Posted on 06/10/2005 11:13:37 AM PDT by Always Right
You left out the ease with which the National Retail Sales Tax can be used for Social Engineering.
As if any income tax, flat or otherwise are not uniquely suited for precisely that purpose and function, including the inherent threat of a powerful bureaucracy with force standing over every citizen of the nation.
The Intent of any income tax is for political and social control not revenue collection.
As the current proposal reads, buying a riding lawnmower to mow your own lawn is subject to tax; buying the same lawnmower to mow other peoples lawn isn't a final use; and thus not taxed. (Similarly for bags of fertilizer.)
Taxation under the legislation is for final use or consumption, not for the use in a business providing final consumption. It seems to escape your notice that the guy doing the lawn mowing for other people, is required to collect and remitt tax for his service from his customers.
I find it interesting you appear to want to continue a system that hides tax from the view of the citizen, rather than assure that each and every voter participates in and is aware of the economic burden levied on us as a consequence of ever growing government.
Things that deemed harmful (taxed, alcohol, firearms) or socially useless (television, movies, chewing gum, hamburgers, soft drinks) can easily be taxed differentially. Similarly for professions. Socially harmful services (rich man, poor man, beggar man, thief) can be taxed higher than socially useful ones (doctor, lawyer, indian chief.)
Yep they are called excise & license taxes and we already do that and have been doing over 220 years now. You figure they are going away? Seems to be a solid tradition of such taxes going back to ole George Washington himself.
This has what to do with the desirability of cleaning the slate with a single rate retail sales tax?
If a businessman gets 10% less volume when he raises his prices by 20%, guess what he is going to do? Read if you can't guess, read an elementary Economics textbook.
This certainly would 'franchise' those of us who support the cost of government with our money. Makes it a lot easier to elect those who would do the will of the electorate.
Of course there is that small factor of repealing the Constitutional amendment that prohibits the levy of any tax that is made a requirement for voting.
As long as Congress Critters have a built in constituency to spend with folks not paying taxes you really figure that amendment is going to get through th 2/3rds reqirement of both houses of Congress to propose such to the states?
That is naive, fails Econ 101. If the market is not very elastic, you get very little extra volume if you lower prices, and you get LESS profit.
What happens in a market that is elastic because overhead costs of doing business fall opening the door to competitors undercutting prices to their market advantage? Lower costs make room for higher profits at lower prices.
Competition takes other forms besides cutting prices. Many prefer to get their extra volume by special features, or extra service, etc. You don't see Mercedes, Jaguar, Lexus, Cadillac cutting prices to compete with Hyundais.
Moreover, many businessmen see profitable co-existence as being preferable to unprofitable cut-throat price competition.
Your points in Post #420 on this thread have validity. Out of all the options, we on this forum may be best qualified to come up with a GOOD, workable proposal that would accomplish the good parts without the bad parts. Anyone up to the challenge? If we could get consensus here, we could sell it... :)
Competition takes other forms besides cutting prices.These guys seem to think pricing is a race to the bottom. It doesn't work that way for most products.
Doubt very much you will find much concensus as to mode of taxation.
This thread is a good example of the entrenched attitudes that exist on the subject.
Basically it comes down to those who believe they have an economic haven in the current system what to maintain it, those the perceive a disadvantage to themselves or families in the current system want a major change away from how taxation is accomplished today.
After engaging in continued debate and discussions on this forum extending back to early 1998, it doubt very much the entrench camps in these debates are likely to come to any sort of agreement such as you may envision.
Sometimes, the market is highly elastic and cutting prices hugely expands the total market by bringing in new large classes of customer, and everyone benefits (e.g., PCs during the 80's and 90's). Eventually, though, the market is bounded and you return to the scenario in the first para, like PCs now.
Great point!
With moderate elasticity, price cuts can sometimes yield higher profits, as long as your competitors don't follow your action. Usually, your competitors do, there's a price war for a while, and then everyone realizes they have cut their own throats, and prices go back up to more profitable levels.Game theory. Businesses don't act without expecting their competitors to react.
The more players there are in the market, the lower prices will be. High end versions of products are the exception to the rule. Their selling point isn't price. For everyone else, price is determined by supply and demand. More supply lowers the price. More competitors offering more of the product equals lower price.
If you're in business and you're waiting for the government to do something across the board for all businesses before you think you can compete you're in big trouble...even if the government does act.
Any businessman worth his salt is striving to REDUCE competition, especially price competition. His aim is to so differentiate his product from other similar products that his competitors thereby become few in number.
Some products (like gasoline) are commodities, where differentiation is not possible, but even here you will find substantial variations in price as you travel around. You view of competition is very simplistic, and just plain wrong.
With moderate elasticity, price cuts can sometimes yield higher profits, as long as your competitors don't follow your action.
You have done little more than construct a very poor and limited argument on which you hope people will generalize.
Sorry the economy as a whole is much broader more flexible than the limitations that you would like to artificially impose.
No change in overall sales volume is even required, merely adjustment in pricing offsetting repeal of business income & payroll taxes and the lower tax related overhead costs that come with that, with profit maintained.
Therein lay the fallacy of your elasticities argument.
As I challenged you before in #249, quantify it across the broad economy as has been done by others. Lets look at your methodology and test your results against broad sectors of the economy as it exits, not just a mere hypothetical in generalized language.
Very few sectors of the economy meet your restrictions. Those conditions you lay would especially be challenged considering a major change in mode of taxation from income taxation to an overt retail sales tax. Such a change would of necessity include large changes in market elasticities simply by virtue of the open incentives to the consumer to save & invest taxfree and spend more later, or spend less now and be taxed.
The pressure on business to reduce prices by the savings in overhead costs attendant with the repeal of the business income and payroll taxes will be tremendous.
With the added pressures place on business by the consumer/investor, as well as competitors more than happy to attract that consumer to their companies, producer level prices will indeed come down to the advantage of those that adapt, those that refuse to will be left hanging in the breeze of being passed by.
No change in overall sales volume is even required, merely adjustment in pricing offsetting repeal of business income & payroll taxes and the lower tax related overhead costs that come with that, with profit maintained.Were you saying something about "not just a mere hypothetical in generalized language"?----
Such a change would of necessity include large changes in market elasticities simply by virtue of the open incentives to the consumer to save & invest taxfree and spend more later, or spend less now and be taxed.
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With the added pressures place on business by the consumer/investor, as well as competitors more than happy to attract that consumer to their companies, producer level prices will indeed come down to the advantage of those that adapt, those that refuse to will be left hanging in the breeze of being passed by.
Any businessman worth his salt is striving to REDUCE competition, especially price competition. His aim is to so differentiate his product from other similar products that his competitors thereby become few in number.If it were all about price, there would be no advertising and we would all be buying stuff in white boxes.
Your arrogance is not a very attractive personality trait.
Your response is a lot more generalized hand-waving than mine. I'm afraid I don't have the time or inclination to carry out the large project you propose, especially since you and your FT co-religionists would reject it, anyway.
Were you saying something about "not just a mere hypothetical in generalized language"?
"As I challenged you before in #249, quantify it across the broad economy as has been done by others."
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