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 ...
Can't happen soon enough IMO. Just think how much money abolishing the IRS itself could save the Government ?
I think you mis-read my comment. My point is that in the current system, there taxation of the income used to buy something, and then indirect taxation (via price inflation do to corporate taxation) when that money is actually spent. The illegal immigrant only pays some taxes because they skip out on the direct income tax, but still pay the indirect corporate tax. In other words, an illegal immigrant still has some tax burden under the current system, but nowhere near as much as he would under a sales tax system.
IW"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.."
YW"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."
I agree to a point. So as we continue to loss jobs in this country that provide a given income, and for most are replaced by jobs that provide a lower income, what you suggest does happen. Except for many, they reach a point where their savings are all gone, they cannot find work, and or again the job found simply will not pay anywhere close to what they where accustomed to. So tell me they will continue to keep the same level of consumption for things other then essentials such as food, medicines, things required by school age children such as cloths etc.
As I have stated elsewhere in these threads, I would hope this idea has enough merit for serious consideration. I just have a feeling it will not prove to be a "best" way of procuring federal tax dollars. If the IRS tax system is abolished. What happens when we go into a super terrible world reccession? And it takes years to for the curve to start to level out and then go back up?
To me, perhaps I am wrong but doubt it, recession means just that. A loss of money gain by private industry. When this happens, jobs are cut, product lines are often discontinued etc.. People who loss jobs and loss all their savings, stop purchasing new things out of neccessity.
Then where do you maintain the yearly expectation in sales revenues in order to keep the government solvent?
Under that dire scenario, an income tax fares no better, and probably worse, than a sales tax for generating federal revenue. If necessary, the government will go into defecit spending, which is a typical government reaction to a recession.
I reject that progressivity is the price for taxation success. Those variables of which I wrote will remain variable, regardless of the tax system in place. The variables to which I was referring are those such as fiscal discipline, the tendency to view revenues as a social equalizer, general market fluctuation, etc.. None of these are addressable by the method of taxation.
I am concerned that everyone seems to view taxation as a matter of social fairness, when it has historically been abused precisely because of that association. The NRST, with the possibility of minor adjustments, such as a lower tax on food, medications, etc., would be much more fair and less prone to abuse than the system we currently drag around.
Taxation is for funding the required duties of the government. It is not a legitimate remedy for social injustice, and should not be viewed as such. A big part of the problem with taxes is that nobody will draw a line dividing the responsibility of the government from that of the governed. As the circle of governmental responsibility grows ever larger, its appetite for revenue grows too. But, I digress.
I think the potential harm to the poor by a flat tax or NRST is exaggerated. I don't doubt that there are honestly poor people in the USA, but I do doubt that there are as many as some would have us believe. Compare our "poor" with the poor in Indonesia and the concern fizzles.
When I read in this article that:
"Sen. Chuck Grassley, R-Iowa, chairman of the Senate Finance Committee, told USA Today that comprehensive tax reform would be "difficult" to do."
That sets of an alarm. I respect Chuck's opinion on things. I am sure as some of us spell out the virtues of this plan, who only look on the bright side, that is, a continuing robots econonmy that can support such a plan,
they are perhaps not considering the less then desirable things that could prevent it from working.
Once again, I feel I should not be trying to compete with ideas in this posts, not having a solid appreciation of all things that must be considered.
So lets just say I am not qualified to be injecting anything of worth into this discussion. And thanks once again for everyones patience, and fair minded input.
Hope our senate and house have the wisdom to decide just what is the best route to take.
Working with importers and manufacturers who are also going to benefit by selling stuff wholesale (at a slight mark-up) free of tax.
That's how it worked in WWII.
I think people would be willing to try it to save $30 or $80 on a clothes shopping expedition, if not $1 on laundry detergent. Getting more money in their pocket isn't going to make them stupid or altruistic. That's the same argument that defends progressive taxation--people who make more money should be content to work with the system and pay higher rates!
How do you think the police will catch people? You must be imagining a large expansion of police energy to combat the black market activity that will arise. Doesn't sound economical or a source of expanded freedom. The IRS doesn't exist for no reason.
"If necessary, the government will go into defecit spending, which is a typical government reaction to a recession."
We are already in a defecit spending mode. The government just announced yesterday that it would increase the amount of treasury bills etc., to borrow money, which of course later has to be payed back.
As I mentioned I really should not be included in these discussions, after realizing I probably cannot contribute any worthwhile ideas. I am not a economist by trade, nor have a solid background in economics. So my thoughts probably are simply not worth responding to. Seriously.
Thanks for your further input.
Right, coming off a major disaster (9/11), a recession, and two wars. This is a perfect example of how the government goes into defecit spending during stressful times. In the '90s ("peace and prosperity"), old defecits were whittled away to projected surpluses.
"In the '90s ("peace and prosperity"), old defecits were whittled away to projected surpluses."
Agree. And that happened because of a republican controlled congress, and Clinton's willingness to finally give in to the congress, in how much we would spend.
Kevkrom, thanks again for the well thought out responses as well as all others who equally qualified in this bracket.
I gotta run...........din din time. Got some left overs, to digest!
Take care all.
Money currently being goosed around in tax shelters has to go somewhere.
And how would it not raise the price of products?
A sales tax would also eliminate corporate income taxes, the cost of their tax accountants etc.
A corporate income tax is just a hidden national sales tax. This would just put it out in the open.
The base price of a product would decrease and the total price you pay would increase, but this would be offset by the increase in your paycheck.
I believe the proposals also include a sales tax rebate equivalent to basic needs such as food etc.
Sorry that I can't agree with you. Our views on the mechanics of economics are different. You could be right, but I don't agree with your assessment.
You can get more info at http://www.fairtax.org
They can do that in any type of market. It does not matter if its a free market or not. Besides shiping it overseas will still cost money.
Hilarious and correct. People like you make FR what it is.
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