How would this work exactly? Around what percentage would be needed, and how would that percentage change over time? I read that Bush made a remark that said it's something that ought to be considered seriously. Also, who all has proposed this in the past, and when did talk of this start?
Guess you read my post in the guns threat, a response to Sam's stupid insinuation that I favor a money for nothing-style funding system for the govt. Here is link from Fairtax.org about the National Sales tax and below that is a more in-depth Cato Institute (libertarian think-tank) paper on the issue. Hope this opens some eyes and maybe some minds. But with the soak-the-rich liberals, I doubt it will even make a dent. link Here is the link to the Cato Institute paper on the issue: link
Personally, the way I would do it is as a consumption tax for new goods excluding food, medicine, and other necessary goods. I would also provide an exemption of $5000 for each adult and $2500 for each child in a household. The numbers I saw stated that the tax would have to be about 17%, though I would set it a bit higher with the surplus going to pay off the national debt. Once the debt is paid, we could both lower the tax rate and provide additional rebates in the form of tax holidays at back to school time like we do here in Texas. The idea has been bandied about some for years and most European countries use what they call a Value Added Tax (VAT) that is similar to a national sales tax. This type of system would encourage people to save more as taxes are only taken when one makes a purchase. Eventually, as we change the way Americans do business (more saving, less credit card spending), we might even be able to meaningfully reform or repeal Social Security.
Actually, I didn't read your post, I was talking to my friends, who are right-leaning, about it. Thanks for the link, very informative. It seems like a smart solution, why isn't there a bigger push for it? It could sway my vote if Bush is serious about this.
If you put the tax rate at 17% + the 8.25% we pay in Texas already, I know it would make me think twice before buying something. I'd still prefer that, however, to writing a check to the US Treasury quarterly. But I would be in favor of different rates for different goods. Perhaps there could be a scale. The further something is away from the necessities, the higher the rate. That way you don't have something like clothing taxed at the same rate as a Sea-Doo. Of course, I suppose you can run into problems there. For example, I would think things like musical instruments would probably be at a higher tax , but a new instrument could be more of a necessity if you make your living that way. The same goes for computer hardware and some software. So I'm not sure there would ever be a way to do this practically.
Apparently, he is interested in the idea. Maybe a 2nd term would give him the ability to get it done? Denny Hassert is in favor of the idea.
So you're saying that Bush should not be able to come up with new ideas, since it's not "convenient"? Right.
"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." A comment at a town hall meeting doesn not official policy make.
He didn't bring it up, a reporter asked him. I'm gonna go with my gut and say it's not something that he's ever seriously considered.
Unless he brings it up in speeches or debates, I'm skeptical that he'll work at enforcing it. If he truly does want to get this done, though, it will probably sway my vote. I'm still very undecided.
it is when there's < 90 days to election day yes. the concept isn't exactly a new idea. i'm sure he's heard of it before.
what's the downside? the Cato Institute is not exactly known for its impartiality? let's hear from the economists out there...
To be honest with you, if GWB were to make this part of his official proposal, I would go back to undecided. IMO, scrapping the tax code ranks second only to real campaign finance reform as far as the most important issues we, as a country, have to address.
Not like the left ever proposes any meaningful reform. To them, the only word that goes with taxes is higher.
I am actually very much in favor of this. People will always spend and basic necessities like food/medicine (similar to what states tax) should be excluded. Everyone should also be givien a basic exemption to make this progressive. I think the real benefit will be the amount of tax evasion this would cut as now the same IRS would focus on businesses. Same workforce, less taxpayers to monitor should be a boost. I also think we should eliminate the corporate income tax too. Primarily for a more simplistic solution....whether it be payroll, etc. This is much more difficult of course. Companies are being double taxed and its stupid that a company is taxed b/c its a C corporationg vs. an S corporation. Realisticially, they should eliminate the income tax at the corporate level and just tax individual shareholders...ie, you own 300 shares, IBM reported income of 3.45 per share, should you owe tax on ~1000 of income. Right now, the company pays tax and then you pay a tax on the dividend, or if its a company w/o dividends, you pay capital gains tax. but i digress...
Although I am for it, one of its drawbacks is that is still tends to squeeze the middle class. However, it increases the value of saving while simplifying the tax code so I am all for it.
Consumptive taxes are anti-corporate and anti-consumerism so you know the folks that pay billions to the lobbyist to keep the money flowing are not ever going to let this idea see the light of day. Flat taxes on income have a better chance if the wealthy see a way to exploit it. Another point to be wary of is that a national sales tax system would encourage a black market to avoid taxes. Bartering outside of the system would become an accepted way of life...well even more than it is now.
I think the way you minimize that is to charge the tax at the producer level so that the retailer has no choice but to charge it. Currently, say your neighborhood store buys cereal from a kellogg distributor. He doesn't pay sales tax on it, but instead is responsible for charging the customer the sales tax and submitting those proceeds to the government. Obviously, as this dollar amount increases, so does the temptation. If we were to do this, I think you would have to get the tax levied at the producer level (ie., Kellogg charges the distributor the tax). This also lowers the number of businesses that have to be monitored...ie, not every mom and pop business.