What if a Sales Tax Were the Only Tax?

New York Times ^ | October 17, 2004 | DANIEL ALTMAN

[baseball_fan]

REPRESENTATIVE JOHN LINDER, Republican of Georgia, is a man on a mission. He wants to replace the current tax system - or at least personal income and payroll taxes - with a national sales tax. When he brought this idea to the floor of the House of Representatives a couple of weeks ago, Democrats chided it as a pipe dream.

But in August, President Bush called it "the kind of interesting idea that we ought to explore seriously." From a taxpayer's perspective, it may indeed sound like a great idea: no more long instruction booklet to read, no more endless hours calculating the figures for every box on the form; you just pay at the cash register. Yet when it comes to designing such a new system, it's not quite as simple as it sounds.

[baseball_fan]

while being wary of the source of the story, it may be worthwhile to look under the hood and kick the tires.

[TFine80]

Linder defeated Bob Barr when their districts combined...

[austinaero]

I rely on my fellow Freepers to insulate me from anything from the slimey Times....that paper has ZERO credibility in my opinion, esp when quoting the President.

[Admin Moderator]

To prevent duplicates, please do not alter the heading. Thanks.

[FairOpinion]

PING

[Tench_Coxe]

Chief_Negotiator used to be pretty eloquent on the workings of how this would work until his passing.

[Hotdog]

Works in TN?

[ProudVet77]

What if a Sales Tax Were the Only Tax?
Then the rich would pay a lot more taxes. And the income earners would pay less.

[ClintonBeGone]

It would be an unimaginable boost to the economy. We would have to insist on a constitutional amendment to eliminate all payroll taxes and cap the sales tax. Plus we would have to safeguard ourselves from state increases in income tax.

[ClintonBeGone]

Chief_Negotiator used to be pretty eloquent on the workings of how this would work until his passing.

Wasn't there some sort of mystery surrounding his death? He seemed like a good egg.

[Greenpees]

Sales Tax, No.

Flat Tax, Yes.

There is no way that you can ID those that make too little, and exempt them from the tax, the way our tax code does right now.

And don't tell me about how they already "pay sales tax". This law would dramtically increase that tax, and they lowest of the low income would get hurt.

This is NOT the message our party, or belief system should send.

What would separate those at the lowest brackets would be a Flat Tax, filed at the end of the year. Otherwise, people would have tto carry some kind of exemption card, akin to a poor person's ID card.

Not a good idea.

[Oblongata]

The only way I would support this is if it was a constitutional ammendment that stated the sales tax rate. It is way to easy for legislators to raise a single tax rate to increase revenue for more crappy programs. We'd have a continuously climbing tax rate.

[kingu]

End purchase national sales tax? I'll go for that. This strange system that I've heard floating around that would tax at various wholesale levels? No. It would destroy my business in weeks, if that long.

If it was just the end purchaser paying the sale tax, it would also make it a whole lot more attractive to control the illegals - regularly you can go into their areas and into their stores (yup.. They own stores) and not be charged sales tax. Between those stores and swap meets, the state likely loses a quarter billion dollars in sales tax revenue a year.

[Willie Green]

The NRST is an inherently regressive form of taxation that is truly despotic.

Long term, it would result in a two-tiered socio-economic stratification of our society.

It is not disimilar to a 21st Century eco-feudal system where the corporate aristocracy invest and expand their property holdings completely tax-free, while the serfs are overburdened with the excessive taxation on consumption and persuaded that it's supposedly "fair" because the consumption taxes are redistributed through the formal social welfare system.

[balrog666]

It would be an unimaginable boost to the economy.

A 29% tax on all retail sales would put us into a depression.

[ancient_geezer]

A Taxreform bump for you all.

If you would like to be added to this ping list let me know.

John Linder in the House & Saxby Chambliss Senate, offer a comprehensive bill to kill all income and payroll taxes outright, and provide a IRS free replacement in the form of a retail sales tax:

H.R.25, S.1493
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.

Refer for additional information: http://www.fairtax.org & http://www.salestax.org

[1066AD]

Agreed. What's interesting these days is that it's the GOP that seems to be interested in new ideas rather than the Dems who seem hell bent on maintaining the staus quo to satisfy their core base. Whilst a national sales tax sounds attractive, the devil is in the details - do they mean a sales tax or is it to be a VAT ? Will it be flat rate or will it have different rates for differing categories of goods or services ? How easy to change etc etc

[ancient_geezer]

There is no way that you can ID those that make too little, and exempt them from the tax,

Don't have to:

 

All legal residents will receive a demogrant called the Family Consumption Allowence(FCA) equivalent to the FairTax paid on essential goods and services. The FCA will be paid in advance, in equal installments each month. The size of the monthly FCA will be determined by the government's Poverty Level for a particular family size, multiplied by the tax rate paid to all households regardless of income or actual expenditure.

Every year, the Department of Health and Human Services [HHS] determine the "poverty level" for each family size.

The 2001 "FairTax" Family Consumption Allowance Figures
Family Size	HHS Poverty Level	Annual FCA	Monthly FCA
One	$8,590	$1,976	$165
Two	$17,180	$3,951	$329
Three	$20,200	$4,646	$387
Four	$23,220	$5,341	$445
Five	$26,240	$6,035	$503
Six	$29,260	$6,730	$561
Seven	$32,280	$7,424	$619
Eight	$35,300	$8,119	$677

1) Federal Register: February 16, 2001, Pages 10695-10697).

[ The monthly FCA for each adult is .23 * (HSS poverty level for a single person)/12 to assure no marriage penalty due to the manner in which the poverty level is dependant on family size. The monthly FCA for each child is .23 * (the incremental increase of HSS poverty level for a family with one child over no child) ] A. Geezer

A family of four, for example, could spend $23,220 per year free of tax because they will have received over the course of the year rebates totaling $5,341. $5,341 is the amount of sales tax paid on $23,220 in expenditures. A family spending double the "poverty level" or $46,440 per year will effectively pay tax on only half of their spending and, therefore, have an effective tax rate of 11 ½ percent or half the FairTax rate.

The beauty of the FairTax is that you can control how much you pay in taxes. If you happen to save, invest or spend a portion on used [previously taxed] items, you can get your effective tax rate below 9%.

To illustrate examine the tax burden that a family of four will have at various annual expenditure levels as compared to that same family under the current system:

 

H.R.25 "The FairTax Act

[baseball_fan]

I tend to favor the flat tax as well, one reason being people would feel it has more of an ethical or equitable (?) basis, and there would be a higher participation rate as a result. The feeling would be if their neighbors are doing it, so do I, and if I don't, their flat rate will have to go up. So there is a direct connection between our actions and the impact on others - and if we do better together as a society, the rate might actually go down.

[ETERNAL WARMING]

And the scam would be that it's a way to continue to tax the h*ll out of the Boomers for the rest of their lives. Who is kidding whom? That's what this is about. Real wages are at an all time low, fewer citizens contributing to the tax pool...gotta keep those Boomers on a leash. (Less than 6% of the illegals pay any taxes at all.) Gotta keep the bucks rolling in to support a government that is way out of control. I expect this will pass one of these days, simply for that reason.