US National Sales Tax...

[fskimospy]

What they ought to do is reinstate the Articles of Confederation. Contrary to pop belief, that'd work fine. No more FDRs/Obamas trying to trick people into firing the first shot.

Are you ever going to back up these opinions you have with actual facts?

Or do you subscribe to the Austrian school of history too?

 

[Darwin333]

What would you have the government reduce spending on?

Everything (yes really, everything). It is the only way to get our spending and the rosiest revenue projections (including soaking the rich) in line with each other.

The law of exponents has caught up with us and math can be a cruel bastard at times, this is one of those times.

 

[Engineer]

Do
Not
Want

 

[piasabird]

10% Cut accross the board.

Make all elected officials in Washington DC work for minimum wage. That is what they deserve, since they dont manage to get anything done.

Just take the top 1000 overpaid Federal employees and fire them or offer them retirement.

Cut the School lunch program. I took a lunch to school every day. In the long run Peanut butter is pretty cheap and more nutritious than most school lunches.

Cut all Sports programs in public schools that should save lots of money.

Start bringing soldiers back from overseas. We dont need to make muslim countries peaceful. Just bomb them if they act up. Line up our soldiers on our southern borders. That will give them something useful to do.

Cut every stupid liberal program you can think of including all money going to idiot women who have children and expect free money from the government. Tell them to get a job or starve.

 

[Darwin333]

Care to dispute the math that I posted above (33.7% without any non-taxed items or help for the poor) or the link that eskimospy posted (34%)? Then do you care to dispute the likely effects of politicians giving breaks to special interests all of which must then raise the rate further?

The 23% number that is floated around assumes the federal government slashes spending by far more than it ever has and likely ever will.

In all fairness, didn't you use current spending and the level of taxation required to get us to that number?

If that is the case, the counter argument would be that current taxes, for the sake of this debate, should be almost double (ALL of them at the Fed level) then they currently are. That would add a bit of perspective to the debate as arguing tax rates for a balanced budget against tax rates with absurdly large deficits simply isn't reasonable.

 

[Darwin333]

http://www.factcheck.org/taxes/unspinning_the_fairtax.html

Nope, 34%. As I linked before, fairtax proponents use a novel (read: bullshit) way of counting income taxes that hides how much the tax actually is. Basically, they look at the math backwards. To paraphrase the example used in the link, their argument is that if something costs $100, $77 will be the price, and $23 of that is tax. They call that a 23% tax rate. Under the way we actually do sales taxes in the US, $23 in tax on a $77 item is actually an ~30% tax rate.

Then it comes down to reality, which is that their 23% (actually 30%) figure assumes ZERO tax evasion, and it taxes everything, even things we don't tax today like rent payments. When President Bush's own tax advisors looked at it (and that's an awfully sympathetic team, don't you think?), they came up with a 34% rate. Other estimates are higher. THEN you add state sales taxes on top, and we're easily talking 40%+.

So getting rid of the income tax completely and going to the fair tax would result in the following? This is using your math (and round numbers for simplicity):

Ipod costs $100 today
Ipod without income tax would cost $77
Ipod with new sales tax at 34% would cost $103.18

So I would be paying roughly 3% above current prices AND I would never have to worry about the IRS again or paying some asshole to figure out how much money I owe them? Shit, you have sold me, where do I sign up?

 

[Darwin333]

10% Cut accross the board.

Make all elected officials in Washington DC work for minimum wage. That is what they deserve, since they dont manage to get anything done.

Just take the top 1000 overpaid Federal employees and fire them or offer them retirement.

Cut the School lunch program. I took a lunch to school every day. In the long run Peanut butter is pretty cheap and more nutritious than most school lunches.

Cut all Sports programs in public schools that should save lots of money.

Start bringing soldiers back from overseas. We dont need to make muslim countries peaceful. Just bomb them if they act up. Line up our soldiers on our southern borders. That will give them something useful to do.

Cut every stupid liberal program you can think of including all money going to idiot women who have children and expect free money from the government. Tell them to get a job or starve.

Just to give a bit of context to the argument, if we implemented all of the above we wouldn't even be halfway to closing the deficit this year.

Oh yeah, don't forget to take into account the huge ramp in interest payments we will see in the near future. Hell, in scenarios that are fairly plausible the increased interest payments alone would eat up everything you just saved.

Those first few years in that house you couldn't afford but got anyways with an interest only ARM sure are nice but eventually the math bitch slaps you. We are currently in those nice years but the math always wins in the end.

So... what else ya got?

 

[matt0611]

That wouldn't even cover the interest on the debt and .mil spending alone on the low end.

We'd have to get rid of a lot of the government, yes, thats the point.

Theres still the corporate income tax, as well as other misc excise taxes etc.

Personal income taxes make up about 40 % of the income.
I want to get rid of this and make up a small part of it with a sales tax.

We'd have to get rid of a lot of the federal government and military though. It is true.

 

[dullard]

So getting rid of the income tax completely and going to the fair tax would result in the following? This is using your math (and round numbers for simplicity):

Ipod costs $100 today
Ipod without income tax would cost $77
Ipod with new sales tax at 34% would cost $103.18

So I would be paying roughly 3% above current prices AND I would never have to worry about the IRS again or paying some asshole to figure out how much money I owe them? Shit, you have sold me, where do I sign up?

There is no realistic basis in the Ipod price dropping. There are a bunch of wishy-washy thoughts that "maybe the manufacturers will decide to take a price cut since the owners now pay sales tax instead of income tax". But that isn't really based in reality. Or maybe you believe in the line of "employees won't notice if the manufacturers pocket the money they were paying for FICA instead of giving what the employee earned to the employee". Again, that won't fly either.

Instead, it is $100 today and $134 with the new sales tax.

 

[fskimospy]

So getting rid of the income tax completely and going to the fair tax would result in the following? This is using your math (and round numbers for simplicity):

Ipod costs $100 today
Ipod without income tax would cost $77
Ipod with new sales tax at 34% would cost $103.18

So I would be paying roughly 3% above current prices AND I would never have to worry about the IRS again or paying some asshole to figure out how much money I owe them? Shit, you have sold me, where do I sign up?

No, not at all. We're going to ignore state sales taxes because they are all different, etc.

Ipod today costs $100.
Ipod with new sales tax would cost $134, 34% more than you pay now. (ie: a 34% tax)
With the fair tax people's shady accounting rules, they would claim that instead of 34%, that $134 would equal a 25% tax, because $34 is 25% of $134.

Nobody in America computes sales tax that way, and that's why you get funny numbers, but that's the point. They are trying to fudge them to make it look better.

 

[dullard]

In all fairness, didn't you use current spending and the level of taxation required to get us to that number?

If that is the case, the counter argument would be that current taxes, for the sake of this debate, should be almost double (ALL of them at the Fed level) then they currently are. That would add a bit of perspective to the debate as arguing tax rates for a balanced budget against tax rates with absurdly large deficits simply isn't reasonable.

I'll agree with you there. Our taxes are too low for what we currently spend. If the Bush tax cuts expired at the end of the month, we'd be just about break even.

 

[fskimospy]

In all fairness, didn't you use current spending and the level of taxation required to get us to that number?

If that is the case, the counter argument would be that current taxes, for the sake of this debate, should be almost double (ALL of them at the Fed level) then they currently are. That would add a bit of perspective to the debate as arguing tax rates for a balanced budget against tax rates with absurdly large deficits simply isn't reasonable.

But that's not what we're arguing. That is the percentage sales tax needed just to bring in EXACTLY the same amount of revenue we're taking in at current income tax rates. Anything else to close the deficit would be more sales tax on top of that.

 

[jhu]

Medicare is reduced by allowing the Medicare formula law to occur as passed (started in the 1980s I believe, last fixed in 1997). This will mean 25% less payments to doctors. Sorry, but your surgeon will now make $500,000 a year instead of $600,000. That is the pain that we will have to endure to fix medicare.

While I agree that Medicare spending is an issue, your absurd example of the surgeon making $500,000 from Medicare alone is laughable. A physician who only takes Medicare patients either has grants or will close the clinic soon due to a lack. Medicare reimbursement alone isn't enough to even pay overhead (eg, clinic space, billing, federal/state compliance, etc.). The ones who are doing well see patients with insurance and/or are fee for service.

 

[Red Dawn]

If they lower or eliminate income taxes accordingly I'd support it. It would help the poor and lower income pay their fair share since they pay no income taxes. As it stands today 3/4 of americans pay less than SS/Medicare (7%). That needs to stop.

Actually the poor pays a lot of tax, just not income tax. A VAT would be totally unfair to the poor. I think doubling the tax on the top .05% would be better. In addition they should triple the tax rate for money won gambling.

 

[DrPizza]

National Sales Tax?? Bring it on. I can avoid sales tax on a lot of items that I purchase by buying a lot of used items, bartering, etc. I can ultimately pay less in taxes - and I already have a shitload of write-offs on my regular taxes - making me believe that others would save even more than I could.

I also think that people wealthier than me, and especially the very wealthy would be thinking "that's fine. Nothing says I have to purchase items in the U.S."

Warren Buffet, who probably makes 1000, or 10,000 times more a year than most of the people here, could easily get away with paying only 10 or 15 times as much in taxes. Think about it. You purchase a $30,000 car. He could purchase THREE 100,000 cars which would result in paying only 10 times as much tax as you. The rest of his money goes into investments, without ever getting taxed, where he earns far more money in a year than most people earn in a lifetime. And, through the miracle of compounding interest - the thing that keeps the poor people poor (i.e. revolving credit cards), the rich become fantastically rich, because they don't spend the majority of their income & will earn tax free interest on even more income.

So, that brings up the question - if I, average middle class, think I can save money; if it's a given that the rich can save a fortune, who the hell is paying the bills for this country??

 

[boomerang]

National Sales Tax?? Bring it on. I can avoid sales tax on a lot of items that I purchase by buying a lot of used items, bartering, etc. I can ultimately pay less in taxes - and I already have a shitload of write-offs on my regular taxes - making me believe that others would save even more than I could.

I also think that people wealthier than me, and especially the very wealthy would be thinking "that's fine. Nothing says I have to purchase items in the U.S."

Warren Buffet, who probably makes 1000, or 10,000 times more a year than most of the people here, could easily get away with paying only 10 or 15 times as much in taxes. Think about it. You purchase a $30,000 car. He could purchase THREE 100,000 cars which would result in paying only 10 times as much tax as you. The rest of his money goes into investments, without ever getting taxed, where he earns far more money in a year than most people earn in a lifetime. And, through the miracle of compounding interest - the thing that keeps the poor people poor (i.e. revolving credit cards), the rich become fantastically rich, because they don't spend the majority of their income & will earn tax free interest on even more income.

So, that brings up the question - if I, average middle class, think I can save money; if it's a given that the rich can save a fortune, who the hell is paying the bills for this country??

Wow. None of this ever occurred to me.

 

[bamacre]

In addition they should triple the tax rate for money won gambling.

Wow, lol.

 

[Darwin333]

There is no realistic basis in the Ipod price dropping. There are a bunch of wishy-washy thoughts that "maybe the manufacturers will decide to take a price cut since the owners now pay sales tax instead of income tax". But that isn't really based in reality. Or maybe you believe in the line of "employees won't notice if the manufacturers pocket the money they were paying for FICA instead of giving what the employee earned to the employee". Again, that won't fly either.

Instead, it is $100 today and $134 with the new sales tax.

I am sorry but I own a business and in a competitive market I couldn't fathom how changing the tax code would increase my profit margin by the insane amounts you are talking about. My competition would price me out of the market within a week.

Personally, I am willing to do business for X percent above actual costs. That X percent is my profit, if the project comes in as I expected it to. I am willing to raise that percentage but I am not willing to lower it significantly. We see this all the time with material costs fluctuating rather wildly, when the material costs come back down so does the price. I can keep my prices the same, increasing profit, but I won't get any work. Sorry, I just don't buy the argument that all businesses will just be able to pocket the cost savings, wish I could at times but it just doesn't happen in my little slice of reality.

 

[Darwin333]

Actually the poor pays a lot of tax, just not income tax. A VAT would be totally unfair to the poor. I think doubling the tax on the top .05% would be better. In addition they should triple the tax rate for money won gambling.

Still not even close to enough, what else ya got?

 

[Darwin333]

But that's not what we're arguing. That is the percentage sales tax needed just to bring in EXACTLY the same amount of revenue we're taking in at current income tax rates. Anything else to close the deficit would be more sales tax on top of that.

I am pretty sure that is exactly what Dullard was arguing due to the following:

2) The sales tax rate would be extremely high. Far higher than most people think. The federal government spends roughly $3.5 trillion a year (2009 data). US consumers spend roughly $10.4 trillion a year. Thus, if we switch entirely to sales tax (no more income, FICA, corporate, etc taxes), we'll have to have a 33.7% sales tax rate. Plus whatever rate you have on your state and local sales taxes.

Not sure how your math works but it appears to me that he is suggesting how much a national sales tax would need to be in order to equal spending. That is not a fair comparison to our current system of taxation, which was my point.

My point stands, in order for the above quote to be fair we would have to pretend that all current forms of Federal taxation are damn near twice as high as they currently are.

Please correct my math if I have made a mistake but last I checked our current revenue does not equal our current spending.

 

[fskimospy]

I am pretty sure that is exactly what Dullard was arguing due to the following:



Not sure how your math works but it appears to me that he is suggesting how much a national sales tax would need to be in order to equal spending. That is not a fair comparison to our current system of taxation, which was my point.

My point stands, in order for the above quote to be fair we would have to pretend that all current forms of Federal taxation are damn near twice as high as they currently are.

Please correct my math if I have made a mistake but last I checked our current revenue does not equal our current spending.

Oh, I see what happened, there was some confusion here. Dullard also misunderstood the principles of the fair tax. (this is undoubtedly on purpose by the fair tax people.) He thought that the number CPA was stating (23% vs 34%) was because CPA believed the government didn't need to take in all that revenue because we could/should cut spending. The discussion about fairtax is one to equal revenue, not spending. If he is arguing that, he has his facts wrong. (EDIT: meaning that if he is arguing that it is supposed to equal spending he is wrong)

What CPA was actually referring to is the disingenuous 23% number circulated by the fairtax people as the sales tax percentage required to totally replace the revenue from US income taxes, when that number is really somewhere north of 30%, most likely 34%+. I thought we were clear on what those numbers represented, but it looks like I misread people's postings.

The comparison between 23 and 34 is referring to the numbers game that I have mentioned, not two different tax policies with one based on deficits and the other based on a balanced budget. At least, that's what CPA and I were referring to. I guess I could be wrong about what CPA was saying as well, but I'm pretty sure on that one.

 

[Jhhnn]

As usual, Righties attempt to address federal income tax as if it were the only tax, and it's not. The total tax rate is a lot flatter than they represent (no surprise)-

http://www.ctj.org/pdf/fsl2004.pdf

Taxes are taxes- they all cut into the bottom line just the same. Something that the link doesn't discuss, but which should be obvious, is that the top .1% likely pay less in total taxes than the rest of the top 1%, simply because their federal tax rate is lower.

http://www.taxfoundation.org/news/show/250.html

We don't need any more regressive taxes- we have plenty of them already. Here's an idea that actually has merit, that could greatly simplify the tax code-

http://www.apttax.com/

 

[Red Dawn]

Still not even close to enough, what else ya got?

Actually what I think would work would be to break this country up in to 5 or 6 autonimous areas. Unfortunately it woudn't be so equitable for the South and Mid West as they wouldn't be able to suck the teet of the West, Northeast, Mid Atlantic and Texas.

 

[WackyDan]

DULLARD... There is no sales tax on house purchasing today... So your example is moot.

Further.... For all of you... France implemented VAT in place of income tax... Revenues from VAT came in higher than forecast and what did they do? They fucking spent it all, grew gov't, and now guess what? THe french not only pay VAT but they now also pay an income tax.

I'm a big fan of vat... but not a fan of vat+income tax.

 

[GTaudiophile]

Would only consider something like this if it was going to REPLACE the current income tax code as we know it. Otherwise, burn it with fire.