Posted on 12/01/2004 8:25:22 AM PST by 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.
(Excerpt) Read more at foxnews.com ...
I prefer a transaction tax because I want the government to be neutral with regard to how money is used: savings isn't favored over consumption and the tax burden is spread equally over the factors of production -- land, labor and capital. Not so with a consumption tax, which taxes labor disproportionately. But, then again, so does the current system.
Also, to keep a sales tax from being regressive it would require adding complexity to it, whereas a transaction tax would be regressive at the level of the individual purchase, though the rate would only be .6%, but progressive in aggregate.
More Info: The Automated Payment Transaction Tax
Here is the solution:
1. Eliminate the income tax.
2. National Sales Tax at only the retail level of 7%
3. Exempt items (the basic requirements) Shelter (house and rent), Food, Medicine/Medical and Transportation.
4. The rest of the revenue would come from a tax on the state governments based on per capita income. The states would be free to structure their own tax system that benefited them the most. (This keeps the feds from picking on the little guy, they pick on somebody thats bigger and has more influence) The rate for each state would start off the same. Then Congress and States would be kept busy by tinkering a tenth of a percent here and there to help the poorer states. 13% of state's per capita income times population to start.
5. Elimination of IRS, Treasury collects money from the states.
6. National Sales tax is already included in the sticker price. Keep the need for a calculator to a minimum.
7. Still have "Sin" taxes, but now they will also include a tax on violence, sex and perversion in movies, TV shows and paid internet sites.
8. Tax credit for Venture Capital: 30% for startups, 20% for second round funding (or small businesses), 10% for third round funding (or medium businesses).
9. Elimination of the capital gains tax.
10. Keep payroll tax, but transition to private accounts. The government would make up the difference between what the private account pays out and the inflation adjusted current social security pay out. Can't lose, but can get more than current social security system.
11. Federal Corporate Taxes are eliminated.
12. Federal Cap on top income tax rate states can set. This cuts back on the potential mass migration from stupid states.
Some of the results of this plan would be:
1. Save the economy billions in Federal Tax Code.
2. Save a lot of trees to print the Federal Tax Code:-)
3. Save a significant amount of money budgeted to the IRS and legal costs.
4. Savings gets partially "subsidized" by pretax income not being subject to the 7% sales tax.
5. Poor pay no taxes if they spend it on the basics.
6. Increased capital available for economic expansion.
7. Risk reduction for Venture Capitalists.
8. Increased new businesses and expanded businesses leads to significant increased in new employment.
9. States compete even more than now for economic friendly tax codes that fit their unique state.
10. Obtain significant revenue from "Hollywood", etc. and help put a lid on gratuatous sex, violence and perversion in "entertainment". "A little spice is nice, a lot of spice is just nasty". Applies to food and life.
11. The economy and stock market would get a long term systemic boost.
12. Fosters an ownership society.
13. Creates a smaller power gap between the people and the ones writing and executing the tax law. (States vs. Fed.)
True enough. However they ger to choose when they are taxed rather than that money being pilfered at the point of a gun. Therein lies the rub folks.
People already pay tax on their savings. The nrst doesn't change that. Savings now are taxed to the same extent under the income tax as they will be under the nrst.
It does, however, allow all savings to grow tax free. It also allows individuals to receive their paychecks with no federal deductions - allowing them to save more in the first place. And there's what numberonepal posted- they have some choice in when and how much tax they pay.
NRST proponent will try to frame this added tax as if it were an income tax and say it's only 23 percent. It's a marketing scheme to do so. It's really a 30% sales tax.
Do lot's of people evade sales tax now?
They sure do. I live in NH (no sales tax), and you wouldn't believe the proportion of out-of-state license plates in mall parking lots. Not to mention people buying online to avoid state sales taxes. And those evasions are with a relatively low sales tax of 4-8%. If taxes jumped to 20-30%, people would do all they could to avoid paying taxes.
Take a "Home theatre installer" - he could justify getting a plasma screen TV tax free, because he was reselling it as a home theatre "package". Imagine the beauracracy that would be required to verify that purchase was in fact taxed at the "last stage". Too complicated, and too easy to evade.
I hope your right.
LOL!
I live in NH too. A Masshole coming here to buy products isn't evading sales taxes as NH doesn't have a sales tax. People aren't evading taxes buying online as sales tax isn't part of online purchases. Just because their home state has a sales tax does not make them tax evaders by purchasing products elsewhere. They are simply being smart consumers.
If the NRST was put in place prices would not go up 20-30%. People would have significantly more money per paycheck and there would be far less motivation to cheat on taxes as there is now.
Massholes buying stuff here proves my point -- which is that there is a powerful desire to avoid paying taxes. If a NRST was implemented, people would evade it in different ways. I, for example, could use my brother (licensed contractor) to purchase home improvement items tax free. One could also purchase from out of country. Canadian businesses could ship items here tax free. Just like Mass border towns have few retail shops, the whole US might give up retail because it would just be too advantageous to buy stuff from other countries and have it shipped here.
The point is that there are just too many ways to get around paying a sales or income tax. A fair tax is one that everyone pays. A transaction tax would be several times more difficult to evade, therefore making it more fair for all of us.
Who cares who is elected years from now. Lets do the right thing. I think it will be hard to undo if its done. After all this is one of the Republicans core issue. This is their best chance to pass it. They need to act on it. Well that is if they wish to stay in office.
BTW, I could not disagree with you more when you said,
"Besides, the purpose of taxes is neither to punish nor to redistribute wealth. They exist simply to provide the government with the revenue needed to provide those services that could not be more effectively provided by individuals or private enterprise (i.e. national defense and law enforcement)"
LOL! When I read that. That is what the government wants you to believe. The best government is the one that governs the least.
What means did the Founding Fathers give the Federal government in the Constitution for generating revenue to accomplish the scope of Federal government's legitimate and Constitutional activities?
As you say, "trust me" the 23% rate is tax inclusive.
It would be a choice if you lived in a cave and chose to never spend a dime on anything.
BTW, this isn't my first rodeo, I've studied and argued the points of this tax for yrs.
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