Kerry Raps Bush's National Sales Tax Quip

AP on Yahoo ^ | 8/12/04 | Nedra Pickler - AP

[NormsRevenge]

CARSON, Calif. - John Kerry (news - web sites) said Thursday that President Bush (news - web sites)'s musing about a national sales tax is an insult to financially struggling voters and would amount to "one of the largest tax increases on the middle class in American history."

The Democratic presidential nominee, during a speech at California State University, Dominguez Hills, tried to reverse partisan stereotypes by portraying the Republican president as the tax raiser and himself as a tax cutter.

Kerry said if Bush wants to create a national sales tax without increasing the deficit, people will end up paying at least 26 percent more for purchases on top of state and local sales taxes.

"We know exactly who that's going to hurt," Kerry said . "That's going to hurt small business. It's going to hurt jobs. It's going to hit the pocketbooks of those who need and deserve tax relief most in America."

Bush has suggested that overhauling the tax code would be a second-term priority if he is re-elected. While campaigning in Florida Tuesday, he said replacing the income tax with a federal sales tax is "an interesting idea that we ought to explore seriously."

Kerry seized on Bush's comments even as White House officials downplayed the idea and denied that any such plan is under consideration.

Kerry said Bush has failed to offer a plan for improving the economy in his second term. He said the president's tax cuts have resulted in a tax increase on the middle class because their state and local taxes have been increased to compensate for loss of revenue from the federal government. He said a national sales tax would only further burden the middle class.

"I call it one of the largest tax increases on the middle class in American history," Kerry said. "And this is coming from an administration that has offered almost no new ideas for our economy, and the few ideas that they have offered have only hurt middle class families. This new idea is no different."

Kerry repeatedly invoked the memory of better economic times under another Democratic president, Bill Clinton (news - web sites). He said Clinton's advisers were helping craft his economic plan and that he will be "a champion for the middle class" by cutting their taxes while lowering the deficit.

Kerry said he would offer tax breaks to help pay for health care premiums, child care and college tuition, paid for by repealing Bush's tax cuts for people earning more than $200,000 a year.

"They will go back to paying the same taxes they paid when Bill Clinton was president," Kerry said. "That was a time when every American rich got richer."

Bush campaign spokesman Steve Schmidt said Kerry cannot pay for his tax plan.

"John Kerry's numbers don't add up," Schmidt said. "He has spent his tax hike more times than anyone can keep track of."

He was also fighting Bush campaign's charge that Kerry has a long history of voting for higher taxes during his 19-year career in the Senate.

[Fast1]

Shut-up Ketchup Johny you are an Blithering Idiot

[smokeyb]

One way (there are others) to make a national sales tax work is to give low and middle income Americans a sales tax rebate based on their income. Higher income will not get any rebate.

And that is just what HR25 does, but EVERYONE gets the rebate, just as EVERYONE should. Everyone get to take the standard deduction and standard exemption right now.

The rebate will be equal to the poverty line rate.

[ancient_geezer]

One way (there are others) to make a national sales tax work is to give low and middle income Americans a sales tax rebate based on their income. Higher income will not get any rebate. Set it up to be an automatic thing that occurs every month and few will complain.

Why have government asking what people income is. It's none of their business.

Just make it a straight demogrant paid to all legal residents like the HR25 NRST proposal does.

All legal residents will receive a demogrant called the Family Consumption Allowence(FCA) equivalent to the FairTax paid on essential goods and services. The FCA will be paid in advance, in equal installments each month. The size of the monthly FCA will be determined by the government's Poverty Level for a particular family size, multiplied by the tax rate paid to all households regardless of income or actual expenditure.

Every year, the Department of Health and Human Services [HHS] determine the "poverty level" for each family size.

The 2001 "FairTax" Family Consumption Allowance Figures
Family Size	HHS Poverty Level	Annual FCA	Monthly FCA
One	$8,590	$1,976	$165
Two	$17,180	$3,951	$329
Three	$20,200	$4,646	$387
Four	$23,220	$5,341	$445
Five	$26,240	$6,035	$503
Six	$29,260	$6,730	$561
Seven	$32,280	$7,424	$619
Eight	$35,300	$8,119	$677

1) Federal Register: February 16, 2001, Pages 10695-10697).

[ The monthly FCA for each adult is .23 * (HSS poverty level for a single person)/12 to assure no marriage penalty due to the manner in which the poverty level is dependant on family size. The monthly FCA for each child is .23 * (the incremental increase of HSS poverty level for a family with one child over no child) ] A. Geezer

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 rebates 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 examine the tax burden that a family of four will have at various annual expenditure levels.

H.R.25 "The FairTax Act

Not only does every family receive a FCA based on family size, not income, but they will also receive 100% of their paycheck:

Fedup Smith makes $39K per year...once the FairTax is the law of the land he will receive an instant increase in pay of $200.00 per week. Since he has a family of four, he will receive a FCA of $445 per month, for a total of $1,305.00 additional income per month that he can do with as he sees fit.

[goldstategop]

Yes, with an exempt basket of essential goods and services, no one pays on stuff needed to sustain life and health. The only items taxable are items of conspicuous consumption. What Kerry doesn't mention is a consumption tax will stimulate higher savings.

[johnfrink]

Of course, with a national sales tax you also pay sales tax on hospital bills, college tuition, and things like that. I find this detail curiously absent from most rhetoric extolling the benefits of a national sales tax.

As it happens, I have no idea why we're even debating something that has the support of about 50 members of the House and as many as two members of the Senate. It's never going to happen, so why even bother.

We might as well talk about how great it would be for Salma Hayek to run away to Hawaii with me for the weekend. The odds of THAT happening are just as good.

[Maigrey]

I also guess sKerry hasn't read up on it? Typical scare mongering.

[tobyhill]

This is classic diving into the welfare world votes for Kerry. First President Bush never said that but it doesn't matter anyway. Most the welfare group either don't vote or can't vote. Basically this was Kerry telling the welfare saps that if he's elected they will get more money than they get now without putting anything in and the middle class will pay for it. What ever happened to self-reliance?

[Lunatic Fringe]

He said the president's tax cuts have resulted in a tax increase on the middle class because their state and local taxes have been increased to compensate for loss of revenue from the federal government.

Which was EXACTLY the point! Return control to the states.

[ancient_geezer]

As it happens, I have no idea why we're even debating something that has the support of about 50 members of the House and as many as two members of the Senate.

Before anything can change, it builds support first.

It's never going to happen, so why even bother.

"The only thing necessary for the triumph of evil is for good men to do nothing."
--Edmund Burke (1729-1797)

 

I discussed the importance of abolishing the income tax because of its tendency to form a habit of servility in the souls of a people that accepts it.

Servility of soul is bad not only in itself, it is also an open door through which will soon walk the abuses of ambitious government power.

Leaders who find themselves with governmental power over a servile people will be quick to conclude that such a people exist to serve them.

Alan Keyes 1999

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.

[EternalVigilance]

If I was a pinko leftist like Kerry, I'd be scared to death of the NRST too.

After all, the income tax is one of the planks in the Communist Manifesto.

[goodnesswins]

Yes....I asked a step-granddaughter...."Who creates jobs? The Poor or the Wealthy?" Kinda helped her understand things a little better.

[tbpiper]

I keep seeing a huge 'enthusiasim gap' between pictures from a Bush rally compared with pictures from a Kerry rallyl.

[joesnuffy]

Kerry sure moans and complains a lot. Maybe Kerry still has some rice stuck in his butt?

He's the "Boston Wailer"

[suzyq5558]

Add me to yer list :)

[Little Ray]

One way (there are others) to make a national sales tax work is to give low and middle income Americans a sales tax rebate based on their income. Higher income will not get any rebate.

Too heck with that! Everybody gets the rebate or nobody. No means testing. Personally, given the rich create jobs for most of the rest of us (and have been paying 96% of the taxes...), they should get the rebate and everybody else can start paying their "fair" share.

[Little Ray]

When the top five percent of income earners get less than 19% of the wealth but pay about 25% of the taxes, how can you say they are not paying their fair share?

Class warfare on this formum really worries me...

[Libertarianize the GOP]

I thought Clinton was bad and after the impeachment I even thought some of my rhetoric about Democrats placing no value on the truth might have been excessive, but Kerry is sure trying to live down to my low expectations.

[JoeFromSidney]

The national sales tax IS a bad idea. The most absurd thing about it is that when they calculate the rate, they do so in such a way that it appears to be smaller than it is.

For example, let's say the tax rate is 30%. If you buy something for $1.00, you pay $.30 in taxes, for a total of $1.30. But when proponents of the sales tax calculate the tax rate on that purchase, they divide the amount you pay in tax, $.30, by the TOTAL, $1.30, which makes the tax rate look like 23%. Very dishonest way to advance the agenda.

True, this is a dishonest way to advance an agenda. Nevertheless, the fact that some proponents are dishonest doesn't mean the national retail sales tax is a bad idea.

If it replaces the current personal and corporate income taxes, several good things result. First, the government no longer gets to snoop into your personal finances. Second, corporate profits distributed as dividends are no longer double-taxed. Third, a lot of complications in the tax laws go away. The tax is levied on retail sales revenue, with no need to determine whether an expense is legally deductible. Fourth, people who now can hide cash income get taxed when they spend it. Fifth, it encourages investment, since investing AS SUCH isn't taxed, although capital equipment purchased with the investment would be taxed.

The big problem is that a sales tax hits the poor harder than it does the rich. Therefore I suggest that this be offset by rebating to EVERYONE, rich or poor, an amount equal to the tax that would be paid by a person at the poverty level. The really poor end up paying no tax at all. For everyone else, the more you spend, the more tax you pay.

[Database]

For example, let's say the tax rate is 30%. If you buy something for $1.00, you pay $.30 in taxes, for a total of $1.30. But when proponents of the sales tax calculate the tax rate on that purchase, they divide the amount you pay in tax, $.30, by the TOTAL, $1.30, which makes the tax rate look like 23%. Very dishonest way to advance the agenda.

Actually, the 23% the NRST supporters quote is an appropriate number for comparision to income and payroll tax rates. The 30% number could be used if you wanted to compare how much your take home would increase if the government stopped witholdings. But we don't generally think of income tax rates in that way (and we don't often think of payroll taxes at all).

[Your Nightmare]

The national sales tax IS a bad idea. The most absurd thing about it is that when they calculate the rate, they do so in such a way that it appears to be smaller than it is.

For example, let's say the tax rate is 30%. If you buy something for $1.00, you pay $.30 in taxes, for a total of $1.30. But when proponents of the sales tax calculate the tax rate on that purchase, they divide the amount you pay in tax, $.30, by the TOTAL, $1.30, which makes the tax rate look like 23%. Very dishonest way to advance the agenda.

It's worse than that. You probably paid ~$1.38 for that $1.00 item if you include state sales taxes. 0.30 divided by 1.38 = 21.7%!

Expressing the rate this way causes all sorts of problems but that doesn't stop the supporters.