The National Sales Tax: Who Shares the Burden?

[The One and Only...]

An excellent study: http://www.cato.org/pubs/pas/pa-289.html

It may seem long, but you should at least read the executive summary.

[KevinTheOmnivore]

Can't read it right now, but I'll take a guess: No income tax, no property tax, no taxes other than sales taxes on most and/or all goods....?

If this is the argument, OAO, just one question: Have you ever worked in retail....?

[The One and Only...]

Actually, there are two points to the study:

That a consumption tax, if put into a lifetime context, appears much less regressive than if put into the annual context (as used a la income tax).

and...

A consumption tax could be made progressive through a rebate system based on poverty level.

The study only deals with replacing the income tax, if I recall correctly.

No, I have never worked in retail. I don't really see how that matters much...

[AChimp]

I've said it before, and I'll say it again. Sales tax isn't a magic solution to everyone's tax woes. Sorry.

[KevinTheOmnivore]

Originally Posted by The One and Only...

No, I have never worked in retail. I don't really see how that matters much...

Well if you can't see the relevance, then you maybe shouldn't be talking about a national sales tax as a Libertarian salvation for something.....

I worked in various levels of retail throughout high school and college. What do you, OAO, think people would rather pay, a lump of their pay check that was never in hand, or higher prices for goods on the market?? Where I'm from, "luxury" goods such as clothing had a 8% sales tax, which nearly caused riots. Then it went to 3.25%, and people still bitched, griped, and then drove to places like New Jersey, who have no sales tax.

And as for its potential to be more progressive than regressive, is that what you want? Is the name of the game lower taxes, or is it an alternative method of taxing in order to maintain the same levels of revenue...? If it's the latter, then why bother??

Chimp, I'd be happy to hear your problems with the sales tax.

[VinceZeb]

So what your saying is Kevin is that the American population are too stupid to realize they get a huge chunk of their check taken away each month?

[KevinTheOmnivore]

No, I'm asking why have a sales tax at all. Keep up, corn muffin.

[AChimp]

In most places in Canada, we pay TWO separate sales taxes, provincial and federal. All it serves to do is increase the price of goods and services (necessities are exempt from these sales tax, but that doesn't amount to much outside of real food) AND it raised the base price of items because merchants had to make up for the sales tax that they paid for stuff, and so on up and up the product chain.

Adding a sales tax isn't just "consumer/end-user sales"; it applies to every transaction between every middleman and every supplier. When their costs go up, their sale prices also go up, and it is the consumer who pays for it in the end... unless that consumer will be content with only buying milk and bread for the rest of his or her life.

This article talks about making it "progressive" by offering rebates and exemptions, but how will that be organized? Give every poor person an ID card that they can flash at the till which will tell the cashier not to charge them tax? The merchant still had to pay the sales tax on that item, so now your businesses are losing money.

Redemptions and rebates? They will never be able to fully reimburse every poor person the full amount that they have paid annually in taxes. Get them to save receipts? Ha... you still need accountants to verify the sums, and accountants COST money. Give everyone a flat amount? Well, you'd be handing out extra money to some people and not giving enough to other people, and people like Vinth would just have another thing to whine about being unfair.

In the end, it just keeps the poor at the bottom like the current system. They don't pay any income tax already, so eliminating income tax to champion the poor is stupid.

[punkgrrrlie10]

a national sales tax would interfere with a state's police powers and tax goods not reachable by federal jurisdiction. The feds can only tax things in interstate commerce. Businessees that are small and solely intrastate would not fall under the tax and thus overcomplicate it. I'm sure 5 of the 9 Sup. Ct. Justices would strike it down as exceeding federal jurisdiction

Don't you love federalism?

[The One and Only...]

Originally Posted by KevinTheHerbivore

I worked in various levels of retail throughout high school and college. What do you, OAO, think people would rather pay, a lump of their pay check that was never in hand, or higher prices for goods on the market?? Where I'm from, "luxury" goods such as clothing had a 8% sales tax, which nearly caused riots. Then it went to 3.25%, and people still bitched, griped, and then drove to places like New Jersey, who have no sales tax.

8% sales tax is high in this day and age because of the income tax. I surely don't believe people would be so ignorant as to think the same way about sales tax rates when their income tax is gone.

Besides, if it does cause a movement for lower taxes, this would be good from a Libertarian perspective. After all, we, as a whole, oppose high taxes.

And as for its potential to be more progressive than regressive, is that what you want? Is the name of the game lower taxes, or is it an alternative method of taxing in order to maintain the same levels of revenue...? If it's the latter, then why bother??

It's both, but initially the latter.

The change would take place because a consumption tax would be more efficient and leave less room for corruption. I suggest you take a look at this link.

[The One and Only...]

Originally Posted by AChimp

In most places in Canada, we pay TWO separate sales taxes, provincial and federal. All it serves to do is increase the price of goods and services (necessities are exempt from these sales tax, but that doesn't amount to much outside of real food) AND it raised the base price of items because merchants had to make up for the sales tax that they paid for stuff, and so on up and up the product chain.

Adding a sales tax isn't just "consumer/end-user sales"; it applies to every transaction between every middleman and every supplier. When their costs go up, their sale prices also go up, and it is the consumer who pays for it in the end... unless that consumer will be content with only buying milk and bread for the rest of his or her life.

Yet, at the same time, if the income tax was gone suppliers could afford to lower their prices, and middle men could afford to pay more for their goods.

In any case, this would put companies who devised ways to cut middle men at an economic advantage, which would spur competition and likely lower prices overall.

This article talks about making it "progressive" by offering rebates and exemptions, but how will that be organized? Give every poor person an ID card that they can flash at the till which will tell the cashier not to charge them tax? The merchant still had to pay the sales tax on that item, so now your businesses are losing money.

Yes, but then again the business owner did not have to pay income tax. Do you happen to be missing something here?

Redemptions and rebates? They will never be able to fully reimburse every poor person the full amount that they have paid annually in taxes. Get them to save receipts? Ha... you still need accountants to verify the sums, and accountants COST money. Give everyone a flat amount? Well, you'd be handing out extra money to some people and not giving enough to other people, and people like Vinth would just have another thing to whine about being unfair.

You know what else costs money? The people who do taxes.

Flat rebates would be fine enough, since they would benefit those on the lower income bracket more than those on the higher.

Oh, just to point something out: the government would likely not want the sales tax to be too high, because that might lower the amount of consumer spending. The more people spend, the more tax money is raked in.

[KevinTheOmnivore]

Originally Posted by The One and Only...

8% sales tax is high in this day and age because of the income tax. I surely don't believe people would be so ignorant as to think the same way about sales tax rates when their income tax is gone.

So you're saying that places such as Alabama, where all taxes are incredibly low (even by our VERY low American standards), that they would welcome an 8% sales tax on goods, were there of course no income tax....? Now, other Libertarian estimates I've seen have placed the tax at a much higher rate than 8%, which it would probably need to be to make up for lost revenue.

I disagree with the notion that people would prefer paying higher taxes on their consumer goods. How is this still not essentially an income tax....? You're taking more per every item from their pay checks, you're just not doing it directly....

Besides, if it does cause a movement for lower taxes, this would be good from a Libertarian perspective. After all, we, as a whole, oppose high taxes.

Well, I'm happy for you and your ideology, but IMO, the focus of the conversation should be what's best (and most practical) for our nation's people.

The change would take place because a consumption tax would be more efficient and leave less room for corruption. I suggest you take a look at this link.

OK, will do, but can you speak on the less corruption point...? How so...?

[The One and Only...]

Originally Posted by KevinTheHerbivore

So you're saying that places such as Alabama, where all taxes are incredibly low (even by our VERY low American standards), that they would welcome an 8% sales tax on goods, were there of course no income tax....? Now, other Libertarian estimates I've seen have placed the tax at a much higher rate than 8%, which it would probably need to be to make up for lost revenue.

Yes, it would be higher than that in order to maintain our current level of government. What I said was that 8% sales tax is considered high in this day and age: sales tax where I live is around 7%...

I believe that the estimate is around 18%? I could be wrong.

I disagree with the notion that people would prefer paying higher taxes on their consumer goods. How is this still not essentially an income tax....? You're taking more per every item from their pay checks, you're just not doing it directly....

I don't think that people would prefer one over the other, but I do think that it would make people more aware of just how much taxes have affected their lives. A better informed public naturally leads to better policy.

It's a consumption tax. Money saved would not be taxed a la income tax, thus creating economic incentives to save. If more people save for the future, that means that less government involvement will be "necessary" to protect the poor/lower income/disabled/etc. In turn, taxes will be cut as government programs will be viewed by more and more people as outdated and unnecessary.

Well, I'm happy for you and your ideology, but IMO, the focus of the conversation should be what's best (and most practical) for our nation's people.

(stands up on soap box) What's best and most practical for my country is the advancement of my ideology!!! (shakes fist in the air, stands off soap box)

OK, will do, but can you speak on the less corruption point...? How so...?

It would be a lot harder for the wealthy to get by without paying taxes. It's not like they can just lie and hide their money: if they don't pay the tax, they don't get their items.