http://hosted.ap.org/dynamic/stories/T/TAX_OVERHAUL?SITE=FLMYR&SECTION=HOME&TEMPLATE=DEFAULT Anyone wants to discuss this? I'm totally confused by what they're trying to accomplish if it is suppose to be government revenue-neutral. Doesn't this create the perfect storm for puncturing the housing bubble? Doesn't the Wall Street lobby realize that if we go into a depression, which we almost certainly will if the housing bubble bursts, nobody will be buying securities of any form even if they are not taxed? I just don't get it.
"Unfortunately, President Bush's tax panel is a Trojan horse, using so-called simplification to cut taxes for the wealthy while increasing taxes for middle-class families," said House Minority Leader Nancy Pelosi, D-Calif. I do not trust GWB wrt taxes. The tax system needs a major overhaul, but GWB aint the guy to do it. Does anyone take a 'presidential panel' seriously? They were likely given a summary and told to write a report.
Forget tax reform, how about some tax elimination? Scrap income tax completely and just jack up the sales tax...
How would that help poorer Americans? Oh wait, dumb question, I forgot whose tax plan we are talking about here.
Well, in case the question wasn't rhetorical, poor people generally spend less money, so a higher sales tax would reward them for not spending as much. If they still go broke because they're spending all that money that's not being taken out of their paychecks from income tax, then it would be their fault.
You could have a national sales tax (not that I'm in favor of one) and also have similar income limits where it doesn't take affect. For example, if you make less than $20,000 you can "reclaim" your sales tax or some sort of system could be put into place. At face value the particular plans outlined would cost me the same and save me around a page of paperwork.
would it? sales tax really doesn't hurt those with money. What hurts the poor is they have limited funds to spend on necessities and they don't have the luxury to save because they live day to day (this is most, excluding the few who do spend all their money on unneeded things). Raising tax would mean they would have less money for groceries, clothes, education. For the real poor, they aren't getting much taken from their paychecks from income tax anyway, so a higher sales tax would actually hurt them more. basically, i would support your statement if the sales tax excluded necessities. On the other hand, in a class society, those in the lower and middle classes spend what leftover money they have on branded goods to raise their status. Still, I'm all for taxing unnecessary goods.
Exactly. I have to pay more for gas as an example to get to work. It hurts me much more than it does my boss because it is a higher percent of my income that is being used on this necessity. If everything were taxed at a higher rate, I might have more take home pay initially, but i would end up paying more in the end. I claim 0 exceptions on W2 now and get a good size refund every year. I usually pay off bills or save that money when I get it back. Under a national sales tax wouldn't I just get that money in my check every month but be forced to spend it on higher taxes on the items that I purchase?
Who said anything about taxing necessary goods like food and gas? Geez, no wonder I never post in D&D...
expounding on what A-Train said...the only proposal i've seen regarding a national sales tax is the FairTax proposal. it does not tax people on necessities. i can also tell you that congressmen from the very poorest districts in this country have come out in support of FairTax. i don't have a strong opinion either way on it...though, i would prefer something far simpler than what we have today.
Well that sounds OK, I just saw that in the plan propsed that one of the tax breaks was a mortgage on a second home. I was like "I know where this is going..."
A-Train, I agree completely. As an independent business owner, I can't think of a better system than to eliminate the current system and pay a higher sales tax. Completing tax forms and returns each year is the most difficult and dreaded part of owning my own business, but even when I wasn't self-employeed I still thought a flat sales tax would make a much more practical system all together. Yes, some people will have to learn how to better manage their money, but it seems that eventually people will make much better decisions when making spending decisions. Here's an old article, but it sounds like a good plan, but I just think that the lobbiests for CPA's would be able to block the plan from passing as there would not really be a need for them anymore. http://usgovinfo.about.com/library/weekly/aa032098.htm Search U.S. Gov Info / Resources Tax Reform: National Retail Sales Tax Act Dateline: 03/20/98 Last week, we took a look at the Armey-Shelby Flat Tax proposal (H.R. 1040) that would tax 17% of the income of all taxpayers, no matter the source of that income and put the entire tax return to a single post card. The other tax reform proposal to make to the point of actual "billdome" was H.R. 2001 (H.R. 1325) - The National Retail Sales Tax Act sponsored by Congressman Dan Schaefer (R. Colorado). How a National Sales Tax Would Work Besides imposing a sales tax of 15% on "the gross receipts from the sale of any taxable property or service sold in the United States.", H.R. 2001 would affect these two sweeping changes: The Income Tax would be repealed - as would all estate, gift and non-trust fund dedicated excise taxes. The IRS would be abolished - as of FY 2001 with no successor agency established. The 15% tax would be collected on all goods and services sold at retail. Things like utility bill payments, legal fees, golf lessons, and video rentals would be taxed. Basically, the money you make -- your income -- would not be taxed at all until you spend it. Capital gains and income from investments would not be taxed as long as the money is reinvested. Contributions to charities would not be taxed -- a 100% deduction under the income tax. Federal taxes would no longer be withheld from your paycheck. There would be absolutely no -- zero -- forms to file. Instead, you would pay your taxes directly to the cash register of every store you shop in. (Social Security deductions would continue.) Exemptions? No sales tax would be collected on any good or service purchased for resale, purchased to produce a good or service for resale, or items to be exported from the United States. The reasoning here is that if you tax the sale of items used to produce items that are to be resold, the initial tax would become hidden in the price of the final product. What About Businesses? Business would pay not taxes, only collect them. That's really the way it works now. Business just pass the their taxes along to consumers in the form of higher prices. Other Benefits of the National Sales Tax Cost to file - No cost to individual taxpayers Complexity - Individuals do not file a return Hours to Comply - zero (0) hours for individuals Penalties - None for individuals Savings - Dramatically increases savings So, What's Wrong with the Sales Tax? According the promoters of the Flat Tax, two things: First, a National Sales tax would require that two-thirds of the House and Senate, and three-fourths of the states vote to repeal the 16th Amendment that created the Income Tax. (Congress cannot create a new national taxing authority without abolishing the existing one.) This, according to Flat Tax supporters, could probably never happen. Second, Flat Taxers say a sales tax is hidden and too easy for the government to increase. Consumers are never sure exactly how much state and local sales tax they are paying now, thus creating less resistance to increasing those taxes. Which Plan Will Win? Only a very, very long time will tell. During which, we'll keep paying income tax to the IRS on 1040's, 1040A's and about a gazzilion other forms not even created yet and hating every second of it. Either plan, flat tax or sales tax, would require massive amounts of daring legislation and have a drastic and pretty unpredictable impact on the American public and economy. Indeed, the passage of either plan would require a a movement of government unseen since "The First Hundred Days" of President Franklin Roosevelt. Current Status of the National Retail Sales Tax Act The Retail Sales Tax Act (H.R. 2001) has been in the House Ways and Means Committee since 6/19/97.
A big reason there won't be a national sales tax is that the retail stores and corporations of America don't want to be the primary tax collector for the federal government. All of a sudden the tax collecting burden for the United States is on them. Also, it would lead to a HUGE grey market with people avoiding taxes. There would be a much larger percentage of tax avoidance than ever before according to a lot of studies.
see, i have a hard time believing that. i don't know for sure, but my best guess would be that you would have a hard time finding a system where more people get away with paying less than their full share than the current system. in fact, that's one of the selling points that the FairTax people tout.
Perhaps, perhaps not. I just don't think its going to happen though. Not in the next 15-20 years at least. Wal-Mart and McDonald's DON'T want to become the tax collecting system for the federal government. Mom and Pop corner store doesn't want to either.
Why not? They're doing it now for the State and county. Not to mention having to fill out 5 Billion or so W-4's each year and withholding taxes, etc.
i'm thinking they're alerady doing it...and they'll still save money on dealing with what they must deal with on federal income tax returns.
Actually one idea we were studying in one of our classes is a modified sales tax system. All your money minus what you put in savings and what you invest is taxed. (as it is now there are differing rates of taxation on investment than on money earned through a job which disproportionately hurts the poor considering they don't invest much) The system would have you send in a report to the IRS that just subtracts savings and investment from your net income and that is taxed. There could be progressive tax rates or a flat tax rate that creates a tax free zone for say the first 20000 dollars of one's income. Generally, it does a better job of avoiding the regressive effects of a straight up national sales tax while simplifying the system and ending the massive tax loopholes and tax benefits on investment that benefit the rich.
