GOP Discusses National Sales Tax

FOX ^ | Dec 1, 2004

[Tumbleweed_Connection]

...President Bush and House Speaker Dennis Hastert (search) have both said the idea of a national sales tax deserves a serious look. For many, the idea of a world without the Internal Revenue Service is very seductive.

"We spend about $400 billion a year complying with the tax code. We spend $200 billion a year just filling out IRS paperwork," said Rep. John Linder (search) , R-Ga., who has proposed a bill that would create a national sales tax.

Proponents have spent millions on research and have concluded that a national sales tax can replace the income tax, payroll tax, estate tax and corporate tax. Advocates say the new tax would lower the cost of manufacturing and job creation and attract foreign investments, among other things.

"If we were to get rid of the sales or the income tax and the payroll tax and all compliance costs, we would be so ferociously competitive in a world economy that corporate America would not be competed with unless foreign corporations started building their plants in America," Linder said.

Proponents seek a 23-cent national sales tax on all retail goods, everything from groceries to clothes, cars to electronics. Everyone would pay the same rate, which critics argue is part of the problem.

"If you consume $40,000 a year and you make $50,000 a year, would you feel it is fair if a guy who made a half a million dollars a year but spent $40,000 a year paid the same tax you do? I think you wouldn't feel it's fair," said Buck Chapoton, former assistant treasury secretary.

[ChicagoHebrew]

I doubt anyone will listen to this, but, what the heck...

But 23 percent sems high; for a $20,000 car, you'd pay $4,600 in federal tax.

It's actually a 30% rate. The FairTax uses a deceptive "tax inclusive" rate to get to 23%. Quite literally, it taxes the total price of a good, including the REST of the sales tax. So under FairTax, the tax on $1 of goods is $.30.

You highlighted another problem. FairTax taxes ONLY new goods, not resale goods. This will totally destroy the housing and car markets by making new houses and cares ridiculously and unjustifiably uncompetitive.

[lewislynn]

What's really pathetic is how you clowns let someone like Sprite518 make fools of themselves with spreading disinformation...But really, parroting disinformation is all any of you really have to offer anyway.

[lewislynn]

Equilibrium will be reached when prices fall to a point where sales price exceeds cost just enough to achieve a reasonable profit margin.

...LOL, written by someone with no experience...Define "reasonable profit margin".

Suppose your false premise of an across the board 23% reduction because of a government action came true, how then would all the companies in the country compete?...The same way they always have, maybe?

[lewislynn]

Ford and G.M. Sales Slide Despite Generous Rebates

Paul Ballew, G.M.'s chief industry sales analyst, said, "You have to come out with best-in-class products, you have to make sure you're developing best-in-class brands, continue to cut costs and remain aggressive" in offering incentives.

Lower prices does not mean increased market share....

[Zon]

But need to realize what economics is and what economists are capable of. ... They are about as good at predicting the economy as weathermen are at predicting the rain. Worse, actually. And you are taking results from a theoretical computer model and presenting it as fact.

Ahh trying to lower the credibility of a man that can run circles around you  while you raise yourself above him. As stated in post 427: "The man could run economic, tax and statistical circles around you blind folded. And you know it. On the far outside chance you don't know that then you've got a real problem or disability that prevents you from making rational evaluations."

It's become obvious that you have a mental disability.

It seems according to you there's no point to making arguments about something that is unpredictable like the weather. But you'd have the reader believe that your predictions are better than a man that can run circles around you. All pointing to you being here just for the sake of argument. As stated in 427 "In final analysis, sadly, you're just another hand- waving pipsqueak."

With his rationalizations the slave argues in favor of his enslavement.

[Zon]

Waste your time spinning your wheels making endless arguments for the sake of arguments themselves. At best you'll convince maybe 10% of the people on these threads that the FairTax is not the better tax scheme. Even then you'll only convince the most abiding slaves. 

If you have a convincing case to back up your assertions you should convince the members of congress that they'd be making a horrendous error. Do a thorough study and take it to congress. If you're right you owe it to yourself and every American and if you succeed you'll be one of America's greatest heroes. If your analysis is right you need only convince a few hundred members of congress not to pass HR25. Makes a heck of a lot more sense to put your efforts where they would be several magnitude more effective.

The one thing above all else, way more important than any other argument that makes the FairTax The best tax scheme is that no person, group or government has the right to violate a person's inalienable rights.

No person, group or government may initiate force or threat of force against any person. The right to life, liberty and pursuit of happiness. The FairTax is the only tax scheme that doesn't violate a person's life and property rights.

It is only the slave that accepts his lot in life that his master may initiate force against him -- that his government-master may imitate force and the threat of force against him. In these more modern days the slave rationalizes in favor of his master not because he -- the slave -- can't be trusted to not do the wrong thing but, that it is other slaves that will do the wrong thing.

With his rationalizations the slave argues in favor of his enslavement.

A dire threat perceived by the slave is the person that has rejected the slave mentality and propaganda of the slave masters to instead use his own authority as master of his own life to put government in it's correct place as a servant to the taxpayer. The FairTax is the only tax scheme that honors and respects every persons' life and property rights. The FairTax rejects the slave mentality.

A paradox: honest principle escapes the slave mentality. A commitment to honest principle is a prerequisite for escaping the slave mentality.

[Zon]

Thanks for further confirming everything in post 427. Especially the last sentence. And post 486.

Me and others have asked endlessly for any proof other than empty words by some one (hired) economist sitting in some room full of government hacks somewhere...

Hard to believe that you could further discredit yourself but you continue to do just that. Here's the biography of the person you assert would have only empty words. He has a mountain of credibility compared to you.  Which is why you must try to tear him down -- trademark of the pipsqueak.

[snowsislander]

You buy a house for, say, $250K after the FairTax is implemented. Your neighbor bought his before the FairTax and paid $250K. You both got mortgages for $200k. You and your neighbor get transferred two years later. You both sell your houses for $265k. In effect, you are getting reimbursed for the sales tax that you paid, just as your neighbor is getting reimbursed for the imbedded tax costs of the old system.

Sorry, I don't think I understand your scenario completely. I assume that both of the houses must be new, because otherwise the Fair Tax wouldn't be involved -- it doesn't tax the sale of used property.

If I buy a new home after the Fair Tax is implemented, I have to pay 30% sales tax on the transaction. If the house is priced at $250,000, I must also pay $75,000 in Fair Tax, for a total of $325,000.

If my neighbor bought a comparable home in the same area prior to the imposition of the Fair Tax for $250,000, then he only paid $250,000.

If we both go to sell our homes at the same time, he could sell his for any amount above $250,000 for a profit. Since I am competing with him, my price won't be much above his by definition, and my total cost of $325,000 means that I am indeed likely to take a large loss.

That's one of the big disadvantages of the Fair Tax is that it penalizes the purchase of new goods, particularly large purchases such as home and automobiles, over the purchase of used goods.

[Zon]

Thanks for further confirming everything in post 427. Especially the last sentence. And post 486.

Me and others have asked endlessly for any proof other than empty words by some one (hired) economist sitting in some room full of government hacks somewhere...

Hard to believe that you could further discredit yourself but you continue to do just that. Here's the biography of the person you assert would have only empty words. He has a mountain of credibility compared to you.  Which is why you must try to tear him down -- trademark of the pipsqueak.

The following is from Dale Jorgenson's Bio

Dale Jorgenson's

Biography

Dale W. Jorgenson is the Samuel W. Morris University Professor at Harvard University. He received a BA in economics from Reed College in Portland, Oregon, in 1955 and a PhD in economics from Harvard in 1959. After teaching at the University of California, Berkeley, he joined the Harvard faculty in 1969 and was appointed the Frederic Eaton Abbe Professor of Economics in 1980. He has directed the Program on Technology and Economic Policy at the Kennedy School of Government since 1984 and served as Chairman of the Department of Economics from 1994 to 1997.

Jorgenson has been honored with membership in the American Philosophical Society (1998), the Royal Swedish Academy of Sciences (1989), the U.S. National Academy of Sciences (1978), and the American Academy of Arts and Sciences (1969). He was elected to Fellowship in the American Association for the Advancement of Science (1982), the American Statistical Association (1965) , and the Econometric Society (1964). He has been awarded honorary doctorates by Uppsala University (1991), the University of Oslo (1991), Keio University (2003), and the University of Mannheim (2004).

Jorgenson served as President of the American Economic Association in 2000 and was named a Distinguished Fellow of the Association in 2001. He was a Founding Member of the Board on Science, Technology, and Economic Policy of the National Research Council in 1991 and has served as Chairman of the Board since 1998. He also served as Chairman of Section 54, Economic Sciences, of the National Academy of Sciences from 2000 to 2003 and was President of the Econometric Society in 1987.

Jorgenson received the prestigious John Bates Clark Medal of the American Economic Association in 1971. This Medal is awarded every two years to an economist under forty for excellence in economic research. The citation for this award reads in part:

Dale Jorgenson has left his mark with great distinction on pure economic theory (with, for example, his work on the growth of a dual economy); and equally on statistical method (with, for example, his development of estimation methods for rational distributed lags). But he is preeminently a master of the territory between economics and statistics, where both have to be applied to the study of concrete problems. His prolonged exploration of the determinants of investment spending, whatever its ultimate lessons, will certainly long stand as one of the finest examples in the marriage of theory and practice in economics.

Jorgenson has conducted groundbreaking research on information technology and economic growth, energy and the environment, tax policy and investment behavior, and applied econometrics. He is the author of 232 articles in economics and the author and editor of twenty-four books. His collected papers have been published in ten volumes by The MIT Press, beginning in 1995. His most recent book, ECONOMIC GROWTH IN THE INFORMATION AGE, was published by The MIT Press in 2002 and represents the first major effort to quantify the impact of information technology on the U.S. economy. Another recent MIT Press volume, LIFTING THE BURDEN: Tax Reform, the Cost of Capital, and U.S. Economic Growth, co-authored with Kun-Young Yun in 2001, proposes a new approach to capital income taxation, dubbed “A Smarter Type of Tax” by the FINANCIAL TIMES.

Forty-three economists have collaborated with Jorgenson on published research. Many of Jorgenson's books and papers have been co-authored with students in economics at Berkeley and Harvard. Among his former students are professors at leading academic institutions in the United States and abroad and several occupy endowed chairs. The MIT Press published ECONOMETRICS AND THE COST OF CAPITAL, edited by Lawrence J. Lau, in 2000. This contains essays in honor of Jorgenson presented at a conference at Harvard by thirteen of his former students. It also contains his biography, a list of his publications, and a list of his sixty-four Ph.D. thesis advisees at Berkeley and Harvard.

[Zon]

Yep, it would BOOM!

You're exactly right. We live in a very different time. Even from just a decade ago. The Internet is going to be a huge benefit. I can see it. I suspect you can too. Returning government to its proper roll as servant -- politicians employed at the liberty of the constituents. Not just in this country but all people around the world will make their governments serve them. Priority one is to eliminate the terrorists -- protect life and property rights of their employer. Then all people will truly become the highest authority--the masters of their own lives.

[snowsislander]

This idea is one of those ideas that sounds good in theory but I fear will be a disaster to implement. Most communities pay anywhere from 5-9% in sales tax already. So, we are talking not about a 23% tax but a 28-32% tax on a $30,000 car? You mean I pay $10,000 tax to buy a new car? Forget about it. The large ticket items will grind to a halt.

Actually, you would 30% in Fair Tax alone, and if there were state sales tax then it would also be added on. For instance, if you purchase a $30,000 car in a state with a 6% sales tax on new car purchases, you would pay $30,000 + $9,000 + $1,800 = $40,800 for the new car, or a total of 36% in federal and state sales tax.

[Zon]

YN: ".....most economist believe capital holders pay it through lower returns on their investments and labor pays it through lower wages." 89

Explain the fundamental difference between tax costs and other production costs that would explain the difference in their incidence, please. Or are you suggesting that all production and operating costs are borne by investors and workers, too?

It's an intended consequence of the public school system. People spewing ridiculous assertions is bad enough but doing so in the belief that others will believe their garbage is truly testament that government run schools are proficient at dumbing down children so the become enslaved adults.

[Zon]

For some reason you're more concerned about my merits than I am.

That's soooo obvious. The way you shoot the hell out of your credibility it screams out that you don't care about not having merit. In trademark pipsqueak fashion you wave your arms complaining that people won't respond to your arguments instead of your lack of merit. You're unworthy and earned the scorn cast upon you.

Get a clue. Character counts.

[phil_will1]

"Suppose your false premise of an across the board 23% reduction because of a government action came true, how then would all the companies in the country compete?...The same way they always have, maybe?"

What you are arguing is that the concept of the elasticity of demand, which is covered in virtually every beginning textbook on macreconomics in the country, is invalid. If you can prove that empirically, an award for achievement in economics awaits you. Of course, you would have to drop your cloak of anonymity here on FR to claim it, so I guess that is out of the question.

For the hundredth time, we never said that price was the ONLY basis for competition. In your world, it has to be all or nothing, doesn't it? It is either not a basis for competition at all or the only basis, huh? Is it not even conceivable to you that it is one of the areas where businesses compete?

Let me ask you this. If businesses could raise their prices 30% and not have it impact their sales volume, why don't they do it now?

[phil_will1]

"...LOL, written by someone with no experience..."

There you go again, making unfounded assumptions.

[tm22721]

Non-compliance to a 23% sales tax would be so pervasive that an IRS replacement would have to be set up to apprehend the black marketeers.

It would have the same measure of success as the 55 MPH speed limit and the drug war. Most damaging would be the increased apathy and disrespect for the law.

BUMP

[phil_will1]

"Indeed you have. Have you managed to persuade anyone of the merits of your argument yet?"

"I don't know or care. For some reason you're more concerned about my merits than I am."

I see. You are just doing this for entertainment. You don't really care that the FairTax has picked up enormous support and momentum since you started bashing it several years ago. It doesn't phase you that in all the anti-FairTax posts you have made that you have convinced few, if any, of the legitimacy of your concerns. Interesting, very interesting.

"But then if you have a problem with the merits of my argument, you have a problem with the plan itself."

That sentence was one of your more illogical posts. Now THAT is saying something! LOL

[phil_will1]

"What's really pathetic is how you clowns let someone like Sprite518 make fools of themselves with spreading disinformation...But really, parroting disinformation is all any of you really have to offer anyway."

Not really. When you have thousands of people joining your ranks, and remember this is almost entirely a volunteer effort, it is impossible to make everyone an instant expert on every facet of the plan. The proposal is thoroughly documented and explained on websites but there is no way to go poof! and magically put that information into someone's head.

We all make mistakes. I still make them and I have been doing this for years. As a matter of fact, I seem to recall a FairTax basher who swore for several weeks over several FR threads that the rebate was based on income, even after being corrected multiple times. Do you think that basher should have retired from bashing the FairTax because he was wrong about that?

PS: For the benefit of others on this thread, that basher's name was "lewislynn"

[bobjam]

Under a flat income tax, the government would have to encourage more American production to increase revenues. Under a consumption tax, the government would have to encourage consumption for more revenue. That consumption would require more production to feed it, but the production doesn't have to be American; it could (and likely would) be Chinese, Indian, Thai, etc.

We need to be a producing society, not a consuming society.

[Zon]

"But then if you have a problem with the merits of my argument, you have a problem with the plan itself." 480

That sentence was one of your more illogical posts. 

It's a non sequitur He's does that a lot. 

Also, the "reason" he claims why he won't use his proclaimed superior tax and economic intellect to do an anti-FairTax study and take it to congress is that the FairTax (HR25) isn't going to pass anyways. That explains why he's on these threads, right? Huh!?