Posted on 03/03/2005 7:05:07 AM PST by FairOpinion
WASHINGTON Mar 3, 2005 — Federal Reserve Chairman Alan Greenspan on Thursday embraced the notion of overhauling the nation's tax system and said that some form of a consumption tax such as a national sales tax could spur greater economic growth.
"As you know, many economists believe that a consumption tax would be best from the perspective of promoting economic growth particularly if one were designing a tax system from scratch because a consumption tax is likely to encourage saving and capital formation," Greenspan said.
(Excerpt) Read more at abcnews.go.com ...
Carefully examine the list of items of "consumption" subject to tax in the document used to determine the tax rate. You will notice the "imputed rent" assessed against a homeowner living on his own property is currently listed as a negative value. The people framing the NRST perceive the use of your own property as "consumption". They account that money as "lost" revenue from the outset. The first pass of HR 25 will not tax this "imputed rent" income. What is disturbing is that it is listed at all. The framers envision imputed rent as legitimate consumption.
I suspect that the pass that HR 25 gives to NRST assessed against imputed rent will turn into a real tax when revenues fall short. Tax policy is never static. What HR 25 institutes can be amended and extended.
If the framers perceive use of private property as a legitimate object of "consumption" to be taxed, there is room for all sorts of mischief. If I drive my free and clear automobile, I am avoiding paying a rental agency for the service of renting a car. Simple fix: using your car is consumption subject to imputed rent...just like your home.
The guy washing dishes down at the local restaurant is performing taxable labor. What if you wash your own dishes at home? Have you deprived the government of income from the taxable labor of the dishwasher? Perhaps the solution is the assign a value to the labor of washing your own dishes and tax you for performing that labor.
I know the examples are obtuse, but the framers of this NRST have already tipped their hand. They perceive use of private property as consumption that they would dearly love to tax. They are willing to forego some of these taxes to get the consumption tax underway.
On the subject of "imputed rent", who determines how much rent a homeowner is "paying himself" by living on his how property? Simple answer: a government bureaucrat.
There is so much room for mischief in this proposal.
BTW, I'm a hardware and software engineer. My labor is a service delivered to an end customer. NRST immediately drives my labor rates up 23% to the end customer.
Rent payments include coverage for property tax. That tax isn't going anywhere with NRST. Rent will have to be increased to cover NRST in addition to property tax assessed by local cities and counties to finance local government and schools.
Nice attitude. I've paid max FICA most of my life. My federal income tax ranges from $30,000 to $70,000 each year. I'm supporting hordes of "do nothings", yet you would be happy to sock it too me even more. My end game is to switch to all passive income and shelter it in a corporation. I'm really tired of 60 to 70 hour weeks.
True enough. This isn't the first time that this has been introduced and if it doesn't pass, it won't be the last.
The bills that do go somewhere are those supported by the President or the Congressional leadership; the only leader on HR 25 is Delay, but his star is somewhat in decline (regrettably).
Buying the left's spin, eh? Or is that the talking point for today? Bush has verbalized general support. Hastert has too. The bill had 56 cosponsors last year and almost that many now. That's more than many bills get. We can make it happen if the doubting Thomases would help instead of just doubting. A lot of good ideas take time to become law.
The President has appointed a bipartisan task force to come up with recommendations; whatever comes out of this effort has a better chance of passage than HR 25.
And if this is the proposal that comes out of that commission, will you get on board or will you just find another reason not to support it?
Even though the President's 2001 tax reform phased out the death tax by 2010, it comes back intact in 2011; I see little chance that Bush can get a filibuster-proof majority to make it permanent, therefore see little hope for that aspect of HR 25.
We have larger majorities now than we did then. We also have a lot of people pushing now -- people who can see passed stumbling blocks, passed some personal costs, passed some imperfections to the larger picture and to the greater good of the country.
Right now we have young men and women dying to win the war on terror overseas. And the people they are fighting for will not even risk some personal benefit to fight the terror that is the IRS. Shameful.
I favor tax reform, especially reform that motivates greater investment and economic growth, but I am just trying to be realistic about HR 25's chances.
"I support our troops. I just don't support what they are doing."
It's the same BS. If you like the idea, work for it. There is no better idea on the table than this. If you see a flaw and you have a better idea, present it. Get on board. Get your friends on board. Call your congressman. Get him on board. Threaten his political life. That's what they care about. IF they don't support it, tell him you'll vote for someone who will. Remember, you're the boss, not them. They are temporary, part time employees, despite what they'd have you believe.
Do you really want your children and grandchildren, and this country to continue down the path that we are on? Or do you want to restore some sovereignty and individual liberty to them? It's your choice.
Wouldn't it be nice to have your grandchildren sit at your feet and tell them about how you helped to slay the monster called the IRS? You can tell them that story right after you tell them the one about the 3 little pigs beating the wolf.
But your story will be be scarier because it will have been real.
That statement of yours, together with the fact that the Feds will still get their revenue, are the claims I referred to. And I repeat: Those three claims, taken together, are outrageous and a scam. There is no free lunch or Perpetual Motion.
See Link:
The PWC model is not alone in estimating tax rates for the NRST that are considerably higher than proponents frequently cite. A National Bureau of Economic Research study place the tax rate at 27.3 percent if payroll taxes are not included in those taxes to be replaced and 45.4 percent if payroll taxes are also replaced. A Joint Economic Committee ("JEC") study concluded that the NRST rate would have to be at least 32 percent unless imputed items of consumption, like "rent" that the national income accounts assume homeowners pay themselves were also included in the base. Furthermore, if food, medicine, and physician's services were excluded (as is commonplace among many state sales taxes) the rate would have to rise from 32 percent to 49.3 percent. Alternatively, they found that if all services were excluded from the base but food and medicine continued to be taxable, the rate would have to rise to 64.6 percent.
Take a look at line item 5 in this link. That item is "imputed rent". The FairTax people are acknowledging that as legitimate consumption and counting as "lost revenue" because they don't intend HR25 to tax it. That doesn't mean that "imputed rent" on owner occupied property is forever exempt. We simply get a pass in HR25.
Do some web searches for "imputed rent NIPA" to find more references.
Rent is the consumption of a service. It occurs every month. Each time is a taxable event. You know what kind of leftist trash is sitting in the judicial branch of this country. The law will be interpreted to allow a monthly assessment as written.
Wow! 49%, 64%, and rising. Principled and ancient_geezer didn't share that with us!
Carefully examine the list of items of "consumption" subject to tax in the document used to determine the tax rate.
I have. It should be noted that the "imputed rent on housing" is expressly subtracted from the calculation of the taxbase in that article, as imputed rent is in the NIPA:GDP data series as part of personal consumption and needs to be removed from taxable consumption as perceived for an NRST:
http://www.cato.org/pubs/pas/pa-272.html
Table 1
Tax Base for National Sales Tax (billions of dollars)
| Description of Taxable Item | Tax Base (1995) | |
| Personal consumption expenditures | $4,924.9 | |
| Purchases of new homes | 156.4 | |
| Improvements to single-family homes | 73.9 | |
| Imputed rent on housing | -534.3 | |
| Additional financial intermediation services | 53.0 | |
| Foreign travel by U.S. residents (one-half) | -26.4 | |
| Expenditures abroad by U.S. residents | -2.7 | |
| Food produced and consumed on farms | -0.4 | |
| State and local government consumption | 682.6 | |
| State and local government gross purchases | 159.1 | |
| Federal government consumption | 453.8 | |
| Federal government gross purchases | 62.7 | |
| Less: Education expenditures | -97.5 | |
| Plus: Expenditures in U.S. by nonresidents | 73.1 | |
| NST Base | $5,978.2 | |
| Source: National Income Product Accounts, Survey of Current Business, August 1996. |
||
Once again I point out the language of the bill does not support anything like what you have stated, and in fact even your statement is take from hypothetical that is resolved by assuming that taxes are prepaid for existing properties through the income/payroll tax system. That is why the Fair Tax Act and everyother NRST proposed in legislative language todate grandfathers all non-business use property from the NRST. As shown in reply #246
There is so much room for mischief in this proposal.
There is much room for mischief in any proposal for which a bill in legislative language has not been introduced.
Fortunately we do have HR25 Fair Tax Act to refer to in our investigations of what is proposed:
H.R.25Fair Tax Act of 2005 (Introduced in House) |
BTW, I'm a hardware and software engineer. My labor is a service delivered to an end customer. NRST immediately drives my labor rates up 23% to the end customer.
Who is your end customer? If it is another business using your services to further their own business purposes there is no NRST to be collected or remitted for those services.
Business to business purchases are exempt.
Don't know many "consumers" that make the use of the services of a hardware and software engineer in the normal conduct of their lives. Business use (not taxed) yes, most individuals for household(i.e. non-business) use no.
Wow! 49%, 64%, and rising. Principled and ancient_geezer didn't share that with us!
Really? What about public schools?
I assume you're kidding.... But, if you're not, I know I'm paying for school lunches.
Rent is the consumption of a service. It occurs every month. Each time is a taxable event.
Rent is indeed taxable in a non-business use rental situation, the business asset being rented is not taxed thus is subject to taxation on rental or sale.
In order to assure that multiple taxation does not take place even any personal property converted to business use is provided a credit towards retail sale or rental for any NRST previously paid.
H.R.25Fair Tax Act of 2005 (Introduced in House)
`CHAPTER 7--SPECIAL RULES
|
One can only hope that we set the tax at about 4.6 percent (to promote maximum economic growth), as opposed to the "revenue-neutral" 30% (23% inclusive) being considered now. If we can't afford to go that low, how about 12.5 percent (to maximize federal revenue)?
There is another fiction in the table. Federal government consumption. Where does the federal government get money to pay NRST on its own consumption? We have a cow sucking on its own udder here. There is a handy item in the table that could offset this fiction. You have it highlighted in purple.
The state and local government "contribution" will be funded by driving up my property tax and state income tax. Money is not created out of thin air.
Furthermore, if food, medicine, and physician's services were excluded (as is commonplace among many state sales taxes) the rate would have to rise from 32 percent to 49.3 percent. Alternatively, they found that if all services were excluded from the base but food and medicine continued to be taxable, the rate would have to rise to 64.6 percent.
LOL, it is good then that services (which are taxed under the income/payroll tax system) continue to be taxed under the NRST then isn't it.
And since food, medicine and physicians services(also taxed under income/payroll taxes) are not excluded under the Fair Tax Act, the whole statement is a non-sequiter against what is proposed.
JCT's very existance as a bureaucracy, mandated in Title 26 IRC, will cease with the repeal of the income/payroll tax under the Fair Tax Act. Couldn't be why they came up with that little Straw Man could it?
As I said in my post, I'm not intending to sock it to "you" the good guys.
But it was some members of your generation, the loud mouth activist Marxist hippies, that have helped make the tax burden what it is in furthering the Great (Socialist) Society. THEY are the ones I said should be footing the bill since they created this tax-and-spend nightmare. Not you.
Your quote is in regards to hypothetical NRST plans, and their hypothetical issues do not apply to the FiarTax.
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