Tax package Bush will sign guts middle class {"Fair" Tax replaced by VAT in "Tax Reduction" Bill}

WorldNetDaily / Commentary ^ | Posted: May 26, 2003 | By Joan Veon

[Bloody Sam Roberts]

But the VAT's levels of taxation are no different than the tax impact of the income tax.

Then why bother with it? Because the levels can easily be increased down the road.

[HatSteel]

I do not want the VAT. I do not want the income tax. They all get passed down line to the ultimate consumer by getting built into the price.

NRST is best.

[Bloody Sam Roberts]

NRST is best.

I agree. It is best. That's why it'll never happen.

[Dianna]

Been a strong advocate of the NRST ever since then.

Most of these discussions are way over my head. So speak slowly :)

If we go from an Income Tax to NRST aren't I going to be taxed twice? The money was taxed when I made it, now it's going to be taxed highly once again as I spend it.

How will we ensure that once a NRST is in place that we will not get an income tax too?

[ancient_geezer]

The money was taxed when I made it, now it's going to be taxed highly once again as I spend it.

You get taxed on it again when you spend it as it stands right now, with the current income/payroll tax system.

DO YOU PAY YOUR INCOME TAX
AT THE SUPERMARKET?
by D. Sherman Cox J.D. L.L.M. Taxation

The full impact of the federal tax system(taxes in gross wage/salaries & other compensation + business income/payroll taxes) added onto the base(taxfree) price of retail consumption goods and services is 36% for federal taxes alone.

The NRST replaces all income and payroll taxes now in place. As such, businesses will no longer be hit with taxes such and the costs of complying with the tax code that are all embedded into the price of the goods and services you buy now will go away and you will receive your full gross paycheck to boot.

Doing away with these tax costs of business will allow shelf price of goods and services to drop 20-30% depending upon particular product, the NRST is placed upon that new price. See Reply #74 above for references on that. Since the NRST is 23% (taking the place of income & FICA taxes) and prices will fall a similar amount, the net result will be that people will be able to purchase the same amount of goods and services NRST + Shelfprice as they do now with taxes & compliance costs embedded in the price of product. The difference being you receive a receipt detailing the NRST and price of products separately.

Second, under the NRST proposal all legal residents will receive the Family Consumption Allowence, which takes the place of personal exemption and standard deduction of the income tax leaving the up to the povertyline of expenditure untaxed. See Reply #60 above.

Third, only money spent on retail new goods and services will be subject to the tax. Money that is saved or invested, and reinvested earnings are not taxed. Thus whatever you choose to invest or save will remain untaxed.

The net effect of the above will provide more than a 15% advance in standard of living in the United States.

[ancient_geezer]

How will we ensure that once a NRST is in place that we will not get an income tax too?

1st, the NRST repeals the all income and payroll taxes;

2nd, the NRST legislation mandates the destruction of income tax related files and documents;

3rd, the NRST legislation defunds the IRS, and provides for the transfer of NRST tax administration to state government.

4th, the NRST legislation calls for the repeal of the 16th amendment and expressed prohibition of all income and payroll taxes.

The rest is up to the American people to see it done, and keep it that way.

[Bigun]

You can find answers to a great many of your questions Here.

Take your time and read through the list.

Regarding this question "How will we ensure that once a NRST is in place that we will not get an income tax too?" I will simply paste text taken directly from HR 25, The FairTax bill and you can judge for yourself!

SEC. 301. PHASE-OUT OF ADMINISTRATION OF REPEALED FEDERAL TAXES.

(a) Appropriations- Appropriations for any expenses of the Internal Revenue Service including processing tax returns for years prior to the repeal of the taxes repealed by title I of this Act, revenue accounting, management, transfer of payroll and wage data to the Social Security Administration for years after fiscal year 2007 shall not be authorized.

(b) Records- Federal records related to the administration of taxes repealed by title I of this Act shall be destroyed by the end of fiscal year 2007, except that any records necessary to calculate Social Security benefits shall be retained by the Social Security Administration and any records necessary to support ongoing litigation with respect to taxes owed or refunds due shall be retained until final disposition of such litigation.

[Taxman]

Thank you for your interest in "The action and passion of my life!"

I see that my ol' buddy, the Ancient One, has jumped in, whilst I was doing some needed computer maintenance, and answered all of your questions in his usual impeccable style.

If you have any questions at all, I will be happy to answer them on this thread, by FReepMail, by email (fdavis@salestax.org) or by toll FRee telephone (877-937-6778).

FReegards

FRank

[Taxman]

Under the NRST, mortgage interest and charitable contributions are paid with untaxed money, ergo, both are "tax FRee!"

Remember, under the NRST, a person is not taxed until he/she purchases a good or a service for his/her own use, consumption or personal enjoyment. Neither mortgage interest nor charitable donations are considered to be "consumption" in that sense, thus neither event is a taxable event.

[Taxman]

LOL! Educate, educate, educate! Eventually, we'll get the critical mass on our side.

George is coming along nicely, as you so astutely observed. We'll get there yet!

Thanks for jumping in.

[Taxman]

Thanks, Bigun. Ever so often, the Muse hits!

[Dianna]

Thanks for the info...I have lots of reading to do!

[Constantine XIII]

No worries, this gal is WND's token liberal. She doesn't seem to represent the majority of opinion there by any stretch. :o)

[Taxman]

You are most welcome.

[lewislynn]

Economists Gary and Aldonna Robbins of the Texas-based Institute for Public Policy examined the case of dry cleaning a shirt, with a particular eye toward uncovering the hidden costs of taxes in price.

It's strange that all of the "hidden costs of taxes" for the suppliers is listed as (the bogus) 25 to 33+% of the gross amount paid, yet the shirt cleaner(s) themselves are paying (passing on) less than 2% of their gross. Even the shirt cleaners profit is a more realistic 5+% compared to the other bogus costs your "economists" claim.

If (as your "economists"(?) claim) the suppliers were passing on 25% of their gross in federal tax, they would have to have 75% taxable profit at a 33% tax rate...(.333 X 75 = 25)

See how impossible if not stupid it all looks now?

Your claim of 20 to 30% reduction in prices is impossible and an outright lie.

[ancient_geezer]

If (as your "economists"(?) claim) the suppliers were passing on 25% of their gross in federal tax, they would have to have 75% taxable profit at a 33% tax rate...(.333 X 75 = 25)

All the costs to them are passed on in price, that includes the federal taxes embedded on their labor costs, FICA, excises, tariffs, all the taxes passed to them by the prices they pay to their suppliers and laborers who they pay. The entire tax bill is passed through to the final product purchased by a consumer. That tax bill accumulates to a total of 36% added on to the price of goods where taxes were not levied at all.

The 23% that prices can fall are due to the federal taxes plus cost of complying with federal taxes throughout the chain of production of suppliers to the final retailer as well as the retailer himself. The producers of his chemicals and supplies, the transporters of those supplies, and their suppliers all contribute to the cost of the final product purchased by the consumer.

Corporate income tax of one retail company selling the final is but a fraction of the total federal tax burden embedded in any retail product.

The full burden embedded in products we buy when all the cost of government is actually included, state & federal, is actually closer to 70%. The small portion of 20-23% is only that which applies to federal taxes that the chain of production bears not counting in the taxes remitted by their laborers that are embedded in wages & salaries.

The total bill embedded in the cost of goods and services, includes all taxes paid from wages, businesses, and the costs of regulations impressed on us from both federal a state.

Federal taxes                  22.4% of income(taxfoundation)
Fed Compliance costs     14.8% (Paine)
State & local taxes             11.8% (taxfoundation)
State Compliance costs        7.4% (Paine)
Regulatory costs                 12.7% (Hodges,Crain)

70.1% of your income is now consumed by government

If govenment were magically removed from the equation, the cost of products would be 30% of what they are with government doing its thing.

See how impossible if not stupid it all looks now?

Your strawman certainly does look impossible and stupid.

The price of a product includes all the costs that go into its manufacture, or the business soon ceases its existence.

[Bigun]

The price of a product includes all the costs that go into its manufacture, or the business soon ceases its existence.

Why do you suppose that simple truth is SO hard for some to grasp?

[lewislynn]

The price of a product includes all the costs that go into its manufacture, or the business soon ceases its existence.

Recent history of rising costs (especially fuel and taxes) and falling prices will dispute that...Maybe you haven't heard about deflation fears.

That still doesn't prove your fallacy of 20, 30, 40% reduction in prices. Businesses don't pay 20,30, 40% of their gross income in federal taxes as you clowns continue to imply.

Only profit and gains are taxable. If a business was making an unheard of 20% profit and paying 38% tax rate the best you could do is 7.6% of the gross...

So let's do real math.
7.6% reduction in price, then
Increase the price 30% for your sales tax and you have,
an INCREASE in price(s) (cost of living actually) of 20+%.....

Oh and BTW, it doesn't matter how many businesses in the supply chain are passing on their 7.6% of their gross in tax, it's still only 7.6% of the gross in the final product...It isn't a VAT/income tax like you would like other mindless fools to believe.

[kevkrom]

Lewis, what you are forgetting is that the income tax acts as a VAT. The final producer may not be paying 20-40% directly (but remember all of the non-profit income taxes it already pays, for example, the "employer's" 7.15% share of FICA), but it also passes along all of the taxes paid by the suppliers lower down in the production chain.

Let's just say that the effective tax rate for the business is 5% of sales. At four stages of production, the overall taxes in the final price is just under 22% ( 1.05 ^ 4 = 1.216 ). For an 8% effective tax rate, the VAT effect is 36% of the final price.

Now, we're talking on average here. It's easy to point to a particular service (no manufacturing chain) business and its overall federal tax rate, and say "see, this 20-40% number is wrong" -- what we are talking about is that when looking at all businesses, the average embedded tax is in this range.

[ancient_geezer]

. If a business was making an unheard of 20% profit and paying 38% tax rate the best you could do is 7.6% of the gross...

A tax on profit is not the tax the NRST repeals, you have left out the payroll taxes paid by the company, the 65 cents of costs to comply with tax laws for every dollar collected by government, and the taxes and costs embedded in the prices the company pays to its suppliers for goods and services.

The entire chain accumulates to a total of 20 - 30% producer price reductions for just those business taxes and the costs attendant with complying with them repealed by the NRST.

You like to pretend the only tax of interest is the business income tax. It is only one of many and not even the major tax most businesses pay, even though it is one of the most costly for them to comply with.

The NRST repeals all income and payroll taxes not just corportate income tax you like to spin.

Of all federal taxes, only excises & tariffs (which comprise less than 6% of the total federal tax take) are not repealed by the NRST. Along with the taxes repealed, the costs of complying with them disappear as well.

The result of repealing those taxes and the removal of the costs of complying with them is what results in 20-23% reduction in producer prices since business do not pay the NRST on their purchases. The NRST is only collected from the final retail customer.

Your attempt to limit the analysis to only corporate income taxes paid by the retailer, is incomplete and totally erroneous. That retailer, must include the total costs of taxes passed on to him in the prices of the materials and services he purchases to deliver a product to you. The cummulative sum of all costs to provide a retail product to the consumer must be reflected in the price of that product.

Sorry lewislynn, but your analysis simply falls short of the real situation.