New National Sales Tax

Corporations don't need to be generous. They just need to make money.

John Galt
 
Corporations don't need to be generous.  They just need to make money.

John Galt
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My point exactly. They're not going to share any of their tax savings with me the employee nor with me the consumer. That's a pipe dream being used to get me to swallow a new tax.
 
Wab, it i

Think of all the tax that would be captured from a
1 trillion underground economy that goes untaxed
at present...... not to mention the billions in under
reported income.  

I think we can all agree that the current tax system
is corrupt with special interests and  loopholes.  It
is burdensome to the max and needs to be fixed.
Wouldn't it be neat to send all the lobbiests on a
permanent vacation?

Charly: Two very good points. Taxing drug money, prostitution, etc. would be a windfall for the IRS.
(Imagine a pimp driving a Toyota Tercel). :D
However, even if it worked to the benifit of the public at large, this board (Most members) would not be very receptive. (If you're paying next to no taxes, or no taxes, then you would have to jump a generation down, and think of the kids).
By the way, the very threat of something like this occuring, kept me from converting part of my I.R.A. to Roth. I decided not to pay any taxes until I had to.
In any case, while I can see the benefit to the I.R.S., and likely to a good share of the population, somebodys ox is going to get gored, and the likely candidates would be most of the retired high assett, non-defined benefit types that have their taxes under control, but like to spend a few bucks.
It is an interesting subject, and I'm sure that the IRS would like to turn the drug cartel into taxpayers. ;)
Regards, Jarhead
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The only way I swallow this is if the IRS is abolished (think of all those tax collectors no longer collecting a government salary - bad for them, good for us, smaller government) AND THERE WAS ABSOLUTELY NONE - NOT NOW, NOT EVER INCOME TAX and the constitution was amended to prevent an income tax when politicians run up future deficits.

(Because you know politicians can't stop spending the money they don't have. :mad:)
 
Charly:  Two very good points.  Taxing drug money, prostitution, etc. would be a windfall for the IRS.  
(Imagine a pimp driving a Toyota Tercel)...
It is an interesting subject, and I'm sure that the IRS would like to turn the drug cartel into taxpayers.
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Are you for real? Can you see a drug dealer selling crack in some dark alley taking out his calculator and multiplying the sale by 30% to submit to the IRS? Or some hooker saying, "Hey sugar, that'll be $200 plus 30% NST."
 
Perfect timing. Here's one of the fruitcakes I was talking about:

From 'The New York Times'
November 6, 2004
Libertarian Arrested for Tax Evasion

By THE ASSOCIATED PRESS
Filed at 12:17 p.m. ET

PHILADELPHIA (AP) -- A Libertarian who lost a race for
Congress on Tuesday has been arrested for evading $87,000 in
federal income taxes.

Arthur L. Farnsworth, 42, had vowed on his Web site that he
would never file an individual federal income-tax return
again.

A federal grand jury alleged the electrical engineer failed
to pay taxes for three years on more than $221,000 in income
and tried to conceal his earnings by transferring assets to
fraudulent trusts and overseas bank accounts.

Farnsworth, treasurer of the Pennsylvania Libertarian Party,
drew fewer than 4,000 votes in his bid for a seat in the
House of Representatives. Republican Michael Fitzpatrick won
the race.

Farnsworth was jailed Friday to await a Monday bail hearing.
If convicted of tax evasion, he could be jailed for at least
a year and ordered to pay all back taxes.
 
Are you for real?  Can you see a drug dealer selling crack in some dark alley taking out his calculator and multiplying the sale by 30% to submit to the IRS?  Or some hooker saying, "Hey sugar, that'll be $200 plus 30% NST."
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Of course not. But when the pimp, or drug dealer purchases a Cadillac, pinky ring, etc. he/or she will be paying 30% on that purchase. On a $40,000 car that would be a tidy sum going to the IRS that is now going untaxed. Another point is I was only commenting on a point that Charly made about a benefit to the IRS that would be available under this type of program.
I am also skeptical about the dislocation that a program like this would cause.
The last time I checked I was for real. Real old, but real nevertheless ;)
 
If this idea ever gets close to reality, I will examine the numbers and evaluate it it in detail. But on the surface, I don't see how this can possibly be any good for early retirees.

I spent 34 years earning income and paying federal tax on those earnings. Now that I have entered my consumption phase and no longer earn income, why would I want to change the rules and tax consumption?

The amount of money that the federal government requires does not change because of the tax structure. So everybody can't benefit from this. If corporate taxes are reduced, supply and demand pressures could result in a reduction of cost. But the reduction in taxes still has to be accounted for. Who pays if not the consumer?
 
"New" national sales tax?

Perfect timing.  Here's one of the fruitcakes I was talking about:
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Hey, Retire@40, he's only a fruitcake because he got caught. Otherwise he'd be a "fee-only financial planner".

For those who brought up the VAT, Hawaii has a 4% version of it. It's what helps the state keep its perennial top-three ranking in Forbes' "Most Business-hostile States" list.

In our last 26 tax-paying years (unlike Mr. Farnsworth, we filed a return for every one of 'em) our taxes have ranged from 6%-18% of our total income. The percentage stayed above 14% for our final ten working years and finally dropped below that in retirement. Last year it was 6%.

I don't like seeing the "flat-tax" numbers that are being proposed here!
 
...when the pimp, or drug dealer purchases a Cadillac, pinky ring, etc. he/or she will be paying 30% on that purchase.  On a $40,000 car that would be a tidy sum going to the IRS that is now going untaxed...
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Ok, I was thinking more in terms of the selling side vs. the buying side, but let's look at the buying side. Pimps and drug dealers are usually one step ahead of the rest of us. This system may get them on assets that need to be registered like a car, but they are going to circumvent the NST on almost everything else. With a NST there is going to be a huge black market of goods that people are going to buy for cash. Since the entire tax code would have been scrapped, there will be no gift tax issues to worry about, so you are going to see lots of things being bartered for or gifted. It won't happen in the Wal-Marts, but it will happen in mom & pop stores.

For example, I am a drug dealer and you are pinky ring salesman. I am a good friend of yours and sell you drugs on a regular basis. I want to buy a $2000 diamond-studded pinky ring from you, so I will trade you the drugs for the pinky ring to evade the tax. Or, if we are just friends, I am going to pay you $2000 cash for the ring, but you are going to give me a receipt for $200 plus 30% = $260.

All I am saying is that there is a reason why no country in the world strictly has a national sales tax. These mental cases pushing for a NST, if they are successful, are going to find themselves stuck with a NST or VAT on top of an income tax. And as I have proved, they are doing all kinds of math tricks like those on that website pushing for a NST.
 
After reading the excellent arguments here against a National Sales Tax, I have come to the conclusion that this tax has an almost zero chance of getting of through Congress.

Hell will freeze over first! :)
 
After reading the excellent arguments here against a National Sales Tax, I have come to the conclusion that this tax has an almost zero chance of getting of through Congress.

Hell will freeze over first! :)
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I imagine you're right, Cut-Throat. I do tend to believe that even the dim wits we've sent to represent us in Washington will see enough problems with this to choke on it.

One the other hand, I can't help thinking about the fact that 60% of the people who voted for Shrub believed that Saddam was behind 9/11. . . or that the number one reason people voted for him was moral reasons. Apparently, a coke sniffing, draft dodging, lier is their moral standard now. :)
 
So everybody can't benefit from this. Who pays if not the consumer?
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Since an income tax is really a tax on productivity, and since whatever you tax you will get less of, a sales tax, if accompanied by repeal of the income tax should increase the productive capacity of the economy. It also would free up a lot of completely wasted effort that now goes into tax compliance and enforcement.

The tax also should decrease consumption which automatically means it increases savings throughout the economy. It might be mostly corporate or mostly government, but savings should increase.

This is contingent on finding export markets to absorb whatever sales are lost from the domestic economy.

I think this tax overhaul is unlikely to happen. At the least the part about repealing income tax. Income tax has been a very useful political and "law enforcement" tool that the Police State Mind is highly unlikely to let pass.

Mikey
 
It also would free up a lot of completely wasted effort that now goes into tax compliance and enforcement.
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Are you sure about this? We have an idea what it takes to prepare tax returns once a year, but have you figured out how much time and enforcement it will take to make sure every single purchaser is paying the NST?
 
Are you sure about this?  We have an idea what it takes to prepare tax returns once a year, but have you figured out how much time and enforcement it will take to make sure every single purchaser is paying the NST?
Click to expand...

No, I am not sure. But since all but 8 to 10 states are right now doing this very effiiciently, my expectation is that it would be pretty straightforward.

Mikey
 
No, I am not sure. But since all but 8 to 10 states are right now doing this very effiiciently, my expectation is that it would be pretty straightforward.

Mikey
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Yeah, but they're losing revenue on the internet everyday and are scrambling to figure this out!
 
No, I am not sure. But since all but 8 to 10 states are right now doing this very effiiciently, my expectation is that it would be pretty straightforward.
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Just multiply the sales by 30% and send it in, right?

It is probably one of the most INEFFICIENT taxes out there because there is NO CONTROL. Like I said, the big retailers like WalMart and KMart do a great job with a sales tax, but have you ever seen what goes on beyond the big players? If you have a friend in the state department of revenue that collects sales taxes, ask him or her how efficient the sales tax is. There are probably just as many things not being taxed when they should be as there are things being taxed.

And this is where state sales taxes are all under 10%. Make the tax rate 30% or higher and remove the income control and you will really see some creative salesmanship.
 
Just multiply the sales by 30% and send it in, right?

It is probably one of the most INEFFICIENT taxes out there because there is NO CONTROL.  Like I said, the big retailers like WalMart and KMart do a great job with a sales tax, but have you ever seen what goes on beyond the big players?  If you have a friend in the state department of revenue that collects sales taxes, ask him or her how efficient the sales tax is.  There are probably just as many things not being taxed when they should be as there are things being taxed.

And this is where state sales taxes are all under 10%.  Make the tax rate 30% or higher and remove the income control and you will really see some creative salesmanship.
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Any idiot can say anything, but I would really like to see some evidence of your assertion above.

I have run retail businesses, and I can state that sales tax is a hard tax to fiddle. Orders of magnitude harder than income tax.

Wihich is not to say that some peckerwood selling tomatoes by the roadside might not withhold some of his sales tax. It just isn't very important in the scheme of things.

Mikey
 
Any idiot can say anything, but I would really like to see some evidence of your assertion above.
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You have been on the side submitting the tax to the government, but you haven't been on the side receiving the tax from businesses. Talk to someone administering the state sales tax and see what they tell you.

I know you're smart enough to find examples of sales tax fraud on your own, but here are some anyway (and these are only the people that were caught):

http://www.state.tn.us/revenue/newsrel/morenews/thomas.htm

http://www.sctax.org/News+Releases/Archived+News+Releases/2003+News+Releases/Smith+plea.htm

http://www.hsmv.state.fl.us/news/pr021804.html

http://seattle.bizjournals.com/seattle/stories/2001/11/19/daily26.html

http://www.yorknewstimes.com/stories/040704/loc_040704002.shtml

http://news.com.com/States+push+for+piece+of+online+sales/2100-1040_3-5187751.html

http://www.revenue.state.il.us/legalinformation/hearings/st/st01-30.pdf

http://www.reviewjournal.com/lvrj_home/1998/Apr-23-Thu-1998/news/7369428.html

http://www.herald.ns.ca/cgi-bin/home/displaypackstory?2003/07/19+148.raw+PE03Jul19+2
 
At least now we are debating the details instead
of rejecting the NST out of hand.

That's progress ....... thanks!

Cheers,

Charlie
 
P.S.

Hey retire@40 ........ no system is perfect. There will
always be deadbeats and crooks who try to scam
the system. Your links do nothing to convince me
that a national sales tax would be worse than the
current income tax.

We do pretty well with the sales tax in Texas and
have no state income tax. Can't say the same for
most of the states on the Left Coast and the L-EAST
Coast.

Cheers,

Charlie
 
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