National Retail Sales Tax

• BoatShoes

  I've noticed that many middle class conservative republicans believe that a national retail sales tax would reach a preferable tax base as opposed to our current hodge podge of tax expenditures we call the Income tax.
  
  Nevertheless, I feel that people who adhere to this world view often have only obtained information in the issue from sites like fairtax.org, touting it as some kind of magical prescription for tax nirvana.
  
  So, I thought I'd provide a link to the Tax Policy Center which provides a brief but fair analysis of a national retail sales tax and other emerging tax issues.
  
  http://www.taxpolicycenter.org/briefing-book/index.cfm
  
  FWIW, the tax policy center is not a liberal organization and generally favors a simple more neutral tax code without preferential provisions (think home mortgage interest deduction, exclusion for employee provided health insurance, etc.) and lower rates reaching a broader base.
  
  My opinion is that tax reform ought to be focused on making the Income tax more neutral as was tried with the 1986 reform act rather than converting to a retail sales tax.
• Manhattan Buckeye

  Very odd article, but typical for a thinktank - a lot of generalization and summary, but light on the data that backs up the generalization and summary. My favorite part is this:
  
  "A uniform retail sales tax would cover consumption of all goods and services. "
  
  Uh, ok. Why? Most states don't cover consumption of services - why would a federal system have to? As for the regressive nature, that could be solved by establishing credits in the form of tax rebates based on income - people would be required to file a return but it would be much simpler than even the current 1040 EZ.
  
  Aside from the complexity, the biggest problem with the current system is the complete lack of transparency and social engineering built into the code. People with similar jobs, living in similar neighborhoods with similar lifestyles pay grossly different amounts of taxes. One of the key positives of a consumption tax is that you KNOW what you and other people are paying.
• O-Trap

  

  Manhattan Buckeye;668321 wrote:Very odd article, but typical for a thinktank - a lot of generalization and summary, but light on the data that backs up the generalization and summary. My favorite part is this:
  
  "A uniform retail sales tax would cover consumption of all goods and services. "
  
  Uh, ok. Why? Most states don't cover consumption of services - why would a federal system have to? As for the regressive nature, that could be solved by establishing credits in the form of tax rebates based on income - people would be required to file a return but it would be much simpler than even the current 1040 EZ.
  
  Aside from the complexity, the biggest problem with the current system is the complete lack of transparency and social engineering built into the code. People with similar jobs, living in similar neighborhoods with similar lifestyles pay grossly different amounts of taxes. One of the key positives of a consumption tax is that you KNOW what you and other people are paying.

  
  Moreover, a consumption tax also allows for two people with the same job, making the same money, to pay different taxes based on what their expenses are.
  
  A 27-year-old single man making $40K a year doesn't have the same expenses as a married, middle-aged father of four with a mortgage payment making $40K a year. The latter will likely be buying more necessity-type goods and services, while the former might splurge on non-necessities. If he chooses to be fiscally wise, he can pay the same as the married father, but if he chooses not to, he can also pay more.
• Manhattan Buckeye

  ^^^
  
  A good point. As someone that started off with a relatively "high" income - my consumption was low because I spent so much money paying back student loans. A person making the same salary at age 45 was definitely better off than I was, but we paid similar income taxes.
• O-Trap

  

  Also, with a consumption tax, it becomes more difficult to cheat on your taxes.
  
  Still not impossible, but more difficult.
• Writerbuckeye

  

  We'll never go to a Fair Tax or consumption tax-type setup because it makes too much sense and would destroy the livelihoods of too many powerful people invested in the current system.
• stlouiedipalma

  Flat tax, no deductions, no loopholes. Keep it simple.
• O-Trap

  

  stlouiedipalma;669502 wrote:Flat tax, no deductions, no loopholes. Keep it simple.

  
  I could live with this.
• Writerbuckeye

  

  stlouiedipalma;669502 wrote:Flat tax, no deductions, no loopholes. Keep it simple.

  
  The class warfare mongers (i.e. liberals) won't allow it. They will cry that it's unfair to the poor and favors the rich, even though both are paying an equal percent of their income.
• I Wear Pants

  Writerbuckeye;669553 wrote:The class warfare mongers (i.e. liberals) won't allow it. They will cry that it's unfair to the poor and favors the rich, even though both are paying an equal percent of their income.

  You know very well that 20% to a person making $20k a year is a lot more than 20% to a person making $1 million a year. It might mathmatically be the same but if you look at what it actually means it isn't even close to the same. Even Friedman realized this.
• dwccrew

  

  I Wear Pants;669604 wrote:You know very well that 20% to a person making $20k a year is a lot more than 20% to a person making $1 million a year. It might mathmatically be the same but if you look at what it actually means it isn't even close to the same. Even Friedman realized this.

  
  Boo hoo. This is the United States; where anyone can become wealthy with hard work and dedication I.E. Warren Buffett, Bill Gates, Oprah Winfrey, Dave Thomas, Ray Kroc, Sam Walton etc. If someone doesn't like paying 20% of their $20k, they need to work harder at making more money.
• Tobias Fünke

  

  dwccrew;669613 wrote:Boo hoo. This is the United States; where anyone can become wealthy with hard work and dedication I.E. Warren Buffett, Bill Gates, Oprah Winfrey, Dave Thomas, Ray Kroc, Sam Walton etc. If someone doesn't like paying 20% of their $20k, they need to work harder at making more money.

  
  Shit like that makes me wonder if I am truly a Republican. I am completely against a flat tax. Someone who makes $20,000 doesn't need the government taking any of their money. Someone who makes $10,000,000 can spare $2,000,000, or even $3,500,000. Of course, I would have exceptions for one or two real estate transactions, as if you sell a $1,000,000 house you inherited you shouldn't be taxed like you're going to make that every year, and on investment in job-creating/D&R endeavors, etc. Progressive Tax > Flat Tax. That said, I don't agree with the progressive tax structure as it is today.
  
  The is the United States. It behooves us to help poor people and lessen the burden on the middle class so we don't end up like some Latin American country in terms of its, gasp, distribution of wealth.
• I Wear Pants

  dwccrew;669613 wrote:Boo hoo. This is the United States; where anyone can become wealthy with hard work and dedication I.E. Warren Buffett, Bill Gates, Oprah Winfrey, Dave Thomas, Ray Kroc, Sam Walton etc. If someone doesn't like paying 20% of their $20k, they need to work harder at making more money.

  A flat tax would end up taxing away money the poor would spend on necessities, you and I would spend on comfort type things, and would really only take away from further investments from the rich.
  
  Which is also the reason I don't think a consumption based tax would work well because the poor only purchase consumption items because that's what things that are necessities are so it would end up taxing them far more than people who are more well off.
  
  The tax structure now sucks and needs simplified and redone, but I don't think a flat tax is the way to go.
• dwccrew

  

  Tobias Fünke;669617 wrote:Shit like that makes me wonder if I am truly a Republican. I am completely against a flat tax. Someone who makes $20,000 doesn't need the government taking any of their money. Someone who makes $10,000,000 can spare $2,000,000, or even $3,500,000. Of course, I would have exceptions for one or two real estate transactions, as if you sell a $1,000,000 house you inherited you shouldn't be taxed like you're going to make that every year, and on investment in job-creating/D&R endeavors, etc. Progressive Tax > Flat Tax. That said, I don't agree with the progressive tax structure as it is today.
  
  The is the United States. It behooves us to help poor people and lessen the burden on the middle class so we don't end up like some Latin American country in terms of its, gasp, distribution of wealth.

  
  Sure they can "spare" it, but why punish them fore being successful? This is counter-productive IMO. You are rewarding someone for doing the minimum and penalizing someone for doing the best. If you make it equal across the board, it will motivate people to do better. I don't know how many times I have heard people talk about how they are content with making the minimum because of the ease of tax burden, but they also can receive assistance from the govenment.
  
  It's time in this country that we give people real incentives to do better. Making a fair and equal tax would be one of them.
• dwccrew

  

  I Wear Pants;669620 wrote:A flat tax would end up taxing away money the poor would spend on necessities, you and I would spend on comfort type things, and would really only take away from further investments from the rich.
  
  Which is also the reason I don't think a consumption based tax would work well because the poor only purchase consumption items because that's what things that are necessities are so it would end up taxing them far more than people who are more well off.

  
  Again, I am not concerned with someone who is doing the bare minimum. Also, people that are making 20k a year are still eligbile for benefits from the government, they might as well pay their fair share in taxes.
• I Wear Pants

  dwccrew;669623 wrote:Again, I am not concerned with someone who is doing the bare minimum. Also, people that are making 20k a year are still eligbile for benefits from the government, they might as well pay their fair share in taxes.

  Then we'd need to increase the benefits to account for the increase in taxes paid.
  
  And why do you assume anyone who is doing poorly financially is doing the bare minimum?
• dwccrew

  

  I Wear Pants;669625 wrote:Then we'd need to increase the benefits to account for the increase in taxes paid.
  
  And why do you assume anyone who is doing poorly financially is doing the bare minimum?

  
  If they are only making 20k a year, they are doing the bare minimum. There are circumstances in which negate that statement, IE college student or part time workers; however, that reflects on tax returns. They wouldn't be subject to the 20%. As I said earlier, there is a lot of opportunity to make money in this country still (not as much as in years past, but it is there). I truly believe you would motivate people to make more money if you gave them an incentive.
  
  That being said, I prefer a consumption tax over a flat tax. Eliminate the income tax. Tax me on the back end, not the front. That way an individual can control what they are being taxed on.
• Tobias Fünke

  

  dwccrew;669622 wrote:Sure they can "spare" it, but why punish them fore being successful? This is counter-productive IMO. You are rewarding someone for doing the minimum and penalizing someone for doing the best. If you make it equal across the board, it will motivate people to do better. I don't know how many times I have heard people talk about how they are content with making the minimum because of the ease of tax burden, but they also can receive assistance from the govenment.
  
  It's time in this country that we give people real incentives to do better. Making a fair and equal tax would be one of them.

  I didn't say the system today is what I like. Any progressive tax setup that lessens what amount you actually put in your pocket after taxes needs to go, no doubt. But it is not punishing them for being successful, or they wouldn't do it. Maybe they bitch and moan because they're greedy, and that is the same greediness that drove them to be so successful. So naturally the good greed/motivation maybe shouldn't be taken seriously because some douche from Connecticut wants to make $100,000,000 and not pay another $100,000 in taxes because he's just a greedy egotistical maniac. Is that possible?
  
  Now I didn't say our tax structure is perfect, or even good. But at the most fundamental levels I think you would need to recognize the existence of society, and that "every man for himself" idea Republicans like to tout might be flawed because it doesn't behoove the society as a whole. The uber rich can pay more and live perfectly enjoyable lives, they don't need to play keeping up with the Joneses with bank account sizes.
  
  
  ....of course all of this would be great if we had a federal government that was smaller and more efficient and knew what the fuck it was doing.
• dwccrew

  

  Tobias Fünke;669627 wrote:I didn't say the system today is what I like. Any progressive tax setup that lessens what amount you actually put in your pocket after taxes needs to go, no doubt. But it is not punishing them for being successful, or they wouldn't do it. Maybe they bitch and moan because they're greedy, and that is the same greediness that drove them to be so successful. So naturally the good greed/motivation maybe shouldn't be taken seriously because some douche from Connecticut wants to make $100,000,000 and not pay another $100,000 in taxes because he's just a greedy egotistical maniac. Is that possible?
  
  Now I didn't say our tax structure is perfect, or even good. But at the most fundamental levels I think you would need to recognize the existence of society, and that "every man for himself" idea Republicans like to tout might be flawed because it doesn't behoove the society as a whole. The uber rich can pay more and live perfectly enjoyable lives, they don't need to play keeping up with the Joneses with bank account sizes.
  
  
  ....of course all of this would be great if we had a federal government that was smaller and more efficient and knew what the fuck it was doing.

  
  Your last statement sums up the problem in this country and why the tax system is so fucked up. If the feds would exponentially reduce spending, it wouldn't be nearly the issue it is today. Sure people would still bitch, but it would be a dull grumble. The government should tax for the essentials at the federal level, such as defense spending.
• I Wear Pants

  Tobias Fünke;669627 wrote:I didn't say the system today is what I like. Any progressive tax setup that lessens what amount you actually put in your pocket after taxes needs to go, no doubt. But it is not punishing them for being successful, or they wouldn't do it. Maybe they bitch and moan because they're greedy, and that is the same greediness that drove them to be so successful. So naturally the good greed/motivation maybe shouldn't be taken seriously because some douche from Connecticut wants to make $100,000,000 and not pay another $100,000 in taxes because he's just a greedy egotistical maniac. Is that possible?
  
  Now I didn't say our tax structure is perfect, or even good. But at the most fundamental levels I think you would need to recognize the existence of society, and that "every man for himself" idea Republicans like to tout might be flawed because it doesn't behoove the society as a whole. The uber rich can pay more and live perfectly enjoyable lives, they don't need to play keeping up with the Joneses with bank account sizes.
  
  
  ....of course all of this would be great if we had a federal government that was smaller and more efficient and knew what the fuck it was doing.

  So that we could take our new, more efficient tax system (one can dream) and spend the taxes on things that actually better our country and make conducting business here better. Like roads and telecommunications and high speed rail (no, not everywhere, stop freaking out).
  
  I'd hardly call what we spend on defense "essential". We spend like the stereotypical women in a shoe store on defense.
• BoatShoes

  Writerbuckeye;669553 wrote:The class warfare mongers (i.e. liberals) won't allow it. They will cry that it's unfair to the poor and favors the rich, even though both are paying an equal percent of their income.

  
  They aren't paying an equal amount in terms of marginal value of dollars. To paraphrase Steve Martin, if you've got a dollar and you take a quarter, you've got $.75 left. If you've got a thousand dollars and you take a quarter, you've still got a thousand dollars. And, on top of that, larger income earners and wealthier individuals have more assets that demand protection from the state. As it is the case that a larger amount of the tax burden falls on middle class income earners as a tax rate flattens, you would literally have Joe in Accounting subsidizing the defense of his boss' assets, etc.
• O-Trap

  

  I Wear Pants;669604 wrote:You know very well that 20% to a person making $20k a year is a lot more than 20% to a person making $1 million a year. It might mathmatically be the same but if you look at what it actually means it isn't even close to the same. Even Friedman realized this.

  That's why I think a flat retail tax would be better suited.
  
  Those who can afford little buy little, and are therefore taxed little.
  
  Those who can afford much typically buy much, and are therefore taxed much.
  
  Same percentage in both instances, and I suppose that the more wealthy could scrimp like they're poor to avoid paying much in taxes, but I'm willing to bet that is, and would continue to be, the acute exception to the rule.
  

  I Wear Pants;669620 wrote:A flat tax would end up taxing away money the poor would spend on necessities, you and I would spend on comfort type things, and would really only take away from further investments from the rich.
  
  Which is also the reason I don't think a consumption based tax would work well because the poor only purchase consumption items because that's what things that are necessities are so it would end up taxing them far more than people who are more well off.
  
  The tax structure now sucks and needs simplified and redone, but I don't think a flat tax is the way to go.

  With consumption tax, on a percentage basis, we'd be taxed equally. On an amount amount basis, we'd be taxed less (we'd be buying less).
• O-Trap

  

  BoatShoes;669809 wrote:To paraphrase Steve Martin, if you've got a dollar and you take a quarter, you've got $.75 left. If you've got a thousand dollars and you take a quarter, you've still got a thousand dollars.

  
  That's not a flat percentage, though. That's a flat amount. As you've pointed out, that's a significant difference.
• Manhattan Buckeye

  I Wear Pants;669620 wrote:A flat tax would end up taxing away money the poor would spend on necessities, you and I would spend on comfort type things, and would really only take away from further investments from the rich.
  
  Which is also the reason I don't think a consumption based tax would work well because the poor only purchase consumption items because that's what things that are necessities are so it would end up taxing them far more than people who are more well off.
  
  The tax structure now sucks and needs simplified and redone, but I don't think a flat tax is the way to go.

  
  A flat tax does not have to be flat from dollar zero - yet progressive types fail to listen to this point. Everyone (and I mean EVERYONE, whether they make $20,000, or $2,000,000) could receive an "X" living deduction (for example, $35,000), and the flat rate applies to all amounts above that. That way everyone gets their first $35,000, or whatever, tax free to live - so we don't worry about poor people not being able to afford necessities, if is "fair" in that everyone gets the deduction, and it would obviously simplify the structure.
• O-Trap

  

  Manhattan Buckeye;669828 wrote:A flat tax does not have to be flat from dollar zero - yet progressive types fail to listen to this point. Everyone (and I mean EVERYONE, whether they make $20,000, or $2,000,000) could receive an "X" living deduction (for example, $35,000), and the flat rate applies to all amounts above that. That way everyone gets their first $35,000, or whatever, tax free to live - so we don't worry about poor people not being able to afford necessities, if is "fair" in that everyone gets the deduction, and it would obviously simplify the structure.

  
  I would lower the amount, but I like this.