There was a lot of talk recently about creating a national sales tax in place of an income tax, supposedly causing more "fairness". I strongly agree with the assumptions that this will create more fairness, and strongly disagree with an idea of a national sales tax. Here is why:…
Article comments
— go to most recent comments26 - Merrill
A Basic NST added to our curent system would be like the Europeans and a potential disaster. The Fair Tax proposal is much more comprehensive and you have to go through the entire package and the many research papers and economic review on their web site to get the entire picture. fairtax.org.
The Fair Tax is better for the poor and Middle class and gets a fairer amount of tax out of the Rich by eliminating deductions and loopholes.
First; read the entire package and you will see that there are solid numbers that the price of Goods and services under this system will drop an estimated 22 to 25%.
Second: Everyone takes home 100% of their paycheck. no federal income tax but more importantly; no payroll tax deductions from your paycheck and none paid by your employer.
The most regressive tax on the working Poor and Middle Class is the Payroll tax - many economists point to it being a suppression on increased wages being paid by employers as well.
The wealthy or "RICH" only pay this payroll tax on the first $87500 in income. Now they will pay their fair share on all they spend with no tax loopholes or deductions. This also strengthens Social Security.
The Rich man buys a new BMW he pays the Fair Tax of 23%, IF I buy a used van I pay no Sales Tax. I can buy that Van Because I took home 100% of my paycheck with no income tax or payroll tax deduction.
I believe high Income earners get tons of tax breaks and their net income tax rate is lower than many Middle class people. Teresa Heinz Kerry paid only 12% on her last tax return. I would rather she pay her fair share and when she buys a new SUV she pays 23%.
Remember, that built into the cost of every product, food, medicine, toys, or service is the taxes on that business that produces and sells that service. Corporate tax, payroll tax; Cost of tax compliance; etc. Fair Tax elimiantes those costs and eliminates the tax breaks and loopholes where corporations don't pay their fair share of tax anyway. (Campaign finance reform benefits as well)
By eliminating this pass through cost, economic anaysis shows a 22% average drop in product costs and a 25% average drop in service costs.
Now add to that product cost a 23% inclusive sales tax( or 30% exclusive- same thing)
A $100 dollar product or service drops 25% in price under the Fair Tax to $75.
Now let's buy that product with the 100% take home pay we now earn under the Fair Tax and pay a 30% Exclusive Sales tax( =23% inclusive).
$75.00 x 30% = $22.50 exclusive sales tax
$75.00 + 22.50 = $97.50 ( 22.50/97.50 = 23% inclusive sales tax rate)
So, I have paid my fair share of tax and the net cost to me is less then before for the product and I don't have the IRS take 16 to 25% out of every paycheck??
Let's be more conservative and say that the price of Goods and Services will only drop by the lower estimated number of 22%.
$100 product drops to $78.00
$78.00 x 30% exclusive rate = $23.40 ( = 23% inclusive rate)
$78.00 + $23.40 = $101.40
Net increase to the consumer of only 1.4 %.
My fair share of tax is paid and I kept 100% of my paycheck to buy it. I only paid $1.40 more but kept 100% of my pay.
I didn't pay 16 % of my income and I didn't have another 7% of my check withdrawn for Payroll taxes and Social Security.
Wow, that works for me.
Wait!!! I forgot - in additon to keeping more of my own money I am also going to get a monthly rebate check of over $400/ month to cover or refund to my family for the tax we spent on the first $15, 000 of income to cover what I spent on essentials up to the poverty line. How is this not better for me and my family ????
27 - bhw
Well, it seems like you think everyone is going to pay a lot less in taxes than they currently pay. There's surely no way a plan like this wold ever be implemented if the truly rich would end up paying MORE.
So, what to do about the budget crunch? We already have a big deficit and spend more than we're collecting in taxes, so where do we start cutting spending? And how can we afford the monthly subsidies you mention with such a reduced amount of tax money to spend?
28 - dave
There is little reason to believe that the cost of goods would go down.
First...the cost fo goods rarel if ever go down, even if they can still make a profit off of it.
Second...all businesses would also be paying sales tax on everything that they buy to produce these goods, which would raise the prices of goods to consumers.
Also...you are relying on a 30% tax, which most economists would say is not nearly enough to cover the national budget.
But then again...when does this administration worry about covering their expenses.
I have read through the fairtax.org website. I understand the concept, and on the surface it sounds really nice. But once it is furthur examined, one can see that not only is it extremely flawed, but that it is a "pro-rich" system that is very regressive and burdonsome to the poor and middle class.
29 - bhw
Also, if companies didn't have to pay taxes, salaries would eventually go down, and we'd all end up taking home the same amount of money at the end of the day, anyway, even if no taxes were taken out.
Example: Employers in NYC pay higher salaries than employers in NJ and CT. Some of that because of the NYC cost of living. But some is also because of the high number of commuters from NJ and CT, who pay NYC income tax on top of their own state income tax. NYC employers adjust salaries to compete with employers in those other states, so that the employees end up taking home the same amount of money as they would if they didn't work in NYC.
If there was no "extra" tax on commuters, NYC employers wouldn't offer them higher salaries.
Same goes for employers if you remove federal taxes. They'll slowly adjust salaries downward so that take-home pay is about the same.
30 - Merrill
The Fair Tax is truly comprehensive in how it is structured and the benefits it can create.
1. Take home 100% of your paycheck with no Federal income tax deduction or Social Security or payroll deduction!
2. Base price of Goods and services drop 22 to 25% because we elimiante Corporate and Payroll taxes.( A pass through cost paid by consumers anyway)
3. Stop or reduce Outsourcing of Jobs - it will be cheaper for comapnies to manufacture and do business in the U.S.
4. Increase exports and increase Jobs in the US. NO tax on our exports, therefor with the 22 to 25% price drop our goods can be exported at a lower cost to foreign consumers. This will create a great economic and growth boom for our country. Reversing the trend in the Trade deficit.
5. Imported goods will have to pay the new tax; making made in the USA products cheaper and more competiitve.
6. All consumption is taxed and part of the tax funds Social Security and Medicare. This is a larger tax base than income. Provides for a stronger Social Security with the Rich paying the tax on all they spend instead of contributing on only part of their income. When the rich get their Corporate dividends they won't pay a capital Gains tax but when they buy that new BMW they will pay for the sales tax.
6. Estimated Compliance costs of $250 Billion annualy to keep up with IRS rules and tax loopholes will not need to be spent on accountants but can be put into more productive parts of growing the economy. Tax simplification that is fair. IF your rich and spend more you pay more.
Look at the whole package. www.fairtax.org
Much more than just a National Sales Tax.
31 - Merrill
Monthly subsidies are accounted for in the Fair Tax Proposal. The 23% inclusive tax rate is revenue neutral.
After paying back the tax rebate; the Revenue to the US treasury is the same as the taxes currently collected for Social Security, medicare, personal income tax, payroll tax and Corporate taxes.
Though a few economists have felt the 23% inclusive( 30% exclusive) sales tax is too low. Many other Economists are on record that the number is correct.
The Fair Tax is taxing final point of purchase of new products and services.
Business to business does not pay this tax. Therefor the estimated drop in prices is warranted. IF the cost of doing business goes down the prices will follow.
The web site has a rebuttal section which answers some of its critics with hard facts. Points out that some critics have not read the entire proposal and have commented on a VAT or European style Sales tax but are not correctly stating the Fair Tax proposal in its entirity.
With the reduction of taxes on business, the economy will grow, demand will grow and the demand for employees will grow. This will result in salary increases not salary decreases.
32 - bhw
Therefor the estimated drop in prices is warranted. IF the cost of doing business goes down the prices will follow.
Maybe. Or profits were merely increase. And companies are pushed hard by Wall St. to continuously icrease profits. Hard to imagine they'll pass that along to the consumer in a significant way.
33 - Merrill
When competing comapnies both have their costs drop 20+%. to stay competiitive they will both lower their prices to the same profit margins they had under the old tax system. IF not one competitior will easily steal business from the other.
Think of the consumers when we switch to the Fair Tax - they will all be expecting prices to drop and than add in the sales tax. If Target drops it's prices so as to net same profit, they will get the business and if WAlMART will not and decides to go for more profit per piece and not drop prices. Than Target wil win and the consumer will win.
I think it is more likely Prices will drop. The public will demand it. Even business to business will demand lower prices under the new system.Though businesses will not pay the tax; they will demand that their suppliers lower their price because they know the cost of doing business has been lowered for everyone.
If you have time visit the fairtax.org site. Clik the GET SMART button and you will see a FAQ section covering your concerns.
Historically, Our Founding Fathers were more in support of Consumption taxes than income taxes. Our income tax system didn't come in to being until early in the 1900's.
A Broad based Consumption tax designed to be progressive with its rebate system is the simplest way to go; eliminating the complexity of the current tax code and saving billions of dollars in compliance costs.
34 - dave
I am still blown away that you would not consider a NST a regressive tax.
A person that makes 30,000 a year is likely to spend close to 30,000 during the year. A person who makes 300,000 is likely to spend much less than 100% of their income, say 70-75% (I don't know the exact figures). This would force the peson making 30,000 a year to pay a much larger percentage of their income to taxes than the person making $300,000/yr.
Also...a sales tax is more more dependable on the level of the economy than an income tax. When the economy is good, spending is high but when it the economy is low, spending is down.
35 - Mac Diva
Who set up Fairtax.org? Who funds Fairtax.org? Why isn't that information prominently displayed on your website? (Assuming it is displayed there somewhere at all.)
Here is a links page from Fairtax.org. Notice all the organizations concerned about 'the little people' supporting a national sales tax-:).
36 - dave
But it is pro-poor! It doesn't matter that almost every link on the page is extremely pro-business! (sarcasm)
37 - Merrill
NST by itself perhaps - But that is my point the Fair Tax is more than that.
Go To: http://www.fairtaxvolunteer.org/smart/faq-main.html#12
The Fair tax has a rebate system of monthly checks to cover the tax on essentials up to the poverty line.
This eliminates the regressive nature of a National Sales Tax by itself. Resulting in those living at or below the poverty line have a net tax rate of 0%; Someone living at twice the poverty level has a net tax rate after rebate of about 11.5%; A family making 40,000/yr has a net effective tax rate after rebate of about 12.3 %. Less than their current income tax rate of 15 %
In your example of $300,000 in income and spending 70% of their income or $210,000; they pay 23% in FAir Tax or $48,300. They get a rebate no larger than the same size family making only $40,000. They get a rebate of $4,283 for a net tax payout of $44,017.
$44,017/ 210,000 is 20.9% on what they spent and $44,017/300,000 = 14.67% of total income.
Because of the rebate system you protect the poor and help the Middle class by making the new system still progressive as a percentage, simpler and more fair across the board.
More importantly, you have eliminated the truly regressive payroll tax of 7.65%. This is truly regressive on the working poor. That money is not returned or rebated. Leaving less money for essential like food and medicine. The Fair tax gives the poor more in their pocket.
Let’s look at a billionaire under the FairTax " if he spends $10,000,000 dollars he pays a tax of $2,300,000 and gets a rebate of $4,283 (assuming he is married and has no children). His effective tax rate is 22.96 percent.
Now, let’s look at a middle-income married couple, under the FairTax, with no children " if they spend $40,000, they pay $4,917 net of their rebate for an effective tax rate of 12.3 percent. The effective tax rate increases as spending increases, but never exceeds 23 percent. This is how I call it a Progressive system.
The Fair Tax as a package is much more than just a NST. IT is well thought out and well studied. Supported by many groups from farmers to small manufacturers. Also supported by research papers from Harvard and Stanford.
38 - Merrill
Is the Fair Tax Pro Poor??
It is both pro Poor, Pro small business and pro farmer. Pro - JObs; Jobs in the US not outsourced overseas.
The status quo is to support the Payroll tax we have now. The most regressive of all the taxes we have. 7.65 % deducted from every minimum wage worker. Let the poor take home 100% of their paycheck. How can you defend the current system and its regressive nature on the poor?? In addition, the poor pay the hidden tax of that 22 to 25% I mentioned earlier, Because it is built into the price of everything they buy now; food; diapers, medicine,clothing, etc.
The Fair Tax is much kinder to the poor with a rebate system to every family. There net effective tax rate is ZERO- 0%. If they are working they take home 100% of their paycheck- no deductions.
Why keep the payroll tax when this is much better??
39 - Merrill
Fair tax is funded primarily by small grassroots contributions from supporters all over the country.
http://www.fairtaxvolunteer.org/materials/factsheet.html
Summary Brief on Americans for Fair Taxation.
Americans for Fair Taxation is a 501c(4) non-profit, non-partisan organization headquartered in Houston, Texas with an office in Washington, D.C. Since it was founded in 1995, Americans for Fair Taxation has grown to become the largest tax reform organization in the United States with over 400,000 supporters and members.
Americans for Fair Taxation advocates the elimination of the current income tax code and proposes to replace it with the FairTax, a single-rate federal consumption tax collected only once, at the final point of purchase for personal consumption.
The FairTax offers long-needed tax relief to all Americans, while eliminating the income tax and allowing Americans to keep 100% of their paychecks. The FairTax is the only tax reform proposal which "untaxes" the poor and allows wage earners to keep 100% of their paycheck while still funding all existing government programs. The FairTax will dramatically reduce prices, protect and ensure funding of Social Security and Medicare, empower low-income earners, and put choice and control back into the hands of every American.
Americans for Fair Taxation has conducted extensive policy research, and it has commissioned a variety of research papers about the economic impact of the FairTax on various sectors of industry and on individual taxpayers. The FairTax has often been referred to as "the most thoroughly researched and the most viable alternative to the current tax system."
The following individuals, along with their affiliated institutions and universities, have been involved in researching the FairTax proposal to determine the impact of the FairTax on the economy, businesses, and individual taxpayers:
Dr. Dale Jorgenson " Chairman of the Economics Department, Harvard University
Joseph Kahn " Decision and Ethics Department, Stanford University
Larry Kotlikoff " Boston University
George Zodrow " Chairman of the Economics Department, Rice University
Jim Poterba " MIT
Steve Moore " The Cato Institute
Bill Beach " The Heritage Foundation
David Burton and Dan Mastromarco " The Argus Group
The acceptance of the FairTax as a necessary and viable replacement for the current tax system is further evidenced by the formal endorsements of such notable and respected organizations as the Associated General Contractors of America, The American Farm Bureau Federation, and National Small Business United, among many others.
40 - Mac Diva
My suspicions are confirmed. Fairtax.org is a front group for Scaife & Co. That's right, kiddos, the far Right's foremost monied megalomaniac is behind it, along with the usual suspects.
An article from the Las Vegas Weekly sums up the situation well and gives a truthful account of what a national sales tax would really do.
Once a upon a time.
January 7, 2003, to be exact, when Rep. John Linder, of Georgia, introduced H.R. 25, proposing to abolish the IRS (and destroy its records) at the end of fiscal year 2007. In place of payroll, Social Security and Medicare withholding, Linder's bill (which now has 54 co-sponsors) would impose a federal sales tax, which would produce a variety of economic bonanzas"in theory.
. . .The primary booster is a 527 group called FairTax.org, and the bill itself is, by a curious coincidence, called the Fair Tax Act of 2003. FairTax.org is allied with the plutocrat-friendly Cato Institute and the Heritage Foundation. The latter's trustees include such average consumers as Steve Forbes, Holly Coors and conservative conspiracy-theory obsessive Richard Scaife (patron of Kenneth Starr).
. . .Early last month, rumblings were heard on cable news that the Bush administration would be making a big push for a national sales tax after the election. House Majority Leader Tom DeLay (a co-sponsor of the bill) and his front man, Speaker of the House Dennis Hastert, made it clear that the tax was a big part of their agenda
While campaigning in Florida, President Bush lent further substance to rumor, saying, "I'm not exactly sure how big the national sales tax is going to have to be, but it's the kind of interesting idea we ought to explore seriously."
Note the subtle semantic shift of the debate. Amidst his characteristically (deliberately?) imprecise speech, Bush reframed the debate in terms of "how big" the tax should be, not whether we should have one.
Read the rest.
I will be sniffing the money trail for Fairtax.org, which I am pretty sure leads back to Scaife, the anti-tax Club for Growth, and other far Right interests. Media Transparency and the WaPo keep pretty good records on Scaife if someone else wants to track it, too.
Merrill and ii (assumming you are different people) are you paid lobbyists for Fairtax.org or the Right Wing foundations that back it?
41 - Merrill
Mac Diva,
I am one of the 400,000 members of Americans For Fair Taxation. A volunteer who works as a Mortgage broker from his home office in Western New York and when there is time - shares thoughts on the FAir Tax proposal. Slow Mortgage day today. I am not paid nor an employee. This is truly a grassroots organization.
I was not aware of the names you mentioned nor do I think it much matters. Whether it is far right or far left Millionaires like George Soros who support any cause doesn't matter.
What matters is the merits of the idea, how well studied or planned out. There are problems with the current system. Unfair to the poor and unfair to the middle class. Tax policy that hurts economic growth. An alternative is needed and I think this idea has merit.
Tax loopholes that let business and the wealthy get away with a lot if they have the right accountant or lawyer. is not a defensable system of taxation.
The only honest objection to this proposal that I have seen is from Tax attorneys that will lose business under this proposal.
Also High paid Lobbyists- Take away thousands of tax rules and tax giveaways in the tax code and they have little to lobby for.
I will gladly discuss the merits of the proposed legislation. I would much rather discuss the merits than focus on a boogie man that you have to scare people with.
This is not some rich guys idea pulled out of the air in the last year- this group has been around since 1995.
I am self employed, I not only pay the 7.65% payroll tax that comes out of a w-2 employed individuals paycheck but have to pay the employer half as well for a total of almost 15% in payroll tax alone. Add income tax on top.
I have seen a younger sister work hard to get ahead - raising her son alone on a wage around the poverty line. It is a struggle. She could use 100% of her check coming home.
There are real people in America that this system would be better for. It is not just a gimmy for the rich or for corporations. This would be good for America, good for the poor and the working poor, Good for poor seniors, Good for Union Workers, Good for Jobs and much more.
In reality, I am more Liberal on other issues. Not a Minimum wage but a Living wage, Basic health care for all, import drugs from Canada .
Under The Fair Tax system I think we are more likely to make in roads on those other issues in time.
Under the current tax code- Lobbyists have more control.
In a round about way you even get Campaign finance reform out of this proposal as well. By eliminating the cumbersome tax code you eliminate the #1 area Lobbyists work on to making the working man pay more and business get special breaks.
McDiva , I respect your opinion and you have asked some great questions. Please give this Proposal a fair shake, I think you will like it.
42 - Merrill
Las Vegas weekly Article.
What an alarmists piece of hogwash. But don't worry, I want to be Fair to the Gambling industry too. Again, look at the whole package and I believe that the fears people have are unwarranted and that this is a smart move for the country.
Like Most Critics over the past few years, they haven't red the whole proposal or accounted for the drop in prices of 22 to 25% nor do they put the taking home of 100% of your paycheck combined with a rebate check in the mix.
Go to http://www.fairtaxvolunteer.org/smart/faq.html
and read the FAQ section to answer all the objections in this article and much more.
43 - Mac Diva
Merrill/ii, if you are not getting paid to flack for the richest people in America, you're being foolish. So, I hope you are indeed collecting some of that bling bling.
44 - jj
Mac and Dave you must be the same person because you are rambling about the same crap. Unlike Merrill I am not a part of FairTax, I am an American that wants a fairer system and like what I have read about FairTax. If you can't see how FairTax is progressive you either don't want to or are to stupid to understand simple math, either way your not the kind of person looking out for what is best for our country.
45 - dave
Definitely not the same person. Mac Diva actually already bashed me for even bringing up an NST, because it is too foolish of a policy to actually be put into action.
FairTax is not progressive. It causes the lower and middle classes to pay a larger % of their income than the upper classes. That is the definition of a regressive tax.
46 - Mac Diva
Constipated, ii? We've disagreed with you on a matter of public policy. I don't see how that translates into being "to (sic) stupid to understand simple math." Though your use of the word 'simple,' as I said above, is telling. It is supposed to keep people from probing into what a national sales tax would actually do. And, in regard to that math, it ain't so simple. In fact, it is magic. It requires revenues to be raised out of thin air.
Dave, when you first raised the idea of a national sales tax, I did think it so unlikely as not to deserve much attention. My eyes have been opened. As bad an idea as a NST is, it is just the kind of thing that would help the Bushites pay back some favors. So, it does deserve the investigation by people concerned about what they will try to pull during the next four years.
47 - Merrill
Dave,
Please review my math , on my post " Comment 37" or the FAQ section of fairtax.org. Give me your thoughts if you feel I am in error- thank you
FAir Tax is Progressive because of the rebate system it has. NST only plan would be regressive. This is not NST only.
Net effective tax rate goes from 0% for a working family at the poverty line of income to 11.5% for a family at twice the poverty line to 12.3 for a family at $40,000 to almost 15% for the family at $300,000 and only spending 70% of their income. to the super rich at 22.9% on what they spend. Keep in mind Teresa Heinz Kerry paid a net of only 12% last year.
I believe this fits your definition of Progressive.
The Fair Tax is more comprehensive than just an NST and therefore is progressive.
2. Dave, Please give me your thoughts on the Payroll tax - a total of almost 15%; half paid by an employer and half paid by a deduction from your check??? regressive?? Solution???
3. Additional Benefit to Fair tax not yet mentioned.
We have been talking about the rebate and working poor at the poverty line having a net effective tax rate of zero.
What about the non-working poor?? No income or below the Poverty line-i.e. Part time work.
If they have a valid Social Security number for themselves and their family. A family of 4 will receive a monthly rebate check for $479.
This is an effective tax rate that is now negative for that family.
Does that not further define a progressive tax???
I appreciate this political discussion and thank you for the opportunity to debate with you the merits.
48 - dan
I don't care who pays what percent of their income. Why don't the poor have to pay any taxes? They use as many if not more of the services provided by the government. The main reason to change to a NST is the individual (you, me, them, us) determines how much we pay in taxes. Don't want to pay taxes, don't buy stuff- simple as that. Exempt food, that's it- many states already do that.
49 - Merrill
4. Why not just exempt food and medicine from the tax?
Wouldn’t that be fair and simple?
Exempting items by category is neither fair nor simple. Respected economists have shown that the wealthy spend much more on unprepared food, clothing, housing, and medical care than do the poor. Exempting these goods, as many state sales taxes do, actually gives the wealthy a disproportionate benefit. Also, today these purchases are not exempted from federal taxation. The purchase of food, clothing, and medical services is made from after income tax and after payroll tax dollars, while their purchase price hides the cost of corporate taxes and private sector compliance costs.
Finally, exempting one product or service, but not another, opens the door to the army of lobbyists and special interest groups that plague and distort our taxation system today. Those who have the money will send their lobbyists to Washington to obtain special tax breaks in their own self-interest. This process causes unfair and inefficient distortions in our economy and must be stopped.
That's why the universal rebate works best. leaves less room for Lobbyists to tinker with the tax and keep it fair.
50 - John
This National Sales tax really could turn out quite lucrative for the state. Think about it this way. What do the rich purhcase the most of? Investments!!! If you get rid of income tax and start taxing purchases than eachi time there is a stock trade or new equity purchase, it is taxed. There for the rich get taxed more and more. Look at it this way. Each day on the NASDAQ over 1 billion shares are traded/purchased.. Each of these transactions will then be open to a "sales tax" as it is consumption. People will continue to purchase stocks, bonds, and mutual funds as the return on the investment is much greater than the tax rate.
Further, because of the lack of "income taxes" the stock and bonds market will become a huge buyers(bull market) as people who hold these equities will not have to pay a capital gains (income) tax.
If you really look at it more carefully it will truly generate a great deal of cash for the govt, and give them an opportunity to eliminate the national debt.
I AM ALL FOR THIS ONE!!!!
51 - Jeff
John -- The NST is a consumption tax. You don't consume shares of stock, smart guy. The tax wouldn't apply to the trading of equities or other instruments. After the IPO, you're essentially buying them used.
52 - Mac Diva
Jeff, the people posting rather silly reasons for supporting a national sales tax seem to be coming from Fairtax.org, the lobbying arm of the movement. Perhaps they are being told to talk down to the public.
53 - Mark Spangler
Cato Institute... Heritage Foundation... Hastert, Gil Gutknecht, Delay.
All champions of the little guy... yep, you betcha. A national sales tax simply continues the trend toward the fleecing of the poor, working and middle classes. The right wing has never forgiven FDR for the incredibly successful New Deal programs and those that followed.
Free markets are okay, but when unrestrained they make a handful rich and the rest paupers. This is what Bush and company want.
It consolidates their control over markets, limits investment options (ya don't need privatizing of Social Security... you can invest privately NOW!), and locks people into economic neverlands with which they have no experience and/or expertise.
The New Deal, the Fair Deal and the Great Society helped lift the elderly and poor out of poverty and gave them dignity. These programs worked quite well. The fact that conservatives refuse to fund them is the problem.
54 - Howard
Addressing the original post, what difference does the tax rate make, 23%, 30%, 56%? Whatever it is, it replaces a tax that is so complicated there is no source of certain application short of the Tax Court or the Supreme Court of the United States.
Damage to the revenue streams of non-profits could be substantial. The charitable contribution deduction is simply an unmentioned form of federal finacial support. If those organizations are in the best interests of our society, let Congress pass legislation funding them. I personally would prefer this method of all public support programs.
I believe the sales tax is a regressive tax, in the sense of the writer's thought. The plan to provide a refund of $4,800 per year to each household may reasonably address that complaint. But there is a much better way to address this problem that I have yet to see discussed.
First, have the enabling legislation provide for all employers to give a raise to each employee equal to the FICA tax the employer no longer pays. Not only is the employer relieved of the cost of deducting, reporting and remitting FICA and withholding taxes, the employee recieves a true 15% increase in income.
Then start on the "social engineering" phase of the legislation. In Texas food and hearing aids are exempt from sales tax. Other states have different exemptions. For the National Sales Tax, exempt ALL basic needs of life, but be stingy. Exempt shoes costing less than $20. Exempt shirts of less than $10. Trousers less than $20, underwear less than $2, etc. Exempt only basic foods of beans, rice, potatoes and hamburger. Leave the tax on non-essentials like ice cream, beef loin, etc. Exempt housing rentals up to $400/month. Exempt house purchases of $75,000 or less.
Such exemptions would encourage conservative spending for those who need to economize. If you can afford $100 Air Jordan tennis shoes, you can afford to pay sales tax. If you can afford $75 new bluejeans made to look old, you can pay the tax. If you can afford a $200,000 home, you can pay the tax.
While a National Sales Tax can be manipulated, such legislative actions will be much more visible to ordinary people. The current Internal Revenue Code is so complicated, no one really understands it. It is a monument to special interests (read that, not you and me). The time for change is long past.
55 - troll
I'm all for the ‘fair tax’ so long as the consumption of labor is taxed at the same rate as that of other commodities
This would eliminate the plan’s regressive nature
troll
56 - Dave Nalle
Any regressiveness in the fair tax is already addressed by the 'prebate' concept - which I personally think is whacked, but which makes at least some sense when they explain it. With the prebate, poor people who manage their money well would actually end up gaining money under the fair tax.
Dave
57 - RedTard
Why not combine a small national sales tax with a massive inheritance/gift tax?
I think that inheritance taxes are very fair and a great answer. Sam Walton did a favor to society by making retail more efficient and he should get to enjoy his reward. I don't understand why his children, who have done nothing to earn their status in society other than win the genetic lottery, should be able to keep his fortune.
The fortunes of people like Sam Walton and millions of other wealthy people should go back to the society that made them rich when they die. Their kids can still get some money, and coupled with their ivy league educations and high level business connections they should be able to do well for themselves without a massive inheritance handout.
Capitalists should be for that, right? Each generation must COMPETE for themselves. The most effective people will rise to the top, not those that had the luck to be born there.
The left should be for it too. The rich would have to give back to all those they made their money from. Each generation would start from a more equal point allowing for more upward mobility.
58 - Howard
RedTard, confiscation of all wealth at time of death wouldn't come close to funding the Federal budget. Had it been in place for the last century, however, it would have denied us the leadership of the Kennedy brothers (that's good and bad), the Rockerfeller family and Franklin D. Roosevelt. Would it have improved your life style? I suspect the politicians of Washington would not have done nearly as well investing those funds as those familes did.
If a NST doesn't sound so bad, why require a trade of something good for something that might not be so good? Every time I read of another "loop hole" in our tax code for a priviledged few, I yearn for a truly fair tax to fund our government. Don't the inequities of the income tax make you want a change?
59 - RedTard
Ending monarchy probably denied us the reign of several great kings, but it still was the right thing to do.
Systems based on class and birthright have a negative effect on society. Why not erode a little bit more of that legacy away by taxing people upon death. That way, people who earn there money get to keep more of it, and less deserving trust fund babies would actually have to go participate in the economy rather than sit back and spend daddies' money. It's really a win-win.
The reason I suggested it is that a straight sales tax would be a hard sell to those on the left. A compromise including an estate tax might be easier to pass, and may even perform better. The estate tax would allow you to drop the sales tax a few points, spurring additional growth in the economy.
60 - Ray
I agree with the guy who said that the example of person A ($18,000/yr) and person B ($180,000/yr) is a really ridiuclous example. I know many people who are making $100K+ and are still living paycheck-to-paycheck. For some people, if they have the money, they will spend it, and for their foolishness they will be taxed under a NST.
If, on the other hand, person B decides to live like a monk (person A has no choice), then person B gets to stash alot of money into the bank... So what!? both the "poor" person, and the "rich" person are living the exact same lifestyles.
If person B ever wants to increase his standard of living, he will have to buy stuff and pay the taxes. It seems like the liberals just expect hardworking "rich" people to constantly pay for lazy, stupid "poor" people.
Americans consume too much... a tax on consumption is fair to all and will make hyper-consumers pay their fair share, whether they are poor or rich.
As for the black market thing... I know many places where I can get a discount for paying cash... betcha that money is not reported to the IRS. Switching to NST won't make things any better or worse in this regard.
61 - T A Dodger
I know many people who are making $100K+ and are still living paycheck-to-paycheck.
Yeah... living paycheck to paycheck because you're behind on your BMW payments is exactly the same as living paycheck to paycheck because you can't afford food....
It seems like the liberals just expect hardworking "rich" people to constantly pay for lazy, stupid "poor" people.
I wasn't sure if sales tax advocates hated the poor or just didn't know how much the policy would hurt them. Thanks for clearing it up for me.
62 - Dave Nalle
A national sales tax isn't a bad idea, but the FairTax as it's called isn't the answer. Their rebate system is unnecessarily bureaucratic and as some have pointed out here it doesn't adequately compensate the poor or even the lower middle class for expenses on essentials. Something more like the typical state sales tax would work better where certain essentials are just exempted from the tax alltogether.
Dave
63 - Mark Saleski
whether a new taxation system 'works' or not is a seraparte issue from the bureaucratic nature of it.
what i mean is that if we're going to overhaul the whole thing, i want the ridiculous confusion of tax preparation to GO AWAY COMPLETELY.
64 - Dave Nalle
Good point, Mark. That's the problem with the FairTax proposal. Somewhere there's paperwork going on with it that there wouldn't be with a more straightforward system.
The other thing that has to go along with any total tax reform like this is a repeal of the 16th Amendment so that we'll never be in danger of having a sales type tax along with an income tax at the same time.
Dave
65 - Ray
"Yeah... living paycheck to paycheck because you're behind on your BMW payments is exactly the same as living paycheck to paycheck because you can't afford food.... "
As usual, the liberals completely miss the point. Regarless of how much money you make, if you spend it you get taxed under NST... spend more... taxed more... spend and get taxed (not to be confused with tax and spend, which is all liberals know how to do)
"hate the poor"?... no, I just hate blood-sucking parasites... who tend to be poor.
66 - T A Dodger
if you spend it you get taxed under NST... spend more... taxed more... spend and get taxed (not to be confused with tax and spend, which is all liberals know how to do)
And we know that, as a group, the rich save more money than the poor, regardless of your friend who can't hold on to his money.
67 - Dave Nalle
The rich also spend more than the poor and therfore would be taxed more under a NST. In fact, they'd probably end up paying more tax and saving less than they do under the current income tax.
Dave
68 - ray
lets take a look at persons A and B again:
liberal view:
person A is undoubtedly a member of some suppressed minority, grew up in an impoverished family, attended a low-performing, under-funded, inner-city school where he/she was subjected to various abuses by local gangs, etc, etc, etc. Now works two jobs in a 12-hour day to scrape together the measly $18K/yr to feed family. Donates time at the local charity on weekends.
Person B is a member of the white elite ruling class, born with the proverbial silver-spoon in mouth, attended best schools that money can buy, used daddy's connections to grease way up ladder for cushy job at $180K/yr... spends weekends sipping pina-coladas at the country club, schmoozing with the old-boys-network.
Liberal conclusion: person B does not deserve any wealth at all... it is imperitive that person B be taxed to the maximum and the money should be handed, without accountability, to person A, who is, of course, only a victim of society.
More rational conservative view:
Persons A and B grew up in the same middle-class neighborhood, both had average families, earning average salaries. Both attended the same public school system and experienced the same general environment. For whatever reason, Person A spent all his/her time smoking weed, "hanging out", fornicating. After high-school, person A bounced from one meaningless, low-paying job to the next, never kicking the drugs/alchohal/cigs they got hooked on trying to "act cool" in school. Now person A is a tired, bitter 30-something year old wondering why only $18K/yr. Person B was focused, got good grades in school, knew where he/she was going, set ambitious goals and WORKED HARD to achieve them. Built herself into the 180K/yr success that she is.
Conclusion: Person B deserves more in life than person A. The NST is fair to both.
69 - T A Dodger
The rich also spend more than the poor
I'm sorry I was vague. I should have said "The rich save more as a percentege of their income.
and therfore would be taxed more under a NST.
Yes, they would pay more in absolute terms because they have a lot more money to spend. As a percentage of income, they would play less than the poor, as I'm sure you know.
In fact, they'd probably end up paying more tax and saving less than they do under the current income tax.
That seems very unlikely.
70 - dave
spend and get taxed (not to be confused with tax and spend, which is all liberals know how to do)
Right...because the conservatives in power do things differently?
Oh yea...they do. They cut and spend. And rack up huge deficits.
Come on...don't make little jabs that make little sense when you think about them. A conservative cannot criticize liberal spending habits when they have conservativces in power who have spent even more.
71 - troll
try a 5% NST on all commodities across the board to include labour...what would those numbers look like do you think...how about 10% - ?
troll
72 - gonzo marx
sure troll...add a luxury tax to all purchases of a car over $25k, a house over $250k and 5% on all stock/bond transactions...add to it 10% from ANY imported item as well as 10% income on any corporations doing business in the US that do not pay taxes in the US ( read: those offshored multinationals)
get some sharp actuarian to figure out those numbers....
Excelsior!
73 - troll
More money than God I tell ya
troll
74 - Dave Nalle
Sadly, troll, the government is such a voracious pit of money consumption that even 10% wouldn't be enough. We'd need a minimum 17% national sales tax across the board, probably more depending on how broadly we classify essential goods and services to be exempted from tax.
Dave
75 - troll
no exemptions - go that route and labour would be exempted in no time
troll