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National Sales Tax in America?

By beads ·
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

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Rhetoric

by TheChas In reply to National Sales Tax in Ame ...

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

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NST

by beads 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

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I agree with Chas. . . .

by maxwell edison In reply to Rhetoric

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....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.

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Which part do you have a problem with?

by jdclyde 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.

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

by FilmCriticOne In reply to Rhetoric
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FairTax ....... HR-25 & S-25

by maxwell edison In reply to National Sales Tax in Ame ...

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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.

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

by maxwell edison In reply to FairTax ....... HR-25 & S ...

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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.

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Taking me awhile to digest...

by beads In reply to FairTax ....... HR-25 & S ...

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

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Overly Optomistic

by TheChas In reply to FairTax ....... HR-25 & S ...

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&amp spending, along with charitable spending.
Tax credits just factor too heavily in R&amp spending decisions. Without tax credits, the returns from R&amp 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

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State Tax - From the FairTax Web Site

by maxwell edison In reply to Overly Optomistic

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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.

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