Skip to comments.Exclusive: Treasury May Discuss National Sales Tax
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. Rangels bill contains proposals to offset his tax cuts with the elimination of special tax breaks for corporations.
(Excerpt) Read more at cnbc.com ...
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.
A tea party is in order.
Apparently the only way we can get the ball rolling is to hand corporate a big ole bonus?
Was going to disagree, then I noticed your tag line, so..
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.
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.
Good point. 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.
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.
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.
Superb analysis. Thanks!
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.
I disagree 110% ,,, THE INCOME TAX STARTED AS A 1% FLAT TAX ... WHERE DID THAT GET US!!!
The “Fair Tax” along with it’s collary ,, the elimination of the income tax and the supporting constitutional ammendment that allowed the income tax is the way to go... We will bring industry back to the US and eliminate all kinds of built in gov’t control over our lives... I have my escape planned if we go full fledged socialist with her thighness ,,, do you?
Not taxing them on their money I don’t think of as a bonus, I think of as sound business. The goods and service they provide can be taxed at the point of delivery.
In the end, ALL taxes are paid by indivduals who have money. Corporate taxes are a tax on all of us, but one that too many people love to see increase because they don’t understand.
Corporations ultimately don’t pay income taxes. Their shareholders, employees and customers do.