1) Overall taxation would be the same as it is now - it equals what the government spends plus or minus surplus or deficit spending. This plan in no way cuts spending, it only changes the method of paying for government. It may cut compliance costs and increase privacy which are good things in and of themselves. 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). 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). 4) I heartily support putting CPAs and tax attorneys out of work and redirecting their energies to useful things like cost accounting. 6) Lets take a simple example. Joe Citizen is retired and has $1000 in the bank. He needs $100 per year to live on. When purchasing the goods and services he needs to live, he pays some corporate tax and some sales/excise taxes. 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 (paid for by other persons since Joe is retired) which pays for government services (assuming the gov doesn't run a deficit). Other persons than Joe paid those taxes in the prior state. Now Joe has to pay a share of them. Joe appears to me to be worse off.
Don't worry, it's a quite typical reaction at FR, - whenever facts interfere with emotion.
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.