National sales tax gains momentum

WorldNetDaily.com ^ | Wednesday, November 13, 2002 | By Jon Dougherty

[weikel]

The social security lobby is good at mobilizing votes but geriatrics can't riot. If social security is maintained given the likelihood of the huge expansion in cost it is quite likely my generation will start rioting social security needs to die.

[weikel]

Between the Renaissance to around the Mid 19th century emergency war funds were ussually raised by the head of state merely asking the upper class to pitch in and contribute money to the war effort( they generally did because it was seen as preferable to taxes but I don't know if this would work today).

[Einigkeit_Recht_Freiheit]

Between the Renaissance to around the Mid 19th century emergency war funds were ussually raised by the head of state merely asking the upper class to pitch in and contribute money to the war effort

Wait, I think you might be on to something. I am going to assume that the "upper classes" were comprable to nobility. They were the wealthy patrons, land owners, etc.

Although we even more wealthy individuals now, they can't be compared in the same way to those of old. But, there are entities that might be similar. They are called corporations.

An economic crisis would not be a point in time to start asking for more money from corporates, but other crises might best be handled in that way. Practical? I don't know, but maybe worth exploring.

I have to make one correction to my agreement with the government using only 6% of GDP. I think it might good to have a slightly higher percentage that would allow the government to run a surplus (maybe accounting for 8-10%). This way if the Fed can no longer cut interest rates to provide fiscal stimulus, a tax cut remains an option.

[RightOnline]

You bring up some interesting points. However, there two that I'd like to rebut just a bit. I'm not sure I'm sold on the NRST either, but as it was explained to me by CHIEF Negotiator (God rest his soul), the fact that businesses would no longer bear the huge financial burden currently imposed upon them by implementation of our current tax code would allow them to cut prices. Not saying they will automatically, mind you, but they can.......and the market has an uncanny way of evening itself out. One cuts prices.......their competitors follow. These price cuts could largely offset.......if not eventually completely offset.........the price increases on goods sold due to the NRST. "Things" simply cost less to produce due to the greatly reduced overhead / cost of doing business.

Additionally, consumers would DEFINITELY know the Federal sales tax rate......and it would be in front of their faces at all times......every time they spend money. This is a great way to drive home the reality of the cost of government, and woe to the legislator that tries to raise that tax rate, for every consumer in the country would immediately see it and HOWL.

[weikel]

Upper class meaning both nobles( old money) and gentry( new money).

[copycat]

Critics of a consumption-based sales tax say adding a levy at the point of sale would likely lead to less consumer spending, thereby worsening a weakened economy.

Why? The average persons takehome pay would increase 20-30 percent.

Also, they say a national sales tax would have to be astronomical for the government to collect its current level of revenues.

IT'S THE SAME AMOUNT OF MONEY EITHER WAY!!! You simply give a consumer fallen on hard times a chance to save for a short period of time by postponing purchases.

[copycat]

I still like Steve Forbes' idea. A flat tax with the first, say, $30,000 of income exempted for everyone...set at around 15 percent with no deductions to tempt Congress to legislate through tax policy.

[Principled]

Thanks for the ping....

[Bigun]

Am I confusing this with anoter type of consumption based tax?

Yes! We are talking about a POINT of SALE National Retail Sales Tax and NOT a European style Value Added Tax. Plenty of educational material can be found at the Americans for Fair Taxation website.

[Bigun]

People won't be " celebrating " this move, when they have to pay a comsumption tax on the full price of the house / condo / co-op they buy, even though they'll have a mortgage. Selling property won't be so easy either.

That simply isn't true my friend! PLEASE take the time to read This research paper on this EXACT subject.

[Bigun]

Tarrifs , alone, on top of a consumption tax isn't going to " cut it ".

Sorry but you are again incorrect! H.R. 2525, the FairTax bill is completely revenue neutral! PLEASE GO Here and read about what we a re talking about here!

[ApesForEvolution]

"Under the income tax, if I earn income and don't pay the tax, I can be fined and jailed," said Rockwell. "Under the consumption tax, if I consume a taxed item and don't pay the tax, I get fined and jailed.

This is always a point at which Lew loses me. Wouldn't one presume that the tax is to be collected before possession and therefore comsumption occurs? Assuming these aren't 'illicit' black-market purchases? The bottom line is we need to get the IRS flashlights out of Americans' back ends.

And, as far as I'm concerned, the IRS flashlights had better not be replaced with anyone else's flashlights. If that is the case, then the taxation system still isn't Constitutional.

[Bigun]

I support replacing the income tax with a consumption based national sales tax. To make sure the income tax isn't resurrected in the future, the 16th Amendment would have to be repealed.

We have exactly 0 protection against having both an income tax and a sales tax as things CURRENTLY stand but if we would demand passage of H.R.2525, currently before congress in the ways and means committee, we would have MANY protections against such a senerio since Income taxes would be illegal by statute, the IRS would be defunded, and ALL their exsisting records would be destroyed! READ it for yourself!

[ApesForEvolution]

Call me crazy, but without the Constitution, what's the point??? Point being, if this isn't THE priority, why have any??? This is where the insanity begins and then it jumps off in all the other nonsense that comes from an un-constitutional nanny-state.

[ApesForEvolution]

That would still require an IRS. Do you like the IRS? If you do, it's because you don't earn very much.

[ancient_geezer]

I still like Steve Forbes' idea. A flat tax with the first, say, $30,000 of income exempted for everyone...set at around 15 percent with no deductions to tempt Congress to legislate through tax policy.

Here's how tax rates come out for the Armey/Shelby Flat Tax, a flat individual/corporate income tax, which leaves all SS/Medicare, Federal Unemployment, excise taxes and tariffs in place and unchanged. All new revenue bills are required to be revenue neutral under the Budget Enforcement Act, meaning not projected to not increase the current deficit or decrease current surplus when compared with the current tax law.

http://www.library.unt.edu/govinfo/subject/vital.html

• "The chart below shows a hypothetical set of flat tax rates and allowances that would result in revenue neutrality. This model, produced by the Congressional Budget Office shows that all federal income tax revenues could be fully replaced by a system with a flat tax rate of 13.1 percent and no deductions. Allowing total deductions for a family of four to reach $36,800 (more than double the amount allowed in 1995) would require a 19.9 percent rate."

Joint Economic Committee

Revenue Neutral Tax Rates for Alternative Allowances and Exemptions Under a Flat Tax

Standard Allowances	Option 1	Option 2	Option 3	Option 4	Option 5
Single	$13,100	$13,100	$ 6,550	$ 6,550	$0
Joint	$26,200	$26,200	$13,100	$13,100	$0
Head of Household	$17,200	$17,200	$ 8,600	$ 8,600	$0
Dependent Exemption	$ 5,300	$ 2,650	$ 5,300	$ 2,650	$0
Revenue Neutral Tax Rate	19.9%	19.4%	16.8%	16.3%	13.1%

Source: Congressional Budget Office, 1995.

---

Under the Armey "Flat" tax, as it is currently proposed,(HR1040 introduced 3/15/2001) a single person would pay:

7.65% ---- 7.65%(SS/Medicare) tax on wages/salary income below $13,600,

26.65% --- 19% + 7.65%(SS/Medicare) tax on wages/salary and other taxable income from $13,600-$75,000

20.45% --- 19% + 1.45% Medicare tax on wages/salaries and other taxable income from $75,001 up.

0% -------- on savings & bond income and stock dividends.

And that single person's business/employer pays,

19% ------ on earnings (Gross Receipts less allowed business deductions, exemptions and credits)

13.65% ---- 7.65% on SS/Medicare employment excises + 6% federally mandated unemployement excises levied on each employee's on wages up to $75,000.

7.45% ----- 1.45% on Medicare employment excises + 6% federally mandated unemployement excises levied on each employee's wages greater than $75,000.

Plus additional selective excises and tariffs dependant upon the nature of business engaged in.

Note: The base "Flat Tax Rate" is subject to meet revenue neutrality requirements under the Budget Enforcement act. The 19% rate stated in the Armey/Shelby Flat Tax proposal does not meet these requirements and would of necessity be adjusted upwards, and/or personal exemptions and business deductions be reduced to meet revenue neutrality criteria for enactment.

Further the Flat Tax is a VAT in the manner in which it transfers tax onto the consumer from business which is taxed at all stages of production and passed on to the consumer hidden in price of retail goods an services.

http://waysandmeans.house.gov/fullcomm/106cong/4-11-00/4-11kotl.htm

"Robert Hall, one of the originators of the proposal(Flat Tax), who describes his Flat Tax as, effectively, a Value Added Tax. A value added tax taxes output less investment (because firms get to deduct their investment.)"

"The Flat Tax differs from a VAT in only two respects. First, it asks workers, rather than firm managers, to mail in the check for the tax payment on that portion of output paid to them as wages. Second, it provides a subsidy to workers with low wages."

 

---

The Flat Income Tax (FIT) proposal, H.R. 1040, has two elements: a Flat Income Tax on an individual's earned income, and a VAT on businesses. The Flat Income Tax on businesses, is, by admission of Professors Robert E. Hall and Alvin Rabushka, who "wrote the book" on the FIT, a subtraction method Value Added Tax.

Quoting Hall and Rabushka ("The Flat Tax," Hoover Institution Press, 1995, pp55,56):

"To measure the total amount of income generated at a business, the best approach is to take the total receipts of the firm over the year and subtract the payments the firm has made to its workers and suppliers. This approach guarantees a comprehensive tax base. The successful value-added taxes in Europe work this way. The base for the business tax is the following:

Total revenue from sales of goods and services
less
purchases of inputs from other firms
less
wages, salaries, and pensions paid to workers
less
purchases of plant and equipment."

FReepers, the Flat Income Tax is a Value Added Tax in respect of business taxation. Professor Hall testified to that effect in a Ways and Means Committee Hearing in 1995 as well as in his book on the subject "The Flat Tax" in that same year; And it is an income tax in respect of individual taxation.

So, let us quit wasting bandwidth arguing about the Flat Income Tax. It combines a VAT with an income tax. Those of you who do not like VATs should not like the FIT. And those of you who do not like income taxes should not like the FIT, either.

[Nuke'm Glowing]

""My worry," he told WorldNetDaily, "is that somewhere down the road, after we replace the income tax with a consumption tax, the American people will get saddled with an additional income tax."

Ron Paul is 1000% correct. We are about to get screwed again.

[ApesForEvolution]

People that in general don't achieve very many Federal Reserve Notes prefer anything with the IRS still in it; i.e., the flat tax.

[ApesForEvolution]

People that would allow any system that still includes the IRS and scrutinizes how people earn and spend money without any privacy simply do not earn much money, don't pay much if any in taxes and are afraid they will actually have to pay a tax on consumption. How else anyone that earns enough to pay significant taxes could stand for anything with the IRS still intact is unfathomable. Dam*ed vampires with firearms.

[webstersII]

My humble prediction is that this is the first step in a move to have a Value-Added Tax like they have in Europe ALONG with an income tax.

Maybe Bush is seeing only one or the other tax, either a sales tax or an income tax but not both, but it is a certainty that the liberals in Congress (including some Republicans) don't want to give up wealth re-distribution through income taxation.

The income tax is punishment for the wealthy. As long as people in this country believe that they should pay less taxes than someone else, simply because someone else has a bigger income, then having an NST-only system is a pipe dream. Even my father-in-law, who considers himself very conservative, believes that "rich" people should pay higher percentages in income tax simply because they have more money. This mentality is rampant in the country. We can't have a change in the tax code without a change in the general mindset of the population.