I am pretty pumped about the idea of deleting all federal taxes, excise, sin, social security, income, gasoline, etc. for the consumption tax and think now is the best opportunity we have to get tax reform. One element that is intriguing is the fact that it would set a precedent for smaller govt. Many bureaucracies exist only because of taxation or enforcement. Wouldn't it be nice if some of the alphabet agencies went away?
Walter Williams on the FairTax
- Thread starter DRZinn
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I am pretty pumped about the idea of deleting all federal taxes, excise, sin, social security, income, gasoline, etc. for the consumption tax and think now is the best opportunity we have to get tax reform. One element that is intriguing is the fact that it would set a precedent for smaller govt. Many bureaucracies exist only because of taxation or enforcement. Wouldn't it be nice if some of the alphabet agencies went away?
beerslurpy
member
The right way to do this is to repeal the 16th amendment. Otherwise any change we make is just going to be even worse than what we already have. I have nightmares about living in a situation like france where people go out of their way to hide signs of affluence so that tax inspectors dont come after them looking for receipts.
National sales tax, especially the proposals Ive seen, will keep income tax and also make the sales tax very heavy with liability for the taxpayer. IE- if you cant show proof you paid taxes on it, you are going to start losing posessions. You can imagine what a pain this will be compared to getting a W2 from a single employer.
National sales tax, especially the proposals Ive seen, will keep income tax and also make the sales tax very heavy with liability for the taxpayer. IE- if you cant show proof you paid taxes on it, you are going to start losing posessions. You can imagine what a pain this will be compared to getting a W2 from a single employer.
Here is a handy dandy comparison chart of the different tax reform proposals, courtesy of thefederalistpatriot. Looks like Linder's FairTax is the one...
Comparison Chart
Comparison Chart
Some issues with the Fairtax:
IRS would probably stay around in a vastly reduced role to administer the sales tax. Not a big deal.
Rebate check seems to be a big hassle. Also subject to fraud. We can argue until our faces are blue about alternatives though. Heck, you could simply make it so that anybody earning that little money is covered under welfare type stuff. Make it a "Workfare" type system and people couldn't abuse it.
Heck, the BX/Commisaries would have a real advantage again. I get upset at them when they try to boast "We're cheaper: No Taxes", my response is "Walmart is still cheaper even with tax, and has a wider selection!"
IRS would probably stay around in a vastly reduced role to administer the sales tax. Not a big deal.
Rebate check seems to be a big hassle. Also subject to fraud. We can argue until our faces are blue about alternatives though. Heck, you could simply make it so that anybody earning that little money is covered under welfare type stuff. Make it a "Workfare" type system and people couldn't abuse it.
Heck, the BX/Commisaries would have a real advantage again. I get upset at them when they try to boast "We're cheaper: No Taxes", my response is "Walmart is still cheaper even with tax, and has a wider selection!"
Beerslurpy said:
Beerslurpy, what sales tax proposals have you seen that would require you, the consumer, to keep proof? The Fairtax certainly doesn't. The "taxpayer" in that case is the business, such as Wal-mart. It explicitly states that collection and enforcement would be kept business side.
As it applies to new goods only, the garage/flea market sales don't matter, as the tax was paid when the item was new.
All you'd have to do would be to look at gross income, subtract any untaxed business sales, and multiply by 23%(proposed rate) to find how much the business should of paid.
There are fraud opportunities, but they're all business side. Any business/corporation should be keeping records and bank receipts.
RealGun
Member
I wonder if the retailer price (pretax) and consumer price shouldn't be kept separate and have an exemption card honored as a tax free sale.
I am a retailer and collect and report sales tax. I would have no problem or significantly additional bookkeeping to compute taxable sales receipts and tax due from me to the tax collection agency.
I see a problem with rebates, which require a year's hardship before being reimbursed. An exemption ID could be issued annually after providing evidence of entitlement based upon the previous year or tax history at the beginning of the program. The ID number could be recorded with each sale and be ultimately auditable. I think that would be necessary to combat exemption fraud.
In any case, I would want to see the tax referred to as 30% because 23% is too cynical a way of stating it. The retailer pays 23% of receipts but the consumer pays a 30% tax. I would want to see the retailer (me) pay 30% of taxable sales (total pretax sales less exempt sales), based upon the real selling price (pretax). That is exactly how I report sales now. I do have exempt sales to businesses with a sales tax license who are declaring the purchase as "for resale". I record all such sales. A consumer exemption card would be comparable to that sales license as a basis for exemption.
I am a retailer and collect and report sales tax. I would have no problem or significantly additional bookkeeping to compute taxable sales receipts and tax due from me to the tax collection agency.
I see a problem with rebates, which require a year's hardship before being reimbursed. An exemption ID could be issued annually after providing evidence of entitlement based upon the previous year or tax history at the beginning of the program. The ID number could be recorded with each sale and be ultimately auditable. I think that would be necessary to combat exemption fraud.
In any case, I would want to see the tax referred to as 30% because 23% is too cynical a way of stating it. The retailer pays 23% of receipts but the consumer pays a 30% tax. I would want to see the retailer (me) pay 30% of taxable sales (total pretax sales less exempt sales), based upon the real selling price (pretax). That is exactly how I report sales now. I do have exempt sales to businesses with a sales tax license who are declaring the purchase as "for resale". I record all such sales. A consumer exemption card would be comparable to that sales license as a basis for exemption.
DRZinn
Member
Actually, it's worse than that. They want to send out checks every month to every taxpayer! Can we say "culture of dependency?"
RealGun
Member
I mentioned exemptions, not rebates, totally removing the rebate bureaucracy. Why does it make sense to take someones money and then return it to them every month as if a favor?
You dismissed exemption cards without saying why.
I think all these local activity taxes (not interstate commerce) should be collected by the States and paid in part to the Feds. The States now get "rebates", when they should have been collecting the taxes in the first place. States suddenly have more rights when they have "the money". That would largely remove the issue of pork projects emanating from the Feds using some other State's money.
DRZinn
Member
Exactly. Makes everyone think the government is giving them something. Same thing that happens now with our annual partial refunds. Imagine it happening every month!
No need for exemption cards, though. Just exempt certain items (necessities only) and leave it at that. No bureaucracy to track incomes, and if the "poor" aren't, then they can damn well pay taxes on the luxury items they choose to buy. Too many of the "poor" in this country have big-screen TV's, etc.
That's one of the ways the Feds circumvent the 10th Amendment. They tax more than they need, then give back to the states conditionally. If the state needs the money, the state can get it. How much is lost in the process of transferring that money from my pocket, to the IRS, to the Treasury, to the state? Twenty-five percent seems likely.
madkiwi
Member
If you are going to call something a sales tax, then it should be a separate item on the bottom of your receipt- added to the cost of the merchandise. If it is hidden in the selling price, that isn't a sales tax- call it anything else, a VAT, a business gross receipts tax, just don't call it a sales tax.
RealGun
Member
Even "sales tax" as we often know it is usually a misnomer. It is a "use tax" that is conditional upon where the item will be consumed or used. Thus mail order out of state is exempt. It is actually a concession to practicality for a store to collect tax unconditionally. Presenting proof of residence should exempt from either the local percentage or the entire tax.
Good point RealGun, concession to practicality
I don't like the idea of the rebate checks, why? It's not practicle. There's alot of budgetory overhead.
And while filling out the paperwork to get a tax exemption for a <10% sales tax isn't practical when you're only picking up a few supplies, avoiding a 30% tax would make alot more sense.
Exempt Food, medical.
It's been said that while sales tax would have to be charged on the sale of a new house, it wouldn't be charged on an old house. Since an old building's tax has already been paid, and I haven't exactly seen alot of "affordable housing" being built(100k+ duplexes? In Minot, ND?), the used housing market would be tax free for the lower income bracket.
The exact definition of Food and medical would require much debate. Does soda pop count? Does food from a restraunt? Gum?
Anybody thought about how the tax is described as being on "new goods only" might mean that it doesn't count for labor? IE I might not be charged the federal sales tax for something like a haircut or massage? If I'm in the oil change business, would you pay the tax on the $10 of oil I use, not the $20 labor?
I don't like the idea of the rebate checks, why? It's not practicle. There's alot of budgetory overhead.
And while filling out the paperwork to get a tax exemption for a <10% sales tax isn't practical when you're only picking up a few supplies, avoiding a 30% tax would make alot more sense.
Exempt Food, medical.
It's been said that while sales tax would have to be charged on the sale of a new house, it wouldn't be charged on an old house. Since an old building's tax has already been paid, and I haven't exactly seen alot of "affordable housing" being built(100k+ duplexes? In Minot, ND?), the used housing market would be tax free for the lower income bracket.
The exact definition of Food and medical would require much debate. Does soda pop count? Does food from a restraunt? Gum?
Anybody thought about how the tax is described as being on "new goods only" might mean that it doesn't count for labor? IE I might not be charged the federal sales tax for something like a haircut or massage? If I'm in the oil change business, would you pay the tax on the $10 of oil I use, not the $20 labor?
RealGun
Member
Categorical exemptions open the door to using the tax for social engineering. For example, new home building could be stimulated by a percentage reduction or a tax moratorium. There could even be an incentive for underprivileged minorities, inner city properties, etc. Probably a bad idea, eh? Might give Congress too much to tinker with and make a mess.
DRZinn
Member
A good middle ground is what they do here in California. (Yes, they did get at least one thing right.): Any edible item which has not been prepared for immediate consumption is exempt.
DocZinn, sometimes I think like a Lawyer. I'd bring up the guy who ate a bicycle as a case.
But yes, it's a more or less good definition.
I was thinking about medical equipment too. Would vitamins be tax-free? Aspirin? What about when you get into bandaids, sportswraps, and such?
Alchohol is consumable, does it get taxed?
And yes, unless we enshrine the wording of the tax in the constitution, the feds can do their standard tricks to encourage/discourage stuff, but they can do that anyways. If anything, lowering the tax on new housing to encourage it is better than offering tax breaks on mortgage.
Come to think of that, that would be an interesting amendment. At the same time as we kill the 16th amendment, we declare that the federal government's taxing authority is limited to a sales tax of a certain type of up to a certain percentage, that can only be increased in emergency by a difficult method. Such as a vote just short of amending the constitution again.
If they want to charge less, of course, that is their option.
But yes, it's a more or less good definition.
I was thinking about medical equipment too. Would vitamins be tax-free? Aspirin? What about when you get into bandaids, sportswraps, and such?
Alchohol is consumable, does it get taxed?
And yes, unless we enshrine the wording of the tax in the constitution, the feds can do their standard tricks to encourage/discourage stuff, but they can do that anyways. If anything, lowering the tax on new housing to encourage it is better than offering tax breaks on mortgage.
Come to think of that, that would be an interesting amendment. At the same time as we kill the 16th amendment, we declare that the federal government's taxing authority is limited to a sales tax of a certain type of up to a certain percentage, that can only be increased in emergency by a difficult method. Such as a vote just short of amending the constitution again.
If they want to charge less, of course, that is their option.
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