Posted on 04/23/2004 4:39:23 AM PDT by Remember_Salamis
re = t / b
ri = t / ( b + t ) That is, the tax exclsuive rate is the amount of tax divided by the basis; the tax-inclusive rate is the amount of tax divided by the basis plus the tax.
For a sales tax, the basis is simple -- it's the pre-tax price of the item. For income taxes, the basis is actually the post-tax income, i.e., income - taxes. Substituting ( i - t ) for b in the above formulas:
re = t / ( i - t )
ri = t / ( i - t + t ) = t / i | Item description | $ 29.65 |
| 8.25% sales tax | 2.44 |
| TOTAL | $32.09 |
| Item description | $ 29.65 |
| 8.25% state & local sales tax | 2.44 |
| 23% national sales tax | 8.85 |
| TOTAL | $40.94 |
Secondly, the price for the item before federal taxes will be less than the pre-NRST price that includes federal taxes and their affects. It doesn't really matter from the standpoint of confusion, but I thought I'd just throw it out there as a reminder.
Now, I'd agree with you that on the receipt, the tax-exclusive form should be used (the legislation explicitly calls for the tax-inclusive version). The main reason why is that the tax-exclusive rates for federal and state can be added together to get the effective tax-exlcusive rate. This is not true for tax-inclusive rates. For example:
Assuming tax-exlusive rates of 30% and 5% for federal and state, on a $100 (pre-tax) purchase, $30 federal sales tax and $5 state sales tax are collected. The total tax is $35, which is 35% of $100, and equal to 30% federal plus 5% state.
Now, if tax-inclusive rates are used, the federal rate is 23% and the state rate is 4.8%. The total tax is still the same, but it works out to 25.9% tax-inclusive, which is lower than the sum of the 23% and 4.8% individual rates.
In short -- while comparing NRST rates to income/payroll taxes, I prefer using tax-inclusive for equitable comparison, but for receipts, tax-exclusive makes more sense for readability.
Actually, I can't seem to find it. Perhaps this year's version of the bill has been modified, or I'm just missing it. There are sections that refer to conforming states (states adminsitering the NRST and conforming their own rules to the NRST definitions), but I can't seem to find the requirement.
Which nrst supporters? Linder and chambliss? Or is it possible they were misquoted?
How about instead of being paranoid that it's all a vast taxpayer's conspiracy/deception and a grand scheme to defraud you - - just realize it's different... some people don't like change regardless.
It is intelligent to ask questions. It is foolish to make outlandish accusations.
I usually use "units" in my discussions because most of the people I talk with default to "add on" method... the type of person who says, "i didn't pay any taxes this year! I got a $250 refund!"...ie they do not understand taxes in general, much less inclusive rates like the rates used to describe payroll taxes and income taxes.
To lengthen the plank you choose to walk out on by making such outlandish statements (It's a deceitful scheme", etc...I don't know if you were the one who said that, but your posts connote same regardless)...to lengthen your plank, you not only claim that the rate is misleading and should be listed as tax exclusive but also in the very same breath that you base comparisons to the income tax and payroll tax using tax exclusive rates.
It's a silly, child-like debate method that FReepers are accustomed to. Nevertheless, the facts are being laid out there for all to see...
I hope you can come up with some real objections to this plan rather than laughable conspiracy theories. We are all interested in discussion, but not so interested in tin-foil.
I'll be back in a few days-
if the link has expired, go to chapter four. Nytol.
I see the word "and" between (A) and (B) not an "or". Doesn't that mean to be considered "used" a property would have to meet both of those requirement (was held on Dec 31, 2004 AND the tax has been collected).
You are reading it wrong. In the particular case "and" is meant as as a term of inclusion.
Used property is both, not "or"
A) Property on which the [NRST] has been collected,After December 31,( i.e. from January 2005, the first day the NRST goes into effect)
and
B) property that was held prior to the NRST going into effect.
You can't very well collect NRST implemented by Section 101, that does not go into effect on January 1st 2005.
B) is a grandfather clause.
Taxes were paid out of income prior to the NRST becoming effective. "Tax once but only once" is the rule of interpretation to be used by the courts and tax authorities if you look in the bill interpretation section.
But I'm glad you point that out, gives me something to pass onto AFFT that's worth looking into, and see if they can have that changed to an "OR" for clarity with the introduction of the bill in the next session of Congress.
Of course that is what committee markup is for, but why leave all the fun to Congress Critters who are generally to lazy to read bills anyway, and will mess it up if you give then any chance to at all.
Can you show me where this is in the legislation?
Actually, I can't seem to find it.
States cannot be required to conform there sales tax systems, however it is strongly in there interests to do so under the legislation:
Refer to H.R.25 legislative text
Section 2(a)(2) CONFORMING STATE SALES TAX- The term `conforming State sales tax' means a sales tax imposed by a State that adopts the same definition of taxable property and services as adopted by this subtitle.
And at CHAPTER 4--FEDERAL AND STATE COOPERATIVE TAX ADMINISTRATION
wherever it refers to conforming state sales taxes
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