As I see it the individual does determine what they spend on necessities, but the government determines how much the check should be by multiplying the poverty level times the tax rate and dividing by 12 for each month, thus an individual or family may be rebated more or less than they spend on necessities.
Here's how I see it:
The prebate check for a one person household is $170. At the NRST rate of 23% how many purchasing dollars does that cover? The person can purchase $739.10 worth of new goods and services a month. The 23% retail sales tax paid on the purchase of $738.10 worth of new goods and services is $170.
Only the individual knows what is a necessity for himself or herself. It may be groceries; it maybe restaurant meals; it may be tobacco products; it may be medicine; it may be a new bicycle; it may be a new Kirby vacuum cleaner; it may be booze; it may be needle point; it may be a new puppy; it may be new tires for the car; it may be car insurance; it may be lawn care service; it may be jewelry; it maybe a snowmobile suit; it may be a computer; it may be a washing machine; it may be baseball season tickets; it may be ________. Anything and everything that is sold as a new item retail a person may consider a necessity.
Yes.
They may decide on their own necessities.
HR2525 asserts that there is a certain level of spending that should be without taxes. Regardless of how you choose to use up your tax-free purchases, there is a defined level of purchases that are made tax free.
Similarly, it asserts that only discretionary spending should be taxed.
To synthesize these assertions, it was concluded that untaxing necessities of life (as defined by the individual) would satisfy both of these. The ned result is that necessities are not taxed while the remainder is discretionary and is taxable spending (by definition that which is not necessary is discreitonary).
THere is no question in my mind, after studying the bill for years, that the mechanism used to untax is a refund of taxes - as it is a refund, it is not an entitlement. Money does not flow from one individual to another individual. Money flows back and forth between a single individual and the government.
The level of tax-free purchase is set at the HHS poverty level. See ancient_geezer's many posts for definitions and links if desired. Contrary to the assertions of another poster, the poverty level is not arbitrarily set by a bureaucrat without oversight by elected officials. Again, see the links from ancient_geezer.
The question I still have is about changing the level of tax free spending at some point in the future.
COngress sets the actual tax rate. I want to know more about the mechanism behind the potential changes in the level of tax free spending...
From an economic and a political standpoint, the overall tax rate will have trememdous downward pressure on it. The left, however, will put upward pressure on the level of tax free spending. But if the level of tax free spending increased, so would increase the overall tax rate.
So there will be competing interests, mitigated by the fact that the left will be less motivated to raise rates on themselves. As it is now, the left is desirous of raising tax rates on only SOME... but the nrst makes an increase in the rate afect ALL voters and ALL individuals.
The left is further hampered by the daily routine of individuals pulling green cash from their pockets to pay for the machine. There is a certain segment of society that, regardless if someone has told them their spending is tax free, will still perceive that they're paying tax when they pull cash from their pockets. This segment (usually the beneficiary and supporter of the left) will no longer be in the left's corner.
So while there will competing interests in setting the overall rate and the tax-free rate, the overall rate has far more power imo. But I'm open.
Geez, can you help with me understanding the mechanism employed by hr2525 in regards to changing the tax free rate?