GOP Discusses National Sales Tax

FOX ^ | Dec 1, 2004

[Tumbleweed_Connection]

...President Bush and House Speaker Dennis Hastert (search) have both said the idea of a national sales tax deserves a serious look. For many, the idea of a world without the Internal Revenue Service is very seductive.

"We spend about $400 billion a year complying with the tax code. We spend $200 billion a year just filling out IRS paperwork," said Rep. John Linder (search) , R-Ga., who has proposed a bill that would create a national sales tax.

Proponents have spent millions on research and have concluded that a national sales tax can replace the income tax, payroll tax, estate tax and corporate tax. Advocates say the new tax would lower the cost of manufacturing and job creation and attract foreign investments, among other things.

"If we were to get rid of the sales or the income tax and the payroll tax and all compliance costs, we would be so ferociously competitive in a world economy that corporate America would not be competed with unless foreign corporations started building their plants in America," Linder said.

Proponents seek a 23-cent national sales tax on all retail goods, everything from groceries to clothes, cars to electronics. Everyone would pay the same rate, which critics argue is part of the problem.

"If you consume $40,000 a year and you make $50,000 a year, would you feel it is fair if a guy who made a half a million dollars a year but spent $40,000 a year paid the same tax you do? I think you wouldn't feel it's fair," said Buck Chapoton, former assistant treasury secretary.

[rdcorso]

I could already hear the business community screaming about having to collect taxes for Uncle Sam on such a large scale.I wonder how they would work that part out.

[RWCon]

The trouble is that the whiners will ruin it.

[johnb838]

Yeah, I want a flat tax just like Russie. The socialists are going to scream at either one though. Soak the Rich, ya know? The Kerry Theme song. Hell, he probably voted against himself.

[Conservative Infidel]

The IRS currently adds 22 cents on the dollar to the cost of everything sold in the US - so it only costs us one cent above that per dollar to be rid of the IRS forever. As an employer, try to imagine not having to spend the accounting time on withholding. As a taxpayer, imagine getting your entire paycheck - but at the same time only paying one cent more for everything you buy per dollar.

Don't think, for one second, that the "IRS will be eliminated." They will just take on new - even more intrusive roles. They will be showing up, unannounced, at every mom & pop store across the country trying to catch people selling stuff "under the counter." They will be more feared and more powerful as they grow into their new roll as the sales tax gestapo. Also, as an employer, you will still be on the hook for SS & Medicare taxes. Therefore, things haven't really gotten much simpler for you.

[jaydubya2]

Yes goods would cost more, but you would also have more money because the income tax would be eliminated. A national sales tax has other advantages: 1. Eliminating the IRS (and the IRS's budget) 2. Encourage savings by taxing consumption instead of income 3. Eliminate double a triple taxations
Also, the cost of goods should go down because the manufacture is no longer paying a tax. I'm undecided at this point. Need more information.

[johnb838]

When I was a kid sales taxes applied to everything.

[snowsislander]

I could already hear the business community screaming about having to collect taxes for Uncle Sam on such a large scale.I wonder how they would work that part out.

The Fair Tax is a retail goods and services tax. Retail goods in most states already have a states sales tax regime which should be easy to augment with a federal sales tax.

As to services, that would be indeed be a new burden, but remember that the idea is that the Fair Tax would supplant far more onerous tax regimes, replacing those thousands of pages of current tax code with a flat 30% tax on services rendered.

[johnb838]

I WANT the poor to pay more. Exempting the bottom 25% from paying any federal income tax at all makes taxes too high on the rest of us. It's supposed to be a pyramid, not an upside down one. Plus, if they don't pay income tax they shouldn't be allowed to vote for federal officials. If they don't pay it is WRONG for them to have an equal say in how MY money is spent. Exempting anyone from a tax is a dangerous, dangerous step in the direction of disaster.

[Sprite518]

I agree. The wealthy will tend to spend more. For instance, cars, boats, homes, etc to just name a few. Therefore, I do not understand how this clown can come up with $40,000. Perhaps he meant the cost of living. Even if he meant this it cost a whole lot more to heat up an Estate than it does a regular home. So I do not know where this clown gets his numbers.

[ol painless]

You could apply this problem to new cars and other expensive items as well. The 'new' item market would be destroyed and the used market would boom. On top of that banks are either not going to lend money to pay the tax or you are going to have flawless credit or other collateral. It would be very difficult for anybody in the middle class to get credit on new items. I like the sales tax option but there are some serious problems like this that are going to have to be worked out.

[Sprite518]

I believe it is HR 25.

[ctdonath2]

Quite true. The NRST people should observe that while Canadians loudly complain about their >30% sales tax, it's still there because they just accept it.

[Conservative Infidel]

Also, eliminating all the hidden taxes would reduce the cost of goods.

Oh really? Look at your phone bill. Will all those FEDERAL taxes on the phone be eliminated? When was the last time you bought tires for your car? Will the FEDERAL excise tax on tires be eliminated? what is going to happen to the FEDERAL gasoline tax?

Get serious. The feds aren't going to give up anything that they get already. NRST will just make everything more expensive.

[johnb838]

The income tax would have to be GONE, ABOLISHED for this to have a hope in hell of being successful. If they just cut taxes way down and implement this uber-tax, I think we all know what would happen.

[johnb838]

Don't be obtuse.

[Sprite518]

"IMHO, there needs to be a mandatory price reduction as part of the deal."

The free market will dictate prices. The last thing we need is more government regulation. If a price is too high, then there will be less buyers. However, the lower you go the more people will purchase the product. So if a company wants to make more money on a product, then they will have to lower their price. Its all about supply and demand.

[monkeyshine]

But if a guy who made 500,000 a year did only spend 40,000 a year - MORE POWER TO HIM! He should be lauded by left and right alike! He is conserving the earth's resources, conserving money, creating more savings which only helps the economy, etc. Nothing wrong with that AT ALL - except, someone thinks its 'unfair' that he isn't punished just because he has the talent/smarts/ingenuity to make more money.

But you are right, a guy who makes 500,000 a year will more likely than not drop 40k (if not 120k or more) on a car alone.

[johnb838]

Like that joke about the simplified tax form:

1. How Much Did You Make? _________

2. Send it in.

[KC_Conspirator]

This should only be conditional with the repeal of the 16th Amendment. Or else we will have both.

[Sprite518]

Not every state has the same tax rate. Plus if the feds do it, then the States will follow. If not, then they will lose business. BTW, John Linder (My local Congressman) 23% is a high number. Further studies indicate that its less than 19%. My guess then would be 17 or 18%. Nevertheless, our economy would boom if we do this.