National Retail Sales Tax - You gotta be kidding!

GOPNATION.COM ^ | January 31, 2005 | Steve Pudlo

[Paul C. Jesup]

Your post 433: Well this isn't a very profound point, but here goes. The income tax is taken before you get a paycheck, true, but the sales tax is taken before you get the purchased item. You can buy or not buy, true, but you can also work on the books, or not. Many folks get their money without paying the income tax man -- either they don't work (e.g., live on investment income or welfare) or get paid under the table (e.g., illegal aliens or waiters) so there is a choice. Much of the 'choice' with the sales tax is similarly phony -- you are not going to walk to work instead of drive, etc.

Would you like your crow served baked or fried?

[Your Nightmare]

The cost of imbedded taxes is larger than just the taxes paid -- it includes complaince costs, lost opportunity costs, higher interest costs, and so on, none of which shows up as federal tax revenue, yet still shows up at the cash register.

$2-3 trillion in compliance costs? Try $100 billion.

Lost opportunity costs? This is in prices? And how are you going to add 30%+ to the cost of ever good and service sold at retail without adding dead weight to the economy? Do you really think you've discovered the only tax that doesn't distort the economy?

Interest is a deductible expense for businesses. The after-tax rate would not drop with the FairTax.

[robertpaulsen]

Sure, but that wasn't what I was talking about, was it. I was talking about the price of imports -- which would not go down 20-25%.

[ArGee]

I think it would. BTW, one of the strong arguments (and I mean REALLY strong) for home ownership is the deductibility of your interest and real estate taxes. Several industries have grown up around it.

Larry Burkett (RIP) used to have a good comment when someone would tell him they couldn't pay off their house because they needed the mortgage deduction. Presume you are in a 20% effective tax bracket. Now presume (for ease of math) that you paid $1,000 in mortgage interest for the year. That means you sent $1,000 to the bank and received $200 of it back in the form of lower taxes. If you think that's a good deal I'll give you an even better one. Give me $1,000 and I'll return $900 immediately. No waiting until April 15 to file - nothing. You can have your $900 the same day.

There will also be less incentive to own your own home so I suspect being a landlord will be more profitable.

The only reason I ever bought a house was so I would know I could not be evicted. It never had to do with the asset value of the house, or the relative value of the mortgage interest and the stock earnings, or the relative cash flow of paying rent to paying a mortgage, or tax incentives, or any of that stuff. If you own it, it's yours. I think most people who buy homes agree. I could be wrong, though.

Shalom.

[nygoose]

Get over it. It's not your money, it's ours.

[ArGee]

Been audited twice. Both times I was doing my best to comply with code. Both times IRS ruled against me and actually showed me my error hidden in the depth of the gawdaful 'code'. And with the IRS you are guilty until you prove yourself innocent. And furthermore, even if there was no intent to defraud, you are still liable for interest and peanalties, so as a business owner, I have no choice but pay out the A** for an accountant to prepare my taxes now.

This story reinforces my point. It is immoral to treat a law-abiding citizen as a criminal. It is immoral to set up a legal system that practically enshrines such behavior.

Trying to set up new procedures, such as treating unaware spouses more gently or reducing the penalties and fees for unintentional errors would only be a band-aid on a system that fundamentally treats people immorally. It MUST be stopped.

Shalom.

[kevkrom]

Lost opportunity costs? This is in prices?

Take econ 101 sometime.

Yes, this is in prices. Assets that are tied up in useless (unprofitable) holdings to avoid taxes means that the productive assets have to produce more income to compensate for them. That means higher prices to gain higher return on investment.

You free up all of that captial, and you don't need as high of a ROI in order to make using it worthwhile, which means operating on lower profit margins, and less cost to consumers.

Interest is a deductible expense for businesses.

Which only means that they don't pay tax on it. Interest is still additional outlay which goes into ROI calculations.

[Badray]

That $10 widget I'm importing from China -- how much will I pay after the NRST is implemented?

It depends.

Do you or your producer have employees in the chain that are currently subject to taxation? Maybe you'll find that American widget producers are a better product and you can buy them for $7 or that your customers are willing to buy them even if they are only a dollar higher than the chinese made ones.

[SCALEMAN]

" as you bought untaxed necessities"

Once and for all... THERE ARE NO UNTAXED NECESSITIES....

[kevkrom]

one of the strong arguments (and I mean REALLY strong) for home ownership is the deductibility of your interest and real estate taxes

Of course, under the NRST, not only are interest and real estate taxes paid with pre-tax money, so is the principal payment.

[OHelix]

`SECTION 1. PRINCIPLES OF INTERPRETATION.

`(a) IN GENERAL- Any court, the Secretary, and any sales tax administering authority shall consider the purposes of this subtitle (as set forth in subsection (b)) as the primary aid in statutory construction.

`(b) PURPOSES- The purposes of this subtitle are as follows:

`(1) To raise revenue needed by the Federal Government in a manner consistent with the other purposes of this subtitle.

`(2) To tax all consumption of goods and services in the United States once, without exception, but only once.

`(3) To prevent double, multiple, or cascading taxation.

`(4) To simplify the tax law and reduce the administration costs of, and the costs of compliance with, the tax law.

`(5) To provide for the administration of the tax law in a manner that respects privacy, due process, individual rights when interacting with the government, the presumption of innocence in criminal proceedings, and the presumption of lawful behavior in civil proceedings.

`(6) To increase the role of State governments in Federal tax administration because of State government expertise in sales tax administration.

`(7) To enhance generally cooperation and coordination among State tax administrators; and to enhance cooperation and coordination among Federal and State tax administrators, consistent with the principle of intergovernmental tax immunity.

`(c) SECONDARY AIDS TO STATUTORY CONSTRUCTION- As a secondary aid in statutory construction, any court, the Secretary, and any sales tax administering authority shall consider--

`(1) the common law canons of statutory construction;

`(2) the meaning and construction of concepts and terms used in the Internal Revenue Code of 1986 as in effect before the effective date of this subtitle; and

`(3) construe any ambiguities in this Act in favor of reserving powers to the States respectively, or to the people.

[Gabz]

I seriously doubt that.......considering I have no clue what any of you are talking about.

[ArGee]

re: (b)(5)

Amen!

Shalom.

[RobRoy]

I agree with Larry on this one. And I rent because I choose to! My son owns rental property and he also rents the place he lives!

However, again, we are talking about the unwashed masses. My wife and I have both been real estate agents and still have quite a few friends in the business. Believe me, one of the major factors, stupid though it is, regarding home ownership is the tax deductibility in your loan. And most people are looking at well over 10K a year.

The reason I rent, btw, is that I like the freedom. I owned my own home for 20 years and I love being able to move at will. I have lived at five different locations in the last seven years. It is a blast!

[Badray]

Well excuuuuuuuse me! I buy used things if they are in good condition, like a riding mower, wheelbarrow, generator, etc. And I have made my own clothes--better than some I have purchased. And I have grown and preserved my own food. I also cook my own food. Also, my home and property are completely paid for, and they are NICE. Where are you from, New York City? Never bought anything at an estate or garage sale? Never cooked a meal? Never raised a chicken? Never bought a used car? Never saved a dime? No wonder you don't like the NRST.

I think that I love you too, now. But it may be more than just platonic. ;-)

I love a good rant like that.

[Your Nightmare]

Take econ 101 sometime.

I have, what does you econ 101 book say about corporate income tax incidence? What does it say about inserting a >30% wedge between the value and cost of a good?

Which only means that they don't pay tax on it. Interest is still additional outlay which goes into ROI calculations.

And it won't under the FairTax?

[robertpaulsen]

The point is that the price of imports wil not be favorably affected.

Great news if you're a protectionist, huh?

[Neets]

You went to the ball??

I didn't know that.

[kevkrom]

And it won't under the FairTax?

Yes, but interest will be lower -- as the lender does not need to make up for the costs of taxes in their ROI.

[RobRoy]

>> Of course, under the NRST, not only are interest and real estate taxes paid with pre-tax money, so is the principal payment.<<

Rent would be too. With the removal of the income tax incentive, one of the major reasons people want to own their own home is gone.

Again, I am all in favor of a flat sales tax, as long as it is coupled with the COMPLETE removal of the Federal income tax.

I still think it will never happen.