Posted on 04/20/2002 12:50:10 PM PDT by Action-America
I thought you were advocating the NRST?
Forgot the "at the retail level only." Yes I support an NRST.
HR2525 is very close to that ideal in that it tax all goods and services once but only once at the retail level.
Its difference from the ideal, lays in creating an effective exemption tax for spending up to povertyline consumption through a prepayment mechanism based on household size. For purity, it would be nice to drop that feature. Practical politics and having a real shot at actual enactment under the current political and social climate demands it.
Are you sure you aren't locking yourself into a single mode of thinking, like those who can't let go of the income tax.
For a moment, forget about the tax part. The volume in the market goes down. How do you match up buyers and sellers? How volatile would the market be? How do you determine the value of your stock?
The value of stock. To determine the base value of stock, you add up all the assets of a company and then subtract the debts. What is left is the amount you could get by dismantling the company. Then you consider how much profit the company makes, how much it puts into R&D, how successful it converts R&D into profits, how well the company is being managed, and other human factors. This is called "value investing". How does an amateur do all that? It's like winning a bet on a football team, part knowledge and part guesswork and part luck. Millions of bad picks are made today under the current system. Can you say definitivly and with absolute certainty that a reduction in volume will make it harder to determine value? Or do you advocate letting the market determine value like sheeple?
How do you match up buyers and sellers? I have been watching the NYSE for a long time. A few years ago I began trading. I have come to the conclusion that the NYSE isn't as efficient as it could be. It is only half a system trying to function as a whole one. Pick up a newspaper and open it to the classifieds. You will find a section with items for sale. You will also find a section for buyers. That is what the NYSE is missing. There should be two boards. One for buyers and one for sellers.
On the sellers board, the lowest "for sale" point is always displayed. Let's say I have a 50 shares of QQQ that I want to sell at $25. I post it to the sellers board. If mine is not the lowest, my valuation does not appear. If mine is the lowest selling point mine appears. If someone likes it, they buy and the value moves to the new lowest selling point. If no one does, the value stays until someone under sells me or I lower my selling point or I rescind my offer.
On the buyers board, the highest buy point is displayed. Let's say I want to buy 100 shares of ZCD @ $46. I post it to the buyers board. If mine is not the highest point, my valuation does not appear. If mine is the highest selling point mine appears. If someone likes it, they buy and the value moves to the new highest selling point. If no one does, the value stays until someone over bids me or I raise my bid or I rescind my offer.
This would be more efficient and would make it easy to determine the value that both potential buyers and potential sellers place on various stocks. I don't know why they don't do it this way now. Maybe some enterprising Freeper can tell me?
How volatile would the market be? The market would be no more volatile than the housing market. Buyers of houses are even more at the mercy of the market. To sell a house, you must factor the value of your house, the value of your neighborhod, and the willingness of people to move into your house. Buyers have it a little easier. At least they have choice of multiple locations.
I remember a speech Reagan made with Gorbachev in Russia. Reagon was talking about nuclear missiles. The translator was converting Reagan's words from English to Russian as fast as he could. When Reagan spoke this phrase, it was converted to "blind and insane".
The tax system we currently have operates as a transaction tax. All of the business taxes (income, gains, social, medicare, etc) are tacked onto the price and forwarded to Joe Consumer. A transaction sales tax would not raise prices. It would lower them by lowering the overall tax rate experienced by businesses. It would lower them by removing tons of administrative overhead and simplifying the tax structure. It would be incredibly simple to figure out the taxes owed - just add up sales, take the percentage, send in the monthly check. There would be no need for tax lawyers or tax accountants.
The tax system we currently have operates as a transaction tax. All of the business taxes (income, gains, social, medicare, etc) are tacked onto the price and forwarded to Joe Consumer.
True, and that is what is wrong with it. It forwards those tax burdens onto Joe Consumer(i.e. voter) and he perceives(and is led to believe by politicians) it as just big business ripping him off again inflating prices, not Congress Critters sticking it to him.
A transaction sales tax would not raise prices. It would lower them by lowering the overall tax rate experienced by businesses.
That is abit of a stretch for which you have offered no basis from which to establish that, looking at the statistics of how business taxes are distributed, in comparison with the current percentage of taxes paid by Joe Average personally, it would appear there would actually be a shift of burden from Joe Average to the business, obscuring more of the burden than is already hidden from Joe.
Refer to: http://www.cbpp.org/taxday98.htm
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CBO Estimates of Effective Federal Tax Rates for 1998 |
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|
Families Ranked by Income Quintile |
Individual Income Tax |
Social Insurance Taxes |
Corporate Income Tax |
Excise Tax |
Total Federal Taxes |
| Lowest | -6.9% | 7.8% | 0.5% | 2.8% | 4.2% |
| Second | 1.7% | 9.9% | 0.9% | 1.6% | 14.2% |
| Third | 6.3% | 10.8% | 1.4% | 1.2% | 19.7% |
| Fourth | 9.0% | 11.3% | 1.4% | 1.0% | 22.7% |
| Highest | 16.2% | 8.0% | 4.6% | 0.5% | 29.3% |
| Top 10% | 18.0% | 6.7% | 5.8% | 0.4% | 30.8% |
| Top 5% | 19.7% | 5.3% | 7.0% | 0.3% | 32.3% |
| Top 1% | 23.0% | 3.0% | 9.5% | 0.2% | 35.7% |
| Average for all families | 11.2% | 9.3% | 3.0% | 0.9% | 24.4% |
| Source: Congressional Budget Office, May 15, 1997. Notes: Pre-tax family income is the sum of wages, salaries, self-employment income, rents, taxable and non-taxable interest, dividends, realized capital gains, and all cash transfer payments. Income also includes the employer share of Social Security and federal unemployment insurance payroll taxes, and the corporate income tax. For purposes of ranking by adjusted family income (AFI), income for each family is divided by the poverty threshold for a family of that size. Quintiles contain equal numbers of people. Families with zero or negative income are excluded from the lowest income category but included in the total. Individual income taxes are distributed directly to families paying those taxes. Payroll taxes are distributed to families paying those taxes directly or indirectly through their employers. Federal excise taxes are distributed to families according to their consumption of the taxed good or service. Corporate income taxes are distributed to families according to their share of capital income. |
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Under the current system Joe Average perceives a 11.1% tax on Individual Income, + One half of the 9.3%(4.65%) Social Insurance Tax(SIT) for a personal fed burden of 15.75% effective federal tax rate with respect to what he perceptibly pays as an individual.
Business, pays the other half of SIT, 4.65% + 3% corporate income tax + 0.9% excises for the hidden consumers fed burden of 8.55%.
We know that the revenue neutral rate is 24.4%, that would mean to shift the tax structure dropping Joe's visible burden to 10% in immediate payments, while the hidden business burden would of necessity increase to 14.3%.
Joe Average peceives less tax burden outright, sees a a possible increase in prices and blames BUSINESS for ripping him off, NOT CONGRESS who comes out looking like Joe's white knight handing him a "tax cut".
It would lower them[prices] by removing tons of administrative overhead and simplifying the tax structure. It would be incredibly simple to figure out the taxes owed - just add up sales, take the percentage, send in the monthly check. There would be no need for tax lawyers or tax accountants.
I suspect a a slight increase on the shelf price(his 10% included, may increase the total slightly even with the reduction in compliance costs)
Even more simple and less costly would be for just one sector of businesses to do that, the retail sector with the added advantage of being where visibility is at maximum for the electorate.
The problem is "business" isn't the electorate.
Ultimately the full cost is actually paid by the retail consumer. Why do you insist that consumer not be informed of that total federal tax burden in a personal and direct manner?
As demonstrated in reply #79, the transaction tax you describe can not inform the voter of the actual or even a close estimate of the cost of government as it impacts his life. Why should the voter not receive a receipt that reflects the true cost of government in his purchases?
The issue is how the electorate perceives the cost of government. It is the electorate that holds the ultimate responsibility for holding the Congress accountable. The bottom line:
Walter Williams, World Net Daily, 10-25-2000
"If you're among those who pay little or no federal
incometaxes, what do you care about tax cuts? Moreover, if you think tax cuts pose a threat to government handout programs, you might be openly hostile and support Al Gore's silly "risky scheme" talk. So many Americans paying little or no federal taxes makes for a natural spending constituency. It's like me in the restaurant: What do I care about extravagance if you're footing the bill?
I fail to see the advantage of a transaction tax to the electorate. It can only serve to obscure the burden of government, to keep the blinders on, impeding the factor of political accountability from properly operating.
The transaction tax you describe, does nothing to correct the fundamental problem of 70% of the public clamoring for more from government, believing someone else foots the bill.
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