Posted on 10/14/2011 11:38:51 AM PDT by Brookhaven
What is a sales tax? It is a tax that is paid by a customer when they purchase a retail item. Today, because of the way our tax system is configured, 22% of the retail price of any item purchased is due to hidden taxes embedded into the price.
Hmmm, a 22% tax that is paid by the retail customer at the time of purchase. You know, that sounds a lot like a sales tax to me--a hidden sales tax.
With all of the hollering and screaming over Herman Cain's proposition to implement a sales tax, we fail to take into account we already have a hidden sales tax. All of the objections being thrown at Cain's 9% sales tax--every single one--also apply to the current hidden sales tax embedded in the retail price of every product.
"There's nothing to stop congress from raising the 999 sales tax rate. The 9% rate will soon be 12% or even 20%!" That's the first objection you hear. But ask yourself, what's to stop congress from rasing the current hidden sales tax?
Nothing. Not only is there nothing stopping them, they are in the process of doing it right now! Obama's calls to raise the business taxes so corporations "pay their fair share" will have only one result: increasing the hidden sales tax embedded in every retail product.
Higher taxes on business are passed onto consumers in the form of higher product prices. This is economics 101; only the ignorant argue otherwise. I'm starting to wonder though, if they still teach economics in college. The Occupy Wall Street college students seem oblivious to the fact that their calls to raise taxes on "evil corporations" will raise the price of every retail item purchased--milk, bread, clothing, protest signs, megaphones, lice killer--everything.
The current sales tax is a hidden tax; maybe they don't realize what will happen, because they can't see it happen. Or, maybe they don't care; they know they can get away with raising taxes, because hidden taxes are always easy to raise.
This is the advantage of Cain's proposal. It ends the hidden sales tax, and replaces it with a visible, in-your-face sales tax. Unlike the current hidden sales tax (which is easy, easy, easy to raise), Cain's tax would be difficult to increase. A rate increase would immediately be recognized by every single person in the country.
"Cain's sales tax could turn into a VAT" is the second objection you often hear. First, what is a VAT?
A VAT (value added tax) is a tax that is applied to a product at each stage of the production process.
Conservatives rightly hate the idea of a VAT, because it results in a hidden tax embedded in the retail price of every product.
Wait, huh, what? Hidden tax embedded in the retail price of every product! Didn't we just finish talking about the fact that there is a 22% hidden tax embedded in the price of every retail product now? Let's look at how the current system works.
The result is an average 22% hidden tax embedded in the retail price of every product.
That's right, the current hidden sales tax meets every definition of a VAT--added at each stage of production, and hidden from the consumer by embedding it in the retail product price. It's a VAT.
Herman Cain's 9-9-9 plan eliminates the taxes that result in the current 22% hidden sales tax and replaces it them a 9% fully transparent, in-you-face sales tax. And unlike the current 22% hidden tax, it is not a VAT.
Haha. Nice.
This is dated 2001, but it will give you some insight:
http://www.ipi.org/ipi%5CIPIPublications.nsf/0/3F31DF6F0D040EE986256AB700630B84/$File/PR160-HiddenTax-FINAL.pdf
SNIPPETS:
Federal income taxes represent only 42 percent of the total tax burden
of U.S. taxpayers. The remainder is hidden, distorting taxpayers’
awareness of their real tax burden and of the true cost of government.
Only fundamental tax reform with an emphasis on visibility can ensure
a fair tax code that allows taxpayers to evaluate
whether they are getting their money’s worth from government.
Congress has imprisoned American taxpayers in a cave where the tax code they see is merely a distorted
image of what they truly pay in taxes. Only through reform and total visibility will taxpayers clearly realize the current level of taxation imposed upon them. Until then, the tax code will continue to be what it
is today: a grossly distorted shadow that cannot, and should not, pass for the truth.
I would imagine mainly corporate income tax. Probably with some other taxes and fees thrown in like employer payroll taxes. I thought the 22% figure sounded low.
It's the result of the federal income tax on businesses. The FairTaxers have been keeping track of this for years, as it is part of their argument as to why we should get rid of the income tax.
The number varies between 15% and 29%, depending on the product. The average for all products is 22%. You can go FairTax.org and get much more detailed info than I could post here.
22% is the assumption that Fair Tax uses for embedded costs
Spot on! As I've mentioned before re Cain's plan, too many people lack critical thinking skills. They leap before they think through a process.
I just hated that they used 22% and didn’t back it up with any kind of analysis. Makes it sound like they pulled it out of thin air.
No doubt. The problem is some have genuine questions or concerns and others are just attacking thinking that somehow helps their candidate. And, it's hard to tell the difference, sometimes. You end up fussing at someone who was just asking a question.
I thought Herman Cain had a good comeback for this in the last debate.
Politicians spend so much time focusing on whether or not something can get passed, that they fail to focus on solutions that will work. That's why we keep kicking problems down the road instead of fixing them.
Maybe we won't be able to pass it, but we know the results of not even trying. At some point, we've got to make a legitimate attempt to fix problems instead of putting another band-aid on them so our kids will have to deal with a bigger problem in the future.
I'm ready to make a real attempt to fix our long term problems now. Maybe it will blow up in my face, but I'm ready to try anyway.
I agree. The way they didn't explain it makes me wonder if they pulled it from someone else's study and didn't want to attribute it. I may do some research this weekend to see if I can find either where the 22% came from or a study on the embedded taxes. The other good thing about the sales tax versus the corporate income tax, assuming that is what their figure is, is that the reduction helps domestic companies more, since they are the ones paying the high rates.
I'm not sure if it's ignorance, or a knee-jerk reaction because it was proposed by someone "that wasn't my candidate."
Cain proposed it? Bad, bad, it's an evil plan that will destroy the country. Yes, that's what I think of Cain's plan to declare January national "puppies are cute" month. No I don't want to know the details or discuss its merits, I just know it has to be destroyed to help my guy get the nomination.
But yea, the fact that people can't even keep the difference between a VAT and a sales tax straight is disheartening.
Although I am no fan of the NST, I understand some of the appeal. Again, though, this is a classic case of “we’ll just have to see how it works out.” I’ve seen some say that employees will quickly get a 15% raise, since payroll taxes would be eliminated, which of course would never happen. Politically, it’s a tough sell as well, adding another tax to the already overburdened taxpayer.
Gonna take a lotta convincing and faith for any such plan.
“That’s why we keep kicking problems down the road....”
Yep. Problem is we’ve reached the end of the road. Folks better wrap their heads around Cain’s plan, or one equally drastic, soon.
Yes, I agree. Conservative's are going to have to go into education mode for awhile. It will take tireless hours of showing people the real numbers in a convincing way. We will also have to overcome the BS and obfuscation that will be introduced from the left and the Republican establishment trying to hold onto power.
The temptation is to SCREAM at somebody that they are being dense, but that probably hurts the cause in the long run.
It would help if Rush got on board.
I wish I could give proper credit but I can’t find who posted this logic originally:
Our GDP is $14 trillion. Our federal spending is $4 trillion. Therefore the private sector is responsible for $10 trillion dollars of the GDP. The $4 trillion the government spends comes from taxes on the private sector, therefore we have an effective tax rate of 40%. Now our wise leaders have deferred a large part of that taxation by borrowing the money instead, clever them.
“Then where does it go from there?”
The same place the current system goes. Up.
Point is, it’ll be much easier to keep tabs on them trying to raise a VISIBLE tax.
***
Elections and Conservatives have kept the income tax from going to “infinity and beyond”, and they’ll work on the sales tax too.
With a sales tax, the following are turned into taxPAYERS:
1) illegals
2) welfare recipients with big screens
3) section 8 people with BMWs
That’s the best thing about as far as I’m concerned. The freeloaders finally have to a pay into the programs they use up.
[ With a sales tax, the following are turned into taxPAYERS:
1) illegals
2) welfare recipients with big screens
3) section 8 people with BMWs ]
NAILED IT!
What does the Cain plan do about federal gasoline taxes?
Snarky comment for your readers. Maybe you had to make it because you were about to try to baffle them with bullshit.
That "hidden sales tax"? Under 999 it's still there - corporate income tax is still passed down from producer to producer to producer and finally to the final consumer.
But under 999, national sales tax is then added on top of that passed-down "hidden" sales tax. Wow, sounds like a great plan.
Oh, but we don't have to worry, because Congress won't raise taxes that everyone can see - Congress only raises taxes that people can't see.
You mean taxes like the corporate income tax, right? The one that is now being passed down as your "hidden sales tax"?
The one which will be the first that Congress raises after 999 is passed? And why? You said it - because it's hidden, and then passed on to the consumer, just like now.
And once that happens, and the magical 999 number is broken up into 9-20-9 or something, then each tax will be declared separate, and... raised.
Get real.
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