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GOP Discusses National Sales Tax

Old 12-01-04, 03:34 PM
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Actually, it will lower the cost of most goods, or at least they will remain the same; currently the costs of taxation across the board are tied into the price of a product, [the "hidden costs of taxation"] which currently gets an *additional* [visible] state sales tax added to it [in many states].
I haven't heard any of the experts (pro or con) say anything other than the national sales tax will increase the cost of goods.

The national sales tax doesn't affect the state sales tax. The 45 or so states have sales taxes will continue to have them.

Realism: There's no chance of a national sales being enacted. There's absolutely no chance that the Republican plan will be enacted, because it doesn't contain progressivity.
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Old 12-01-04, 03:40 PM
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Originally posted by dtcarson
"Loaded phrasing" notwithstanding [Look! I have two sides to my mouth!] I don't see how these two are mutually exclusive:
"On the one hand, a sales tax encourages savings, but on the other hand, rich people will spend a lot of money"
So the 'poor' have the OPTION to spend, because now their tax burden is *directly* in their hands and very visible. They can decide to save money and live thriftily [a good thing], so that they can then become wealthy [even though it's apparently a sin to be wealthy], and can *then* spend more of their money. Would they rather buy a used Kia every two years, or save up and buy a new BMW or Lincoln every ten? A simple lesson taught to many of us as children--if you want something, you should save for it.
There you go talking about "sin" again. For the umpteenth time, the tax system is not about punishing people; nobody thinks it's bad to be wealthy, and we don't have a graduated income tax rate because we hate successful people. Honestly, do you really think paupers wrote the internal revenue code?

And the poor (why the quotes?) don't have the OPTION to spend, since they need to do things like PAY THEIR RENT or BUY FOOD. But next time I see somebody scraping buy on $20,000 a year, I'll be sure to let him know that he shouldn't buy wasteful things like clothing.
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Old 12-01-04, 03:42 PM
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Originally posted by JasonF
There you go talking about "sin" again. For the umpteenth time, the tax system is not about punishing people; nobody thinks it's bad to be wealthy, and we don't have a graduated income tax rate because we hate successful people. Honestly, do you really think paupers wrote the internal revenue code?

And the poor (why the quotes?) don't have the OPTION to spend, since they need to do things like PAY THEIR RENT or BUY FOOD. But next time I see somebody scraping buy on $20,000 a year, I'll be sure to let him know that he shouldn't buy wasteful things like clothing.
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Old 12-01-04, 03:46 PM
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This is research specifically for the FairTax, but the concepts should be the same:

http://www.fairtaxvolunteer.org/smart/faq-main.html#17

"How much do pre-tax prices for goods and services go down under the FairTax? All goods and services already contain the embedded costs of the current tax system in their prices. When these embedded taxes are removed, prices come down. Dale Jorgenson, Ph.D., former chairman of the Economics Department at Harvard University, has projected an average producer price reduction of 22 percent for goods and services in just the first year after the adoption of the FairTax. In addition, the FairTax lowers compliance costs by an estimated 95 percent and the removal of these costs will force prices down even lower."

I know there will still be state sales taxes. I have no problem with that. That was simply to say there is a visible tax [sales tax] added on to the invisible tax costs of most products.

And they go on to sale the 23% rate is actually 30% tax-inclusive.

" When income tax rates are quoted, economists call that a tax-inclusive quote: “I paid 23 percent last year.” If that were the case, for $100 one earned, $23 went to Uncle Sam. Or, “I had to make $130 to have $100 to spend.” That’s a 23-percent tax-inclusive rate.

We choose to compare the FairTax to income taxes, quoting the rate the same way, because the FairTax replaces such taxes. That rate is 23 percent.

Sales taxes, on the other hand, are generally quoted tax-exclusive: “I bought a $77 shirt and had to pay that same $23 in sales tax. This is a 30-percent sales tax.” Or, “I spent a dollar, 77¢ for the product and 23¢ in tax.” This rate, when programmed into a point-of-purchase terminal, is 30 percent."

http://www.fairtaxvolunteer.org/smart/faq-main.html#17

I don't want to say there's no chance of it being enacted. It wasn't long ago that there was no chance of women voting, of blacks voting, of gays being married, etc. And 2 of 3 of those things have passed. Of course, the big obstacle a national sales tax has to jump is the idea that it's bad to be wealthy, and the wealthy must be punished with high tax rates rather than the ultimately fair sales tax [Regardless of how or why the 'progressive' tax structure came about, this is the argument most on the left use: No more tax cuts for the rich! No more tax breaks for evil companies! Class warfare.
And yet, about taxing corporations: "Corporations are legal fictions that have not, do not, and never will bear the burden of taxation. Only people pay taxes. Corporations pass on their tax burden in the form of higher prices to consumers, lower wages to workers, and/or lower returns to investors. The idea that taxing a corporation reduces taxes on, say the working poor, is a cruel hoax. A corporate tax only makes what the working poor buy more expensive, costs them jobs, lowers their lifestyle, or delays their retirement. Under the FairTax plan, money retained in the business and reinvested to create jobs, build factories, or develop new technologies, pays no tax. This is the most honest, fair, productive tax system possible."
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Old 12-01-04, 03:47 PM
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Can someone explain to me how a check being issued monthly to lower-income people to make up for the sales tax they would be paying isn't progressive taxation?
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Old 12-01-04, 03:54 PM
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Originally posted by JasonF
There you go talking about "sin" again. For the umpteenth time, the tax system is not about punishing people; nobody thinks it's bad to be wealthy, and we don't have a graduated income tax rate because we hate successful people. Honestly, do you really think paupers wrote the internal revenue code?

And the poor (why the quotes?) don't have the OPTION to spend, since they need to do things like PAY THEIR RENT or BUY FOOD. But next time I see somebody scraping buy on $20,000 a year, I'll be sure to let him know that he shouldn't buy wasteful things like clothing.
If it's not a sin to be wealthy, why all the class warfare against the wealthy? The only solid and consistent thing John Kerry said during his campaign was that he would increase taxes [or remove tax cuts] for the wealthy.

NO ONE has the option to not spend, at least while we still have some freedom and not a cure-all government taking "care" of us. And even then it won't be an option, the money will be forcibly taken to fund it. The proactive tax rebate, which EVERYONE gets, would counter the cost of taxes for the 'necessities' [like clothing, food, housing] which they are already taxed on [if they buy it with their own money].

Fine. Not a sin. According to you, the idea of everyone paying X% on the things they buy, with a Y$ rebate given to counter the taxes on the basic needs, is somehow less fair than someone paying a higher rate for making more or inheriting money or selling stock or winning a lottery, while still taking advantage of billions of loopholes and strategies that the poor can't because they don't have enough wealth to even invest or use in a tax strategy. That about says it all.

Let's say I make 1 million a year [legally]. My next door neighbour makes 10k. How much should I be taxed, and why?

How is that different from my going into a store and their saying 'Oh, since you're rich, this product costs 100 bucks, but for him, it's only 10 bucks.'

If there's a 23% sales tax, the odds are that I will be spending much more than my neighbour and will inherently be paying a greater amount into the tax system.

Last edited by tonyc3742; 12-01-04 at 03:58 PM.
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Old 12-01-04, 04:02 PM
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Originally posted by X
Can someone explain to me how a check being issued monthly to lower-income people to make up for the sales tax they would be paying isn't progressive taxation?
When you have a different tax rate on a Kia than you do on a Rollys Royce - that's a progressive tax rate. That's not what the Republican proposal calls for.

Unless there's progressivity in the sales tax proposal (such as the above), it doesn't have a snowball's chance in hell of ever passing - at least not in your lifetime.

The so-called Fair Tax plan (actually it's anything but fair) would mean that the poor will pay more in taxes. Most of the middle class will pay more in taxes. I'll let you guess which group will pay less in taxes.
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Old 12-01-04, 04:04 PM
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The 23% figure reminds me of the orginal figure proposed by Armey in his flat tax scheme - 17%. What, again, was the figure that the CBO said would be necessary when they costing out the plan?
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Old 12-01-04, 04:09 PM
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I thought the object of progressivity was to make those who make more money pay an increasing rate on their income (or purchases in this case).

If everyone pays 0% up to say $40,000 and then 25% (or whatever) above that, the more spent above $40,000 the closer the rate is to 25%.

If someone spends $80,000 their tax is ($40,000 x 0%) + ([$80,000-$40,000] x 25%) which is an overall rate of 12.5%. If they spend $1 million their rate is going to be pretty close to 25%.

That looks pretty progressive to me.
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Old 12-01-04, 04:11 PM
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Originally posted by classicman2
When you have a different tax rate on a Kia than you do on a Rollys Royce - that's a progressive tax rate. That's not what the Republican proposal calls for.

Unless there's progressivity in the sales tax proposal (such as the above), it doesn't have a snowball's chance in hell of ever passing - at least not in your lifetime.

The so-called Fair Tax plan (actually it's anything but fair) would mean that the poor will pay more in taxes. Most of the middle class will pay more in taxes. I'll let you guess which group will pay less in taxes.
Most of the 'public' that the mainstream media sells to perceives 'progressivity' as 'that rich guy having to pay more than me', in the context of class warfare.

That tax rebate for the person certainly will count as 'progressivity.' If the poor person spends 10k, and gets 9k in a rebate, his actual effective tax rate is much less than 23%. Thus, progressive. A great number of people will have an effective tax rate of 0% or less. The more you spend, the greater the difference between 'Amount spent' and 'Rebate', thus, the higher your effective tax rate. Progressivity and fairness, in one, unlike the current tax system.
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Old 12-01-04, 04:14 PM
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House Speaker Dennis Hastert created a flurry of excitement in Republican circles the other day when it was reported that he is proposing the abolition of the Internal Revenue Service in his new book. This would be accomplished by eliminating all existing federal taxes and replacing them with a national retail sales tax.


There is no indication of what tax rate Speaker Hastert thinks would be necessary to replace all federal revenue. A current proposal by Rep. John Linder (R., Ga.) says that a 23 percent rate would be adequate. But such a low rate can only be sustained by making completely absurd assumptions about what would be taxed. Every serious economist who has ever looked at this question has concluded that a vastly higher rate would in fact be needed.

An unstated assumption is that the 23 percent rate proposed by Linder is comparable to existing state and local sales taxes, where the tax comes on top of the purchase price. Thus, a 5 percent sales tax on a $1 purchase comes to $1.05.

But that’s not the way the Linder plan works. He deceptively calculates the rate as if the tax is part of the purchase price. He calls this the tax-inclusive rate. Calculating the rate the normal way people are accustomed to with state and local sales taxes would require a 30 percent tax rate, not 23 percent.

When Congress’s Joint Committee on Taxation scored the Linder proposal four years ago it estimated that it would actually require a tax-inclusive rate of 36 percent, not 23 percent, to equal current federal revenues. Calculating the rate in a normal, tax-exclusive manner would mean a 57 percent rate.

Economist Bill Gale of the Brookings Institution notes that supporters of the sales tax assume that there will be no tax evasion under their proposal and that the size of government will not grow, even though they would send a large annual check to every American in order to offset the regressivity of the tax. Making realistic assumptions, Gale estimates that the tax-inclusive rate, comparable to Linder’s proposed 23 percent rate, would actually have to be about 50 percent. A rate comparable to existing sales taxes would be close to 100 percent.

And let us not forget that state and local sales taxes would come on top of the federal sales tax, pushing the total rate even higher.

Obviously, the federal government is not going to impose tax rates this high, nor would anyone pay them if it did. There would be a massive tax revolt.

The Linder bill (H.R. 25) is also deceptive in its basic assumption that all consumption of goods and services in the U.S. would be taxed. Implicitly, Americans would be taxed on, among other things, all medical care, purchases of new homes, and services provided by state and local governments if Linder’s bill became law.

This means that if you are sick and have large doctor bills, you are going to pay 30 percent on top to the federal government. (Alternatively, you would pay 30 percent more for health insurance.) If you buy a new house listed for $150,000, your actual purchase price is going to be $195,000, including the sales tax. (Alternatively, there could be a tax on the imputed rent homeowners pay themselves for living in their own homes.) And if your children receive $20,000 worth of education each year from the local public schools, somehow or other you are going to have to pay an additional $6,000 to the federal government.

Of course, it is completely idiotic to think that the American people will ever allow this to happen. The idea of taxing all consumption sounds nice in theory until you realize just how broad the definition of “consumption” would be under Linder’s plan.

Economist Evan Koenig of the Federal Reserve Bank of Dallas makes the point that any new sales tax is going to raise prices by that amount. If the Federal Reserve accommodates it, we are going to have 30 percent inflation the year the tax is introduced. If it is not accommodated, then producer prices are going to have to fall by 30 percent, which will cause a severe recession and greatly reduce the tax yield.

Somehow or other, Linder has gotten 54 House members to co-sponsor his proposal. They should all pray that their opponents overlook their poor judgment. When last the national retail sales tax was a major campaign issue — in the 1996 senate race in Louisiana — the Republican sales tax supporter was crushed by his anti-sales-tax Democratic opponent. That may explain why only two senators support Linder’s plan, one of whom is retiring this year.

With all due respect to Speaker Hastert, trying to eliminate the IRS by adopting a national retail sales tax is a very dumb idea.

— Bruce Bartlett is senior fellow for the National Center for Policy Analysis. Write to him here.







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Old 12-01-04, 04:37 PM
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My suggestion for revamping the tax code?

I say just scrap "income withholding".

Actually make people write a check to the government every April 15th.

Then let's see how many of the liberals talk out both sides of their mouths....

It's always easier to spend SOMEONE ELSE'S money...
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Old 12-01-04, 04:38 PM
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Originally posted by classicman2
When you have a different tax rate on a Kia than you do on a Rollys Royce - that's a progressive tax rate. That's not what the Republican proposal calls for.

Unless there's progressivity in the sales tax proposal (such as the above), it doesn't have a snowball's chance in hell of ever passing - at least not in your lifetime.

That worked great when they put the luxury tax on Yahts, as I recall

The rich tend to have the most power, and tend to be higher up in government. If they were serious about anything, I would expect to hear about a wealth tax at some point, and I have never heard a Republican or a Democrat speak to it. At the end of the day, they both want to keep as much money as they can, and they kill anything that messes with that, but give different reasons for it.

It won't change.

I think Trump advocated a wealth tax of about 2% on assets above 10 million when he "ran" for president. That amount would wipe out the debt (not deficit) in a single year, iirc.
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Old 12-01-04, 04:44 PM
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Originally posted by mosquitobite
Actually make people write a check to the government every April 15th.
Preferably it would be November 1.
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Old 12-01-04, 04:46 PM
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Newsflash for kvrdave.

I assume you're aware that the graduated income tax was in place when the luxury tax was imposed. My proposal (the fair proposal) would not be an additional luxury tax.

You need to keep up with the topic of the thread.
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Old 12-01-04, 04:49 PM
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Originally posted by mosquitobite
My suggestion for revamping the tax code?

I say just scrap "income withholding".

Actually make people write a check to the government every April 15th.

Then let's see how many of the liberals talk out both sides of their mouths....

It's always easier to spend SOMEONE ELSE'S money...
That silly statement sounds someone arguing that the computer in the federal building belongs to him.
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Old 12-01-04, 04:55 PM
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Just as silly as someone saying that that computer was "free"

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Old 12-01-04, 05:07 PM
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Originally posted by classicman2
Newsflash for kvrdave.

I assume you're aware that the graduated income tax was in place when the luxury tax was imposed. My proposal (the fair proposal) would not be an additional luxury tax.

You need to keep up with the topic of the thread.
And I think you need to look past the the rose colored glasses. You actually believe that a graduated sales tax (which is just a modified luxury tax) wouldn't affect the sale of products that the government considers "luxury"?

Hogwash.
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Old 12-01-04, 05:07 PM
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Why is that silly?
The reasons most people don't get too worked up about the tax structure as it is today is that there ar eplenty of exemptions, and that most of it is hidden. People get excited when they get a 400$ refund, which was basically a 400 interest free loan to the government.
It's like the car commercials or the infomercials--Buy Now, nothign down, 299/month! Wow, really?!? Too cheap not to buy. No one asks 'how many months', or 'whats the total expenditure'. Psychological. I'm surprised Tax Freedom Day isn't talked about more, that's a good 'visualisation' of the issue.
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Old 12-01-04, 05:17 PM
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Originally posted by kvrdave
And I think you need to look past the the rose colored glasses. You actually believe that a graduated sales tax (which is just a modified luxury tax) wouldn't affect the sale of products that the government considers "luxury"?

Hogwash.


Modified luxury tax


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Old 12-01-04, 05:20 PM
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Originally posted by dtcarson
Why is that silly?
The reasons most people don't get too worked up about the tax structure as it is today is that there ar eplenty of exemptions, and that most of it is hidden. People get excited when they get a 400$ refund, which was basically a 400 interest free loan to the government.
It's like the car commercials or the infomercials--Buy Now, nothign down, 299/month! Wow, really?!? Too cheap not to buy. No one asks 'how many months', or 'whats the total expenditure'. Psychological. I'm surprised Tax Freedom Day isn't talked about more, that's a good 'visualisation' of the issue.
The money is no longer yours once you pay taxes.

You've paid for government services. You do accept the idea that the government does perform a service for you, don't you?

It's like going to store and buying a suit. That $800 you paid for the suit is no longer yours. It's the stores. You've received goods for the money.

Why is this concept so difficult for right-wingers to understand?
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Old 12-01-04, 05:24 PM
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Originally posted by dtcarson
If it's not a sin to be wealthy, why all the class warfare against the wealthy? The only solid and consistent thing John Kerry said during his campaign was that he would increase taxes [or remove tax cuts] for the wealthy.


A liberal and a conservative were sitting in a bar. Then Bill Gates walked in. "Hey, we're rich!" shouted the conservative. "The average person in this bar is now worth more than a billion!" "That's silly," replied the liberal. "Bill Gates raises the average, but that doesn't make you or me any richer." "Hah!" said the conservative, "I see you're still practicing the discredited politics of class warfare."

Fine. Not a sin. According to you, the idea of everyone paying X% on the things they buy, with a Y$ rebate given to counter the taxes on the basic needs, is somehow less fair than someone paying a higher rate for making more or inheriting money or selling stock or winning a lottery, while still taking advantage of billions of loopholes and strategies that the poor can't because they don't have enough wealth to even invest or use in a tax strategy. That about says it all.
Treating all people the identically is not fair. Treating identically situated people identically is fair. And if you don't like loopholes, get rid of the loopholes. Don't throw the baby out with the bathwater.
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Old 12-01-04, 06:08 PM
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Originally posted by classicman2
The money is no longer yours once you pay taxes.

You've paid for government services. You do accept the idea that the government does perform a service for you, don't you?

It's like going to store and buying a suit. That $800 you paid for the suit is no longer yours. It's the stores. You've received goods for the money.

Why is this concept so difficult for right-wingers to understand?
It's not that it's hard to understand...it's that
WE DON'T WANT THE SERVICE TO BEGIN WITH!!!
OR we don't USE the service OR we want ACCOUNTABILITY WHEN THAT $800 SUIT FALLS APART WHEN WE TAKE IT HOME!
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Old 12-01-04, 06:23 PM
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Originally posted by mosquitobite
It's not that it's hard to understand...it's that
WE DON'T WANT THE SERVICE TO BEGIN WITH!!!
OR we don't USE the service OR we want ACCOUNTABILITY WHEN THAT $800 SUIT FALLS APART WHEN WE TAKE IT HOME!
Here's the thing about government services - they're not <i>a la carte</i>. You don't get to choose which ones you want to pay for, and which ones you don't. When you say you don't want the services to begin with, pardon me for being skeptical. But if you're really serious, then might I suggest you vote Libertarian?
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Old 12-01-04, 06:24 PM
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Tampering with the system further... in the middle of two major wars, after giving significant tax cuts, and a large federal budget deficit - smart.

Bah, I have to take the liberals' side this time, I need a shower.
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