Consumption taxes are not the answer

TownHall.com ^ | Friday, May 28, 2004 | by Bruce Bartlett

[Principled]

In #110 you agree that the Fair Tax plan includes repealing the 16th and making the taxation of income unconstitutional, but in #112 you change your mind... heh heh heh you're lost.

[Your Nightmare]

I can actually see a distinct difference between the writing styles of lewislynn, which is pure propaganda, and yournightmare, which are at least grounded in reality. I'm not 100% convinced they're the same person anymore.

I can assure you we are NOT the same person. And I can prove it:

Lewislynn, what's your favorite color?

[lewislynn]

Why yes, yes it is. That indeed is the definition of the Fair Tax plan...

It might be "the definition" of a plan but it isn't their plan and if their plan (HR25) was implemented that doesn't mean any other actions would be taken...

Their plan, HR25, doesn't legislate anything constitutional....but you knew that.

[Your Nightmare]

part of that is obviously repealing the 16th and making the taxation of income unconstitional.

Sorry, if it's not part of the legislation, it's not part of the plan.

[Principled]

If it's part of the "plan", why not make the NRST contingent on the repeal of the 16th?

Good question - one that is at the heart of many peoples' distrust of goverment (mine included).

I concluded, after some time and much talking, that the only way to pass the Fair Tax and eliminate the income tax, eliminate withholding, eliminate payroll tax, eliminate the IRS, eliminate filing, etc. and make the taxation of income illegal (not yet uncnstitutional, was to first have a viable revenue option to income/payroll taxes in place.

That being said, I hadn't made up my mind until I was shown all of the roadblocks to re-imlementation of the income tax after said passage.

1) you'd have to convince everyone that their paychecks should be reduced again by 35% or so.
2) you'd have to convince business to start "contributing" to FICA again
3) you'd have to reconstitute an IRS
4) you'd have to write a new tax code (the existing code is erased/abolished upon passage of the Fair Tax). How long would it take and how hard would that be!?
5) you'd have to convince industry to increase the prices of their exported goods by 25% or so.
6) you'd have to convince everyone that the economic boom should end
I have a crying 3 yr old. Back soon...

[Principled]

Of course if you want to keep the income tax and some day have both an income tax AND a sales tax, you could use this as a reason to keep the income tax and keep the door open to having both taxes.

What's the worst that could happen by passing the Fair Tax? We could end up with - *gasp* - what we have now!!!

[Principled]

Sorry, if it's not part of the legislation, it's not part of the plan.

There's no reason to be sorry!

The plan is to pass the fair tax and pass an amendment that repeals 16th and makes taxation of income unconstitutional. There are two pieces of legislation - hence your use of the definite article was inappropriate.

There is HR 25 and HJR 45. You should look at them both.

[lewislynn]

It's interesting that they never go around accusing the other screen names of being me. Only me being them/you

[ancient_geezer]

How many times have you made one of your typical cut-and-paste posts that showed how the 29.87% rate was calculated

The NRST is 23% of sales receipts remitted by the Vendor, as called for in the bill.

Instead of leaving federal taxes hidden within prices as we do today, the NRST requires the reporting of federal taxation on every retail sales receipt as a separated line item. To accomplish that you multipy the price due by the percentage of taxes included within price and provide that information as a separate line item on the receipt.

In all those posts I don't remember this $140+ billion tax credit being accounted for.

You do not find it because the Budget Enforcement Act / CBO methodology does not require accounting for refunding excess tax payments for setting rates on a revenue bill. refunded excess tax payments are not reported as part of revenue under the current income/payroll tax system, nor are refunded excess tax payments a part of revenue under the NRST.

Tax rates are set in accord with equilibrium conditions not single time transitional effects under the Budget Enforcement Act.

End of issue, you are just repeating yourself.

If you want an honest debate about the NRST, stop with the funny math and Enron accounting, come up with the real rate,

Doesn't take any accounting at all:

The NRST is 23% of sales receipts remitted by the Vendor, as called for in the legislation as set by Budget Enforcement Act requirements. That is the real rate:

H.R.25

Fair Tax Act of 2003 (Introduced in House)

http://thomas.loc.gov/cgi-bin/query/z?c108:H.R.25:

---

`SEC. 101. IMPOSITION OF SALES TAX.

• `(a) IN GENERAL- There is hereby imposed a tax on the use or consumption in the United States of taxable property or services.

• `(b) Rate-

• • `(1) FOR 2005- In the calendar year 2005, the rate of tax is 23 percent of the gross payments for the taxable property or service.

 

---

 

`SEC. 510. TAX TO BE SEPARATELY STATED AND CHARGED.

• `(a) In General- For each purchase of taxable property or services for which a tax is imposed by section 101, the seller shall charge the tax imposed by section 101 separately from the purchase. For purchase of taxable property or services for which a tax is imposed by section 101, the seller shall provide to the purchaser a receipt for each transaction that includes--

• • `(1) the property or services price exclusive of tax;

• • `(2) the amount of tax paid;

• • `(3) the property or service price inclusive of tax;

• • `(4) the tax rate (the amount of tax paid (per paragraph (2)) divided by the property or service price inclusive of tax (per paragraph (3));

• • `(5) the date that the good or service was sold;

• • `(6) the name of the vendor; and

• • `(7) the vendor registration number.

 

and lets debate it.

You want a higher tax rate, debate with a democrat.

I find the "real rate" actually paid by an individual citizen to be much lower, when all is accounted for.

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 FCA prepayments 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 the NRST works, examine the tax burden that a family of four will have at various annual expenditure levels.

[Your Nightmare]

You do not find it because the Budget Enforcement Act / CBO methodology does not require accounting for refunding excess tax payments for setting rates on a revenue bill. refunded excess tax payments are not reported as part of revenue under the current income/payroll tax system, nor are refunded excess tax payments a part of revenue under the NRST.

It's not a refund, it's a credit. One that will reduce the amount of revenue for the first two years meaning the 29.87% rate is NOT revenue neutral. It will have to be higher.

[Principled]

It's not a refund, it's a credit.

If inventory has already been taxed, then taxing again at sale is double taxing- hence the refund. Call it what you will, but it's function is to refund taxes already paid.

[Your Nightmare]

If inventory has already been taxed, then taxing again at sale is double taxing- hence the refund. Call it what you will, but it's function is to refund taxes already paid.

That's not true. It's not to refund taxes already paid, it's to avoid paying taxes twice. This is done by giving retailers a credit, meaning they collect the sales tax, but don't remit it. Those sales taxes that the retailers keep were not factored out of the formula for the 29.87% rate.

[Zon]

I belong to no socialist or communist cult. How from my comments did you come to some fantasy that I am a collectivist?

See/read for yourself:

Final Authority wrote: ...we [emphasis mine] now believe that a sales tax if ever enacted will be another layer of broad based taxes adding to the levy of the income tax. 48

Zon wrote: What collectivist cult do you belong that you speak for its members? 49

Who is the "we" group you are speaking on behalf of?

Next time you write I suggest you verify your vocabulary using a dictionary. Better, don't bother to write unless you can add to the discussion in a positive way.

Wrong. I read too carefully for your liking and when exposed you you go into denial. Then again, it may be that you're so mired in mysticism you aren't aware of the "we" group you speak for, or you're just feigning that you didn't notice that you wrote the word "we". Pleading incompetence is unbecoming of you.  

So who is this "we" group you speak for and what is it about.? Are you a tax accountant, a lawyer, a politician, perhaps an IRS bureaucrat -- an automaton?

[ancient_geezer]

It's interesting that they never go around accusing the other screen names of being me. Only me being them/you

Your past coming back to plague you lewislynn, lousbolts, lurkeylou?

Problem with known bad behavior, multiple times caught means to be always suspected. That's karma lewis.

[ovrtaxt]

I'm all for reducing the size of government, but what makes you think reducing revenue reduces the size of government?

Reducing spending reduces the size of government. But the scope of government is also at issue here, and in my opinion, a far more important issue than money. The opportunity for individual control that the income tax provides the politicians and bureaucrats is radically opposed to the concept of liberty. This is supposed to be of, by and for us, but the current system stands that concept on it's head. And in practical terms, tax court operates totally outside the realm of a just court system.

True conservatives believe in paying their bills, not cutting taxes while increasing spending and going even further into debt.

I absolutely agree that the federal governemnt spends way way way too much of our money, and they seem hellbent on spending even more at an ever increasing pace. A NRST is the best way to stop that crap at once.

[Principled]

It's not to refund taxes already paid, it's to avoid paying taxes twice.

Yes it is. It's function is to prevent overpayment of taxes. Retailer has already paid tax on inventory, so why would he collect tax on inventory again? And why on earth would you count double taxes in determining a rate?

You wouldn't.

BTW the price sof those inventory items will be the same as new items on which the sales tax will be paid.

[ovrtaxt]

I can assure you we are NOT the same person. And I can prove it: Lewislynn, what's your favorite color?

Can I be one of you too?

Roses are red violets are blue I'm a schizophrenic and so am I... :)

[Principled]

he he he

lewis' favorite color is red - you know with marx and communisim and all....

[ovrtaxt]

Ouch! Well, at least it isn't that Islamic green...

[ancient_geezer]

meaning the 29.87% rate is NOT revenue neutral. It will have to be higher.

The 23% rate imposed by the legislation is "revenue neutral" under the requirments of the Budget Enforcement Act through CBO measure.

CBO methodology is the determinate, not your aspirations of paying for the refund of excess payments to government by increasing rates so there is no longer an excess.

With your rationale, Congress would be forced by law to raise income tax rates whenever anyone could receive an income tax refund.

The reason a refund is paid is because of an overpayment to govenment (overpayments do not count as revenue), not because the rate is too low. Overpayments occur under the income/payroll tax system and are refunded, during transition overpayments will occur and be refunded by the NRST.

"Revenue neutral" tax rates under BEA/CBO are set by equilibrium conditions not by transient overpayments.

Furthermore, the BEA requirements actually allow reducing the 23% NRST rate provided the conditions can be met to allow a tax cut coincident with implementation of the NRST.

PAYGO RULES: CRS Rules 98-20006
Refer 2 USC 900-909
House Point of order waivable by unanimous consent
Senate Point of order waivable by 3/5ths vote.
May be waived under Sequestration Rules on declaration of War or
conditions of <1% real economic growth for 2qtrs.

It doesn't fly NY, your argument is a dud and a strawman from its conception.

If you want higher taxes, go push your baloney to democrats they will agree to anything that raises taxes. (They will glad to cancel out your income tax refunds for tax overpayments by increasing income tax rates).