Posted on 01/30/2004 8:20:56 AM PST by Temple Owl
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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 pure consumption tax:
H.R.25
SPONSOR: Rep Linder, John (introduced 01/7/2003)
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.S.1493
Sponsor: Sen Chambliss, Saxby [GA] (introduced 7/30/2003)
Title: 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 sales tax to be administered primarily by the States.
Now that is tax reform.
Any thoughts on the national sales tax for all levels
Why all levels? Businesses selling to businesses just add to the cost of final retail products. Essentially you describe a European VAT, and that is worse in many way than what we have. Taxes are hidden totally from the view of the electorate, buried in the price of goods and services and not seperable into what is tax and what is do to business costs & profit.
With a VAT, government gets of the hook of accountability by blaming business for rising consumer prices. Not good, keep taxes visible and at the stage that the voter can see them. Intimate and a daily reminder of what government "largess" is costing each of us.
That is why I support a visible single stage, single rate tax that everyone can perceive. The National Retail Sales Tax. Nothing hidden, everybody is aware of and pays the same rate of tax with every purchase of new goods and services.
That to me is a much better method of taxing people. How can you maintain "eternal vigilence" when government can put horse blinders on you, like a VAT does. A retail sales tax is much better to allow the electorate to actually see and experierence what the cost for more government bennies is in our individual lives.
A Vat just allows government to maintain the fiction that someone else is footing the bill, even worse than the income tax with its exemptions, credits and deductions.
Waler Williams states it clearly, and applies to any tax that appears to transfer the burden to someone else.
Walter Williams, World Net Daily, 10-25-2000
- So many Americans paying little or no federal taxes makes for a natural spending constituency. It's like me in the restaurant: What do I care about extravagance if you're footing the bill?
See reply #26 above for the proposed National Retail Sale Tax alternative and links to its legislation and status in Congress.
Paying at the retail level by the consumer would work. It's just a lot more red tape than paying at the manufacturing and import level.
Paying a sales tax at manufacturing and import levels is a VAT. A VAT operates on the sale of goods and services at all levels of production, manufacturing and import are just specific production activities that feed into cost structure of final retail products.
The chief problem of a VAT is that it is not perceived by the final retail consumer of retail products as a cost to himself (such taxes are inseparably embedded into the price structure of retail products.), rather the VAT is perceived as a tax on business as opposed to the individual consumer.
Definition [ http://www.encyclopedia.com/articles/13330.html ]:
value-added tax
levy imposed on businesses at all levels of production of a good or service, and based on the increase in price, or value, added to the good or service by each level. Because all stages of a value-added tax are ultimately passed on to the consumer in the form of higher prices, it has been described as a hidden sales tax. Originally introduced in France (1954), it is now used by most W European countries.
The current corporate income/payroll tax structure now in place is a subtraction method VAT, in that it is a levy imposed on businesses at all levels of production, it is passed on to the consumer hidden in the price of goods and services(more than 22%[the lowest estimate that prices would fall with enactment of the NRST] of the price of all goods and services), lower wages, lower returns on investment for investors, and higher interest rates(as much a 25% greater than they would be under the NRST).
The business accounting costs for such VATs are much greater than the simple NRST which only requires the tracking of gross retail sales revenue for calculation of the amount of tax to remit. An accounting that is done for prudent business practice in anycase.
Paying at the retail level by the consumer would work. It's just a lot more red tape than paying at the manufacturing and import level.
What red tape beyond a register receipt that goes with retail sale anyway would that be?
And we all would be informed as to what the "tax" is either way.
We aren't now, and there are many such taxes in place today of which people take no notice for lack of immediate participation in the payment thereof. It could be said that we are informed of how much tax we pay today. But that would be stretching the reality abit.
The Individual Income Tax return(1040) that captures everyone's attention each April, is merely a partial VAT accounting sheet the government cons individuals, held at ransom, into filling out. Its misdirection puts blinders on the eyes of the electorate, and totally distorts their perceptions as to the real impact of taxation in their lives.
Every man woman and child in the nation, pays federal taxes through that VAT.
DO YOU PAY YOUR INCOME TAX
AT THE SUPERMARKET?
by D. Sherman Cox J.D. L.L.M. Taxation
The full impact of the federal tax system(taxes in gross wage/salaries & other compensation + business income/payroll taxes) added onto the base(taxfree) price of retail consumption goods and services is 36% for federal taxes not counting the embedded cost of compling with the income/payroll tax system.
Wow!!!!!!!!!! I want a job just like that!!!!!!
They don't want to lose their jobs, so they are fighting this issue tooth and nail.
Bullshit, it's a lie and mathematically impossible.
Retail price does not include 22% income taxes that would be removed with a sales tax
Do the math and show your work.
Business/corporate taxes are imposed on profits/gains not on gross income.
You're suggesting that of every $100.00, $22.00 is tax. Meaning (your idiotic theory) there is $22.00 tax imposed on $78.00 of GROSS INCOME. That's 28+% ON THEIR GROSS.
For that to happen there would have to be 94% profit at a 30% tax rate.
$78.00 X .94 = $73.32(profit)
30%(tax) X $73.32(profit) = $21.99.
BTW, 5 companies passing on their (example) 10% markup doesnt equal 50%...it can only be 10%.
Company A( 100.00 gross + 10% profit/overhead = $110.00
Comany B( 100.00 gross + 10% profit/overhead = $110.00
Comany C( 100.00 gross + 10% profit/overhead = $110.00
Comany D( 100.00 gross + 10% profit/overhead = $110.00
Comany E( 100.00 gross + 10% profit/overhead = $110.00
Total (gross) $550.00
Total profit/overhead $50.00
Total profit/overhead percentage of gross 10%
And if the $50.00 was all profit the tax at a 35% rate would be $17.50
the $550.00(gross) could be reduced by $17.50 or about 3%.
Bullshit, it's a lie and mathematically impossible.
Retail price does not include 22% income taxes that would be removed with a sales tax
Do the math and show your work.
Income taxes are not the only taxes that are removed by the NRST, The fair tax replaces over 94% of all Federal taxes now collected.
H.R.25
SPONSOR: Rep Linder, John (introduced 01/7/2003)
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.
I researched the effect of repealing all income and payroll taxes laid on business on the theory that we as individual consumers end up paying those taxes at the retail counter.
The following article covers the mechanism on how the current Federal tax system propagates and is embedded into consumption expenditure.
DO YOU PAY YOUR INCOME TAX
AT THE SUPERMARKET?
by D. Sherman Cox J.D. L.L.M. Taxation
The 24% in the article considers only those factors actually paid to government out of imposititions on business in complying with the income, payroll, excise & tariff tax laws.
I refer you to the section of the following article about the Income/Payroll tax system and its impact on our economy "A. Hidden Upstream Taxes. " paragraph 39.
"[39] Dr. Dale Jorgenson, Chairman of Harvard University's Economics Department, believes that the price of goods and services are inflated by about 20 percent or more by upstream taxes consumers ultimately bear. In a recent paper Dr. Jorgenson estimated the built-in taxes contained in the price of goods and services. /22/ In the chart above, he quantified the hidden component of tax, estimating that producer prices would fall on repeal of upstream taxes an average of about 22 percent."
Looking at the accompanying chart, the range of values from industry to industry appears to be about 12-25%.
Economists Gary and Aldonna Robbins of the Texas-based Institute for Public Policy examined the case of dry cleaning a shirt, with a particular eye toward uncovering the hidden costs of taxes in price.
The Robbin's attributed over 33.6% of "consumer prices" to be due to federal taxation passed on to the customer.
The Federal Tax System
http://www.cbo.gov/showdoc.cfm?index=2125&sequence=0&from=1#pt1
From the Table 1 we may extract the proportionate contributions of each sector of taxes as they contribute to consumer price for the year 2000.
Those tax components which will not change prices as a consequence of enactment of HR2525
============================
Adjust for a conservative $600billion(1995 figure, AGCA '00, Payne '95, PillaBartlettNorquist '95 ) interest & cost of compliance effects.
Estimated change in consumption prices as consequence of enactment of a National Retail Sales Tax, repealing all business income and payroll taxes:
33.6*(1186.5/1945) = 20.5% in consumption prices
Which compares well with the Jorgenson empirical study of 22% fall in producer prices.
The two sources are in reasonable agreement, and I see 20-23% a reasonable value to expect prices to fall not only for customers here in the United States, but in our exports as well making them far more competitive on international markets.
Every man woman and child in the nation, pays federal taxes through that VAT.
DO YOU PAY YOUR INCOME TAX
AT THE SUPERMARKET?
by D. Sherman Cox J.D. L.L.M. Taxation
The full impact of the federal tax system(taxes in gross wage/salaries & other compensation + business income/payroll taxes) added onto the base(taxfree) price of retail consumption goods and services is 36% for federal taxes alone.
All wages and the taxes on them are paid for out of sales receipts to business,(i.e. consumption expenditure).
family consumption expenditure = gross income less savings state & fed taxes paid
Federal tax revenues collected as % of family consumption expenditure = fed/(1-state-fed-savings) =
23.5/(1-.235-0.102-0.012) = 36.09%
If we add in the cost of federal tax compliance, planning, litigation & enforcement, the percentage that truely represents the burden on the family due to the Federal income/payroll tax system, product prices are increased by more than 55% over taxfree prices.
Where Have All the Dollars Gone?
How the government robs Peter to pay him back.
By economist James L. Payne, Reason Magazine February '94When the overhead costs are added together, (24 percent compliance costs, 33 percent disincentive costs, and 8 percent other costs), they total 65 percent of tax revenue.
Current total Federal tax revenues are about $1900billion, more than $1,000 billion additional dollars are added on onto consumption prices due to the business costs of complying with the federal income/payroll tax laws.
The percent total current federal burden (taxes + compliance costs) of consumption dollars = 36*(1900+1000)/1900 = 54.95% economic burden added on to base retail(i.e. taxfree) prices.
Too bad that citizens don't get a receipt detailing those "hidden sales taxes" buried in their consumption purchases. If they ever did, some of those 70% of the public clamoring for more from government, thinking someone else foots the bill, might be tempted to change their mind.
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