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To: Tennessean4Bush
A properly constructed consumption tax will result in lower costs for all businesses in the United States.

The income tax system is far more costly to our economy than any person in government is ever likely to admit, because if they did admit to the real cost, the system would crash, immediately.

HST, the real economic cost to our economy for each dollar of taxes raised is about 65 cents. And that figure is an old one, dating from the 1993 book written by James L. Payne; "Costly Returns. The Burdens of the U.S. Tax System" (San Francisco, ICS Press, 1993).

The real cost today may be as much as $1.00 for each dollar raised in federal taxes. Who knows? You can bet that the U.S. Government is not going to tell us!

The NRST lowers the compliance cost of the tax system to ZERO for an individual, for example. And lowers corporate compliance cost by about 90%. Not to mention eliminating the IRS ($17 billion dollars) and the tax courts (no estimate available).

Just for starters.
44 posted on 11/17/2002 5:37:17 PM PST by Taxman
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To: Taxman
A properly constructed consumption tax will result in lower costs for all businesses in the United States.

"Properly" is the operative word. The article (and others I have read recently) did not inspire confidence in me that the framers of this particular idea had a proper and practical plan ready to implement.

I agree wholeheartedly that a breathtaking amount could be saved on the compliance and collection side, both by the government and by corporate America. Also, this would encourage savings and investment up and down the socio-economic ladder.

However, I am suspicious of a value-added tax as its snowball effects on cost can never be anticipated accurately. In theory, I favor a point-of-consumption tax (i.e., a sales tax) alone with no value-added tax. This is the way businesses are already set up to operate. They already are able to purchase goods on the wholesale market with no tax added if they can show that they use the wholesale goods as raw materials in their point-of-sale product.

Practically speaking, someone will have to do a whole lot of educating the public to show how even though their cost of goods will now go up by 15-20% at least, they will save on a paycheck-by-paycheck basis. Remember, most people earning less than 40,000 per year (a whole heck of a lot of people BTW) do not pay 15-20% of income tax after factoring in mortgage and dependant deductions. So their tax burden will automatically increase. Dramatically, in many cases. While this might be a good thing to encourage savings and spur job creation in theory, practically speaking it is a real tough sale. This will be one argument where the demonRATs will be right that it will be a huge tax cut for the upper brackets being paid for by the lower brackets. While I agree that just charging the same percent for everyone is truly "fair", it is not a practical idea to sell given our current system.

I am certainly open to hearing more explanation. But any explanation that does not carry a very simple sales pitch to Joe "six-pack" Taypayer that explains how this will make him better off is moot.

66 posted on 11/18/2002 6:01:25 AM PST by Tennessean4Bush
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