Top 11 Secrets of a National Retail Sales Tax

Various | 6-10-05 | Always Right

[pigdog]

The revenue neutral rate will be something when the bill is marked up, but my point is that the number presently in the bill is 23% and nothing but.

Nor was I quarreling with 30 vs 29.9. I pointed out that the correct calculation to go from 23% in the bill to a t-e value is 29.87% (and nothing but).

[Badray]

I also collect my income tax from customer, so where's the difference? The biggest difference is under the sales tax I pay on gross income, and under the income tax I pay on net income. The fact is I still send a check to the government and the customer is where the money came from in BOTH cases.

Wouldn't it just be easier, and intellectually honest, to admit that you are wrong than to post something stupid like this after 5 years of debating the FairTax proposal and having it explained to you countless times? As someone else has already pointed out, you include the costs, but leave off the benefits of the FT.

[Sprite518]

Lets just put away the numbers for a moment. Basically you guys are saying that Sellers factor in the taxes. Well nothing could be further from the truth. You see Sellers will not be taxed. Only the buyers on a volunteer basis. Not like the way the current progressive tax, and or the flat tax.

[Diplomat]

The biggest fallacy of a national sales tax is the notion that other taxes will be eliminated when this is done.

[pigdog]

Another one who hasn't read the bill. My, my!!

[Sprite518]

LOL! Thanks :-) They seem to believe that the Seller pays taxes, and has to factor that part in to whatever he or she is selling. Nothing could be further from the truth. That is the beauty of it. The only thing that is taxed is the buyer, and that is by choice. Its not like the current progressive tax or even by a flat tax. They try to confuse everyone with the numbers. Plus they assume all prices for products would remain the same, and not go down.

[expatpat]

see 959

[Badray]

Thank you.

Your post demonstrates just how fraudulent some of the anti FairTax people are. Unlike you, they never admit to any good aspects of the plan (there has to be some, doesn't there?), they never acknowledge a sound argument. They just try to rip it to shreds.

Having doubts is fine. Having questions is normal and good. But some intellectual honest, like yours, is appreciated. So again, thank you.

[pigdog]

Yup, you're right of course ... and they also throw out that wages will go down but that's just to scare wage earners and those of us who have to work for a lining.

Nothing like a few lies sprinkled in among some half truths to try to fool the unwary/uninformed.

[Sprite518]

Ok let me keep it simple for you. 77 times .23 = 17.71

Therefore, $17.71 is 23% of $77. So the product total would be 77 + 17.71 = $94.71 and not 100. LOL!

First off this guy is assuming prices would not go down. Guess what they would, and you know why? Because the buyer is the ONLY person that pays the tax on a VOLUNTEER basis. Its not like the current progressive tax or Flat tax. If the fair tax was ever passed, then you would see states change their tax codes too in order to stay competitive.

[expatpat]

It's somewhere around the middle. The thread is too long and I'm too tired of repeating myself to look for it for you, but it's there. Use the search tool.

[Sprite518]

Put the numbers down for a moment. Why would the Seller care about the price of a product if he did not pay taxes. Just think about that because that is what you flat taxers are saying.

[expatpat]

Don't post your quibbling to me. I was quoting pigdog's post 749, so please argue with him, instead.

[lewislynn]

29.87% as calculated from a stated 23% because, you see, some sales tax rates are quoted to two decimal places - your idiocy not withstanding.

Who's idiocy Lapdog?

AFT's FAQ #47

I know the FairTax rate is 23 percent when compared to current income taxes. What will the rate of the sales tax be at the retail counter?
30 percent. This issue is often confusing, so we explain more here.

When income tax rates are quoted, economists call that a tax-inclusive quote: “I paid 23 percent last year.” If that were the case, for $100 one earned, $23 went to Uncle Sam. Or, “I had to make $130 to have $100 to spend.” That’s a 23-percent tax-inclusive rate.

We choose to compare the FairTax to income taxes, quoting the rate the same way, because the FairTax replaces such taxes. That rate is 23 percent.

Sales taxes, on the other hand, are generally quoted tax-exclusive: “I bought a $77 shirt and had to pay that same $23 in sales tax. This is a 30-percent sales tax.” Or, “I spent a dollar, 77¢ for the product and 23¢ in tax.” This rate, when programmed into a point-of-purchase terminal, is 30 percent.

Note that no matter which way it is quoted, the amount of tax is the same. Under an income tax rate of 23 percent, you have to earn $130 to spend $100.

Spend that same $100 under a sales tax, you pay that same $30, and the rate is quoted as 30 percent.

Perhaps the biggest difference between the two is under the income tax, controlling the amount of tax you pay is a complex nightmare. Under the FairTax, you may simply choose not to spend, or to spend less.

[Always Right]

The biggest fallacy of a national sales tax is the notion that other taxes will be eliminated when this is done.

Well, the sale taxers got all over my case when I assumed that states would eliminate their income tax and roll it into the sales tax. I guess they believe that states will go the other way and predominately use the income tax. But then we are still reporting income and having our income audited.

[pigdog]

What I had posed to him, of course, was that if you paid $100 for a thing, then the tax was $23 and the thing itself was $77.

That's not what he posed to you. Do you suppose that was just a slip of his tongue?

[Always Right]

Besides the 23% rate still assumes a 100% compliance rate. They just take the total taxes replaced add in their tax credit and divide that by total consumption. To hang their hat on the 23% rate is just plain silly and dishonest.

[Sprite518]

I don't understand why they think this is so hard to understand? Its very simple. I laugh every time they say you have the base price of $77 then you add the taxes and fed and state which comes to $100. Therefore, there is your 30% sales tax. I laugh so hard every time I read that. First, they assume States are going to leave their current tax system in place and not change in order to keep business and jobs in the state. Second, they do not understand percentages.

[expatpat]

Why would the Seller care about the price of a product if he did not pay [the] taxes.

The seller worries about it because of price resistance or "sticker shock" and thus lower sales -- the buyer cares what he is paying out of his pocket, not what the base price was. The FT fans claim that lower prices are advantageous, which conversely means that there is a disadvantage to having a higher gross price, if you agree with them.

[Always Right]

Therefore, $17.71 is 23% of $77. So the product total would be 77 + 17.71 = $94.71 and not 100. LOL!

You still don't get it. Here is the explaination from the FairTax web site:

I know the FairTax rate is 23 percent when compared to current income taxes. What will the rate of the sales tax be at the retail counter? 30 percent. This issue is often confusing, so we explain more here.

When income tax rates are quoted, economists call that a tax-inclusive quote: “I paid 23 percent last year.” If that were the case, for $100 one earned, $23 went to Uncle Sam. Or, “I had to make $130 to have $100 to spend.” That’s a 23-percent tax-inclusive rate.

We choose to compare the FairTax to income taxes, quoting the rate the same way, because the FairTax replaces such taxes. That rate is 23 percent.

Sales taxes, on the other hand, are generally quoted tax-exclusive: “I bought a $77 shirt and had to pay that same $23 in sales tax. This is a 30-percent sales tax.” Or, “I spent a dollar, 77¢ for the product and 23¢ in tax.” This rate, when programmed into a point-of-purchase terminal, is 30 percent.

Note that no matter which way it is quoted, the amount of tax is the same. Under an income tax rate of 23 percent, you have to earn $130 to spend $100.

Spend that same $100 under a sales tax, you pay that same $30, and the rate is quoted as 30 percent.

Perhaps the biggest difference between the two is under the income tax, controlling the amount of tax you pay is a complex nightmare. Under the FairTax, you may simply choose not to spend, or to spend less.


Figure 4: 23 percent tax-iunclusive vs. 30 percent tax-exclusive