National Retail Sales Tax

• gut

  I Wear Pants;670183 wrote:I would be okay with that I guess. If done right it could certainly be more simple than the mess we now have. And leaving out food and energy/utilities takes away at least some of the "it harms the poor" argument.

  
  Oh, I'm not talking as a replacement. The govt cannot collect enough revenues on a sales tax to replace the income tax. No country does that. Don't get me started on the Fair Tax. I'm talking a sales tax in addition (or better, in trade for lower income taxes), to raise some additional revenues as opposed to further complicating the current mess. There are many, many arguments favoring a consumption based tax. Keep it clean and simple, we don't need more bureacracy and entitlements.
• O-Trap

  

  I Wear Pants;670181 wrote:I need to start making it more clear when I'm making a general statement that the quoted post made me think of and not a direct response to the quote.
  
  He did not say that poor people are lazy/stupid that is correct. Though I've seen/read/heard many people espouse that idea.

  Gotcha. I do from time to time as well, hence my following statement.
  

  O-Trap;670105 wrote:Neither is acceptable. Period.
  
  Anyone who truly believes either one is incredibly ignorant, and their opinion on the matter is a detriment to society.

• gut

  O-Trap;669935 wrote:Actually, I'd be willing to bet they spend more than 80% of the yearly total spent on consumer goods and services. I'd be interested in seeing the statistics on this.

  That would be interesting, but I suspect you are incorrect because I guess food and energy make up by far the largest portion and the wealthy really can't consumer disproportionately more (they do, but it can't be many multiples). And services make up something like 75% of GDP and I'm not sure how much more of that the wealthy can consume (i.e. they can't have need to call the plumber that much more).
  
  The wealthy have about 80% of assets maybe (which includes savings). But the bulk of their large purchases are going to housing (often buying existing property) and other rare assets such as paintings, classic cars, etc..things that aren't part of GDP because it's not production of NEW goods and services. In order for them to consume more than 80% of the pie, they'd have to be saving an equal percent (or less) of their incomes, which of course we know is not true as they save & invest a much greater portion of their income.
• O-Trap

  

  gut;670474 wrote:That would be interesting, but I suspect you are incorrect because I guess food and energy make up by far the largest portion and the wealthy really can't consumer disproportionately more (they do, but it can't be many multiples). And services make up something like 75% of GDP and I'm not sure how much more of that the wealthy can consume (i.e. they can't have need to call the plumber that much more).
  
  The wealthy have about 80% of assets maybe (which includes savings). But the bulk of their large purchases are going to housing (often buying existing property) and other rare assets such as paintings, classic cars, etc..things that aren't part of GDP because it's not production of NEW goods and services. In order for them to consume more than 80% of the pie, they'd have to be saving an equal percent (or less) of their incomes, which of course we know is not true as they save & invest a much greater portion of their income.

  
  I suppose my point is more about sustainability. As such, I care less about flat assets than I do yearly income, and I'd be willing to bet that the yearly income of the top 10% is not 80% of the overall income. I WOULD be willing to bet that the same top 10% spends on a higher rate of the overall percentage of spending than they make as part of the overall spending.
  
  That might have sounded confusing.
  
  Here, I found this. It kind of explains what I mean.
  
  http://affluenceresearch.org/about-us/the-importance-of-the-affluent-market/
  
  According to this (which, admittedly, I've done little background checking into), the top 10% make about 35% of the annual income of the whole. Yet they spend almost 50%. They're annually putting more into the market than they're getting out. One might think they'd spend more, but as that article does say (which makes sense), they tend to be savers over spenders as a rule.
  
  That makes sense, as I recently saw a study done on a wide sample of people who annually made seven figures or more. They were looking at the average million-earner's vehicle. It was a Ford F-150, which seems reserved given the wealth available, but plays toward that same notion that they aren't extravagant spenders.
• gut

  O-Trap;670520 wrote: the top 10% make about 35% of the annual income of the whole. Yet they spend almost 50%.

  
  That makes sense, although I wonder if they are counting capital gains in their income figures, which is probably the lion's share of the wealthy's income.. No one can complain about a sales tax done right, well beyond the govt taking more of our money. Not advocating 10%, but in my view $2 tax on a $20 pair of jeans is no more or less fair than $10 on a $100 pair of jeans. If you can't afford the $10, then you can't afford the jeans. I don't want to take food off someone's table, but if the tax makes that smartphone unaffordable for you that's probably a good thing.
• Tobias Fünke

  

  I Wear Pants;670066 wrote:People cry about class warfare and then say things like this.
  
  Saying that poor people are lazy/stupid is just as bad of a generalization as thinking that all rich people are greedy, cheating, loophole finding deviants.

  
  It's pretty hard to deny that the average IQ of someone on welfare and the average IQ of someone making six figures a year is not very close. There are plenty of poor people who are lazy and/or stupid. One you can control, one you can't. If you're dumb you can work harder, if your lazy you should hopefully be a genius or shit isn't going to turn out well for you.
  
  I think the best thing that we can do is mandate school attendance be taken and tie it to welfare benefits (whether it be increases for attending or decreases for not). Yes, I'm being a bit of a socialist (lower case "s") in the sense that as a society, if we're paying for your shit, you're going to freakin' go to the school that we also pay for. I coached at Toledo Libbey, they went from a 60% attendance to a >90% attendance over five or so years because they didn't tolerate absences. Toledo Scott currently has <50% attendance on any given day. It is unacceptable. I'd tie welfare to grades, tutoring programs attendance, etc.
  
  If we going to pay for your heating and food, and we also fund your schools, you're going to freakin' correctly parent your child or there will be consequences.
  
  
  Now I understand that had nothing to do with taxes, but I guess how it is spent is just as important as how it is taxed. Fix the fuckin' government before you fix the taxes, otherwise it's a bit useless in my opinion.
• Footwedge

  I think that a national sales tax, if implemented correctly, would be an excellent means of cost savings to the taxpayer. This is the way to go in putting in place a "fair tax". The federal sales tax should be exempt from prerishables, heating, clothing and such.
  
  The progressiveness could be maintained by the Congress levying the appropriate percentages as it relates to "wants" vs. "needs"....on a sliding scale basis.
  
  But of course, none of this will ever come to fruition...because the tax industry has their own lobby...and making cuts in this fashion will be bought off.
• Footwedge

  To the string of posts...regarding meritocracy. Yup...smarter people make more than dumber people....good looking people make more than uglies. I would also say that taller peopler make more than short ones. Material successes in life are both genetic and hereditary. Who says life is fair?
  
  I know for a fact....had it not been for having the greatest parents....an issue whereby, obviously, I had no say in...I'd have turned out to be a total piece of shit.
  
  In relative terms though, no matter what cards you are dealt, you can improve youir lot in life by working hard.
• CenterBHSFan

  

  Footwedge;672720 wrote:In relative terms though, no matter what cards you are dealt, you can improve youir lot in life by working hard.

  But Footie,
  
  Haven't you learned by now that it's not fair for somebody to have to work that much harder for a few bucks than somebody else? Haven't you learned by now that it's not fair that somebody might work less hard for more money than somebody else? Haven't you learned by now that it's just more fair to take somebody else's money to give it to others?
  
• fan_from_texas

  Footwedge;672720 wrote:To the string of posts...regarding meritocracy. Yup...smarter people make more than dumber people....good looking people make more than uglies. I would also say that taller peopler make more than short ones. Material successes in life are both genetic and hereditary. Who says life is fair?
  
  I know for a fact....had it not been for having the greatest parents....an issue whereby, obviously, I had no say in...I'd have turned out to be a total piece of shit.
  
  In relative terms though, no matter what cards you are dealt, you can improve youir lot in life by working hard.

  
  
  Good post.
  
  When I think of a meritocracy, I think that people who are smart and work hard have better odds of success than people who are dumb and/or lazy. Plenty of smart/hardworking people fail, and plenty of dumb/lazy people succeed, but that's because luck plays a big role in marginal outcomes. I don't believe for a second that to have a true meritocracy we have to levelize genetics--that starts sounding awfully . . . Bergeronian.
• Cleveland Buck

  

  Replacing the income tax with a national sales tax would be great for this country even if it took some time to adjust to it. It would encourage people to earn more money, because they would get to keep all of it. With rebates you could make the system progressive. By eliminating income taxes on capital gains you would make huge amounts of investment capital available to companies that want to expand. This way you would even collect taxes on people who make money under the table or selling drugs or whatever. The only aspect that causes me to think about it is that you can discourage consumer spending with a sales tax, although you can encourage spending when everyone is looking at a bigger paycheck. I've been a fan of this plan since I first saw it.
  
  I would not be in favor of a sales tax along with the income tax. Washington has their greedy, despicable hands in too many things already. Pick one or the other.
• BGFalcons82

  

  Cleveland Buck;672852 wrote:Replacing the income tax with a national sales tax would be great for this country even if it took some time to adjust to it. It would encourage people to earn more money, because they would get to keep all of it. With rebates you could make the system progressive. By eliminating income taxes on capital gains you would make huge amounts of investment capital available to companies that want to expand. This way you would even collect taxes on people who make money under the table or selling drugs or whatever. The only aspect that causes me to think about it is that you can discourage consumer spending with a sales tax, although you can encourage spending when everyone is looking at a bigger paycheck. I've been a fan of this plan since I first saw it.
  
  I would not be in favor of a sales tax along with the income tax. Washington has their greedy, despicable hands in too many things already. Pick one or the other.

  
  I completely agree with all of this.
• dwccrew

  

  BGFalcons82;672938 wrote:

  Cleveland Buck;672852 wrote:Replacing the income tax with a national sales tax would be great for this country even if it took some time to adjust to it. It would encourage people to earn more money, because they would get to keep all of it. With rebates you could make the system progressive. By eliminating income taxes on capital gains you would make huge amounts of investment capital available to companies that want to expand. This way you would even collect taxes on people who make money under the table or selling drugs or whatever. The only aspect that causes me to think about it is that you can discourage consumer spending with a sales tax, although you can encourage spending when everyone is looking at a bigger paycheck. I've been a fan of this plan since I first saw it.
  
  I would not be in favor of a sales tax along with the income tax. Washington has their greedy, despicable hands in too many things already. Pick one or the other.

  I completely agree with all of this.

  
  As do I.
• gut

  Cleveland Buck;672852 wrote: The only aspect that causes me to think about it is that you can discourage consumer spending with a sales tax

  
  True, and sales tax would have to be so high that it would be crushing to consumer spending. And you never get to a sufficient level in the first place, because empirical evidence and research suggests a sales tax higher than the mid-teens becomes very marginally productive because evasion and [legal] avoidance/minimization tactics start to have large incentives/returns. No matter how you tax, the more you tax the more people are going to seek out ways to minimize that tax, legal and otherwise. This is why a sales tax can never replace the income tax but does have value as a supplementary form of taxation. It's also more palatable to other forms of tax if you remove food & other necessities because most will find it fair to pay the same tax on that big screen tv regardless of income levels.
  
  Forget rebates. More govt bureacracy, more govt waste. The IRS is already a ginormous waste, and a rebate program would just become a large, unwieldy division of the IRS.
• O-Trap

  

  gut;673955 wrote:True, and sales tax would have to be so high that it would be crushing to consumer spending.

  Not necessarily.
  
  The sales tax WOULD be high based on our current view of such a thing, but that's because we perceive sales tax in light of our take-home income budget.
  
  Those who have the money to purchase things could still do so. Those who don't have enough money to afford anything but the essentials won't be taxed so heavily ... or at all.
  
  The model, at least the one I've seen, is projected to function very much like an income-based "tax bracket" model, where the higher earners will inevitably pay a higher percentage in taxes, based on the fact that they have the ability to consume more. Essentially, the difference is, people will have a choice in their taxation.
  

  gut;673955 wrote:No matter how you tax, the more you tax the more people are going to seek out ways to minimize that tax, legal and otherwise.

  To be sure. I would contend, however, that a consumer tax makes evasion more difficult. Essentially your only options for evasion are black market purchasing and living well below your means.
  
  With income tax, evasion is far easier as so much, especially in terms of write-offs, ends up functioning as an "honor system." No offense to the public, but I don't trust Average Joe to not cheat on his taxes as a default. And as it currently exists, that's a VERY easy thing to do.
• dwccrew

  

  gut;673955 wrote:True, and sales tax would have to be so high that it would be crushing to consumer spending. And you never get to a sufficient level in the first place, because empirical evidence and research suggests a sales tax higher than the mid-teens becomes very marginally productive because evasion and [legal] avoidance/minimization tactics start to have large incentives/returns. No matter how you tax, the more you tax the more people are going to seek out ways to minimize that tax, legal and otherwise. This is why a sales tax can never replace the income tax but does have value as a supplementary form of taxation. It's also more palatable to other forms of tax if you remove food & other necessities because most will find it fair to pay the same tax on that big screen tv regardless of income levels.
  
  Forget rebates. More govt bureacracy, more govt waste. The IRS is already a ginormous waste, and a rebate program would just become a large, unwieldy division of the IRS.

  Sales tax would not have to be so high. Government spending would have to be reduced. Also, if the income tax is eliminated in favor of a consumption tax, this could mean the end of the IRS (which would save billions a year).
  
  I don't see people spending less because of a consumption tax. People will spend regardless and possibly more if the income tax is eliminated and they have bigger paychecks to spend the money. As Otrap pointed out, with a consumption tax, it is much more difficult to cheat taxes, thus eliminating the need for the IRS to audit people and wasting our tax dollars.
• Cleveland Buck

  

  The thing is, if you eliminate the income tax on everyone including corporations, and you replace it with a 20% sales tax, many companies, without the 35% tax burden, will have room to lower their prices if demand really gets low because of the sales tax, so prices may only go up 10-15% (including the tax), which when you consider people would be getting much bigger paychecks, might not dampen demand that much at all. And even if it does reduce consumer spending a little, that isn't necessarily a bad thing. Americans have no savings, and this might encourage them to save their money and stop living on credit.
• gut

  Number one reason sales tax fails: The higher it goes, the more incentive to buy used goods and blackmarket goods - when you buy my old smartphone or jeans, it's pretty hard to enforce a tax on that transaction. Or, you buy my used car and pay me cash for a large chunk so I can under report the sales price (and so, instead, a new car is not bought). The wage and price arguments are dubious, at best, and there are a lot of ways things could go that would be very bad.
  
  Don't get me started. I see arguments made by Fair Tax here. You can write a book discussing the flaws with that research and findings. No respectable economist supports that, outside really of Lawrence Kotlikoff who's research it is based on or I should say who's research was misused to support it (Kotlikoff himself really only favors it as a means of retro-actively taxing savings to bail out SS and Medicaid).
  
  The US GDP is some 10 trillion. Most economists don't expect a national sales tax much above 15% to be feasible because of diminishing returns from evasion and avoidance, which only means the tax has to be higher, creating an even greater incentive for more evasion and avoidance. And 15% of 10 trillion is only 1.5 trillion, well short of funding govt spending.
• gut

  dwccrew;674104 wrote:this could mean the end of the IRS (which would save billions a year).

  
  The most ridiculous and laughable argument made by Fair Tax. Who is going to collect all this sales tax - hundreds of more transaction than an income tax return? Who is going to go around auditing store records to ensure compliance? And, god forbid, you have prebates - who is going to calculate and distribute those? You don't "eliminate" the IRS you just replace it with a larger govt bureaucracy by another name.
• Manhattan Buckeye

  "Who is going to collect all this sales tax - hundreds of more transaction than an income tax return?"
  
  Who collects income tax now? The burden is on employers to make the necessary withholdings for federal, state (to the extent there is a state income tax) and FICA. Likewise the burden is on businesses to collect state/local tax on sales. Are businesses doing a poor job of collecting state/local taxes - if they are I haven't noticed it!
• gut

  Manhattan Buckeye;674487 wrote:"Who is going to collect all this sales tax - hundreds of more transaction than an income tax return?"
  
  Who collects income tax now? The burden is on employers to make the necessary withholdings for federal, state (to the extent there is a state income tax) and FICA. Likewise the burden is on businesses to collect state/local tax on sales. Are businesses doing a poor job of collecting state/local taxes - if they are I haven't noticed it!

  
  If you are self-employed or have substantial other income you have to self-report/pay quarterly prepayments (and a huge portion of the personal income tax comes from those types, think small business owner). You can't separate collection from enforcement here, and if you are talking about replacing income tax with a sales tax that increase transactions and collection points many-fold I 100% guarantee you that the IRS is evolving into a larger organization to audit and enforce the sales tax system, particularly when you are going to add a national sales tax on top that is more than double what most state sales tax already is. And I 100% guarantee you will see an increase in cash sales, especially for services, that will be kept off the books. And all of that is why the IRS, or whatever you choose to call it, doesn't go away but necessarily becomes bigger.
• Manhattan Buckeye

  "And I 100% guarantee you will see an increase in cash sales, especially for services, that will be kept off the books."
  
  Most services aren't taxed anyway. If you hire a contractor to renovate your kitchen, an attorney to draft a will, or an accountant to prepare your return, chances are it isn't a taxable transaction.
  
  I suppose the rationale is that there isn't true consumption. We're renovating our master bath and kitchen, the appliances we've purchased are certainly subject to the local tax, but the labor isn't.
  
  At any rate, are cash purchases for goods (sales tax) "off the books" that much different than cash purchases for services (income tax for the provider) "off the books?"
• BGFalcons82

  

  gut;674472 wrote:The most ridiculous and laughable argument made by Fair Tax. Who is going to collect all this sales tax - hundreds of more transaction than an income tax return? Who is going to go around auditing store records to ensure compliance? And, god forbid, you have prebates - who is going to calculate and distribute those? You don't "eliminate" the IRS you just replace it with a larger govt bureaucracy by another name.

  
  This is actually the brilliance of the fairtax.org argument. Sales tax is ALREADY collected. The only thing the IRS would have to do would be to collect it from the states, whom already have mechanisms, systems, and abilities to charge and collect sales tax. It's easy as pie!! The IRS would have nothing to do against the citizens interests any more. No more audits. No more agents. No more intimidation. No more intrusion into our lives. No more searches and seizures based on their best guesses. No more lobbying. No more tax attorneys. No more tax accountants. No more H & R Block. No more!!!
  
  We have GOT to get our system of taxation under control. Have you read the tax code? Do you understand it? DOES ANYONE ON THIS PLANET understand it? The answer is NO. How in the fuck are we required by law to fill out forms and compute taxes in a system that is the definition of corruption? It must be fixed and made easy to understand, easy to implement, easy to collect, and easy on the people. What we have now is so twisted, maligned, complex, underhanded, and corrupt that it's beyond tweaks and repairs. Trash it. It sucks. Literally.
• O-Trap

  

  BGFalcons82;674691 wrote:This is actually the brilliance of the fairtax.org argument. Sales tax is ALREADY collected. The only thing the IRS would have to do would be to collect it from the states, whom already have mechanisms, systems, and abilities to charge and collect sales tax. It's easy as pie!! The IRS would have nothing to do against the citizens interests any more. No more audits. No more agents. No more intimidation. No more intrusion into our lives. No more searches and seizures based on their best guesses. No more lobbying. No more tax attorneys. No more tax accountants. No more H & R Block. No more!!!
  
  We have GOT to get our system of taxation under control. Have you read the tax code? Do you understand it? DOES ANYONE ON THIS PLANET understand it? The answer is NO. How in the fuck are we required by law to fill out forms and compute taxes in a system that is the definition of corruption? It must be fixed and made easy to understand, easy to implement, easy to collect, and easy on the people. What we have now is so twisted, maligned, complex, underhanded, and corrupt that it's beyond tweaks and repairs. Trash it. It sucks. Literally.

  
  The scariest part is, the people in charge of RUNNING the damn thing don't even understand it. That doesn't work out for anyone.
  
  Talk about evasion? How many people do you know that cheat on their taxes? MOST the people I know do, and those that don't cheat could if they didn't have the ethical conviction not to.
  
  It's a joke how many people are able to cheat the system as it is. Might there be an increase in black market purchasing? Sure. Do you know the problem with that? The buyer assumes all the risk on the illicit market. You buy something that doesn't work? Who are you going to sue? Who are you going to ask for a refund? It was an under-the-table purchase, and as far as taking it to court, you won't have grounds to sue.
  
  It IS correct that the higher you raise taxes, the more people will try to evade them. However, that principle applies no matter HOW you try to tax.
• dwccrew

  

  Cleveland Buck;674149 wrote:The thing is, if you eliminate the income tax on everyone including corporations, and you replace it with a 20% sales tax, many companies, without the 35% tax burden, will have room to lower their prices if demand really gets low because of the sales tax, so prices may only go up 10-15% (including the tax), which when you consider people would be getting much bigger paychecks, might not dampen demand that much at all. And even if it does reduce consumer spending a little, that isn't necessarily a bad thing. Americans have no savings, and this might encourage them to save their money and stop living on credit.

  
  For some reason I don't have much faith in people saving their money. I think that if they see bigger paychecks (if the Federal Income tax is eliminated) then they will spend just as much or more, collectively. I don't think a consumption tax would sway that many people. Maybe the fiscally conscience people on this site, but the US as a whole, I don't think so IMHO.
  

  BGFalcons82;674691 wrote:

  gut;674472 wrote:The most ridiculous and laughable argument made by Fair Tax. Who is going to collect all this sales tax - hundreds of more transaction than an income tax return? Who is going to go around auditing store records to ensure compliance? And, god forbid, you have prebates - who is going to calculate and distribute those? You don't "eliminate" the IRS you just replace it with a larger govt bureaucracy by another name.

  This is actually the brilliance of the fairtax.org argument. Sales tax is ALREADY collected. The only thing the IRS would have to do would be to collect it from the states, whom already have mechanisms, systems, and abilities to charge and collect sales tax. It's easy as pie!! The IRS would have nothing to do against the citizens interests any more. No more audits. No more agents. No more intimidation. No more intrusion into our lives. No more searches and seizures based on their best guesses. No more lobbying. No more tax attorneys. No more tax accountants. No more H & R Block. No more!!!
  
  We have GOT to get our system of taxation under control. Have you read the tax code? Do you understand it? DOES ANYONE ON THIS PLANET understand it? The answer is NO. How in the fuck are we required by law to fill out forms and compute taxes in a system that is the definition of corruption? It must be fixed and made easy to understand, easy to implement, easy to collect, and easy on the people. What we have now is so twisted, maligned, complex, underhanded, and corrupt that it's beyond tweaks and repairs. Trash it. It sucks. Literally.

  
  
  Precisely BG, you are on the mark. You may not totally eliminate the IRS, but you could drastically reduce the size of it as an entity. Sales tax is already collected by businesses. Many have it set up to automatically deposit into an account it has with with state. All the IRS or whatever agency that would be in charge at this point needs to do is make sure the deposits are still going through, like they do now.