Originally posted by: yuppiejr
Originally posted by: Craig234
Those figures were not income. They were capital gains. Most people's income is from wages and subject to the income tax on wages. The 'federal sales tax' is a joke, IMO.
Well, keep in mind that per my original post I am not of the opinion that you can slice and dice "classes" of income in order to tax them separately - 50k is 50k regardless of investment versus wage income.
I'd be interested in why you think the 'federal sales tax' is a joke - normally you offer relatively complex responses so I find this "x is a joke" and run response surprising.
I'm very pleased by your comments, insofar as that I was aware when posting of the choice between a lengthier explanation and the short comment I made, but the fact that you have noticed it's unusual for me to post such a brief comment is nice to see. I'll explain why.
One reason was that I have posted longer explanations on the national sales tax repeatedly, and didn't want to just repeat them. A second reason is that in the realm of discussion, there are ways that radical ideas become 'mainstream', and mainstream ideas become 'radical'. Take an idea that's 'radical', do a talk show where 3 of 5 guests argue for it, and viewers tend to suddenly see it as 'one of two sides', even if they disagree with it.
These are what I'd sort of call the 'boundaries' of the political culture. People seem sort of predisposed to have the 'left', the 'right', and the fringes. But the issues that fall within those categories radically varies over time and culture. A right-winger in the USSR had little in common with a right-winger in the US.
Anyway, the comment in part was to keep the 'national sales tax' as a 'radical, fringe, unworkable' idea not in the mainstream for discussion - which I think is the case, though I recogjnize that since some take it more seriously, a combination of that message and discussing the merits is helpful. Pne final reason is that I am not sure I can do justice currently on why it's such a bad idea and hate to post an incomplete case. But thanks again for noticing the less than substantive reply.
In my opinion and observation, a federal sales tax replacing all other federal taxes has the following benefits:
Vastly easier to administer than tiered income / deduction system of today, reducing the need for a significant government organization (the IRS) which means lower administrative overhead and better use of tax dollars.
Collection method already exists in most POS / business systems based on the proven and successful state sales tax model that's been used for years in this country.
Exclusion methods also already exist in sales tax software to support states like MN that do NOT tax "essential" items like food and clothing and certain household goods which should remove the "sting" from low income earners who do not pay taxes under the current system.
I think 'easy to administer' is vastly overrated. Sure, I like it too, like everyone else, but I think it pales in comparison to the impact of the actual tax policy.
In fact I'd go so far as to say that it's a trojan horse in which the advocates for such terrible tax ideas they can't get passed on their own merit, tries to sneak them in.
"DON'T YOU HATE THE COMPLEX TAX SYSTEM? (LOTS OF ANECDOTES) SO VOTE FOR THE ALTERNATIVE! (and don't read this small print what the new plan does)."
Elimination of corporate tax (which would presumably be made up for in the overall federal sales tax to cover the shortfall) would result in lower costs and lower prices to consumers and business on goods/services purchased.
Common sense would suggest that if the national sales tax is revenue neutral, then in the best case, consumers would not pay one cent less for products because of the shift.
"Fairly" lumps the greatest tax burden on those with the greatest means who spend the most money. Allows individuals to grow wealth tax free and then pay-in when investment income is spent on other investments or goods.
That's not the case. People do not purchase goods and services proportional to their incomes. People who make less spend far higher proportions of their incomes.
Once again let me mention the metaphors of most people having money as a river, and the wealthy having money in the form of a lake.
The wealthy spend a trivial proportion of their incomes on goods and services compared to most peopole - the national sales tax *is advocated by those trying to benefit the wealthy*.
Really, look at any serious study - not one from a bought and paid-for right-wing think tank (read right-wing propaganda machine) - on the actual effects the tax would have.
The tax, I suspect, would have to be so high, that it would create a cycle of discouraging consumption, which would force increasing the rate to make up for the reduced sales, which woudl further reduce consumption, and so on, and throwing in the recession/depression from all the reduced consumption as a free bonus with the policy.
The predictions on what the tax rate would have to be do two things: one is not to account for the decrease in consulmption and the effects, and the other is to dishonestly represent the percentage by changing how they define it. Normal people would say that if you pay 25 cents tax on a one dollar purchae for a total of $1.25, that's a 25% sales tax - 25% of the one dollar price. But the sales tax advocates say it's a 20% tax - 20% of the final $1.25 price, to make the rate look lower than it is.
I think the actual effect would also be to simply reduce the amount of taxes collected as the only way out of the cycle I mentioned - which is the goal all along of advocates.
So, I really do think it's 'a joke', in that it's the most transparent sort of trojan horse to cause huge problems by trying to trick people with bright shiny things like 'simplicity'.
I think our current tax system, for all its flaws, corruption, and room for simplification, is the best system, with some corrections, than any of the radical new taxes I see suggested.
But hey, why don't the so-called conservatives revert to the tax our nation used for nearly all federal revenue from its founding until the 20th century passage of the income tax:
Tariffs. That would have the benefit of protecting American jobs as well.
Edit: one more good reason for the one liner response is that I got caught up in the post above and badly burned four nice pieces of bacon, an economic policy with 100% loss.