Posted on 08/10/2004 7:08:18 PM PDT by NormsRevenge
NICEVILLE, Fla. (Reuters) - President Bush (news - web sites) said on Tuesday that abolishing the U.S. income tax system and replacing it with a national sales tax was an idea worth considering.
"It's an interesting idea," Bush told an "Ask President Bush" campaign forum here. "You know, I'm not exactly sure how big the national sales tax is going to have to be, but it's the kind of interesting idea that we ought to explore seriously."
Republican economists who speak regularly to the White House have said that the Bush campaign has been mulling the idea of an overhaul of the tax code as part of an agenda for a second term should Bush win reelection.
Some lawmakers have floated ideas of simplifying the tax code by putting in place a "flat" income tax rate or a national sales tax. But those ideas have so far not gained much traction in Congress. Opponents say such a system would not be in the best interests of the poor and the middle class who would pay the same tax rate as the wealthy even though they have less disposable income.
Do you guys not realize that the consumer pays for all taxes corporations are responsible to pay today? We currently have an imbedded tax in the price of goods today, we just don't get to see that tax with each purchase. Corporations don't pay taxes, customers do!This isn't necessarily true. To pay taxes, instead of raising prices (consumers bare the burden) a corporation could make less profit (capital bares the burden) or pay their workers less (labor bares the burden). But it is probably a combination of the three.
A MEN to that brother. The black market will go away.You don't think the black market would grow with total sales taxes (fed + state) approaching 40% (exclusive) on every product & service sold? Why do you think there is a larger black market for cigarettes than there is for candy bars?
Have you ever done wholesale purchasing? A lot of the minimums are prohibitive for the average family. The places I buy from require $200-$500 minimum per purchase. There may be a little of this going on, but most people will just pay the sales tax.
Everything in your argument is a wash, as in it applies equally to my position as yours.
If all that lobbying can affect a Flat Tax, it can affect The Fair Tax.
Capitulation to lobbyist would have to be fought by capitulation to the voters a cycle that starts with leadership. That I think we can agree on.
The IRS as we know it could be abolished with a flat tax or Fair Tax. We will need a collection agency, but lets call it that. The FTCS. The Federal Tax Collection Service. Or shoot, maybe we can just turn it over to the electric company.
Built into my preference for flat tax is that income is more stable than sales. It is the health of the economy filtered by enough factors to not fluctuate wildly. It has some built in smoothing to it that averages out the highs and lows by the time it takes to higher and train, and fire as well the slower rate of salary growth.
Anything hitched to sales or production of goods will become seasonal and highly elastic. Movements in the economy will be magnified several times in tax revenue or lack of it. The reverberations will require fiscal discipline never before known to politicians. Any release of money into the market could have immediate repercussions. Imagine the temptation to the fed. Printing 1% of the money supply will yield a return of 100% in tax revenue as consumers spend the money and prices rise. Rabid Inflation ensues as the dollars chase goods, spending and tax revenue falls, the fed is tempted again... repeat until explosion.
I will use a metaphor. The Fair Tax or National Sales Tax essentially puts the congress on a commissioned salary. The economy does well, they do really well, and vice versa. To operate as a commissioned person you have to have spending discipline. You have to save to cover thin times. You have to be able to forecast effectively. You have to hedge more greatly against catatrophic events because their risk can be magnified if you are in a downturn.
I do not see that discipline or wisdom in the Fed, so I am in favor of putting them on salary.
-- lates
-- jrawk
P.S. How about making things really interesting and moving towards a government funded by fees.
You have accidentally swerved into one of the often overlooked truisms re: a National Retail Sales Tax.
In this regard, what will happen under the NRST is that consumer prices will decrease, business profits will increase and wages will increase.
IOW, the burden of the income tax system which depresses wages and business profits and increases prices to the consumer will be lifted, resulting in the above phenomenon.
That, my FRiend, will be good news to consumers, workers and business owners!
Actually, they would have to pay a LOT, at least relative to legal residents. Because you have to have a valid SSN to file for the rebate (or Family Consumption Allowance), illegals would in actuality be paying a higher effective tax rate than the rest of us.Supposedly ~25% of what they are buying now is "embedded taxes" and prices will drop that amount with a NRST. So an item that costs $100 today would cost $75 plus $22.40 in taxes for a total of $97.40. I doubt the illegals would complain too much.
That's called conversion of assets, and would indeed be taxable.
IOW, the burden of the income tax system which depresses wages and business profits and increases prices to the consumer will be lifted, resulting in the above phenomenon.If you believe that, then you believe that gross consumer prices will rise. What you are doing is taking the incidence of taxes off of capital and labor and putting it fully on consumers.
That's called conversion of assets, and would indeed be taxable.And who is going to make him pay his tax? The states? For 1/4 of a penny on the dollar collected?
Hey! Hey! Hey! Sounds like the quarterback coach may be about to make some moves! Thanks for the info.
I think most people agree that progressive income taxes and the IRS need to end. That's a good starting point.
its simply too late in the election cycle to come out for something like this, the sheeple will look at it as a ripoff, as soon as they hear "national sales tax".The reason Bush isn't "exactly sure how big the national sales tax is going to have to be" is because he knows if he says he's in favor of a 30%(exclusive rate) NRST, his reelection chances are over. Kerry could pound on him every day that "Bush wants to make your [insert sympathetic consumption item here (daycare, healthcare, new home, etc)] 30% more expensive." It would be all over.
I believe that Hastert was actually the trial balloon. I've been predicting to friends that Bush will discuss this during his speech at the GOP Convention. He's needs something big for his second term, and the WOT is already a given. I can easily see him saying something like... "And by 2007, we are going to abolish the IRS". The ovation would last for about half-an-hour, and it gives Dubya the agenda until the election. Taxes are the main way that the people interact with the government, and creating such a fundemental change would dominate the news cycles for weeks.
Swing voters and independents would all move to the Bush column, and it would drive the Democrats nuts, since it threatens the main element of the current tax code... social engineering.
"Supposedly ~25% of what they are buying now is "embedded taxes" and prices will drop that amount with a NRST. So an item that costs $100 today would cost $75 plus $22.40 in taxes for a total of $97.40. I doubt the illegals would complain too much."
Ok, YN, two things need to be stated here for the benefit of the others on this thread so that they will know what is going on. (1) You understood the point that I was making and chose to pretend otherwise and (2) you posted your response to a related but slightly different point in a deliberate attempt to confuse and/or mislead others on the thread.
Therefore, I am posting my rebuttal for their benefit.
Contrary to your post, the point I was making was NOT that illegals would be paying more than they are now or that we would have a mass tax revolt among illegals on our hands. The point I was making (as you well know)is that illegals would be paying taxes at a rate that would be disproportionate to those of us who are legal citizens and choose to file for the rebate or PCA. That should go a long way toward quelling the resentment and hostility toward illegals that we see now and the perception that they utilize public services that they do not pay for. The fact is that, to the extent that they buy "stuff" that has taxes imbedded in it, they are helping to pay for government services now, but that isn't the public perception and they certainly don't pay at a rate that is disproportionate to the rest of us. Under the current tax regime, legals pay BOTH the imbedded taxes, as well as tax on their incomes. The FairTax would shift the tax responsibility from being tilted in favor of illegals to one that favors legal citizens. Even you will have to admit that's a positive step, right?
What you are doing is taking the incidence of taxes off of capital and labor and putting it fully on consumers.
Precisely where it should be, to assure accountability of the government to the voter by assuring that all voters knowingly and proportionately participate in the tax system.
Thomas Hobbes, 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.
"Imposts, excises, and, in general, all duties upon articles of consumption, may be compared to a fluid, which will, in time, find its level with the means of paying them. The amount to be contributed by each citizen will in a degree be at his own option, and can be regulated by an attention to his resources. The rich may be extravagant, the poor can be frugal; and private oppression may always be avoided by a judicious selection of objects proper for such impositions. "
"It is a signal advantage of taxes on articles of consumption that they contain in their own nature a security against excess.
They prescribe their own limit, which cannot be exceeded without defeating the end proposed - that is, an extension of the revenue."
| "As a matter of fact, what the income tax does — and this is the debate that I think we always try to get into in order to let you and him fight, see — and the people of this country are led down a path where the actual control of their resources, which in the end is the control over their will, is handed off to the government." . . . "The government then manipulates that will in order to destroy the freedom of our electoral system through the income tax structure, and we call the resulting slavery a free system." "In point of fact, it is not as the founders understood, and the only way to restore real freedom is to give people back control over the income that they earn so that they won‘t, at the voting booth and in other phony issues, be subject to that manipulation." |
"The same applies for the 'underground economy' except now they can avoid these taxes altogether by purchasing on the blackmarket."
Just what types of consumer products do you think will be sold in mass on the black market - houses, cars, groceries, furniture? Help me out here, YN.
Yup.
For 1/4 of a penny on the dollar collected?
This is assinine even by your standards -- the state will do it for their own cut. Regardless of what tax system the state will be using, someone shielding personal expenses as business items will be depriving them of their own revenue. The 0.25% kickback is for administrative overhead.
>>Payroll Taxes - FICA / Medicare
I'm not in favor of eliminating that...
They should go back to calling it what it truly is... INSURANCE
Everybody pays their own insurance and everybody reaps a
retirement proportionate to what they themselves put in.
democRATS want RICH FOLKS (ie: middle class families out in the suburbs) to pick up THE ENTIRE TAB
Politically, the best way to institute the National Retail Sales Tax is to abolish the IRS and begin the new tax on January 1, 2006. This would give the government over a year to prepare our financial agencies. Also, anyone in the poverty zone (only the truly needy) could present a "tax free card" to a cashier, exempting them from paying sales tax. This will cut the Democrats claim of "hurting the poor" off at the knees.
Just what types of consumer products do you think will be sold in mass on the black market - houses, cars, groceries, furniture?Sure. Whatever can be evaded, will be to some degree. Like I asked before, why do you think the blackmarket for cigarettes is greated that the blackmarket for candybars?
|
When governments try to extract tax revenue from the economy, they foster an array of responses from citizens who have an economic incentive to avoid the tax. Higher tax rates create even greater incentives for avoidance, evasion, and black-market activity. New York City's experience with cigarette taxes vividly illustrates these problems. New York's high cigarette taxes have spawned a massive black market that has diverted billions of dollars from legitimate businesses and governments to criminals. More troubling than the financial losses is the crime associated with the city's illicit cigarette market. The enormous profits that can be made smuggling cigarettes into New York have lured smalltime crooks, mobsters, street gangs, and terrorists into the racket. Those criminals have engaged in a host of violent activities, including murder, kidnapping, and armed robbery, to earn and protect their illicit profits. Such crime has frustrated law enforcement efforts to curtail it and exposed regular citizens, such as truck drivers and retail store clerks, to violence. The failure of New York policymakers to consider the broader effects of high cigarette taxes has been a mistake repeated across the country in the stampede to maximize taxes on this demonized product. Too often, policymakers do not consider those effects in the erroneous belief that people do not respond to government-created economic incentives. The negative side effects of high cigarette taxes in New York provide a cautionary tale that high tax rates have serious consequences — even for such a politically unpopular product as cigarettes. |
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