The national sales tax (Why the NRST is dopey)

Town Hall ^ | May 3, 2005 | Bruce Bartlett

[BJClinton]

I hope one of the NRSTers responds to rp's point. I see this as being way to easy to cheat and as RFG pointed out, every bit as burdensome on business as the current income tax system. A flat tax with only 'cost-of-living exemptions' (medical, school, retirement, poverty level income) seems much more efficient.

[Dead Corpse]

So you like having the IRS around? You want to maintain the status quo with the million and one tax regulations that even the IRS can't keep track of, loopholes, special interest tax breaks, communist progression, ect...?

You want everyone to continue to suffer because you are afraid to try something new, or worse have a vested interest in maintaining the current scam? Now THAT is "childish".

[Dead Corpse]

All of the sales tax systems are already in place. The reporting would be a bit different, but the effort would be much less confusing or costly than the current gamut of payroll, income, and corporate taxes that must be accounted for today. Compliance costs would be a fraction of what they are currently.

[Your Nightmare]

and the fact that foriegn companies would set up tax havens here and contribute to our tax base

You need to read the bill. The FairTax is an income tax for foreign entities. Any income a foreign company or individual made in the US would be taxed at the FairTax rate.

Don't expect foreign companies to consider the US a "tax haven" under the FairTax.

[newgeezer]

Please note, I was referring to your "You're dismissed" response to someone else.

But, again, I am not an expert on this subject. That is why I sent you to the Web site.

[Texas Patriot]

Your Welcome, I always thought of it as a straight forward sales Tax until I really read what they were saying. unfortunately you will find a lot of questions about the NRST, but there are questions about all the Taxing schemes out there. they all have their places where Abuse can take place and possible positive/negative economic consequences. my favorite 3 are the NRST, then comes a true flat tax 15% on everything and I mean everything! then I read alittle bit about something called an APT (don't flame me people) where every single financial(key word) transaction that takes place would be taxed at a fraction of 1% it kind of sounded neat but it has severe problems as well once you get into it. Dig away at least have fun with it.

[RockinRight]

Quit bitchin about the IRS and the present system as they'll bever change it. And I am starting to think the American people dont deserve to have it changed. I hope they get what they deserve and the present socialist tax system rate goes to 80 plus percent (with state and local taxes). How's that?

If you REALLY want that, you're an a$$, that's what I think. That said I think, like me, you are overly frustrated with our current system and feel that we've lost hope, but we have not.

I support an NRST with reservations, it has a lot of potential. A VAT is a horrible idea, the IRS has raped us for years. Do you have a better suggestion?

America is still a nation of hope, a shining city on the hill, but we need polished up a bit. Throwing in the towel and saying we "all deserve an 80% tax" is just ridiculous.

All I know is that right now, most people are blind to how much they pay. Anything that shows Americans what they pay in taxes right up front is a good thing.

[Dead Corpse]

You need to read the bill.

I did. Other than them having to pay the retail tax like everyone else, I see no other extra taxation on foriegn companies moving here. This removes the burden of taxation they are currently paying in their various home countries. For EU companies, getting away from the VAt would be a major motitvator. How is this a bad thing?

[RockinRight]

Haven't Estonia, Lithuania, and Latvia done either a flat or national sales tax? Those three countries WILL be the economic up-and-comers of Europe in the next 20 years...they are worth watching.

[newgeezer]

Unlike socialized medicine, which is a pretty poor idea with a couple of good points, this kooky scheme is not currently being used by anyone anywhere in the world....is it?

When someone else attempted to argue the merits of this point of yours, you responded with "You're dismissed."

I suppose when you started with the preconceived notion that it's a "kooky scheme," that should have been a clue that your interest is feigned.

[Principled]

My definition of insanity is to propose a radical new policy about how we fund our government,

Like in 1913 when they began taxing incomes and withholding?

[Your Nightmare]

I did. Other than them having to pay the retail tax like everyone else, I see no other extra taxation on foriegn companies moving here. This removes the burden of taxation they are currently paying in their various home countries. For EU companies, getting away from the VAt would be a major motitvator. How is this a bad thing?

You must not have gotten to the end of the bill.

`SEC. 905. WITHHOLDING OF TAX ON NONRESIDENT ALIENS AND FOREIGN CORPORATIONS.

`(a) In General- All persons, in whatever capacity acting (including lessees or mortgagors or real or personal property, fiduciaries, employers, and all officers and employees of the United States) having control, receipt, custody, disposal, or payment of any income to the extent such income constitutes gross income from sources within the United States of any nonresident alien individual, foreign partnership, or foreign corporation shall deduct and withhold from that income a tax equal to 23 percent thereof.

`(b) Exception- No tax shall be required to be deducted from interest on portfolio debt investments.

`(c) Treaty Countries- In the case of payments to nonresident alien individuals, foreign partnerships, or foreign corporations that have a residence in (or the nationality of a country) that has entered into a tax treaty with the United States, then the rate of withholding tax prescribed by the treaty shall govern.'.

[kevkrom]

They do not pay income tax but if they work they pay a high payroll tax.

... which they get back as a tax credit (negative income tax) via the EITC.

[Dead Corpse]

to the extent such income constitutes gross income from sources within the United States

Ie; Retail sales. This applies to any income generated HERE. And? What is your point?

[ancient_geezer]

First thing I can see is a nose-diving economy as people reign in spending as they adjust themselves to the new system.

Domestic consumption is expected to initially drop 5% while personal investment and savings increase at least that amount. At the same time, our export business is expected to grow by as much as 30% by virtue of removing the tax burdens from our manufacturing and export businesses making our products much more competitive on foreign markets. That assures continued short growth of our economy as well as strengths the American dollar in foreign markets while attracting manufaturing back to our shores and a tax friendly, indeed tax haven for manufacturing creating jobs and demand for labor (higher real wages) as our economy expands long term.

 

Chairman of the House Ways and Means Committee,
Rep. Bill Archer (R-TX)
August 12, 1996

• "A recent survey was done, in Europe and Japan, of the major corporations and I was astounded at the results. They were asked, 'If the US abolished its income tax and went to a sales tax, would that have any impact on your decisions?' Eighty percent of the corporations said they would build their factories in the United States of America. Twenty percent said they would move their international headquarters to the United States of America."

Today, one of our greatest economic problems is the lack of personal savings. A pure consumption economy with nil personal savings and investment is what keeps the Social Security system inplace and assuring the growing dependancy of the people on government.

The lack of savings and investment on the part of the American consumer is holding back the full potential of our manufacturing base. Savings and capital investment assure techonlogical impovements and upgrades of out business infrastructure as well as creating new industry which fuels labor demand and higher wages.

 

Virtually all economic models project a much healthier economy if a federal sales tax replaces the current tax system. These models typically project that the economy will be 10 to 14 percent larger in 10 years.[2] A dynamic, growing economy will provide more and better paying jobs. Employers will need more and better-trained workers.

FIGURE 1: This figure shows the positive correlation between real wage rates and capital investment per hours worked, from 1947 to 1992. During this time period, the amount of capital per hour worked increased steadily and
these increases led to increases in real wage rates over the same time period.

 

The ever growing decline in personal saving and investment with growing dependancy of the majority of American families on govenment and its social systems has come with a very high cost in terms lack of capital investment into our business infra-structure:

[dg62]

Well IMO you could be right, but just as easily you could be wrong.

Look nobody likes the IRS or any other tax body for that matter and I'm all for a better tax system, but to me the flat tax with a simplified tax code is far less risky.

[Your Nightmare]

Ie; Retail sales. This applies to any income generated HERE. And? What is your point?

Income is not retail sales. Besides, what ever they might have sold at retail had already been taxed.

[Dead Corpse]

I'd prefer a NRST. Then again, I lean heavily libertarian. A Flat Tax at around 10-12$ like the Russians did would be a step in the right direction. However, it would leave in place all the other payroll tax crap, the compliance burden, and the mechanism for abuse that got us to where we are at currently.

Not exactly an ideal situation. Also note, that someone above said it leave the income tax in place. Sec 101 repeals subtitle A of the IRS code of '86. :ie the Income Tax. Sec 102 repeals payroll taxes. 103, estate and gift taxes. Ect...

[newgeezer]

are the CSX's and Rockwell collins's and GE's and Aliant's of the nation jumping up and down to go to this method of taxation?

I'm not aware of their shareholders going on record either way. They probably don't want to rock the boat. Maybe it's not on their radars. What's your point?

Many economists favor it.

FairTax FAQ

[Doctor Stochastic]

I would say a flat income tax would be best but then the working poor couldn't afford the 30%...

However there was an exemption of around $30,000 in the original flat-tax proposals. The idea was a 20% (17% actually, pre-Bush pre-GOP Congress) tax on income over $30,000. Personally, I think it was rejected because it was too simple.