Posted on 11/18/2004 10:00:17 AM PST by LouAvul
Think of a world where there is no income tax, where you get to keep everything you earn and you pay the tax man when you buy stuff," said Minnesota Republican Rep. Gil Gutknecht.
That's the basic premise behind a proposed national sales tax, just one of many ideas for overhauling the nation's tax code. Under a bill co-sponsored by Gutknecht and more than 50 others, all federal taxes on income would disappear, but consumers would pay a 23 percent federal sales tax on their consumption - on top of existing state taxes.
Washington is abuzz with ideas after President Bush won a second term and immediately pledged to make "tax reform" a top domestic priority.
Nevertheless, the Senate's top tax-writer is expressing doubts about prospects for a major overhaul, perhaps dealing a blow to its chances. Sen. Chuck Grassley, R-Iowa, chairman of the Senate Finance Committee, told USA Today that comprehensive tax reform would be "difficult" to do.
Grassley said Bush would have to aggressively use his "bully pulpit" to win wider popular support.
(Excerpt) Read more at sacbee.com ...
http://www.freerepublic.com/focus/f-news/1282651/posts
This guy is displaying his economic ignorance. If I buy a bottle of Coke for $1 and the government immediately extracts 23% in “sales tax”, that is the same as an income tax. The retailer, bottler, sugar cane farmer, shareholders in Coca-Cola, etc are paid in after-tax dollars! The amount of the tax doesn’t even flow through the producers’ checking accounts since the government gets it so early. To some, this is a good thing. To the economic literate, the panacea of the sales tax is smoke and mirrors.
Didn't this hope...
A national sales tax isn't hope, it's despair. If you want a deep and grinding economic depression, then hope for a national sales tax.
Elimination of the federal income tax, as wonderful as it would be, is never going to happen. It's one of the prime mechanisms with which the politicians buy votes and manipulate people.
This guy is displaying his sweetening ignorance. Coke is sweetened with corn sugars in the US, not cane.
I don't understand exactly why this is a bad idea. But I'm not very economically literate. So in laymen's terms please explain, if it is smoke and mirrors, and there really isn't any difference, does it not still simplify the process? I mean...I wouldn't have to fill out any forms, and the IRS wouldn't have to cut checks, audit forms, etc. Wouldn't this eliminate a lot of paper work?
Oh yeah? Look at Russia. They went to a 13% national sales tax and everything is going fine.
NRST ping... they keep coming!
YES! Get rid of the IRS and the UN. :)
False conclusion: you have the option of not buying the coke and, therefore, not paying the sales tax. Try not paying your income tax.
The retailer, bottler, sugar cane farmer, shareholders in Coca-Cola, etc are paid in after-tax dollars!
This assumes an income tax exists... the point was to get rid of it and all of the supporting documentation, etc. surrounding an "income" tax.
Another advantage is that *all* money is taxed at the same rate rather than just income. This invalidates tax shelter scams, social engineering via the tax codes by whomever is in office, tax credits that politicians write for themselves etc....
Basically, it's long overdue.
I agree. It taxes spending instead of income. This makes sense to me. I also think it would promote saving. You, in a sense, decide how much tax you pay by how you spend or save. So those who have more expensive taste, and want to live a higher lifestyle pay more. And those who wish to save their money, pay less. How does this effect investment? And how would it not raise the price of products?
The liberals NEVER quit, they will twist any quote they can find to suit their own warped view of reality so that they can continue their support for a corrupt tax system.
The benefits are too numerous to list but include
billions in paperwork savings related to tax filings
taxation of income earned through the black market via things like drug dealing
Better privacy for citizens who will no longer need to report every nickel they make every dollar they donate and every person that depends on them to a government beauracracy.
How would it tax the black market?
And also...I'm still wondering how the price of the products we buy would not increase?
Yeah!
Russia uses a sales tax because its collectable, otherwise Russia would have no revenues at all.
Another Alternative:
AUTOMATED PAYMENT TRANSACTION (APT) TAX
Taxation technology for the 21st century
Dr. Edgar L. Feige, Professor Emeritus of Economics from the University of Wisconsin-Madison and the originator of the APT Tax concept, has just produced new estimates suggesting that a broad-based transaction tax as low as six tenths of one percent could replace the entire Federal and State 2005 budget revenue requirements of the United States of America.
The APT concept is elegant in its simplicity - potentially replacing the entire federal and state tax system - including income, corporate profits, excise and estate taxes - in favor of a tiny tax on all transactions. The tax would be automatically deducted from special taxpayer accounts, linked by software to all accounts at financial institutions capable of making final payments to the government seamlessly in real-time. The APT tax therefore eliminates the need for individuals and firms to file income and information tax returns. This is estimated to save citizens and the government roughly $200 billion per year in administration, enforcement, evasion and compliance costs, roughly seven times the amount currently being spent on homeland security.
The APT tax seeks to maximize the goals of both the government and the people - collecting necessary revenue with the lowest possible tax rate. The difference between the APT tax and our current income tax, as well as the proposed consumption taxes, is simplicity, progressivity, and breadth-the APT tax allows for significantly lower rates spread more equally throughout the world of economic activity. The APT is a transaction tax, and as such, taxes every single transaction that occurs in the economy including fund transfers between accounts and transactions involving the exchange of bonds, securities and foreign exchange. Because the wealthy conduct a disproportionate share of these financial transactions, the tax is highly progressive despite its flat rate. Progressivity is achieved through the skewness of tax base itself rather than through the progressive income tax rate structure of the current system. The very small tax is "sliced" off each side of every transaction as it moves electronically through banks and all other qualifying financial institutions. The tax collection is orderly and transparent, the rules are simple and universal and apolitical. The APT system eliminates the entire present tax code. No more exemptions, no more deductions, no more special interest loopholes and no more tax returns.
Feige's 2005 projections of total debits of $881 Tril., and total transactions of $832 Tril. (based on the most recent 2002 Bank for International Settlements data) update the figures he used in his original paper, published in Economic Policy in 2000. Taking the average of these two estimates ($856 Tril.), he conservatively assumes that the replacement of the current tax system with a revenue neutral APT tax will reduce total transactions by 50%. The projected potential APT tax base for 2005 would then be $428 Tril., permitting a revenue neutral flat tax of .57 percent on all transactions or .28 percent on each (buyer and seller) transactor to replace projected 2005 Federal and State tax revenues.
The tax rates required for a "revenue neutral" tax are divided into three phases which are the result of a suggested implementation plan that would gradually replace virtually all Federal and State taxes. The projected tax rates are calculated conservatively, assuming that only 50% of the potential 2005 APT tax base is available, since the volume of total transactions is expected to fall with the introduction of the APT tax. To the extent that transactions decline less than is assumed in the current calculations, an even lower tax rate would be able to raise the requisite revenues. As individuals and businesses use their new found economic freedom, transactions naturally grow over time, suggesting that future tax rates could be even lower.
Utilizing 50% of the projected APT tax base for 2005 of $856 Tril., that is, $428 Tril, the estimated tax rates required to raise the revenues projected for 2005 budgets are as follows:
Phase I (Eliminate all Federal taxes other than SS and Medicare)
Required revenue neutral target=$1.242 Tril:
Required tax rate = 0.29% per transaction or 0.15% per transactor.
Phase II (Eliminate all Federal taxes including Social Security and Medicare "payroll" taxes)
Required revenue neutral target = $2.036 Tril.
Required tax rate = 0.48 % per transaction or 0.24% per transactor.
Phase III (Eliminate all Federal taxes including Social Security and Medicare "payroll" taxes and all State personal income; corporate profits and sales taxes)
Required revenue neutral target = $2.436 Tril.
Required tax rate = 0.57% per transaction or 0.28% per transactor.
The estimates above are based on 2005 revenue and transaction projections. Implementing the three phases will require several years and careful government management, especially the third phase. However, Dr. Feige has built in a safeguard for the APT Tax by calculating the required tax rate based on only half of the transactions that are actually observed.
Examples: Assuming full implementation of Phase three:
1. $100 restaurant bill would have a tax to the customer estimated to be 28 cents and the restaurant would pay 28 cents.
2. $50,000 family income deposited and spent or moved to savings results in $100,000 of transactions paying a total tax of $280 distributed over all the individual transactions as they occurred through the year. These amounts would be doubled if businesses fully shifted their tax burden to the consumer, but nowhere near the $15,000 to $20,000 the family would pay under the current federal and state systems.
It is now important to begin the process of planning the economic, legal, technical and administrative requirements necessary for a smooth and transparent transition from the current tax system to an APT system. The proposed, new collection system will be tested by computer simulation to capture all potential errors and omissions (new job for the IRS). Then, it will take several years to rollout, especially Phase III involving central collection and distribution to the States. A national commitment to this revolutionary, fair, automatic and lowest cost tax system is needed NOW!
For more details, please visit www.apttax.com
William J Hermann, Jr. MD, Director APT Tax Project Contact: administrator@apttax.com , 713-932-3773
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