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 ...
That's why the KEY word is Retail Sales Tax.
Otherwise you are talking about VAT tax.
If the employee is only getting the same paycheck, then he's getting screwed, because he himself has to now pay the employer's share of the FICA tax, which is now in the sales tax. See #60.
Businesses include all known and projected costs -- including tax cost -- into the price of the product before they set the price which they sell a product to a wholesaler, distributor or retailer. Businesses embed the cost of taxes into the product before they set the price.That's the dumbest thing I've ever heard. Prices are set by the market equilibrium. This is Econ 101 (Chapter 1, at that).
The only "deal" in NRST for me is avoiding income tax on the 401K.
But even that is a mirage. The Feds are going to insist on at least tax-neutrality so the money they would have got from you with IT on the 401(k) they will now have to get from you with a higher sales tax rate
See #59. Whatever it is, it will have to be made up in the sales tax rate, and the embedded cost will remain. In fact, it will cause the employee to need more than his original salary because now the worker has to pay the 7.62% employer share himself, via the sales tax. If he doesn't get more, the employee is getting screwed.Don't try logic with these guys.
That's nonsense. See #60,62,64. Any embedded tax money the Feds lose will be made up in a higher sales-tax rate. There's no way out unless the Feds accept less income!
I fail to see your point. Retail tax or VAT tax, the rates will still be set to recover ALL the income to the Feds lost by the income-tax ending.
Attaboy, AG. This ought to give us (Bill Thomas, et al.) a meaningful boost from behind. Yesterday AG supported SS reform NOW, and today he supports a consumption tax (Fair Tax Act). Let's put the two ideas together and get it done!!
I should have said in the employee's costs.
Well, in a fiat currency, there really is no such thing as a "fair share". The Treasury prints money at will, so in theory, every government program could easily be paid for by simply printing the money. There really is no deficit, or "national debt" or anything of the like.
Taxation is necessary for only one reason. Controlling inflation. The more money people have in their hands, the less it is worth. Taxation simply controls monetery supply. It doesn't "pay for anything" per-se.
Sorry, but you're operating under a fallacy that the tax distribution will remain the same. It won't. Under an NRST, many people who currently operate tax-free (or close to it) will be subject to taxes. A good example of this is under-the-table workers (illegal immigrants), who don't pay income or payroll taxes now, yet would subject to the NRST when they buy things. Also, since they aren't legal residents, they wouldn't be eligible for the FCA, so their effective rate would be the marginal rate.
Also, you'd have the economy expanding -- especially exports -- due to the removal of disincentive to production and a more competitive pricing of U.S. products. Regardless of the actual dollars involved, the real key is purchasing power, which should go up under the NRST as compared to lide under the income tax.
Under the nrst, the tax base is SOOOOO much larger... it's no longer just wage earners... it's everyone who spends... including tourists, illegals, importers, etc.
If you have a pizza party for 10 people and the pie costs $90, you could:
a) have 5 people pay $18 each...
or you could expand the base
b) you could have 18 people pay $5 each.
The same amount of money is raised.
Of course, this will require every business to be completely honest and remit the "tax" to the Federal Reserve instead is sticking it their own personal accounts. Every business becomes a tax collector (yes, I know they alrady are - but more so).
There is still lots of room for "under the table" stuff here.
If a transaction took place and nobody saw it, did it really happen? You could undercut your competition by only "reporting" half of your sales, and setting lower prices. I can often get a much better "cash price" in certain neighborhoods around here. Since they aren't traceable, they almost always "knock off the tax".
Tons more auditing is going to be going on.
Maybe I should just say "There is no such thing as a free lunch (especially when the government is eying your wallet)".
The fact is that, on the average, we will all get hit with as much as before -- more if salaries don't go up 7.6% -- and there will be some re-distribution. People without 401(k)'s will do worse than those with; people with after-tax savings will do worse than those without; workers will do a little worse since they probably won't get the full 7.6% extra; businesses will be winners since they won't have the 7.6% to pay, and will be able to sneak in price increases when the sales-tax is added, etc.
The VAT (value added tax) is actually a very BAD idea because it will only encourage the manufacurers to outsource even more to remain competitive.
See #59. Whatever it is, it will have to be made up in the sales tax rate,
The fiartax will be revenue neutral so of course the it will bring in the same amount as the current system does. Nobody claimed otherwise as you imply. It's not nice to.... well, I'll try to make it as clear as I can.: do you still beat your wife?
and the embedded cost will remain.
When the embedded costs the company is now paying to the government are removed the do not remain. Your argument is illogical or delusional -- you chose.
In fact, it will cause the employee to need more than his original salary because now the worker has to pay the 7.62% employer share himself, via the sales tax.
The 7.62% will be a portion of the amount a company will reduce the price of a product. Myopia blinds you from seeing the obvious.
If he doesn't get more, the employee is getting screwed.
Except that your premise fails thus so does your attached argument.
Benefits of the fairax:
You're an expat what do you care unless perhaps you sell tax avoidance manuals/information to U.S. taxpayers?
I have no reason to argue with you. You can declare yourself the winner -- or not -- or claim anything you want. I'll stick with the experts and vast majority of people that have scrutinized the the fairtax and agree on it being the best alternative to the present income tax.
Nothing is perfect, but the current system is an unmitigated mess, and like someone else said, is a "walking due process violation".
The IRS is the world's most powerful law enforcement agency ... and they get their own code wrong 40%-70% of the time.
What chance does the average Joe have.
Anything is better than the current setup.
All that can (and does) happen under the income tax. Under a sales tax, the number of taxable entities drops by about 90% (retail business only). That makes enforcement much easier. There will be some evasion (there always is, regardless of the system), but not enough to destroy the system.
You are right. The amount of fraud in reporting sales-tax used to be very high, and I haven't heard that they've cleaned it up.
Oh, I agree. I'm for the NRST. Just pointing out to someone else that it doesn't necessarily work in a vacuum.
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