Flat Tax or Sales Tax? A Win-Win Choice for America.

The Heritage Foundation ^ | 8/14/1997 | Daniel Mitchell

[Taxman]

The idea is to write legislation which taxes the broadest possible range of goods and services -- keeps the rate low.

Also, as soon as one item or one service is "exempted," the manufacturers of every gadget and providers of every service will demand equal treatment. This is, of course, how we got into this mess in the first place.

I daresay that had the Congress in 1913 stipulated a small percentage flat tax and then guarded the concept as aggressively as they have guarded the concept of a steeply progressive tax, this fundamental tax reform movement would have no legs.

And the USA would be a hellofalot richer nation than we are!

Having said all that, both the NRST bills have a provision that allows a family unit (irrespective of size) to spend up to the official poverty level without paying the NRST.

Oh, they will pay the NRST, all right, when they purchase an item or service -- there are no exemptions. There are, however, provisions in each bill to ensure that this highly desirable feature works and that no one will pay the NRST on the necessities of life.

The NRST will eliminate individual record keeping, filing and the fear of audit, fer shure, fer shure!

[hardhead]

And not only that, all the criminals (politicians, lawyers, drug-dealers, etc.) who BUY things, would be supporting their own demise. I'm sure they do not pay taxes on all their ill-gotten gains now.

[Taxman]

Thass right, hardhead. Great point!

“I have sworn upon the altar of God eternal hostility against every form of tyranny over the mind of man.” [Thomas Jefferson, letter to Benjamin Rush, 1800.]

We will never be a truly FRee people so long as we have the income tax and the IRS.

Click here to help us scrap the Code, scrap the IRS and abolish the VLWC!

We will never be a truly FRee people so long as we have the income tax and the IRS.

You can also click here to sign a petition in support of Fundamental Tax Replacement.

We will never be a truly FRee people so long as we have the income tax and the IRS.

[Leto]

Why haven't I head the words, FLAT TAX or SALES TAX come from Bush's and Frist's mouths?

One word Politics, there isn't a political consensus for this type of sweeping tax reform, politically it would be suicide for conservatives to allow for the creation of a NRST without the repeal of the 16th amendment, experience show we would end up with both types of taxes. Aside from the current tax reform (WHICH DOES ESTABLISH THE IDEA THAT DOUBLE TAXATION OF BUSINESS PROFITS IS WRONG, a key idea in a Flat Tax plan), I think Medicare reform is the big idea for this election cycle (which is scary lots to go wrong here. The other biggies are judicial appointments and a PBA Ban (the most important thing to be accomplished this session of congress).

[Leto]

My inquiring mind wants to know that if a NRST were to be implemented, would the individual states and high tax cities also tack on their own sales tax?

No state sales taxes, income taxes and other fees imposed by the states and municipalities are not affected by HR 2525.

[Coleus]

What do they propose to do with the Social Security Tax, they want to repeal all payroll taxes, so how would the people of America Save for their retirement and how would we fund the people presently on Social Security and those almost there?

[Leto]

In HR2525 (a NRST Bill) the payroll tax bcomess part of the Sales Tax as does the Medicare and Unemployment tax ( I believe, but not sure, that the employers will continue to pay patroll taxes). I think the Tauzen version keeps the Payroll taxes in their current form and has a lower taxrate than HR 2525 (15% vs 23%).

The Flat Tax proposals DO NOT touch the current Payroll taxes (SS, Medicare, Unemployment Ins). I think keeping the Payroll taxes seperate is very important politically. If those taxes are buried inside a NRST is becomes politically more difficult to reform/privitaze the system. I think we should move to a SS system like Chile's, the current system is an unsustainable ponzi scheme. The Medicare system is demographically running onto the rocks and needs to be replaced with a system based on Medical Savings accounts and Tort reform.

I think the rats that support HR 2525 are using it as a Trojan Horse to make SS an dMedicare reform politically impossible (it'll be damn tough as it is).

OBTW, the tax rate for the NRST under HR2525 is raised automatically to cover the anticipated requirements of SS and Medicare, without a vote by congress!! A dream for socialist, tax increases without accountability (No taxation without representation anyone?).

[hripka]

Read HR 2525. It's not regressive because there's a universal rebate that covers the cost of all purchases up to the poverty line.

How would the government know I am under the poverty line? So under a retail sales tax, I would STILL need to fill out forms listing my income.

Sounds like no real change from current law. Almost all of the paperwork the IRS requires you to file concern INCOME.

Thank you for your honesty on this.

[Paulus Invictus]

This is all very inspiring stuff, but it's useless unless the Congresscritters and the equally useless Senators can get one or the other new tax law passed. Last year, the year before and forever at tax day, these articles appear and nothing happens. It's depressing! After this year's taxes, I'm more than ready for either a flat or sales tax, but I have no hope they will come in my lifetime. In my kid's lifetime? Niet!. My grandkids liftimes? That's a maybe!

[lewislynn]

How would the government know I am under the poverty line?

They wouldn't. Every household, as in every household would receive a welfare check every month based on family size, based on the arbitrary estimation of what the central government thinks the universal poverty level should be. You could ask yourself where that money would come from.

So under a retail sales tax, I would STILL need to fill out forms listing my income.

You, if you're self employed, your employer if you aren't...but don't worry, it's only for Social Security reasons (wink-wink).

[lewislynn]

Last year, the year before and forever at tax day, these articles appear and nothing happens.

It's a dangling carrot.

[ThinkDifferent]

How would the government know I am under the poverty line?

It's a *universal* rebate, everybody gets it; you, me, and Bill Gates. Your income is irrelevant.