Posted on 10/14/2004 11:11:20 AM PDT by Tolerance Sucks Rocks
Thank you
If 10% is enough for God, it is certainly enough for the Federal Government.
They are bloated by excessive spending caused by excessive revenue collection.
There should be no HUD, no Dept of Education, etc. PJ O'Rourke has a hilarious and highly accurate essay on what the Federal Government ought to look like. A properly trimmed Federal govt would stop doing things that are the states proper responsibility. State taxation may go up as a result.
But an overall economic boom will also cause revenue to go up regardless of the actual rate. Just as a too high rate reduces economic activity and net revenue falls.
The fact is our elected officials in congress have been trying to vote everyone rich at the expense of everyone else. It doesn't work. You just keep slicin and dicin the pie into smaller crumbs that are mostly siphoned off by the bureucracies administering the distribution of the pie.
Get the government out of the way and people will make more pies, but many don't bake if half the pie is confiscated. It's much easier to just join the pie distribution consortium, either as a bureaucrat or a client of the bureaucracy.
There comes a point where the parasitic nature of the government will overwhelm the host like in the 70's, Reagan did a lot to scrape the lice off the body politic, but damn if we aren't back in the same state again 30 years later.
I think the flat tax and limiting congress ability to endlessly tax is the best method.
I used to think that too. When I was involved with California's Prop. 13, a bunch of us would get together and ruminate over different ways to tax. The flat tax's advantage is that it is simple It's disadvantage is, that if truly flat, it will not raise enough income under present spending laws. Again, it does get back to the 16th Amendment and its open language. The Amendment places no limit on Congress to spend in relation to income or debt. In the end, one returns to a progressive tax. It really is the most "fair". That is, taxes will a discomfort, but not a pain and the government will have the needed funds to carry out its duties and obligations of a "Superpower".
I don't mind paying a % or two above a flat tax , to be the biggest, meanest MF in the "Valley of the Shadow of Death" that this World will be for Centuries to come.
Welcome to FR, member of two weeks.
Just a thought...
Yeah... because Wal-Mart, Sears, Safeway, etc. will have such a great incentive and opportunity to cheat... and large retailers like that cover some 80% of the market...
You don't think it's easy to cheat against the income tax system? The simple truth is that under any system, there will be some who cheat, either for personal profit or on general principle. Of course, under the income tax, lack of compliance is often unintentional just because of the complexity of the code.
Aaron Zelman's a good guy, but he's just this side of an anarchist.
SOURCE: http://www.freerepublic.com/forum/a387234a60d28.htm
Top 10 Secrets of a National Retail Sales Tax
Politics/Elections Opinion Keywords: NRST, SALES TAX
Source: Self
Published: 1/4/00 Author: Always Right
Posted on 01/04/2000 09:57:58 PST by Always Right
Top 10 Secrets of a National Retail Sales Tax
1. The 23% sales tax rate turns 35%. A retailer who sells an item for $100 must charge his customer an additional $30 for federal sales tax. Most people familiar with state sales tax call this a 30% tax, since the tax is 30% of the seller's price. The NRST folks call this a 23% tax, since $30 is 23% of the final price ($130 including tax), which they call the 'tax-inclusive' rate. Neither way is technically incorrect, it is just important to understand what is really being discussed. Remember this 30% tax-exclusive rate is only the federal portion of the tax, state sales tax will also be added in. Currently, 47 states have sales tax ranging from 3% to 7%, with the most common rate being 5%. The NRST taxes services and food, so the tax base is roughly doubled and the state rate could be cut in half, or about 2.5% to obtain the same revenue. Next, the 42 states that collect an income tax leveraging off the IRS reporting must now convert this to a sales tax. This will add on average another 2.5% to the sales tax rate. Thus on average, the tax-exclusive rate that you will see at the cash register on all goods and services will be 35%.
2. 35% goes higher. One amazing fact when the NRST calculates their rate is that they assume 100% compliance. The current income tax system has about a 15% non-compliance rate. Conservatively, we could assume that the sales tax will have a similar compliance rate which will force the rate over 40%. And this is a very conservative assumption, see secret #5. Brookings Institute economist Bill Gale (National Tax Journal, September 1999) calculated that about a 50 percent sales tax would be required to be revenue neutral, more then double the 23 the NRST folks claim.
3. Hidden Taxes still exist. While the NRST does eliminate some of the 'hidden taxes' that resulted from federal payroll taxes and excise taxes, it does not eliminate the 'hidden taxes' that state and local governments imposes such as hotel taxes, cigarette taxes, gasoline taxes, property taxes, etc. So the NRST claim that there are no hidden taxes isn't true.
4. Millions must file. The NRST supporters would have you believe that only retailers need to file under the Sales Tax. That simply is not true. In order to offer the 'low' 23% rate, the NRST must tax services too. 'In 1993, 12,778,000 taxpayers filed individual returns with business income or losses, and another 1,919,000 filed farm returns. In addition, in 1992 the IRS received returns for 17,292,286 non-farm sole proprietorship businesses, 1,484,752 partnerships, and 3,868,004 corporations-all of which probably produced goods or services on which the sales tax would be levied. Thus the supposed simplicity of the sales tax turns out to be a mirage.' (Brookings Institution Policy Brief #31-March 1998) Thus over 35 million filers will still be subjected to reporting and audits, most of these are individuals. This doesn't even consider the 100 million of people who will still have their wages reported to the SSA. Also, all households must register every year with the 'sales tax administering authority' in order to receive your monthly tax rebate. Hardly the zero tax filings for individuals as the NRST supporters claim.
5. Tax Evasion will skyrocket. 20 countries have tried a national sales tax, and 20 have switched to a value-added tax. These countries have gone on record and have flat out stated a retail tax of more then 12% is unworkable. People will avoid it, especially with the internet which makes it very easy for the common citizen to purchase goods from foreign sources. The fact that businesses to business sales are not taxed, makes it very tempting to buy personal stuff under a business name. It will take a mighty powerful and intrusive taxing authority to audit all business expensive to make sure. The sales tax rates we are talking about have never been successfully implemented in the history of the world, but it hasn't been for a lack of trying.
6. Big Government gets Bigger. In the 20 countries where the national sales tax has been implemented, and in each case replaced by necessity by a Value-Added Tax, the amount of federal taxes quickly grew from about 20% of GDP, as currently in the US, to 40% and above of their GDP. Not a promising precedent. 7. Underground Economy still not taxed. The NRST advocates falsely claim that the underground economy now will be taxed. Nothing could be further then the truth. Sure, when the money re-enters the legal economy the money is taxed, but that is true today. But will the drug dealers and prostitutes remit sales tax for their goods and services under the NRST? Absolutely not, this portion of the economy is still invisible to the tax collector and therefore not taxed. According to Bruce Bartlett, 'thus whatever revenue is gained when drug dealers spend their ill-gotten gains will be lost because no tax was collected on their drug sales.' (Bruce R. Bartlett, senior fellow, National Center for Policy, Analysis, November 5, 1997)
8. Lower and Middle Income pay more. Steven Sheffrin of UC Davis in a 1996 CPS brief says that a revue-neutral consumption tax even with a generous personal exemption shifts the tax burden to the lower to middle income households. A 1992 Congressional Budget Office study of consumption based tax concluded the consumption tax would decrease the tax on the wealthiest 20% by five percent, while hitting all other groups with a higher tax burden. The poorest quintile being hit the hardest with a 20% increase in tax and the 20-40% income quintile being hit with 9.3% increase in their effective tax rate. This is because the poorest spend a much higher percentage of their income each year and in many cases are even forced to borrow to keep up with their expenses. These numbers are much worst today as the federal tax liability for the bottom 20% has been greatly reduced through expansion of the earned income tax credit.
9. Elderly assets are unfairly burdened. The elderly, who have already worked and saved under the income tax system, will now be faced with paying additional high consumption taxes. This group of especially hard hit people, will not have the opportunity to earn tax-free wages, so all their already taxed wealth will be taxed again when they spend it.
10. Marriage Penalty Still Exists. The proponents of NRST boldly state there is no marriage penalty under the NRST. Looking at their rebate scheme establishes this as untrue. A typical family of four qualifies for an annual rebate of $5088 under the current NRST proposal. If this same family of four divorced, they would qualify for two annual rebates of $3790 each, or $7580. This $2492 marriage penalty is larger then the marriage penalty under the current code for this typical family.
I put this together simply because every time you try to debate the NRST worshipers you are called names such as commie, NAZI, IRS-lover, liar, and disrupter. So let the name-calling began. I don't accept many of the outlandish claims made by the NRST 'experts'. This utopia promised by the NRST faithful is no different then the disasters promised by the fear-mongering global warmers. It's all based on unrealistic assumptions and faulty computer modeling.
I would hope that none of the NRST posters on this forum are part of the $20 million effort to sell the public on the national retail sales tax. If they are, they have a long way to go. So far the public isn't buying. A recent FoxNews poll shows by a 2 to -1 margin, the public favors a flat tax against a national sales tax, and a Harris poll showed 57% oppose a national sales tax. At least the NRST followers have a lot of work on 'educating' people.
Yes they are. And few have noticed that a flat tax can just as accurately be called an "Existence Tax", or that a National Sales Tax can be referred to as a "Production Tax".
Just a thought.
I think Everyone should pay a fixed dollar amount. Maybe $7,000 a year. No more, no less. Now THAT would be fair.
It's the price you pay to live in the USA. Same charge for anyone.
It's nobody's business how much I make, or how much I spend, or what I spend it on.
Now THAT's fair.
No breaks for anything, and no records, except if you paid that year. If you can't pay, you sweep the floors of government buildings, 40 hours a week, until you have paid your debt.
We'd have 20% GDP increase per year.
Yep, and I still do. This article provides a bunch of worst-case scenarios (like abolition of cash purchases) that are equally or more likely to come about if we keep the current income tax. Quibbling about what the sales rate would be is pointless. If it's too high, that just means that the government is spending too much, and the NRST would expose that.
Personally, I'll go with whatever Milton Friedman thinks.
Behind Reagan, he's my second hero.
Then W.
Now to answer your assertions.
Virtually all of the assumptions promoted by AFT are based on the rosiest possible projections. That there will be zero tax evasion.
As a point of fact NRST projections are based on measured reactions to past changes in tax law in economies through out the world as well as the US. Most of the claims for HR25, are based on replacing the income tax alone, and do not count the additional benefits to the economy of repealing business half of payroll taxes as well.
PDF: The Economic Impact of Fundamental Tax Reform
http://www.economics.harvard.edu/faculty/jorgenson/papers/208.pdf,
Frontiers of Tax Reform, Stanford, Hoover Institution, 1996, pp. 181-196; reprinted in Joint Economic Committee, Congress of the United States, Roundtable Discussion on Tax Reform and Economic Growth, One Hundred Fourth Congress, First Session, 1996, pp 98-112.
That all new goods and services will always be taxed equally, without social engineering or other political manipulation.
No such claim is ever made by the NRST proponents. It is obvious the current income/payroll tax system is totally take over by such interests. All any tax reform measure can do is provide a clean slate. It is up to the American people must work to keep any tax system clean of such measures.
That the base price of new goods will drop 22 percent across the board in the first year (and the price of all services will drop by 25 percent in the same period). That “compliance costs” under the new tax bureaucracy will be lower than those under the existing tax system.
An obvious response of business to lowering of taxes and costs in competing for market share.
When manufacturing base is no longer taxed, guess what the economy prospers. Making the US a tax haven for business instead of a tax trap makes for the conditions to reverse the current outflow of industry and capital from the US to places that offer tax advantaged environments.
PDF: The Effects of Fundamental Tax Reform and the Feasability of Dynamic Revenue Estimation
http://www.economics.harvard.edu/faculty/jorgenson/papers/baker.pdf
in Joint Committee on Taxation, Congress of the United States, The Modeling Project and 1997 Tax Symposium Papers, Washington, U.S. Government Printing Office, November 20, 1997 (with P.J. Wilcoxen), pp. 130-151.
They totally ignore, or breezily dismiss, the jolting disruptions to the economy that imposition of their plan will cause.
Perhaps it would be good to be a bit more explicit as to what disruptions are alluded to.
They pretend there will be no black markets.
LOL, hardly infact they state only that such market exist under the current system, and that under the NRST they will be no worse as the marginal tax rates under the NRST are half those of the income/payroll tax system reducing the economic incentives of tax evasion.
Despite the clear statement of tax liability in the proposed law, they claim Americans will be forever free of paperwork. They simply don't deal at all with all the obvious implications for citizen tracking inherent in a national sales tax.
The statement of liability for remission of the tax is upon the seller of the goods and services, is same as for state retail sales taxes. How does this increase or create any implication for "citizen tracking" beyond that exists for states retail sales taxes today?
Under the income/payroll tax monitoring of the individual citizen is implicit in the enforcement and administering of the income tax. Collecting a retail sales tax on the otherhand requires no information as regards the individual purchasing goods or services.
They assume that the IRS and a raft of long-time taxes will simply go away, despite every clue that history and the nature of bureaucracy has to offer.
No such assumption exists, the legislation mandates the the total repeal of the taxes it replaces.
H.R.25Fair Tax Act of 2003 (Introduced in House)
TITLE I--REPEAL OF THE INCOME TAX, PAYROLL TAXES, AND ESTATE AND GIFT TAXES
*** SNIP ***
|
There are obvious ommissions too. This is a propoganda hit piece.
He he he socialists must be getting worried :0)
BUMP for a long read later.
THis is simply untrue. Nobody thinks tax evasion will disappear. It would be stupid to think that.
It is equally as stupid to assert that black markets will disappear.
Nobody who supports the NRST is saying these things. This is a propoganda piece. Funny, really, that they'd try to pass this off as real.
1. 23% is the tax-inclusive rate for federal taxes. The tax-inclusive rate is used so that the taxes can be equitably compared to the income and payroll taxes they replace. State taxes are a state matter, and would exist independently of an NRST anway, so including them in the analysis is simply a red herring.
2. Non-complience is factored into the rate. Period.
3. Again, using state and local taxes in a discussion about federal taxes. The NRST cannot address these issues as they are not federal issues.
4. The number of filers would drop by about 90%. Filing sales tax compliance is simple compared to income tax compliance.
5. No cites to any of these "cases". No mention if the sales tax was a full replacement for other taxes. Internet or mail order purchases from foreign sources would be suject to customs (including imposition of the sales tax) upon entry to the U.S.
6. Again no cites. Government getting bigger is a function of spending -- outside the scope of a revenue replacement bill.
7. I actually agree with this point. I see the udnerground economy as a net wash. However, since one has to be a legal resident to receive the FCA, it does mean at least that illegal immigrants would be paying a higher effective rate than citizens.
8. I don't buy this at all. Any study of this form appears to completely ignore the 20-40% of current prices that are the result of federal income and payroll taxes. Thanks especially to the payroll tax, the current system really slams the middle-class (lower incomes get off easier with the EITC). No study of this sort has ever come close to convincing me that the poor or middle classes woul dbe worse off under an NRST.
9. Another canard that forgets that those same savings are indirectly taxed with the 20-40% of current prices that are the result of federal taxes. Also, 401k (and other tax-deferred) savings would be compeltely untaxed under the NRST, other savigns would have their capital gains compeltely untaxed.
10. If this was true at the time of the article, it has since been corrected. The FCA is calculated as a certain amount per adult plus a certain amount per child, and therfore makes no difference whether two adults are married or not.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.