A $5,OOO Cat? - The NRST and Real Estate

NRSTA - Virginia Chapter ^ | N/A | Steve Hayes

[Mr. Bird]

The NRST is definitely catching my eye these days, but I read different things regarding its effect on FICA. Why retain FICA? It's a huge drag on employment, and is (as far as I'm concerned) the most immoral tax out there.

I'd prefer a higher NRST rate to keeping the payroll tax.

[Always Right]

I'd prefer a higher NRST rate to keeping the payroll tax.

Don't worry the NRST is already higher, the advertized rate of 23% inclusive, is really a 30% tax on your goods and services. If you bought a new $300,000 house, you would have to pay an extra $90,000 in taxes. The mortgage exemption is no big deal, but the 30% sales tax (which they twist and say is 23%) is a big deal.

[Remember_Salamis]

If you really wanted to compare it to income, you'd use the 23% rate (inclusive vs. inclusive).

[tarawa]

hmmmm..... very interesting.....

[Mr. Bird]

Well, simplify it for me. Under the NRST, if I buy an item that is listed at $10, how much cash do I give the sales person?

[r9etb]

I don't trust his analysis. His discussion of the mortgage interest deduction is full of holes.

[zeugma]

The problem I have with the NRST is that the rates people have bought into for it are insane. 23%???? They are out of their freaking minds. Same thing goes with the 'flat tax'. The lowest rates for this are quoted at like 30% or so. God doesn't ask for more than 10%. What makes government think it deserves more?

[Always Right]

Well, simplify it for me. Under the NRST, if I buy an item that is listed at $10, how much cash do I give the sales person?

If you bought an item that costs $10, you would have to give the cashier $13. How they come up with 23%, is that the $3 tax is 23% of the final cost of $13. But it is really a 30% sales tax if you wish to discuss things honestly. I build new homes, and I can say with 100% certainty, if they added 30% sales tax on to the cost of new homes, I would be out of business.

[Principled]

The NRST is definitely catching my eye these days, but I read different things regarding its effect on FICA. Why retain FICA? It's a huge drag on employment, and is (as far as I'm concerned) the most immoral tax out there.

The nrst does repeal FICA.
SS benefits are paid out of sales tax revenues instead of having a payroll tax.

NRST=NO PAYROLL TAX.

FAIR TAX FAQ

[wingster]

Indeed. I dare say you'd be out of business too. LOL

[Principled]

...if they added 30% sales tax on to the cost of new homes, I would be out of business.

Right. It would be stupid to think this would go anywhere if prices were to rise.

But prices won't rise under the nrst. Prices remain stable.

How stupid would it be to try to put an additional tax on us? The nrst is not an additional tax, it's a replacement tax.

Prices will remain stable. The amount of tax currently being paid is the same amount that will be paid under the nrst. The beg difference is that with the nrst, you can see what portion of prices is actually federal tax. These days, that amount is hidden.

[Always Right]

How stupid would it be to try to put an additional tax on us? The nrst is not an additional tax, it's a replacement tax.

I know every cent I spend on federal taxes (including both my personal return and all my company's payroll taxes) and on compliance costs, and they are closer to 3% of my gross sales, not 30%. There is no way I could come up with 30% savings to offset this. I really don't care what your NRST pointie-headed experts say.

[Remember_Salamis]

OK. If you want to play the numbers game, here's this one. Let's say this person makes $5,000 a month. Of that $5,000, this person pays $765 in payroll taxes and $500 in federal taxes (at an extremely low 10% tax rate just to prove how much better the fairtax is). That makes for $1,265 in taxes every month, or a 25.3% marginal rate. If you want to make that tax-exclusive, that would be 33.6%. If this person had a more realistic income tax of 20%, these numbers would be 35.3% tax-inclusive and over 54% tax-exclusive. So you tell me, which way is cheaper??? Oh, and by the way, a used house is tax free.

[Principled]

So you are stipulating that the "pointy-headed" EXPERTS say one thing, and you say another?

Well now we're agreeing on something.

Yes, all of the experts point to a major component in prices of goods and services that comes to 22% tax inclusive (that's 28% tax exclusive).

Why don't you read the research and report on it's errors? That would be information we would all be thankful for.

BTW you're "forgetting" about a lot of tax costs you incur that would be eliminated under the nrst. It is likely that you, like many, have been duped into thinking that if you don't see it then you don't pay it.

[kevkrom]

Under the NRST, if I buy an item that is listed at $10, how much cash do I give the sales person?

$10.

The sales person would then remit $2.30 of that to the government as sales tax receipts.

[Remember_Salamis]

They're actually doing the most honest thing. Only somebody trying to trick somebody would compare apples and oranges. The Tax-inclusive rate is used because that it is a replacement for the income tax, and income taxes are cited tax-inclusive terms. We could go the other way and compare both in tax-exclusive terms. A 25% income tax is really 33.33% tax-exclusive ($100 - $25 = $75; $25/$75 = 33.33%).
As long as we compare apples and apples we're good to go. If we didn't do that, it would be like there being no price difference between buying some thing in dollars and Euros, only the same price (like 10 dollars or 10 euros) is charged even though the Euro is worth 15% more than the dollar.

[Always Right]

Oh, and by the way, a used house is tax free.

If I could only figure out a way to build used houses, you would have a point. Unfortunately, my new houses loaded with a 30% tax will have to compete against thost tax-free used houses. From a builder of new homes, the NRST sucks BIG TIME.

[kevkrom]

I know every cent I spend on federal taxes (including both my personal return and all my company's payroll taxes) and on compliance costs, and they are closer to 3% of my gross sales, not 30%. There is no way I could come up with 30% savings to offset this.

Do you use any supplies or equipment? Any electricity or other utility? Staff? Transportation? Advertising?

[Always Right]

They're actually doing the most honest thing.

It is honest, selling a 30% sales tax as a 23% sales tax? It is honest, in your example to include the employer's share of payroll tax as part of the employees tax but not part of their income? It is honest to think that someone who grosses $60K per year pays anywhere close to $12K in federal income taxes? I think the 10% figure is even high once you consider all the deductions.