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 ...
He's kinda funny about that at times! ;>)
Well at least you realize pointing out the facts vs the lies and distortions of the fairtax doesn't equate to defense of the income tax.
After all these yrs. of "debate" all you've been able to come up with is (the fallacy) that I said the fairtax rebate was based on income...LOL...BFD!
Speaking of "rebates". If a rebate is such a good idea to untax the poor, why not increase the rebate amount to untax even more people?...What's so magic about an arbitrary one size fits all number a few bureaucrats manipulate to suit their need?
The Sales Tax, the VAT, and Taxes in Between - or, Is the Only Good NRST a "VAT in Drag"? - George R. Zodrow
However, several other claims made by RST proponents in support of their cause are far less compelling. For example, some observers have argued that the VAT is far inferior to the RST because the former is a hidden tax in the sense that it is included in the price of consumer goods, while the RST is a much more visible tax in that it is quoted separately on consumer purchases. This in turn implies that the RST is more desirable from a public choice perspective in that the cost of public services is clearer to voters than with a hidden tax such as the VAT.[11] The fundamental flaw with this argument is that, even though the practice in many countries that use the VAT is to include the tax in the consumer price, there is absolutely no reason why the VAT cannot be stated separately on consumer receipts. Because the VAT would be collected using the invoice credit approach, retailers would in fact assess tax on the full purchase price of consumer goods. This amount of tax could easily be specified on the invoices presented to consumers, so that the tax would be fully "visible" in a public choice sense. The fact that retailers would receive credits for taxes paid by their suppliers would be irrelevant for the purposes of these invoices (and for the economic impact of the tax, as all such credits would simply offset prior taxes paid so that the final tax liability would equal the product of the tax rate and the retail sales price). Indeed, the fact that separate statements of tax liability are the practice under the state RSTs in the United States suggests clearly that this practice would also be followed under a federal VAT in this country.[12] In any case, given the general sentiment questioning the efficacy of government expenditures prevalent today, it seems clear that any federal VAT could be structured in this fashion and would thus be as visible a tax as the RST.[11] See Americans for Fair Taxation (1998).
[12] It must be admitted, however, that certain excise taxes in the United States, such as those on gasoline and alcohol, are an exception to this rule.
In the EU, where the VAT is most used and indeed is a requirement for membership, there is no requirement that a VAT must be shown to the general retail customer with the VAT itself is embedded into the product shelf price.Are we joining the EU?
"it seems clear that any federal VAT could be structured in this fashion "
Is a long way from must be.
Secondly the imposition of a VAT on all businesses throughout the production chain entails much higher cost related to collection and application of credit/voucher system. In fact the cost are virtually the same as are incurred in an corporate income tax system with its similar reporting, filing and auditing requirements.
Sorry, not interested in a VAT.
It is interesting, however, to go over to the Thomas website & search on "value added tax" to note who are introducing and supporting the only VATs in Congress and their proposed purposes.
H.R.15
Title: To provide a program of national health insurance, and for other purposes.
Sponsor: Rep Dingell, John D. [MI-15] (introduced 1/7/2003)
S.112
Title: A bill to amend the Internal Revenue Code of 1986 to impose a value added tax and to use the receipts from the tax to fund America's war effort.
Sponsor: Sen Hollings, Ernest F. [SC] (introduced 1/9/2003)
In the EU, where the VAT is most used and indeed is a requirement for membership, there is no requirement that a VAT must be shown to the general retail customer with the VAT itself is embedded into the product shelf price.
Are we joining the EU?
Nope, and neither are we buying into a VAT.
I'm a little suspicious of the Fair Tax model myself, but a 10-15% flat tax has it's drawbacks as well, what's to stop the states from levying the same thing???? Then we're being taxed at a cumulative 30-45% rate on every dollar.
The total consequence is not only is the price retail customers must pay for products elevated by the VAT itself,
This just isn't true.
those prices are also substantially inflated by the costs of the system imposed on those businesses.
Plans I have seen would have no more collection points that a NRST. There are methods to reduce compliance costs (they aren't "substantial" to begin with). These methods would benefits small businesses particularly.
Actually, there are some who believe that a NRST would inflate prices more for other reasons.
The Sales Tax, the VAT, and Taxes in Between - or, Is the Only Good NRST a "VAT in Drag"? - George R. Zodrow
Third, the invoice credit approach provides a simple yet highly effective means of ensuring that the VAT is not applied to business inputs. Firms receive tax credits for all purchases of such inputs, including all intermediate goods and capital goods. Thus, the VAT applies only to final purchases of consumption goods and is quite accurately characterized as a consumption-based tax. In marked contrast, the exemption from tax of business inputs is quite haphazard under the typical state RST. Firms receive exemption certificates, which in theory permit them to purchase business inputs on a tax-exempt basis. This approach, however, is fraught with difficulty as it opens the door for widespread abuse in the form of business purchases of personal consumption goods. To avoid erosion of the tax base, states have been very restrictive in determining which goods are eligible for exempt purchase. As a result—and also due to explicit policy choices to tax some intermediate goods and capital goods—the states that use the RST have been singularly unsuccessful in ensuring that most business inputs are not subject to tax. For example, in a recent update of his often-cited earlier work, Ring (1999) estimates that the fraction of business purchases subject to tax under the retail sales taxes operated by the states averages roughly 40 percent. This fraction, of course, should be zero under a true consumption-based tax.
It is difficult to overstate the problems caused by such treatment of the purchases of business inputs. It is clear that a tax that applies to business purchases cannot accurately be characterized as a consumption-based tax. Rather, it is more like a haphazard income tax, which is borne to some unknown extent by capital income. Thus, the efficiency gains often claimed for a movement from income taxation to consumption taxation cannot be claimed if the new tax system is similar to the RSTs currently operated by the states. Moreover, because the taxation of business inputs is haphazard, tax cascading will occur in some industries while other industries will be largely spared any tax burden. This implies distortions of both the allocation of investment across industries and consumption decisions. It is hard to argue that such a reform would be much of an improvement in terms of economic efficiency relative to the current tax system. Moreover, to the extent that the taxation of business purchases is built into consumer prices, border tax adjustments are problematical under the RST, as exports will not be relieved of domestic tax while imports will be undertaxed relative to domestically produced goods. Again, it is hard to argue that such a result is desirable.
Is a long way from must be.You're silly. A NRST could be structured where the tax was inclusive in the price and not seen by consumers. A VAT and NRST is applied the exact same way at the register.
Secondly the imposition of a VAT on all businesses throughout the production chain entails much higher cost related to collection and application of credit/voucher system.Not necessarily.
In fact the cost are virtually the same as are incurred in an corporate income tax system with its similar reporting, filing and auditing requirements.This is complete and total BS. There would be no depreciation, no foreign sourced income, etc. In the end all you are doing is subtracting your tax credits from your tax receipts. You also only have to file to one entity, not fifty. So a national company could file 12 returns a year or 600. Which did you say was more complicated?
Nope, and neither are we buying into a VAT.Not your flavor of Kool-Aid, huh?
The total consequence is not only is the price retail customers must pay for products elevated by the VAT itself,
This just isn't true.
Definition [ http://www.encyclopedia.com/articles/13330.html ]:
value-added tax
levy imposed on businesses at all levels of production of a good or service, and based on the increase in price, or value, added to the good or service by each level. Because all stages of a value-added tax are ultimately passed on to the consumer in the form of higher prices, it has been described as a hidden sales tax. Originally introduced in France (1954), it is now used by most W European countries.
Plans I have seen would have no more collection points that a NRST.
Just retailers paying a VAT? LOL.
Moreover, to the extent that the taxation of business purchases is built into consumer prices, border tax adjustments are problematical under the RST, as exports will not be relieved of domestic tax while imports will be undertaxed relative to domestically produced goods. Again, it is hard to argue that such a result is desirable.
Under the HR25, there is no retail sales tax imposed on exports. (taxation of exports are expressly forbidden in the Constitution if you aren't aware of that) and imports are fully taxed exactly the same as domestic products are.
In short your find is full of it and not discussing the elements of the Fair Tax Act HR25 at all.
It is a pile of BS not applicable to the actual legislation, nor applicable to any bill presented to Congress.
levy imposed on businesses at all levels of production of a good or service, and based on the increase in price, or value, added to the good or service by each level. Because all stages of a value-added tax are ultimately passed on to the consumer in the form of higher prices, it has been described as a hidden sales tax. Originally introduced in France (1954), it is now used by most W European countries.So it collected at all levels of production. So what. It's still the same amount of tax as a NRST. This is pretty basic. I'm sure you know this.
Just retailers paying a VAT? LOL.There are ways to exempt businesses under a certain revenue level (you know, small businesses) from having to file. Unlike a NRST, a VAT could eliviate all compliance cost from small business who are hit by the economies of scale with any tax compliance.
Under the HR25, there is no retail sales tax imposed on exports. (taxation of exports are expressly forbidden in the Constitution if you aren't aware of that) and imports are fully taxed exactly the same as domestic products are.Did you even read what I posted? Experience with sales taxes show that they creep into the production chain causing higher production costs.
In short your find is full of it and not discussing the elements of the Fair Tax Act HR25 at all.So we are limiting ourselves to papers that specifically talk about the FairTax? Ok, that takes every Jorgenson paper out of play because he's never modeled the FairTax.
It is a pile of BS not applicable to the actual legislation, nor applicable to any bill presented to Congress.So? You people act as if HR25 is on the verge of being passed! LOL! It ain't close. The flat tax had more buzz in the mid 90s and look what happened to it.
So what. It's still the same amount of tax as a NRST.
So is the income tax with its burdens, it is the burdens coupled with the ability to hide nasty provisions behind the veil of prices and business that does the damage. The lack of transparency of corporate taxes in general and the burden imposed on business is the problem. The factors you refuse to recognize.
There are ways to exempt businesses under a certain revenue level (you know, small businesses) from having to file.
Show us in a bill before congress that exempts small business from such a VAT. Removing small business or any business, product or service from a VAT simply decreases the taxbase and increases the necessary rate to be collected. Sorry, your VAT is rapidly looking worse and worse.
Unlike a NRST, a VAT could eliviate all compliance cost from small business who are hit by the economies of scale with any tax compliance.
LOL, nothing to prevent an NRST from exempting the same business, except the need to keep tax rate low, and to prevent rent-seeking activity to avoid/evade taxation.
Remove the tax VAT or from one classification of business based on merely size or other arbitrary criteria just means you create the conditions that assure higher rates and less tax collected from the other businesses demanding an even higher rate to make up the difference.
Hmmmm, wonder where it stops, and when government decides its time to hide the VAT rates like in the EU?
Experience with sales taxes show that they creep into the production chain causing higher production costs.
Definitely true as regards the VAT which is classed that catagory of "sales tax."
However I note you give no specific example of such under HR25's provisions with regard to business purchase exemptions. Note state retail tax provisions due not apply the same rules nor are state retail taxes as broadbased thus are not applicable to the measure of "experience."
H.R.25Fair Tax Act of 2003 (Introduced in House) `SEC. 102. INTERMEDIATE AND EXPORT SALES.`(a) IN GENERAL- For purposes of this subtitle--
`(b) BUSINESS PURPOSES- For purposes of this section, the term `purchased for a business purpose in a trade or business' means purchased by a person engaged in a trade or business and used in that trade or business--
*** Snip *** Sec.1(a)(8)`(A) IN GENERAL- A taxable property or service is used to produce, provide, render, or sell a taxable property or service if such property or service is purchased by a person engaged in a trade or business for the purpose of employing or using such taxable property or service in the production, provision, rendering, or sale of other taxable property or services in the ordinary course of that trade or business. |
So we are limiting ourselves to papers that specifically talk about the FairTax? Ok, that takes every Jorgenson paper out of play because he's never modeled the FairTax.
As a matter of fact he has. It is just not available on the internet. You have to write Jorgenson to get a copy of the results.
One must remember Jorgenson's baker paper and the recomendations that came out of it are the basis on which the the legislation was authored.
However, testing of the Fair Tax Act provisions specifically, was done by Jorgenson in '97 applying his model with the Fairtax provisions that include both replacement of income and payroll taxes as well as addressing progressivity on the expenditure side of the budget as HR25 does with its FCA.
Here is the text of summary results of that testing, that were passed on to me from that specific work:
THE ECONOMIC IMPACT OF THE NATIONAL RETAIL SALES TAX
By Dale W.Jorgenson
INTRODUCTION AND SUMMARY The purpose of this report is to analyze the economic impact of substituting the National Retail Sales Tax (NRST)for individual and corporate income taxes,the Medicare,Social Security, and FUTA payroll taxes,and the estate and gift taxes.1 I consider a revenue neutral substitution-one that leaves the government deficit unchanged. Finally,I focus on the impact of this fundamental tax reform on economic growth over the next quarter century. I have summarized my conclusions in a series of charts: 1.The revenue neutral substitution of the NRST for existing taxes would have an immediate and powerful impact of the level of economic activity.The first chart gives a projection of GDP under current tax law. The second chart shows that GDP would increase by almost 10.5 percent in the first year.This increase would gradually decline to a little under 5.4 percent over the next twenty-five years. 2.Taxation of consumption would induce a radical shift in the composition of economic activity-away from consumption toward investment. The third chart shows that real investment would initially leap by a staggering 76.4 percent and then gradually fall to about 15 percent higher than under existing taxes. The third chart reveals that real consumption would initially decline by 9.1 percent. However,consumption would overtake the level under existing taxes within five years and grow rapidly under the NRST.
3.Holding net foreign investment constant,the fourth chart shows that exports would jump by 26.4 percent under the NRST, while imports would rise only modestly. This is the consequence of excluding exports from the tax base while including imports. The initial export boom would gradually subside, but exports would ultimately remain more than 13.3 percent above the level under the current tax system, while imports would fall a modest 0.9 percent below this level.
4.As a consequence of the elimination of taxes on capital income,individuals would sharply curtail consumption of both goods and leisure. In addition,the implied subsidy to leisure time would drop to zero under the NRST; under the existing tax system this is equal to the marginal tax rate on labor income. The fifth chart shows that the NRST would generate dramatic growth in the capital stock and a sharp initial rise in the labor supply that would gradually decline over time.
5.Since producers would no longer pay taxes on profits or other forms of capital income under the NRST and workers would no longer pay taxes on wages, prices received by producers, shown in the sixth chart,would fall by an average of twenty percent.The seventh chart shows that industry outputs would rise by an average of twenty percent with substantial relative gains for investment goods producers.
6.In the long run producers’ prices, shown in the eighth chart,would fall by almost thirty percent under the NRST.In addition,the shift in the composition of economic activity toward investment and away from consumption would drastically redistribute economic activity among industries.The ninth chart shows that production would rise in all industries,but the increase in production of investment goods would be relatively greater.
7.The imposition of the NRST would produce a sharply higher tax rate on consumer goods and services, but the tenth chart shows that the initial consumption tax rate would be twenty-three percent at both federal and state and local levels or only 18.4 percent at the federal level. This would gradually rise over time,but remain below thirty percent or 23.8 percent at the federal level.
So? You people act as if HR25 is on the verge of being passed! LOL! It ain't close.
whistling through the graveyard again.
The flat tax had more buzz in the mid 90s and look what happened to it.
Yep, it's been knocked out of the park by the NRST. ROTFLMAO
You may be interested in the Jorgenson '97 Fair Tax Act test summary results I received.
Refer to #575 above.
the initial consumption tax rate would be twenty-three percent at both federal and state and local levels or only 18.4 percent at the federal level. This would gradually rise over time,but remain below thirty percent or 23.8 percent at the federal level.
Effect on rate(federal and agreggate avgs) of Bush Tax cuts?
Effect on rate(federal and agreggate avgs) of Bush Tax cuts?
LOL, NO!! that is the rate based on revenue neutrality against Clinton's '96-'97 tax law.
Linder and the Legal beagles, apparently took the overall average of the full 25years of chart as their estimate for the Bill's language.
"The market sets the price."
Not according to your bud, lewislynn. In the past he has posted that he has been running his own business for years and years and he has always charged whatever the heck he wants to and his customers have no choice but to pay it.
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