A National Sales Tax

Town Hall ^ | March 31, 2005 | George Will

[JimRed]

What frightens me is that this might eventually be in addition to other taxes.

Exactly! There has to be legislation outlawing other taxes on top of the "fair" tax.

[Critter]

The income tax doesn't do that?

[Nephi]

Yes, it does, just like the NRST, but not like tariffs. Hence, why globalists oppose tariffs. Its all about breaking down American independence and sovereignty. Globalism is incompatible with conservatism. Sadly, conservatives don't realize they bought the globalism dogma from the same people who support the UN, world government and tax the rich.

[Your Nightmare]

Don't you see? You are saying that I would have to keep my fees the same to receive the same amount of income. No sir Mr. YN. If I am not paying income taxes then I am saving at least 25% of my gross. So if my gross is 100,000 per year I am now going from an income of 75,000 to one of 100,000. But where is it written in the fair tax law that I have to give that 25,000 back to the government when they want it? You seem to infer that is the case.

You obviously don't understand what "real" income is. It is your income adjusted for inflation, basically the purchasing power of your income. If you make $100,000 and take home $75,000, you can buy $75,000 worth of goods and services. Under the FairTax, if you cut your fees and took home $75,000, you would only be able to buy $57,750 in goods and services. You've had a decrease in "real" income.

To avoid this decrease in real income you would have to keep your fees where they were. You are just rearranging where you pay your taxes.

You estate tax example is meaningless. In 2003, estate tax collections were only $20 billion. That is insignificant in our economy.

[groanup]

You estate tax example is meaningless. In 2003, estate tax collections were only $20 billion. That is insignificant in our economy.

The amount of money spent to avoid estate taxes is part of the compliance cost I am talking about. Not the tax itself. I'm out of here for a week. Spring break.

[painter]

Care to amplify, maybe by giving an example or two, with your take on why George Will is gullible?

I agree with you too.That fact that George Will is on board with this means that this is picking up some steam.

[Your Nightmare]

The amount of money spent to avoid estate taxes is part of the compliance cost I am talking about. Not the tax itself.

Then it is even more insignificant.

[Scotsman]

To short circuit your arguments ...

... assume, as you do, that there would be no benefits to the individual taxpayer in a change to the NRST and the elimination of the IRS.

The simple removal of the IRS from the individual US citizen's life and the consequent collection, storage, and dissemination of personal information across the governmental spectrum alone would be a lifting of a tyranny from our lives.

And there are other benefits, the totality of which we won't understand until the system is up and operating, but there will be other, financial benefits to all current taxpayers - only the gross amounts are in debate.

[lewislynn]

assume, as you do, that there would be no benefits to the individual taxpayer in a change to the NRST and the elimination of the IRS.

I don't think he ever assumed no benefit, but rather the benefits are so overblown by the sales tax pitch he's bringing it into perspective with what would be reality.

It wouldn't/couldn't be the near tax free nirvana with 20 to 30% cheaper goods and services that they claim. The fact they have to be deceitful about that and the rate itself is proof enough.

[Scotsman]

At this point, attempting to assign any sort of cost/benefit ratio to the NRST is meaningless.

Until the ideas congeal into proposed regulations (first, a Law is passed, then the regulations get promulgated - that's the way a Law is enforced - through the framework of regulations for enforcement of the Law) ...

... it is going to be almost impossible to figure out the benefits to various classes of current taxpayers.

Without going through every single post here, I doubt that there has been very much intentional deceit, on either side. The key point to the whole NRST is the elimination of the IRS - so it is much more important to focus on that as the one overriding benefit that will positively effect every class of current taxpayer.

And because of that, it is important to make certain that the IRS IS eliminated as a part of the overall push to implement a NRST. There is a Bill in both the House and Senate to amend the Constitution to repeal the 16th (I think that's the IRS Amendment) Amendment and efforts should be focused on that, with the NRST to be part of the solution to the elimination of the IRS.

[lewislynn]

Without going through every single post here, I doubt that there has been very much intentional deceit, on either side.

Well, you're wrong.

[groanup]

Without going through every single post here, I doubt that there has been very much intentional deceit, on either side. The key point to the whole NRST is the elimination of the IRS - so it is much more important to focus on that as the one overriding benefit that will positively effect every class of current taxpayer.

You will learn that there are people on here who will go to any ends of the earth to maintain the IRS. Deceit? Maybe, but it is too easy to ferret out. The real culprits are those who obviously have an agenda to see that the IRS stays as it is.

[groanup]

Maybe insignificant to you, moneybags. Not insignificant to a mom and pop company that wants to pass its legacy to children. Of course the generational transfer of wealth was one of the things the early communist leaders warned about.

Once again, compliance costs do not simply reside in CPA's fees. There are billions of dollars spent on tax advantaged oil and gas programs, housing tax credits, various other limited partnerships that are set up for tax reasons every year. Many of these programs exist because of taxes not because they are necessarily the best place to invest. Then there is the whole trillion dollar or so muni bond market that exists as a separate market because of the tax code.

[rwrcpa1]

You estate tax example is meaningless. In 2003, estate tax collections were only $20 billion. That is insignificant in our economy.

Then why don't they get rid of the dang thing?

[Your Nightmare]

Then why don't they get rid of the dang thing?

They are.

What's interesting is that the FairTax would function as an estate/inheritance tax for most people. People who inherit money would have it taxed when they spend it. The "real" value of an inheritance would be reduced by 23%. This wouldn't happen with a flat tax.

[rwrcpa1]

Except that you are assuming that assets would be converted into cash and spent on taxable items. If the assets are never sold or are turned over into other investments they would never be subject to the Fair Tax. If the income thrown off is spent on taxable items then that is taxed, but the income is taxed under the current system, too. Under current law, which includes estate taxes, the value of the assets is taxed at date of death (if over exemption amount), and then the income from the assets (if you have any assets left after the estate tax) is taxed, too (except for municipal bonds, of course).

I think to say that the "real" value of an inheritance would be reduced by 23% is an exaggeration. Theoretically, I suppose after 100 years that all of the estate's assets could be converted into cash and spent on taxable items, but with the time value of money I think the estate tax paid now would be much greater versus the Fair Tax paid over the next 100 years. You have a choice whether to pay tax or not, too. Under current estate tax law, you have no such choice.

[Your Nightmare]

Most estates are liquidated so that debts can be paid and the remaining assests can be divided amoung the beneficiaries. Most estates are not businesses.

[rwrcpa1]

Of course. But most large estates have some business ownership involved. My employer's estate got socked with over $10 million in estate taxes (part of your insignificant $20 billion dollars referenced earlier). Fortunately, we had anticipated his death after some asset sales and had the cash stashed, but just think what we could have done with that money instead of giving it to the government. We are an oil and gas company. We could have use that money for exploration or other capital investments instead of paying Ted Kennedy's liquor bill. This company will not be liquidated. I'm sure we are not the only example. Unfortunately, when his widow dies we have to repeat the process. That may be any day now.

[Your Nightmare]

part of your insignificant $20 billion dollars referenced earlier

We were talking about prices and $20 billion is insignificant in our economy.

[rwrcpa1]

Agreed. But $10 million was very significant to our company.