Posted on 06/10/2005 11:13:37 AM PDT by Always Right
1. The 23% sales tax rate turns 37%. A retailer who sells an item for $100 must charge his customer an additional $30 for federal sales tax. Most people familiar with state sales tax call this a 30% tax, since the tax is 30% of the seller's price. The Sales Tax folks call this a 23% tax, since $30 is 23% of the final price ($130 including tax), which they call the 'tax-inclusive' rate. Neither way is technically incorrect, it is just important to understand what is really being discussed. Remember this 30% tax-exclusive rate is only the federal portion of the tax, state sales tax will also be added in. With the elimination of federal reporting, states will have to replace their personal and corporate income receipts, with a sales tax. States collected nearly $500 Billion in 2003 through income tax and sales tax. With Personal Consumption at $7.76 Trillion in 2003, that is 6.4% in tax inclusive terms, which will add another 6.8% to the tax-exclusive rate. So if you buy $100 worth of goods, you will end of paying nearly $137 once State and Federal Sales tax.
2. Even 37% is not enough. One amazing fact when sales tax calculates their rate is that they assume 100% compliance. Everyone will cheerfully report every sale. There will be no under the table or black market sales. Also, no one will try to buy goods overseas to avoid this tax. This is pure fantasy. No one could believe any tax system will have perfect compliance and zero avoidance. The current income tax system has about a 15% tax-evasion rate. Conservatively, we could assume that the sales tax will have a similar tax evasion rate of 15% and a tax avoidance (like spending overseas) rate of 5%. With these more realistic assumptions, the tax rate would have to be bumped up to 44% to be revenue neutral. And these are very conservative assumption. Brookings Institute economist William Gale (National Retail Sales Tax, September, 2004) calculated that about a 60 percent sales tax would be required to be revenue neutral.
3. Fraudulent Calculations. Besides using ridiculous assumptions like 100% compliance, the sales tax economists create money out of thin air. Their paid for economists routinely double-count savings of their plan. The biggest one is being the $1.3 Trillion that individuals pay in taxes. Under the 30% Sales Tax bill, that money would end up in the pocket of individuals, and the proponents correctly tell you that take home pay will go up. But then the Sales Tax proponents go on to tell you that prices will go 25-33% to offset their 30% sales tax. Well if individuals are pocketing 67% of the taxes that are eliminated, how are businesses going to reduce prices very much? The sales tax eliminates about $650 Billion in taxes to businesses. Considering Americans consumers spend $8 Trillion on goods and services, that only allows for businesses to lower their costs by 8%. Once the 30% sales tax is added, the final end cost to the consumer will be 20% higher if the calculation were done honestly. Even allowing for a reasonable amount of savings in compliance costs to businesses under the sales tax system, prices would still shoot up 18-19%.
4. Millions must file. The Sales Tax supporters would have you believe that only retailers need to file under the Sales Tax. That simply is not true. In order to offer the 'low' 30% rate, the Sales Tax must tax services too. 'In 1993, 12,778,000 taxpayers filed individual returns with business income or losses, and another 1,919,000 filed farm returns. In addition, in 1992 the IRS received returns for 17,292,286 non-farm sole proprietorship businesses, 1,484,752 partnerships, and 3,868,004 corporations-all of which probably produced goods or services on which the sales tax would be levied. Thus the supposed simplicity of the sales tax turns out to be a mirage.' (Brookings Institution Policy Brief #31-March 1998) Thus over 35 million filers will still be subjected to reporting and audits, most of these are individuals. This doesn't even consider the 100 million of people who will still have their wages reported to the SSA. Also, all households must register every year with the 'sales tax administering authority' in order to receive your monthly tax rebate. Furthermore, individuals that buy things without sales tax, like overseas purchases, must submit monthly forms and payments to the government. Hardly the zero tax filings for individuals as the sales tax supporters claim.
5. Tax Evasion will skyrocket. 20 countries have tried a national sales tax, and 20 have switched to a value-added tax. These countries have gone on record and have flat out stated a retail tax of more then 12% is unworkable. People will avoid it, especially with the internet which makes it very easy for the common citizen to purchase goods from foreign sources. The fact that businesses to business sales are not taxed, makes it very tempting to buy personal stuff under a business name. It will take a mighty powerful and intrusive taxing authority to audit all business expensive to make sure. The sales tax rates we are talking about have never been successfully implemented in the history of the world, but it hasn't been for a lack of trying. "Many people would masquerade as businesses" to avoid the tax, says Robert Hall, an economist at the Hoover Institution. Gale reckons that evasion would be far higher than today 's estimated 15%.
6. Big Government gets Bigger. In the 20 countries where the national sales tax has been implemented, and in each case replaced by necessity by a Value-Added Tax, the amount of federal taxes quickly grew from about 20% of GDP, as currently in the US, to 40% and above of their GDP. Not a promising precedent.
7. Underground Economy still not taxed. The NRST advocates falsely claim that the underground economy now will be taxed. Nothing could be further then the truth. Sure, when the money re-enters the legal economy the money is taxed, but that is true today. But will the drug dealers and prostitutes remit sales tax for their goods and services under the NRST? Absolutely not, this portion of the economy is still invisible to the tax collector and therefore not taxed. According to Bruce Bartlett, 'thus whatever revenue is gained when drug dealers spend their ill-gotten gains will be lost because no tax was collected on their drug sales.' (Bruce R. Bartlett, senior fellow, National Center for Policy, Analysis, November 5, 1997).
8. Lower and Middle Income pay more. Steven Sheffrin of UC Davis in a 1996 CPS brief says that a revue-neutral consumption tax even with a generous personal exemption shifts the tax burden to the lower to middle income households. A 1992 Congressional Budget Office study of consumption based tax concluded the consumption tax would decrease the tax on the wealthiest 20% by five percent, while hitting all other groups with a higher tax burden. The poorest quintile being hit the hardest with a 20% increase in tax and the 20-40% income quintile being hit with 9.3% increase in their effective tax rate. This is because the poorest spend a much higher percentage of their income each year and in many cases are even forced to borrow to keep up with their expenses. These numbers are much worst today as the federal tax liability for the bottom 20% has been greatly reduced through expansion of the earned income tax credit.
9. Elderly assets are unfairly burdened. While people currently working will get to keep more of their paycheck, people on fixed incomes will stay the same. Elderly, who have already worked and saved under the income tax system, will now be faced with paying additional high consumption taxes. This group of especially hard hit people, will not have the opportunity to earn tax-free wages, so all their already taxed wealth will be taxed again when they spend it. Come January 1, 2007, if someone's rent was $1000, they will owe an additional $300 in federal tax alone, and many without any additional source of income.
10. Government Taxes Itself. One amazing thing is under the Sale Tax is that government somehow raises money by taxing itself. Whereas this is an interesting way to reduce government, it is typical of the smoke and mirrors the fraudulent analysis of the so-called fair taxers use. Under the plan, the government is considered the consumer and most of it's purchases and employee salaries are taxable. So if the state of Alabama pays its clerk $30,000 in salary, it would be liable to pay the federal sales tax of $9000. The same applies to the federal government, but it pays itself. An interesting way to raise revenue, but it more fraud on their part. If government could truely tax itself, why not just put 100% sales tax on government and then no one else would have to pay taxes.
11. Auto and Housing Industry Hit Hard. As the luxury taxes have proven in the past, adding a large sales tax on item deters people from buying. In 1991, after the Democrats snuckered Bush Sr. into signing the Luxury Tax, Yacht retailers reported a 77 percent drop in sales that year, while boat builders estimated layoffs at 25,000. And that was only for a 10% tax! With new homes and autos having to compete against existing homes and used cars, paying the additional 30% sales tax will be hard to swallow for most consumers.
ha ha ha ha. I never said that. The misquote is typical of the sleazy tactics pulled by the flat tax con-artists.
And their Kool-Aid drinkers, of course.
The misquote is typical of the sleazy tactics pulled by the flat tax con-artists.
But it wasn't a misquote. We just want to know if you're a class warrior or not.
Now, who's the liar?
Post 228.
You did say that. Why the denial?
He's merely trying to "thread the needle" on you. A word wih switched position allows him to pretend it means something other than it clearly did. Nightie uses the same stunt all the time.
This poster must be one of the lib SQL crowd.
I guess that's all they've got left.
Sometimes the rate is too high. Sometimes it's too low.
Everything about the income tax is really bad, but they like it.
I wonder why?
I DID read the original quote.
Nothing "fast-talking" about it at all, friend. No matter whether the word "useless" is in either of the two spots, the meaning of the post is still the same.
You're trying to promote class-warfare by claiming that high income folks (and heirs) are somehow benefitted by the FairTax - and that is an outright lie ... nor have you been able to offer anything to back up such an outrageous statement.
Unfortunately for you the posts on the thread ARE retained and you cannot now go back and alter what you posted. Moving the one word to a slightly different location does not change the meaning of the post at all.
If that's the totality of your argument you'll join the likes of Looey, Nightie, Rongie, etc. as well-known SQL liars and mis-directors.
ha ha ha ha.
Well, that the end of you as someone who might have a rudimentary understanding of the language.
Well, no, I understand the language just fine - but YOU don't seem to. Show us how the repositioning of the word "useless" changes the meaning of your post. (hint: it doesn't).
You are now merely attempting the dishonesty of trying to twist and turn and wiggle your way out of your lie. Guess you don't like being pinned with a lie just like some others on the thread. Same lib outlook - say or do anything no matter how utterly ridiculous to try to discredit the FairTax and never own up to any lie.
It won't work as most of those reading the thread are up to speed on those sorts of tactics - they are quite common by the SQL crowd. And, oh yes, we know you'll never discuss how the single-word repositioning changed the meaning of your post (since it didn't but just gave you a red herring). You're hardly the first to try those stunts.
I don't have to. Anyone with an eighth grade reading comprehension level will see it as obvious. Any further clarification effort would be pearls before swine. Or before pigdogs. Or whatever.
Did you miss the 'IF' and 'THEN" in that statement?
Do you collect a paycheck? Why not let the government have it all?
Do you have savings and investments?
IF you believe the garbage that you posted, THEN . . . .
Get it? Besides, what is so offensive in that statement? Rather than take offense, shouldn't you turn the other cheek?
You're certainly barking up the wrong tree. The meaning of your post is quite clear and not changed at all even if the word were left completely out.
You SQL types never try to explain why you love the present system so. Perhaps you're really too inarticulate. It's apparent you were caughe in a lie in your original post of trying a bit of class warfare that backfired on you.
Read the entire sentence -- "...billionaires and their useless heirs...
I didn't say that you said that the billionaires didn't earn their money. I asked you if you thought that their heirs were intitled to it (through inheritance, with or without your judgment and blessing). Do you? If not, should the government confiscate and redistibute it?
You tried to say I did. That's when I knew you weren't playing with a full deck, and this wasn't a real debate - from your post:
"If anyone leaves their heirs a billion dollars or even fifty thousand, are you saying that they haven't earned it..."
You're a twisty-turny one. No doubt you might fool a few dimwits - or people that aren't paying attention. But any intelligent person listening will see through your cheap tricks.
Interesting - but why do we have to wait for an attack on DC? He, heh.
I'm not "heading" anywhere. I'll be around for longer than you would care to be and I assure you I will be working for passage of the FairTax.
You can continue with your idiotic devense of the current system as you choose. You are convincing no one; nor is your pathetic class warfare effort (which you can't even back up).
Great! And with vociferous support from nit-wits such as yourself the FT will always be a big joke.
"You can continue with your idiotic devense of the current system as you choose. You are convincing no one; nor is your pathetic class warfare effort (which you can't even back up).
ha ha ha ha. Gee, maybe you will be around longer than me.
Because if you keep this up I am going to die laughing.
You not only are offering no defense of the present system, you're not making any definitive headway trying to attack the FairTax.
Insults to FairTax supporters aren't the same thing - but apparently you're too stupid to realize that. Regardless of whatever you do, the FairTax is going to become the tax law for the country. I'll bet that really grabs you, dosen't it?
The FairTax treats all taxpayers equally fairly and is revenue neutral to boot. In addition it will kick off a great economic boom in this country as it makes our exports (for one thing) far more competitive. You're too ignorant
to realize that, too, no doubt.
Since you're so uninformed, here are a couple of links to learn from:
http://www.fairtax.org/index.html
and the bill itself:
http://thomas.loc.gov/cgi-bin/query/z?c109:H.R.25:
Spend some time ... you'll learn a lot.
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