This is oxymoronic. There's already a tax on marijuana, how well do they do at collecting that? There are already any number of taxes due from the underground economy that don't go collected. What makes you think that the same people won't buy off the black market?
Fully taxed? This country already has markets in illegal drugs, illegal labor, illegal cars and parts, illegal booze, illegal cigarettes... With an NRST and open borders for goods due to CAFTA, that market will explode.
The only reason those goods are sold illegally is that the amount of the tax makes it worth the risk of getting caught.
Realize the National Retail Sales Tax implemented under the FairTax legislation does not exempt products or services. Instead it provides a sales tax rebate mechanism paid to all legal residents equally to provide for payment of the sales tax on expenditures at the HHS poverty level defined for size of household. This avoids the necessity and problems of making such definitions and specific exceptions as you mention which obviously are the source of much manipulation and political wrangling in the state sales taxes.
Given the byzantine tax code we have, you are asserting that Congress won't insert line items into budget bills altering sales taxes for specific goods before the ink on the NRST is dry? What planet are you living on?
When you clean the slate it becomes more difficult to favor a specific group without raising the hackles of everyone else.
"More difficult" will likely last about 45 minutes. Until you've seen the machinations of the California State Board of Equalization over sales tax minutae (an Orwellian name if there ever was one), you can't tell me that Congress will leave this alone. No way.
Look, I have been an advocate of sales taxes for twenty-five years. I applaud the intent to have the public recognize the cost of government in every purchase. I wait for the day that every spending bill will be discussed in terms of its impact on a visible tax that every citizen confronts every day. But until we can get spending down to about 10% of sales, I promise you, the size of black market you'll see will be mind boggling, the number of exemptions for specific uses and products will be daunting, and the mechanics of enforcement will make the WOD look like a garden party. The burden of calculating tax collections on thousands of goods at a myriad of rates under various conditions will fall heavily upon all but the largest of retailers, who, I am certain, love this proposal.
When the advocates of NRST start to deal honestly with the public, I'll pay more attention to what they have to say.
The burden of calculating tax collections on thousands of goods at a myriad of rates under various conditions will fall heavily upon all but the largest of retailers, who, I am certain, love this proposal.Maybe not.
Statement of Del Threadgill, Vice President of Taxes,...."I am here today to express the retail industry's strong opposition to a proposed National Retail Sales Tax (NRST)"....J.C. Penney Company, Dallas, TX, and
Chairman, Taxation Committee, National Retail Federation
This is oxymoronic. There's already a tax on marijuana, how well do they do at collecting that?
Today, they collect zilch.
Under a National Retail Sales Tax, the income from the marijuana spent on consumption will be taxed when said marijuana dealer goes byes that fancy new car with his ill gotten loot.
are already any number of taxes due from the underground economy that don't go collected. What makes you think that the same people won't buy off the black market?
What makes you think they don't already. The point being when ever they purchase anything from a legitimate source the will be taxed where today that income goes completely untaxed.
Fully taxed? This country already has markets in illegal drugs, illegal labor, illegal cars and parts, illegal booze, illegal cigarettes... With an NRST and open borders for goods due to CAFTA, that market will explode.
The FairTax NRST provide a rather interesting reason to control them borders better it seems to me. Government always responds to threats to its revenue.
H.R.25Fair Tax Act of 2005 (Introduced in House) Section 101(c) Coordination With Import Duties- The tax imposed by this section is in addition to any import duties imposed by chapter 4 of title 19, United States Code. The Secretary shall provide by regulation that, to the maximum extent practicable, the tax imposed by this section on imported taxable property and services is collected and administered in conjunction with any applicable import duties imposed by the United States. |
Under CAFTA no import duties, however that is no barrier whatsoever to collecting a retail sales tax that is collected the same on consumer products. Anything carried in for use in the US, is taxed identically to domestic products sold in the US for use in the US.
Looks to me 23% revenues on product entery into the US is one big incentive to government for tightening up borders.
The only reason those goods are sold illegally is that the amount of the tax makes it worth the risk of getting caught.
This is different how from the current tax system with marginal tax rate breaking 40% to encourage the same trade. Don't see much in the way of addition to what is already being done in the 25% of GDP underground economy now days.
Given the byzantine tax code we have, you are asserting that Congress won't insert line items into budget bills altering sales taxes for specific goods before the ink on the NRST is dry? What planet are you living on?
Those are called excises today, and make up less than 5% of revenues for a reason. The electorate hates hates them.
"More difficult" will likely last about 45 minutes. Until you've seen the machinations of the California State Board of Equalization over sales tax minutae (an Orwellian name if there ever was one), you can't tell me that Congress will leave this alone. No way.
Lets see, you start out with a tax system that taxes everything equally to establish the lowest possible rate with the largest possible taxbase.
Any attempt to remove some specific item from taxation narrows that base, they either must raise the tax rate on everything else, and the ire of the entire electorate. Or it just becomes a tax cut.
Where's the problem? Remember specific excises don't fly today, there is even less reason for them to fly under a retail sales tax system in the eyes of the electorate that controls who stays in Congress.
But until we can get spending down to about 10% of sales,
Spending ain't coming down any as long as most of the electorate figures they are getting a cheap ride for their government bennies.
I promise you, the size of black market you'll see will be mind boggling,
We are already in that condition with a 25% of GDP undergound because of an unenforcible income tax system.
the number of exemptions for specific uses and products will be daunting,
Tax cuts are fine by me. Just how are they going to go about making all the exemptions without cutting spending?
and the mechanics of enforcement will make the WOD look like a garden party.
With all the exemptions you forsee what is left to enforce?
As if we didn't already have a monster at the door we are try to get rid of:
man's business; the eye of the federal inspector will be in every man's counting house....The law will of necessity have inquisical features, it will provide penalties, it will create complicated machinery. Under it men will be hauled into courts distant from their homes. Heavy fines imposed by distant and unfamiliar tribunals will constantly menace the tax payer. An army of federal inspectors, spies, and detectives will descend upon the state."
-- Virginian House Speaker Richard E. Byrd, 1910, predicting the consequences of an income tax.
The burden of calculating tax collections on thousands of goods at a myriad of rates under various conditions will fall heavily upon all but the largest of retailers, who, I am certain, love this proposal.
What small retailers? They will all be in your black market.
However, Since less than 20% of retail dollar flow through the small businesses that would be an improvement over the current evasion losses under today's income/payroll tax system. Same folks that are busy evading income and payroll taxes today, you can figure will continue to try doing so under any tax system including an NRST. The key is whether or not the situation is worse than today.
I submit it will be better, not worse:
refer: ==> Tax Evasion: The Underground Economy
When the advocates of NRST start to deal honestly with the public, I'll pay more attention to what they have to say.
You might try abit less hyperbole for size. It might fit better.
Dear Carry_Okie,
"This is oxymoronic. There's already a tax on marijuana, how well do they do at collecting that? There are already any number of taxes due from the underground economy that don't go collected. What makes you think that the same people won't buy off the black market?"
Well, the NSRTers will argue that, hey, at least when the drug dealer goes and spends his ill-gotten gains, he'll have to pay the NSRT. Well, to some degree, that's true, but it leaves out a critical part of the transaction chain.
I don't know about the buying and selling of illegal drugs, so I'm going to translate this to a part of the underground economy with which I'm familiar.
I have friends who hire folks off the books to do stuff like clean the house, be a nanny to their kids, or do landscaping for their homes. Let's take the case of the nanny.
We have some friends who have a nanny for their children, a woman whom they pay $10 per hour. They pay no payroll taxes, withhold no income taxes.
Under the new system, this woman will still get her $10 per hour, but NOW SHE'LL HAVE TO PAY THE NSRT ON HER PURCHASES! It's a MIRACLE! We've closed down the underground economy!
Well, no, not quite. Under the new law, Little Miss Nanny should be charging the 30% NSRT on her services to my friends, taking here income, and then spending it personally and paying the NSRT on her purchases. Thus, we're missing half the taxation that should be going on, here.
"Oh! But we're only missing HALF the taxation," say the NSRTers.
Yeah, I think that's true. I agree with that analysis.
"Under the old law, we were missing ALL the taxation," they say.
No, that part isn't true.
Under the new regime, my friends will be paying for this woman's services with untaxed dollars, and will not be paying any sales tax on those services.
But currently, under the new law, my friends are paying for the services with AFTER TAX dollars, not untaxed dollars, and thus, even though this woman is paying no income taxes, TAXES WERE COLLECTED ON THE MONEY BEING USED TO PAY HER.
In the current situation, half the tax transactions that should be occuring ARE occuring, just as it will be under the new law.
As well, because this woman, even on a full-time bases, is in the very lowest tax bracket, and my friends, God bless them, are in the very highest tax bracket, because it is their side of the transactions that are taxed, and their rate is higher, the "half" of the taxes that are paid are considerably greater than the "half" that are unpaid.
However, under the NSRT, the half that is unpaid would be at least as large as the half that is paid.
All that's being done with the NRST is we're moving the point of taxation from the "front" of their money - when they receive their income, to the "back" of money - when they spend their income. In this example, NRSTers miss that the folks with the nanny are paying their taxes at the "front" of their money, on their income, even though the nanny's "front" of her money goes untaxed.
Under the NSRT, the "back" of the family's money will go untaxed, but the "back" of the nanny's money will now be taxed.
Looks like a roughly even swap to me.
Dimples, I'm pinging you because: you're a lot more knowledgeable about how to apply statistical analysis to these questions, so if I'm making an error, you can perhaps point it out to me; I think you may know much better the appropriate terminology to better express what I'm saying, and may choose to do so.
sitetest