Replies

On further reflection, I believe I got the transition problem exactly backwards, for which I apologize. Let me try again.

Anyone who today has assets left after all income and payroll taxes have been paid would be subject to the same federal sales tax as folks receiving new untaxed income. In short, this proposal would subject all current assets already taxed under current law to a brand new sales tax on all purchases.

That's a pretty effective to raise significant new revenue for the government. Good for young folks with no assets. Bad for old folks with big (previously taxed) assets.

Anyone who today has assets left after all income and payroll taxes have been paid would be subject to the same federal sales tax as folks receiving new untaxed income. In short, this proposal would subject all current assets already taxed under current law to a brand new sales tax on all purchases. That's a pretty effective to raise significant new revenue for the government. Good for young folks with no assets. Bad for old folks with big (previously taxed) assets.

"Assets" is probably a poor chocie of words -- selling a previously taxed item, whether or not that tax was paid pre-NRST or post-NRST would not be subject to being taxed again.

Now, converting assets to cash and using that to buy new goods and services... yes, that would then be subject to the NRST. However, that is little different from today, where the income tax acts as a hidden VAT on goods and services. The only real difference is that the tax is explicit instead of implicit. The amount of the embedded tax should be roughly the same either way (probably within a few percent of each other).

I'll be the first to admit that the transition period could be a little strange, but I don't think anyone is going to be shafted as a result.

In short, this proposal would subject all current assets already taxed under current law to a brand new sales tax on all purchases.

Actually under the current system that is when you pay the taxes embedded in prices now. The premise of this article. The difference being, under the NRST you will recieve an explict receipt for the tax you are paying. Under the current income/payroll tax system you have little or no idea what the tax burden is.