Posted on 11/03/2004 10:42:24 AM PST by tgusa
"I'm not exactly sure how big the national sales tax is going to have to be, but it's kind of an interesting idea that we ought to explore seriously," the president said. The next day administration officials said Bush was not considering such a reform.
John Kerry's campaign quickly condemned a national sales tax, and Bush for potentially supporting it.
“If [Bush] has his way, every trip to the supermarket will feel like a visit to H&R Block and every day will be April 15. And now that this plan has been exposed, George W. Bush is trying to mislead the public into thinking it was just an off-the-cuff comment," Kerry spokesman Phil Singer said in an Aug. 12 statement.
(Excerpt) Read more at foxnews.com ...
What I am concerned about is what happens to retired people of fixed means. I am not one of them, but I do have parents who are
Here's one example: a loaf of bread that costs a dollar has 22 cents tax embedded in it. Strip out the embedded taxes -- which the NRST does -- and the loaf of bread costs 77 cents. But now you have to tack on a 23-cent retail sales tax to the bread. Thus, the same loaf of bread still costs 77 cents plus 23 cents in tax. Retired people on fixed incomes will ultimately pay the same prices they are now.
Actually, it's better than that. Under the income tax there is no sales tax on medicine. But, a $50 bottle of pills still has roughly 23 cents of tax embedded in it So even though the total price for the bottle of pills is the same under both tax schemes, the prebate check from the government pays the 23% tax.
See FairTax.org's research paper for futher analysis.
Thank you - finally a link to a detailed discussion.
So the NRST replaces all corporate taxes (which is what is embedded in the price of a good or service in your example)? I guess I need to read up a bit more since this "prebate" thing eludes me.
The IRS, a thinly camouflaged collection agency is a tool for social manipulation and control. It's imperative that the IRS be held accountable for its attrocities and eliminated. IRS Abuse Reports -- The Case Against the IRS
A word to the naysayers: Maybe you have immunity--a "get out of jail free card". Ninety-nine-point-nine percent of us don't.
I support a national sales tax, but I have to disagree with you here.
You disagree because you don't understand the economics of the Fair Tax scheme.
Person A pays $25 on his earned $100 and saves it. After the NST, he spends his $100 on a widget costing $100 and pays another $25 in taxes.
After the effect of the Fair Tax kicks in, lowering manufacturing & selling costs, he spends $75 on a widget that formerly cost $100 and pays another $25 in taxes.
Given, -- lower costs do not happen overnight. Income Taxes must be abolished substantially before the sales taxes are put into effect.
Again, it's not an NST, it's an NRST. There's an important difference. Maybe that's why you're confused.
BTW how much income tax, payroll tax, any gift or estate tax do you pay? Add those amounts to te 22% federal tax costs you pay in EVERY purchase - new or used. How much faster would your savings/investments grow if not for income taxes? Would you choose different investments not tax handicapped? or just let your investments grow faster? Would you be able to buy a larger home if interest rates fell to the tax free rate (a decline of say 25%)?
etc....
you're tied to the income tax b/c you don't pay any, huh?
While hr25 is not advertised as a spending reduction bill, IMO having every single individual pay the tax on every retail purchase will lead to pols actually wanting to be the one to lower taxes for everyone.... as opposed to today's system in which pols ignore cost and promise benefits. The way to lower taxes is increased productivity, more efficiency, and *gasp* lower spending. Wow- gov't with incentive to spend less.... So I think it will lead to reduced spending - jmho.
2) It does increase the amount of taxes on my existing stock of capital since under the present method of collecting taxes, the rate of taxation on the goods and services purchased is lower than it would otherwise be because income and capital gains are taxed (and make up revenue to the government which would need to be offset).
I don't follow this at all. How does eliminating the tax on investment growth make the investment less valuable??? The tax paid when spending occurs doesn't change - you're already paying 22% at the register for fed tax costs in goods and 25% in fed tax costs on services. So your investment grows faster and is taxed at the same rate when spent. Please explain if I've misunderstood your point.
3) I do take seriously the history of the income tax and am quite aware that the founders did not want this method of taxation (which required a constitutional amendment to legalize).
Me too. And the income tax was legal before the 16th- the 16th just allowed the tax to be unapportioned?Under a national sales tax, the tax on those goods must go up to cover the lost revenue to the government caused by the loss of income taxes...
No. Taxes at the counter will stay about exactly the same. Econ 101. Joe will have no federal deductions from his paycheck and will pay very nearly the same tax at the counter.
I told you earlier I pay approx 25% of my total income out in income taxes. Total federal income tax (not including SS payroll taxes or federal excise taxes) divided by annual gross income.
Well rehearsed line.
Anyway, the "hidden tax" is in the price. Not because of taxes in the product made overseas- but because products manufactured and sold in the US contain a tax component of 22%. This means that the prices of imported goods could be less because they are manfuctured for less- but since all comparable products have higher prices (due to embedded tax costs), imports rack up their prices to just nearly the same as domestic prices to maximize their profit.
OTOH if imports had the NRST placed on them, they would not have that gravy train anymore - they'd have to compete :0). All those imports - and we get lots - would have to have the nrst slapped onto their price.
Of course, since
a)most imports have the tax component removed via gov't subsidy before coming in and
b)importers are running huge profits on imports b/c they can still charge the prices that do indeed include a tax component
- then the nrst can be slapped on them without affecting their price much if at all.
Instead of the US taxpayer subsidizing imports, foreign companies would have to play on a more even field - 'course we still have payroll issues- but man what an improvement it would be.
No because I would not be able to afford a house 25% more expensive (actually more because I don't get to deduct mortgage interest under the NRST).
BTW a decline of 25% off of current 6% mortgage rates takes it only to 4.5%. Some ARMs are in the 3% range already.
It is you who is pretending not to understand.
Savings, whether taxed under the income tax or the NRST, are treated the same with respect to fed income tax costs tax at the counter.
Under the income tax, you'll pay 22% in federal tax costs on every good and you'll pay 25% in federal tax costs on services. Under the NRST you'll pay 23% on items for retail consumption and services.
You're just pretending not to understand this fundamental concept - and beginning to look, well.... you're pretending.
If that is your concern, then I think you will like the NRST.
I have ALREADY PAID the "22% in federal tax costs on every good and ... 25% in federal tax costs on services" on my savings!! Now you want me to pay an ADDITIONAL "23% on items for retail consumption and services" under the NRST.
Why will you not address this very important point? I'm not talking about any future earnings. I'm specifically addressing my PRESENT savings which I would spend in the FUTURE under the NRST. You want me to pay both inthe transition period.
Savings, whether pre or post tax, whether spent under the income tax or the nrst will have the same fed tax cost bite at the counter. Their is no difference. Please take a look at the quick link.
From the link, "...some erroneously believe that people who have invested in Roth IRAs will never pay taxes on this money again....
And their is no tax on SS benefits. And investments grow fastr tax free. And estates are passed on tax free.....
Go look at my example (post 199) again. In that example, the widget formerly cost $125. Now Persons A & B are paying $100 for it plus $25 in tax. But Person A has already also paid $25 income tax on his money and Person B has not.
Apologies for missing that, FC. And so it is clear that you would pay less under the NRST, as its maximum possible rate is 23%.
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