You don't?
Are you going to tax medical services? Because TN doesn't. Is the Unfair Tax going to raise the cost of being sick by 25%
What about food? A lot of states tax that differently than other goods? Is the Unfair Tax going to raise the cost of food for the elderly by 25%?
What about sales of equipment used by businesses to make other goods and services? Businesses are usually exempt from paying sales tax here in TN. Are you going to do that nationally? Or maybe it's just certain equipment? Is the Unfair Tax going raise the cost of business investments?
What about the internet sales? Are you going to tax them? Interstate transactions? Is the Unfair Tax going to apply to those?
UnFair tax advocates say the UnFair Tax will be collected by state Sales Tax departments. So how are they going to collect when people make out of state purchases? Are there going to be reciprocal agreements between states?
Etc.
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etc.
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TX sales tax law is 161 pages. And that's just the code. Who knows how much the regulations and interpretations behind it are.
All consumption purchases are taxed. The FairTax uses a rebate, rather than exempting specific items or classes. It is much simpler and fairer. No one pays taxes (on a net basis) up to poverty level purchases; everyone is a net taxpayer who consumes above the poverty level.
Business inputs are not consumption and are therefore not taxed. The idea is to tax a product once and only once during its life cycle.
Internet sales would be taxed the same way brick and mortar sales are. The idea is to stop playing favorites with the tax code and stop all the economic distortions and political games of the current system.
The sales tax will be collected in the same state that the sale takes place by the business making the sale. It doesn’t matter if the buyer is from down the street or from France.
“TX sales tax law is 161 pages. And that’s just the code. Who knows how much the regulations and interpretations behind it are.”
I have never seen the TX sales tax statute, but I am guessing you could reduce that by at least a third if you substituted a rebate system, such as the FairTax has, for the exemptions/exclusions that I assume Texas uses.
The FairTax bill is, I think, around 140 or so pages. Even if Treasury supplements that with regs that are 3 times that long, you still would have less than 1,000 pages in the system. CCH counts the current system at over 70,000 pages. Are you really implying that you don’t consider that a significant simplification?
Statement of Billy Hamilton, Deputy Comptroller,
Office of the Texas Comptroller of Public Accounts,
on behalf of Honorable Carole Keeton Cylinders, Texas State Comptroller of Public Accounts
Testimony Before the House Committee on Ways and Means
Hearing on Fundamental Tax Reform
April 11, 2000
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As you know, H.R. 2525 would permit states to collect and administer the Fair Tax on behalf of the federal government. In my opinion, Texas would be well-equipped to administer the Fair Tax based on our experience in administering our own sales tax. Even though the base, rate and other characteristics of the Fair Tax are significantly different from the Texas sales tax, it would be feasible for our office to collect the Fair Tax by expanding and enhancing the systems we currently have in place. For example, we would:
· Expand our current system for registering Texas retailers to include registration of sellers under the Fair Tax (615,000 businesses are currently registered as sellers in Texas; under the Fair Tax, 1.5 million Texas businesses would have to be registered);
· Expand our taxpayer assistance efforts to respond to a larger volume of telephone, letter and e-mail inquiries from sellers who collect the Fair Tax and individuals who pay it;
· Expand our Revenue Processing Division to process more returns and tax payments on a more frequent basis and to remit tax collections to the federal government on an almost-daily basis;
· Expand our current audit team and train all auditors to examine businesses for both the Fair Tax and the Texas sales tax; and
· Expand our information technology systems to collect and maintain the computerized records critical to effective administration of a consumption tax like the Fair Tax.
The expansion of our systems to administer the Fair Tax, in the manner I've just described, would be sizable. Under the Fair Tax, we would serve approximately 900,000 more filers than we do currently. We estimate that serving that many additional taxpayers would require 1,100 to 1,600 more full-time employees. The Texas Comptroller currently employs about 2,700 people on a full-time basis.
In spite of this large expansion, the compensation for collecting the Fair Tax that would be provided to states under H.R. 2525 would likely cover our projected costs. As a first approximation, we estimate that the cost to the Texas Comptroller's office for collecting the Fair Tax at full implementation would be $100 to $150 million per year. I emphasize, however, that there would be significant costs to begin collection, including the cost of facilities to house the additional processing facilities, the capital costs of information technology and revenue processing equipment, and the costs of notifying, registering and educating taxpayers on the new tax.
In closing, I believe that if the Fair Tax is to become a reality, the U.S. government would be well-served to make use of the existing expertise of the states. Many states have administered consumption taxes since the 1930s and have developed particular capabilities in this area. We also have extensive experience in dealing with the affected businesses. As long as the administrative fee paid to the state is adequate in relation to the costs of collection, I see no reason that the State of Texas could not effectively administer the Fair Tax.