Washington Times, Steve Forbes: "Flat tax vs. national sales tax"

[Bush_Eats_Beef]

http://washingtontimes.com/op-ed/20050721-093749-6762r.htm

By Steve Forbes
July 22, 2005

The flat tax is not the only solution that has been proposed to address the problem of our monstrous federal income tax code. Another proposal under discussion is the national retail sales tax (NRST). The NRST would be a consumption tax levied at the national level. One variation that has gained a lot of support in Congress is a 30 percent tax on most consumer purchases of goods and services.

The flat tax is a better idea than the NRST for a multiplicity of reasons we will get to shortly. But it should be stressed that supporters of a sales tax have their hearts in the right place — they rightfully believe that what we have today is an abomination, that we are overtaxed and that we are all subject to abuse from the IRS. A sales tax would be infinitely preferable to the current monstrosity. I believe, though, the flat tax is preferable, not least because it could more easily, readily be enacted than a national sales tax: Before a sales tax is put in place, we must first repeal the Sixteenth Amendment to the Constitution, which allows Washington to impose the income tax. Otherwise we will end up with the situation that exists in most states — and indeed in most other countries — and that is both an income tax and a sales tax (or in other countries the Value Added Tax).

The national retail sales tax is intended to replace personal and corporate income taxes as well as payroll taxes, capital gains levies, and estate and gift taxes. It would be collected on the sale of new goods and services and exempt from all transactions of used items. Business-to-business purchases would also be exempt from taxation. Potential snags are immediately obvious: What is the definition of new? What constitutes a business? Let's say you sell stuff on eBay; one can imagine people justifying a sales-tax exemption on a slew of items that may or may not really qualify. The national sales tax plan calls for a refund from Washington for all taxpayers. This refund would be issued each month to offset the tax levied on necessities such as food, clothing, and shelter. The official poverty level for a family of four is $18,850; the rebate — if this family included a married couple — would be $479 a month or $5,745 a year (see below).

But, alas, the concept presents numerous challenges: A national retail sales tax will raise the price of many goods and services. The price of non-exempt goods and services purchased at retail would increase 30 percent. Partisans reply that such hikes would be overcome by people having higher take-home pay — no more deductions for incomes taxes or FICA taxes. They also insist that the sales tax would sufficiently lower the cost of most goods and services over the long term, so that the 30 percent surcharge would not be noticeable.

[queeg]

1. The problem with a sales tax or VAT in America

is that most people dont live where the sales tax is already 9 percent.---in Austin Texas, its 8 3/4 now, and soon to be over 9 and perhaps 10 if the special legislative session chokes up another hairball this week.

[TahitiNut]

2. Let's see a national sales tax on stocks and other equities, first!!

These proponents of a 'national sales tax' don't seem to think the buying and selling of corporations qualifies ... because it's THEM (the "ownership class") who'd have to pay.

Fuck 'em!!!

Yesterday's NYSE dollar sales volume was over $48 billion. A 1% national sales tax on those equities alone would've yielded $480 million. That doesn't count the other exchanges. A half-billion here and a half-billion there adds up. In 200 days of trading, that'd be $100 billion in tax revenues - in a market that's created and protected by the services of the U.S. Government.

[NNguyenMD]

3. wouldn't states have to keep their sales taxes on top of this one as well?

so you're in fact payin 30% on top of the 8 or 9% in state sales taxes you're already paying?

Not a progressive tax cut at all, and will severely cripple social programs. The government wouldn't be able to do much on the national level with anything less than a 40$ sales tax I would imagine.

[Bush_Eats_Beef]

5. You keep the state tax, and the 30% is a LIE.

Most of the economists who have looked at the proposal say that it would take a 40 to 50 percent National Sales Tax...in ADDITION to local state taxes...to "replace" the IRS.

[1932]

4. Could these people have any more disdain for low and middle income people?

I hope that in my lifetime we see the death of these ideas about tax which overwhelmingly benefit people who (1) make much more than they spend (sales tax) and (2) have incredible wealth (flat tax).

[evlbstrd]

6. Yet another attempt to kill the working classes.

Sales taxes are inherently regressive. And how does FICA get cancelled in the bargain?

[applegrove]

7. Now he wants the income tax act repealed. I thought they didn't want

activist judges?

Canada has a sales tax and an income tax. And our economy is booming. Our schools are good. And when parents give teens money to go to the mall - that helps to pay for health care.

This is scary. The freaks only have two years to change the whole make-up of the USA.

[flaminbats]

8. why not have them both?

no reason to pit one sorry idea against another :shrug:

[high density]

9. Won't these turds like Steve Forbes ever go away?

I cringe every time hear about a flat tax or national sales tax.

They also insist that the sales tax would sufficiently lower the cost of most goods and services over the long term, so that the 30 percent surcharge would not be noticeable.

Yeah, I find that all of the stuff that I buy goes down in price as the taxes increase on it, such as gasoline. :eyes:

[skids]

10. NRST (aside from shafting the common man) would be sooo simple.

After all, there would just have to be this big long list of items that are exempted.

And, since we can't have non-farmers exempted for farming supplies, for example, we'd have to have this long list of how you qualify for an exception.

Hrm, lets see. Thousands of types of items. Thousands of reasons to be exempt or not to be exempt from the retail sales tax on given items.

Oh, yeah, that'll simplify things :sarcasm:

Me personally, I think if we got rid of all the parts that create loopholes for the favorite sons of capitalism, that might cut down on the complexity.

[TahitiNut]

12. Don't forget that every seller becomes a Federal tax collector.

Imagine all the IRS jobs that'd no longer be needed. :sarcasm:

[skids]

14. Yeah, and think of all the stuff that would be...

...ehem... "leased to me by my cousin's company" because said cousin could buy it wholesale thus avoiding the tax.

Oh, and the lovely black market in tax free goods, naw that won't be hard to police. Better give all those IRS agents a sidearm and put them out on the street, eh?

[LSK]

11. hmmm a right wing rag featuring an article from superrich Forbes

Why should we give this article any discussion??? Its just another cute way for the SuperRich to not pay taxes and shift the tax burden to the middle and lower classes.

[Bush_Eats_Beef]

13. We want to give any National Sales Tax noise PLENTY of discussion.

I posted the following in another thread.

Bush's Tax Advisory Panel delivers their recommendations on SEPTEMBER 30th.

People need to KNOW what's bbeing proposed. Right now, I'm sure a lot of people think "A National Sales Tax will never happen."

Maybe it won't.

Maybe it WILL.

After the AMT

New York Sun Editorial
July 22, 2005

http://www.nysun.com/article/17419

Next week, on Thursday, members of the Ways and Means Committee will hear testimony from their fellow representatives about radical tax reform proposals. Some of the proposals will be radically rationalized versions of the current income tax, such as the "Simplified USA Tax" proffered by Rep. Phil English, of Pennsylvania. Mr. English proposes eliminating most deductions and exemptions, and then creating a three bracket progressive rate system.

Rep. Michael Burgess, of Texas, has introduced a voluntary flat tax that would still give people the option of filing under the old system. It bears a striking resemblance to Steve Forbes's famous flat-tax idea. Some will be radically different approaches to taxation.

One such is a proposal by Rep. John Linder, of Georgia, to abolish the Internal Revenue Service entirely and shift from an income tax to a national retail sales tax. The sales tax would differ from a European-style value-added tax because it would be assessed only at the register during the final sale to the consumer, as opposed to being tacked on at each stage of the production process.

Many prominent economists are lining up behind the idea of a consumption tax, and especially one such as Mr. Linder's that would use a system of "prebates" to make it progressive. Others are backing a flat tax on income. This would eliminate the complexities of the current tax code, without necessitating the creation of a new bureaucracy to process progressive prebate and rebate transfers under a consumption tax. It sidesteps what some see as a flaw with the consumption tax idea: Unless the Congress overturns the 16th Amendment ("The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."), we could end up with both a national sales tax and an income tax.

[JDPriestly]

15. Taxes viewed as a sacrifice not as a burden.

I heard an interesting comment recently. A veteran of the Iraq war who is running for Congress was talking about the need to make sacrifices to our country at a time of war. He talked about paying taxes as a sacrifice to our country.

Progressive or graduated tax rates make sense if you look at taxes not as a burden but as a patriotic sacrifice. The sacrifice of a poor man who pays a lesser percentage of his meager income in taxes may be greater than the sacrifice of a rich man who pays a larger percentage of his larger income. Think of the widow's mite -- a poor woman's gift of a few small coins is worth more in the sight of God than a large amount of money donated by a rich man.

Forbes seems to view taxes as a burden not as a sacrifice. He complains about the complex tax code but I think what really bothers him is that the progressive tax requires him to make a sacrifice comparable to the sacrifice of the poor man. In fact, as a rich man, regardless of how much he pays in tax, Forbes sacrifices far less than a poor taxpayer.

If Forbes really loved his country, he wouldn't be so obsessed about getting rid of progressive taxes. I believe Forbes has several children. I wonder if he is as stingy with them as he wants to be with his country. I bet not. I bet he loves his kids. If he really loved his country, he wouldn't be so worried about how "unfair" and complex the progressive tax system is. The progressive tax is the fairest way to even out the sacrifices taxpayers make. Think of all the soldiers, many of them very young, who have sacrificed their lives for our country. In comparison, paying taxes is a minor inconvenience.