WTF? A 30% sales tax? End the IRS? Who's the wacko in Congress with this idea?

Americans are undertaxed. Our persistent deficits are all the evidence that is needed to demonstrate that we consume more government than we pay for and we need to pay higher taxes.

 

Those 291 million returns (probably closer to 200 million, but who's counting) predominately have a third party verification that automatically compares what the taxpayer says. There is no such automatic verification with a sales tax.

 

Okay, this is the link to the code sections that are currently under Title A and the code sections I provided for. Notice that it is in subtitle A, chapter 1, subchapter d, Part 1, subpart A.

In HR 25, it eliminates in total Subtitle A.

And if you look at page 117 of the proposed HR 25 in the 118 Congress, the retirement plans are only mentioned once and it relates to judgments under IRC 7476. Nothing else would matter. The ERISA act would also become null and void by default since subtitle A would be eliminated.

 

True, we do have the second lowest personal income tax among all OECD countries. But with a sales tax, we would be in the upper percentile among the OECD countries. Yet, people who support this bill somehow think they will be paying less. they are going to be in for a nasty suprise.

Personally, I think we can make improvements to the tax code and streamline line it a little, and increase the rates moderately in specific circumstances to have the same net result of higher revenues and less deficits assuming the spending only goes up by a minimal proportion.

 

Sorry, but that description is wishful thinking and highly optimistic to the point of fantasy land. The 25% interest drop is highly dubious and is the only way it would work. If it is not 25% or hell, even 5%, it won't work, would it?

 

A value-added tax is a lot different. It is a tax at every stage of the production line and is embedded in the price you pay. It is also why you really don't see price tags in Europe most of the time for most items.

 

My assumption would be that a VAT or sales tax would replace the income tax, at least in large part. I hope the result would be that we pay more.

 

When does the government have to balance their budget? I'm not a piggy bank so they can just raise my taxes anytime they want to spend more than they have confiscated.

Did you ever notice that high tax states have the highest cost of living? There's a reason for that.

 

I know. But it's still the same concept, and there's no reason a US consumption tax could not also be embedded in the price.

 

US voters persistently elect leaders who don't balance the budget. By those votes they are saying they want more government than they will pay for. In this discussion I take no position on how much government is the right amount, but I do insist we should pay for what we get.

 

Except that with income taxes, baed on your facts and circumstances, the size of your family, whether you are married or not, whether there are two earners or not, and how different incomes are taxed, your effective tax rate can be as little as 0 and has high as 23% or higher. But with a sales tax, you do not have that luxury, so you would hurt mostly the middle class, families with two earners or two sets of income, and so forth. The poor will get hurt by higher prices and thus have to pay more with the prebate not doing much for them at all. It looks fine on paper, but in reality, it is doomed to fail for obvious reasons.

 

It's not about paying less, it's about fairness.
It's about predictability.
It's about sustainability.

First of all 30% is far too high, but, some reasonable level below that, everyone knows that they are agreeing to pay 22 or 23% whatever the final number is agreed to, on federal services. And if that's where the budget balances that's a good number. And if someone comes up with a great idea for the federal government to spend more money, it also needs to come with the information of how much of a tax increase that will require.

Or, of someone suggests the Federal Government selling off a bunch of excess property that it really has no good reason to hold, or auction off natural resources for development, or increase tariffs, that too should come with the explanation of how much of a sales tax reduction that will include.

A Free People need good information in order to make good decisions. The current system is a complete mess, as a $29T federal debt clearly attests. The federal debt took over 200 years to get to the $5T, it's only taken another 22 years to get to nearly $30T.

It's time for improvement,
It's time for clarity.

 

We don't do that to begin with. You will get the price, take it to the counter, add the sales tax to the price, then pay. In Europe, the price is embedded, so if you pay 10 Euros for a piece of clothing, that is what you pay. Now the shop owner might get 1 Euro profit or might get 5 Euros for profit. No one really knows until he files his quarterly income and expense report and pays the business income tax, which is much lower than the personal income tax.

 

Let's get one thing straight. there is nothing fair with this tax proposal. Nothing at all. But no income tax system is fair. The whole point of the tax system no matter how it is derived to to furnish the revenues to keep the government functioning. That is all. What I am saying is that any tax system, flat, progressive, VAT, or NRST has its positives and negatives. For the NRST tax as it is proposed, it would hurt the middle and poor classes, more so the middle class than the poor, while rewarding the wealthy who can then go all over the world to buy what they want to buy, not here mind you, and then not have to pay a single dime while getting all the benefits and rewards. That is not fair in my book.

 

And those people don't balance their books either. Hence the problem. If you look historically at the personal debt among our citizens, it has always been the case. And since the 1980s, we are a credit society and pretty much buy almost everything on credit. Look at mattresses for instance where people would finance that over two years to purchase a $2500 mattress or finance the remodeling of their home that may cost $35k or now take 6 years to pay off that car that they just purchased. It is all about monthly income and expenses, but if you look at the books where their income is far less than their obligations, we don't balance one thing at all personally. And the government is a reflection of how society thinks and operates.

 

If the GOP Electoral college their way into the presidency again and take both houses and pass this bill, it will go down in history as the year the GOP died.

Ending the Payroll tax would end Medicare and Social Security. Everyones bills would grow by nearly 1/3 and houses/cars would grow by 30%.

In 1 day this would happen.

Grocery prices jump 30%
Rent and mortgages jump by 30%
Gas prices go up by 30% Your $3.10 gas is now $4.00 over night.
Medical prices jump 30%

Elderly GOP voters lose their pension, and healthcare end up homeless and starving.

I actually hope they do this. I would result in the largest loss of seats in US history. Fox news frantically trying to convince people the Democrats are responsible. The Democrats would win enough seats to amend the constitution.

 

Actually it is 291 million tax returns. but with a FairTAx, everyone becomse the tax collector for the sales tax and then have to pay the state. The state then has to keep track of it and then send the amount, if they so choose to do so, to the federal government.

 

Yes there is but it is not because of high taxes. It has to do with very limited space and high demand for that limited space. Why do you think it is expensive to live in NYC even though the taxes are not that high compared to the federal level? Want to pay $4000 a month for a one-bedroom apartment in the middle of Manhattan?

 

That is not how the proposed system would work. For starters, the state would have to keep track of those sales and use tax forms. Second, they would be the ones who would be in charge of sales tax audits. Third, the number of people now subject to the sales and use tax returns would be pretty much everyone who is old enough to work and before they died. And it would be all goods and services except those exempted which would be investment income, intangible property, and business purchases. That's it.

 

I think that was coming down to a wording issue and how we were using them. I am aware that Roth's are invested with post tax dollars vs regular ones with pre tax.

 

And if you look at the 8 states with no state income taxes, they tend to have the higher sales tax, with the exception of Alaska. With state income taxes, all take your AGI from your federal return and either add or subtract certain income that is not taxed at the state level. For instance, North Carolina states that government pension plans are not taxed which includes pension plans from the military, FERS/CERS, Social Security, etc. then you have Ohio which literally taxes EITC tax refunds at the state level. It is not as simple as you think it is. The only state that comes close to resembling the federal income tax is really California.

 

With Roth IRAs, you have a vetting period, say five years. Assuming your contributions are all vetted and you reach 59 and 1/2, then your distributions are tax-free because the cost in the plan is all after tax dollars. But if you take out the money before the vetting is completed, then part of the distribution is taxed, the earnings specifically, and you have a 10% additional tax penalty. This assumes that you meet all the requirements to have a Roth, aka, you are not a multimillionaire on the tax return.

 

You make valid points, but the crux is in the details. My state has a sales tax but it is not charged for most groceries and medicine, cars, houses, rent, et al.

 

Fake news. Everyone chipping in an equal share of their spending is extraordinarily fair.

You just claimed that no tax system is fair, which is false, a fair tax system is of course possible, but, what an indictment you just delivered to our current tax system. Thank you, you have well made that point that our current system is unfair and would benefit from a fundamental overhaul.

Well, if it's not in balance, at some point it will stop functioning.

No it wouldn't. It would allow them to intelligently agree to, as a group, the level of taxation that delivers the level of service they desire. You seem to view taxes spent as a dead loss with no benefit received from the taxed. That's ridiculous. Do you like roads? Government benefits? Trustworthy sidewalks? Beveled curbs to allow the handicapped to move about? Reliable power? Safe Neighborhoods? Safe food standards? A honest measurement of a gallon at the gas pump? Security against foreign invasion?

Like John Kerry parking his yacht at Rhode Island to escape the luxury tax?

You think that imports would be exempted? Why would you think that?

 

Well, it is closer to 200 million if you look at just income taxes, but as I said who's counting, and it doesn't really matter. Are you saying the federal sales tax would be a voluntary remittance by the states??? If the states collected all the sales tax that would reduce the IRS.