GOP Discusses National Sales Tax

[Schweddy]

Source: FOX news

WASHINGTON — While Republican leaders of the House and Senate are huddling for the next two days in Norfolk, Va., to chart the agenda for the upcoming Congress, White House officials meeting with them on tax reform are likely to debate the idea of a national sales tax.

President Bush and House Speaker Dennis Hastert have both said the idea of a national sales tax deserves a serious look. For many, the idea of a world without the Internal Revenue Service is very seductive.

"We spend about $400 billion a year complying with the tax code. We spend $200 billion a year just filling out IRS paperwork," said Rep. John Linder, R-Ga., who has proposed a bill
that would create a national sales tax.

Proponents have spent millions on research and have concluded that a national sales tax can replace the income tax, payroll tax, estate tax and corporate tax. Advocates say the new tax would lower the cost of manufacturing and job creation and attract foreign investments, among other things.

I truely hope this flys. A national sales tax would definatly be the way to go.


What do you think?

 

[IronTongue]

At this point, it seems like a great idea. It will tap into the black "underground" market and economy, as well as foreigners and immigrants. However, we don't have enough data or specifics to declare this a good or bad idea. I think we should invest a LOT of thought and time into it; if after that we think it's still a good idea, we should go for it.

 

[Schweddy]

Many states already have a sales tax, The % would be much higher of course.

Imagine getting your full paycheck back... you might spend 2 bucks on bubble gum - but it's yours to spend!

 

[IronTongue]

There is some thought that certain areas of the country should have different tax rates based on average income level. This is a bad idea, and the administration needs time to make sure stuff like that doesn't happen.

 

[Pacridge]

The nation sales tax idea is another idea aimed at directing more of the tax burden to the lower income earners. It's basically a consumption tax. And since low income families spend almost every dime they earn they would end up paying a higher percentage of their earnings in taxes. Higher income earners can afford to put a larger portion of thier income into savings and trusts therefore avoiding the tax burden. Where as now they are taxed on what they earn. It's kind of like the flat tax idea. Everyone pays the same, meaning the wealthly who now pay higher rates would then end up with lower tax rates. Which is an OK arguement if you think the wealthly are over taxed.

 

[bryanf]

They have been looking at ways to address the income variance, and the plan currently being discussed includes a tax rebate for families that earn less than a certain amount of money to cover the basic living expenses.

 

[Pacridge]

Yes, I've seen movement in that direction. There's also talk about removing some items such as food and medicine from the tax. Only everytime I see numbers worked out on this they don't come out very good, IMO. Then the sales tax ends up being really high. Other proposals have lower numbers but are a more "blanket tax." I saw one that included rent payments.

 

[Schweddy]

One of the biggest issues I see is the possibility down the road to have both sales and income taxes. Not good.

 

[Pacridge]

Yes, exactly. I think there's a real chance that we could end up with both. I think that would really be bad. I think underlying issue here seems to be that our tax system is in serious need of an overall. It's overly complex. It seems like there ought to be some way it could be simplified. My only concern is that in the process of simplifing it we don't increase the tax burden on low and middle income earners.

 

[WKL815]

I went 'round and 'round with some diehard republicans until they agreed to disagree with me.

This National Sales Tax idea to me sounds inherently unfair.

If all things other than income are equal, this NTS places a disproportionate tax burden on families the less they make. For example:

Say Family A makes $60,000 and buys goods and services over their monthly rebate which they paid taxes on of $12,000.

Say Family B makes $50,000 and buys the same goods and services over their monthly rebate which they too paid taxes on of $12,000.

So Family B is paying 24% of their income in taxes and Family A pays only 20% because they make more. So in effect goods and services cost more for people who make less.

Some may argue that the family that makes less makes the choice to spend their money for those few extra things and therefore that's their penalty.

It just seems so wrong - so unAmerican - to me to penalize people for what they desire to own as opposed to our current system of taxing on a graduated system of what they earn.

And while an NST tries to get some of the underground capital floating around: A. It shouldn't be on the backs of the honest lower and middle class, and B. There is no way to ensure other underground/black-market consumerism won't spring forth or worse, an increase in theft and burglaries.

It seems like all the planets would have to align for this to work, and the economists look at the numbers, but do they look at the people?

 

[Pacridge]

And while an NST tries to get some of the underground capital floating around: A. It shouldn't be on the backs of the honest lower and middle class, and B. There is no way to ensure other underground/black-market consumerism won't spring forth or worse, an increase in theft and burglaries.

I think this is another good point, though I not sure I can make the connection to the increase in crime. Most of these "new" tax plans whethers it the sales tax or the flat are basically aimed at decreasing the tax burden on wealthly people and increasing it on the middle and lower wage earners. If you look at the system like a pie chart, and realize the full chart must be funded. Then reduce to the amount that is now being paid by the upper end earners, then the lower earner have to pick up the slack. Most of these plans are "sold" as something other than what they really end up being.

 

[Pacridge]

I don't like welfare, at all. I think it causes more problems then it solves. Giving people something for nothing doesn't help us and it doesn't help them. I favor a workfare system. Don't have a job? Fine we'll give you a job and you can earn the money you need to survive. I my past occupation I dealt with many individuals who did nothing but find ways to suck money, for free, out of the "system." Including women who when the state would remove their children do to their drug use or abuse, they would loose their "benefits." Solution, go s**t out another kid, nice. I certain this happens nationwide.

As for the flat tax, In theroy, at first, I thought it sounded good. After looking into it I don't favor it. It shifts too much of the tax burden to the lower and middle class earners. I know when you look at the numbers and the percentages the wealthy pay it seems like a lot but when you're making a lot I think you can afford to pay a lot. If you make 300,000 and you end up paying 100,000 in tax you still have 200,000 left. But if you only make 30,000 and you pay 10,000 in tax it only leaves you 20,000 to live on.

 

[CSA_TX]

They have been looking at ways to address the income variance, and the plan currently being discussed includes a tax rebate for families that earn less than a certain amount of money to cover the basic living expenses

So is this another form of welfare? I am for a flat tax personally it seems to me to be the fairest that all tax payers pay the same percentage.

 

[bryanf]

So is this another form of welfare? I am for a flat tax personally it seems to me to be the fairest that all tax payers pay the same percentage.

It may be seen as such, but, then again, if the money is theirs in the first place, and the government is merely giving it back to them, is it really welfare? Most welfare programs give money to someone that they did not earn, and that is what I dislike about typical welfare programs. But, if a person earned the money in the first place, then I agree with Pacridge, that to not address the disparity between the upper and lower classes is not fair on those who make less money.

I also like the Fair Tax idea because of the corporate aspect of it. As you may have heard recently (it's been discussed on quite a few talk show venues) that the U.S. corporate tax code is extremely unfair. Our government taxes U.S. companies both for products that they sell here, and for products that they sell overseas. The Fair Tax Act would do away with that, and only tax companies on what they purchase in the course of production.

The Fair Tax Act is the idea that I personally support.

 

[IronTongue]

The tax system must be set up in such a way that it is beneficial to try to be rich; if we punish the rich too much, no one will think it's worth trying to become rich. It's then when our society breaks down, because no one works hard.

 

[Schweddy]

Absolutely.

I will say again, I am for a consumption tax. If the 'rich' by a 3 million dollar home - they will get taxed on it. If a poor person buys a 20,000 home - they will get taxed on it.

Add them up - which will be giving more actual money to the government?

If a middle classed family does not travel or live in high style - they won't pay as much tax. If the rich lives like a king - they will be taxed like a king. If the poor acts like a king on a slaves salery - who's fault is that?

If you don't spend, you don't pay taxes.

At the end of the year, if your income is less than X - you get all the money you spent on taxes back.

It's really an easy concept.

 

[WKL815]

If you look at the system like a pie chart, and realize the full chart must be funded. Then reduce to the amount that is now being paid by the upper end earners, then the lower earner have to pick up the slack.

Someone please correct me if I am wrong. If not, then your explanation here, Pacridge finally enlightens me as to why you constantly claim the "burden" is shifting to the lower and middle class.

Your example only works if you assume the dollar figure of the "pie" is static. In actuality, the amount of money garnered in income taxes fluctuates.

When tax rates are dropped ACROSS THE BOARD, the pie wedges do not change shape - the pie gets smaller. This is why we have a national debt. More spending than income.

 

[Pacridge]

The tax system must be set up in such a way that it is beneficial to try to be rich; if we punish the rich too much, no one will think it's worth trying to become rich. It's then when our society breaks down, because no one works hard.

Being rich has it's own benefits and really doesn't need help from the tax system. This idea that if you end up paying a higher tax rate if your rich, then no one will try and become rich is a basic faulty logic all it's own. We've always had higher tax rates for the wealthly, it's never stopped anyone from attempting to become wealthly. Or do you hear people consantly saying things like "screw that I'm not buying a lotto ticket, you know what the taxes would be if I won?"

 

[Pacridge]

Someone please correct me if I am wrong. If not, then your explanation here, Pacridge finally enlightens me as to why you constantly claim the "burden" is shifting to the lower and middle class.

Your example only works if you assume the dollar figure of the "pie" is static. In actuality, the amount of money garnered in income taxes fluctuates.

When tax rates are dropped ACROSS THE BOARD, the pie wedges do not change shape - the pie gets smaller. This is why we have a national debt. More spending than income.

The pie may get smaller, by debt, in this case. But eventually it needs to be paid. These consumption tax rate and sales tax schemes all lower the rate paid by the upper ends and increase the rate at the lower end. That's why it puts a larger burden of the tax on the lower and middle class.

 

[WKL815]

If a middle classed family does not travel or live in high style - they won't pay as much tax. If the rich lives like a king - they will be taxed like a king. If the poor acts like a king on a slaves salery - who's fault is that?

This is the problem I have. Aspiring to own things would be "foolish" which would seem to instill class division. That makes me very uncomfortable.

 

[WKL815]

The pie may get smaller, by debt, in this case. But eventually it needs to be paid. These consumption tax rate and sales tax schemes all lower the rate paid by the upper ends and increase the rate at the lower end. That's why it puts a larger burden of the tax on the lower and middle class.

BAH!

You've changed your argument and it makes no sense to your original claim. "eventually it needs to be paid"??? So you're now arguing the future middle and lower wage earners will be burdened??? By the proposed - as in not yet in effect - tax structures??? What???

Let's pick a line of thought and stick with it.

Either taxes will be increased or if we are lucky, we'll spend less - both get us a balanced budget. The pie wedges still don't change shape.

The only time the pie wedges change shape and burden truly shifts to the lower and middle wage earners is when the percentages of their incomes that they pay are increased while the percentages of the top level income earners stay the same or are cut. But what Bush and Congress did was CUT THE TAX RATES ACROSS THE BOARD.

NST gives us a whole new pie wedge - a more diverse pie wedge - a four dimensional pie wedge? A pie wedge I don't want to have to even think about because I'm still stuck on the class division thing.

 

[Pacridge]

BAH!

You've changed your argument and it makes no sense to your original claim. "eventually it needs to be paid"??? So you're now arguing the future middle and lower wage earners will be burdened??? By the proposed - as in not yet in effect - tax structures??? What???

Let's pick a line of thought and stick with it.

Either taxes will be increased or if we are lucky, we'll spend less - both get us a balanced budget. The pie wedges still don't change shape.

The only time the pie wedges change shape and burden truly shifts to the lower and middle wage earners is when the percentages of their incomes that they pay are increased while the percentages of the top level income earners stay the same or are cut. But what Bush and Congress did was CUT THE TAX RATES ACROSS THE BOARD.

NST gives us a whole new pie wedge - a more diverse pie wedge - a four dimensional pie wedge? A pie wedge I don't want to have to even think about because I'm still stuck on the class division thing.

BAH?

I haven't changed any part of my arguement. You changed the debate from being one of tax burden to national debt. My arguement all along was that the two tax schemes being discussed shifted the tax burden to the middle and lower class. You interjected that the taxes were all lowered and asked how my arguement then made sense. I simply stated that yes Bush lowered everybody taxes, but that's not what this discussion was about. This discussion involved flat tax and sale tax. Both of those shift the burden of tax to the lower and middle class earners. I'm attempting to stick with a "line of thought." So do you want to debate national debt or would you prefer to debate tax burden? Or would you like to try and do both at the same time?

 

[Schweddy]

This is the problem I have. Aspiring to own things would be "foolish" which would seem to instill class division. That makes me very uncomfortable.

Which is exactly the reason I like it. If I don't buy much - I don't pay much.

Dumb people who have to have diamonds and caviar - will pay more of the burden than me.

But, I will pay my fair share through whatever I do purchase - a car - a house- bubble gum.

The rate of tax is the same, but consumption between everyone is different. Since it would be based on consumption instead of income - it is ideal. Come Christmas time the government coffers will be full every year.

 

[Pacridge]

The rate of tax is the same, but consumption between everyone is different. Since it would be based on consumption instead of income - it is ideal. Come Christmas time the government coffers will be full every year.

To some extent you're right it is different for everyone. But it cost everyone something to survive. And by lowering the rate for those at the top you're basically increasing it for those at the bottom.

 

[WKL815]

You're right that I wasn't arguing about the proposed NST. I was arguing with your pie example. The debt (I should have said deficit) was tangential and not the point at all.

You're the one that brought up the pie example which was an insight into how you view the collection of taxes and justify your incessant claim that the Bush tax plan and flat tax rate isn't really for the middle and lower classes in this and other threads.

In my initial post I was having an "ah ha" moment. Now I see where you're getting your basis for that claim - a mistaken belief that this pie has to be "funded" with a certain amount of dollars. Your words, not mine.

If you look at the system like a pie chart, and realize the full chart must be funded.

"Must be funded"? Your illustration infers it must be funded to a certain predetermined point which is the only way your pie-chart "theory" about shifting tax burden could hold water. In reality the extra money IS the BUDGET DEFICIT. I don't want to argue budget deficits and national debt with you. I wanted you to see the err of your pie chart shifting tax burden theory.

But it never ceased to amaze me the wellspring of tangential thoughts I encounter when arguing points against a...um...non...uh...someone with a differing viewpoint.

To make my point about your pie chart theory further, I went on to outline just what type of income tax increases would actually create a shifting tax burden - to restate - a point, again, made against your shifting burden pie chard misconception. Not trying to argue about debts or deficits there either.

But in classic "differing viewpoint" style , you choose to argue a point I didn't try to make and claim I'm senseless. Classic.