or in the
huge ?underground economy,?

? Dramatically reduce federal tax compliance costs paid by businesses, which are now
embedded and hidden in retail prices, placing U.S. businesses at a disadvantage in world
markets,

? Bring greater accountability and visibility to federal tax collection,

? Attract foreign equity investment to the United States, as well as encourage U.S. firms to
locate new capital projects in the United States that might otherwise go abroad, and

? Not tax spending for education, since H.R. 25 and S. 25 define expenditure on education
to be investment, not consumption, which will make education about half as expensive
for American families as it is now.

The current U.S. income tax code is widely regarded by just about everyone as unfair,
complex, wasteful, confusing, and costly. Businesses and other organizations spend more than
six billion hours each year complying with the federal tax code. Estimated compliance costs
conservatively top $225 billion annually ? costs that are ultimately embedded in retail prices ppaid by consumers.

The Internal Revenue Code cannot simply be ?fixed,? which is amply demonstrated by more
than 35 years of attempted tax code reform, each round resulting in yet more complexity and
unrelenting, page-after-page, mind-numbing verbiage (now exceeding 54,000 pages containing
more than 2.8 million words).

Our nation?s current income tax alters business decisions in ways that limit growth in
productivity. The federal income tax also alters saving and investment decisions of households,
which dramatically reduces the economy?s potential for growth and job creation.

Payroll withholding taxes are regressive, hitting hardest those least able to pay. Simply
stated, the complexity and frequently changing rules of the federal income tax code make our
country less competitive in the global economy and rob the nation of its full potential for growth and job creation.

In summary, the economic benefits of the FairTax Plan are compelling. The FairTax Plan eliminates the tax bias against work, saving, and investment, which would lead to higher rates of economic growth, faster growth in productivity, more jobs, lower interest rates, and a higher
standard of living for the American people.

? no federal income taxes,
? no payroll taxes,
? no self-employment taxes,
? no capital gains taxes,
? no gift or estate taxes,
? no alternative minimum taxes,
? no corporate taxes,
? no payroll withholding,
? no taxes on Social Security benefits or pension benefits,
? no personal tax forms,
? no personal or business income tax record keeping, and
? no personal income tax filing whatsoever.

No Internal Revenue Service; no April 15th; all gone, forever.

We believe that many Americans will favor the FairTax Plan proposed by H.R. 25 and S. 25,
although some may say, ?it simply can?t be done.? Many said the same thing to the grassroots
progressives who won women the right to vote, to those who made collective bargaining a reality for union members, and to the Freedom Riders who made civil rights a reality in America.

We urge Congress not to abandon the FairTax Plan simply because it will be difficult to face
the objections of entrenched special interest groups ? groups who now benefit from the
complexity and tax preferences of the status quo. The comparative advantage and benefits
offered by the FairTax Plan to the vast majority of Americans is simply too high a cost to pay.

Therefore, we the undersigned professional and university economists, endorse a progressive
national retail sales tax plan, as provided by the FairTax Plan. We urge Congress to make H.R.
25 and S. 25 federal law, and then to work swiftly to repeal the 16th Amendment.

Respectfully,

Donald L. Alexander
Professor of Economics
Western Michigan University

Wayne Angell
Angell Economics

Jim Araji
Professor of Agricultural Economics
University of Idaho

Ray Ball
Graduate School of Business
University of Chicago

Roger J. Beck
Professor Emeritus
Southern Illinois University, Carbondale

John J. Bethune
Kennedy Chair of Free Enterprise
Barton College

David M. Brasington
Louisiana State University

Christopher K. Coombs
Louisiana State University

William J. Corcoran, Ph.D.
University of Nebraska at Omaha

Eleanor D. Craig
Economics Department
University of Delaware

Susan Dadres, Ph.D.
Department of Economics
Southern Methodist University

Henry Demmert
Santa Clara University

Arthur De Vany
Professor Emeritus
Economics and Mathematical Behavioral Sciences
University of California, Irvine

Pradeep Dubey
Leading Professor
Center for Game Theory
Dept. of Economics
SUNY at Stony Brook

Demissew Diro Ejara
William Paterson University of New Jersey

Patricia J. Euzent
Department of Economics
University of Central Florida

John A. Flanders
Professor of Business and Economics
Central Methodist University

Richard H. Fosberg, Ph.D.
William Paterson University

Gary L. French, Ph.D.
Senior Vice President
Nathan Associates Inc.

Professor James Frew
Economics Department
Willamette University

K. K. Fung
University of Memphis

Satya J. Gabriel, Ph.D.
Professor of Economics and Finance
Mount Holyoke College

Dave Garthoff
Summit College
The University of Akron

Ronald D. Gilbert
Associate Professor of Economics
Texas Tech University

Philip E. Graves
Department of Economics
University of Colorado

Bettina Bien Greaves, Retired
Foundation for Economic Education

John Greenhut, Ph.D.
Associate Professor
Finance & Business Economics
School of Global Management and Leadership
Arizona State University

Darrin V. Gulla
Dept. of Economics
University of Georgia

Jon Halvorson
Assistant Professor of Economics
Indiana University of Pennsylvania

Reza G. Hamzaee, Ph.D.
Professor of Economics & Applied Decision Sciences
Department of Economics
Missouri Western State College

James M. Hvidding
Professor of Economics
Kutztown University

F. Jerry Ingram, Ph.D.
Professor of Economics and Finance
The University of Louisiana-Monroe

Steven J. Jordan
Visiting Assistant Professor
Virginia Tech Department of Economics

Richard E. Just
University of Maryland

Dr. Michael S. Kaylen
Associate Professor
University of Missouri

David L. Kendall
Professor of Economics and Finance
University of Virginia’s College at Wise

Peter M. Kerr
Professor of Economics
Southeast Missouri State University

Miles Spencer Kimball
Professor of Economics
University of Michigan

James V. Koch
Department of Economics
Old Dominion University

Laurence J. Kotlikoff
Professor of Economics
Boston University

Edward J. L?pez
Assistant Professor
University of North Texas

Salvador Lopez
University of West Georgia

Yuri N. Maltsev, Ph.D.
Professor of Economics
Carthage College

Glenn MacDonald
John M. Olin Distinguished
Professor of Economics and Strategy
Washington University in St.Louis

Dr. John Merrifield,
Professor of Economics
University of Texas-San Antonio

Dr. Matt Metzgar
Mount Union College

Carlisle Moody
Department of Economics
College of William and Mary

Andrew P. Morriss

Galen J. Roush
Professor of Business Law & Regulation
Case Western Reserve University School of Law

Timothy Perri
Department of Economics
Appalachian State University

Mark J. Perry
School of Management and Department of Economics
University of Michigan-Flint

Timothy Peterson
Assistant Professor
Economics and Management Department
Gustavus Adolphus College

Ben Pierce
Central Missouri State University

Michael K. Pippenger, Ph.D.
Associate Professor of Economics
University of Alaska

Robert Piron
Professor of Economics
Oberlin College

Mattias Polborn
Department of Economics
University of Illinois

Joseph S. Pomykala, Ph.D.
Department of Economics
Towson University

Barry Popkin
University of North Carolina-Chapel Hill

Steven W. Rick
Lecturer, University of Wisconsin
Senior Economist, Credit Union National Association

Paul H. Rubin
Samuel Candler Dobbs
Professor of Economics &
Law Department of Economics
Emory Univeristy

John Ruggiero
University of Dayton

Michael K. Salemi
Bowman and Gordon Gray
Professor of Economics
University of North Carolina at
Chapel Hill

Dr. Carole E. Scott
Richards College of Business
State University of West Georgia

Carlos Seiglie
Dept. of Economics
Rutgers University

Alan C. Shapiro
Ivadelle and Theodore Johnson
Professor of Banking and Finance
Marshall School of Business
University of Southern California

Dr. Stephen Shmanske
Professor of Economics
California State University, Hayward

James F. Smith
University of North Carolina-
Chapel Hill

Vernon L. Smith
Economist

W. James Smith
Dean of Liberal Arts and Sciences and Professor of
Economics
University of Colorado at Denver

John C. Soper
Boler School of Business
John Carroll University

Roger Spencer
Professor of Economics
Trinity University

Daniel A. Sumner, Director,
University of California

Agricultural Issues Center
and the Frank H. Buck, Jr.,
Chair Professor,
Department of Agricultural and
Resource Economics,
University of California, Davis

Curtis R. Taylor
Professor of Economics and Business
Duke University

Robert Vigil
Analysis Group, Inc.

John H. Wicks, Ph.D.
Professor Emeritus
Department of Economics
University of Montana

F. Scott Wilson, Ph.D.
Canisius College

Mokhlis Y. Zaki
Professor of Economics Emeritus
Northern Michigan University

Large corporations generally do not pay taxes, true

In reply to FairTax ……. HR-25 & S-25

Small to medium sized businesses generally don’t qualify for huge tax breaks from the Federal government and when they do its generally a very targetted break for R & D or “emmerging markets”, say, a new type of solar electrical startup. See the Dsire database for Michigan.

http://www.dsire.org

Michigan in general is an interesting place to start for taxes as its one of the least small business friendly states to start a business. Top five though Mississipi and West Virginia rank numbers 1 and 2, respectively.

Why is Michigan a bad place to start a business? Taxes. Plain and simple the single business law in Michigan makes it prohibitive to pay out nearly 40% of gross to the state. It may have come down since I left Michigan 10 years ago. That used to kill me as a small business owner. I had one of two ways to break out of the cycle: Create a second “business” or somehow grow to the point of grossing several million a year with so many employees, etc. Then and only then could I go to a lower tax bracket.

Michigan sold too much of itself to the “Big 3” automakers in the 60s and 70s to uphold a normalized tax bracket by giving billions in tax breaks. Shifting the burden of taxation to the smaller businesses that, as a whole, employed many times more people than those precious automakers ever did.

The NST would be a good start. Probably some loopholes that need to be investigated and 401(k), Key and Roth accounts would likewise need to be adjusted a bit one way or another depending on the bracket. Overall, it has my tenuous support. My biggest problem is that it looks almost too good to be true. And as the adage goes… Well, you get the picture.

Surprised that this hasn’t shown up on the news much as of late, as well.

– beads

Too good to be true?

In reply to Large corporations generally do not pay taxes, true

.
You said, “My biggest problem is that it looks almost too good to be true. And as the adage goes…..”

I first heard of this proposal about a year ago. And you know what? I thought the same thing. So I studied it in-depth. I’ve made it a point to learn as much about it as possible.

I’ve heard Tom Wright, the executive director of FairTax.org, both giving radio interviews and in person. He gladly fields any and all questions from people of all political persuasions, and I’ve never heard of one instance where he didn’t have a good answer for any of them.

http://releases.usnewswire.com/printing.asp?id=35623

Do yourself a favor and buy the book, The FairTax Book by Neal Boortz.

And you mentioned Michigan. Well, I ran across this blog called, Michigan For Fair Taxation.

http://michfairtaxation.blogspot.com/

It makes for some interesting reading.

This is not some fly-by-night idea. This is the real deal. There are some economic heavy-hitters behind it; there are senators and congressmen behind it, except the ones who make it their job to control people via the tax code; and if you wonder about FairTax.org long term ambitions, they hope to get this thing passed and go out of business, so to speak.

Call them: 1-800-FAIRTAX

Write them at info@fairtax.org

Read all about it:

http://www.fairtax.org

http://www.fairtaxvolunteer.org/news/

But don’t simply dismiss it because it sounds too good to be true, assuming therefore it probably is. To the contrary, probably does not mean with absolute certainty, so there is a glimmer of hope that this one will become reality. (And then we can start work on cutting into the percentages and spending.)

There is some merit for National Sales Tax, however

In reply to FairTax ……. HR-25 & S-25

Max wrote: “I like it because people who earn under the $27,000 range would literally pay no taxes whatsoever.”
…
I have a problem with that part, since it will still require a beauracracy to return rebates to people. Even worse, it means some people will be getting more money from the government than they pay in. I know we have that now (earned income tax credit, etc.), but it is just not right. I would prefer a truly flat tax structure, with no minimum. When a minimum income is set, then the others have to pay a higher percentage to make up for that. When a portion of the population is exempt from paying taxes, then they can still vote for increaesed spending and taxation because it does not come out of their pockets. We might want to reverse the principle “No taxation without representation” to “No representation without taxation”. In other words, if you don’t pay taxes, then you can’t vote. With the current system of exemptions based on income, we will soon come to the day when those who do not pay taxes are in the majority, and they will vote to raise taxes on the minority who do pay taxes.

I would prefer a national sales tax with no income exemption and rebates. Exemptions might be made for certain necessities, such as food and medicine, and that would take care of the lower income segment, since most of their income goes towards such necessities. I do not want progressive or a regressive tax structure. A flat tax structure is the fairest.

Consider This. . . . .

In reply to There is some merit for National Sales Tax, however

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When compared ONLY against the current system of taxation and spending, and not against someone’s preferred system of taxation and spending (especially a libertarian preferred system, which is unrealistic in the short term), where we have an even bigger bureaucracy to verify income and return rebates (refunds) to people, this is exponentially better.

Moreover, and this is a very important distinction, income levels will not have to be verified at all, only family size, because the prebate will be paid to ALL people, regardless of their level of income. It’s not that only people who earn less than $27,000 will not be taxed, but NOBODY will be taxed on their first $27,000 of spending. That does, in essence, level the playing field and puts everyone on exactly the same system. It also ensures that necessities like food, basic medical care and basic living expenses will not be taxed either — not for anyone.

Question number 3 from FairTax Q&A page:

How does the rebate work?

All valid Social Security cardholders who are U.S. residents receive a monthly rebate equivalent to the FairTax paid on essential goods and services, also known as the poverty level expenditures. The rebate is paid in advance, in equal installments each month. The size of the rebate is determined by the Department of Health & Human Services? poverty level multiplied by the tax rate. This is a well-accepted, long-used poverty-level calculation that includes food, clothing, shelter, transportation, medical care, etc. See chart in Figure 1 below.

>>>>> Make sure you review the chart <<<<< Question number 3 from FairTax Q&A page: Why not just exempt food and medicine from the tax? Wouldn?t that be fair and simple? Exempting items by category is neither fair nor simple. Respected economists have shown that the wealthy spend much more on unprepared food, clothing, housing, and medical care than do the poor. Exempting these goods, as many state sales taxes do, actually gives the wealthy a disproportionate benefit. Also, today these purchases are not exempted from federal taxation. The purchase of food, clothing, and medical services is made from after income tax and after payroll tax dollars, while their purchase price hides the cost of corporate taxes and private sector compliance costs. Finally, exempting one product or service, but not another, opens the door to the army of lobbyists and special interest groups that plague and distort our taxation system today. Those who have the money will send their lobbyists to Washington to obtain special tax breaks in their own self-interest. This process causes unfair and inefficient distortions in our economy and must be stopped. http://www.fairtaxvolunteer.org/smart/faq-main.html#3

I believe that you and I, or anyone else, can certainly try to advance the "most fair" system, at least as it seems "fair" to us. But this FairTax proposal, which is currently before Congress, is intended to replace the current system of collection, making it exponentially simpler and cheaper to implement, while not adversely affecting anyone.

I can't see a single instance where anybody would be worse off; and I can see a lot of instances where people would actually be better off; and it would result in the same amount of revenue, not affecting the current levels of spending at all. (And like I said, spending cut measures can come later.)

A flat tax would have absolutely no chance of passing Congress. Your (and mine) "fair tax" proposal would have absolutely no chance of passing Congress. But this one just might have a chance. And it would set the stage to make future reform easier to implement, not harder. And when compared ONLY to the current system, this one seems like a no-brainer to me.

And Also Consider This

In reply to There is some merit for National Sales Tax, however

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If a person makes around $27,000 per year, he really pays no income taxes at all the way the current system works, especially those with a family, considering the various tax credits and such. (He does, however, pay SS taxes.)

If a person makes $57,000 per year, and his first 27,000 is exempt (by way of the prebate), he will only be subject to possible taxation on $30,000 per year. If he spends the entire $30,000, his tax payment, based on a 23 percent rate, would be $6,900 per year. But let me ask you this. What would his combined federal income tax and SS tax be on a $57,000 year income? At today’s tax rates, about $11,000 a year. HOWEVER, if he does not spend that $30,000, he pays no taxes at all.

From FairTax Q&A question number 28:

“…..Under the current system, savings and investments are taxed. Under the FairTax, savings and investments are not be taxed at all. As Americans save more money, the pool of funds in lending institutions grows. When you add to this the flood of capital currently trapped offshore, we realize a huge increase in the pool of capital, thereby causing the cost of borrowing funds to drop.”

And this is a revenue-neutral program. Revenue taken-in by the government will be exactly the same.

How taxes should work

In reply to National Sales Tax in America?

1) First there should be a flat tax that starts with incomes around $25,000/year. The reason for a flat tax, is so that EVERYONE pays the same percentage of their paycheck. This means that those that are richer pay the same percentage in tax as those that are poorer. The tax code wouldn’t be 9 billion words long, nor would there be loop holes for the super rich or super poor.

2) Force any state still using gross receipt tax to do away with it. Not only is it a “double” tax, but it hurts small businesses and impacts the consumer.

3) If a national sales tax is invoked, it will only ensure consumers buy more tax free goods online or go to Mexico. The national sales taxes would destroy poor families and impact the most on the middle class buying power.

Imagine if you will, a gross yearly pay check of $30,000. Now state and federal taxes are going to take about 20% of that. We also need to factor in state taxation on goods (in most states there is a sales/gross receipt tax). Yank out another 10%-15% for goods taxation.

Now remove the federal income tax, but add on top of all the other taxes a NST. I would assume it would be in the range of 7%-10%. So now, ANOTHER 7%-10% of my money, for EVERY PURCHASE, is going to the government.

Why not make a leaner government without all the golden parachutes? Why not trim the fat of of the various deparments? Why not clean up the overhead? Why not start looking at what we are spending and tightening the belt a little?

Before you comment on this particular NST

In reply to How taxes should work

Please read it first.

The Home Page is here:

http://www.fairtax.org

The answers are here:

http://www.fairtaxvolunteer.org/smart/faq.html

I still don’t like it

In reply to Before you comment on this particular NST

1) I don’t like the idea of rebates. Not only does it mean you are paying taxes and then getting them back (which is government overhead), but you are also creating loopholes in the system.

2) Why are we taxing all goods and services? Not only does that mean people will buy less, that also means they will buy elsewhere (like the internet or Mexico or worse the creation of a large black market)

3) What happens when a middle/lower middle class worker buys a large purchase (a car, big screen TV, etc) They pick up the bulk of the taxation.

4) The current fair tax calls for a 30% tax! That means for every dollar you pay an extra $0.30!

5) We’d have to repeal the 16th Amendment to the Constitution!!! I doubt this would happen.

6) States could no longer tax their citizens as well. Imagine a 50% sales tax!

I say go for the flat tax. Not only could we keep the 16th Amendment, but we could build a taxation system with few loopholes. Everyone would be taxed the same. “Tax breaks” wouldn’t be so easy to come buy and DINKs (Dual income/no kids) and SINKs (single income/no kids) wouldn’t feel the pinch of not having kids, housing, etc as tax breaks.

I just don’t like the fair tax as it seems it is just another way to screw the consumer. The rich would no longer buy in America and the middle class would pick up the burden (again). High ticket items would not be bought as often and the middle class would be forced to buy less and pay more.

I still don’t like it

In reply to Before you comment on this particular NST

1) I don’t like the idea of rebates. Not only does it mean you are paying taxes and then getting them back (which is government overhead), but you are also creating loopholes in the system.

2) Why are we taxing all goods and services? Not only does that mean people will buy less, that also means they will buy elsewhere (like the internet or Mexico or worse the creation of a large black market)

3) What happens when a middle/lower middle class worker buys a large purchase (a car, big screen TV, etc) They pick up the bulk of the taxation.

4) The current fair tax calls for a 30% tax! That means for every dollar you pay an extra $0.30!

5) We’d have to repeal the 16th Amendment to the Constitution!!! I doubt this would happen.

6) States could no longer tax their citizens as well. Imagine a 50% sales tax!

I say go for the flat tax. Not only could we keep the 16th Amendment, but we could build a taxation system with few loopholes. Everyone would be taxed the same. “Tax breaks” wouldn’t be so easy to come buy and DINKs (Dual income/no kids) and SINKs (single income/no kids) wouldn’t feel the pinch of not having kids, housing, etc as tax breaks.

I just don’t like the fair tax as it seems it is just another way to screw the consumer. The rich would no longer buy in America and the middle class would pick up the burden (again). High ticket items would not be bought as often and the middle class would be forced to buy less and pay more.

Look at your objections closely

In reply to I still don’t like it

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You said, “I don’t like the idea of rebates. Not only does it mean you are paying taxes and then getting them back (which is government overhead), but you are also creating loopholes in the system.”

First of all, this does not call for a “rebate”, but rather a “prebate” — paid before the fact, to ensure that lower wage earners don’t pay the tax. However, what do you call tax refunds — rebates! Moreover, a tax refund, i.e. a rebate, is your own money given back to you, without interest, of course. Is this also not “government overhead”? But overhead of a more unfair sort? And where are the “loopholes” in the FairTax proposal? And compare them to the “loopholes” in the current system, which literally number in the tens of thousands.

You said, “Why are we taxing all goods and services? Not only does that mean people will buy less, that also means they will buy elsewhere (like the internet or Mexico or worse the creation of a large black market).”

It doesn’t mean they will buy less. Nor does it mean they will buy elsewhere. People will continue to buy what they need; and they will continue to buy what they want. And sure, there might be some sort of underground market to buy and sell some things under the table, but there is right now anyway. Worst case it’ll be a push. And consider all the income that is earned under the table, both through legal and illegal means. All of that would be subjected to the NST when they spend the money. People don’t just stuff wads of cash under their mattress. They spend it.

You asked, “What happens when a middle/lower middle class worker buys a large purchase (a car, big screen TV, etc)? They pick up the bulk of the taxation.”

How so? If a $27,000 per year person pays no taxes at all (ensured by way of the prebate to all persons), how can you say such a thing? Moreover, if you really look at the plan, you’ll discover that whether a person pays an income tax or a NST, it’s about the same amount of money in the long run. The difference is, however, is that a person will not have the overhead of having to keep track of income and file a tax return every year, which, in many cases, costs people a lot of money.

You said, “The current fair tax calls for a 30% tax! That means for every dollar you pay an extra $0.30!”

Actually, it’s about 23 percent, and see the above answers to this objection. People will pay about the same amount. It’s just the means of payment that will change.

You said, “We’d have to repeal the 16th Amendment to the Constitution!!! I doubt this would happen.”

Yes we would, and yes it could happen.

You said, “States could no longer tax their citizens as well. Imagine a 50% sales tax.”

States already tax their citizens right now, as it is. Why would this make things any different?

From FairTax.org:

How are state tax systems affected, and can states adequately collect a federal sales tax?

No state is required to repeal its income tax or piggyback its sales tax on the federal tax. All states have the opportunity to collect the FairTax; states will find it beneficial to conform their sales tax to the federal tax. Most states will probably choose to conform. It makes the administrative costs of businesses in that state much lower. The state is paid a 1/4 of one percent fee by the federal government to collect the tax. For states that already collect a sales tax, this fee proves generous. A state can choose not to collect the federal sales tax, and either outsource the collection to another state, or opt to have the federal government collect it directly. If a state chooses to conform to the federal tax base, they will raise the same amount of state sales tax with a lower tax rate ? in some cases more than 50 percent lower ? since the FairTax base is broader than their current tax base. States may also consider the reduction or elimination of property taxes by keeping their sales tax rate at or near where it is currently. Finally, conforming states that are part of the FairTax system will find collection of sales tax on Internet and mail-order retail sales greatly simplified.

And where did you get that 50 percent figure from?

You said, “I say go for the flat tax. Not only could we keep the 16th Amendment, but we could build a taxation system with few loopholes.”

THAT’S WHAT WE HAVE NOW! But it’s a progressive tax system, not a flat tax system — either way FULL OF LOOPHOLES. And to suggest “the rich would no longer buy in America” is just silly. How can you make such a claim, and how can you describe the scenario in which it would happen? You have a guy in Kansas who wants to buy a television set……..

And if you think the “customer would get screwed”? What are we getting now? I could go on and on about how we are currently “getting screwed”, but there’s no indication of how this FairTax proposal would “continue the love”.

I hope you give this proposal some serious study. All of your objections are addressed.

I see your point, but

In reply to Look at your objections closely

“First of all, this does not call for a “rebate”, but rather a “prebate” — paid before the fact, to ensure that lower wage earners don’t pay the tax. However, what do you call tax refunds — rebates! Moreover, a tax refund, i.e. a rebate, is your own money given back to you, without interest, of course. Is this also not “government overhead”? But overhead of a more unfair sort? And where are the “loopholes” in the FairTax proposal? And compare them to the “loopholes” in the current system, which literally number in the tens of thousands.”

A flat tax would be far more efficient. Not only do you not get into the rebate realm, but you also skip out on any of the possible “pre-bate” loopholes that will be created with such a system.

“People don’t just stuff wads of cash under their mattress. They spend it.”

With the NST that is proposed, at 30% tax would mean people WOULD be stuffing money in a matress. Why not a flat tax?

“How so? If a $27,000 per year person pays no taxes at all (ensured by way of the prebate to all persons), how can you say such a thing? Moreover, if you really look at the plan, you’ll discover that whether a person pays an income tax or a NST, it’s about the same amount of money in the long run. The difference is, however, is that a person will not have the overhead of having to keep track of income and file a tax return every year, which, in many cases, costs people a lot of money.”

Not true. Let’s assume in the same year I buy a house, furnature, and a highish end computer. Let’s also assume that the next year I have a child. For 2 years, I’m paying through the nose. The NST is going to be lumped in with local and state taxes (they won’t go away) and we end up in a situtation similar to some European countries.

Re: 16th amdmnt “Yes we would, and yes it could happen.”

I really don’t think a 2/3’s majority would come out on this one. A flat tax not only makes more sense, but is always going to ensure that the consumer does just that…consume.

“Where do you get the 50% figure from.”

I’m guestimating given similar systems. Many systems in Europe have tried similar taxation schemes and they turn into a ponzi scheme very quickly. The states continue to tax and then reap the benefit of the NST. It turns into a vicious circle. Now, if you forced states to stop taxation, I still say no.

I honestly don’t think the Federal government should have a tax scheme (NST or other wise) as they do now. They take the power away from the states and force them into begging for federal funding and caving to federal pressure for money.

“THAT’S WHAT WE HAVE NOW! But it’s a progressive tax system, not a flat tax system — either way FULL OF LOOPHOLES.”

A flat tax doesn’t have to be full of loop holes. No deductions, no rebates/prebates/anything. Just a flat tax on gross pay. Not only would that trim our tax code down from 9 billion words, but it would also help ensure LESS loop holes. The biggest problem with graduated taxation is that it is inhierently loop hole filled. With all the rebates, pre-tax, post tax, side ways tax, etc, it just doesn’t make sense.

A flat tax means you pay x% on your gross pay, no fuss no muss.

“And to suggest “the rich would no longer buy in America” is just silly. How can you make such a claim, and how can you describe the scenario in which it would happen? You have a guy in Kansas who wants to buy a television set……..”

We have this handy tool called the internet that is tax free. Why would I pay NST if I could buy tax free on the net? With the NST an import tax from Mexico or Canada would be cheaper than buying in the nation. So why buy here? Not only that, but the rich would take their money elsewhere to buy goods at a lower tax rate. The middle class would still absorb the brunt of the cost.

The internet would be a haven for tax free sales and the US couldn’t stop it.

“And if you think the “customer would get screwed”? What are we getting now? I could go on and on about how we are currently “getting screwed”, but there’s no indication of how this FairTax proposal would “continue the love”.”

I just don’t see it working out. Sales tax in most states is a joke and gross recipts is even worse. In essence the state is taxing you to live there, taxing you to buy stuff, and then you have a NST on top of that? How is that fair?

“I hope you give this proposal some serious study. All of your objections are addressed.”

It just doesn’t make sense. States will continue to tax at the same rate and eventually the federal government will ensure the NST is in the 35% to 40% range. High ticket items become less afforable and general affluence will go down.

A simple flat tax, no loop holes, no deductions, no child benefits, no home ownership help, no . Just a tax that taxes your gross pay no matter what.

A Flat Tax Won’t Happen

In reply to I see your point, but

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You said, “A flat tax would be far more efficient. Not only do you not get into the rebate realm, but you also skip out on any of the possible prebate loopholes that will be created with such a system.”

First of all, there are no loopholes defined in the FairTax system. And how can you suggest that “loopholes…..will be created with such a system”? It’s easy to simply say something will happen, and use it as justification for your desired outcome. But why don’t you elaborate on what those loopholes will be if they appear so obvious to you? Furthermore, you could certainly say that “loopholes…..will be created with such a system” when considering a flat tax on all income. In fact, it could be argued that loopholes are MORE likely with a flat tax system because we’re plagued with loopholes in the current system that’s also based on taxation of income.

If such loopholes are so obvious to you in the FairTax system, answer this. Where are all the loopholes with the current state and local sales tax system. Name them. Point them out. You simply can’t answer that question because they’re aren’t any. To suggest that it will happen is stretching for a reason to justify your objection.

I was going to go on and address all of your issues, but I’d just be repeating myself. All of your objections are the same ones you voiced before, but only worded differently. And there’s no way you read the whole FairTax plan; your objections to it, as you articulated, are all addressed.

You are obviously dead-set in favor of a flat tax on income? That’s all fine and dandy. So go for it. Try to get it passed in Congress. See how far you’ll get. Be advised, however, it’s been suggested before and tried before. In fact, Dick Armey, a former Republican congressman from Texas, tried and tried over and over again all throughout the 90s. It just couldn’t garner enough support in Congress to even get out of committee for a full floor vote. And Steve Forbes ran for president proposing a flat tax system, and it never gained the grass-roots support necessary to get the general population behind it. And they’re not the only ones. A lot of people have tried to push a flat income tax system. The result has always been the same — sputter and die. So you can call for a flat-tax system all you want. But it just ain’t gonna’ happen.

You start telling people, however, that their take-home pay check will be 15 percent, 20 percent, 30 percent higher than it is right now, and you watch the attention you’ll get. You further tell them that their first $27,000 of spending will be tax free, and show them that their overall tax bill will be less than or equal to their current tax bill, and tell them that they will never again have to file an income tax return, and you’ll start to see the support necessary to really get something going.

You show Congress that the grass-roots support is there (meaning the voters want it), as described above, and you’ll get their serious attention. And if you further show them that it will be a revenue-neutral system, meaning they still have the same amount of money to throw around, and you just might get it out of committee and on for a full floor vote. And if that happens, you watch the people start calling their congressman in droves telling them to vote in favor of the FairTax system — or in the next election, they’ll vote for someone who will.

So there ya’ go. You can either hold-out for your coveted flat tax system, but knowing that it’s never going to happen. Or you can be content to keep the system exactly the way it is now. Or you can broaden your scope a little bit and consider supporting something that’s exponentially better than our current system, and it has better than a snowball’s chance in hell — a much better chance — of becoming reality.

A real flat tax takes out the loops holes…

In reply to A Flat Tax Won’t Happen

A real flat tax means one percentage, no deductions, no rebates. That means VERY little chance of loopholes. You can write a flat tax code in one page.

What the fair tax says means loops holes (rebates and graduated systems) and it means hurting the mom and pop stores. I didn’t notice anything about abolishing state taxes (or making them more fair to fit the fair tax system), sin taxes, road taxes, etc. Since those assumable will still be there, that means you pay for your booze tax, plus the NST. Not quite fair, is it?

There is also no way in the world my take home pay will be higher. The reality is that the fair tax means I’ll be spending just as much in tax and those that can “reduce” (hide) their income will again be able take advantage of the system.

If the fair tax did away with ANY rebate and move to a VERY clear way to kill ALL taxes, save it, I’ll buy into it. However, there is no way you will ever get states to give up sales/gross recipts tax and you will never kill local taxes.

The NST on the surface seems warm and fuzzy, but it is snake oil my friend.
http://www.brookings.org/comm/policybriefs/pb31.htm
http://www.lewrockwell.com/orig4/cox4.html
http://www.gigo-soapbox.org/gigo/2002/06/18.shtml

Plus you haven’t addressed the internet. Why would I pay tax, when I can buy tax free on the net?

You also aren’t factoring NAFTA, CAFTA, WTO, et al…this only benefits them and hurts the American consumer.

More Food For Thought

In reply to I see your point, but

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If I had my choice between a flat income tax system versus our current progressive income tax system, I’d support the flat tax. There would be no question about it. In fact, I mentioned Dick Armey’s flat tax proposals in the 1990s, and I actually wrote to him, even thought I don’t live in Texas, to support his efforts. I also wrote my congressman at the time to ask her to support it; but she never got a chance to vote no (she would have opposed it) because, as I said, it never made its way out of committee for a full floor vote. It sputtered and died — as all flat tax proposals have, and as all flat tax proposals will.

Likewise, if I had my choice between this FairTax proposal versus our current progressive income tax system, I’m supporting the FairTax plan.

Moreover, for whatever reasons, people seem to like a progressive tax system; and congressmen and senators seem to prefer it well. The more a person earns, goes the argument, the more taxes a person should pay — in both real dollars and in real percentages.

And the FairTax system actually is progressive when you factor in the initial $27,000 exemption. People earning around $27,000 or less will pay zero percent of their income on taxes. A person earning in the $40,000 range, will pay about 9 percent of his income on taxes, less than they pay now, actually. $50,000 will pay about 14 percent, again, less than now. $150,000 – 20 percent. And on it goes to a maximum of 23 percent.

Look at the explanation and graph at this link (question 48):

http://www.fairtaxvolunteer.org/smart/faq-main.html#48

Unfortunately (or maybe fortunately, depending on how you look at it), we don’t have a choice between a flat tax proposal and the FairTax proposal. That’s not what’s before congress today. And if you want to oppose it simply for the sake of holding-out for the flat tax, it’ll never happen.

I holding out becasue

In reply to More Food For Thought

It is too easy to run a multi-million dollar business and pay yourself $27,000. So you get everything tax free! How is that a fair tax?

jmgarvin – when you said

In reply to More Food For Thought

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You said, “It is too easy to run a multi-million dollar business and pay yourself $27,000. So you get everything tax free! How is that a fair tax?”

You really either don’t understand or are not comprehending. (I don’t mean that as a flame.) For if you did, you wouldn’t have said such a thing.

Under the FairTax plan, people are not taxed on what they earn, but rather what they spend.

Your posted objection, “It is too easy to run a multi-million dollar business and pay yourself $27,000. So you get everything tax free! How is that a fair tax?”…..applies to the way things are done today, under the current income tax system.

But it is based on earnings

In reply to More Food For Thought

If I make less than $27,000/year I get my rebate so I don’t really pay tax….

I do understand it and find the rebate to be counter productive and pointless. The whole rebate system is worthless and should be done away with. The rebate system only ensures that loopholes will be available. The best idea for a NST is to stop rebates and only tax purchases up to a certain dollar amount (say $5,000). Why? I get taxed to death buying a car, why would I want to be taxed even MORE? Take for example a $25,000 car. It will be around $30,000 after all the current taxes on it. The NST would only make this worse!

So basically I think the NST isn’t taking into account high dollar purchases (eg a big screen TV, cars, houses, et al) and is assuming Americans only buy things for less than say $1000…

The NST STILL doesn’t account for internet sales and I don’t know how you would enforce it unless it was a “tariff” of some kind.

Read my links and you’ll see what I mean.

jmgarvin – A fundamental difference

In reply to More Food For Thought

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You obviously believe that the government should generate its revenue by taxing income.

I don’t believe that the government should generate its revenue by taxing income, regardless of the method, the amount, the exceptions, or anything else. I believe that the government should generate its revenue by taxing something other than income; and taxing consumption, by way of a sales tax, is a viable alternative.

When a government taxes income, as ours does today, I lose control of the dollars I earn. If the government taxes consumption, by way of a sales tax, I maintain control over every dollar I earn.

I also don’t believe that government should tax private property ownership. The same argument applies — control. I want to control what I earn; and I what to control what I own. I don’t like the government controlling those things. Because if it does, then the government, in essence, controls me.

It appears to me that that’s a fundamental difference between you and me.

Maybe I’m too much of a realist

In reply to More Food For Thought

The cat’s out of the bag. We are going to be taxed on private property (which is wrong) and on income, regardless of what happens. Why? The feds would somehow also have to stop state and local governments. Not only that, but the NST would be income tax (as it is currently written with all the wonky rules and outs), just hidden cost.

If the NST was written to say:
All goods, regardless of method or where they are bought, are taxable by a NST for 25% of the total gross cost of the product to the consumer. Further, no person making under $30k/year (dual income) or $15k/year (single income) shall pay the NST on living goods. Futher the NST shall not apply to property or certain (eg cars) high dollar needs.

The way it stands now, the government is going to tax me to hell and back…

Why don’t you READ the whole plan?

In reply to More Food For Thought

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How can you possibly discuss something in a reasonable and informed manner if you don’t read the subject about which we are discussing? And by seeing your objections, it’s obvious you haven’t read it.

I’ll tell you again, in case you missed it. I’m not supporting a theoretical, generally speaking, national sales tax. I’m supporting this very clear, concise, and specific plan, which, by the way, is currently before both houses of congress in the form of House Resolution 25 and Senate Bill 25. I’m talking about this specific plan, not some theoretical NST.

If you had read the plan, you wouldn’t have said, “The feds would somehow also have to stop state and local governments.”

Stop them from what? Assessing state and local income taxes and/or sales taxes?

No, not at all. The states and localities remain unaffected. This is a proposed overhaul of the FEDERAL tax collection system, not the states’.

(And it’s revenue neutral in as much as it takes in the same amount of revenue, but just by a different means)

Read the friggin plan, man. Then, perhaps we can discuss it in a reasonable manner.

http://www.fairtax.org

Moreover, you remain firm on supporting a flat-rate income tax plan, even though such proposals have failed to garner any support in congress and/or by the electorate dozens of times over the past 20 years, and no such proposal is currently before congress. But you call yourself a “realist”? I don’t think so.

READ THE PLAN if you want to discuss it any further. Otherwise, this is a waste of time.

By the way, you would actually be doing yourself a big favor if you DID read the whole plan, and compare it ONLY to what we now have and what it’s intended to replace, because, as I said, this IS a proposal currently before both houses of congress.

In your particular state, one of your Senators (Pete Domenici) is against the plan, but could be swayed by other party supporters; your other Senator (Jeff Bingaman) is still undecided; and out of your three U.S. House Representatives, one remains uncommitted (Tom Udall), one is leaning towards voting for it (Heather Wilson), and one is strongly in favor of it (Steve Pearce). In fact, Steve Pearce, one of your very own state representatives, is a co-sponsor of the bill.

– There are currently 37 U.S. House co-sponsors of the bill.

– There are currently 127 U.S. Representatives either FOR or LEANING FOR approval of this bill.

– There are currently 82 U.S. Representatives either AGAINST or LEANING AGAINST.

– There are currently 230 U.S. Representatives who are undecided, and could go either way.

– There are currently 21 U.S. Senators either FOR or LEANING FOR approval of this bill.

– There are currently 24 U.S. Senators either AGAINST or LEANING AGAINST.

– There are currently 58 U.S. Senators who are undecided, and could go either way.

This is the real deal, not some theoretical discussion. And you should do yourself — and your fellow citizens — a big favor by becoming educated on it before you claim to be against it by throwing forth some blanket objections that would have been answered had you READ THE PLAN.

Flat Tax versus FairTax Plan

In reply to More Food For Thought

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http://fairtaxvolunteer.org/pdf/FairTax_vs_flat_tax.pdf

House Resolution 25

In reply to More Food For Thought

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The full text of the legislation before congress”

http://thomas.loc.gov/cgi-bin/query/D?c109:1:./temp/~c109HQE3Os::

Like I said

In reply to More Food For Thought

I have read it and I don’t like it.

My issues:
1) The rebates are an loophole waiting to happen

2) Gross Recipt tax needs to go (at the state and local level) if this is going to fly. The tax plan says it doesn’t plan to mess with states or local taxes, but this is going to cause higher taxation on the public. I would simply go to a state with no sales tax/gross recipt tax and buy my stuff there rather than buying in state.

3) The internet makes a NST moot. I don’t see any mention of how to deal with internet sales.

4) Read my links, they bring up many good points AND they are talking about the current bill.

5) I’m for a flat tax (even though it hasn’t garnered support because the blue bloods in congress would actually have to start paying their fair share) because the flat tax as stated in the last iteration had no rebates and took into account low income families in a far more realistic way.

6) High dollar purchases aren’t addressed very well and this will cause loopholes and/or higher taxation than we already have.

You are right – but Fairtax is more goofy than you think

In reply to I still don’t like it

YOu are right – Fairtax is goofy. The “prebate” is utter nonsense that they CLAIM is free! They don’t count the 800 billion as an expense “because people will use that to pay their taxes, so it’s a wash”. HELLOOOO — that is goofy nonsense! And just ONE of many. It doesnt cost anything to pay out 800 billion??? Because peoiple use that to pay taxes?

Well, if that were even sane, lets just send out 3 trillion!! People can use that to pay their taxes! We don’t have to count it! Yes – its THAT goofy. Its really that goofy.

http://fairtaxfineprint.blogspot.com/

Fairtax – Farce Tax? Fine print?

In reply to National Sales Tax in America?

I used to love Fairtax. Then I read their fine print. http://fairtaxfineprint.blogspot.com/

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