Posted on 01/31/2005 7:12:16 AM PST by bmweezer
You tell the American people that this is a "23% sales tax" and what are they supposed to think?
Now you come along with this condescending, "Oh, that 23% is really a tax conclusive, amortized debenture income tax comparison" bull$hit.
Who's playing "gotcha" games here? If you cannot be straight with the American people with something as simple as the goddamn rate, what else are you hiding?.
The NRST may indeed be the best thing since sliced bread. But we'll never know, because I and many Americans simply don't trust you and will never vote for it.
You have a common misunderstanding of the dynamics involved with the FairTax, and it has been addressed already on this thread:
You percieve that the FairTax switches from the system where you already paid taxes and replaces it with a sales tax which would essentially tax your already taxed savings. What you miss is that the existing system ALREADY is going to tax your savings again, in the form of all of the corporate, income, ss, etc taxes embedded into the price of goods you buy.
The FiarTax does not swap what you've already paid for a sales tax, it swaps the system that embeds those prices with a more visible sales tax.
So even though it appears it has ADDED a very visible tax, it has also REMOVED a very invisible tax. The FairTax does NOT reduce the value of your savings by 23% as is commonly asserted on these threads.
There will certainly be some products, especially in the short term, whose prices will not correct immediately. However in the long run there should be no significant difference in the value of your savings. Considering the positive effects on American industry, the ability to purchase used items tax-free, and the visible nature of the tax likely resulting in popular demand to reduce the tax rate, I expect the value of your savings will go up significantly under the FiarTax.
Further, there are many other benefits to the FairTax, such as the elimination of inheritance taxes, no tax on additional savings or investments, no caps on how much you can save tax free, no tax on income from investments...
I believe as you become more familiar with the FairTax, you will begin to realize how you will benefit greatly from the FairTax, and that the concept that you are going to get slammed with an additional tax that wasn't there before, is misleading.
Would you please use the rabbit with a pancake that thing grosses me out. Thank you! :)
Thank you for your answer. It was very helpful and makes a lot of sense. I was involved in this thread early on, but now it has balloned to over 900 replies and there's no way I'll be able to catch up on all of them.
Another question I had (and it may also have already been answered) had to do with the economic impact of the changeover. I understand that the decreased cost of tax compliance will have a positive economic impact. Over time, this will generate wealth and have an ultimately positive effect on the economy.
In the short term it seems to me that much of the impact will be felt rather harshly. In other words, the positive effects of the change will filter down over time, but the negative effects of the change will be felt immediately. Am I incorrect in this?
Both, it depends on your point of reference.
In terms of a sales tax as you are used to paying, it is 29.87%. In terms of an income tax you're used to paying, it's 23%. The two tax systems use different mechanisms (tax-exclusive for state sales taxes, tax-inclusive for income and payroll taxes).
The example is easier to understand on a $100 total bill, after taxes. The pre-tax item price is $77, the tax is $23. Under the state sales tax model, the tax rate is 23/77 = .2987 -- under the income tax model, the tax is 23/100 = .23 .
The example is easier to understand on a $130 total bill, after taxes. The pre-tax item price is $100, the tax is $30. Under the state sales tax model, the tax rate is 30/100 = .30 .
-- Under the "income tax model", you can say the tax is 23/100 = .23 , but it makes no sense to do so, seeing that the actual tax is 30% .
It is mind boggling that Fair Tax supporters are trying to promote the Act by using a BS "model" to misquote the actual taxes paid .
The Fair Tax idea sells itself without playing games over percentages .
As I see it, the actual tax percentage paid would have to be printed on all sales receipts in any case.
That percentage would be 30%, -- correct?
`(1) FOR 2005- In the calendar year 2005, the rate of tax is 23 percent of the gross payments for the taxable property or service.`(5) GROSS PAYMENTS- The term `gross payments' means payments for taxable property or services, including Federal taxes imposed by this title.
Nope, the word price isn't there. the word price isn't there because their clear intent is to tax "the gross payment" not the price...
`(1) IN GENERAL- On or before the 15th day of each month, each person who is--Get it yet?`(A) liable to collect and remit the tax imposed by this subtitle by reason of section 103(a), or
`(B) liable to pay tax imposed by this subtitle which is not collected pursuant to section 103(a),
shall submit to the appropriate sales tax administering authority (in a form prescribed by the Secretary) a report relating to the previous calendar month.
`(2) CONTENTS OF REPORT- The report required under paragraph (1) shall set forth--
`(A) the gross payments referred to in section 101,
`(B) the tax collected under chapter 4 in connection with such payments,
Touche -- that's what I get for going from memory.So why would anyone want to compare the sales tax rate to the income tax rate after the income tax is gone?
The NRST may indeed be the best thing since sliced bread. But we'll never know, because I and many Americans simply don't trust you and will never vote for it.Bing! If they could just be straight we could discuss the merits but too often we are correcting "misleading" statements and pie-in-the-sky projections presented as fact.
I've "gotten it" for a long time, but you're still stuck in fantasy land. I challenge you to show me where the NRST bill authorizes a tax on state or local sales taxes, because the sections you quoted support my point, that " `gross payments' means payments for taxable property or services, including Federal taxes imposed by this title" -- note that state/local sales taxes are not included in this definition. Also comapre to the principles of interpretation in the bill (I can't quote directly because thomas.loc.gov doesn't have this session's version on-line yet, and I don't have a copy of last session's bill), which state that administrators and judges should interpret the law to avoid multiple or cascading taxes.
Again, I am all in favor of a federal sales tax if implemented in two ways:
1. The income tax would be repealed, requiring a constitutional ammendment to re-instate it.
2. It was absolutely flat. No refunds, no reason for the federal government to even concern themselves with how much income you collected.
I am not interested in replacing one beauracracy with another one, full of exceptions and loopholes. I want this tax SIMPLE and COMPLETE. I want the taxpayer to see just how much tax they are paying. No hidden taxes. I also want the ability to control my taxes in ways other than reducing my income.
I'm all for the change. But I firmly side with Greenspan that it isn't going to happen. As I used to say when I was in high school (1972), the US is like the proverbial farmer with his arm caught in a piece of machinery. If he does not pull out his pocket knife and cut his arm off, his whole body is going to be drug in and he will be killed.
Nobody has the political will to unsheath the blade. The farmer is going to die.
You honestly take these economists predictions seriously? How long have you been following the accuracy of their statements?
"thank you for posting this.The national sales tax will be a boondoggle not seen since the income tax if it is passed. The example of the washing machine is a good start but doesnt go far enough.If the national sales taxe gets passed that 500 dollar washing machine wont cost 700 like the article states it will cost more like 1200. becasue the steel company that sells the steel to maytag will be selling it for the cost of thesteel plus a sales tax on the steeel.The same thing will happen to the people that sells the washtubs and engines and knobs to maytag to be turned into a washing machine.Maytag will then add the tax into the cost of the washing machine who will sell it to sears who will have to pay a national sales tax on it.Sears will then add the cost of th e tax it pays to the price of the washine mashine who will then sell it to the costumer who will then pay a national sales tax on the washing machine."
You've probably heard this many times, but go read the actual legislation being proposed. What you describe is a VAT, not the fairtax. There is an astronomical difference and I don't know any fairtax supporters that have not stated they emphatically reject a VAT.
What else did I miss?
If people are saving, they aren't spending. If spending drops, a recession can follow. If the economy is not "on the edge" this is not a problem. A man with a rainy day savings account of one years wages suddenly loses his job, no problem. If a guy with no savings and nagging phone calls from his creditors suddenly loses his job, things could work out a little differently.
I guess it depends on how much of a "non-spending" hit one thinks our economy can withstand.
I have no problem using either form of the rate, nor have I ever tried to mislead or hide what the rates mean. The sole reason the bill is written in tax-inclusive terms is for comparable debate within Congress. I would actually be in favor of a modification ot the bill so that the tax-exclusive rate is used on receipts and publicly printed rates, because that would make for easier implementation. (Since the NRST does not tax state sales taxes, and one woul assume vice-versa [up to the states to define], tax-exclusive forms are much easier to work with because the individual rates can simply be added together to determine the total combined rate -- that can't be done with a tax-inclusive form.)
But I'm willing to wait on that change until after various tax plans are compared in Congress, so that the form the rate is expressed in does not artifically make the NRST look worse compared to other plans being presented.
In plain english the FairTax rate is 29.87% and no, that is not what would be printed on a sales receipt. By law, the sales receipt would have 23% printed on it.
Weird. -- You claim that a $100 receipt would show a 23% tax as $30 ???
I agree that it is mind boggling that Fair Tax supporters are trying to promote the Act by using a BS "model" to misquote the actual taxes paid.
The Fair Tax idea sells itself without playing games over percentages.
As I see it, the actual tax percentage paid would have to be printed on all sales receipts in any case.
That percentage would be 30%, -- dispite what you imagine.
I would expect so. I certainly don't have my mind wrapped around the macroeconomic dynamics as well as some here do, but I think it's pretty reasonable to expect a period of adjustment.
From what I understand, the primary issue involved in that adjustment is when a company who was accustomed to paying 15% of their gross receipts in corporate and payroll taxes, suddenly has that tax burden eliminated, how will they respond? Will they lower their prices by 15% or will they try to keep the prices the same and boost profits or increase wages?
I think the general consensus is that market pressures will eventually tend to force prices down. I think common sense would suggest most things would go down quickly (the things they sell as Wal-Mart, Home Depot, and grocery stores) because that portion of retail is so competitive and generally run on business models that attempt charge the lowest price possible and still achieve their profit goals.
The low-competition sectors will be more likely to convert the loss of the existing tax burden into more profit or higher wages rather than lower prices.
Retailers will have a harder time reducing their prices than their vendors, because they will also have to collect the tax. This is where Your Nightmare, I think, says that it would not be possible without wages being reduced. I expect Wal-Mart will be pretty influential in making sure it's vendors suck it up, and don't try to profit from the adjustment so it can keep it's prices as low as possible.
:&)
Weird. -- You claim that a $100 receipt would show a 23% tax as $30 ???See post # 915 for the specific language from the bill. It would require that the 23% rate be printed on receipts even though the customer paid a 29.87% markup on his purchase.
Yes, the politician says 5%. But when you look at your receipt, your $100. purchase ($80. plus $20 NRST) is now $101. ($80. plus $21 NRST).
To the consumer, this looks like a 1% increase, not 5%. Very easy to "hide" a large tax increase.
(In a $13 trillion economy, that 5% increase just generated $650 billion in additional government revenue.)
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