[Ditto]

If you bought an item that costs $10, you would have to give the cashier $13.

How do you figure? If the rate were 23%, your bill would be $12.30. If it were 17%, your bill would be $11.70. How do you get $13?

As to the price of homes rising by a rate equal to the sales tax rate, if income tax and compliance costs on you and your suppliers were eliminated, wouldn't the costs of building a house for you and your competitors also decrease? Wouldn't the market force you to drop the retail price accordingly?

Have you ever tried to figure out how much income tax and compliance costs are hidden in the price of dry wall, plywood and concrete?

[kevkrom]

How do you figure? If the rate were 23%, your bill would be $12.30. If it were 17%, your bill would be $11.70. How do you get $13?

He's right in that if the pre-tax price was $10.00, the post-NRST price would be just under $13.00 ($12.99 to be exact) -- because $2.99 (the tax) is 23% of $12.99 (the total inclusing tax). In "tradtional" sales tax terms, the 23% NRST rate would be the same as a 29.87% sales tax. The 23% ("tax-inclusive") form is used so it can be equitable compared to the income and payroll taxes it replaces.

Where the example is misleading is the assumption that today's $10.00 item will remain $10.00 pre-tax under the NRST. That assumption requires the fallacy that the post-tax price today equals the pre-tax price under the NRST -- when in reality, the embedded cost of taxes and compliance will keep post-tax prices roughly the same under both systems.

[lewislynn]

How do you figure? If the rate were 23%, your bill would be $12.30

You're being fooled.

`(b) Rate-

`(1) FOR 2005- In the calendar year 2005, the rate of tax is 23 percent of the gross payments for the taxable property or service.

$10.00 plus 30% = $13.00

$3.00 is 23% of $13.00(gross payment).