If you have NOT visited the numerous sites www.salestax.org, www.fairtax.org, please do so as they have quite extensive FAQ sections.
I have a few tax paid bucks put away myself and would like to think that any change to the NRST would include a 1 or 2 year declaration period during which folks could present evidence of such investments and receive an offsetting one-time payment equal to the NRST they'd otherwise have to pay. It would give the IRS people something constructive to do while they were cleaning out their desks.
Having said that, you and I are ALREADY getting hammered AGAIN NOW for another 20 to 25% EMBEDDED business tax and compliance hit buried in the cost of the things we buy! MOST or all of that would go away under the NRST.
And, you know what? If I knew my grandkids would be spared the total BS of the income tax from THEIR lives, I'd gladly pay the NRST WITHOUT the offsetting credit thing.
If you check up on this thread you'll find that I'm willing to consider the notion of a NRST, but there are serious concerns that need to be addressed, including the concerns of retirees and people halfway through their careers. How is this going to impact them?
You may wish to look at my reply to valkyrieanne #505 & 506. Your response is invited.
Also, at one point I invited Wille Green to post a summation of his objections to the NRST, which he was kind enough to do. His summation included some very reasonable concerns.
Willie Green only offeres two primary objections in his summary:
The primary criticism of a sales tax is that sales taxes are inherently regressive.
Not a characteristic of the the Linder NRST, on one hand Willie deplores the family consumption allowence that is designed to remove such regressivity from the NRST, and then complains that NRST's are inherently regressive. Yet has no compuctions about the graduated aspects of personal exemptions and deductions in income taxes.
Another inherent effect of a sales tax is that it discourages consumption of the item being taxed.
Income/payroll tax systems discourage consumption to even a greater degree by limiting income to begin with, as well as the effects of embedded costs of compliance and corporate taxes on prices. The simple fact is the NRST removes the tax burdens and cost associated with them (65 cents for every tax dollar collected) providing for competitive price reductions offsetting the 23% NRST. Net result is virtually no change in overall price price paid (NRST plus new shelf price) of consumption goods and services.
Both have been rebuted many times as well as his other more specific diatribes against the NRST.
Please note that Willie Green's concept of his ideal tax system is a combination of 20% tarrifs (to replace corporate income taxes leaving payroll taxes in place) and individual income taxes with a $10k per person exemption. Neither does away with the intrusive nature of the income tax, and the former is a formula for death of foreign trade and hides taxes from the view of the electorate, while the later is just more of the same ole tax the rich but not me style of taxation that we should be trying to get rid of.
- "There has been a shift in the relationship between individuals and government, he argues, such that fewer and fewer are paying taxes at the same time that more and more are receiving increasingly generous benefits. If it becomes the case that most voters do not bear a financial burden for this largess, then there will be little to restrain--and significant political incentives to encourage--the continued growth of government. And at that point, DeMint warns, we have reached a major crisis in our democracy."
Milton Friedman as quoted by Northwest Florida Daily News, 10-16-2000:
Walter Williams, World Net Daily, 10-25-2000
If you're among those who pay little or no federal income taxes, what do you care about tax cuts? Moreover, if you think tax cuts pose a threat to government handout programs, you might be openly hostile and support Al Gore's silly "risky scheme" talk. So many Americans paying little or no federal taxes makes for a natural spending constituency. It's like me in the restaurant: What do I care about extravagance if you're footing the bill?
To remove visibility of taxation from the individual, is to remove the goad which assures accountability of government to the electorate. Federal tax rates are high because a majority of the electorate do not share proportionately in the burden their demand for largesse imposes on the minority of citizens.
The siren call for representation without taxation is the formula that got us where we are at today. The ability to hide or disguise taxation from the view of large sectors of the electorate allows the Congress to get away with the creation of the evergrowing monster that it fosters.
Liberty and freedom have a price, responsibility. If that price is avoided there are no brakes on the growth of government, the ultimate result is the end of freedom through creeping socialism.
Right now the bottom 60% perceive little to no "Individual Income Tax" burden,(in many cases even a handout) and 70% of the voting public clamors for more from government looking for the top 40% of income earners/producers to foot the bill. That perception continues to grow ever stronger by eliminating even more participants from the Federal Individual Income Tax rolls as proposed in the tax reduction proposals through changes in personal exemption limits and other mechanisms such as the EITC.
What kinds of economic distortion will the NRST be likely to produce? What transactions/activities/decisions will be affected by the removal of the old system and the implementation of the new system? There will undoubtedly be both positive and negative ramifications. What will the most likely ones be, how extensive will their effects be and will the good outweigh the bad?
I would refer you to the following articles for a clearer understanding of the NRST in these areas. You are right it is an indepth set of questions, and they can only be replyed to with a great deal of detail. The following discussion and analysis papers should provide some indications to the answers of your questions:
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Tax Analysts Document Number: Doc 1999-32575 (25 original pages) Citations: (October 8, 1999) Dan R. Mastromarco is a partner in the Argus Group of Washington, D.C. According to Mastromarco, distributional equity, or rather the perception of distributional equity, is the fulcrum on which the debate over tax reform will pivot. Is a consumption tax "fair" when compared to an income tax translates into: "will taxpayers pay their just share of taxes?" The orthodox wisdom, the author says, is that since the poor consume more of their income than the rich, a sales tax must be less progressive than an income tax; some say it is must even be regressive. However, he argues, this orthodoxy is based less on science than bias. Conclusions about distributive equity cannot be drawn until we (1) resolve the standard by which fairness is judged, and (2) are able to accurately measure distributional burdens against that standard. The author argues the current means of measuring distribution -- income taxes paid over annual income -- presumes the standard is correct. He asserts that other means of measuring distribution, such as taxes paid over consumption, may yield more useful comparisons. Moreover, the author argues, even if we accept the standard that distribution is properly measured as taxes paid over income, the results are today knowingly misrepresentative because they resemble snapshots taken with the wrong lens and the wrong filters. The author asserts that all known biases in distributional methodologies, assumptions, and presentations are now in favor of an income tax. An honest debate over consumption taxes can only follow re-evaluation of distributional assumptions, methods, and manners of presentation. The author recommends steps that can be taken by credible institutions to make honest comparisons of distributional equity. Only then, the author asserts, might a consumption tax can be properly evaluated as the debate progresses. ====== FULL TEXT ====== What's So Fair About a Tax on Income?
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| http://www.cato.org/pubs/pas/pa-302es.html | ||
The Hidden Burden Of Taxation:
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The following one has somewhat of a caveat as its author suggest that total federal taxation should be increased by 25% over what it is today and his numbers and analysis of the effects of an NRST reflect his basic assumption there. The proposed Linder NRST, maintains revenue neutrality with current tax law and does not increase the tax burden as this Author proposes one should. However, keeping that in mind, his comments on a NRST and it expected effects on the economy and analysis of transition problems(from a government perpective of making sure no-one gets out of pay tax on tax deferred investments, IRA's and such) are worth the read, especially noting that his analysis is of a very worst case scenario a full 30% NRST as opposed to the 23% NRST proposed in the Linder bill.
| http://waysandmeans.house.gov/legacy.asp?file=legacy/fullcomm/106cong/4-11-00/4-11kotl.htm |
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Statement of Laurence J. Kotlikoff, Testimony Before the House Committee on Ways and Means Hearing on Fundamental Tax Reform April 11, 2000 |
I have a few more such papers and articles by Jorgenson and Others that I have to locate the references on. However I suspect the above should keep you busy for the time it takes to find the additional papers on the net.
I'll try to address you question of my own research and contemplation on the subject later but for now these are primary sources for you to refer to.