National Sales Tax Again

[msparks]

Was watching CNBC this afternoon:

NICEVILLE, Florida (Reuters) - President George W. Bush has said that abolishing the U.S. income tax system and replacing it with a national sales tax is an idea worth considering.

"It's an interesting idea," Bush told an "Ask President Bush" campaign forum on Tuesday. "You know, I'm not exactly sure how big the national sales tax is going to have to be, but it's the kind of interesting idea that we ought to explore seriously."

Republican economists who speak regularly to the White House have said that the Bush campaign has been mulling the idea of an overhaul of the tax code as part of an agenda for a second term should Bush win re-election.

Some lawmakers have floated ideas of simplifying the tax code by putting in place a "flat" income tax rate or a national sales tax. But those ideas have so far not gained much traction in Congress. Opponents say such a system would not be in the best interests of the poor and the middle class who would pay the same tax rate as the wealthy even though they have less disposable income

 

[JohnnyO]

quote:

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Originally posted by msparks:
Some lawmakers have floated ideas of simplifying the tax code by putting in place a "flat" income tax rate or a national sales tax. But those ideas have so far not gained much traction in Congress. Opponents say such a system would not be in the best interests of the poor and the middle class who would pay the same tax rate as the wealthy even though they have less disposable income

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I think either is better than the system we have now. Being that poor folks use more govt services and money than richer folks, I propose that the poor are not paying their fair share.

I own a small business, in a way I am already a tax collector for the govt. Being that the bulk of my competition works under-the-table and pays no taxes at all, I don't know if a national sales tax would help, hurt, or not matter.

 

[VaderSS]

quote:

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Two Choices for Tax Reform
Monday, August 09, 2004
By Daniel J. Mitchell
Even people who disagree about tax cuts usually agree that our tax system is a mess. It should be repealed and replaced with a system that treats all taxpayers fairly and equally.

Now that the speaker of the House of Representatives has announced he wants to dismantle the IRS, perhaps we have the chance to do just that.

Two great ideas for achieving this goal are on the table — the flat tax (search) and the national sales tax. (search) They may seem different, but the flat tax and the sales tax are different sides of the same coin: The flat tax takes a small slice of your income as it's earned; the sales tax takes a small slice of your income as it's spent. Both proposals share the following attractive characteristics:

— A single flat rate. Economic activity is taxed at one low rate, ensuring that government treats taxpayers equally. It also would promote faster economic growth by minimizing tax penalties on work, risk-taking and entrepreneurship.

— No bias against savings and investment. Both the flat tax and a national sales tax would ensure that no income is taxed more than once. Eliminating the double taxation of saving and investment would boost long-term growth.

— Equality. Adoption of the flat tax or a national sales tax also would end the discriminatory treatment caused by a tax code that grants preferences or imposes penalties on certain behaviors and activities. Either reform would change the code so that all taxpayers — and all income — are treated the same. Rich people would have to pay their fair share no matter how many lawyers, lobbyists and accountants they had on the payroll. But the tax code would be stripped of the punitive "soak-the-rich" provisions that make it hard for other Americans to become rich.

— Simplicity. With hundreds of forms and thousands of pages of incomprehensible instructions, the IRS system is a nightmare of complexity. Under the flat tax, individuals and businesses would fill out one simple postcard-sized form every year. With a national sales tax, wage earners wouldn't have to report their income, and businesses simply would send the government a postcard-sized form every month.

— Competitiveness. In today's global economy, it's easy for jobs and investment to cross national borders. This is why many nations, such as Russia, Slovakia, Hong Kong and Estonia, have adopted flat taxes. It's also why jurisdictions that rely on consumption taxes, such as the Cayman Islands, are so prosperous. Tax reform will help America remain a rich and powerful nation.

— Honesty. A flat tax or a national sales tax would end a corrupt system that allows politicians to trade tax loopholes for political support. This would be bad news for tax lobbyists in Washington but great news for honest government.

Ideally, both President Bush and Congress will launch a national debate on which tax reform plan would be best for America — which shouldn't be too difficult, as President Bush already has publicly praised the 13 percent flat tax in Russia, and Speaker Dennis Hastert is just one of many tax-reform advocates on Capitol Hill.

To be meaningful, this debate should include potential pitfalls. For instance, if we adopt a flat tax, how can we ensure that politicians don't create new loopholes? And if we adopt a sales tax, how do we make sure the politicians don't pull a bait-and-switch, implementing a sales tax but then conveniently "forgetting" to repeal the income tax? Many European nations have adopted a form of national sales tax, but none have eliminated their income-tax systems. As a result, national sales taxes have been used to finance a big expansion in the size of government — which helps to explain why so many European nations are economically stagnant.

There's no question tax reform will prove an uphill battle. Special-interest groups will fight to protect the loopholes and shelters they have placed in the current system.

But this doesn't mean the battle can't be won. Nobody thought President Reagan would be able to cut America's top tax rate from 70 percent to 28 percent. Nobody predicted 15 years ago that the Soviet Union would disappear and be replaced by a more democratic Russia with a 13 percent flat tax. If the American people demand a fair and simple tax system, the politicians will have no choice but to comply.

Daniel J. Mitchell is the McKenna fellow in political economy at The Heritage Foundation.

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http://www.foxnews.com/story/0,2933,128499,00.html

quote:

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Kerry Seizes on Bush National Sales Tax Comment
Thursday, August 12, 2004

CARSON, Calif. — John Kerry (search) said Thursday that President Bush's musing about a national sales tax (search) is an insult to financially struggling voters and would amount to "one of the largest tax increases on the middle class in American history."

The Democratic presidential nominee, during a speech at California State University, Dominguez Hills, tried to reverse partisan stereotypes by portraying the Republican president as the tax raiser and himself as a tax cutter.

Kerry said if Bush wants to create a national sales tax without increasing the deficit, people will end up paying at least 26 percent more for purchases on top of state and local sales taxes.

"We know exactly who that's going to hurt," Kerry said. "That's going to hurt small business. It's going to hurt jobs. It's going to hit the pocketbooks of those who need and deserve tax relief most in America."

Bush has suggested that overhauling the tax code would be a second-term priority if he is re-elected. While campaigning in Florida (search) Tuesday, he said replacing the income tax with a federal sales tax is "an interesting idea that we ought to explore seriously."

Kerry seized on Bush's comments even as White House officials downplayed the idea and denied that any such plan is under consideration.

Kerry said Bush has failed to offer a plan for improving the economy in his second term. He said the president's tax cuts have resulted in a tax increase on the middle class because their state and local taxes have been increased to compensate for loss of revenue from the federal government. He said a national sales tax would only further burden the middle class.

"I call it one of the largest tax increases on the middle class in American history," Kerry said. "And this is coming from an administration that has offered almost no new ideas for our economy, and the few ideas that they have offered have only hurt middle class families. This new idea is no different."

Kerry repeatedly invoked the memory of better economic times under another Democratic president, Bill Clinton. He said Clinton's advisers were helping craft his economic plan and that he will be "a champion for the middle class" by cutting their taxes while lowering the deficit.

Kerry said he would offer tax breaks to help pay for health care premiums, child care and college tuition, paid for by repealing Bush's tax cuts for people earning more than $200,000 a year.

"They will go back to paying the same taxes they paid when Bill Clinton was president," Kerry said. "That was a time when every American got richer."

Bush campaign spokesman Steve Schmidt said Kerry cannot pay for his tax plan.

"John Kerry's numbers don't add up," Schmidt said. "He has spent his tax hike more times than anyone can keep track of."

Kerry was also fighting the Bush campaign's charge that Kerry has a long history of voting for higher taxes during his 19-year career in the Senate.

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http://www.foxnews.com/story/0,2933,128784,00.html

 

[k1xv]

How about a national birth tax on every child born?

Such a tax has many advantages. First, you pay it once, and after that you don't have to worry about it any more. Second, it discourages large families that place a big burden on school budgets. Third, seniors will largely be exempt. Fourth, it is easy to administer...no complicated tax forms. Fifth, it encourages celebate behavior.

If you cannot afford to pay, your newborn will be sold to the gypsies.

 

[Whimsey]

My biggest concern with a national sales tax is that it will be IN ADDITION to the income tax and will increase uncontrollably over the years along with the income tax rates. Politicians of all parties are like crack addicts. Tax dollars are their crack and they can't do with less. G*d forbid they try and cut spending

. I speak with experience from NJ introducing a sales tax first to cut our property taxes and the same Democratic governor introduced an income tax a few years later again to "again" reduce the property tax. Both taxes were introduced around 30 years ago and both have increased tremendously over the years. And surprise! 30 years later our propery taxes are the highest in the nation and our sales and income taxes are among the highest still in the nation. Though they increase much higher under Democratic administrations. A pox on both their houses. Though I really wish the "BLACK PLAGUE DEATH" on Democratic politicians for creating the welfare state and welfare mentality among it's citizens

. Republicans in NJ are not faultless by any means. They continued to perpetuate the welfare "gimme" mentality in order to hope to get votes. That is a hopeless and stupid thing for Republicans to do

. The "voters" that want the freebies would never vote for a Republican, even giving them the freebies. And by doing so the Republican politians turn off their base. Trust me in NJ the "pubs" have succeeded in doing that. He*l the "pubs" don't even support their candidates unless he/she is a really a democrat in disguise as a Republican

. Which is really sad because we've had great Republican state candidates but they are not "democratic" enough for the state "republican" bosses

. I guess we get what we deserve. To he*l with both of them.

Whimsey

 

[Gary Allan]

quote:

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Opponents say such a system would not be in the best interests of the poor and the middle class who would pay the same tax rate as the wealthy even though they have less disposable income

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This should be your first clue that this is a "fair" tax system and will cost at least some people with money more. There is no other reason for it to be opposed.

Even if it's adopted ...they'll adulterate it to conform to their needs anyway. It will never do as it intends.

There is no escape ..I keep telling you

 

[MAJA]

Whimsey, excuse my ignorance, but if the tax code is to be revamped and simplified, why would we have a national sales tax "in addition" to income tax. Is not the whole debate going to be about replacing one with the other? Again excuse my ignorance, as I have not researched any on this.

With that being said, and assuming the "income tax" would be abolished, a national sales tax will probably increase the price of a gallon of gas (or milk) by a dollar or so. Are we ready for $3.00 gas? Maybe so. At least in this case, we have an option in paying the tax, by decreasing our consumable spending by walking more and staying at home more with our kids, interacting with them.

A national sales tax, maybe along with a nation lottery game (aka a TAX most people "enjoy" paying) may be the best thing for this country at this time. A flat rate would, IMHO, also be an improvement over the existing taxes.

 

[keith]

If you look at Canada (GST, PST, HST) and Europe (VAT) you can see that having multiple taxes is more than possible, it WILL happen.

We are right to be very skeptical about changing the tax code. The only way this would happen is if Congress believed they would end up on the winning side - more taxes collected.

I would consider a single national sales tax - ONLY if there were a constitutional amendment to ban federal income tax and abolish the IRS.

Keith.

 

[JohnnyO]

IMO some sort of IRS would still have to exist to make sure that businesses were collecting, reporting, and paying the proper amount. I own a small business (see above). Never been audited by the IRS but I can be sure the state unemployment and work comp auditors will visit every year and the wage tax and sales tax auditors every other.