Posted on 04/15/2005 3:38:15 PM PDT by Your Nightmare
ARLINGTON, Va., April 14 /PRNewswire/ -- The Retail Industry Leaders Association (RILA) announced today its strong opposition to legislation proposing a National Sales Tax.
"Radical proposals to impose a new, multi-billion dollar sales tax regime on all Americans would threaten the U.S. economy and will have far-reaching, negative impacts on American consumers," said RILA President Sandy Kennedy. "This legislation would hit low and moderate income Americans the hardest, punishing those least able to pay."
Legislation has been introduced in Congress that would impose a federal tax of 23 percent on the sale of most merchandise and services. Tax experts predict a 25-30 percent sales tax would actually be required to offset the costs of moving from an income tax system to a consumption-based system. In addition, a national sales tax would be layered onto existing state and local sales taxes, putting the cost of many basic commodities out of reach for millions of Americans. Virtually every consumer must buy food, clothing and shelter. Everyone must buy personal hygiene products, over the counter drugs, and household goods.
Such a dramatic restructuring of the tax system would have a devastating effect on the retail sector of the economy and would create excessive administrative burdens for retailers. "This new tax would significantly depress retail sales and damage the economy by sharply curtailing consumer spending -- spending that has been driving the U.S. economy during the past several years," Kennedy said.
The retail industry is the second largest industry in the U.S. with $3.8 trillion in annual sales. Retail employees represent 12 percent of the nation's workforce. "Unfortunately, these employees will also be harmed by this legislation," Kennedy said.
The Retail Industry Leaders Association (RILA) is an alliance of the world's most successful and innovative retailer and supplier companies -- the leaders of the retail industry. RILA members represent more than $1 trillion in sales annually and operate more than 100,000 stores, manufacturing facilities and distribution centers nationwide. Its member retailers and suppliers have facilities in all 50 states, as well as internationally, and employ millions of workers domestically and worldwide. Through RILA, leaders in the critical disciplines of the retail industry work together to improve their businesses and the industry as a whole.
The report also show that the main compliance cost was one people don't usually consider, credit and debit card fees. Retailers pay a percentage of the amount of any credit card transaction in processing fees. Add sales tax to the total and the retailer pays a percentage of that, too. They estimated that credit and debit card fees were 0.76% of the dollars collected.
With the federal government's $2.3+ trillion budget, excess credit and debit card fees would be $17.5 billion in out of pocket costs to retailers.
A similar compliance cost would hit individuals. We would be financing/charging a great portion of our tax burden and with that financing comes interest. For example, the FairTax on a new $200,000 home would be an additional $60,000. The interest on $60,000 at 4.25% for 30 years is ~$46,000. That adds 75% to the cost of paying the sales tax and the total cost of paying a sales tax on this new $200,000 home ends up being $106,000 (and this doesn't even take into account the sales tax you would pay on the taxable portion of the interest - interest is payment for a taxable service).
sales versus income taxes?
The ONLY way I would support a national sales tax is if all other federal income-related taxes are dissolved.
In this modern age of electronic banking, I'm surprised someone in the banking industry hasn't come forward with a proposal to cap credit card fees -- for example, by setting credit card fees at 2% of the transaction but no more than $15. This would make credit card fees no different than ATM fees, and would basically mean extending the same "fixed rate" brokerage fee concept adopted by Wall Street to another aspect of the financial world.
help ping
Sounds like way too much freedom to handle. It would be wonderful to get rid of the whole tax system and simplify everything. I know it wouldn't be easy, but I think it's possible.
And, for most people, the tax rate will go into effect overnight but I wonder how long will it take for those embedded taxes to trickle down to a change in retail prices? A week? A month? 6 months? Maybe never?
The ONLY way I would support a national sales tax is if all other federal income-related taxes are dissolved
Which is precisely what is proposed by HR25, which replace both individual and business federal income and payroll (SS/Medicare etc.) taxes:
John Linder in the House(HR25) & Saxby Chambliss Senate(S25), offer a comprehensive bill to kill all income and SS/Medicare payroll taxes outright, and provide a IRS free replacement in the form of a retail sales tax:
Legislative Text:==>H.R.25,S.25
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.Refer for additional information:
help ping
Yeah, hurry up. We need you to cut and paste things from the Fair Tax advocacy site even though you don't understand them.
Why so rude?
If you would like to be added to this ping list let me know.
This article is propaganda with incorrect generalizations which either ignore or misrepresent the contents of the legislation ( HR 25 the fair tax). Let's take these items one at a time.
"This legislation would hit low and moderate income Americans the hardest, punishing those least able to pay."
----no it wouldn't -- the low to moderate workers would get their FULL paycheck with no withholding, and also get a monthly rebate for the tax for 'necessities'. And ... it is predicted that prices would go down an average of 22% when the current costs of collecting the tax are eliminated. So low to medium earners would be a winner under this plan. Retailers are afraid people would save rather than spend.
"... putting the cost of many basic commodities out of reach for millions of Americans. Virtually every consumer must buy food, clothing and shelter..."
--- again, rubbish. Prices go down 22%, tax of 23% is imposed, tax is rebated for necessities.
"...It's no wonder retailers oppose a national retail sales tax. Retailers would face the brunt of compliance costs under a NRST..."
---- Compliance costs for most retailers would not be much affected in states which collect sales tax - just the amount of tax collected. Lawyers, CPAs, etc. might get nicked because most sales tax is collected on products, not services.
"...the main compliance cost was one people don't usually consider, credit and debit card fees..."
--- This is a red herring. Prices go down, taxes bring them back up again - credit card fees remain the same.
"...the FairTax on a new $200,000 home would be an additional $60,000..."
--- again, a red herring. The prices of the supplies used to build the house go down, the price of labor goes down (e.g., no more collecting FICA, no more paying employers share of FICA), then tax is added to bring the price back up. It isn't nearly as bad as you project.
I am looking forward to the debate of whether the "Fair Tax" should replace the income and payroll taxes, but hopefully we can reduce the misrepresentations and inflammatory rhetoric that create more heat than light.
"The ONLY way I would support a national sales tax is if all other federal income-related taxes are dissolved."
That is exactly the plan. It also eliminates the 'estate tax'.
SUCH whiny BS. If I buy a new Mercedes, I get "punished" more than Joe buying a used 1980 Yugo. Sounds fair to me.
Please visit www.fairtax.org for the REAL story, and stop wasting time and bandwidth with this stupidity.....
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