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.
I heard Mark Levin on his show recently say that some in the administration are talking about a true VAT tax on top of the current system to close the deficit. That would affect every single person in the country.
Look at what Herman Cain has done. He has totally changed the debate from taxing the rich more to totally scrapping the current system in favor of a much more simple one. I never thought that would happen in my lifetime. And he has soared in the polls while doing it which means it is resonating out there.
[ There will be plenty of resistance to such a plan. I’m not worried about elected officials. They’ll cave to public pressure and go along with anything to save their phoney baloney jobs. It’s the tax attorneys, accountants, tax ‘professionals” and software manufacturers that will scream the loudest, and spare no expense to scare the hell out everyone with this “added tax” bs. ]
The Tax Master’s Guild will be plenty pissed off.
I would like to see most all of the Tax Attourneys and Tax Planners have to start looking for a new job.
[ Eliminate punitive taxes too. A straight 9 percent tax on gas and alcohol is only fair. While at it, stop mixing gas and alcohol. Stop taxing diesel, since it is the fuel of commerce. ]
Damn Straight! Social Engineering through taxes is EVIl ITSELF!
Stop trying to avoid THE argument for 999 - that all this does is ADD a new tax revenue stream. It reduces NOTHING. By your own admittance, taxes will go up no matter what! So why in hell should Congress get another tax revenue stream - national sales tax - ON TOP of the taxes they now have to raise?
The very concept that this won't happen is illogical. Other than avoidance, what defense of this madness do YOU have, other than YOUR illogical arguments?
“No new taxes of any kind!”
Alright. Would you mind outlining your tax plan? Or do want us to keep floundering along with the current 80,000 page system?
“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.”
The problem is that we have 3.5 million Boomers retiring every year. That can has been kicked down the road and we’re at the end of the street.
Our failing economy cannot handle this load.
Something must be done NOW to fix this economy or the Boomer Bubble will squash us.
I think that Cain is the first person to come up with a way to save our economy and save SS in a fast, efficient way.
“But yea, the fact that people can’t even keep the difference between a VAT and a sales tax straight is disheartening. “
The fact that CONSERVATIVES can’t keep the difference straight is disheartening! The fact that they don’t understand that there are tons of hidden taxes imbedded in the retail prices of the items they buy is disheartening. The fact that they don’t understand and accept that the free market and competition will bring prices down once the tax burden is lifted and that the ‘evil’ corporations won’t keep all the profits is disheartening.
The fact that so many are b*tching that *they* might actually have to contribute something to the public coffers is disheartening.
I expect this kind of ignorance from the DU. To see so many on the right who are mired in leftist speak breaks my heart.
What’s your plan for fixing the tax code and when do you plan to begin your campaign for president?
I'm sure I missed some, but here are a few I found.
Alcohol 13.8%
Tobacco 25.6%
Telephone 1.5%
Transportation 52.3%
Airport and airway 15.9%
Black lung disability 0.9%
Inland waterway 0.1%
Oil spill liability 0.7%
Aquatic resources 0.9%
Leaking underground storage tank 0.3%
Tobacco Assessments 1.4%
Vaccine injury compensation 0.3%
There is also a gas tax of 18.4 cent per gallon.
I know there is one on tires and coal too, but I couldn't find the percentage.
If Cain's plan gets rid of all this kind of crap, then I'm okay with it.
Death Tax
Reparation tax
Capital gains tax
Federal unemployment tax
Medicare tax
Social Security tax
It eliminates 6 tax streams and adds 1.
Since your sure Congress would raise the rates under 999, perhaps we could discuss what you think would happen if they actually did raise the rates.
Question: What would happen if congress raised the rates from 9-9-9 to 20-20-20 (remember, they are raising the rates of every single voter to 20%).
I'm guessing option 2 would be the most likely, but options 1 & 3 are possible also.
The point is, when a tax effects every single citizen (without exception), it's political suicide to raise it.
New taxes are added under the current code virtually every day. Doing nothing means new taxes.
And we're not just talking about taxes created by congress. We're talking about taxes instituted by bureaucrats in Washington, who suddenly decide to interpret a part of the code differently, and suddenly something comes under the code and becomes taxable. They write up the regulation, put it in the system, and a new tax is born. All without any congressional approval.
Have you ever wondered why you see so many different numbers about how many pages are in the tax code? The fact is, they add pages to it so frequently nobody really knows. 2,500, 5,000, 8,500, 12,000 pages; I've seen all of those numbers. Even the IRS can't give a specific answer.
Support for the status quo is support for a new tax.
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 CAIN’s system works.
1. The dairy farmer pays 9% taxes on the milk he sells to the processor, which he passes on in the form of higher prices plus a 9% slaes tax.
2. The milk processor pays 9% taxes on the milk he sells to the wholesaler, which he passes on in the form of higher prices plus a 9% slaes tax.
3. The milk wholesaler pays 9% taxes on the milk he sells to the grocery, which he passes on in the form of higher prices plus a 9% slaes tax.
4. The grocery pays 9% taxes on the milk they sell to the customer, which they pass on in the form of higher prices plus a 9% slaes tax.
The result is an average 72% hidden tax embedded in the retail price of every product. Granted the last 9% is visable.
Congratulations.
You didn’t even read down to the 4th and 5th lines of the article before posting.
Maybe read the article next time.
The current business income tax rate is 35%.
Are you really trying to make the argument that lowering it to 9% will make prices go up?
2. The milk processor pays 9% taxes on the milk he sells to the wholesaler, which he passes on in the form of higher prices plus a 9% slaes tax.
3. The milk wholesaler pays 9% taxes on the milk he sells to the grocery, which he passes on in the form of higher prices plus a 9% slaes tax.
4. The grocery pays 9% taxes on the milk they sell to the customer, which they pass on in the form of higher prices plus a 9% slaes tax.
I discussed this with someone earlier today as a major problem with Cain's plan. It seems a significant number of people don't know the difference between a VAT and a sales tax, even on FreeRepublic.
It's obvious you don't, or you never would have put the "plus a 9% sales tax" part on the end of the sentence. That's OK, as Mark Twain said "everyone's ignorant about something." I'm never critical of someone for not knowing something, as long as they are open to learning (and that's the same attitude I hope others take with me, as I've had plenty of "I didn't know that" moments as well).
Sales taxes are only paid after the item reaches the cash register for the final sale. In the case of milk, a sales tax is only applied when the home-maker is buying a gallon of milk to take home to put on their cereal.
What you've tried to outline is a VAT. A VAT is applied at every step of production when the product changes hands.
The 999 plan does NOT contain a VAT, it has a sales tax.
Everywhere I have seen the sales tax is to be on all new items sold. If you have a link to somewhere that states otherwise I would like to see it.
Also, when working in the HVAC field, the state would always try to insist that we had to charge sales tax to the customer even though we were performing a service not selling a product. The company purchased the equipment from the manufacturer with sales tax added and installed the units for the customers. The state did not care and wanted to collect the tax both times.
Cain’s 9% tax on personal income will still be hidden in the price of an item. His 9% tax will still be hidden if a company plans on taking a profit (rather than paying out all revenue to the owners). Only the 9% sales tax will be made visible.
His 9-9-9 plan will lower the “hidden” rate from 22% to 9% while simultaneously tacking and additional 9% on the consumer’s end. I highly doubt the consumer will see savings. Currently corporations get taxed on profits only which means the corporate tax does not represent a large portion of the item’s market price. (35% of profit on the item, which could be $0 NOT 35% of the retail price of an item).
Is a tax a tax? Or does it depend on what the definition of ‘is’ is?
So the current tax system - it can’t go up?
By your own statement, the United States should drop taxes.
I would vote for that, but then I wouldn’t have Military, Schools, Police, etc. So instead, I think I’ll keep some taxes. And you know what? They can ALL go up in the future.
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