Posted: 8/2/2004 6:27:43 AM EDT
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Rumor Control says they (Congress/Bush Administration) are considering a flat rate income tax, a national sales tax, and a value added tax (VAT). Let's look at them... Value Added Tax (VAT). This would be a bad idea for the American Consumer. By its nature, the cumulative VAT ends up being paid by the person who purchases the finished product. As taxes are added at each step of the production/distribution process, the taxes are paid “on paper”, but anybody familiar with basic capitalism knows that all operating expenses, including this tax, are passed on in costs to the next level. In other words, if I had a role in production and had to contribute $X in VAT, I would increase the price of my product $X to compensate for this added cost of doing business. These costs accumulate like a snowball rolling downhill, and in the end all of them end up being paid by the end consumer. This has been demonstrated in other countries that currently have a VAT. VAT bad. I enthusiastically support tax reform, and believe the best routes lay with either a flat rate income tax or a national sales tax. A flat rate tax would take an equal piece of everybody, which is inherently fair, in contrast with our current graduated system which penalizes achievement. A national sales tax would be based on consumption rather than production, so people who are buying “big ticket” items are paying more than people with more modest lifestyles. Whichever of these routes are chosen, I would also recommend hard safeguards to prevent runaway abuse. There should be strictly defined and enforced limits on the rate of taxation to protect the American citizen from abuse by excessive confiscatory taxes. |
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IMO, a flat tax combined with a national sales tax would be the best option. However, here are the reasons the current tax code will be kept: 1) An entire industry is set up around compliance and avoidance. This is a VERY wealth industry, and greases the palms of both parties 2) Democrats love it because the progressive income tax allows them to market themselves to the rank and file as the party that soaks the rich. After all, the more you make, the more you should pay because you've made your money off the backs of the poor anyway.  3) Both Republicans and Democrats love it because they can manipulate industries (read political donations). As I understand it, during the Clinton years, most major corporations were able to pay almost no income taxes, because enough holes/exemptions had been built into the system to benefit their particular industry. The unfortunate reality is that people with bucks do not want a flat income tax, because their overall tax burden will go up. Look at John Edwards. Rather than pay SS taxes, he awarded himself much of his income in dividends (rather than wages) which are not SS taxable. |
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I just read the article on the Drudge Reportwww.drudgereport.com/rnc.htm I'm hoping that the current tax system will be completed eliminated and not an adjunct to the proposed system. I am a firm believer that a National Sales Tax will capture the black market money that never gets into the system. Even the dope dealers will need to buy goods and services once and a while. 
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Even though I haven't been a member here for very long, I've seen this topic come up at least three or four times, and as usual people don't have any idea what they are talking about. VATs are evil. The tax is hidden in the cost of goods and no one really knows how much of the sales price is really going to tax. This makes it really easy to raise rates without most of the people knowing. I'm sure it's one of the reasons Big Macs cost $7 in Europe. Only an idiot would vote for a VAT system here. National Sales Tax. Always ballyhooed as the "next great thing" when it's not as clean and simple as you might imagine. Are we going to tax every sale? Some states don't tax groceries, most don't tax professional services (doctor, lawyer, accountant, etc), some don't tax food, unless it's eaten on the spot. Regardless of how it plays out, it will be a compliance nightmare for businesses and states, since the Federal system would most likely differ significantly from state systems. Even then we're not getting rid of the IRS. After all, someone has to receive the sales tax money and returns, and audit businesses to make sure they are paying over the correct amount. The biggest problem with an NST is that we will end up with both the NST and income tax, not just the NST. I don't see that as an improvement. Income Tax. This is only an issue because it's so complicated and is easily used to divide people. The poor think the rich don't pay enough, while the rich are upset the poor don't pay anything, but they have to pay half the taxes collected. The income tax will not go away for the simple reason that it is a method of control - revenue collection is secondary. The income tax is the reason we have "money laundering" laws, cash reporting requirements and a million and one businesses demanding our social security numbers. Your tax return tells more about you than any other document out there. The only real way to improve the situation is to simplify the tax code and make the tax rates flat, or very close to that. I designed a flat tax system for my state that would eliminate 65% of people who have to file returns - all taxes would be withheld at a flat rate from most sources of revenue, and only those with business income or extraordinary items would need to file. My state congresscritters want nothing to do with it - probably because it would put half the people at the tax commission out of work. On a federal level, the most revenue collected at the least cost, with the highest rate of compliance (virtually 100%) would be to tax services that everyone uses, such as: - gas, electricity, water & other utility bills - telephone services - gasoline, diesel, ethanol How many "taxpayers" would you have that fit in the above category? Maybe a couple of hundred at the source. There aren't that many gasoline refineries - so assess a tax per gallon upon first sale, and audit all 5 or 10 refineries each year. How many power companies in this country? A dozen? Assess an X percent tax on the power bill, and audit all 12 power companies each year. And so on for the others. This would get the Fed.gov out of the individual's personal information and life, would collect taxes from drug dealers and any others in the underground economy and would give us back our privacy, but it will never happen because of the control issue for income taxes. There are ways to fix the system, but until people realize the true nature of the tax system, we'll keep hearing pleas for VATs or NSTs by the uninformed. |
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A National Sales Tax would be the most fair and equitable means to provide funding for the various programs that NEED to be kept around. ANY type of income or property tax is nothing more then SLAVERY. A sales tax is paid by INDIVIDUAL CONSENT. I doubt a NST will ever be implemented without bloodshed. The politicians LOVE the social controls provided by income taxes and property taxes, and I don't see ANY of them willing to give up control without a fight. The IRS willbe here until we are willing to refresh the Libery Tree with the blood of tyrants and patriots alike. |
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What about abolishing the current tax system and (re)instituting a system of import tariffs as proposed by the Constitution Party? More information Here Edited to say that I have been very curious about how such a system would work, and what the economic effects would be, but don't know enough about economics to say. |
Oh yeah, sure. I remember him complaining that we pay less for gas than any other western, industrialized nation and wanting to massively increase gasoline taxes. I also remember him making comments about 'that danged Constitution." |
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I agree with tax_monster. You really have to be careful what you ask for. Another problem with a national sales tax is that people will find ways to "cheat" it and not pay, just like with any sales taxes. The states almost all have sales taxes and they are running 8-10% and up. Tack on another 15% and you are really talking punitive, BOHICA kind of punishment there. Income taxes are evil, too, but he's right--a simplified code with no nonsense that can be manipulated could be astoundingly successful. Don't hold your breath. Most corporations are dodging corporate taxes like crazy. I don't blame them, but it is patently dishonest to keep making Joe Twelvepack make up more and more of the difference each year. Tax-freedom Day is pretty good indicator of how dire our situation has become as middle class taxpayers. |
Tariffs are a really shitty idea given that most of the things we buy these days are imported. We want to shoot for free trade, not protectionism/mercantilism. Tariffs are always bad news for consumers. |
dude, joke, comprende? |
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I don't have the answer. All I know is that my wife and I pay too damn many taxes (fed, state, city, city,city) not to mention (hidden taxes like excise, fuel,phone bs, ect). property. One big hurdle will be weaning the public at large and the homebuilding industry off of the tax deductions for home mortage, real estate taxes. This will probably be the hardest thing to overcome. |
Sorry, I missed that. One of the problems for Goatboy to fix is that I couldn't hear the inflection in your voice. 
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My favorite tax idea is to remove withholding at all levels. Withholding was only supposed to be a temporary program during WWII anyways, and I'll bet that a lot more people will be concerned about tax levels if they have to cut a big, fat check to the Government every year. tax-monster brought up ideas to have high compliance with low government effort. I think that this is one of those Big Government ideas that sound appealing at first, but make you wary of the power that government is getting when you think about it. Kinda like requiring CCW permits (instead of no-permit carry) and background checks. It might be appealingly easy, but I don't want the government to be able to collect all taxes easily and quickly. But you probably are right that trying to get a national sales tax will most likely get us that in addition to the income tax, which would make the whole system an even bigger mess. |
Why? Are you insane? Making tax collection easy and simple allows us to cut $50 billion a year from the IRS budget, which could go directly to deficit reduction or tax breaks. Or are you thinking that if it's too easy to collect the tax, they'll just up the rate and spend more? Wake up - they've been doing that for 40 years already. Making it easier to collect won't change that. |
Pretty much, and people will notice it and object even less then they do now. Like I said, it's kinda like CCW licensing. We all know that lots of people who carry have disturbingly small amounts of training and practice, and that isn't a good thing. Therefore, wouldn't it be a good idea to make anyone who wants to carry legally get a state-issued permit and get some level of training? As long as it's shall-issue, there's no rights violation, right? It's a very reasonable-sounding idea, and one that many gun-rights advocates have supported. But many here would still argue that even though it sounds pretty reasonable, it's still a violation of the second amendment and our overall RKBA because it gives the government too much control over a fundamental civil right. And the potential government oppression is much more disturbing then some idiot carrying a gun that he has never fired for protection. In the same type of argument, making it easier for the government to collect taxes also sounds like a good idea. Why waste effort by making it harder to get tax money from people that they're going to get it from anyways? The reason why not is the same as the CCW argument - it gives the government more power. The easier it is to collect taxes, the less objections there will be when they are raised. The less objection there will be when taxes are raised, the less political effort is required to raise them. Less political effort to raise taxes means taxes raised more often, and even faster growth of government. IMHO, that potential is much worse then spending a few percent of the tax money raised to collect it. Yeah, they've been growing government disturbingly fast for 40 years, but why make it easier? That sounds like saying that they've been chipping away at gun rights for 75 years, so why object to a few more chips being taken away? |