[Iwo Jima]

Always Right seems to know his business. We would do well to listen to what he is saying.


There may or may not be savings in the cost of producing a new home under the NSRT. Always Right says that any savings would be far less than predicted. But what we do know WITHOUT ANY DOUBT is that the cost of his product to the consumer under the NRST would be 30% more than what he would otherwise sell it for.

Even in a perfect world where there is no taxation of any type and everybody has a whole lot more money to spend, consumers will always prefer to pay 30% less for a product or to just not buy (which is almost always an option).


Consider this scenario: Always Right has a new house which he has just built. There are other, older (i.e.,USED) houses on the same street. He wishes and is willing to sell his house for $100,000. The government will tax the transaction 30%, making the cost to the buyer $130,000. (I know that there is some disagreements about what the true tax % and number is, but whatever it is, it's a whopping big deal killer of a number.)

The owners of the other homes on the street put up their homes for sale, but their sales price is $110,000. The buyers prefer these offers to Alway Right's offer because there is no tax on used homes, so the bottom line is better for them. True, there are benefits to having a new home, but not enough to justify a 30% differential.

WHAT YOU HAVE DONE IS MAKE A USED PRODUCT MORE VALUABLE THAN A NEW ONE. Always Right will go out of business long before the supply of used homes is exhausted.

Now, what Always Right might do is to move his family (or a street bum) into the new house for a month and then sell it as "used." Then what will happen is that regulations, etc. will be passed outlawing whatever avoidance mechanism is being used to survive. The "IRST" (the renamed "IRS") will do audits and everything else that the NRSTers are saying they are trying to eliminate.

[CSM]

I never disputed the price effect of a sales tax. What I am trying to understand is why the claim was made that the cost of business will go up AND the price to the customer will rise.

AR claimed that in order to offset the cost increases, he would have to lower wages, pay less for supplies, or any number of offsets. How does his cost increase? That is the question I am asking.

With regards to the price effect, do you assume that population does not grow and the housing needs remain constant?

[Principled]

There may or may not be savings in the cost of producing a new home under the NSRT.

You are the only one saying that.

But what we do know WITHOUT ANY DOUBT is that the cost of his product to the consumer under the NRST would be 30% more than what he would otherwise sell it for.

Holy Cow! That's really, really wacky.

Nobody believes that prices will increase by the amount of the tax, nobody.

The argument is just how much prices will fall before adding the nrst.