Posted on 11/18/2004 10:00:17 AM PST by LouAvul
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," said Minnesota Republican Rep. Gil Gutknecht.
That's the basic premise behind a proposed national sales tax, just one of many ideas for overhauling the nation's tax code. Under a bill co-sponsored by Gutknecht and more than 50 others, all federal taxes on income would disappear, but consumers would pay a 23 percent federal sales tax on their consumption - on top of existing state taxes.
Washington is abuzz with ideas after President Bush won a second term and immediately pledged to make "tax reform" a top domestic priority.
Nevertheless, the Senate's top tax-writer is expressing doubts about prospects for a major overhaul, perhaps dealing a blow to its chances. Sen. Chuck Grassley, R-Iowa, chairman of the Senate Finance Committee, told USA Today that comprehensive tax reform would be "difficult" to do.
Grassley said Bush would have to aggressively use his "bully pulpit" to win wider popular support.
(Excerpt) Read more at sacbee.com ...
Wal-Mart will lose business to the black marketers.
What a weird answer you gave.
My post stated a simple concept. Currently we are losing hundreds of billions of dollars in tax revenue in the underground economy. We also lose untold billions in lost productivity as people struggle doing tax returns and gathering required info.
I can't fathom what angle you are coming from, but you certainly do not make sense.
Pimps buy Coca Cola.
Shady businesses buy Coca Cola.
All these scumbags would be paying tax under a national sales tax plan. Currently, whores, pimps, drug dealers and millions of shady businesses avoid income taxes in the underground economy.
You've got to understand that people with legitimate jobs visit whores, buy drugs and patronize shady businesses.
Whores, drug dealers and shady businesses won't collect and remit sales taxes under a sales tax regime. Furthermore, the legitimate income earned by the john, pot smoker or patron of a shady business won't be captured by an income tax anymore, either. And lastly, Coca-Cola, its bottlers, distributers, shareholders, retailers, etc., are already paying income tax on sales to drug dealers and whores.
Looks like when it comes to the underground economy, the sales tax strikes out.
And your flat tax program will have to consider and accommodate these "variables" to be successful. Like the poster implies at #68, one still winds up at a form of progressivity.
"Not unless they want to lose business to competitors who do lower their prices."
To an extent I can agree with your statetment. Guess it really will depend on type product being sold, whether there is much competition or not. If say, all the gun manufactures in the US have an agreement that they will not lower the cost of the products, then obviously in this case, your hypothesize would not hold up. If all companies that compete in lets say tooth paste, beer, whatever, agree to not reduce the cost of their product, once again, only the companies will benifit. No they will not hire new people. Why should they? The cost of manufacturing, marketing, and distributing the product does not deviate from prior to the sales tax, so they have no reason to want to create new jobs because they now have more money to distribute to high level execs etc..
So as usual one can present many arguments pro and con on this type issue. Bottom line is, I for one must learn/re-learn a great deal more about what is proposed before I should be making comments on this topic.
Perhaps I am "very un-learned" on the issues involved.
I agree that the "tax the underground economy" angle is probably a net wash (I'd hardly call it "stikes out"). However one area the NRST would beat the income tax is in taxing illegal immigrants -- these are currently cash-under-the-table employees, but who buy goods and services from retailers.
Price-fixing is illegal.
I doubt it. People will have more money in their pockets, after-tax prices, once competition kicks in, should be somewhere in the ballpark of today's prices... I hardly see masses of people risking jail time just to save a buck on a bottle of laundry detergent.
"Price-fixing is illegal."
Age and sex discrmination is also illegal. Yet it happens all the time.
Yes, too simple
Currently we are losing hundreds of billions of dollars in tax revenue in the underground economy.
Much of that economy is illegal. Do you think that government should receive income from drug dealers and disease ridden prostitutes or arrest them? If government profits from crime, government will encourage crime.
My angle is that you can consider taxation as a form of moral punishment, or an equivalent excuse to tax. It's not a good way to tax. Don't use the tax code to encourage crime to reduce your own tax burden. Its simply bad law.
Yes, but not via collusion across an entire industry. Getting that level of cooperation between competitors is going to leave way too large of a paper trail to follow.
You are too fringe for me.
I will move along now and discuss issues with others.
Good luck.
You don't understand, I don't have any questions. I've been through this many times before. At one time, I too was in favor of a flat tax or a national sales tax. I grew up.
Are the retailers and producers of the goods that the illegal immigrants buy not already paying income tax on those transactions?
I mean, if an illegal alien buys a Coke, Kroger, Coca-Cola, their employees and shareholders pay income tax on the transaction today. Under a sales tax, Kroger will collect and remit the sales tax. Your example makes no sense; the taxes are paid either way.
It's a free country.
"Personally, I'm in favor of giving anything new a try. What we have had in place for all these years is simply out of control."
So what we must asked ourselfs is, why do we think that a new system will be any better. Who will keep the new system in control? I still think dispite my perhaps total ignorance in things involed here, that the proponents of this idea based their hopes on a stable and or ever growing economy, where we are assured a given amount of tax can be generated to pay the bills. What if we go into a deep recession once more, which any economist on this forum should know in their hearts will happen, due to the cyclical nature of things. Then what?
You are correct that some taxes are paid today in this scenario due to corporate income tax costs being passed on to the consumer. However, the under-the-counter worker is failing to pay income and payroll taxes now. Under an NRST, the entire tax burden falls on the consumer at a single time -- there is no way to evade only part of the tax. Since illegal immigrants aren't eligible for the FCA, this means that their tax burden is the NRST rate on their retail purchases. In essense, they will have a higher effective tax rate than a legal resident.
Consumption is far more stable than income. When times are good, people pay down debt or save/invest. When times are bad, people borrow or cash in savings. In either case, consumption doesn't vary as much as income.
If you truly believe this, then the only thing "deep and griding" is your willful ignorance on the subject.
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