Abolish the IRS with National Sales Tax?

Fox News ^ | 11/3/04 | tgusa

[tgusa]

"I'm not exactly sure how big the national sales tax is going to have to be, but it's kind of an interesting idea that we ought to explore seriously," the president said. The next day administration officials said Bush was not considering such a reform.

John Kerry's campaign quickly condemned a national sales tax, and Bush for potentially supporting it.

“If [Bush] has his way, every trip to the supermarket will feel like a visit to H&R Block and every day will be April 15. And now that this plan has been exposed, George W. Bush is trying to mislead the public into thinking it was just an off-the-cuff comment," Kerry spokesman Phil Singer said in an Aug. 12 statement.

[tpaine]

Get a grip. You are quibbling..

No tax scheme is perfect, but this one could work.

[Principled]

No because I would not be able to afford a house 25% more expensive

Prices don't rise. Homes will be priced the same. The NRST replaces existing taxes - doesn't add to them.

FAQ

(actually more because I don't get to deduct mortgage interest under the NRST).

Egads. The mortgage interest deduction only allows you to pay mortgage interest with pretax dollars. OTOH the NRST allows you to pay mortgage interest AND EVERYTHING ELSE with pretax dollars too!

So the nrst lowers interest rates, keeps prices stable, and allows you to pay mortgage interest, AND EVERYTHING ELSE with pretax dollars.

[Principled]

I have ALREADY PAID the "22% in federal tax costs on every good and ... 25% in federal tax costs on services" on my savings!!

No. You have paid income/payroll tax on your savings. The 22% in federal tax costs on every good and ... 25% in federal tax costs on services is paid when yo purchase something.

[Zon]

Because none of those are new-retail goods or services for consumption. It's quite an eye opener what falls by the wayside having been rendered obsolete.

Thanks for the segue....

There's a ton of baggage that fades by the wayside.  Obsolete. With rising honesty people increasingly agree with paying for government protection services. The primary focus of government is intended to be to protect life and private property rights and free-choice contracts.

Rising honesty eliminates socialist./fascist government bureaucracy. Rising honesty shrinks government and causes increased efficiency in government's primary purpose/focus. Rising honesty shrinks black markets and crime. Rising honesty booms the economy. Rising honesty spreads around the world. 

Effectively fighting terrorism wherever it hides is rising honesty.

Eliminating the IRS and implementing an NRST is rising honesty.

[Principled]

I'm specifically addressing my PRESENT savings which I would spend in the FUTURE under the NRST. You want me to pay both inthe transition period.

Ahem. You're already paying both now.

The nrst will treat savings exactly like they're being treated now with respect to fed tax costs at the counter.

However, under the nrst, you will receive your paycheck with no federal deductions, no payroll tax withheld, no income tax withheld...and your savings and investments will grow faster cuz they don't forfeit taxes on earnings.

Spend ten minutes here. It's quick FAQ.

[Principled]

I read your example in 199 but didn't follow it. Could you try again? I want to understand your point...

[ancient_geezer]

about mowing Mrs. Shipley's lawn for $10

in Canada really small businesses have an option, no you don't have to pay tax on that $10

Under the NRST of HR25, up to $1,200 dollars received per year from the conduct of casual sales by individuals is exempt from collection of the NRST. Basically if the sale is not a part of conduct of a certified retail business up to that amount there is no NRST to be collected from the buyer to be remitted as tax.

[ancient_geezer]

Hay How bout we just give retirees a NRS Coupon to give the old folks a savings on the NRST. The coupon could then transfer up to a discount on the item taxed to the retailer.

Why treat any individual differently from any other?

Tax everyone without exception with the same rate, cover tax payments up to the povertyline of expenditute for everyone with a pre-paid grant based on household size.

No second class citizens required.

Under HR25, all legal residents would 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

 

Today, using 2004 HHS povertyline figures, A family of four, for example, could spend $24,980 per year free of tax because they will have received over the course of the year a demogrant totaling $5,745. $5,745 is the amount of sales tax paid on $24,980 in expenditures. That family spending double the "poverty level" or $49,960per 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 as compared to that same family under the current system:

 

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 gross paycheck to allocate between savings/investment tax free or spending for consumption before government can lay claim to any tax dollars.

[ancient_geezer]

What I am concerned about is what happens to retired people of fixed means. I am not one of them, but I do have parents who are.

In addition to the FCA demogrant that everyone gets, and lower consumer prices, the price index used to adjust SS for cost of living increases would incorporate the NRST rate into the base index to assure that they recieve SS with no loss in purchasing power with respect to their current status under Social Security.

[ancient_geezer]

Thank you - finally a link to a detailed discussion.

Here's more than enough to glaze your eyes over for a while ;o) About 22 different papers covering a broad spectrum of issues addressing business, investment, and individual concerns:

Mash ur clicker hear ==> Fair Tax Facts

[ancient_geezer]

I told you earlier I pay approx 25% of my total income out in income taxes. Total federal income tax (not including SS payroll taxes or federal excise taxes) divided by annual gross income.

Better add those SS & Medicare payroll taxes in, as HR25 repeals all federal income and payroll taxes. Replacing them with one single retail sales tax.

That means both individual and corporate side of all those taxes are gone right along with the IRS that administers them and the direct and indirect costs attendant with complying with that onerous tax system.

H.R.25

Fair Tax Act of 2003 (Introduced in House)
http://thomas.loc.gov/cgi-bin/query/z?c108:H.R.25:

---

*** Snip ***

TITLE I--REPEAL OF THE INCOME TAX, PAYROLL TAXES, AND ESTATE AND GIFT TAXES

• SEC. 101. INCOME TAXES REPEALED.

• SEC. 102. PAYROLL TAXES REPEALED.

• SEC. 103. ESTATE AND GIFT TAXES REPEALED.

• SEC. 104. CONFORMING AMENDMENTS; EFFECTIVE DATE.

TITLE II--SALES TAX ENACTED

• SEC. 201. SALES TAX.

*** Snip ***

[ancient_geezer]

I have ALREADY PAID the "22% in federal tax costs on every good and

No you haven't you saved and didn't spend your money yet. All you have paid is the individual side of federal taxes, not what you get hit with embedded into the prices of products when you spend your savings/investments or even income off your savings/investments.

Under the current system, as soon as you go out to spend savings on anything at all, you pay the corporate side of all federal income and payroll taxes as well as all the costs associated with them embedded into the price you pay for retail products.

Now you want me to pay an ADDITIONAL "23% on items for retail consumption and services" under the NRST.

There is no additional 23%, The current system not only hits you individually, but when you buy products as well, the cost of products today are 20-25% higher than they would be without corporate taxation.

As a consequence of repeal of taxes both individual and corporate, on average products prices will decline 22% (from removal of tax & tax related costs of the current tax system reflected in consumer prices).

The net result is you pay approximately the same with NRST for a given basket of products, as you do today with the embedded burdens of the current corporate income/payroll tax system in prices.

Why will you not address this very important point? I'm not talking about any future earnings. I'm specifically addressing my PRESENT savings which I would spend in the FUTURE under the NRST.

You have been addressed. your total costs for goods and products NRST included is approximately the same as they would be under the current system where corporate income & payroll taxes and costs associated with them are embedded into what you pay now for the products you buy.

You, the individual, gain approximately the difference between what you pay now in individual federal income & payroll taxes, plus the FCA demogrant.

You want me to pay both inthe transition period.

Restrain your buying from your savings/investments through the transition period until you are comfortable with product pricing plus NRST.

We are talking about savings and capital invested, afterall my friend, not your regular income nor gains from savings/investment on which you pay do not tax prior to spending under the NRST.

In fact under the NRST capital gains are not taxed unless spent so rolling stocks and equities over into stronger investements imposes no tax penalty on gains.

If you really want to minimize any tax byte on your previously earned capital, the best thing to do with it is to invest in equity instuments such as stocks an businesses rather that spending it on goods.

The gains due to economic expansion and the effect on business of the NRST will be substantial.

[CSM]

If you don't like the NRST then why do you bother entering a conservative discussion board. I suppose you like the Feds (IRS) tracking your private earnings, your investments, your savings, and your spendings. Instead of just the spendings.

I suppose your angry at the results of the current election too......

[CSM]

What do you suggest?

[CSM]

If you honestly think our system ain't broke, then you must not pay any income taxes. If you think that 50% of our country voting for socialism is a success, then I half to ask what your motives are.

The reality is that we almost had a President that PROMISED to raise taxes on the successfull persons in our country. Why are you supporting that platform?

[CSM]

I suppose they might be willing to refuse if they were also willing to give up their senate and house seats. Do you suppose they might be willing to give up those seats for not collecting?

[CSM]

Which is best? The Feds pounding the citizens or the Feds pounding the states? Which gives the individual more freedom?

[BearCub]

I read your example in 199 but didn't follow it. Could you try again? I want to understand your point...

I don't know how else to say it. One person is paying twice the tax the other is paying.

How about: I am 65 years old, just retired and have $500k in my Roth IRA. I have paid taxes, say $125k, on this already. I will now pay another $125k in taxes as I spend this money for a total of $250k.

Another guy starts saving in his Roth IRA today. He doesn't have to pay taxes on the money as he earns it. He retires with $500k too. When he spends it he'll pay only the $125k.

I paid $125k more in taxes than the other guy on the same amount of money. How is that fair?

All I'm proposing is some way for people to shelter money that has already been taxed so they don't have to pay the sales tax on products purchased with that money.

The 'prices will be lower' bit is a red herring. Everybody will be benefiting equally from the lower prices so this can be eliminated as a variable. The fact of the matter is that some people will pay twice the tax as others.

[CSM]

Ummmmm, the NRST is not a VAT. I would fight extremely hard against any VAT, however, the NRST sounds like a great solution to the problems we have with our tax system today. Why do you "flat-taxers" fight so hard against the NRST when you can't offer a realistic alternative as a solution with enough support to see passage?

[CSM]

Why would you oppose a better tax system if that system didn't necessarily help you? I thought all conservatives supported a government that allowed for individual success. If I'm mistaken, then clearly we need to redefine conservatism to allow the half of the country that doesn't pay taxes to call themselves conservatives.

Don't forget about the imbedded taxes in the price of goods that you already buy.