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Exclusive: Treasury May Discuss National Sales Tax
http://www.cnbc.com/id/21900018 ^ | 11-20-07 | Steve Liesman

Posted on 11/20/2007 10:39:21 AM PST by Hydroshock

A U.S. Treasury report on ways to cut corporate taxes will include discussion of a national sales tax, a senior Treasury official told CNBC.

The U.S. currently has no national sales tax, also known as a value added tax, or VAT, though many states do. The tax would be one option to help offset revenue lost from lowering corporate taxes. The report is due in the coming weeks.

The top corporate tax rate is now 35 percent, and the official said that if exemptions are eliminated, a 27 percent rate would be revenue-neutral.

Besides a national sales tax, the Treasury report will also discuss accelerating depreciation and expensing, to as much 35 percent of the value of new investments in the first year.

The Treasury official said the document would make no choice as to the best option, but would note that the "best bang for the buck" for growing the economy will come from accelerated expensing.

The Treasury document is partly an attempt to counter a proposal by Charles Rangel, the Democratic chairman of the House Ways and Means Committee, to cut the corporate rate to 30.5 percent from 35 percent. Rangel’s bill contains proposals to offset his tax cuts with the elimination of special tax breaks for corporations.

(Excerpt) Read more at cnbc.com ...


TOPICS: Business/Economy; Government; News/Current Events
KEYWORDS: taxincrease; treasury; vat
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1 posted on 11/20/2007 10:39:23 AM PST by Hydroshock
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To: Hydroshock; Calpernia; cbkaty; Nervous Tick; ex-Texan; RockinRight; NVDave; Neidermeyer; ...

Economy/Credit/Housing Issues Ping List

If you want on or off this list let me know.


2 posted on 11/20/2007 10:40:25 AM PST by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: Hydroshock

Next they’ll tax air.


3 posted on 11/20/2007 10:41:37 AM PST by mtbopfuyn (I think the border is kind of an artificial barrier - San Antonio councilwoman Patti Radle)
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To: Hydroshock

I want off the discussion of a sales tax for the rest of my lifetime.
Flat tax fine.

National Sales Tax is a scam through and through. It will never end and just makes it easier for government to increase taxes further.

Want another 100 billion. Just increase one tax. Done.


4 posted on 11/20/2007 10:41:58 AM PST by romanesq
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To: Hydroshock
Heaven help us if the Dims implement a National Sales tax while leaving the income tax in place. “BOHICA”
5 posted on 11/20/2007 10:42:15 AM PST by NavVet (O)
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To: Hydroshock
This is the best a FINANCIAL network can do? A national sales tax is NOT the same as a VAT tax.

Sheeesssshhhhh..........

6 posted on 11/20/2007 10:42:21 AM PST by willgolfforfood
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To: Hydroshock

Uh, that would be ON TOP OF the income tax we already pay? No doubt. When did they put Gov. O’Malley of Maryland in charge of the Treasury?


7 posted on 11/20/2007 10:43:25 AM PST by 3AngelaD (They screwed up their own countries so bad they had to leave, and now they're here screwing up ours)
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To: romanesq

Actually, the experience here in Canada has been that the sales tax is the most difficult to increase because it’s so visible. Corporate and payroll taxes are the easiest to hike because most voters don’t notice, but add a penny to the sales tax and EVERYONE notices.


8 posted on 11/20/2007 10:45:43 AM PST by Squawk 8888 (Is human activity causing the warming trend on Mars?)
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To: 3AngelaD

As much as I’d like to get rid of O’Malley...making him Secretary of the Treasury is not the way to do it!


9 posted on 11/20/2007 10:45:48 AM PST by RockinRight (Just because you're pro-life and talk about God a lot doesn't mean you're a conservative.)
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To: Hydroshock
I am barely surviving now....

National Sales Tax....call me homeless.

10 posted on 11/20/2007 10:46:10 AM PST by Jersey Republican Biker Chick (RIP Eric Medlen. You will be missed.../ Get well Soon John Force!!!)
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To: Hydroshock

Further proof that the whole “Fair Tax” is something dreamed up by the Scientologists (or the guy that wrote “The Wizard of Oz”). National Sales Taxes are ALWAYS levied on top of existing taxes.

A Flat Tax is the way to go. Unlike this “Fair Tax” it actually has a successful track record in over 30 countries so far. Beginning with Hong Kong in the ‘fifties and now spreading over the countries of Eastern Europe and the former Soviet Union.


11 posted on 11/20/2007 10:46:44 AM PST by sinanju
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To: Hydroshock

String the bastards up.


12 posted on 11/20/2007 10:47:05 AM PST by skepsel
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To: Hydroshock

Sounds like a fair tax.


13 posted on 11/20/2007 10:47:47 AM PST by Paladin2 (We don't fix the problem, we fix the blame!)
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To: Hydroshock
...The U.S. currently has no national sales tax, also known as a value added tax, ...

News to me.

14 posted on 11/20/2007 10:48:00 AM PST by SGCOS
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To: Hydroshock

A sales tax, on top of the income tax? No.

Not just no, but hell no!


15 posted on 11/20/2007 10:48:28 AM PST by NeoCaveman ("Don't doubt me" - El Rushbo, alternative tagline: Hunter/Pissant 2008)
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To: RockinRight

I am sure Mrs. Clinton has noticed the efficacy of his efforts to separate the citizenry from their hard-earned cash.


16 posted on 11/20/2007 10:49:25 AM PST by 3AngelaD (They screwed up their own countries so bad they had to leave, and now they're here screwing up ours)
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To: Squawk 8888
That's the exactly the idea behind the Fair Tax. Its visible unlike the income tax and any attempt to raise a national sales tax would run into widespread resistance.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

17 posted on 11/20/2007 10:49:36 AM PST by goldstategop (In Memory Of A Dearly Beloved Friend Who Lives In My Heart Forever)
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To: Hydroshock

They can discuss it until they are blue in the face. Anyone voting for this will end their career in politics.

Idiots.

What is it about ‘Republican and Conservative’ do they not understand?


18 posted on 11/20/2007 10:49:38 AM PST by RinaseaofDs
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To: Hydroshock
Put the tax on the high-end sales market. It’s the only growth sector and the higher price would improve purchaser’s conspicuous consumption.
19 posted on 11/20/2007 10:50:12 AM PST by ex-snook ("Above all things, truth beareth away the victory.")
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To: Squawk 8888

“Actually, the experience here in Canada has been that the sales tax is the most difficult to increase because it’s so visible. Corporate and payroll taxes are the easiest to hike because most voters don’t notice, but add a penny to the sales tax and EVERYONE notices.”

That’s my point actually. Taxation won’t end there. It will merely be another tool of taxation among taxes. And I refuse to allow anyone to convince me otherwise because you and our neighbors to the north are the finest example.


20 posted on 11/20/2007 10:51:30 AM PST by romanesq
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To: Hydroshock
The tax would be one option to help offset revenue lost from lowering corporate taxes.

Because heaven forbid they actually CUT SPENDING and fire some useless bureaucrat overseeing the managers of scientists studying bear DNA. Can't have that, now can we?

21 posted on 11/20/2007 10:57:00 AM PST by mvpel (Michael Pelletier)
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To: Hydroshock

If you eliminate the corporate taxes, and replace them with a sales tax, there are some advantages.

First, it means U.S. corporations are taxed less. That lowers their expenses. Either they can lower the price of goods (offsetting the sales tax), return it to shareholders, or use it to grow.

It also makes them more competitive in the global marketplace.

Meanwhile, we would pay the sales tax not just on items purchased from U.S. companies, but on EVERY item from all companies. So in effect it would be taxing foreign corporations for the business they do in this country. Again, helping U.S. companies who currently share the entire burden of taxes while the foreign companies skate.

There are problems with a national sales tax. It is regressive (probably not an issue amongst us here), and it is a new tax. But we are already paying the corporate tax through the price of goods and services.

I’m not saying I support this idea, just that I can see some positive effects. The negatives have been covered here pretty well.


22 posted on 11/20/2007 10:58:14 AM PST by CharlesWayneCT
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To: romanesq

Well, our taxes dropped quite dramatically in the 1990s. The GST was actually revenue neutral because it replaced a hidden sales tax that was levied on manufacturers and importers. The beauty of it now is that our Conservative PM has cut two points off the rate (from 7% to 5%) and put the opposition in a position where they’ll actually have to go into the next election campaign with their vote against the cut fresh on everyone’s mind.


23 posted on 11/20/2007 11:02:28 AM PST by Squawk 8888 (Is human activity causing the warming trend on Mars?)
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To: Hydroshock

I would LOVE a national sales tax if, and only if, they abolished the income tax.

Getting taxed on both ends is insulting - at the very least.


24 posted on 11/20/2007 11:03:50 AM PST by RobRoy (Islam is a greater threat to the world today than Nazism was in 1938.)
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To: romanesq

>>I want off the discussion of a sales tax for the rest of my lifetime.
Flat tax fine.

National Sales Tax is a scam through and through. It will never end and just makes it easier for government to increase taxes further.

Want another 100 billion. Just increase one tax. Done.<<

Yes, but if there is only one tax, everyone knows how high it is. When you nickel and dime people here and there it is easier to raise taxes. When people see that their sales tax is 60%, it will be much harder.

It is also very fair becuase it becomes a flat tax. That is, the guy that earns $200k pays the same percentage as the guy that earns $20k.

‘Course, it will never happen, at least as a replacement for the federal income tax.


25 posted on 11/20/2007 11:06:10 AM PST by RobRoy (Islam is a greater threat to the world today than Nazism was in 1938.)
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To: 3AngelaD

And would this force the repeal of the 16th amendment and eliminate the IRS? Somehow, I doubt that will happen.


26 posted on 11/20/2007 11:07:00 AM PST by NCC-1701 (PUT AN END TO ORGANIZED CRIME. ABOLISH THE I.R.S.)
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To: Hydroshock
I think politicians miss the point of lowering taxes. You are not supposed to lower them in one area and then raise them somewhere else to make up the difference. Don't you wish we, as individuals, had this power? Simply tax your employer so you get paid more. If he complains about high wages tax him for letting you park in his parking area and cut wages. That should make him happy./SAR

Politicians, the scum of the earth. Why we actually think we need them, I don't know. Citizens who take turns at the helm should be the order of the day and I believe that was roughly the idea when the constitution was penned. We have allowed a whole class of professional power brokers to take over this country and have allowed it almost from the start of this government but we keep making it worse instead of fixing it.

27 posted on 11/20/2007 11:08:13 AM PST by calex59
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To: Hydroshock

This article seems to be equating a national sales tax with a VAT. As I understand it a VAT applies at each stage of the manufacturing process, while a national sales tax might apply only at the point of final consumption.

VAT’s are for countries with greedy, lowlife governments that would strangle their citizenry for a few extra bucks - no wonder it’s getting support in Washington.

I think, if enacted, American may be going down for the count. :(


28 posted on 11/20/2007 11:08:22 AM PST by The Duke (I have met the enemy, and he is named 'Apathy'!)
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To: Squawk 8888

I have always said if Americans had to write checks for all of their taxes instead of the “convenient” withholdings scam there would be a revolt PDQ.


29 posted on 11/20/2007 11:13:10 AM PST by Resolute Conservative
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To: Hydroshock

Perhaps I’m wrong, but I always thought there was quite a difference between a retail sales tax, and a value added, or VAT tax. This article says they’re the same thing.


30 posted on 11/20/2007 11:16:08 AM PST by Red Boots
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To: Resolute Conservative

My sentiments exactly. To most working people, taxes are just numbers on a pay stub- they never actually see the money so they don’t appreciate the true cost. A reminder at the store checkout counter on a daily basis would make a lot of people think harder about the desirability of “free” government services. A major turn for the worse in the Canadian health care system was when they dropped the monthly premiums and started funding it with a payroll tax; people stopped making the connection between cost and quality of service because they never saw the cost.


31 posted on 11/20/2007 11:18:35 AM PST by Squawk 8888 (Is human activity causing the warming trend on Mars?)
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To: CharlesWayneCT
First, it means U.S. corporations are taxed less. That lowers their expenses. Either they can lower the price of goods (offsetting the sales tax), return it to shareholders, or use it to grow.

They could. But I find myself lacking warm fuzzy feelings. They could also use the savings for Special Golden Parachutes, Bonuses, Travel Allowances, Company cars, boats and aircraft, and continue their Quarterly looting.

But they wouldn't do that.

No, they would lower the prices and return the money to Little People.

Sorry, forty years in Fortune 500's has left me a reformed optimist.

32 posted on 11/20/2007 11:18:42 AM PST by Gorzaloon
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To: sinanju

But.........have you noticed that nobody running for President is talking about changing our tax system? The “Flat Tax” or “Fair Tax” is never discussed by anyone in the government. It’s not even being talked about in Congress. Taxes are the easiest way to control the people. Take their money away from them and the people have no control over their lives. This is one thing Hillary would love to do. Glad to see people wising up about her and turning on her now.


33 posted on 11/20/2007 11:30:34 AM PST by RC2
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To: Hydroshock

Here we go once again - doing favors for “corporations” at the expense of the general public. If the proposed corporate tax rate change will result in a shortfall, please explain to me why it becomes incumbent upon the taxpayer to make up the difference?

Corporations and their unaccountability are the among the biggest reasons this nation is crumbling as it is, why should we do them any more favors when ultimately they’ll just export their factories out of this country anyway?

Blatant ignorance is running rampant in DC...


34 posted on 11/20/2007 11:31:57 AM PST by retr0 (He who argues with a fool is an even greater fool.)
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To: Hydroshock

If it’s to subisidize the lowering of coporate taxes, then it had better ONLY be charged on sales to corporations and not private citizens!


35 posted on 11/20/2007 11:35:50 AM PST by BMIC
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To: Hydroshock
national sales tax, also known as a value added tax, or VAT

In what alternate universe?

36 posted on 11/20/2007 11:40:08 AM PST by RightWhale (anti-razors are pro-life)
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To: ex-snook
Put the tax on the high-end sales market. It’s the only growth sector and the higher price would improve purchaser’s conspicuous consumption.

Sounds like Teddy Kennedy's 'Luxury Tax' back in the 80s.

That didn't end well, especially for people who's livelihoods depended on manufacturing 'luxury goods.'

37 posted on 11/20/2007 11:44:13 AM PST by Ditto (Global Warming: The 21st Century's Snake Oil)
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To: Squawk 8888

but it’s just a penny here a penny there. You don’t get one big bill that tells you how much total taxes you paid.


38 posted on 11/20/2007 11:55:14 AM PST by ari-freedom (I am for traditional moral values, a strong national defense, and free markets.)
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To: Gorzaloon

I have a similar disgain for the average company these days. I haven’t thought through though (wow, that’s a pretty cool string of words there) what the conservative way is to fix it.

Supposedly, if a company is wasting it’s profits on useless things, another company that focuses on the customer should be able to undercut the wasteful company and win market share.

But there is a bias toward large companies, through some rather predatory practices regarding sales outlets that are quite legal but seem monopolistic.


39 posted on 11/20/2007 11:55:22 AM PST by CharlesWayneCT
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To: Hydroshock

I support a National Sales Tax — right after they repeal the 16th Amendment.


40 posted on 11/20/2007 11:57:41 AM PST by Maceman
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To: BMIC

I’m afraid the corporations will just pass their increased costs unto the consumer - Whether it’s a tax or increased product costs it’s still less money in your wallet.


41 posted on 11/20/2007 12:06:38 PM PST by Baron 2A
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To: Hydroshock

A tea party is in order.


42 posted on 11/20/2007 12:09:37 PM PST by unixfox (The 13th Amendment Abolished Slavery, The 16th Amendment Reinstated It !)
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To: CharlesWayneCT
First, it means U.S. corporations are taxed less. That lowers their expenses. Either they can lower the price of goods (offsetting the sales tax), return it to shareholders, or use it to grow.

Apparently the only way we can get the ball rolling is to hand corporate a big ole bonus?

43 posted on 11/20/2007 12:09:54 PM PST by Realism (Some believe that the facts-of-life are open to debate.....)
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To: retr0

Was going to disagree, then I noticed your tag line, so..


44 posted on 11/20/2007 12:28:04 PM PST by waverna
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To: retr0

I don’t blame Corporations, I blame free-trade with slave nations. The Corporation are just being moved by the “invisible hand” (of slapping).

A Corporate tax is directly passed onto the consumer anyways.


45 posted on 11/20/2007 12:37:56 PM PST by Hunterite
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To: romanesq
The reason people push a national sales tax is protectionism.

They want to shift all the tax burden to sales because it acts as a subsidy to exports because exported goods are not taxed.

It also acts like an import tariff because all of the tax burden is on sales and it is born equally by both domestic and foreign goods. Most foreign goods would also have embedded taxes from their home country as well that contribute to their cost.

The shift from an income tax to a sales tax will also generate a huge spike in the price of purchasing items (including the taxes). You will get more dollars in your take home pay to offset that, but each dollar buys less.

If you think the weak dollar is a problem now, what do you think an instant 20% to 30% drop in domestic purchasing power would do?

How do you think all the nations that have been financing out debt that we would then pay back in devalued dollars would feel about that?

I'm thinking it would be much harder to get financing for our national debt, and since we are constantly paying off and refinancing short term debt, it wouldn't just be a problem with borrowing for new spending. A lot of the debt we owe would come due, and we wouldn't able to refinance the old debt either.

The "Fair Tax" would very likely bankrupt the US simply because we would screw over our creditors to the point where they wouldn't continue to lend us money any more.

46 posted on 11/20/2007 12:41:22 PM PST by untrained skeptic
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To: Ditto
"That didn't end well, especially for people who's livelihoods depended on manufacturing 'luxury goods.'"

Good point. Exclude those manufactured in the USA.

47 posted on 11/20/2007 1:03:38 PM PST by ex-snook ("Above all things, truth beareth away the victory.")
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To: ex-snook
Exclude those manufactured in the USA.

Turn about being 'fair play', I expect that wouldn't be so good for people who make 'luxury' goods for export.

Right now with the dollar being low, American-made goods are a bargain in Europe and elsewhere. If we get crazy with tariffs, we can expect retaliation.

I have a different suggestion. Let's cut spending instead of finding new things to tax.

48 posted on 11/20/2007 1:11:51 PM PST by Ditto (Global Warming: The 21st Century's Snake Oil)
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To: Ditto

Sorry Cut spending? No one is listening to you. Now it’s don’t tax me, don’t tax you, tax the kids who don’t vote yet.


49 posted on 11/20/2007 1:15:54 PM PST by ex-snook ("Above all things, truth beareth away the victory.")
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To: Hydroshock

We went down this road in the 70s with Rep. Al Ullman who is barely a spot of mud in the sands of history today.

And, we still don’t have a VAT.

Nor will we when they finsih talking about it.


50 posted on 11/20/2007 1:26:17 PM PST by DustyMoment (FloriDUH - proud inventors of pregnant/hanging chads and judicide!!)
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