WTF, national 23% consumption or sales tax on goods or services

What do you think about a 23% national sales tax? 36 members of the house are sponsoring a bill that would abolish S.S. taxes and income taxes and replace them with a 23% national sales tax.This bill is known as the Fair Tax Act of 2003.Doesn't sound to fair to me.If you have to spend all you earn like many lower income Americans and seniors on S.S.,your tax rate would be nearly 33% counting state and local sales taxes. Not to mention property and government fees such as car tags and license fees.This sounds like another scheme by the GOP to make the rich, richer and the poor, poorer.

to those who can least afford it.

not that sending todays spending via borrowing on to our kids as a birth tax is a bad idea - if it was a bad idea to increase the birth tax the media would say something -right? - - - so increasing the the hell out of the National Debt would mean we could eliminate the income tax and the payroll tax and not even replace them with a sales tax.

Now THAT is a good idea.

Indeed government by borrowing makes a lot of sense when it is proposed by a compassionate conservative - at least that is what the media tells me.

And make taxes in America totally regressive.

YOu know, maybe we ought to go along for a year or so while demand plummets, and destroys the economy, and people realize just how important a progressive tax system is.

money you never received.

It also means that credit card companies make a profit off taxes, because lots of people would, effectively, be financing their tax bill on their credit cards (which is the way many people pay for consumer goods).

Oh, and it's supper regressive. Rich people are rich becuase they spend way less than they earn. The poor are poor becuase they spend most of their income. So rich people would be paying effective rates (and assuming relative tax burdens) way out of proportion with the benefits of society which they reap. Ideally, for society to be fair, and so that tax burdens don't result in a playing field which isn't level, you want tax burdens to match social benefits you receive. And the rich are definitely benefitting from a society to a much greater degree.

Because folks have to pay more for the products bought there and, therefore, will likely buy less products.

And, of course their big bully competitors will always win out, because they are protected from market forces by their ability to lobby and payoff politicians.

the IRS takes credit cards now.

is a scam whereby

- the really rich always get off
- the middle class gets milked and
- the brainwashing blames it all on the poor ("freeloaders")

I do not support a flat sales tax, but consider the effects of replacing income tax (at least up to, say, $100,000 a year) with a selective system of sales, production and energy charges. Everyone keeps the money they really earned and has some choice in what they spend it on.

We could keep an income tax of up to 50 percent, no loopholes, for incomes above $100,000 (I really see that as an approximate border where you cannot argue that one has simply earned it by work, but where luck and the economic structure begin to play the primary role).

We could have

- high luxury taxes
- energy taxes on fossil fuels
- a lower VAT or sales tax on everything except for food and medicine.
- production charges based on the health, social and environmental costs of given productive activities (again without taxing food and a few other items judged essential).

We could also have a wealth tax, say 1% a year on your wealth (first home is deductible).

Tell me that would not be fairer and simpler than the present system of taxing incomes that are barely enough to scrape by (and really almost everything up to $40,000 in most places is BARELY enough).

If you make $35,000 and pay $7,000 income tax, wouldn't you prefer to get that money and at least have a choice of what tax you pay via price?

To say nothing of how this system would help to convert the economy away from its present over-consumption and other destructions.

Progressive Taxation is what we want. What they are proposing is Regressive taxation and that sucks "Big Time"

While I'm not opposed to a VAT this is ridiculous.

Quite simply, the more you have the more you should pay because most of expensive government stuff is put in place for your protection. With my pitiful savings, I don't need FDIC. I don't own stock so I don't need the SEC. The list goes on and on, even to the point that the military doesn't really do much for me. Yes, it protects me from an invading country, but would my pitiful life really be that much different? Different day, different oppressor.

LuminousX, how true.

Ditch diggers will still dig ditches.

180

to rich Repukes.

everything does. They make the rules. Beyond that, I think it might be a good idea because people will be rewarded for positive behaviors (saving vs. spending).

It will never pass, though. Consumption would grind to a halt.

Middle- to lower-income earners will end up having to pay so much in taxes just to subsist that they won't even have the option to save.

Thus the "permanent underclass" that will clean the rich's toilets and mop their floors.

they get into the mansions of the rich, with a gun. such things happened in fracne during thier revolt, where the few rich treated the *overwhelming* majority like slaves, it backfired.

I know there's no sales tax on stock; and I strongly suspect there's none on mergers and acquisitions, either...? Why not? It certainly would make capital less fluid, but I'm not sure what the long-term impact would be on the economy. Capital flight, probably..but perhaps combined with reinstating some of the rules about capital flow across borders.

It's a bit absurd that no matter what individuals buy, they pay a sales tax; but for a large portion of what corporations buy -- particularly acquisitions of corporations -- there is no sales tax.

have a capital gains tax currently. If you make money, you send part of it to the government. During 95-99, the stock market was up over 20 % five years in a row. The government got incredible amounts of extra unexpected taxes from capital gains. It's why everytime the defecit projections came out during that period they would be revised to the better every quarter.

and i wholly support it, but it should be levied directly within the banking system on ALLLLLLLLLL transactions. This means foreign exchange, withdrawing cash, recieving salary... any time money changes hands in the banking system... coporate payments, etc... and in this regard, 23% is too high, 12% would do the trick when you include the financial markets transactions.

Some goods should be exempt from sales tax, food, medicine and education materials. All others should be levied. The idea is that clearly you have money if you're spending it... so it only taxes those who have money.... no spend, no tax.... for those who are not big consumers, no worries on being taxed to death.

It is a sound idea, as it would allow the entire IRS and tax court system to be ENDED, along with the associated surveillance and compliance... a huge cost savings in itself.

called the 'stamp duty' - it's just 0.5%. The stock market always lobbies for it to be abolished, saying it encourages people to deal on other stock markets instead, but so far it's been kept - it earns a bit of money, and anyone buying and selling stocks can afford it. There is a theory that it can help stop pointless speculation on the stocks, and there is a movement to have a similar tax put on world currency markets, where the real money is: google for 'Tobin tax'. But the international markets would never allow it - they make billions from the tiny fluctuations in currency it would make unprofitable, and it couldn't be enforced without all countries in the world agreeing.

It includes a rebate check to every American for many thousands of dollars, so that the poor get their tax money back.

That's why some Democrats are co-sponsoring it.

... here's a quick analysis of it by Robert McIntyre:

http://www.ctj.org/html/nytsales.htm

For analysis of this and other tax issues, I highly recommend:

http://www.ctj.org/

The Center for Tax Justice does a pretty good job of making complicated tax issues understandable to the layman.

Cheers.

Yeah,just like I said in a lower post,you can't run this country on 23% but...thats the carrot that will be dangled. Then in a year or so the tax will have to go to 25%,then 27,then 30--who the HELL knows where it will stop?

But if your super wealthy like Limbaugh,Gates and others your STILL millions and millions ahead of the old federal tax game even if the tax would soar to 30-35%.

So,guess who gets nailed with the blunt end of this ridiculous scheme?? Yeah,the millions and millions in the working class which once again are called on the support the filthy rich.

This shit will never work and they know it....

David

And would paying 23% in sales taxes put a marginally "not poor" person into the "poor" column?

This idea stinks. Repeal the tax cuts for the rich and tax capital gains at the same rate as income that people EARN from WORKING.

And reinstate the estate tax.

With such an idea you could produce as much as you want and make all the money you wanted,but if you wanted to live a "rich" lifestyleyou would pay more taxes than the person who CONSUMED less.

It would put married and "living toghether", gay or straight, in the same tax category.

You could help the poor by making food, medicine & medical services, housing (up to a certain dollar amount), education, tax free. Since the poor spend a greater percentage of their income on those items then they would be taxed less. In Texas there is a tax holiday of three days on clothing (up to a certain dollar amount) just before school starts to help parents with kids in school.

It would bring a lot of the underground economy into taxation when they spent the money they had made. Illegal aliens, who don't pay income tax or SS tax would then become taxpayers when they spent the money.

It would greatly simplify taxation.

Since savings and investments would not be taxed it would encourage those, thereby leading to greater capital formation, lower interest rates, and more jobs.

It would close lots of tax loopholes and bring money out of tax shelters and into productive use.

The rich, because they buy lots more, would pay lots more. No more would you see this thing of somebody making a huge amount of money and not paying any income tax, unless they saved it all.

All taxes act as a punishment on whatever is taxed. By having an income tax we are punishing individual productivity. By doing away with it and taxing consumption we would be taxing those who lived rich, thereby encouraging moderation in consumption.

If tax rates need to be changed to speed up or slow down the economy then the effects would be seen more quickly, instead of once a year rate change.

The Party that does away with the income tax will be loved by Americans for many years. If it is a bipartisan effort then the Reps won't get all the credit.

I can think of a lot of other advantages to this too, but that is enough for now.

a national sales tax of this type is a completely abominable idea. It is one of the most regressive forms of taxation available. Poorer people spend a much larger proportion of their income on day-to-day purchases, and would therefore pay a much much much higher taxrate. A better proposition would be to remove the current $84,000 or so wage cap on FICA taxes.

I made a specific suggestion on how to stop that tax from being a burden on the poor. Please speak to what I actually said. I think that was a knee-jerk reaction.

Which you have got to have from time to time whether your rich or poor would nail a family making only 25K and living on the edge of poverty a full 23%. Meanwhile Pigboy making 30 million per year would pay the 23% and not pay any income taxes--yeah,thats REAL fair.

Same could be said for food or clothing. This proposed tax is ridiculous and is usually brought up as a GREAT idea by the very wealthy--Gee,what does that tell you?

Its BS,I still don't think you could run the country on it as people try to cut way back on purchases to save paying 23%.

David

insofar as it's a flat sales tax on everything.

But try to imagine a selective system, that spares essentials and taxes luxury goods more heavily, that taxes destructive production and covers the externalized costs of production (health, environmental), that encourages a shift in energy consumption. Also including wealth and an income tax above a much higher minimum (I would release everyone below 100,000).

We'd have to imagine a whole different set of societal values and an entirely different economy, of course, because growing consumption would cease to be a good (or a necessity!) in itself.

Also consider that this would greatly scale back the biggest and meanest apparatus of surveillance and enforcement on the planet, the IRS.

like this in place already. Where you pay up front for the consumption of a product...meaning what it will cost over its lifetime to salvage, environmental damage done, pollution, etc.

... given the attitude about planned obsolescence in this country. In the EU (where a 17% VAT is applied to every purchase of a manufactured item), the consumer probably pays three or four times as much for some items, such as appliances, what is charged in this country. But, their reasonable expectation is that the item will be useful for twenty or more years.

What happens to consumption in this country when an item craps out every few years and a 23% or higher tax is applied every few years? People begin to do without, since it's impossible to get anything repaired economically these days.

And, yes, you're right--if the plan is embraced by the wealthy, one can be fairly certain that it benefits them to a greater degree than the rest of us. The working poor get hammered on this one, and everyone supporting it knows that to be true.

Cheers.

A consumption tax is both regressive and economically destructive.

If you want to fix the tax system, simplify it. Make it a flat tax with a huge floor beneath which nothing is taxed, say $30,000 a year. That would mean the same tax structure for everyone, simplified tax returns and still a progressive system because most people would pay a much lower percentage.

For example, let's pick 23% like above:

Person A, Income $30,000 -- NO tax
Person B, Income $60,000 -- Income after tax $53,100; Tax $6,900; Tax percentage 11.5%
Person C, Income $100,000 -- Income after tax $83,900; Tax $16,100; Tax percentage 16,1%
Person D, Income $200,000 -- Income after tax $160,900; Tax $39,100; Tax percentage 19.55%

I don't usually grok to your posts, but this time we are in total agreement. A national sales tax is a horrible, completely regressive form of taxation. a flat tax with a high floor as you suggest would be much preferable.

I appreciate it.

I didn't focus on it, but cutting out the complexity (I'm sure the home tax break and charity tax break would stay because I am a realist) would definitely save us all money on accountants and such.

I think the rate would have to be much, much higher to make a change revenue-neutral. I think a few brackets would be better:

no tax under 15,000 single/30,000 married.

10% from 15/30 to 30/60
20% from 30/60 to 50/100
35% from 50/100 to 100/200
50% from 100/200 to 400/800
70% for everything above that 400/800.

I think this would be close to revenue-neutral. The majority would get a tax cut and we'd have a more optimal apportionment of consumer power.

The number used was similar to the one that was bandied about a couple years ago when Forbes was talking about it. The number ranged from 21% to 25%.

You set the floor too low and escalate the tax too high for others making it a discriminatory tax. I like a fair tax for all.

While I like the replacement with a national sales tax idea better, the flat tax with a big floor is also excellent.

and just start taxing people for being poor. That ought to teach them! Stop being poor and you won't have to pay anything!

(Sarcasm off)

This is how they figure "23%": they add 30% to a dollar of purchases. Then they divide the 30 by 130, coming up with 23%. Who the hell figures a sales tax like that!? Even their low estimate is 30%, not the "tax-inclusive" 23% they promote.

I'm an economics student, and this is of interest to me. Reasonable economists know that to make a shift revenue-neutral, we'd need upward toward a 50% sales tax. That is right: 50%.

23% my ass...

Do these guys actually *want* poor and working people to hate government?

The rich cannot buy enough in goods and services to make this fair. Only a portion of their income would be taxed, whereas the poor who live from paycheck to paycheck would be taxed on all of their income. It's another variation of trickle down. Theoretically, the rich would buy more, but in reality their unspent money would go into investments and receive what is becoming untaxed dividend and interest income.

Progressive income taxation, where the rich can be taxed up to 40 or 50 percent of their income, is fairer and distributes money better. This would only apply to the upper 10% of the wealthiest. Of course they would have you believe that everyone would be paying the highest rate.

Must be well loved by the conswervatives.

It would be regressive.

On the other hand, a flat tax COULD work, but it would only be fair if you had a high exemption for lower income people. a 4 person family making up to, say, $50,000/yr should have to pay no income tax.

Personally, I favor my own income tax plan.

I'll just do the Single rates, since I'm lazy:

Marginal rates:

$0-$19,999 - 0%(no tax liability on these $ earned)
$20,000 - $49,999 - 10%
$50,000 - $99,999 - 15%
$100,000 - 200,000 - 20%
$200,000-500,000 - 30%
$500,000-999,999 - 40%
$1,000,000 and up - 50%

Keep in mind that these are tax rates for a SINGLE person, not married and with no dependents. Obviously, those tax tables would be different.

I think this would be a fair tax system. I'd Keep the child tax credit and keep the marriage penalty eliminated.

It not only penalizes lower income people, but it also penalizes consumer spending, thereby dealing yet another blow to the economy. It's as though they were just looking for the worst possible ideas that would do the most damage and threw them together.

I don't need most of the stuff I have now. So, I'll have a whole lot more money to stick in my mattress, making for a more restful sleep.