National sales tax gains momentum

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

[webstersII]

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

If the average goes down by 20-30 percent, then the government revenue would go down by about the same amount. Are you planning on making the gov't 30 percent smaller? Sounds terrific to me. Now let's see you find a liberal that will go for it; ain't gonna happen in this session of Congress.

[ApesForEvolution]

Good points. As happens all the time, when someone can do a quality job or provide a quality service or innovation for less, the rest either adapt or lose market share. The cost to business and then the end consumer is deeply embedded.

[ApesForEvolution]

Have you even been audited?

[ApesForEvolution]

This is the best next step...

[FITZ]

The more I think about it, the more I like the National Sales Tax. They need to start seriously cutting government spending though.

[ApesForEvolution]

The 'embedded' costs of the income tax is the part of the equation that you missing...

[hardhead]

To this uninformed mind of the vast right wing unwashed majority, I never could figure out why WORK AND PRODUCTION was taxed! 'Work hard and we'll hold you back; do nothing but take and we'll reward you. Make everybody equal!' Time to get rid of this socialist mindset. This would be very equitable in that all the crooks would pay taxes on their ill-gotten gains (politicians?) when they buy that fur coat for their sugar baby or the diamond necklace for their wife. Purveyors of death (the drug dealers) would be paying tax on every luxury they buy.

[webstersII]

The 'embedded' costs of the current tax system amount to 20-30%? That sounds like alot, but you may be correct. Whether it's 20 or 30 or whatever percent, doesn't that money go to pay the salary of someone in gov't? There is certainly alot of waste in the system but most of the waste goes to pay someone's salary in the fed. gov't, which is what I'm saying about downsizing.

One of the features of the Reagan tax cuts of the 80's was that it was revenue-neutral. That was the only way they could get it passed in Congress.

[Hostage]

I guess your comments could be summarized as "don't do anything, it's too risky". I would wager anyone could throw that reasoning around. But don't you think the peole that are working on the details haven't thought of what you so *afraid* of?

[ApesForEvolution]

I may be wrong, but I believe the 'embedded' cost of the IRC is appr. 25%; i.e., the hamburger, the tires, the hard goods, etc., that you buy are 'inflated' due to the IRC.

I also believe that the bloat in spending on nefarious, unconstitutional 'programs' needs to come into line quickly.

And, it is my understanding that the "Fair Tax" is 'revenue neutral' and abolishes the IRS.

FReegards, AFE

[Leto]

The IRS will still be there to collect the NRST, don't kid yourself.

Without repeal of the 16th amendment we will end up with BOTH a Income Tax and a sales tax. That has happened in EVERY country that has a NRST. In every country that has has an NRST it has evolved into A VAT tax.

The problems with the NRST as not with the concept. The problem is in the politics.....

The are currently 25 rat Govenors, 204 Rat congressmen + Bernie the Socialist, 46 rat Senators + Jeffords + Chaffee
, then we have the assorted RINO's. Given this REALITY, how would a repeal of the 16th amendment be accomplished? I don't see it.

I would love to see the IRS go away, since that isn't going to happen anytime soon let's look to restrict their power. The Flat Tax goes a long, a lot of the terror they inflict comes from their ability to interpet an incomphrensible tax code to screw tax payers. If we had a system like a Forbes/Armey Flat Tax, they are no rules for the IRS to interpet. It would also have the following benefits: End the double taxation on investemnt income (some flavors eliminate income tax for business's and tax shareholders on their capital gains and dividends), it gets rid of the death tax preserving family capital and business's. Also the SS tax isn't rolled into the system. Demographically the SS System will collapse, we will need to go to a system like Chile has, if we go to a SS Inclusive NRST it will be much harder to change SS and Medicare.

A final question how much did you pay in Sales Tax last year? I don't really remember the #, but I can tell you EXACTLY how much I paid in income and FICA.

If we are going to reduce goverment spending to reasonible levels (Freidman suggest 11-12% GDP for the Feds and 20% for all levels of goverment. People have to see the direct cost to them. For the Flat tax I would go to lower rate with smaller exemptions, I would also build in a tax cut.

[ancient_geezer]

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.

Ahhh! I really hate to be the one to inform you but for all practical purposes, our corporate tax is a VAT.

We've already got that, the issue comes down to how to get rid of it;

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, pays federal taxes through that VAT, (i.e hidden sales tax)

DO YOU PAY YOUR INCOME TAX
AT THE SUPERMARKET?
by D. Sherman Cox J.D. L.L.M. Taxation

And how not to perpetuate the problem.

The Forbes/Armey Flat tax is still an income tax with VAT, requires an IRS, and still taxes business passing on such taxes in higher prices to consumers, lower wages to employees, and lower returns to investors/retirees.

None other than the father of the flat tax, Robert Hall of Stanford University (along with Alvin Rabushka), in his 1995 Ways and Means Committee testimony said, "The Hall-Rabushka flat tax is a value-added tax."

Which was pointed out again in additional hearings in April of 2000:

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."

[Leto]

If the IRS catches you bartering or buying items under the table you are breaking the law.

[ancient_geezer]

I may be wrong, but I believe the 'embedded' cost of the IRC is appr. 25%; i.e., the hamburger, the tires, the hard goods, etc., that you buy are 'inflated' due to the IRC.

European and the FarEast VATs levied on businesses exempt those country's export products, while our income/payroll tax system embeds federal taxes into the price of all goods and services.

I researched the effect of repealing all income and payroll taxes laid on business on the theory that we as individual consumers end up paying those taxes at the retail counter.

The following article covers the mechanism on how the current Federal tax system propagates and is embedded into consumption expenditure.

DO YOU PAY YOUR INCOME TAX
AT THE SUPERMARKET?
by D. Sherman Cox J.D. L.L.M. Taxation

The 24% in the article considers only those factors actually paid to government out of impositions on the business in complying with the income, payroll, excise & tariff tax laws.

I also refer you to the section of the following article about the Income/Payroll tax system and its impact on our economy "A. Hidden Upstream Taxes. " paragraph 39.

"[39] Dr. Dale Jorgenson, Chairman of Harvard University's Economics Department, believes that the price of goods and services are inflated by about 20 percent or more by upstream taxes consumers ultimately bear. In a recent paper Dr. Jorgenson estimated the built-in taxes contained in the price of goods and services. /22/ In the chart above, he quantified the hidden component of tax, estimating that producer prices would fall on repeal of upstream taxes an average of about 22 percent."

Looking at the accompanying chart, the range of values from industry to industry appears to be about 12-25%.

Economists Gary and Aldonna Robbins of the Texas-based Institute for Public Policy examined the case of dry cleaning a shirt, with a particular eye toward uncovering the hidden costs of taxes in price.

The Robbin's attributed over 33.6% of "consumer prices" to be due to federal taxation passed on to the customer.

The Federal Tax System
http://www.cbo.gov/showdoc.cfm?index=2125&sequence=0&from=1#pt1

From the Table 1 we may extract the proportionate contributions of each sector of taxes as they contribute to consumer price for the year 2000.

• Total revenues collected by Feds in '00 = $1945billion ( 33.6% of consumer price)

Those tax components which will not change prices as a consequence of enactment of HR2525

• Individual Income Tax(Labor) = 945billions,
• Employer half of Social Insurance = 653/2 = 326.5billions,
• Excises = $68billion
• Customs Duties = $19Billion
• Miscellaneous = $40Billion

============================

• Total constant price factors = $1358.5 billion
• Remainder federal tax components affecting price = (1945-1358.5) = $586.5

Adjust for a conservative $600billion(1995 figure, AGCA '00, Payne '95, PillaBartlettNorquist '95 ) interest & cost of compliance effects.

• Total tax related factors affecting consumption price = (600 + 586.5) = $1186.5billions

Estimated change in consumption prices as consequence of enactment of a National Retail Sales Tax, repealing all business income and payroll taxes:

33.6*(1186.5/1945) = 20.5% in consumption prices

Which compares well with the Jorgenson empirical study of 22% fall in producer prices.

The two sources are in reasonable agreement, and I see 20-23% a reasonable value to expect prices to fall not only for customers here in the United States, but in our exports as well making them far more competitive on international markets.

[ancient_geezer]

The IRS will still be there to collect the NRST, don't kid yourself.

H.R.2525
SPONSOR: Rep Linder, John (introduced 07/17/2001)
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
Refer: http://www.fairtax.org & http://www.salestax.org

Just what is your IRS going to be doing after being defunded, with the state tax authorities doing what they already do with regard to there own sales tax, and that is collect it from the business; and all Income(corporate & individual) tax, all payroll (FICA uemployment etc.) taxes and all gift/estate taxes repealed, with IRS income tax records destroyed?

[ApesForEvolution]

Thank you sir.

[ApesForEvolution]

I believe ancient_geezer addressed this in post #75.

[webstersII]

And, it is my understanding that the "Fair Tax" is 'revenue neutral' and abolishes the IRS.

Not trying to be dense here, just want to make sure I understand what you are saying.

You are saying that the NST would be revenue-neutral (i.e., we would still be raising $2+ Billion for the gov't budget) and the 25% savings would come in the form of lower prices for commodities?

[Dead Dog]

If you sell your house it is a "used" item, and is not retail as in N. Retail. S.T. as per HR2525.

All good and services will drop about 20% in price and cost. As it is now, when you buy something you pay the income tax of every person and corporation that touched it during production.

NRST makes investment in production like a 401K, it is only taxed after the investment matures. There is a real advantage by taking x number of dollars out of the return on investment as opposed to taking that same amount out of the original investment.

[Leto]

If you think the defunding of the IRS will survive markup in the congressional lawmaking process you are naive.

Again a couple of points, HR 2525 recommends repealing the 16th amemdment but that is FAR different than repealing the 16th amendment. My original point holds, given the makeup of congress and the composition of state goverments, what leads you toi believe that the rats and RINO's would go along with repealing the 16th amendment? For all the Pollyanna posts by ancient geezer, principled, Cheif and others, no one has said how and when the 16th amendment would actually be repealed. The language in hr 2525 and $4 will get you a cup of latte at Starbucks.

Again in EVERY country that has instituted a NRST the Income tax came back. As a conservative I look at reality and what History teaches us.

One more question, Why is it that there are democrat congressmen sponsoring HR2525 but no Dempcrat has ever been favor of the Forbes/Armey Flat Tax????? WHat do you think??? are there actually socailist who want smaller goverment???? I have my doubts.