If we view tax deductability as a government subsidy, then we should properly classify a lot of other things as government subsidized (home ownership, charitable giving, organized religion, etc).
One attractive aspect of a national retail sales tax (NRST, aka the "Fair Tax") is that it reduces government's role in encouraging/discouraging various behaviors.
How about this: We have a NRST just like proposed in the present legislation:
- Abolish the income tax and the SS tax (the most regressive tax of all)
- Tax all purchases of services and new products at 23%. No exemptions/exceptions.
- A prebate to all families equal to the 23% of the poverty level income for that family size (e.g The HHS poverty level for a family of four is $20,000 per year. Every family of four gets a prebate of 6072 per year ($506 per month)) without need to file a return, etc.
- Now, the health care portion:
-- Health care services and health insurance, whether purchased by the employer or the employee, would be subject to the same 23% tax. Employers would get no deduction, so there's no advantage to providing health care through employers (anticipated effect: Employees receive a boost in salaries equal to the employer's previous cost of providing this coverage.
-- With employer sponsored health care out of the mix and everyone conscious of the actual cost of the stuff, it would open the way for more efficient means of providing coverage.
e.g. 1) Private individual purchase of insurance, with government susidized care of the indigent: Government could help insure an efficient market by mandating standardized plans (say 5-10 standard packages) and allowing consumers to compare prices and buy what they want. Care of the indigent is as it is today, or perhaps they are assigned to "Package 3"coverage, with premiums paid by the taxpayer. This achieves universal care, keeps freedom of choice for those who can afford it. Cons: Paperwork and inefficiencies caused by private insurance layer.
or
2) A universal taxpayer-funded universal "baseline" with purchased add-on coverage. The baseline coverage might be paid from a reduction in the prebate (appropriate, since rich or poor get the same baseline coverage) or an increase in the sales tax rate above 23%. It would be best to make the cost of this coverage explicit, so everyone realizes it isn't "free."
Results:
- Universal care (of at least baseline coverage)
- Health care costs taken off employers, making them more competitive in the global economy
- NRST encourages savings, discourages consumption
- Costs for medical care made more explicit
- Removes embedded taxation costs from the cost of producing US goods. Another boost for US competitveness in the world economy.
The only thing that will enable US workers to keep/improve their standard of living in a globally competitive economy is to continually increase productivity. Yes, this also helps businesses (and those who own stock).
One attractive aspect of a national retail sales tax (NRST, aka the "Fair Tax") is that it reduces government's role in encouraging/discouraging various behaviors.
How about this: We have a NRST just like proposed in the present legislation:
- Abolish the income tax and the SS tax (the most regressive tax of all)
- Tax all purchases of services and new products at 23%. No exemptions/exceptions.
- A prebate to all families equal to the 23% of the poverty level income for that family size (e.g The HHS poverty level for a family of four is $20,000 per year. Every family of four gets a prebate of 6072 per year ($506 per month)) without need to file a return, etc.
- Now, the health care portion:
-- Health care services and health insurance, whether purchased by the employer or the employee, would be subject to the same 23% tax. Employers would get no deduction, so there's no advantage to providing health care through employers (anticipated effect: Employees receive a boost in salaries equal to the employer's previous cost of providing this coverage.
-- With employer sponsored health care out of the mix and everyone conscious of the actual cost of the stuff, it would open the way for more efficient means of providing coverage.
e.g. 1) Private individual purchase of insurance, with government susidized care of the indigent: Government could help insure an efficient market by mandating standardized plans (say 5-10 standard packages) and allowing consumers to compare prices and buy what they want. Care of the indigent is as it is today, or perhaps they are assigned to "Package 3"coverage, with premiums paid by the taxpayer. This achieves universal care, keeps freedom of choice for those who can afford it. Cons: Paperwork and inefficiencies caused by private insurance layer.
or
2) A universal taxpayer-funded universal "baseline" with purchased add-on coverage. The baseline coverage might be paid from a reduction in the prebate (appropriate, since rich or poor get the same baseline coverage) or an increase in the sales tax rate above 23%. It would be best to make the cost of this coverage explicit, so everyone realizes it isn't "free."
Results:
- Universal care (of at least baseline coverage)
- Health care costs taken off employers, making them more competitive in the global economy
- NRST encourages savings, discourages consumption
- Costs for medical care made more explicit
- Removes embedded taxation costs from the cost of producing US goods. Another boost for US competitveness in the world economy.
The only thing that will enable US workers to keep/improve their standard of living in a globally competitive economy is to continually increase productivity. Yes, this also helps businesses (and those who own stock).
![:-\](https://www.early-retirement.org/sk/forums/images/smilies/undecided.gif "Undecided :-\")
