Collins Calls for Bold Action to Reduce Tax Burden On American Workers

Software would be more accurate and too smart to support an NRST.

I know a lib who likes to complain about tax cuts, but then complains because he has to pay state taxes this year. He claims it's all President Bush's fault because the state isn't getting enough federal funding. He says a lot of moronic things I could dispute, but aren't worth the energy and frustration.

Third, a tax inclusive rate on consumption is not comparable to a tax inclusive rate on income.

You're correct, the tax inclusive rate on consumption generally overstates the tax paid in comparison with rate expressed with regard to gross income out of which consumption takes place, as gross income includes savings and investment which is not taxed under the NRST.

That is all to the good as the comparison in conservative not overstating the situation.

But you don't need the tax "inclusive" NRST rate to get to the effective tax inclusive income tax rate needed for comparison. It's easier with the the tax exclusive NRST rate.

Accurately express the income/payroll tax rate expressed in tax exclusive form so it can be compared. You have been challenged to do so several times, you have yet to do so.

" I don't think you can get an accurate calculation of the income/payroll tax system rate using just the tax "inclusive" calculation

LOL, neither can most folks.

so why would I or how could I demonstrate it?"

Indeed, To be able to compare the NRST with the income/payroll tax system it replaces. But then it is obvious you wish to express the NRST in terms where it cannot be compared accurately.

While we can compare both systems as percent of gross income using only tax inclusive measure.

For the income/payroll tax example given in #97

gross income = $100,000
savings          = $           0
net taxpaid    = $  20,606 = FICA + IncomeTax(from tax tables) = 0.0765*$100,000 + $12,956
consumption = $  79,394 (gross-taxpaid)

effective Income/Payroll tax inclusive rate = 20.606% = 100*$20,606/$100,000

For NRST on the same basket of goods purchased:

consumption = $79,909 = $79,394*(1-0.225/(1-0.23)
FCA family of 4 =$5,340
net taxpaid = $13,039 =0.23(79,909 - $5,340)
gross income = $100,000

effective NRST tax inclusive rate = 13.039% = 100*13,039/100,000

I rest my case.

How can you compare an income tax to a consumption tax if you don't know someone's income and consumption level.

The individual interested in comparing systems with regard his own taxes knows his individual case. Otherwise you create typical cases to do comparisons based on what is known.

And how can you get an accurate comparison if one of these factors change?

Comparisons are always made on equivalent basis, consumption of a fixed basket of goods out of a fixed gross income. You want to change a factor you change the conditions equally for the income/payroll tax case and the NRST case then recalculate.

I see the need to make a comparison and have shown it is easier using the tax exclusive NRST rate.

Where is that conversion of income/payroll tax rate in tax exclusive terms, so we can make the comparison?

Oh I see: Your Nightmare: "I don't think you can get an accurate calculation of the income/payroll tax system rate using just the tax "inclusive" calculation "

Which is why the NRST is expessed in (tax inclusive) terms so it can be compared with the income/payroll tax system, with gross income as the basis.

Or one could make the comparison in marginal tax rate terms; as a function of tax on next dollar earned with that same dollar spent as is frequently done in evaluating the effect of taxes for investment decisions:

Your chart uses marginal rates which doesn't show what a person actually pays in taxes. Also, it's from 1997. The marginal rates have changed.

You want to update it for current rates you are welcome to do so. The combined rate = current income tax bracket rate + SS/Medicare taxes.

And, it doesn't show the necessary scale for a full comparison. It doesn't show the negative numbers that represent the people who will actually profit from the NRST.

Nor does it reflect the effect of EITC or child tax credits of the Income tax system that represent the people who actually profit from the Individual income tax system.

Of course if you wish to show how people are better off in the NRST at the low end as well you could try to make a chart with -100% at the first dollar earned for both systems and reflect all factors.

If you wished to make accurate comparisons you wouldn't use the wrong numbers that are outdated and put them on a inaccurate chart!

So update it for us. Show us how bad the income/payroll tax system remains, (in comparison to the NRST margin rates of 23%. (first margin rate = 10% + 15.3% today)

At the time of the constitutional convention, it was well know that the state were the dog and the new constitution was the tail, just like the articles before it.

LOL, that was clearly the opinion of the opponents to the Constitution (i.e those who wish to either dissolve the United States or continue under the loose federation of the Articles of Confederation), however "We The People" picked two dogs with each with defined powers through the ratifying conventions for the Constitution replacing the Articles of Confederation.

State government operating on the individual under state sonstitutions, and mational government under the national constitution supreme to both, each with expressed separate and independant powers operating on the individual:

Federalist #39:

"The difference between a federal and national government, as it relates to the OPERATION OF THE GOVERNMENT, is supposed to consist in this, that in the former the powers operate on the political bodies composing the Confederacy, in their political capacities; in the latter, on the individual citizens composing the nation, in their individual capacities. On trying the Constitution by this criterion, it falls under the NATIONAL, not the FEDERAL character;"

but concurrent jursidiction in the case of taxation:

Federalist #34:

``A CONCURRENT JURISDICTION in the article of taxation was the only admissible substitute for an entire subordination, in respect to this branch of power, of State authority to that of the Union.'' Any separation of the objects of revenue that could have been fallen upon, would have amounted to a sacrifice of the great INTERESTS of the Union to the POWER of the individual States. The convention thought the concurrent jurisdiction preferable to that subordination; and it is evident that it has at least the merit of reconciling an indefinite constitutional power of taxation in the Federal government with an adequate and independent power in the States to provide for their own necessities.

All well known and debated by "We The People" prior to their ratification of the Constitution for the United States of America.

The people resisting the income tax statutes are forming a new concept: defunding socialism in the US.

LOL, Just creating more freeloading constituents for more government spending doesn't seem to be doing a very good job of it.

The Honorable James DeMint (R-SC)
United States House of Representatives
THURSDAY, APRIL 5, 2001

"There has been a shift in the relationship between individuals and government, he argues, such that fewer and fewer are paying taxes at the same time that more and more are receiving increasingly generous benefits. If it becomes the case that most voters do not bear a financial burden for this largess, then there will be little to restrain--and significant political incentives to encourage--the continued growth of government.

Milton Friedman as quoted by Northwest Florida Daily News, 10-16-2000:

"If we're to have an income tax, it's a good thing for everyone to pay at least a nominal amount," he said. "If non-taxpayers become a majority in society, what would restrain them from voting for ever higher taxes on others?"

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?

TAXES

100years of history under the income tax makes it clear that we will not get there (smaller government) from here (the income tax).

I know the status quo, as far as the amount of money funding it, is close to your heart, but status quos don't last forever.

23%........... Effective total federal tax rate with respect to consumption expenditure

14.91% ..... rate if Social Security and Medicare were eliminated
14% .......... rate if Nat'l Endowment for the Arts were eliminated
11.9%........ rate if Dept. of Education were eliminated
10% .......... rate if welfare were eliminated
9.8%.......... rate if foreign aid were eliminated
etc.

So lets look at what the maximum it would take to fund those functions clearly authorized under Article I Section 8 of the Constitution, in current dollars:

http://w3.access.gpo.gov/usbudget/fy2001/guide02.html#Spending

$334 Billion --- Defense & Military related expenditure
$ 31 Billion ---- Administration of Justice
$ 16 Billion ---- General Government
$199 Billion ---- Interest on the Debt
=========================
$580 Billion ---- Total

Institute an across the board, Flat rate, single stage National Retail Sales Tax, which taxes all imports and domestic products with the same rate.

Replacing all current federal tax law with a retail sales tax would be 23% on new goods and services paid and receipted at the retail register. No hidden tax, no exceptions, exemptions everyone participates.

Such a tax acts in a natural manner to encourage the elimination of excess government functions through visibility of burden among all constituencies of the electorate.

The total federal government budget would move from $2,000 billions towards something less than $580 billions calculated.

The across the board federal tax rate on new goods and services would decline towards less than 6.7%.

As tax rate on sales decreases the economic burden on retail items, the sales volumes and growth in the economy would be tremendous allowing even further reductions in tax rates below that less than 6.7% theoretic level.

That is what I perceive as the ultimate achievements possible under a National Retail Sales Tax structured in the manner of the revenue bill H.R.25. Simple common sense applied to the principal of TANSTAFFEL,( no free lunch, everyone participates in paying their way in proportion to the benefit the extract from their consumption.) encourages the natural change in attitudes required of the electorate as regards the burden of government largess in their lives.

Thomas Hobbes from Leviathan

It is fairer to tax people on what they extract from the economy, as roughly measured by their consumption, than to tax them on what they produce for the economy, as roughly measured by their income

Hmmmmmm....... It's do able, with time and effort, once the blinders are removed from the electorate.

Up until the time of the war, it was understood that the states were sovereign republics.

Yep, which they constituted into a loose federation under the Articles of Confederation six years prior to the end of the war.

Read the constitution.

Indeed, after the war "We The People" made a few changes in the organization of things by ratifying that Constitution replacing the federation of states under the Articles of Confederation, with the Republic we now have:

http://www.archives.gov/national_archives_experience/constitution_transcript.html

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

With your lack of understanding of the relationship of the states to the federal government codified int he constitution, I don't doubt that you support a NRST.

Hot air and no substance.

The authors and proponents of the Constitution tell us otherwise:

Federalist #39:

"The difference between a federal and national government, as it relates to the OPERATION OF THE GOVERNMENT, is supposed to consist in this, that in the former the powers operate on the political bodies composing the Confederacy, in their political capacities; in the latter, on the individual citizens composing the nation, in their individual capacities. On trying the Constitution by this criterion, it falls under the NATIONAL, not the FEDERAL character;"

Hylton v. United States(1796), 3 U.S. 171

"A general power is given to Congress, to lay and collect taxes, of every kind or nature, without any restraint, except only on exports; but two rules are prescribed for their government, namely, uniformity and apportionment: Three kinds of taxes, to wit, duties, imposts, and excises by the first rule, and capitation, or other direct taxes, by the second rule. "

"the present Constitution was particularly intended to affect individuals, and not states, except in particular cases specified: And this is the leading distinction between the articles of Confederation and the present Constitution."

"Uniformity is an instant operation on individuals, without the intervention of assessments, or any regard to states,"

"[T]he DIRECT TAXES contemplated by the Constitution, are only two, to wit, A CAPITATION OR POLL TAX, simply, without regard to property, profession, or any other circumstance; and a tax on LAND."

Constitution for the United States of America:

Article VI: "This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding."

Article I Section 8: "The Congress shall have power to lay and collect taxes, duties, imposts and excises,
to pay the debts and provide for the common defense and general welfare of the United States;
but all duties, imposts and excises shall be uniform throughout the United States; "

Article I Section 8: "To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof."

Pre Civil War definintion of terms:

A LAW DICTIONARY
by John Bouvier, Revised Sixth Edition, 1856:
DUTIES. In its most enlarged sense, this word is nearly equivalent to taxes, embracing all impositions or charges levied on persons or things;
A LAW DICTIONARY
by John Bouvier, Revised Sixth Edition, 1856:
EXCISES. This word is used to signify an inland imposition, paid sometimes upon the consumption of the commodity, and frequently upon the retail sale.

Have it your way, geezer. I've said what I wanted to say and we've already go over these points in several points prior. If a man wants to believe something, nothing anyone says will make a difference. I have better things to spend my time on than picking nits.

See you in the next cartoon.

Have it your way, geezer. I've said what I wanted to say and we've already go over these points in several points prior. If a man wants to believe something, nothing anyone says will make a difference. I have better things to spend my time on than picking nits.

See you in the next cartoon.

I can't believe that you are telling me that the feds would not be involved at the state level collecting NRST and executing federal law.

That is merely due to your incapacity for comprehension due to your preconceived and ill founded notions of how the legislation works.

Read the H.R.25 legislation Chapter 4, retailers collect the tax from you, states administer & collect the tax from retailers, the federal government interfaces with the state.

There can be no "By agreement with the National government" if the choice to not agree is not allowed.

Three choices consistent with the Constitution are all allowed:

State agrees to collect, administer and remit the tax to the national government itself,
State agrees to allow another state on its behalf to collect, administer and remit the tax to the national government,
State does not agree to do either of the above, the national government through the Treasury department collects, administers the NRST from retailers.

Now, the feds operate afar with their collection of the income tax.

LOL,

I have never made but one prayer to God, a very short one: "O Lord, make my enemies ridiculous." And God granted it.
-- Voltaire

If that is true, each of the so-called "tax protesters" should be tried for sedition.

Apparently your reading comprehension skills are deficit read it again

"Bottom line, if you want to rebel over national taxes, you are in revolt against the Constitution of the United States and the Republic founded under it."

Rebellion involves violence and the advocacy of violence, if that is is your act then you should be tried for sedition.

"Tax protesters" are merely dupes and common criminals offering irrational excuses for their refusing to pay taxes due. Same as any other deadbeat skipping out on a bill.

United States v. Sloan, 939 F.2d 499 (7th Cir. 1991)
Argued that there is no law imposing a tax on income

KANNE, Circuit Judge.

Like moths to a flame, some people find themselves irresistibly drawn to the tax protestor movement's illusory claim that there is no legal requirement to pay federal income tax. And, like the moths, these people sometimes get burned. Lorin G. Sloan believed these claims and because he acted upon them now faces four months in a federal prison; there can be little doubt that he has been burned.

The real tragedy of this case is the unconscionable waste of Mr. Sloan's time, resources, and emotion in continuing to pursue these wholly defective and unsuccessful arguments about the validity of the income tax laws of the United States. Despite our rejection of Mr. Sloan's legal analysis of the tax laws, we are not unmindful of the sincerity of his beliefs. On the other hand, we are less sure of the sincerity of the professional tax protestors who promote their views in literature and meetings to persons like Mr. Sloan, yet are unlikely ever to face the type of penalties incurred by him. It may be that our decision will not alter Mr. Sloan's views regarding the tax laws of this country, for he has stated that if we affirm his conviction without applying the law as he understands it, our decision will be "a sham to which I WILL NOT SUBMIT." It may also be that serving his sentence in prison will not alter Mr. Sloan's view. We hope this pessimistic assessment is incorrect.

We AFFIRM the conviction of Lorin G. Sloan on all counts.

You're correct, the tax inclusive rate on consumption generally overstates the tax paid in comparison with rate expressed with regard to gross income out of which consumption takes place, as gross income includes savings and investment which is not taxed under the NRST.

The problem isn't that the tax "inclusive" rate on consumption "overstates the tax paid in comparison with rate expressed with regard to gross income", it's that you are trying to compare two things that shouldn't be compared. You seem to think that because the phrase "tax inclusive" is in "tax inclusive consumption tax" and "tax inclusive income tax" that they can be compared directly. They can't. Income and consumption are two different things.

Accurately express the income/payroll tax rate expressed in tax exclusive form so it can be compared. You have been challenged to do so several times, you have yet to do so.

How many times do we have to go through this? Geez. I understand "common denominators" and accept the effective tax inclusive income tax rate as an accurate common denominator to compare tax programs. But you don't have to use the tax "inclusive" NRST rate to get to the effective tax inclusive income tax rate! It's easier with the tax exclusive NRST rate. You are the one trying to use uncommon denominators by trying to compare the tax inclusive NRST rate on consumption with the tax inclusive income tax rate.

I rest my case.

LOL! No, you rest my case! You used the tax exclusive rate to figure out their consumption. You just tried to hide it by factoring it in with the price reduction and using the equation to convert tax exclusive rates to tax inclusive rates, but there it is! Let take the price reduction out so we can see your tomfoolery. (Don't freak out, I'm not arguing the price reduction right now.)

consumption = $79,909 = $79,394*(1-0.225/(1-0.23))

becomes

consumption = $103,109 = $79,394*(1/(1-0.23))

which is the same as

consumption = $103,109 = $79,394 * 1.2987

So your "1-0.225/(1-0.23)" is really the tax exclusive NRST rate with the price reduction factored in! Too funny!

Also, the consumption level is incorrect and you made the calculation needlessly complex (I'm assuming to justify the use of the tax "inclusive" NRST rate). This family's consumption level after the NRST (and theoretical price drop) would be $61,530 ($79,394 * 77.5%), not $79,909. You're including the sales tax as part of consumption, but the family didn't consume $79,909, they consumed $61,530 and paid $18,379 (net of $13,039 w/ FCA) taxes on that consumption. Here's the calculation made simpler with the tax exclusive NRST rate:

gross income = $100,000
consumption = $61,530 = $79,394 * .775
FCA family of 4 = $5,340
net taxpaid = $13,039 = (0.2987 * $61,530) - $5,340
savings = $25,430

effective ~~NRST~~ income tax inclusive rate = 13.039% = 13,039/100,000

The individual interested in comparing systems with regard his own taxes knows his individual case. Otherwise you create typical cases to do comparisons based on what is known.

And that individual would use the tax exclusive NRST to calculate the effective tax inclusive income tax rate to make that comparison.

Comparisons are always made on equivalent basis, consumption of a fixed basket of goods out of a fixed gross income. You want to change a factor you change the conditions equally for the income/payroll tax case and the NRST case then recalculate.

I'm not changing anything. You're the one I've had to stop from doing that in the past.

Where is that conversion of income/payroll tax rate in tax exclusive terms, so we can make the comparison?

I've never said you need to express the effective income tax in exclusive terms, I've only said you need to use tax exclusive NRST rate to figure the effective tax inclusive income tax rate to use as a comparison.

Which is why the NRST is expessed in (tax inclusive) terms so it can be compared with the income/payroll tax system, with gross income as the basis.

For the millionth time, this is not true, you use the tax exclusive NRST rate to figure the effective tax inclusive income tax rate for comparison.

You want to update it for current rates you are welcome to do so.

You're the one posting erroneous, outdated charts. It would be a full-time job to fix your errors. Either fix it or stop posting it.

Nor does it reflect the effect of EITC or child tax credits of the Income tax system that represent the people who actually profit from the Individual income tax system.

So it overstates the income tax rate on the low end? Why would it do that? Another error for you to correct.

Which is why the NRST is expessed in (tax inclusive) terms so it can be compared with the income/payroll tax system, with gross income as the basis.

For the millionth time, this is not true, you use the tax exclusive NRST rate to figure the effective tax inclusive income tax rate for comparison.

Pitiful, your saying untrue a million times, doesn't make a difference in the actual answer.

I use the tax inclusive NRST rate alone to figure the effective tax rate to be used in comparing with the effective tax rates for income/payroll taxes as can anyone else.

NRST is not an income tax, but it is expressed as tax inclusive rate just as income/payroll taxes it replaces are.

The accurate and proper method of calculating effective tax rates using tax inclusive rates alone is:

For the income/payroll tax example given in #97

gross income = $100,000
savings          = $           0
net taxpaid    = $  20,606 = FICA + IncomeTax(from tax tables) = 0.0765*$100,000 + $12,956
consumption = $  79,394 (gross-taxpaid)

effective Income/Payroll tax inclusive rate = 20.606% = 100*$20,606/$100,000

For the 23% NRST with a family of 4 purchasing the same basket of goods and services:

gross income = $100,000
consumption expenditure = $79,095 = $79,394 * (1-0.225)/(1-.023)
FCA family of 4 = $5,340
net taxpaid = $13,039 = (0.23 * $79,095) - $5,340
savings = $25,430

effective NRST tax inclusive rate = 13.039% = 13,039/100,000

Demonstrating the individual can very definitely use the NRST 0.23 tax inclusive rate alone to to make the comparson with income tax inclusive rates as shown.

Your merely repeating untrue, untrue, untrue, ... in the face of obvious fact is indeed pitiful.

Your entire argument against the NRST (with its tax inclusive rate) boils down to nothing more than a red herring over arithmetic proceedure instead of substance of actually comparing the NRST with the income/payroll tax system replaces.

Nor does it reflect the effect of EITC or child tax credits of the Income tax system that represent the people who actually profit from the Individual income tax system.

So it overstates the income tax rate on the low end? Why would it do that?

Since the chart is scaled from 0, of course they don't show below the povertyline.

Another error for you to correct.

LOL, if you want to extend the chart range, go ahead. I don't happen to earn or spend below the poverty line myself, do you?

Show us all how both the NRST and Income/payroll tax systems start with a net % gain for 1st dollar earned/spent and advance from there.

Better yet to demonstrate the NRST advantage for the low end of the economic spectrum, it is better to use effective tax rates as opposed to marginal.

To illustrate, examine the effective tax burden a family of four will have at various annual expenditure levels under the NRST.

Gee, it really does start out with a negative percent (i.e. gain) below the povertline of expenditure for anyone who constrains their spending to that level.

Now you are invited to provide a similar chart for the income/payroll tax system based on gross income. Just pick rates for a family of 4 and go for it. I'll even spot you the advantage in your using gross family income instead of gross expenditure in your calculations.

The NRST proposal applies to Federal taxation. Banning a federal income tax is no help, however, if we do not also ban the "right" of states to tax income. As federal taxation is reduced, states will gobble up what they think is left over and nothing will be gained. Only if repealing the 16th amendment applies to all political entities and subdivisions will there be any gain in all this for the country and for the taxpayer.

California is an example of taxation run rampant. There are so many illegal voters in California now who think that this country owes them, that only federal intervention into the taxing practices in California will bring it under control. That means of course that California has to be forced to reduce spending. Or let the state go bankrupt - but no federal bailout!

One really great advantage to the NRST is that the European socialist states can no longer claim foul regarding import duties - there will be no import duties. But every off-shore produced product sold in this country will be charged the 23% federal sales tax. No foul, because our own products will be taxed the same. A big difference though, as previously alluded in the postings here, is that the goods exported will not be taxed in this country. A significant reduction in cost of goods sold! We could even see a positive change in the balance of payments (export vs import) in this country. Again, this happens only if the taxing authority of states and other political entities is sharply limited.

Will you at least admit that using the tax inclusive NRST rate is not necessary to compare the NRST plan to the tax inclusive income taxes we currently have?

Since the chart is scaled from 0, of course they don't show below the povertyline.

The chart doesn't even show any level hitting 0%! The lowest rate, for $1, is over 20%. So scaling must not be the problem. Maybe you should just stop posting erroneous, outdated charts.

Will you at least admit that using the tax inclusive NRST rate is not necessary to compare the NRST plan to the tax inclusive income taxes we currently have?

When you admit admit that mixing tax exclusive rates with tax inclusive rates introduces significant confusion and distorts perceptions of relative levels of burden.

When you admit that it is not necessary to compute the tax inclusive rates used in final comparison using tax exclusive rates.

Consider:

I have a bag of 100 marbles, 20 of which are green 80 of which are red.

inclusive measure: The percentage of total is 20% = 20/100.
exclusive measure: The ratio of green marbles to red marbles expressed as a percentage relative to red marbles is 25% = 100*20/80.

Both regard the same amounts of red and green marbles, but the percentage representation of the same magnitude nor basis. The reflect different considerations entirely.

One should never mix the two percentage expressions in arithmetic calculations to avoid invalid comparisons as regards relative magnitudes of like components.

Since income tax, the tax system to be replaced is expressed in tax inclusive measure, maintaining consistancy and clarity of what is being measured is of significant value thus demands the representation of the NRST in like terms for comparative purposes..

The chart doesn't even show any level hitting 0%! The lowest rate, for $1, is over 20%. So scaling must not be the problem. Maybe you should just stop posting erroneous, outdated charts

I note you have seemed to overlooked the fact that the rates are for "single" taxpayer no children. Thus it would have no EITC or Child credits in it in anycase. The NRST is show to fall through that 0% level at the povertyline of expenditure for a single person.

Looks to me the lowest income (for income/payroll tax) is around $2,000, not many people with gross annual incomes under that. However that may be, when you or I locate a like chart in a more uptodate published report or study by an identified expert in the field, I will be more than happy to post a different chart.

Meanwhile what exists is what I have, and will be on the lookout for something more uptodate:

VI. The Wrong Camera: The Denominator of the Tax Incidence Equation
Tax Analysts Document Number: Doc 1999-32575 (25 original pages)
Dan R. Mastromarco, LLM (LL.M. Taxation, Georgetown) ;
Tax Analysts, Tax Notes October 8, 1999

Which is the same time for which the 23% BEA/CBO revenue neutrality calculations were done. Since that time the percentage total tax rate has dropped a significant amount, and it is to be expected that the NRST 23% number will be adjusted downward as well to maintain a NRST rate at no more than the minimum necessary to meet BEA/CBO revenue neutrality challenge.

In the mean time using 23% NRST as representative of worst case makes sense and marginal rates etc for income/payroll tax system available from studies will be whatever I can locate.

What Dan Mastomarko author of the above material from TAX ANALYST, has had to say concerning the representation of tax rates:

D. Use a Consistent Size Screen to Portray It.

[118] When considering the rate of a national sales tax, or any tax for that matter, one must always decide which of two distinct means of portraying this rate -- the "tax-inclusive rate" or "tax- exclusive rate" -- best expresses the tax burden. Which one we employ changes absolutely nothing in terms of the taxes that are actually raised or paid by the taxpayer under the taxing regime examined, in the same way that measuring a journey in inches or meters does not change the distance. However, how the rate is presented changes how the relative tax burden is perceived by those who wish to compare the merits of competing tax proposals. Confusion results when we compare alternatives under different measuring scales.

[119] The sales tax is particularly susceptible to this confusion because state sales taxes are normally expressed on a tax- exclusive basis, while income, estate, and payroll taxes, as well as the Flat Tax and other VATs, are normally expressed on a tax- inclusive basis. If we were to express a sales tax rate as a percent of the product price as is done in the states, we would be unfairly overstating the burden of the tax when we compare it to what it is meant to replace at the national level. Or conversely, we would be greatly understating the relative burden of the federal income and payroll taxes for those who don't have time to learn the different measuring systems.

[120] Presentation of a rate of tax on a tax-exclusive basis simply means that the rate of the tax is expressed as the tax paid over a base determined after the tax was already imposed (for example, taxable income under our personal income tax system that is net of the tax). In other words, a tax-exclusive rate would be defined as:

$ tax paid ------------------------------------------------------------------- ($ base on which the tax was imposed)-($ tax paid)

[121] The rate therefore reflects the ratio of taxes paid to what is left in the base, such as net of tax income.

[122] On the other hand, defining the rate of tax on a tax- inclusive basis simply means that the rate of the tax is expressed as the tax paid over the base before the tax has been imposed. In other words, a tax-inclusive rate would be defined as:

$ tax paid

------------------------------------------------------- $ base on which the tax is to be imposed

[123] Since the base of the tax before the tax is imposed is always more than the base after tax (the denominator is greater), expressing the tax in a tax-exclusive way will always yield a higher rate. In other words, it will express the tax as having a higher burden. /56/

[124] Let us take the following example.

Example: An individual earns $1,000 and pays $200 in taxes
(under either a VAT, income tax, or sales tax) but spends the
remaining $800 on a stereo. Although the taxpayer will pay the
same amount of taxes ($200) out of the same amount of pretaxed
income ($1,000) a question arises as to how the rate should best
be expressed? Is the tax rate 20 percent or 25 percent?

[125] Clearly, one might say that the income or Flat Tax rate is the lower rate, 20 percent, since the taxpayer paid $200 on $1,000 of pretaxed income. That is because the income tax and VATs are normally looked at (unquestionably looked on) on a tax-inclusive basis. However, when we view traditional state sales taxes we might say that the state sales tax rate needed to raise $200 of revenues is 25 percent, even though the sales tax rate raises the same amount of revenue as a 20 percent tax-inclusive income or Flat Tax rate. The taxpayer would be considered to have paid the tax at a 25 percent rate since the taxpayer paid $200 of tax on $800 worth of goods exclusive of tax. That is because the state sales taxes are normally looked on on an after-tax or tax-exclusive basis. To use our formula for tax-exclusive representation:

$ tax paid -------------------------------------------------------------- (base on which the tax was imposed)-(tax paid)

or,

$200/$800 or, 25 percent.

[126] Which is the correct way of expressing this rate? To the casual observer, it is obvious which tax to prefer. All else being equal, one would prefer a 20 percent rate over a 25 percent rate. But that same person may be surprised to find out that they are saying the same thing, and paying the same tax.

[127] The problem with using a tax-exclusive basis for determining the rate of a national sales tax and a tax-inclusive base to portray the income tax is that it can be very misleading. Let us look at a taxpayer who is at the top marginal rate under each taxing scheme. The tax-inclusive and tax-exclusive rates would be compared as shown in the charts just above and just below.

[128] In the tax-inclusive chart, we see comparisons that we are used to seeing. This chart reflects the maximum marginal rate of the current personal income tax system as 43.3 percent. /57/ Here the sales tax rate is 23 percent and the Flat Tax rate is 32.3 percent, reflecting the combined payroll and Flat Tax burdens. /58/ But the tax-exclusive chart indicates that the income tax with the payroll tax bears a maximum marginal rate that is 75.8 percent of the tax- exclusive base. Even the federal individual income tax alone reflects a maximum marginal tax-exclusive base of 43.3 percent. According to the chart above, the Flat Tax bears a maximum marginal rate of 47.7. The FairTax plan bears a maximum marginal rate of 29.9 percent. In this chart, the taxes paid are calculated as a percentage of what remains after tax.

[129] In making comparisons between alternative taxing systems it is important to ensure therefore that these comparisons are consistent, fair in terms of expectations, and are well explained. Fair comparisons eliminate and do not exacerbate confusion over a relatively critical point as the means of expressing the tax rate. The only means to do so is to ensure that a tax-inclusive rate is compared with a tax-inclusive rate.

VIII. Conclusion.

[130] It strikes me that the whole idea of analyzing distribution of an income tax on the basis of income in an annual period, let alone using that method for comparing an income tax to a consumption tax is disingenuous at best and misrepresentative at worst. In the very least, it fans the fires of ignorance. What we do not know about the current distribution of taxes and yet profess to know is shameful.

o we do not know the standards by which distributional equity is
judged, yet we assume a concensus on the standards;

o we do not know what is the right definition of income, yet we
gloss over the details;

o we do not know how much implicit tax consumers pay, so we
ignore it or arbitrarily assign it to capital and labor;

o we do not know how much tax is buried in the user cost of
capital, so we ignore it;

o we do not know how to distribute compliance costs, so we
consider them negligible;

o we know that we have improperly assumed that individual income
is static, when we know mobility is the general rule (and we
consider distribution on an annual basis);

o we do not know the exact effects of economic growth, so we
don't bother distributing the benefits of plans that clearly
increase overall well being.

[131] In short, we do not know the distribution of taxes on individuals, as hard as we try not to admit it. If we don't know the distribution of these taxes, then we are a long way from saying that they are fairly distributed today -- especially when we do haven't defined the standard on which "fairness" is based.

[132] Let me end by suggesting something that those of us who engage in the tax reform debate -- economists, tax lawyers, and advocates -- should always remember. Many of us are in a genuine struggle to improve the system and to make it fairer. The debate is more than a chance to watch an amusing clash between those that believe they have their hearts in the right place and those that are heartlessly helping to advantage the already advantaged. We are all absolutely right to try to evaluate all tax reform proposals -- even the current system -- by the distribution of the tax. However, we must have a goal in mind and sound criteria against which our progress toward that goal can be measured.

[133] What are these goals? One such goal might be upward mobility so that tax policy affords the greatest opportunity for rewards within the control of the taxpayer. Another might be that the tax system allows for the greatest after-tax income of the most number of taxpayers. Another might be that the tax system is based on the ability to pay, at least insofar as it does not tax those who don't have the ability to pay.

[134] The most frustrating part of the arguments about fairness and distribution is that, while the issue is easily politicized because it has the maximum ratio of buzzwords to fuzzwords, it takes patience to understand. It will take a willingness on behalf of the politicians and advocates to define the criteria against which fairness can be judged. It will require the Joint Tax Committee staff and others to develop more accurate measurements of distribution and to expose the current measurements as faulty. Today, every assumption is stacked in favor of the income tax. What is worse, we know that if we base distributional estimates on these assumptions we have a greater chance of being wrong than right. The debate over a consumption tax is a serious intellectual debate: it should begin with ensuring that those charged with defining "fairness" set forth the basis for that standard and that those charged with the responsibility of evaluating distribution do so with science and not bias.

I managed to get a little more time to devote to your examples.

Federalist #39:

"The difference between a federal and national government, as it relates to the OPERATION OF THE GOVERNMENT, is supposed to consist in this, that in the former the powers operate on the political bodies composing the Confederacy, in their political capacities; in the latter, on the individual citizens composing the nation, in their individual capacities. On trying the Constitution by this criterion, it falls under the NATIONAL, not the FEDERAL character;"

You forgot to put in this part of #39:

But if the government be national with regard to the operation of its powers, it changes its aspect again when we contemplate it in relation to the EXTENT of its powers. The idea of a national government involves in it, not only an authority over the individual citizens, but an indefinite supremacy over all persons and things, so far as they are objects of lawful government. Among a people consolidated into one nation, this supremacy is completely vested in the national legislature. Among communities united for particular purposes, it is vested partly in the general and partly in the municipal legislatures. In the former case, all local authorities are subordinate to the supreme; and may be controlled, directed, or abolished by it at pleasure. In the latter, the local or municipal authorities form distinct and independent portions of the supremacy, no more subject, within their respective spheres, to the general authority, than the general authority is subject to them, within its own sphere.

In this relation, then, the proposed government cannot be deemed a national one; since its jurisdiction extends to certain enumerated objects only, and leaves to the several States a residuary and inviolable sovereignty over all other objects. It is true that in controversies relating to the boundary between the two jurisdictions, the tribunal which is ultimately to decide, is to be established under the general government. But this does not change the principle of the case. The decision is to be impartially made, according to the rules of the Constitution; and all the usual and most effectual precautions are taken to secure this impartiality. Some such tribunal is clearly essential to prevent an appeal to the sword and a dissolution of the compact; and that it ought to be established under the general rather than under the local governments, or, to speak more properly, that it could be safely established under the first alone, is a position not likely to be combated.

Federalist #34:

``A CONCURRENT JURISDICTION in the article of taxation was the only admissible substitute for an entire subordination, in respect to this branch of power, of State authority to that of the Union.'' Any separation of the objects of revenue that could have been fallen upon, would have amounted to a sacrifice of the great INTERESTS of the Union to the POWER of the individual States. The convention thought the concurrent jurisdiction preferable to that subordination; and it is evident that it has at least the merit of reconciling an indefinite constitutional power of taxation in the Federal government with an adequate and independent power in the States to provide for their own necessities.

You didn't mention that the concurrent jurisdiction of the taxing power is of federal character of general government. You posted yourself the definition of national character in #39.

Also, the discussion in #34 was of the FEDERAL power of the government had taxing power on the states, as per the definition of "federal", a example of the recent war expenses spread to the several states was given, as the individual states bore the burden.

The authority of the general government to wholly defend the nation in the new constitution (under discussion) put the entire burden on the general government, with the power to tax the states for the expense. Examples consisted of war and emergences of the conbined-state Union.

The Union incurs expenses and bills the state for them. The state uses it's form of revenue raising to pay it.

With an NRST tax, the federal authority will force a GENERAL tax by FEDERAL STATUTE on a state, instead of merely taxing the state, then the state getting revenue in various ways from its citizens to pay the federal bill, like putting a federal portion on the tax on fuel, to be sent to the feds. The end is the operating expenses of the Union.

I found on-point errors in many of your pastes in the past, when I have time to trace them back. I wonder, do your really read and analyze their sources?

You didn't mention that the concurrent jurisdiction of the taxing power is of federal character of general government. You posted yourself the definition of national character in #39.

I not you choose in so asserting the existance of this "federal" power to rob state treasuries you leave out consideration of:

Federalist #21:

The principle of regulating the contributions of the States to the common treasury by QUOTAS is another fundamental error in the Confederation. Its repugnancy to an adequate supply of the national exigencies has been already pointed out, and has sufficiently appeared from the trial which has been made of it.

The authority of the general government to wholly defend the nation in the new constitution (under discussion) put the entire burden on the general government, with the power to tax the states for the expense. Examples consisted of war and emergences of the conbined-state Union.

The Records of the Federal Convention of 1787
(Farrand's Records)
James Mchenry before the Maryland House of Delegates.
Maryland Novr. 29th 1787--
Appendix A, CXLVIa, page 149, S9.

"Convention have also provided against any direct or Capitation Tax but according to an equal proportion among the respective States: This was thought a necessary precaution though it was the idea of every one that government would seldom have recourse to direct Taxation, and that the objects of Commerce would be more than Sufficient to answer the common exigencies of State and should further supplies be necessary, the power of Congress would not be exercised while the respective States would raise those supplies in any other manner more suitable to their own inclinations --"

Federalist #45:

"The change relating to taxation may be regarded as the most important; and yet the present [continental] Congress have as complete authority to REQUIRE of the States indefinite supplies of money for the common defense and general welfare, as the future [Constitutional] Congress will have to require them of individual citizens; and the latter will be no more bound than the States themselves have been, to pay the quotas respectively taxed on them. Had the States complied punctually with the articles of Confederation, or could their compliance have been enforced by as peaceable means as may be used with success towards single persons, our past experience is very far from countenancing an opinion, that the State governments would have lost their constitutional powers, and have gradually undergone an entire consolidation."

Which clearly indicates a national (i.e. on individual citizen) jurisdiction concurrently shared with state authority in the realm of taxation.

I'm sure the states will be delighted to find you have so freely given their "soveriegn" authority over state treasuries and control of their budgets to to the Congress under the Constitution.

ROTFLMAO!!! You argue a federal power assigned to Congress over "sovereign" states, that you deny existed at the time of enactment of the Constitution.

When one recognizes that the national government operates upon the individual citizen within the operation of its enumerated powers, one of which is the power of Congress "to lay and collect taxes" per Article 1 Section 8 clause 1 of the Constitution, it is no mystery that the power to tax is a concurrent one with states, the Congress acting in a national authority over citizens, not a power operating on state government in a federal character.

Your assignment of federal power over state treasuries fails miserably when tested against the writings of the authors of the Constitution, actual practice of Congress and recognition of the Supreme Courts from their earliest findings under the Constitution.

Hylton v. United States(1796), 3 U.S. 171

"A general power is given to Congress, to lay and collect taxes, of every kind or nature, without any restraint, except only on exports; but two rules are prescribed for their government, namely, uniformity and apportionment: Three kinds of taxes, to wit, duties, imposts, and excises by the first rule, and capitation, or other direct taxes, by the second rule. "

"the present Constitution was particularly intended to affect individuals, and not states, except in particular cases specified: And this is the leading distinction between the articles of Confederation and the present Constitution."

"Uniformity is an instant operation on individuals, without the intervention of assessments, or any regard to states,"

"[T]he DIRECT TAXES contemplated by the Constitution, are only two, to wit, A CAPITATION OR POLL TAX, simply, without regard to property, profession, or any other circumstance; and a tax on LAND."

With an NRST tax, the federal authority will force a GENERAL tax by FEDERAL STATUTE on a state, instead of merely taxing the state, then the state getting revenue in various ways from its citizens to pay the federal bill, like putting a federal portion on the tax on fuel, to be sent to the feds. The end is the operating expenses of the Union.

Merely a convoluted statement rendering to a nullity in meaning.

The NRST, levys a tax remitted by sellers of retail products to the states by agreement or to the US Treasury where a state does not agree to be the intermediary, is hardly anything other than an operation on individuals in the national enumerated power to lay and collect taxes under the Constitution.

I found on-point errors in many of your pastes in the past, when I have time to trace them back.

LOL, a man who arrogates to himself the power of judge over his own case.

I will let others reading these threads to investigate the links and information thereunder for themselves to make such judgements.

When you admit admit that mixing tax exclusive rates with tax inclusive rates introduces significant confusion

BS. It's just the opposite. The tax exclusive sales tax rate is the easiest and most natural way to compare a consumption tax to a tax inclusive income tax. Let's break it down to it's most basic form:

effective tax inclusive income tax rate = consumption rate x tax exclusive sales tax rate

It's really that simple. Expanding the consumption rate, this becomes:

effective tax inclusive income tax rate = (consumption level / gross income) x tax exclusive sales tax rate

If you tell me your consumption rate is 70% (no matter what your salary) I can easily tell you that your effective tax inclusive income tax rate with a 29.87% tax exlusive sales tax is 20.91% (.7 * .2987).

And contrary to your "One should never mix the two percentage expressions in arithmetic calculations to avoid invalid comparisons as regards relative magnitudes of like components" statement, the tax exclusive sales tax rate relates directly to the magnitude of the effective income tax rate. If I double the tax exclusive sales tax rate, the effective tax inclusive income tax rate doubles also!

30% sales tax x 70% consumption rate = 21% effective tax inclusive income tax
60% sales tax x 70% consumption rate = 42% effective tax inclusive income tax

Try that with the tax inclusive sales tax rate.

You want to know how much your effective income tax rate is going to change if the tax exclusive sales tax is changed? It's equal to the amount of change in the sales tax rate times your consumption rate. If the tax exclusive sales tax rate increased by 3.41%, the family above's effective income tax rate would increase 2.7 percentage points (79.39% consumption rate x 3.41%).

You want to know the comparable income tax rate the family in your example is paying in state sales taxes? 6.55% or ($79,394/$100,000) * 8.25%. You want to know what they would pay in state and federal sales taxes? 30.27% or ($79,394/$100,000) * (29.87% + 8.25%).

This doesn't account for the FairTax plan's FCA, but that's not a feature of a fundamental sales tax. We can easily calculate the effective income tax with this equation:

tax inclusive income tax rate = ((consumption level / gross income) x tax exclusive sales tax rate) - (allowance / income)

Simple.

So let's drop the hogwash about "Since income tax is expressed in tax inclusive measure, maintaining consistancy and clarity of what is being measured is of significant value thus demands the representation of the NRST in like terms for comparative purposes." That's all bunk. The FairTax using the tax inclusive sales tax rate is just the result of the Americans for Fair Taxation's focus groups, it is not a neccessity for comparison like we are lead to believe (actually, mislead). The natural way to compare a sales tax on consumption to a tax inclusive income tax is with the tax exclusive sales tax rate.