National sales tax gains momentum

WorldNetDaily.com ^ | Wednesday, November 13, 2002 | By Jon Dougherty

[JohnHuang2]

Yes -- and, as the Gipper is wont to say, you ain't seen nothing yet! ;^)

[undeniable logic]

I don't care about the $100,000 price... sell price is all relative.

Let's say $500,000. How much must you earn to buy a $500,000 house in cash (no mortgage). If your avg income tax rate is 28%, then you must earn $500,000 / .72 = $694,444.44.

If there is no income tax, then you must earn the price of the house + tax. Let's say the tax rate is 25%. How much will you have to earn to buy the house?

$500,000 * 1.25 = $625,000.00.

and for your final comment about interest rates... I will try to keep this simple. Let's say you had been wanting to start a business, but the cost of capital was too high. Well, one year ago, interest rates dropped like a rock, so you borrow money and start a business. How long do you think it would take, on average, to create a profitable venture that employs several people? It does not happen immediately. To say interest rates dropped 6 months ago, but you don't see immediate results is looking far too much in the short-term. If a company sells a 30 year bond at low interest rates, you will see the impact during the 30 years, because costs will be lower due to lower interest payments. It takes time for the money obtained through the sale of the bonds to be put into an economically beneficial use.

Undeniable Logic

[nopardons]

Rightyo ! :-)

The Dems are on the slippery downside slope. Pelosi is going to help them increase that; so is algore ! Did you hear that he now advocates Socialist Medicine, a la England and Canada ?

[JohnHuang2]

Pelosi is going to help them increase that

Which is why I say, Go-Nancy-Go! *Very wicked grin* ;^)

[JohnHuang2]

Did you hear that he now advocates Socialist Medicine, a la England and Canada ?

Wait a min....Al who? ;^)

[nopardons]

Okay, you'll have to double + the now used house price ; however, that's still not the crux of the problem; which you still can't see. So, let me explain it again. using your figures.A house selling for $500,000 plus a consumption tax is, per your figures $694,444.44. Then you claim that a person would have to earn aa nontaxed $625,000.00. That still doesn't match the $694,444.44 and excludes all other expenses. Expense, which the 25 % ( probably higher ) consumption tax would have taxed. It also leaves out the realestate lady's fees, the tax ( in some places ) on the purchse, and the consumption tax on moving, new furniture, drapes, paint, the painters, etc. ; all on top of local sales tax and property taxes. I don't know about YOU, but that all puts me off .

Neither have you addressed the fact that you can't just " do away " with the income tax, immediately and install this tax. There is also NOTHING to stop an income tax being reintroduced, ON TOP OF THE CONSUMPTION TAX , at some point in time.

Greenspan has been lowering interest rates for a year + now. Of course I know that startups take time. I probably understand this stuff better than you do. LOL

[nopardons]

I'll join you in that " wicked grin " and a full throated " GO NANCY GO ". LOL

[nopardons]

The " tree ". ( another wicked / evil grin )

[JohnHuang2]

lol

[nopardons]

Giggle

[undeniable logic]

You misread what I said. A house + consumption tax is $625,000.00. If there was no consumption tax, the house would cost $500,000 + the income tax required to pay $500,00, which comes to $694,444.44. It is cheaper with the consumption tax. Now, of course, you could argue that the consumption tax rate should be set so that the tax is equivalent to the income tax required (otherwise, there would be a tax revenue drop).

The same logic applies to real estate lady, moving, furniture, drapes, painters, etc.

The argument that prices would drop by 25% and then add consumption tax so that you are at the same place is ludicrous. Essentially, the people that claim this are saying that all prices would be about the same after the tax, but there would be no income tax. This is dumb. The real benefit arises from the reduction in compliance costs. Also, it becomes increasingly difficult to make a consumption tax progressive. AND, individuals would no longer fear an audit. One other thing, it gets rid of hidden taxes (like employer paid taxes, property taxes applied to businesses, etc.)

What you are missing is during the initial construction, none of the construction items or work would have a consumption tax, because that is the manufacturing process. Only when it is sold as a new home would it be taxed. My guess is that when later sold, the difference in sales price would have to be taxed.

I do agree that the problem is that an income tax could be reintroduced.

What I personally would like to see is an amendment that allowed the only form of taxation to be a flat consumption tax. No income taxes, no property taxes, etc. It would consolidate all the taxing authorities, thereby significantly reducing compliance costs. Also, it would become extremely clear to the average joe how much he is paying in taxes.

Undeniable Logic

[nopardons]

Wait just a darned minute ! If there IS a consumption tax, on everything, then there WOULD be a tax on what is bought to construct a house. Since I was talking about an already built one, though, one built prior to the introduction of a consumption tax, you've managed to strengthen MY side of the argument AND proven that a consumption tax would then make buying the house more expensive than buying one under today's ( which needs fixing and lowering ! ) income tax situation.

The article says absolutely nothing about property taxes, state taxes of any and all kinds, being done away with ; just a change in the FED GOV system of tax collecting.Neither does it claim that a consumption tax could never be increased. It could and it would be.

All in all, not that many people get audited. Have YOU ever been ? I have and we did nothing wrong. It's inconvenient, a pain in the neck, but not the end of the world.

The Fed Gov can't do away with local property taxes. That's a state's perogavtive and is not even a state doing this, but a local community.

The majority of states have state income taxes and N.Y.C. even has a city income tax. This article and the vast majority of posters totally ignore these saliant facts! Also being totally ignored, are the local sales taxes, which in Chicago and N.Y.C. are almost 9% of most purchases. Since a 25% consumption tax, on top of all of that, would be close to 40 % taxation and NO ONE, not even the highest tax rate level, is that high, this would be punishing. BTW, nowhere, in this article is a rate even mentioned. For all we know, it could be a 20 % or a 25 % or a higher rate. What if it's 30 % ? Where's the tax saving then, for most people ?

[Cincinatus' Wife]

Bump!

[undeniable logic]

First, you are missing a critical part of the consumption tax. It is just like any retail sales tax. Example, let's say you own a gas station and you want to buy sodas to sell in your station. You do not pay sales tax when you buy it because you are tax exempt - you only charge the tax when it is sold in your store. There is no double tax. Same thing goes for manufacturing, and at the heart of it, a home is a manufactured product.

In theory, if set correctly, the taxes paid by an individual under a consumption tax or income tax would be identical. Let me provide a simple example. I earn $100 a year. Income tax is 25%. Therefore, I pay $25 in tax and can by $75 in product.

Now, let's say I earn the same $100 a year. Consumption tax is 33%. I buy a product for $75. The tax is $25.

See, there is no difference (if taxes are changed appropriately). My earnings are $100 in either case. I get $75 in either case. I pay $25 in tax in either case.

The difference is compliance costs. Let's say that compliance cost for an individual is 10% of income taxes, but for a business it is 5% of consumption taxes (increased efficiency) - in fact, I would say that since all businesses are already processing sales tax, there would be relatively little additional cost in asking them to include a federal sales tax to their local sales tax, all-the-while eliminating all individual taxpayer's compliance cost.

Also, the fed could do away with local property taxes. This doesn't mean they will, but they can.

Here's my concern. Govt's need a certain amount of money. They know people will be pissed if they collect it all in one place (because it is an enormous amt of money) so they split it up in all different kinds of taxes. There is a cost in collecting each tax. There is no question that a consolidated tax collection methadology would dramatically reduce the cost of collecting a tax. It would also dramatically reduce the taxpayer's time and financial cost of delivering the tax to the taxing authority.

I don't understand why you argue that changing an income tax to consumption tax would increase your taxes (it clearly depends on what the tax rate is) - it does not matter in any shape or form what methods and rates local govts use to collect revenue.

I do agree that local taxs in some communities are outrageous, but it is still additive to the income tax.

For example, look at your NY example. Case 1: 25% income tax 9% state sales tax. $100 - $25 income tax = $75. $75 / 1.09 = $68.81. This is how much product you can buy with your initial $100 in earnings.

Case 2: 25% Federal Sales Tax + 9% State Sales Tax = 34% total tax. $100 / 1.34 = $74.62.

You get to buy almost $6 more in product. In order to get the same amount of product, the federal sales tax would have to be $100 / 68.81 - 1.09 = 36.3%.

It's all symantics and you are either falling into the trap or spewing the trap for others to fall into.

Undeniable Logic

[nopardons]

You're still wrong. Sales tax in N.Y.C. is different from the sales tax in Buffalo, which is still different than what it is in Post Washington. Sales tax, in Jersey, is lower , than it is in Manhattan . Why is that important ? Because people, who live in N.Y.C., often shop in Jersey, to get a better rate. Now, take that a step farther, and you see the complications. What about internet sales, where now there is NO sales tax ? The government would have to regulate AND spy on those purchases, with a consumption tax ; not to ment the fact that those entities are NOT set up to get and transmit to the fed gov the new consumption taxes and they won't want to.

You're wrong about businesses already collecting sales taxes. Not ALL business and services are now taxed. They don't want to have to do this paperwork and what happens when ( and it will be ! ) things get screwed up ?

Let's see ... sales tax on stocks/ options / etc. now , commisions, added to a consumer tax, when the markets are just beginning to recover ? Hmmmmmmmmmmmmmmm...

On line trading ? WHO PAYS AND HOW DOES THE FED GOV MONITOR THAT ?

Right now, the top 1% pays a 38 % Fed Gov income tax. In N.Y.C., a purchase from Tiffany, would then be 39 % taxation ; with a consumption tax. There would still be a city and a state income tax, and a property tax ... now also on renters.That increases , NOT decreases their taxation.So, Madame decides that no, she really doesn't need that necklace / watch / ring / crystal vase / whatever and down go sales. She, instead, buys something as nice in Europe. The tax, when returning to the USA is lower than the USA's new consumption tax !

Now, on to " complience " costs. As I have already pointed out, many services and businesses are not now collecting sales taxes. All of a sudden they must. That adds to the price of the goods and / or services. There goes your theories, right into the ashcan ! :-)

This won't even come to pass. I don't know WHY any of us are even bothering with this. It's a pipedream, which won't make things easier, less complicated, nor put more money in any of our pockets. A falt tax is better, IMHO.

[nopardons]

falt = flat

[Mad Dawgg]

"Remember the " LUXURY TAX " ?

Yes the Luxury Tax was terrible since it was ON TOP OF THE INCOME TAX.

NRST proposes to Emd the Income tax.

All that an Sales tax over an Income tax does is take money on the back side instead of the front side.

The main problem with income tax is "THE GOVERNMENT GETS IT'S MONEY BEFORE YOU DO!" You have no say in the matter.

With a Sales tax you decide how much you want to pay buy your buying habits.

Further you don't have to PAY someone to figure out how much you owe the damned government. This fact in itself is worth all the concerns you have.

[Mudboy Slim]

Yo, dude...ya have anything to do with this?!

FReegards...MUD

[.30Carbine]

However, if the President would truly use the bully pulpit and his vast political capital to finish the educational job, we could get there very, very quickly...and the end result would be what others on this thread have said...April 15th would be just another spring day, and George W. Bush would go down in history as one of the greatest of our Presidents.

mega ditto amen and hallelujah bump

[RFP]

Thanks for the ping EV. One interesting side benefit of NRST would be that, as it would slightly raise the prices of all new items and taxes would become VERY VISIBLE, Americans would again become "quality conscious". We have become a throw-away society.

Few people repair things anymore - it's too easy to pitch them and go to WalMart (province of China) and by another cheap piece of junk. As such, people don't look at buying products for the long run and manufacturers know this and design and build their products for a designated life-span accordingly. Trust me. I worked in the automotive industry for fifteen years. American cars are built to last SEVEN (7) YEARS because that is the duration for which the law says that a manufacturer must be able to provide repair parts! Now you know why I drive a Volvo (has over 200k miles on it and compression specs on its original untouched engine are still like new).

Americans have the know-how to build the best. At least we used to. Europe and Japan now have the reputations for high quality products. NRST would help bring this back to the good ol' USA. We'd see Americans once again being frugal and industrious fixing and repairing things around the house. Used items that you see everyday in the classifieds would sell like hotcakes. There would be less trash and landfill... the list of side benefits to NRST goes on-and-on! I have my fingers crossed.