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To: VRWC_minion

If I were spending 30% of my money on sales tax, I'd be using planners like crazy on large purchases to both avoid incurring the tax and to look at methods to lower the taxable consideration.

What do you do now to avoid the 20-25% embedded taxation costs in the price of say a large ticket item like a car today? Thw way I see it, sometimes the cost of avoiding a tax is greater than any benefit one might derive from avoiding it.

An example under the NRST, one may buy a new car, and pay 23% of the total payment in taxes, one could avoid the NRST by

1) building one yourself for own use (not a very cost effective thing to do);

2) buying a used one;

4) not buying a new car and investing instead;

5) start a company building new cars, creating jobs and income for oneself so you can pay both the tax and the principle plus gain on the new business you own; or

5) buying a new one on the black market with attendant risks;

All the tax planning it the world in a broad based efficient retail tax does not necessarily achieve an end result of a longterm gain without high risk. Any large potential gains will be arbitraged to nil, by the consumption markets involved, just as they are today.

The complexity of the income tax on the otherhand has created a system that rewards avoidance behavior through its specialized systems of deductions credits and depreciations that define what is left to be taxed. Tax planning can work there for a price, because the rules can actually decrease the basis of the tax. Not so easily done on retail products for personal use.

111 posted on 05/01/2004 6:45:00 PM PDT by ancient_geezer (Equality, the French disease: Everyone is equal beneath the guillotine.)
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To: ancient_geezer
I know you believe that the sales tax will simplify things and end the IRS but you deny simple economics. If you were to look at the planning and the various methods used to avoid the transfer taxes on gifts and estates you would see that the principles will apply to the National sales tax.

Experts will be available to provide methods to reduce both the existance of a taxable transfer or at least lower the taxable amounts.

112 posted on 05/01/2004 8:12:09 PM PDT by VRWC_minion
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To: ancient_geezer
FWIW, if investing is exempt from the tax then there are huge loopholes.
113 posted on 05/01/2004 8:13:15 PM PDT by VRWC_minion
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