Gutknecht pushing national sales tax

Pioneer Press ^ | 11-15-04 | ap

[Rakkasan1]

MINNEAPOLIS - Rep. Gil Gutknecht is pushing legislation that would replace the federal income tax with a national sales tax.

"Think of a world where there is no income tax, where you get to keep everything you earn and you pay the tax man when you buy stuff," Gutknecht, R-Minn., told the Star Tribune of Minneapolis.

[Your Nightmare]

Price decline arising from increased productivity and cost savings is not deflation my friend. It is a properly operating economy.

Price declines are deflation. Your "properly operating economy" is nothing more that a computer simulation residing on some hard drive somewhere. It's not the real world. Jorgenson himself says his model overstates the results in the short term. Won't you even listen to him?

[Your Nightmare]

That is what gives rise to the 4.3% decline in consumption in the first year of an NRST resulting falling prices received by business without loss of profitability and is totally consistent with Gravelle's paper.

Maybe you should tell her that. Have you even read it?

[G Larry]

Thanks!
The reason a 17% NST makes sense is due to the LARGE underground economy.
(Drugs, construction, day-labor, unreported tips, mob money, gambling, etc.)
Could increase Fed income by 15%.

[Bigun]

The issue and superiority of the NRST is not one that allows governent be able to plunder the citizen for more, the issue of NRST superiority is one of personal liberty and empowerment that the NRST provides to citizen not the government and of superior economic performance.

This is the United States of America you dunce! That is the way it was supposed to be from the begining and WAS that way until 1913 when this communist inspired monster called the "progressive" income tax came into being!

[Zon]

Argh.

So obvious that you're speechless... that production is the engine that consumers rely on.

The post at 312 you didn't respond to, it's important to know if you understood it. Here is the pertinent portions of it with new notes in [brackets].

Producers follow consumer's lead. 309

You used the word "lead" to imply that consumption comes before production. 312  [Also, you used the word "follow" to imply that production comes after consumption.]

Producers decided that consumers should have cameras, cars, telephones, electricity, electric lights, dry cleaners, computers, VCRs, etc. Then they invented them, manufactured them and brought them to market to see if people would pay for their inventions. The producers lead the consumers to buy products and services they had never imagined. 312

A producer who makes stuff people aren't buying won't last very long. 309

True. People are by nature producers, not consumers. For a consumer must produce before they can consume. Production is the engine that drives consumption and the economy. 312

[ancient_geezer]

So you want a tax that's easy to evade.

Sorry your barking up the wrong tree.

Then the marginal rate has to be higher.

23% max marginal rate of the NRST is just fine against the 40%+ of the income/payroll tax system.

Honest people have to pay more.

Hmmm, the tax burden that a family of four will have at various annual expenditure levels as compared to that same family under the current tax law, (2004 income plus FICA/MC):

 

H.R.25 "The FairTax Act

 

And the economy suffers overall.

http://www.economics.harvard.edu/faculty/jorgenson/papers/baker.pdf

Revised April 12, 1999.
THE ECONOMIC IMPACT OF FUNDAMENTAL TAX REFORM
by
Dale W. Jorgenson Harvard University
and
Peter J. Wilcoxen University of Texas, Austin

This paper was prepared for presentation at the
Baker Institute Conference
on Tax Policy Reform
Rice University Houston,
Texas November 6, 1998

---

Under the Sales Tax the GDP jumps by 13.2 percent in 1996, but the impact gradually diminishes over time, falling to 9.0 percent in the year 2020.

[phil_will1]

"So tell us, YN, what criteria are you using in ranking the FairTax below that of these other tax systems?"

"The main issue is enforceability."

You HAVE to be kidding. You favor the current system over the FairTax because of ENFORCEABILITY?

[ancient_geezer]

 

Price decline arising from increased productivity and cost savings is not deflation my friend. It is a properly operating economy.

AR, Price declines are deflation.

LOL, well then give me that kind of deflation any day.

The Blessings of Deflation
Ludwig von Mises Institute

[phil_will1]

"What strawman. Jorgenson's model shows consumption dropping a large amount."

Incorrect. Jorgenson's study shows consumption dropping by about 9% in year 1, a lesser amount in year 2 and by about the 4th year consumption would have caught up to where it would have been under the current system. From that point forward, consumption is greater under the FairTax because of the greatly expanding economy.

Even in year 1, the net drop in consumption is comprised of a large decrease in consumption of exports partially offset by an increase in the consumption of US produced goods. GDP growth during that first year is an eye-popping 10.5%.

[phil_will1]

"Talk about straw men. I've only asked for a paper that verifies Jorgenson's claim. We've all been aware of Jorgenson's paper for a long time. Why would I ask for it? I have several versions on my hard drive and in print."

How many economic studies have you provided to support your desired approach to tax reform?

[Your Nightmare]

This is the United States of America you dunce! That is the way it was supposed to be from the begining and WAS that way until 1913 when this communist inspired monster called the "progressive" income tax came into being!

Over the last century, the US has become the greatest economic force on the planet. Maybe superior economic performance has nothing to do with the income tax.

[Your Nightmare]

23% max marginal rate of the NRST is just fine against the 40%+ of the income/payroll tax system.

The current rate has nothing to do with what we were talking about. If people evade the sales tax like you want them to do the rate will have to go higher. Period. The current income tax rates are higher because of evasion. A system less prone to evasion allows the rate to be lower. This really isn't that difficult to understand.

[Bigun]

Over the last century, the US has become the greatest economic force on the planet. Maybe superior economic performance has nothing to do with the income tax.

I would say that the US was the greatest economic force on earth LONG before the last century and has, somehow, managed to maintain that status despite the hugh albatros the communist inspired income tax hanging around it's collective neck. That, however, won't necessarily always be the case.

[Your Nightmare]

THE ECONOMIC IMPACT OF FUNDAMENTAL TAX REFORM

What was the rate he was using? It wasn't 23%. Did he add evasion into his model? [hint: no!] Jorgenson has since admitted that the FairTax rate the AFT is proposing is too low and that it would have enforcement issues.

Since taxes distort resource allocation, a critical requirement for a fair comparison among alternative tax reform proposals is that all proposals must raise the same amount of revenue. It is well known that the ST and AFT [Americans for Fair Taxation] sales tax proposals fail to achieve revenue neutrality and tax rates must be increased substantially above the levels proposed by the authors of the plans.

...

A very high tax rate of the National Retail Sales Tax provides powerful incentives for tax evasion and renders effective tax administration difficult. Although it is possible to mitigate compliance problems, controlling the erosion of the tax base within a tolerable limit appears to be more problematical.

- Dale W. Jorgenson and Kun-Young Yun (2002)

source

But you only believe the good doctor when it benefits your cause, right?

[Zon]

332 posted on 11/18/2004 9:02:00 AM EST by Your Nightmare (Honesty always outlives the lie. It always has. It always will.)

"Honesty outlives the lie. It always has. It always will." -- Zon 10/05/2002, 12, 63

[Your Nightmare]

I would say that the US was the greatest economic force on earth LONG before the last century and has, somehow, managed to maintain that status despite the hugh albatros the communist inspired income tax hanging around it's collective neck. That, however, won't necessarily always be the case.

I think the UK would have to be considered the dominant economy of the 19th century.

But this is really irrelevant.

[Your Nightmare]

You're so easy.

[Your Nightmare]

You HAVE to be kidding. You favor the current system over the FairTax because of ENFORCEABILITY?

I believe the discussion was about alternatives (eg. VAT, flat).

[Your Nightmare]

LOL, well then give me that kind of deflation any day.

The Blessings of Deflation
Ludwig von Mises Institute

Lew Rockwell has a lot of interesting ideas...

The Myth of the Replacement Tax
Llewellyn H. Rockwell, Jr.

That is why so many of the people and groups who want to scrap the income tax seek what they see as a politically viable solution. They want to replace the income tax with some other form of tax that would supposedly be more painless to pay. The favorite candidate here is the innocuously named national sales tax. We picture ourselves paying an extra few pennies on what we buy at the checkout counter and never again having to worry about income taxes.

In fact, the national sales tax would have to be 20 percent at the retail level in order to match the revenue generated by the income tax. If your computer cost $2000, you would pay an extra $400 to the government for the privilege of owning one. Sales would plummet in the official market, and a huge black market would emerge overnight.

The government response would be to initiate a vast crackdown on tax evaders, which means that no businessman in America could conduct a single sale without thorough reports to the revenue agents. As in Europe, they would have to crack skulls but because not everyone can be policed, enforcement would be even more politically corrupt than it is now.

source