The Prosperity Tax.
No mercy.
Posted on 10/31/2002 9:02:13 AM PST by Tumbleweed_Connection
In the heart of the Treasury Department, their work deeply under wraps, tax-policy experts are hatching policy options for what could be the Bush economic team's first big idea: shifting the U.S. tax system away from taxing income, toward taxing consumption.
But taking what has long been an academic ideal and translating it into real-world tax policy would take a dramatic commitment of presidential leadership, a long education and political campaign, and a bipartisan convergence of political interests, tax-policy experts say. Few of them are holding their breath.
"It's true that you can write down a simpler tax system on paper than the one we have," said William G. Gale, a tax expert at the Brookings Institution and a critic of consumption-tax proposals. "But it's not necessarily true that you could get that tax system through the legislative system, or ensure it would stay that way once you did."
Officially, a year-long tax policy project at Treasury will merely present President Bush with tax-reform options, probably early next year. But economists and tax lobbyists close to the effort believe that Treasury Secretary Paul H. O'Neill is serious about elevating tax reform on Washington's agenda. If Congress is not prepared to act yet, at least the issue could underpin Bush's reelection campaign, they say...
(Excerpt) Read more at washingtonpost.com ...
Exactly. Any exemptions from a NRST is just a way to let the nanny state dictate what is "good" and "bad" for us. No exemptions and a universal rebate is the way to go.
Recommended by whom? I don't disagree with you at all. But as ServesURight pointed out this could lead to a scenario as bad as we've got now.
"Then you'll have the Democrats and special interest groups demanding that their pet product or service be exempt from the Federal Sales Tax"
Good! But we should stop inching and start running away from it because The income Tax is the Root of ALL Evil!
perloin: The income tax makes all American products more expensive, while the price of foreign products is unaffected.
Our export goods include the income tax and the cost of compling with the tax code, a change to a retail sales tax would remove the taxes and the costs making our companies more competitive.
perloin: Switching to across the board tariffs would raise the cost of foreign goods and aid the domestic economy.
Tarriffs also encourage a rise in domestic prices as well. Tarriffs are paid by the purchasers of goods, not the foreign importers thereof, thus depressing the economy overall.
discostu: Any form of tax is going to make products more expensive.
The income tax is probably the most inefficient and expensive way to impose taxes, replacement of such taxes with a different form would actually reduce the expense built into products and services that exist because of the income tax.
Where Have All the Dollars Gone?
How the government robs Peter to pay him back.
By James L. Payne, Reason Magazine February '94When the overhead costs are added together, (24 percent compliance costs, 33 percent disincentive costs, and 8 percent other costs), they total 65 percent of tax revenue.
However a National Retail Sales Tax actually reduces costs of doing business as well as removing taxes from export goods and services making our businesses more competitive on the world market, as well as providing an incentive for businesses to return to the U.S.
Rep. Bill Archer, Chairman, House Ways and Means Committee:
- "A recent survey was done, in Europe and Japan, of the major corporations and I was astounded at the results. They were asked, 'If the US abolished its income tax and went to a sales tax, would that have any impact on your decisions?' Eighty percent of the corporations said they would build their factories in the United States of America. Twenty percent said they would move their international headquarters to the United States of America."
Thus we would benefit both in our internal economy as well as our foreign commerce in replacing the income tax with a National Retail Sales Tax.
the best tax would be a national sales tax. However, the lack of the progressivity is just going to give an issue to the Dems to beat the crap out of us.
Not necessarily, instead of making certain items tax free, charge the same tax rate at the register, but assure all families receive sufficient to pay tax on expenditures up to the poverty level of income. Only thing necessary is to know the household size to determine the tax prepayment. A retail sales tax thus provides a progressive element and yet assures proportionate participation of everyone in the tax system making them aware of the cost of government where they can't miss it.
| Protecting the Poor from the Tax A common assumption about the NRST is that it is naturally regressive, since lower income individuals spend a greater percentage of their income in any given year on consumption of necessities. Because a sales tax is an altogether different paradigm of taxation, any judgment on the equity of the tax must be accompanied by a different analysis of regressivity. To examine how a national retail sales tax could address such concerns, a number of issues should be broached. First and foremost, taxing income at a graduated rate is not the only means of making a tax system progressive. Moreover, a tax on income, no matter how steeply graduated, does not necessarily make an income tax progressive. Even if progressivity is measured by the common standard of "ability to pay," the income tax is imposed only on productive labor and the return to capital and not on wealth. An income tax does not tax consumption of older accumulated capital, whereas a sales tax does. Equally important, using taxable income as the basis to determine progressivity is necessarily based on a year-to-year analysis where the ability to pay is measured as a function of income per unit of time. Consumption over the life of a taxpayer is in many respects a better measurement of the ability to pay taxes. Because people's incomes fluctuate throughout their lives, the lifetime application of a sales tax is much less regressive than it would appear to be when examining a cross-section of taxpayers in any given year. Since all income is earned for the purpose of eventual consumption, under a national retail sales tax, the taxpayer can defer taxation by saving his income. But he cannot forever avoid the tax. In any case, an NRST plan can be made progressive through a rebate mechanism that would shelter low-income people from paying the tax. One manner in which the NRST could be made less regressive would be to exempt certain necessities--such as food and clothing--from the tax. That approach would exempt, however, the most expensive food (lobster and caviar) and the most expensive clothing ($1,000 designer suits). It is a very inefficient means of providing tax relief to lower and middle income Americans and would necessitate a much higher overall rate. A more neutral and less distortive approach is to simply provide each family a level of consumption free of tax by providing a rebate of the tax on expenditures up to the poverty level. The rebate could work as follows: A family consumption refund would be established for each household at an amount equal to the sales tax rate times the poverty level. The poverty level is defined by the Department of Health and Human Services guidelines and should be raised by the sales tax rate. The family consumption allowance approach has several effects. First, it makes the sales tax applicable only to consumption beyond the necessities of life. Second, it makes the tax in effect progressive, not only because it is based on consumption, a better index of true ability to pay, but because--if one wants to continue to view progressivity through an income tax lens--it entirely exempts lower income workers. Third, unlike most state taxes, it does not undertake the complex and politicized task of determining what to tax and what to exempt, thereby minimizing administrative and compliance questions and economic distortions. The Linder NRST plan would have a highly beneficial impact on the U.S. economy and raise the standard of living of the American public. The tax compliance costs borne by our economy would fall sharply. And the degree of intrusiveness of the tax system in our lives would decline greatly. Once set free from the burdens of compliance with the current system and the punitive tax rates imposed on work, savings, and investment, the United States will become a more productive and more prosperous republic. A national retail sales tax is more compatible with the principles of a free society than any other alternative tax system. |
The Prosperity Tax.
No mercy.
But the politics of taxes are, unless you can show that, say, the top 1% income earners will pay the same percentage of taxes as they do under the present system, the Dems will filibuster it in the Senate and they will use class warfare politics against us at the next election.
They already do, that is not a reason to not work for a change to the NRST. I have found it very easy to sell the NRST to persons of all political affiliations, as there is a clear economic gain for every individual in the country under the NRST.
The other problem with the national sales tax is that its too easy to cheat on it because it's only collected at the final retail sales step.
So how is an NRST any easier to cheat than the personal income tax which one merely needs to not file and enter a cash economy to evade entirely. Under a Retail Sales Tax, the business is held responsible for collection, the business takes the risk for a consumer's advantage? No large business will operate at such a risk and less than 20% of businesses do more than 80% of the sales volume. The oppertunity to cheat is comparatively low.
For good or ill, a NSRT will quickly morph into a Value-Added Tax.
Nice blanket statement, however the fact is an NRST is levied at the retail level only, manufacturing, labor unions, etc will not take kindly to taxes moving into the production sector once relieved of the cost burdens associated with income and payroll taxes. There is little reason to believe that business will not fight such a move tooth and nail as well as the fact that Value Added Taxes are held in very poor reguard politically, inspite of the fact that the current income/payroll tax levied on business is a subtraction method VAT. With it's elimination business is not likely to welcome it back.
Most libertarians HATE the VAT tax because it is so efficient
Agreed, so tell me again how the VAT is so popular that a Single Stage, Single Rate, Visible tax (The NRST) is going to morph into a tax that is levied on business at all stages of production, with the cost that are inherent with such taxes.
Most libertarians HATE the VAT tax because it is so efficient that it becomes too easy to raise revenue and thus expand the size of government (its the main revenue source for EU governments).
http://www.taxfoundation.org/foundationmessage03-00.html
"Under the WTO definition of the term, a sales tax is an indirect tax, as is an European-style VAT. The economic equivalence of an European-style VAT and a subtraction-method VAT is well-established. A subtraction-method VAT is essentially identical to a business income tax except that all purchases of plant and equipment may be expensed, rather than depreciated as under current U.S. law."
And every man woman and child in the nation, pay federal taxes through that VAT.
DO YOU PAY YOUR INCOME TAX
AT THE SUPERMARKET?
by D. Sherman Cox J.D. L.L.M. Taxation
The full impact of the federal tax system(taxes in gross wage/salaries & other compensation + business income/payroll taxes) added onto the base(taxfree) price of retail consumption goods and services is 36% for federal tax revenues alone, that is not counting the overhead burdens imposed in the collection of the federal income/payroll taxes.
The House Ways & Means Committee hearings listening to how and why we need to make that change to make our Corporate tax system totally WTO compliant.
I would suggest your concerns about a VAT have already gone down the tubes and we should be looking to remove the defacto VAT that is currently in place by going to the single stage NRST.
"... legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind. The descent of property of every kind therefore to all the children,...But it is not too soon to provide by every possible means that as few as possible shall be without a little portion of land. The small landholders are the most precious part of a state."
-- Thomas Jefferson to James Madison, Oct. 28, 1785 -- PROPERTY AND NATURAL RIGHT
I presume those of you who are posting to this thread are interested in fundamental tax reform [except Willie Green -- he has been proven wrong on these tax reform threads so many times, we now ignore his comments]?
If you are interested, and wouold like to educate yourselves and, perhaps, help us, click here or here.
I am convinced that all it will really take to accomplish our mission is roughly 1,000 committed fundamental tax reform activists in each Congressional District.
Any of you FReepwers want to gather 999 other like minded individuals in your Congressional District around you to help you (and us) replace the income tax with a National Retail Sales Tax and abolish the IRS? We can do this, but we need your help.
LOL! The globo-financial despots will NEVER go for that one!
They seek to establish some kind of bizarre, 21st Century eco-feudal system.
Overburden the serfs with a heinous sales tax that penalizes consumption, and keep 'em happy with formal socialism.
(Read the proposal: the NRST flying-monkeys make they're system "fair" by replacing the boogeyman IRS with monthy rebates for EVERYBODY from Social Security!)
Meanwhile, the elite class already in possession of financial wealth will be ecoourage to reinvest, vastly expanding their holdings totally tax-free. While those at the bottom of the totem-pole (having the same investment opportunity in theory only) will have to spend the vast majority of their scant resources on a tax on the necessities of life.
It's a truly sleezy proposal that squashes the bejeesuz out of upward economic mobility.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.