Posted on 10/21/2011 5:39:01 AM PDT by normy
There is a fine line between a scam, and a legitimately lower price due to the tax from market forces themselves. also, if a builder is going under and liquidating (therefore, selling at a discount), that too can be problematic.
It could encourage builders to buy and rehab old homes vs. building new ones.
I appreciate your reply, but I’m afraid I’d have to guess at the meaning of all the acronyms you used to even hope to understand it.
From what I did get of it, it appears that you pay your deductible plus the sales tax on the repairs, i.e., that the insurance doesn’t cover any sales tax.
I’m not sure how this is a “monstrosity.” It just seems to be the way the law is written. It could as easily be written to allow the insurance to cover sales tax along with repairs. But a choice had to be made. Or maybe more expensive policies are available that cover all expenses including the tax? I just don’t know enough about it beyond that.
I do suspect though that if the tax was 9%, the policy would cover it here, because 9% would rival a lot of deductibles on car policies here. Don’t know though. Seems to be an insurance issue more than a tax issue. Our policies currently cover state sales tax, for example.
So, what is to keep a builder from greating a subsidiary that does nothing but buy the homes from the builder? The builder builds them, then the subsidiary buys them, at some fraction of their real cost. The subsidiary pays the sales tax. Then the subsidiary sells the homes as used homes on the secondary market, for double the price.
The Subsidiary will have to pay 9% on the initial purchase of the home they bought cheap (Sales tax).
The Subsidiary will still have to pay 9% on the profit of that sale that was doubled (business tax).
Say is cost a builder 50,000 to build a home.
Builder’s Subsidiary buys the home for 50,000 and pay 9%, he pays $54,500.00
Subsidiary Sales home for 100,000.00 as used. His profit is $45,500.00 which they pay Corp tax of 9% he makes $41,400.00
Strait up builder sales as new
Cost 50,000 sales for 100,000
$50,000 profit at 9% he makes $54,500.00
end buyer pays the 9% of $100,000.00
There is a fine line between a scam, and a legitimately lower price due to the tax from market forces themselves. also, if a builder is going under and liquidating (therefore, selling at a discount), that too can be problematic.
With a retail sales tax he only pays the tax once.
Also, there are ways around many of the so called arguments against a sales tax, they can be written into any amendment.
I'm sure we can't know the answer to this because the “plan” is not much more than talking-point form right now. Cain is presenting it as if it is all thought-through, but it is not. It's a starting point.
I wonder if one way of handling this is that every individual component of a new home (the lumber, the paint, the carpet, the appliances, the roofing, etc.) is purchased.... I wonder if those components would be considered Retail purchases that would be taxed at 9%, or if they would be considered Business Purchases and therefore included in the Business tax of 9%... Cain states that nothing would be “taxed twice”, so if the individual components were considered retail purchases, then the home itself should not be taxed upon sale.
Who knows. Time will vet the details.
All I know is it's a starting point for serious discussion about revamping the tax code. And that is what I like about it, whether or not any of it ever gets passed.
What you’re describing sounds like two of Cain’s 9’s, the business tax (where each level is taxed on value added) and the national sales tax, where the consumer pays a tax on the retail price.
I’m assuming though that, in Canada, only the value added portion is taxed at each level. It makes no sense to have each wholesale level pay tax on the entire value of the transaction to that point. That would be too detrimental to the movement of goods in the supply chain.
I just hope my county can get in on this, so I can pay less in taxes than other americans who are too stupid to get THEIR community labelled an opportunity zone.
‘Does Cain envision an entire city or state qualifying as a zone? the bigger the zone, the better, the adviser replied.’
Cain seems content to make the whole nation right to work, no minimum wage, and his other conservative economic policies, all voluntarily adopted locally. I only feel a little guilty that he would be using federal power for good, instead of for ill like the Dems and RINOs have long done.
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