[Preechr]

Originally Posted by KevinTheOmnivore

What bill again are we referencing here?

HR 25

Originally Posted by KevinTheOmnivore

Perhaps I still simply don't follw. If people are being taxed at the sales counter, but then simply receiving rebates, what did you suggest, once a month, than why have the taxes at all?

The rebates "refund" the estimated amount of sales tax a person is expected to pay for the NEXT month for only certain items. They have also been called "pre-bates," because they are paid before the tax is spent. The items for which that money was spent are then considered to be un-taxed. What we're talking about here is specifically the money a person spends on food, shelter and clothing.

What I was illustrating before was that a "poor" person will actually receive more back through the rebates than he is taxed, similar to how under the current system we can say that guy is subsidized by government (through EICC, generally) rather than taxed. If I'm receiving one of those "pre-bates" every month for, say, $300, and I spend a total of $1600 per month, then I'm taxed about $68 (1600 x 23% - 300). If I save up a bunch of money and buy a $30K bass boat one month in addition to my normal spending, I'm taxed an additional 23% of $30K or $6900, plus the $68. If I'm rich, I get the same tax refund as if I were poor.

Originally Posted by KevinTheOmnivore

I've seen some call the sales tax revenue-neutral, but that proposition seems to be revenue-negative to me. Now, I know as a Libertarian you might dig that, but is that actually solvent?

When they say revenue neutral, they are talking about the idea that the new tax system will generate the same amount of revenue as the old one, were we to switch one night at midnight. Actually, it is designed to be AT LEAST revenue neutral. Free Market Capitalism says consumer spending will increase, which will increase tax revenues.

I think the part that was screwing you up was that I made it sound like everybody paid nothing. There are those who will receive more back than they put in, just like now, but they will be low income folks that live very cheaply, just as now. My emphasis on the progressivity of the plan is there to entice you to look at it moreso than it indicates my secret love of progressive taxation. If that's what we want to do as a society, then by all means let's... and here's a much less insidious way to acheive that goal...

Originally Posted by KevinTheOmnivore

I'm actually a little surprised that as a Libertarian you even support this. One argument I've seen in favor of the sales tax is that it'll encourage people to save by making them consider the weight of their day-to-day purchases. Is it the job of the government to be deciding that behavior?

Influencing private activity with economic policies (which is 99% taxation strategies) is at least half of what government does each day. We should not smoke, so tobacco is taxed. Homeowners pay school taxes. Liquor drinkers pay luxury taxes. Yacht owners... well, they register their boats in the Bahamas now, so that's a bad example...

No, I do not like that. HR25 might encourage folks to save more money by giving them their entire paycheck, but they'll not notice any increase in overall price in the consumer goods they buy, so that's not why they might save more. If it happens, it's gonna be because they simply have more money and there's enough left over once the bills are all paid that they can manage to save some of it.

Originally Posted by KevinTheOmnivore

Secondly, I know you as being a pretty strict constructionalist. If a federal income tax doesn't pass constitutional muster in your book, how does a tax on consumption for the purpose of raising revenue? Curbing the consumption habits of Americans through heavy, up-front taxation is one thing, curbing government spending? That's a whole other animal.

First off, let me again state that there will not be any "heavy, up-front taxation." The average product purchased contains, hidden in it's cost, about 22% embedded taxes. These taxes are those paid by the various suppliers and manufacturers that went together to finish that product and offer it for sale at the place you buy it. These are, among other things, the "corporate income taxes" Rush Limbaugh correctly moans are always passed onto the consumer. Businesses also pay various other taxes in many different forms. Embedded taxes are known to constitute about 22% of the cash price of all products.

When the Fair Tax in enacted, the free-market system will cause counter prices to fall at least that 22%. You may not believe in Capitalism as strongly as I do, so maybe you don't buy that part. Harvard's Economic Department agrees with me, so Ppthththh!

So, prices fall, and then the 23% consumption tax is added. Net affect, prices have not changed. Repeat: OVERALL PRICES WILL NOT CHANGE. PEOPLE WILL NOT PAY MORE FOR PURCHASES.

Originally Posted by KevinTheOmnivore

My point wasn't that rich people spend less per capita than middle and lower class folks (although to argue that home ownership only exists in the upper-class is rather silly, isn't it?). My point was that a national retail sales tax brings taxation to the front lines. It taxes people on their consumption, and I believe it's the paycheck-to-paycheck people who would suffer the most under this, because it goes right after the cash, credit, etc. that they immediately have on hand. And again, if you're saying it's no big deal because they get it all back, then uh, what's the point?

I think I said Million Dollar Home Ownership... but I'm sure Dubya's wonderful new ownership society will ensure we ALL own nice stuff. "A chicken in every pot" has worked for a long time, hasn't it?

I think I've explained the rest of this section already, but it's important to note that people are already not only paying that 22% embedded tax on every purchase under the current system, but they have less money to pay it with now because the government has already taken some of their paycheck before they received it. It doesn't make me feel much better to know that they'll get back a big refund on their overpayments once per year.

I don't hold a lot of faith for the average joe-filer to apply for all the refunds he's due. Besides, the deck is stacked against him. We know that poor people's spending habits are atrocious, and that they spend a higher proportion of their income on highly taxed items like alcohol, tobacco and gas than rich folk do, so it's safe to say your average joe-sixpack-filer is paying more in taxes than we think.

Keep in mind, as well, that states will still be free to tax as they choose, so some of those embedded taxes will remain. I believe the states will emulate the federal system once it proves itself.

It's much, much simpler. It's transparent. I see the current system as sneaky and deceptive, and I prove the merit of my suspicions by pointing at the rising costs of tax preparation. I'm not the only one having problems drawing a line between fair and easy.

Originally Posted by KevinTheOmnivore

I also think you underestimate the power of a 30% sales tax, the outrage, protest, and flat out anger it would create. I only say this from working most of my teenage years in a miserable retail outlet, where people would berate me for charging them a 3.25% rate on a fucking tie.

As I said, the only tax you'll have to explain to those people is the state sales tax. The sticker price on that fucking tie will include the fucking federal consumption tax. When they see it on the fucking receipt, you can explain to them that the price of the fucking tie went fucking down by that same amount and then kick them out of the fucking store because they wouldn't have the fucking receipt if you didn't already have their fucking money.

Let them know a paper still costs the same, and recommend they read one every once and a while. I guarantee this will be in the news a long time before it's passed. I'm talking to you about it early on in the final process, but it's an idea that's been around since the sixties.

Also, it's becoming common to see opponents of the idea referring to a 30% tax. It's not, and it's not all in how you look at it.

Originally Posted by KevinTheOmnivore

Also, there seems to me like this would just create more collection headaches. So rather than taking from an individual's income, the federal government will then be responsible for collecting from business and retail industries? That doesn't sound sketchy to you?

That sounds exactly like only one small portion of the current system's tax collection mechanism. There are a lot more individuals than retail businesses, so it's sounding much more streamlined right there. Add in that a business has a lot more to lose by cheating (and knows it) than your average filer, and I'm feeling much better about it.

Originally Posted by KevinTheOmnivore

And back to my point above, I personally believe that the tax system is built (be it intentionally or not) to serve big-spender consumers. You might say that you can't dodge taxes at the retail counter, but i will counter that we simply don't know, because we haven't quite seen it on a grand scale yet, with a high % rate. What would prevent retail companies from creating their own "priority customer" loopholes to allow large consumers to dodge heavy taxation, sort of like folks with buckets of cash can dump it into foundations and charities to avoid the Estate tax???

One thing we do know is that the current system can be cheated by anyone on an individual basis. You simply lie to the government and hope you don't get caught. Under the Fair Tax, it will take at least two parties to cheat, and one of them will ultimately be the guy who is subject to losing his business in order to save some idiot a few bucks. Even if a simple clerk is the one buying into the scheme, the business owner is ultimately responsible, right?

Keep in mind, what we are doing here is replacing many, many forms of taxation with ONE single form... Many, many mechanisms of collection with ONE single method.