If they pass a national sales tax.....

[Cobalt Violet]

Will we have to pay it on purchase made from other countries? Will we have to pay it on rent?

[BJ]

1. It'll apply to whatever can best screw over the working class.

And it won't apply to whatever the investing class purchases.

[fertilizeonarbusto]

2. Well put.

n/t

[ooglymoogly]

16. hoyer thinks this will be a trojan horse for bush to shift the tax

burden from the rich to the middle and poor. does anybody think the dear man would do such a thing............yuuuuuuuuhhhhhhhh

[pa28]

5. That's what I was thinking.

If you were to buy a new $55,000 Escalade, for instance, only the first 20,000 would be taxable. They would find a way to make it regressive by calling it "pro-growth".

[mhr]

35. And One Wonders How Long Till The Underground Economy

Becomes dominant as people avoid the tax. With a black market economy, how long will the US consumer economy last as retailers and manufactures fold with limited sales to the ultra-wealthy only?

[TexAsh]

42. FairTax and the Underground Economy

Here's my best understanding of how the FairTax will impact the underground economy:

http://citizen.home.texas.net/FairTax/Underground.html

[ooglymoogly]

15. they will sell it any way they can lie cheat steal and once passed

watch out... some 19 year old house intern will start slipping changes into 3000 page bills and wa la, a whole new robber baron society of rich and surfs will emerge under george the turd and his ilk. goodby middle class, hope you didn't get too damaged to work falling off the turnip truck.

[chicagiana]

3. No new taxes !!!

Except if it's a tax on poor people, than it's a-ok.

Bush Jr. has not made such a promise. But I wouldn't put it beyond him as a "finance the war" measure. Or perhaps they'll call it the "body armor tax".

[TexAsh]

46. Agreed! Let's REPLACE the income tax with the FairTax -

America's tax system is broken. Our Founding Fathers warned us that an income tax is unworkable and dangerous. Let's adopt a different system that is simple, fair and stable. Let's create a system that is worthy of a free society in the 21st century ...

Quick View of the FairTax:
http://citizen.home.texas.net/FairTax/main.html

Is th Fair Tax Progressive?:
http://citizen.home.texas.net/FairTax/Progressive.html

How does the FairTax affect social security?:
http://citizen.home.texas.net/FairTax/SocialSecurity.html

How does the FairTax affect seniors and retirees?:
http://citizen.home.texas.net/FairTax/Seniors.html

How does the FairTax affect charitable donations?:
http://citizen.home.texas.net/FairTax/Charitable.html

How does the FairTax affect real estate and mortgage interest?:
http://citizen.home.texas.net/FairTax/RealEstate.html

How does the FairTax affect small and retail business?:
http://citizen.home.texas.net/FairTax/SmallBusiness.html

How does the FairTax affect the underground economy?:
http://citizen.home.texas.net/FairTax/Underground.html

Tinkering with the tax code:
http://citizen.home.texas.net/FairTax/Tinkering.html

[Claire Beth]

4. A sales tax is a regressive tax....

and will only hurt the middle class and poor even MORE.

[Tyrion]

6. Any new product will be taxed

I've done some extensive research and so far the National Sales Tax being proposed is not out to "screw" the working man. In fact it will provide relief for a lot of middle class families.

So far the way it is written is you would have to pay sales tax on all NEW products sold in the US. That would include imports.

HOWEVER on USED items you would not have to pay any taxes.

That means that they would no longer be doing multiple taxes on items. If you buy a pre-owned car or a pre-owned home you would not have to pay ANY taxes on it.

That would actually offer relief to many lower income families who would be looking to purchase a home or auto.

I don't think it's a perfect solution but I do think it's a step in the right direction.

For more information you guys might want to read:

www.fairtax.org

They have some good info. You can always google it too.

[sabbat hunter]

7. natiloal sales tax

is a TERRIBLE idea


this is right from that website

"Under the Fair Tax Act of 2003, sponsored by U.S. Rep. John Linder, R-Ga., all goods and services would be taxed at 23 percent. There would be no exemptions, including for food and medical expenses, but some low-income people would be eligible for monthly tax rebate checks. An identical bill has been introduced by U.S. Sen. Saxby Chambliss, R-Ga."

food and medicine would be taxed. do you realize how harshly that would affect middle and lower income people. people like my parents, who wouldnt be eligble for the 'some low income' exception would not be able to afford medicines if a 25% tax was imposed on top of the already ridiculous cost.

david

[TexAsh]

29. The FairTax Rebate Is For EVERYONE

The FairTax is the only nat'l sales tax bill now before Congress.
It UNtaxes the poor, including the regressive payroll tax.

Don't Guess - Learn More:
http://citizen.home.texas.net/FairTax/
Click on "Progressive or Regressive?"

No one should be taxed to survive. However, as we thrive, we should pay a higher tax rate as we spend more. THAT is how the FairTax is designed to work.

EXCERPT:

The FairTax issues each month, to any U.S. resident with a Social Security card, a rebate of the FairTax amount on retail spending up to the poverty-level.

Democrats should steal the Tax Reform issue and advocate for the FairTax.

http://www.fairtax.org

[mhr]

36. So Texash, How Does One Know If Someone Is Poor At The Point Of Sale

Seems this is the flaw in this argument.

If poor people are to be excepted from paying a point of sale tax, how will this be done?

[TexAsh]

40. FairTax prevents taxes on ALL poverty-level spending

Thanks for asking, mhr!

Here's how:

Under the FairTax, any U.S. resident with a social security card is eligible to receive a monthly rebate of the FairTax amount on retail spending up to the poverty-level.

We can think of this as a "prebate" because it comes every month and it is equal to the taxes on basic spending for the coming month that Health & Human Services says EVERYONE in your household MUST spend in this country to survive (poverty-level spending).

The people who enjoy the greatest benefit from this rebate are the folks who earn - and spend - the least. That's because this flat, per capita rebate represents a higher-percentage of low-income spending than that of the fat cats.

[mhr]

43. Seems To Simple - Pardon My Skepticism - I just Don't Buy It Given

That it is coming from the Republicans and the Bush administration.

I have been unemployed for 54 months now and don't buy anything that these folks say.

If your convinced fine. I've already been screwed by these folks.

No trust here at all.

[TexAsh]

45. FairTax is Grassroots, Not Republican

One of the original sponsors of the FairTax bill is Rep. Collin Peterson, Democrat from Minnesota's 7th Congressional District..

Actually, there are about the same number of Republican co-sponsors as Democrats.

Check the facts!

FairTax Sponsors:
http://thomas.loc.gov/cgi-bin/bdquery/z?d108:HR00025:@@@P

[elsiesummers]

12. They must think used items will go blackmarket anyway,

so why bother to write a law that is unenforcable.

I wonder how a no used tax would work regarding collectables, such as high priced antiques, fine musical instruments and fine art? Seems like this could be a loophole/tax cut for both the poor (second hand purchasers) and the rich (collectors) but help the middle class the least.

They need to have no tax on grocery foods (restaurants are another matter), possibly no utilities tax and no rent/mortgage tax.

Then the tax actually would be relatively progressive.

[amazona]

14. they must know they are lying about no tax on used items

Since sales tax is collected on used items even as we speak...

[amazona]

13. sales tax is collected on used items

I've heard this fib put out before. As a re-seller, I can assure that sales tax is collected in full on used items, especially automobiles. Even if you give the car away, in my state the buyer must pay a $105 sales tax on many older cars -- they just assume you are lying about transferring the car gratis -- I have had to refuse some autos being given away to save the owner a towing fee because of this. If there was no sales tax on used cars, I would have towed the car, parted it out, and made a small profit for my labor. But, having to pay $105 sales tax for a car that has to be towed...for me, it's too risky.

Don't kid yourself. Used items may actually end up paying a higher percentage tax; cars will certainly, on average, since worthless cars will still pay a minimum tax, just as they do now.

Sellers who do not collect sales tax on used items are breaking the law. In some cases, we've had sellers taken away in handcuffs until they paid what they failed to collect from their customers. And, frankly, I'm just as glad -- I'm tired of competing with folks who are not paying taxes when I do comply with the law.

All the sales taxes we have to collect make it very difficult and expensive to be an honest re-seller. Sales taxes are very painful and hurtful to entrepreneurs just starting out. I'm talking about real small businesspeople, not people who are fronting for large corporations and call themselves "small business" when they just have bought their 6th MacDonald's franchise!

[BadRay]

47. FairTax on used items

You are correct that STATE sales tax is collected on used items.

However, the FairTax is a National Tax and NO USED ITEMS ARE TAXED.

The point of the tax is to eliminate double or triple taxation.

If I buy a new car or house, I pay tax. If I sell it to you,
you will not be taxed on them. Tax is paid once and only once.

Please don't take this the wrong way, but if you have some spare
while you are looking for a job, please read the bill (HR 25).
It's only 130 pages long. That's it. The entire bill is 130 pages.
The current tax code is over 40,000 pages of convaluted and often
contradictory regulations that no one can understand, but you are
still liable for whatever the government says you owe.

[midnight armadillo]

18. Multiple taxes on items?

Paying sales tax on used items does not mean the item is being taxed multiple times, but rather the value of the transaction is being taxed.

[TexAsh]

30. FairTax NOT Assessed On Used Goods

The FairTax is the only nat'l sales tax bill now before Congress.

It does not apply to used goods.

Don't Guess - Learn More:
http://citizen.home.texas.net/FairTax /
(Read the Quick View)

OR READ THE ACTUAL BILL:

http://thomas.loc.gov/cgi-bin/query/z?c108:H.R.25:

Democrats should steal the Tax Reform issue and advocate the FairTax.

ALSO:
http://www.fairtax.org

[FormerDittoHead]

76. See example of how this is "fair". NOT. I'm starting to get pissed...

http://cgi.ebay.com/ebaymotors/ws/eBayISAPI.dll?ViewItem&rd=1&item=4515849570&category=6315

Of course, this was imported used (note: Condition: used) and even though would be NEVER be taxed under this SCHEME unlike your diapers and milk, those "hard working producers" who will be buying this car will pay neither income tax or sales tax on "necessities" such as these.

Just remember that when paying 23% tax on your *BREAD*.

Now, the money we'd be paying for interstate highways, bridges, safety laws, consumer protection, not to mention the military which makes our country safe for people to drive cars like this.....

REMEMBER: THEY'RE NOT GOING TO PAY A F*CKING PENNY FOR ANY OF THOSE EXPENSES UNDER THIS TROJAN HORSE SCHEME!

But keep believing that, in ANY REAL WAY this is a "progressive" tax...

Uhhhh.... DUHHHH!

[BadRay]

48. multiple taxation

Under the FairTax Plan, no item is taxed when it is used. 

Even if you buy a brand new home, you will not pay tax on 
the value of the land because ALL land is considered to be
used.

New is taxed. Used is not taxed. It's that simple. Really.

[Dark]

20. Uh, actually, it WOULD hurt the working class.

It would cost them their jobs. Spending on new items would go WAY down if people have to pay a quarter more for every dollar. Thus, new items would not be produced as they are today. Jobs would be lost, and companies, other than ebay, would lose enormous amounts of money.

[BadRay]

49. hurting the working class

Actually, the reverse is true.

Once this plan is passed into law, prices will come down
because the imbedded cost of the present system will be
removed from the cost of the item. That cost is approximately
25% of the cost of every good and service that you purchase
now, new or used.

Secondly, you will receive your entire paycheck except for
voluntary deductions such as insurance and savings, and your
state and local taxes. No more federal withholding of federal
income tax or social security taxes.

For many people, their take home pay will increase by 50% to
75%. That will put a lot of money into the economy for you to
buy a lot more than you can now.

[Dark]

63. So prices will go up 30%, but then come down 25%?

Then explain to me how you will be able to pay for all this:

-Individual Taxes

-Alternative Minimum Taxes

-Social Security/Medicare Taxes

-Estate Taxes

-Business Taxes

-Capital Gains Taxes

-Gift Taxes

-Self-employment Taxes

http://citizen.home.texas.net/FairTax/main.html

So, 5% is the net raising in taxes. 5% is supposed to pay for ALL the above taxes? Every last one, without cutting spending to ANY THING?! And, oddly enough, that site doesn't even give its sources.

[Vickiela]

65. Prices drop 22 to 25% than add the 30% sales tax

"Several well-known economists from Harvard, Stanford and MIT calculate that the elimination of business and payroll taxes will cause savings to snowball through the supply chain from manufacturer to wholesaler to retailer and cause prices to drop an estimated 22 to 25%." from article at http://tinyurl.com/698ec

also this.. http://tinyurl.com/6v6fn

"By eliminating the business and payroll taxes the prices of goods and services will drop an estimated 22 to 25%. Then the Fair Tax package adds in its national sales tax component of 23% inclusive( 30% exclusive). The net result after the price drop is you pay about 1.4% more that you paid before. However you took home 100% of your paycheck free of federal income tax at 25% for middle income families and free of 7.65% deduction for Social Security and Medicare taxes."

"The drop in prices of 22 to 25 %, will result in increased exports that the National Sales Tax portion of the Fair Tax Legislation does not apply to. Economists estimate a 10.5% jump in economic growth in the first few year of implementation. Increased Exports means increased manufacturing with good paying jobs in America that are not outsourced overseas.

American workers can't always compete with low wage countries nor do we want to. However, we can fight back with lower taxation on our exported goods. The Fair Tax package will increase demand for made in America products because of price. A drop in export prices of 22 to 25 % will have an amazing impact on economic growth.

Unfair imports from low wage countries will have to pay our new national sales tax making made in America products more competitive in America as well."

you decide.

[FormerDittoHead]

58. The rich, by definition, don't spend all their income: they pay a lower %

I also note there's this "progressive" feature of the plan.

I just don't understand how THAT will be enforced. The gov't will keep track of your PURCHASES????

[FormerDittoHead]

75. So *THIS* wouldn't be taxed?? Grreeeaatt....

http://cgi.ebay.com/ebaymotors/ws/eBayISAPI.dll?ViewItem&rd=1&item=4515849570&category=6315

Hey, THAT seems FAIR! (not!)

People buying a new Buick? 23%!

You want the car above? NOTHING - free pass! You deserve it! It's to help the economy!

Just gets better and better...

I'm so glad that just about everyone here sees through this scam..

[TexAsh]

28. The FairTax is MORE Progressive Than The Income Tax

The FairTax is the only nat'l sales tax bill now before Congress.

Don't Guess - Learn More:
http://citizen.home.texas.net/FairTax/
(click on "Progressive or Regressive?")

EXCERPT:

Possibly the most regressive tax today is the "payroll" tax, which collects funds for social security and Medicare.

Today's payroll tax ...

... is a flat-rate income tax, assessed regardless of income.

... hurts low income earners the most.

... is not subject to any income tax deductions.

... is more expensive than income taxes for 74% of all Americans.

... withholding is eliminated under the FairTax.

Democrats should steal the Tax Reform issue and advocate the FairTax.

ALSO:
http://www.fairtax.org

[Lefty48197]

8. Switch to black market purchases and the barter system

We can create an economy that isn't tied to the Republican party.

[cpalson]

9. Look at Europe

Europe has what is called a VAT - Value Added Tax - which is one kind of sales tax. Somehow, it works, even though it is regressive. People have a very decent standard of living there and they have far less poverty.

One big advantage: it's not so easy for the very rich and the giant corps to evade these taxes.

We need more research on how Europe does it.

[canuckforpeace]

10. Canada has the GST

the Goods and Services Tax, 7%. Brought in by the Conservative Mulroney Government in the 1980's. Highly unpopular at the time, but now you never hear anyone bitch about it. It applies to retail items so, no, rent is not taxed but utilities are. Grocery food items are not taxed but restaurant meals are. I don't know what the threshold is, but low income people get a GST rebate based on their income. There have been numerous promises to eliminate the GST, but it is such a cash cow that the Liberal Gov't, first under Chretien, and now Martin can't let got of it and all the surplus revenue it brings in. I'm not complaining. At least we have universal health care.

[aneerkoinos]

17. VAT

Yep we do, and EU is primarily funded by VAT, each member state pays IIRC 1% of the VAT they collect to fund EU.

As usual, the devil is in the details, VAT is not progressive but can be used progressively to guide consumption. Here the VAT is generally 22%, but lower e.g. for food and books, which is good, but could be better (even lower like 0%). Artisan manufacturing is freed from VAT as are very small businesses whose turnover stays below certain sum. So what effect VAT has on consumers depends on how it is used. And especially how governement uses the taxes collected by VAT.

Businesses can deduct the VAT they pay on purchases from the VAT they charge from sales, which goes to state. That used to be very nice thing when I run a small business, in practice it meant that I got 22% discount on all kinds of stuff my company "needed" (stuff I really bought for myself and few friends) like new computers, camcorders, fancy meals at restaurants (aka "business meetings") etc. :)

[RPM]

11. welcome to the new barter black-market n/t

[papau]

19. The rate starts at 23% tax everything-then 31%exclude financial and export

transactions,

then exclude rent/food/ and whatever and we move toward a near 40% rate - or we borrow more.

Indeed borrow more is always the solution for GOP economic proposals.

[Jim__]

24. My understanding is that the 23% is just another lie

It's really 30%. If you buy something that costs $1.00, there is a 30% sales tax; so it winds up costing you $1.30. How do they get 23%. They divide the new $0.30 salses tax by the entire new cost, 1.30 and then claim it's only a 23% tax.

A sales tax is also extremely regressive. Take someone earning $20,000 per year. He has to spend everything just to survive. So, he will be spending 23% of his income on taxes. Now, take a guy earning $200,000 per year. He can survive spending that same $20,000; so his tax bill could be 2.3% of his income.

[TexAsh]

27. Partly true; partly not

The FairTax is the only nat'l sales tax bill now before Congress.

Learn more:
http://citizen.home.texas.net/FairTax/

TRUE:
The 23% figure is a "tax inclusive" figure, based on the percentage of the whole taxable transaction, used because that is how income taxes are expressed (apples-to-apples). However, we are all accustomed to seeing sales taxes expressed as a percentage of the item price. In that form, the FairTax rate is 30%.

PARTLY TRUE:
A straight nat'l sales tax IS regressive. But the FairTax offers a rebate that eliminates taxes on poverty-level spending. Go to the link above and click on "Progressive or Regressive?"

Democrats should steal the Tax Reform issue and advocate for the FairTax.

http://www.fairtax.org

[BadRay]

51. tax rate

Your understanding is incorrect, but it is understandable.

There are two ways of expressing the cost of taxation.

This is from pafairtax.org website:

When income tax rates are quoted, economists call that a tax-inclusive quote: "I paid 23 percent last year." If that were the case, for $100 one earned, $23 went to Uncle Sam. Or, "I had to make $130 to have $100 to spend." That's a 23-percent tax-inclusive rate.

We choose to compare the FairTax to income taxes, quoting the rate the same way, because the FairTax replaces such taxes. That rate is 23 percent inclusive.

Sales taxes, on the other hand, are generally quoted tax-exclusive: "I bought a $77 shirt and had to pay 30 percent sales tax on the $77, amounting to that same $23, for a total of $100 spent on the shirt. This is a 30-percent sales tax." Or, "I spent $100 dollars, $77 for the shirt and $23 in tax." This rate, when programmed into a point-of-purchase terminal, is a 30 percent tax.

Note that no matter which way it is quoted, the amount of tax is the same dollar amount ($23) and you maintained the same buying power ($77). Under an inclusive income tax rate of 23 percent, you have to earn $130 to spend $100. Spend that same $100 under a sales tax, you pay that same $30, and the rate is quoted as 30 percent.

Perhaps the biggest difference between the two systems is under the income tax, controlling the amount of tax you pay is a complex nightmare. Under the FairTax, you may simply choose to spend less, spend on used goods not taxed, or choose to not spend at all to control your own annual rate of tax.

**********

An important thing to remember is that now, most people are paying at least 30% of their INCOME. Under this plan, they will pay about 30%
of what they SPEND. You control what you spend and how much of that is taxed.

AND, everyone who applies for it (it's voluntary) will receive a rebate
each month that will cover the amount of tax that you will pay if you
spent every dime of your income on taxable goods up to the poverty level for your household size.

Soooooo. . .

1] Prices will come down because the hidden cost of our current tax system will be removed.

2] Incomes will go up because taxes will no longer be withheld from your paycheck.

3] You will get a rebate to cover your taxes and you will get it at the beginning of each month before you even buy anything.

Bottom line is this: people at, or below the poverty line will effectively be removed from the tax rolls altogether. Under our current
system, they still have to pay the payroll tax and that is the most regressive tax of all.

[Jim__]

60. Not quite

Note that no matter which way it is quoted, the amount of tax is the same dollar amount ($23) and you maintained the same buying power ($77). Under an inclusive income tax rate of 23 percent, you have to earn $130 to spend $100. Spend that same $100 under a sales tax, you pay that same $30, and the rate is quoted as 30 percent.

People who are currently in a 15% tax rate will now be in a 23% tax rate. People in a 30% tax rate will now be in a maximum 23% tax rate. People in a 30% tax rate have more discretionary money. They don't have to spend all their income to survive; thus they can lower the effective tax rate. People ina 15% tax rate are usually required to spend everything just to survive. Their taxes go up; thus they have less to spend on necessities.

Perhaps the biggest difference between the two systems is under the income tax, controlling the amount of tax you pay is a complex nightmare. Under the FairTax, you may simply choose to spend less, spend on used goods not taxed, or choose to not spend at all to control your own annual rate of tax.

Only a person who does not have to spend all their income to surviv believes this to be true. People who have to spend everything they earn do NOT have the option of spending less; but, since they will now be taxed at a higher effective rate, they will be forced to spend less; thus losing the ability to purchase some necessities.

[BadRay]

50. Tax rate

Please do yourself a favor and read the bill.

It's 130 pages. Reading it for yourself will allay a lot
of your fears.

The only thing that you had right in your post was that
products going overseas will not be taxed. That will make
American made products more competitive abroad and increase
jobs and manufacturing here.

[andino]

21. Anyone have any idea on how it will effect real estate?

How would people get credit for the interest on their homes?

[Muzzle Tough]

22. The mortgage interest deduction would be eliminated.

And on top of that, you'd have to pay sales tax on the house, if it was a new house.

So you'd get screwed twice.

[andino]

23. Well, that would piss a lot of rich people off too

No more real estate tax shelters. Hey, wouldn't that piss every american that has a house off.

[grumpy44]

61. Suddenly this doesn't sound so bad

Buy an old house in a bad part of town. No tax.

Build a new McMansion. TAX.

Drive an old car. No tax.

Buy an SUV. TAX.

People would be more inclined to use old things, and less inclined to just throw them away and buy a new one.

It's a tax on living large. The punishment for greed is...TAXES.

Still reading, still interested....

[FormerDittoHead]

62. Think again, THINK AHEAD.

FIRST OFF, NONE OF THIS WOULD HAVE ANY EFFECT ON STATE TAXES, so the net charge for new/used things food/clothing/services (not taxed in some states, but in others) etc etc would become more and more complicated.

The market would drive used car prices up... Like 23%????

Dealers will buy used cars with 1 mile on them overseas, import them and sell them as used (technically true). What kind of cars would this be worthwhile to do? LUXURY CARS.

New cars would change hands in Mexico and the "used" ones driven up here and sold with no taxes.

The automobile examples were right off the top of my head.

One of the evils of any tax system is that people arrange their affairs just to get around the taxes. You'll see this in spades with this SCHEME.

Now what about under the table?

Here's a good one: I buy an old (used) barn that's ready to fall down.

The vast majority of expenses for building is LABOR - what's to stop me from simply paying guys CASH to "renovate" the barn into a million dollar mansion?

If you think the underground economy is rampant NOW, just wait until THIS BS SCHEME would kick in!

ONE EFFECT WOULD BE GUARANTEED - DOMESTIC MANUFACTURING WOULD BE DESTROYED while wholesale importation of "used" goods would go untaxed.

Great plan they got there. More holes than a swiss cheese.

[Vickiela]

66. Tax Cheating still possible but less likely

Tax cheats are rampant now on over 200 million returns to monitor. complicated rules, tax breaks that only a rich man's tax lawyer can make work and a $1 trillion illegal economy with no income taxes filed and you are already a system full of swiss cheese holes.

A National Sales tax reduces filers to 40 million businesses. To buy tax free you need a business license and a tax certificate in most of the 45 States with sales tax. The same would apply Nationally, monitoring a used car lot to show that a product has at least paid the Fair Tax once in its product life would be the determining factor.

Even a business that bought a product tax free and sold it used would be required to charge a sales tax in that case. Similar state rules apply to state sales taxes and have been monitored and collected by States like New York with a lower rate of cheating than on the estimates for the Federal Income Tax.

There will be less returns and entities to monitor making it easier to insure compliance and everyone paying their fair share.

Loopholes will be found and they will need to be plugged just like we have now. Let's not make a good proposal the enemy of the perfect this is certainly better than the status quo on many levels.

[Inland]

67. And yet, the problems in enforcement aren't being faced.

You don't bother to tell us how sales are going to be monitored. Of course, they are going to be monitored the way they are now: people are going to have to send in returns.

Nobody bothers to tell us how sales taxes on services are going to be enforced. Presently, a purchaser of services sends a 1099 to the government so that the service provider's income is tracked. But in a sales tax regime, that wouldn't occur.

And nobody bothers to remember that the only way to "refund" sales taxes to those living below the poverty line is to make them fill out returns. So the burden of record keeping and filing returns follows the tax burden: it is shifted from the rich to the very poorest. Anyone who has followed how the republicans audit recepients of the EITC knows that the poor are going to have the shit audited out of them.

Presently, cigarettes are smuggled from Canada. But smuggling is going to be less of a problem than the rich simply making all their purchases across the border. Why would Gates buy a house in Redmond when he can buy the same house across the border for 23% less? Why not buy a small island in the Carribean? Either these purchases are lost or someone is going to have to track them. Good luck.

The only reason why the sales tax looks easy to collect is because the states have been doing it. But state sales taxes are relatively small and only on goods. But nobody has attempted to put an entire national government with its pension plan solely on a sales tax. Nobody has attempted a 23% sales tax. Why experiment with the entire nation in order to give the rich a tax break?

[FormerDittoHead]

68. Excellent point plus one more for proof

Your points about keeping track of purchases are excellent. What a nightmare. "Remember to keep all your receipts from McDonnalds"!

>The only reason why the sales tax looks easy to collect is because the states have been doing it.

Delaware doesn't have sales tax. Get that?

In other words, in Delaware, (any other states with no sales tax?) all businesses would have to START collecting sales tax, now, isn't that simple for them? (I know, SCREW 'EM!, neo-con mantra)

In NJ, (and there are many states who do stuff like this) certain "necessities" (unprepared food, clothing to name two) are not taxed. What a mine field having to calculate sales tax on different items...

And again, stores which only sell these items would NOW would have to START collecting sales tax.

Just gets more and more simple, don't it? FOR SIMPLE MINDS! It's not what's right, it's what will SELL IN THE RED STATES, EH?

One more point, but it's a doozy:

I'm WONDERING... will the sale of STOCKS AND BONDS be subject to sales tax? (which the rich own a disproportionate share of?)

I'd bet a dollar to a donut: *NO*...

They come up with some BS excuse, "as stock is sold in a secondary market, it would be considered "used"...

There, that wasn't even hard to figure out their little plot to exempt the rich from THAT one..

[Inland]

69. News to me:

I thought all states had a sales tax. But even states will sales taxes on goods don't put a sales tax on services. So entire industries are going to find themselves no longer filling out income tax forms and filling out sales tax forms instead. Assuming they do it.

And of course sales of stocks and bonds won't be taxed. No investment vehicles will be taxed--except, of course, primary residences, because that's the investment of the grubby middle class, who are almost as bad as those retirees and young families and others that the sales tax seeks to punish for spending too much.

[FormerDittoHead]

70. It just gets more and more complicated...

No sales tax in Delaware: Living in Southern NJ, I can tell you there's been more than one person from here or Philadelphia to take the 30 minute trip down to Wilmington to buy something "expensive" at Best Buy or Sears. You could always return it at a local branch... :-)

NJ does NOT tax services UNLESS it's connected to a TANGIBLE product. As a computer consultant, you don't get a disk of any program I make - all done by download / email.

I can write a $15,000 program, and it's not taxable. If I give you just a single CD of it, however, the whole thing becomes taxable.

Texas, doesn't have any income tax, but DOES tax services, even ISP services.

Not complicated enough?

>So entire industries are going to find themselves no longer filling out income tax forms and filling out sales tax forms instead. Assuming they do it.

Business to business sales will be exempt. Think of it, if I had a company which made something for eventual resale, I wouldn't have to do income taxes any longer!

Or would I? I WOULD, because most every state (except Texas that I know of) has income taxes! So you'd have all of the same record keeping and paperwork just for the state(s) you do business in, not to mention investor financials.

ANOTHER example of how screwed up this will get: Staples sell paper to a company which will print instructions on them to include with a bike for retail sale. The purchase of the paper would *not* be taxed...

So, (another abuse of the system) people be going around with those "reseller id" certificates in their wallets buying everything left and right, getting a nice 23% discount on things which you and I will have to pay more for... don't think they won't.

AND LET'S NOT FORGET TO KEEP THE RECEIPTS FOR *EVERYTHING* YOU BUY, in case you're *audited*!!! Where did you buy that TV? Where's the receipt? How about that sofa?

How *long* should you keep those receipts? FOREVER....????

Yeah. Sure SOUNDED simple...

[seasat]

71. Also some state tie their tax codes to the federal code.

If the federal tax is eliminated, by law, the state tax is eliminated. The states will either have to change their income tax codes or raise taxes that are not tied to the federal code. You're right, it will get really messy.

[Inland]

72. Yep, good points

If your state still has income tax, there is no savings in paperwork. And you would be subject to audits, still, and isn't it more difficult to prove what and when you bought something and if you paid tax then income?

[sabbat hunter]

73. legally

if you buy something in delaware and bring it over the state border to NJ you are required to pay the jersey tax. same thing for any item bought over the internet

in fact in NYS there is now a line on the tax return asking you to state how much in goods you bought via the internet so you can calculate the tax you owe.


david

[FormerDittoHead]

74. Absolutely. A Question.

>in fact in NYS there is now a line on the tax return asking you to state how much in goods you bought via the internet so you can calculate the tax you owe...

Question: How many New York Staters do you think will be using it?

As for NJ, for as long as I know (since the late 70's) there's been a line on the NJ State Income Tax form for taxes on out of state purchases otherwise not taxed. Mail order & catalogs existed long before the Internet!

The point was that a national sales tax would become as wide-spread abused as the state sales taxes are now, and probably disproportionately by the big ticket items that the rich like buying..

example:
http://cgi.ebay.com/ebaymotors/ws/eBayISAPI.dll?ViewItem&rd=1&item=4515849570&category=6315#ebayphotohosting

[sabbat hunter]

77. actually

they got a decent number, what they did was threaten to audit returns of people the thought were likely to use the internet to buy stuff. for the couple bucks it cost me , i filled the line out.

david

[FormerDittoHead]

78. Many would have NOT.

...what would they have "audited" the information with??

That other component is the key.

Only if they had some information to check it against with would they be *able* to do that. Insurance companies are known to cooperate with governments to crack down on drivers living in one state, but insured in another (cheaper) state, (this happened in Philadelphia) but that's as far as I've heard it being taken. Naturally, it's more money for the insurance companies.

Currently, the only vendors who are 'cooperating' with multiple states are very large (eg: Eddie Bauer) with in-house computer departments who can easily afford the added expenses, but their cooperation is that they actually collect the tax.

If I'm a small business in NJ, and the Commonwealth of Virginia writes me a letter saying, "We suspect you may be selling our residents tangible goods over the internet. We'd like a list of sales to our state complete with names and addresses" it better come with a subpoena, and this, not being Virginia, would be a pretty good trick.

Actually, the issue has been quite sticky for many years because of all the revenue (potentially) lost for the states, but I think they look the other way because of the bureaucratic nightmare it would create to make EVERY online vendor fill out 50 forms every MONTH, 49 of them for states he's not in? and/or at least buy/create the necessary software to charge the appropriate amounts for each state (and what about some cities, would the same apply to sales to citizens of New York City?)

Without other information, I don't care if you're retired and online 20 hours a day, it offers no proof of anything you purchased something out of state, etc etc.

AGAIN, NO ONE LISTENS TO *ME*. THE SOLUTION WOULD BE, NOT TO TAX THE BUYER (the state from which the order's taken from) BUT THE SELLER, and then states could compete with one another to keep their sales tax rates low to attract out of state purchases.

I don't understand the legal hoop they refuse to jump through to do this, but it would solve everything and make it simple for the vendors as well.

If the Feds got into the act, however, BIG BROTHER WOULD (have to) BE WATCHING!

[Inland]

64. Tax on living large? Not really.

Fact is, taxes are going to be shifted to people whose incomes are so low that they spend everything they have on food, drugs, rent, water, clothing, electric. To pretend that you are punishing them for greed and sock them with a 23% tax seems pretty silly. There isn't any correlation between spending and greed.

And of course people would be more inclined to use old things--but only those people who are paying more tax under the new sales tax. They couldn't afford any better. In the same fasion, they will be more inclined to do without anything, since they have found everything to be 23% more expensive. And for things that don't age well, like drugs or education, they will do without.

Well, what about the guy building the McMansion? Won't he get socked? Nope. He has actually more after tax income. He can better afford his house. It is like fining someone $50 after giving him one hundred dollars.

[TexAsh]

31. Learn About The FairTax

The FairTax is the only nat'l sales tax bill now before Congress.

Don't Guess - Learn More:
http://citizen.home.texas.net/FairTax /
(Click on "Real Estate & Mortgage Interest")

OR READ THE ACTUAL BILL:

http://thomas.loc.gov/cgi-bin/query/z?c108:H.R.25:

Democrats should steal the Tax Reform issue and advocate the FairTax.

ALSO:
http://www.fairtax.org

[TexAsh]

41. FairTax Impact on Real Estate

Here's my best understanding of how the FairTax is expected to impact real estate and the mortgage interest deduction ...

http://citizen.home.texas.net/FairTax/RealEstate.html

[sendero]

25. I think....

... the National Sales Tax has less than 1% of happening. At best.

[TexAsh]

26. Steal The Tax Reform Issue!

The only national sales tax bill now before Congress is the FairTax.

Learn more:
http://citizen.home.texas.net/FairTax/
http://www.fairtax.org

It taxes all retail tranactions of services and new goods.
It UNtaxes the poor and lowers taxes for all honest taxpayers.

The FairTax can help Democrats increase political power and build a legacy that will be admired across the poltical spectrum for generations.

EXCERPT:

Today's payroll tax ...

... is a flat-rate income tax, assessed regardless of income.

... hurts low income earners the most.

... is not subject to any income tax deductions.

... is more expensive than income taxes for 74% of all Americans.

... withholding is eliminated under the FairTax.

[TexAsh]

32. Pelosi's Letter On Tax Reform to Dubya

(Sounds a lot like the FairTax ...)

December 15, 2004

President George W. Bush
The White House 1600
Pennsylvania Avenue Washington, D.C. 20500

Dear Mr. President,

As we approach a new session of Congress, Democrats and Republicans agree that we must reform the tax code now. Recent statements by Administration officials indicate that you may postpone the appointment of a tax reform advisory panel and may delay sending Congress a proposal until 2006. We are writing to encourage you to act now so that tax reform can move us toward a system that is more fair, less complex, and that adequately funds the budget without perennial deficits.

Democrats are committed to the following principles:

Fairness: Tax reform must not result in tax increases on middle-income families, and we must uphold our commitment to progressive taxation. Millions of middle-income Americans are paying more than their fair share as a result of an overly complicated, loophole-ridden tax code. This tax burden will only increase as more families are ensnared by the Alternative Minimum Tax (AMT). By 2010, the AMT is expected to hit 33 million taxpayers, up from just 1 million in 1999. We believe that tax reform must include a long-term solution to protect middle-income taxpayers from the AMT's unintended consequences.

Simplification: We must make the tax code far less complex. The tax code and its regulations currently span more than 60,000 pages, thousands of which have been added since the mid-1990s. It takes the average family nearly 7 1/2 hours longer to complete their tax return than it did in 1994, and tax changes made since 2001 have only served to further complicate the tax code. The following example illustrates how the current tax code is unnecessarily complex. Parents with children in college must choose between two non- refundable tax credits and the higher education deduction, all of which are calculated differently with different income limits and phase-outs. Moreover, parents saving for their children to attend college have to decipher three different saving mechanisms. It is a taxpayer's nightmare.

Fiscal Responsibility: We must not add to the deficit; indeed, we must steadily reduce it. Revenue neutrality is especially important given the historic level of debt. Democrats are committed to reforming the tax code without burying our future under a mountain of national debt.
We look forward to working with you on a bipartisan basis to simplify the tax code for all Americans. Together, we can create a tax system that reflects common values and creates a more vibrant economy.

Thank you for your attention to our concerns.

Sincerely,


Nancy Pelosi
Democratic Leader

Steny H. Hoyer
Democratic Whip

Robert Menendez
Democratic Caucus Chairman

Charles B. Rangel
Ranking Member, Committee on Ways and Means

John M. Spratt, Jr.
Ranking Member, House Budget Committee

George Miller
Ranking Member, Committee on Education and the Workforce

Rosa L. DeLauro
Co-Chair Steering and Policy

[Vickiela]

33. Co-opt tax reform from Republicans

We have to propose an alternative to Republican Tax reform. We can't just play defense and be against what ever they propose. Neither can we wait until there is a firm proposal out of Bush's Tax reform panel. In New York, my biggest concern is that this idea of paying for tax cuts or Private social Security is going to be paid for by eliminating the deduction from federal Taxes for State and local taxes. Other articles have been written on how this will penalize more blue states than red states.

The recent Letter on Tax Reform from Minority Leader Nancy Pelosi is a good place for Democrats to start. Tax Simplification is what I would prefer. But tax breaks and tax loopholes that only the wealthy really make work for themselves has got to stop. I want a system that is less corruptible and prone to lobbyist tinkering with.

Payroll taxes are not Fair To the Poor and Middle Class, they are the most regressive of all. The Rich and their employers stop paying after $90,000 in income starting in 2005.

Middle class has 7.65% taken out of their pay and their employer pays the another 7.65%. If you make more than that neither the wealthy or the the employer pay any more into the system. That isn't fair!!

The Democratic Leadership is right when they say it takes an average American 7 plus hours to fill out a tax return and if you are self employed you pay the full 15.3% payroll tax pus the income tax.

I want Democrats to propose or co-opt away from Republicans a Tax reform and/or Social Security reform package that makes sense for the poor and middle class.

The super Rich only pay 12 to 16% net on their millions made from their inherited billions, while I pay 25% in Income tax and 15.3% in payroll tax.

Either a Flat Tax or a Fair Tax or something else simple that we propose as a positive agenda item and solution.

We are going to shoot ourselves in the foot again if all we do is spend the next 4 years complaining about Republicans without a viable alternative proposal on the table that we can all promote.

[koz4933]

34. FairTax is bipartisan

Colin Peterson, democratic congressman from Minnesota, is an original sponsor of the FairTax bill. For the life of me, I don't understand why ANYONE would not be in favor of this proposal, EXCEPT if they haven't truly studied the specifics. Almost all who have done so agree that it is a superior solution to the current mess we have. Also, remember, now matter how simplified an income tax is made to be (flat tax included), IT WILL NOT REMAIN SO!

[seasat]

37. I understand why people don't support it.

The "FairTax" will increase the effective rate on the middle class and the elderly. To keep government income at the same level you have to have winners and losers in any tax system. The wealthy people are the less of a proportion of their income they spend in goods that fall under sales taxes. As a proportion of income this is a huge break for the wealthy. If you truly give a break to the poor, then the middle class will bear the burder on this tax. The states generally have regressive sales taxes already so we need a progressive income tax, like we currently have, to balance state taxes out. Under the "FairTax", the already growing gap income disparity gap will strengthen. In addition, it will ecourage a further weakening of the dollar. I've read all the propoganda on the issue and I'm suprised that anyone who has studied up on it would be for this scheme...unless you're in the upper 20% bracket.

[TexAsh]

39. Please explain ... let's take a look ...

HOW will the FairTax increase the effective tax rate on the middle class and the elderly?

It seems to me that, under the FairTax, effective tax rates go down for everyone except those who now illegally evade taxes or those few who enjoy tax loopholes.

I used an Excel spreadshseet and my best understanding of the FairTax, having actually studied the FairTax ...

http://www.fairtax.org ...

... including much of the actual legislation itself ...

http://thomas.loc.gov/cgi-bin/query/z?c108:H.R.25:

Here's what I got when I calculated effective tax rates for various spending brackets under the FairTax:

http://citizen.home.texas.net/FairTax/Progressive.html

I don't want the regressivity of either the payroll tax or the tax-loopholes-for-campaign contributions scam. However, I don't want something else that's just as bad or worse.

I am intersted in any argument that offers contradicting facts.

[seasat]

56. I've read up on the "FairTax" before and understand it.

First, it does not generate enough revenue to replace the current income tax. Most economic analysis I've read point out that a real national sales tax would have to be between 43% to 60% and not the 30% in this proposal to maintain a break even revenue.

Second, you are not the first one to spam DU with links to the "FairTax". It gets discussed here several times a year.

Third, My philosophy on taxation is that only income above what is needed by the family to survive should be taxed. That means that Federal tax policy should be progressive. Most state taxes are regressive, putting a large burden as a percentage of income on the lower income levels and less on the upper levels. This proposal will hammer the middle class especially when combined with regressive state taxes. The upper 20% will always pay more in total dollars under either the "FairTax" or the current almost flat tax system, but the real statistic that shows tax burden is the tax as a proportion of income (effective tax rate). It will be higher under the "FairTax" and therefore, I oppose it.

Finally, read the ITEP's analysis (LINK) or the Brookings Institute's William Gale's analysis (LINK). My wife is expecting this next year and I do not want an extra tax burden so I will write my legislators to oppose this tax increase if it ever makes it to the floor. That's all I have to say on this subject.

[Vickiela]

38. Pelosi and Tax Simplifcation article

Read this article at
http://www.useless-knowledge.com/1234/dec/article268.html
Tax simplification - Bipartisan Solution.

If a Middle income family of 4 has $7500 more to spend on childcare , Health Insurance or on Retirement savings, why isn't this a fit with what Nancy Pelosi is talking about??

I won't support it if it isn't progressive but this appears to be progressive?

If not this than Bush is going to push thru permanent tax cuts on what he got last time and than add something like no income tax on investmets at all. Then the Rich who have primarily investment income will pay nothing.

As Democrats we are not thinking ahead to what is coming. We are not putting on the table a bold plan of our own that helps the people we think need it. We shoot ourselves in the foot and continue to add to the complexity of this ridiculous tax code by designing our own complicated tax breaks or incentives for education or savings, etc.

I like this article if true. Instead of hurting Social Security more by sucking out $2 trillion to pay for private accounts, widen the tax base so the rich are paying into Social Security on ever purchase they make and they spend a lot more than the $90,000 FICA cap we got now. Don't give the rich any tax breaks or loopholes and make my filing of taxes so much easier. Than I could be happy.

I want to learn more about this Prebate? of the tax though? If that makes it progressive so the Rich truly pay their fair share - than I am listening.

[TexAsh]

44. The WORST Thing That Could Happen ...

... is for voters to allow Congress to enact a smoke-and-mirrors appeasement bill that preserves the tax-loopholes-for-campaign-contributions scam.

It is up to voters to demonstrate to Congress that we are serious about replacing our tax code with something that is worthy of a free society in the 21st century.

The income tax started as a nearly flat income tax on our wealthiest individuals. Immediately, Congress began tinklering with it so that we now have what President Jimmy Carter once called a "national embarrassment."

Tinkering with the tax code, including starting over again with a flat income tax, would be a fatal flaw ...

http://citizen.home.texas.net/FairTax/Tinkering.html

[yop]

52. Progressive to start, regressive to finish

Sales taxes are regressive. A rebate is progressive. The so-called "FairTax" adds these two together, so it will be progressive at low income levels, but it will inevitably become regressive at some point as you move up in income.

That begs the question: where does the transition occur? Are we talking about a system that is unfair for most Americans? Half? Is it only Warren Buffet getting a raw deal relative to Bill Gates?

If you go to the website for the Bureau of Labor Statistics, you can find data on household spending. Every year, they do a survey of 100,000+ households.

Using the data from the latest survey (2002), assuming a sales tax of 30% (equivalent to a 23% tax-inclusive rate), and a rebate of $6000/year (equivalent to exempting $20,000/yr worth of expenses), I find:

4th Quintile of BLS survey households:
-Avg. Income: $59,177
-Avg. Expenses: $45,134 (excluding Social Security and pension payments)
-Taxes After Rebate: $7,540
-Tax Rate: 12.74%

5th Quintile of BLS survey households:
-Avg. Income: $121,367
-Avg. Expenses: $68,135 (excluding Social Security and pension payments)
-Taxes After Rebate: $14,441
-Tax Rate: 11.90%

The "FairTax" falls more heavily on the middle class than on the wealthy.

[TexAsh]

53. Compare Apples With Apples

I commend "yop" on the thorough use of valid statistics. However, the logic of comparing taxes relative to income under today's system and under a consumption tax is flawed. It's like comparing organic apples to Frankenfood oranges:

* When you are talking about taxing income, we should compare taxe rates relative to income.

* However, when we are talking about taxing spending, we must compare taxe rates relative to SPENDING.

Comparing apples to apples, under the FairTax the more you spend, the higher your tax rate.

The FairTax is MORE progressive than the income tax. Here's why:

http://citizen.home.texas.net/FairTax/Progressive.html

[yop]

54. By definition

No. By definition, when we discuss the progressivity of a tax, we are comparing tax rates relative to income. This discussion is not restricted solely to income taxes. For example, by looking at the data comparing the spending habits of the rich and poor, we can prove that sales taxes as we know them today are regressive. In other words, the poor lose a higher proportion of their income to sales taxes. Comparing the regressivity of sales taxes to income taxes is comparing apples to apples.

We can perform the same analysis with the FairTax, using the available household spending data. Using this data, we find that the FairTax falls more heavily on the middle class than on the rich.

[TexAsh]

55. Who's definition?

Whose definition applies income tax measurments to sales tax structures? Not mine.

I say "Compare tax rates relative to income when taxing income; compare tax rates relative to spending when taxing spending."

Measuring percentages of income when discussing taxing spending is a rhetorical trick to demonize a proposal without unbiased consideration of its merits.

Unless one insists upon clinging to Karl Marx's socialist principles of wealth redistribution by the state, "From each according to his abilities, to each according to his needs," then we should measure the FairTax based on projections of its dollar impact on the family budget. The FairTax is specifically designed to untax the poor and reduce taxes for honest taxpayers - at every economic level.

For the record, I am not addresseing "sales taxes as we know them." My remarks are about the FairTax, a specific, grassroots proposal which, it seems to me, some people insist upon judging without any legitimate evaluation.

LEARN MORE about the FairTax, then GET BEHIND IT:
http://citizen.home.texas.net/FairTax/

[FormerDittoHead]

59. You're SPINNING...

The ISSUE is will the wealthy pay more or less tax with such a sales tax over the progressive income tax that we have today.

Don't change the subject. The website addresses THAT issue.

Those ARE the apples.

The truth is that, people making more money than they spend (ie: upper incomes) the less tax they will pay with this SCHEME than with a progressive income tax.

I agree, however, that it would be nice to 'simplify' things, but I don't think this is the way to go, rather, a national property tax (tacked onto the existing property taxes everyone already pays) with a simliar low-end rebate / exemption.

No one seems interested in my idea, however, even though all property is already taxed (even in Texas!) and no one seems to have a great problem with it...

[Inland]

57. Of course. They would have to, to keep the rate a low, low 23% sales tax

Right now, the fed govt takes about 18% of GDP in taxes. It still runs a deficit, but there you go. So a sales tax replacing all the fed taxes means a rate of MORE THAN 18% on sales. Why? Because about 3% of GDP is saved. So how can you exempt anything and still keep a rate of "only" 23% on all other goods and services?

That would include foreign goods purchased--but don't ask me how it would be enforced. Currently cigs already cross the border.