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UnknownPD
08-03-2004, 09:34 AM
There is a proposal to replace the IRS with a national sales tax. What do you think?

Personally I think it will catch all these fuckers that work "off the books" and be much more fair than the current system where people are able to avoid paying their fare share. Now your neighbor that owns a restaurant will have to pay taxes on that money he bought the BMW with.

Doctor Manhattan
08-03-2004, 09:56 AM
How high would the sales tax be?

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silera
08-03-2004, 10:09 AM
I agree with it. I think it is the fairest way to deal with income proportionately as it applies to wealth. I'd need to see the details as how they would deal with poorest in the nation and ensuring that their sales taxes get placed back in their pockets.



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cumbiero_81
08-03-2004, 10:17 AM
IRS has been lloongg ggoonnee... ;p

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42nd-delay
08-03-2004, 10:17 AM
How high would the sales tax be?


I've heard about 23%.

The thing is, despite all this talk about it being simpler, I think it would end up being just as complex as the old system. How long before some items start to get taxed more, and some less? How long til you can defer taxes. Politics is all about benefiting this constituent group or that, and inevitably, that would occur in a new tax system.

The other thing is, the sales tax would have to apply to every purchase, including stuff like stocks. I have to say I don't have much faith that the Republicans who support a national sales tax would also support having securities taxed at 23%.

Finally, despite this talk of not having an IRS, how will we make sure everyone pays the right amount of tax? And can you imagine getting audited for that - you'd have to keep your receipts from the whole year.

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JPMNICK
08-03-2004, 10:23 AM
So would it work that of you made 50,000 per year, you would actually get 50,000 per year. And then every purchase you made would have a 23% tax on it. That works out much better for most people, considering you are probably in a higher tax bracket than that now. Would we still pay the 6%(or whatever) state tax on top of the 23%? Either way, I think you would still come out ahead.

The thing is how would they take out for medicare and all of the other wonderful deductions?

And what about interest earned, all tax free?

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HBox
08-03-2004, 12:04 PM
There is really no concrete proposal for this yet. And, seriously, don't believe that there will be no more IRS. There has to be some kind of enforcement agency for this, no matter if they call it the IRS or something else.

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HBox
08-03-2004, 12:08 PM
That works out much better for most people, considering you are probably in a higher tax bracket than that now.

Actually, that's not the case at all. I'm not sure about the bracket's, but I know there are lower brackets than that, and when you take into account dedcutions and tax credits, most people pay less than 23%.

And what about interest earned, all tax free?


Usually under these proposals, savings and investements are tax free. It's supposed to encourage people to save. The only problem is I don't think a lot people have a choice as to whether to save or not.

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UnknownPD
08-03-2004, 02:36 PM
It's supposed to encourage people to save.


Actually the deal with this proposal is that it it trying to eliminate fraud. Other governments have much greater success at collecting the sales tax (aka Value Added Tax) than individual taxes and although there are schemes to beat the taxes the fraud is more difficult. Individuals have no tax returns limiting those with an incentive to cheat and hopefully reducing fraud.

The big "but" here is what Silera points out. The poor spend a higher percentage of their income than the rich. Under a sales tax propsal the poor would then be bearing a higher percentage (proportionally) of the tax burden.

To fix that you'd need tax returns proof of income and we'd be back to the IRS thing.

I personally like the idea because it cuts back on the "cash" economy, but there are too many "vested" interests on both sides of the aisle.

Def Dave in SC
08-03-2004, 02:37 PM
I agree with it. I think it is the fairest way to deal with income proportionately as it applies to wealth


Thats false. Sales tax is a regressive tax. The less you make, the higher the percentage of your money goes into taxes.

I do agree that it is the best way for uber-rich types to pay their fair share, but for those not in the highest brackets it could be a nightmare.

Also, does this mean that items will now be taxed twice? By the state and by the federal government?

One last point. Personally, a 20-something percentage tax would make me think twice about any purchases I make. This plan would put a lot more money into my pocket, but not a whole lot would go back into the economy. I simply wouldnt spend the amount of money that I currently do.

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jeffdwright2001
08-03-2004, 02:48 PM
Why would anyone want to get rid if Irs? She's one of the better callers.

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This message was edited by jeffdwright2001 on 8-3-04 @ 2:49 PM

furie
08-03-2004, 02:50 PM
Steve Forbes put this idea out there when he ran in 96. He hsaid he could balance everything with a 19% flat tax


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silera
08-03-2004, 03:03 PM
Well, if everyone is paying a 20% tax, wouldn't my 20% tax on my Saturn be proportionate with a wealthier person's 20% tax on a BMW?

I just think that while the excessively rich do not need to use most of their disposable income, the income they do use gets spent at a different level than the general public.

I still have reservations regarding the give back to the middle class and poor, but this is not a communist society so maybe a flat tax/sales tax is the most democratic way of dealing with income.

On a social level, the increased income that is assumed because tax evasion would be eliminated (allegedly), could be used to address social programs to provide better education, training, healthcare, and housing so that no matter how little you earn, you will have the basic tools required to live.

Once you have a population where the bare minimum isn't sub par, the responsibility lies in the individual to decide if they want to live at the bare minimum or work their way out of it.

This is all hypothetical and of course isn't impossible now, but the idea intrigues me just the same.


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Def Dave in SC
08-03-2004, 03:12 PM
Well, if everyone is paying a 20% tax, wouldn't my 20% tax on my Saturn be proportionate with a wealthier person's 20% tax on a BMW


You don't seem to understand.

If I make 100,000 a year, and I'm paying 20% on everything i buy, I can afford that.

If I make 20,000 a year, and I'm paying 20% on everything I buy, thats a much larger % of my money towards taxes.

The tax system we have now is progessive, meaning that the more you make the more you pay. Well, thats the theory any way. Thats what tax brackets are. If you only make a little but of money, you are only taxed a small percentage of that. If you make a shitload, your tax rate is supposed to be very high.

By doing a sales tax, or a flat tax, you are screwing poor people. They dont have the extra money to pay the sales tax. If it now costs 15,000 a year to buy groceries, a rich person wont have a problem, but if the person only making 20,000 a year is paying 15,000 annually for groceries, he's fucked.

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silera
08-03-2004, 03:18 PM
That's why I want see how the difference would be taken care of.

20% sales tax, combined with a flat tax, and rebates/incentives for the poor may be better than the current system.

I think the current system sucks for the poor and sucks harder for the middle class. So, maybe considering a change, and trying to deal with the pros and cons of it wouldn't hurt.


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HBox
08-03-2004, 03:23 PM
One of the proposals for helping poor people is to exempt the first, say, $8000 of purchases from taxes. But I don't know how they would do that without GUESS WHO!

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This message was edited by HBox on 8-3-04 @ 3:24 PM

silera
08-03-2004, 03:25 PM
By doing a sales tax, or a flat tax, you are screwing poor people. They dont have the extra money to pay the sales tax. If it now costs 15,000 a year to buy groceries, a rich person wont have a problem, but if the person only making 20,000 a year is paying 15,000 annually for groceries, he's fucked.


I have a very detailed budget, last year I spent about $22,000 after tax dollars on all my expenses. My after tax income was $32400. The difference if I had paid a 20% tax, under this plan, would have been an extra 13K in my pocket.

I think people spend according to what they earn. Basics like food, shelter, and healthcare would have to be addressed, possible exempt from tax.

Plus, if you earn 20K your fat ass shouldn't spend $15K on food. $1250 a month could feed a family of fucking blue whales!


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Def Dave in SC
08-03-2004, 03:40 PM
Plus, if you earn 20K your fat ass shouldn't spend $15K on food. $1250 a month could feed a family of fucking blue whales!



First off, it was an example. A bad one, yes, but an example none the less. Besides, I like out of season Lobster. Is that such a crime????

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silera
08-03-2004, 03:46 PM
Go fish!


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Recyclerz
08-03-2004, 03:47 PM
This is a proposal that gets floated whenever a politician is cleaning out his/her attic and finds one of their old economics textbooks. It is economically sound and is one of the ideas floated by the right-wing anti-tax crowd that actually gets support from a lot of liberal economists. As Silera points out the devil is in the details.

Negative - sales taxes are inherently regressive.
This can be adjusted in several ways. 1. Make basic staples tax free (eg. healthy food, inexpensive clothes). (problems - where do you draw the line?) 2. Give everybody a smart card that gets swiped when you purchase goods or services & everybody gets the first $X,000 of spending tax-free (problem- fraud).

Positives

tax scheme is economic behavior neutral - doesn't encourage stupid behavior to avoid taxes
Brings in more of the underground economy, broadening the tax base
Encourages saving/accumulating wealth


The last one is the most intriguing for me. One good point that the Republicans make (the Good ones - not the asswhacks currently in power) is that a lot of social ills go away when people/families start to accumulate some capital (home ownership, a business, a retirement plan, etc.). To the extent a consumption tax encourages people who don't/can't save now to start it would be a good thing.

PS Did I click the wrong url and wind up on The New Republic web site? or are the R&F crew taking their smart pills?

Edit: I should learn to either think or type faster.



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This message was edited by Recyclerz on 8-3-04 @ 4:09 PM

blakjeezis
08-03-2004, 03:53 PM
It sounds good for individuals and families etc, but what about businesses and corporations. Would they only be taxed on their spending as well, e.g. manufacturers only pay taxes on the raw materials they purchase to manufacture their product? What about labor costs and overhead, are they taxed as well?

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A.J.
08-03-2004, 04:01 PM
Plus, if you earn 20K your fat ass shouldn't spend $15K on food. $1250 a month could feed a family of fucking blue whales!

And the cost of a cup of coffee a day can help save a starving child!

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Recyclerz
08-03-2004, 04:06 PM
It sounds good for individuals and families etc, but what about businesses and corporations. Would they only be taxed on their spending as well, e.g. manufacturers only pay taxes on the raw materials they purchase to manufacture their product? What about labor costs and overhead, are they taxed as well?


The Euros with their VAT tax deal with this the complicated way (a piece of the tax at each step of the value chain); most of the Americans who propose this say if it winds up in the final product it only gets taxed at the final consumer level; if it is another ivory back scatcher for the CEO (or his personal ball washer) the tax gets paid by the Company.



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