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You are right. The system we have now that allows those with the most money to buy their way out of paying income taxes by renting congressmen and double and triple taxation from federal and state and local income tax and corporate tax and SS tax and medicare tax and capitol gains tax and then when we die, death taxes, not to mention the BILLIONS of dollars we spend just trying to comly with the 50,000 pages of tax laws is SOOOOOO much better than one single tax paid when an item is purchased new by the end user.
you forgot, "Women, minorities to suffer most....."
We all get tired of of having to post these arguments in every NSRT thread as if they had never even been considered, so this will make a nice reference thread.
Misinformation ping
Flat tax is the way to go.
7. Underground Economy still not taxed. The NRST advocates falsely claim that the underground economy now will be taxed. Nothing could be further then the truth. Sure, when the money re-enters the legal economy the money is taxed, but that is true today. But will the drug dealers and prostitutes remit sales tax for their goods and services under the NRST? Absolutely not, this portion of the economy is still invisible to the tax collector and therefore not taxed.
This is a strawman argument that completely ignores that even prostitutes and drug dealers DO NOT pay income taxes but they still have to buy groceries and appliances and furniture and automobiles. No matter how you spin it, this is a net GAIN for the government.
Wrong. The customer will pay $100 and the seller keeps $70 and sends $30 to the government.
With the elimination of federal reporting, states will have to replace their personal and corporate income receipts, with a sales tax.
Again you are wrong. Nothing in the Fair Tax bill requires states to go to a sales tax and drop their current income taxes. With me no longer filing a federal income tax return, how does that prevent the state from having me file an income tax return?
And in the tax inclusive/tax exclusive debate, the correct and proper way to do it is tax inclusive if you are comparing it to income taxes, becase income taxes are tax inclusive.
Also, no one will try to buy goods overseas to avoid this tax.
People currently buy items overseas and have to declare them when returning to the country if they are valued above a certain level.
Brookings Institute economist William Gale (National Retail Sales Tax, September, 2004) calculated that about a 60 percent sales tax would be required to be revenue neutral.
Mr. Gale also decided to exempt a whole plethora of items from the fair tax that ARE NOT exempted to come up with his calculation.
The NRST advocates falsely claim that the underground economy now will be taxed. Nothing could be further then the truth. Sure, when the money re-enters the legal economy the money is taxed, but that is true today.
Just how much federal income tax, FICA, etc... are drug dealers paying on their income? ZERO.
But will the drug dealers and prostitutes remit sales tax for their goods and services under the NRST? Absolutely not, this portion of the economy is still invisible to the tax collector and therefore not taxed.
Just as it is invisible to the tax collector today.
According to Bruce Bartlett, 'thus whatever revenue is gained when drug dealers spend their ill-gotten gains will be lost because no tax was collected on their drug sales.'
And today the drug dealer is paying zero income taxes, zero fica, and zero federal sales taxes (after all, they are only paying some excise taxes on gas, phone, utilities, etc... which are not sales taxes according to you). So, it is a net gain for federal tax revenue under the fair tax.
Lower and Middle Income pay more
Being that the bottom 50% of income earners pay ZERO federal income tax its about time they started paying their fair share.
One amazing thing is under the Sale Tax is that government somehow raises money by taxing itself
The purpose of the government paying the Fair Tax under the Fair Tax plan is not to raise revenue, but for the government to compete on an EQUAL basis with private activity in the market. Currently the government enjoys a tremendous advantage with its tax free status.
So if the state of Alabama pays its clerk $30,000 in salary, it would be liable to pay the federal sales tax of $9000.
Again your wrong. An employer (be it government or private sector) does NOT pay a "sales tax" on an employees salary.
And if you are a Flat Tax supporter, remember, our current tax system started as a Flat Tax. Has worked out wonderfully hasn't it. Long live the Flat Tax!
Don't really have the time to refute the entire argument, but here's a few:
1. Luxury Tax didn't replace taxes, it was additional tax.
2. Drug Dealers aren't taxed on their sales? So what. They are taxed on the SS Monte Carlo with the 20" gold plated rims.
3. Entire argument doesn't take into account the idea of a 15% sales tax that does not eliminate payroll taxes.
4. Their is a provision in the sales tax plan that shelters the poor i.e. You don't get taxed on the first 15-20K of your income to account for living expenses.
What do you think that federal, state, and local income taxes + SS taxes + medicare taxes do now? They all tax you off you GROSS amount as if you still have it after each one gets through taking their share.
Also, you ignore that once the cost of the corporations compliance and payment of the all the taxes they have to keep track of is eliminated, the cost of goods will actually go DOWN at the retail level which will INCREASE your buying power.
And don't forget that with the income tax, the government gets a cut NO MATTER WHAT. You have NO CHOICE as to how much you want to contribute. If you object, they will just send men with guns to haul you off to jail and TAKE what they want.
Let's not forget the Ta-ray-za had a true income of almost $50 MILLION but because of loopholes, she paid an effective tax rate of about 2%.
The income tax is for suckers.
You left out the part where we'd end up with both an income tax, and a Nat'l sales tax.
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My question lies with the effect it would have on the American people psychologically. Would a National Sales Tax psychologically discourage people and businesses from purchasing goods and services? Americans (sane Americans that is) hate taxes, its in our blood.
I don't know how I would react seeing a %23 or whatever sized tax on my receipt. But it will most likely make me search for other avenues to purchase the desired product even though I know I am not filing a Federal Income Tax return anymore... Just a thought
Ah yes... use tax-exclusive terms to make the rate seem higher compared to income taxes, and then also lump in state taxes so that instead of merely comparing apples to oranges, you're comparing apples to refrigerators.
2. Even 37% is not enough
The NRST does not assume 100% compliance, and quoting a left-wing Brookings Institute paper isn't going to help you around here. The NRST assumes equivalent compliance, i.e., that the same amount of economic activity goes unreported as it does today.
3. Fraudulent Calculations
No, just more complex than your simple analysis. Some tax savings (labor specifically) are ripple effects through the production process. Compliance costs go down dramatically. Other tax savings are more indirect, such as lower interest rates for borrowing money (if you don't believe me, look at tax-exempt vs. taxable bonds -- there's a roughly 30% price premiuim built into the rates for taxes).
4. Millions must file.
Now who's using fraudulent calculations. You assume that every single individual-owned business provides a retail service. Hogwash. Many small businesses provide services primarily or solely to other businesses -- these would not require any filing. I'd say 20 million is far closer to 35 million, which means about a 90% reduction in the number of filers. Even allowing your fraudulent number, we still see over an 80 reduction in the number of filers.
5. Tax Evasion will skyrocket
Supposition, again backed by that Brookings institute. With a much smaller number of colelction points than the income tax, policing activities becomes much easier. And despite your assertion, not one country has ever tried a pure retail sales tax approach.
6. Big Government gets Bigger
Repeating your earlier lie doesn't help you here, either.
7. Underground Economy still not taxed
This is one I'll allow, with a caveat. A portion of the underground economy -- illegal immigrant labor -- will be taxed that is currently missed (with the exception of indirect taxes built into the prices of goods and services). Moreover, since these illegals have no valid SSN, they will be taxed at the full marginal rate and receive no FSA "prebate". This should also make hiring illegals less attractive, since there is less of a cost savings once payroll taxes are eliminated.
8. Lower and Middle Income pay more
Based on an old, CBO static analysis. I wouldn't trust the CBO to tell me the time of day without being off by at least 50%. Nevertheless, the middle class generally bears the heaviest burden under any tax system, and pretending that it isn't true under other proposals is just lying to yourself (and to others) because of the hidden and embedded taxes that affect consumption. People making (and spending) at near the poverty line would pay an effective tax rate of about 0%. At double the poverty line, assuming they spend every penny on new goods and services, they would pay only 11.5%.
9. Elderly assets are unfairly burdened
Except the removal of income taxes and the addition of the FCA, you meant to say. People on low fixed incomes would pay close to or no net tax once the FCA was factored in, as pointed out above.
10. Government Taxes Itself
A complete and utter lie. The government pays taxes only on wages that are otherwise taxable services. Your typical civil servant would not have their salary taxed. This lie is based on a blantant misreading of the bill and one quote that was based on a single poorly clarified statement from an AFFT spokesperson.
11. Auto and Housing Industry Hit Hard
The example you cite was where when a special tax was added on a specific industry. That does not logicially apply to something levied on all industries that replaces existing taxes.
This is seriously the best you can do? Outright lies, exaggerations, class warfare, and left-wing think tanks?
Let's start with #2.
I'll get back to more of your other distortions as time permits.
Any criticism of the rate as an argument against the FairTax is bogus.
The level of the rate that is needed to keep the new form of taxation REVENUE NEUTRAL is a commentary on the level of FEDERAL SPENDING, not the method by which you collect revenue.
What you status quo-ers are doing when you make this silly argument is to attempt to make transparency somehow a bad thing. It's not. It's wonderful, and one of the best features of a retail tax.
If the rate needed to bring in the same amount of revenue as the current (largely hidden) system is shocking, it is because the amount the national government is spending is shocking.
The day that the American people can see that fact plainly and clearly, right in front of their faces, is the day that political pressure will begin to build to reign in out-of-control federal government spending.
And the divide-and-conquer political tactics of the high taxers/big spenders won't work anymore, since every American's self-interest will be identical: A LOWER RATE!
Pure smoke - pure mirrow. The tax loopholes are eliminated in a national sales tax and there are no exceptions to the sales. Flat tax or NST either one would eliminate the volums of federal code we currently labor under.
And even if it DOES require a huge NSRT to remain revenue neutral why is that a BAD thing? Would it not be better if the people KNEW how much of their money the government was stealing?
I think you're right on target. After this "sales tax" we'll still get hit with state, local, school taxes etc. There'll be no exemptions, only the poorhouse!
The Cat is Out of the Bag. Thanks for the summary.