REAL WORLD EVENT DISCUSSIONS

National Sales tax?

POSTED BY: CONNORFLYNN
UPDATED: Monday, December 27, 2004 01:04
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Wednesday, August 11, 2004 9:11 AM

CONNORFLYNN


Okies, I'm a bit confused here. To be honest this is the first I've seen of this. Anyone know anything about this? If you do , maybe you can answer a couple of my questions..

My questions are -

A) Does this also eliminate state income taxes?

B) Does this flat tax also allow for tax shelters and deductions? In other words par example..

If Richard Cranium makes $2,000,000 a year and has to pay 15% flat tax which would equal $300,000 bringing him to $1,700,000 in useable income. Does he get write offs and what not that allow him to instead of paying $300,000 in taxes pay say a fraction of that? Or are the days of tax shelters over?

Whereas Bubba "the sheep" Luvver who makes $21,000 a year and has to pay 15% flat tax which would equal $3,150 bringing him to $17,850 in useable income, yet doesn't have any savings or investments because he has to live week to week on his paycheck without the ability to write off or shelter any of his tax dollars.

I think I will definitely break out my old college waterbong if writeoffs and tax shelters are still allowed.

C) How does this affect the social security taxes?

Quote:

From CNN : Bush says national sales tax worth considering


NICEVILLE, Fla., Aug 10 (Reuters) - President George W. Bush said on Tuesday that abolishing the U.S. income tax system and replacing it with a national sales tax was an idea worth considering.

"It's an interesting idea," Bush told an "Ask President Bush" campaign forum here. "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 reelection.

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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Wednesday, August 11, 2004 9:19 AM

QUICKSAND


Bush thinks lots of things are worth looking at. Like, dictating who can get married and who can't, or, say.... those darn Iraqi WMD's.

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Wednesday, August 11, 2004 9:37 AM

CONNORFLYNN


Quote:

Originally posted by Quicksand:
Bush thinks lots of things are worth looking at. Like, dictating who can get married and who can't, or, say.... those darn Iraqi WMD's.



Lol thanks for an on topic answer.

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Wednesday, August 11, 2004 10:14 AM

KELLAINA


This is all I've read about it (and keep in mind that I'm not even American) but I would assume that a national sales tax would be similar to Canada's GST (goods and services tax). We pay 7% on almost every dollar we spend as well as income tax and a provincial/territorial sales tax.

Anyone whose income falls under a certain level gets a GST rebate 4 times a year. But its like anything else, it tends to affect the poor more than the rich since they have less money to begin with.

As for the flat tax, I have no idea... although I would imagine deductions and shelters would remain. The bad thing about heavily taxing the rich is that they tend to move their money or other holdings out of the country to avoid paying taxes at all. Plus, I would imagine that Bush wouldn't want to hand the democrats the next election

Anyway, that's just my 2 cents...





If nothing we do matters, then all that matters is what we do. -"Angel"

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Thursday, August 12, 2004 5:45 AM

GEEZER

Keep the Shiny side up


Here's a recent National Review article on the National Sales Tax:

http://www.nationalreview.com/nrof_bartlett/bartlett200408090847.asp

It was just on our clip service at work because it mentioned the IRS, but seemed like good timing in relation to your questions.

"Keep the Shiny side up"

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Thursday, August 12, 2004 6:50 AM

ARAWAEN


A. It doesn't eliminate state income tax only federal.

B. There are no shelters or deductions (though some items may be exempt, such as food is under state sales tax.)

C. Not sure what you mean by social security taxes. The collection of social security (taken from your paycheck) or taxes on actual social security payments? It wouldn't affect the former, but the latter should be free of tax.

The supporters tend to suggest a 26% sales tax would be necessary to replace the income tax. Others have said at least 30% and probably with budget cuts. Budget cuts would mean more economic burden on states which would raise their assorted taxes to compensate.

Overall it helps the rich and hurts the poor, as in the rich would pay less taxes, but the poor would pay more. It would probably also lead to a substantial black market (just think of the problems we have with cigarettes).

It seems an unlikely switch because taxes are used so frequently in an attempt to control society (flat taxes mean no more tax incentives) and I doubt politicians are going to willingly give up that kind of power.

While the neo-cons like the idea, their popular support comes from people who I think misunderstand how income taxes works (not to say that the IRS and income tax isn't in need of serious reform).

Barring deductions, incentives and shelters, every American pays the same tax rate on a given amount of money. A person that makes $20,000 and a person that makes $40,000 pay the same rate on the first $20,000 [figures are totally arbitrary]. If a tax bracket break raises the rate for the second individual, he only pays it for the amount above that limit. The first person doesn't pay that rate because he didn't make any money above the break. The graduated income tax system is not that the rich pay more, but that every person has to pay more out of what is disposable income and the more disposabe it becomes the higher percentage of it you are to contribute to the community's coffers. At least that is how I understand the system to work. The special cases (i.e. deductions, incentives, and shelters) are what makes it so immensely complicated.

EDIT: Apparantly the rates I read were drastically low, given the article in the National Review. If those are correct, it is even more unlikely to ever happen.

Arawaen



Um, I'm lost. Uh, I'm Angry. And I'm Armed.

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Thursday, August 12, 2004 8:53 AM

CONNORFLYNN


Quote:

Originally posted by Arawaen:
A. It doesn't eliminate state income tax only federal.



hehe


Quote:

B. There are no shelters or deductions (though some items may be exempt, such as food is under state sales tax.)


Interesting.

Quote:

C. Not sure what you mean by social security taxes. The collection of social security (taken from your paycheck) or taxes on actual social security payments? It wouldn't affect the former, but the latter should be free of tax.


Yeah, I meant payroll deductions. However I often wonder why folks who are collecting unemployment insurance are taxed on the benefits, it's kind of like throwing salt in the wounds if you ask me. As it is in NY..if you are Unemployed you are paid on a 4 day week versus hourly (in other words, you don't want to get a job that is less then 4 days a week or you might as well forget about collecting any benefits) I also believe you get paid 50% of your income up to I believe $425 a week., then taxed on 50% of your normal income.

Quote:

The supporters tend to suggest a 26% sales tax would be necessary to replace the income tax. Others have said at least 30% and probably with budget cuts. Budget cuts would mean more economic burden on states which would raise their assorted taxes to compensate.


**boggle**, thats insane. I consider myself lower middle class. If I had to pay 26% plus state and SS and U.I. and Medicare etc..etc.., I wouldn't have a whole hell of a lot to take home.

Quote:

Overall it helps the rich and hurts the poor, as in the rich would pay less taxes, but the poor would pay more.


I could see that.

Quote:

It would probably also lead to a substantial black market (just think of the problems we have with cigarettes).

It seems an unlikely switch because taxes are used so frequently in an attempt to control society (flat taxes mean no more tax incentives) and I doubt politicians are going to willingly give up that kind of power.

While the neo-cons like the idea, their popular support comes from people who I think misunderstand how income taxes works (not to say that the IRS and income tax isn't in need of serious reform).

Barring deductions, incentives and shelters, every American pays the same tax rate on a given amount of money. A person that makes $20,000 and a person that makes $40,000 pay the same rate on the first $20,000 [figures are totally arbitrary]. If a tax bracket break raises the rate for the second individual, he only pays it for the amount above that limit. The first person doesn't pay that rate because he didn't make any money above the break. The graduated income tax system is not that the rich pay more, but that every person has to pay more out of what is disposable income and the more disposabe it becomes the higher percentage of it you are to contribute to the community's coffers. At least that is how I understand the system to work. The special cases (i.e. deductions, incentives, and shelters) are what makes it so immensely complicated.

EDIT: Apparantly the rates I read were drastically low, given the article in the National Review. If those are correct, it is even more unlikely to ever happen.

Arawaen



Hehe.. disposable income. I have forgotten what that felt like LOL. I hope you're right. Flat taxes scare me. I don't feel quite as foolish for being against the idea (without being a tax specialist)now LOL.

Thanks for the Link, Geezer and the info Arawaen. Constructive discussion is always pleasant hehe.




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Thursday, August 12, 2004 9:45 AM

ARAWAEN


I 'liked' the 4-day week thing too. Not quite as charming as only counting those people getting benefits as being unemployed, but definitely up there are the list of the government is a bozo list.

"Hey, if we lower the classification of poverty by $5,000, look how many people are no longer poor."

Overall, I would rather have a single income tax and get rid of all the sales tax, land tax, school tax, gas tax, telephone tax, registration fee, electricity surcharge, etc. Right now the trend is to lower the federal income tax but then increase these other taxes.

I have never liked the concept of land-based tax, always struck me that the government owned the land (despite claims of private property) and I had to pay them rent or they would evict me.

Arawaen

Um, I'm lost. Uh, I'm Angry. And I'm Armed.

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Thursday, August 12, 2004 12:17 PM

CONNORFLYNN


Quote:

Originally posted by Arawaen:

I have never liked the concept of land-based tax, always struck me that the government owned the land (despite claims of private property) and I had to pay them rent or they would evict me.

Arawaen




Theres a story in the news now about a couple who owed $23,000 in back real estate taxes. His wife was cancer ridden and they were trying to deal with it. The state foreclosed and sold the property for in excess off $500,000. The couple recieved none of the excess income. The state kept it all. So I agree with your statement. We lease the land whether we think we do or not.

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Monday, December 27, 2004 1:04 AM

FARSCAPEPKWARS


something may happen next year, huge US debts, a weak and unsteady dollar, rising costs of Iraq, the cuts will have to come somewhere...

...he made a promise to cut the deficits

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