Income tax; Flat tax; National Sales tax; No tax

AlbqOwl said:

While I agree that the flat tax would remove ability to use taxes for economic stimulus, and I continue to think about that, it would also remove ability of politicians to use taxes to manipulate votes.

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The ability to manipulate taxes pales in comparison to manipulation via spending.

I can't see how it would be the least bit regressive, however.

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It is when you discuss it in the context of marginal utility. Taking $10 from someone who only has $100 is pretty painful and needs that $10 for basic necessities compared to someone who has a million and taking $100,000 from them who doesn't need it to live. Essentially the really poor person's marginal utility of every dollar is higher then the rich person's.

AlbqOwl said:

I agree that the sales tax would be ridiculously complex, would not simplify the system in the least, and would likely swell the bureaucracy that we already have. And, as previously stated, it is far more regressive than any other proposed system.

While I agree that the flat tax would remove ability to use taxes for economic stimulus, and I continue to think about that, it would also remove ability of politicians to use taxes to manipulate votes.

I can't see how it would be the least bit regressive, however.

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The national sales tax would be simple. All the infrastructure is already in place and most things already have a sales tax. All you have to do is raise the rate. The IRS could then be dismanted.
Sales tax has been around forever. It is not ridiculously complex at all.

obvious Child said:

It is when you discuss it in the context of marginal utility. Taking $10 from someone who only has $100 is pretty painful and needs that $10 for basic necessities compared to someone who has a million and taking $100,000 from them who doesn't need it to live. Essentially the really poor person's marginal utility of every dollar is higher then the rich person's.

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Easy. Necessities aren't taxed.

reefedjib said:

Easy. Necessities aren't taxed.

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That would work on a national sales tax system not on a national flat income tax system.

obvious Child said:

That would work on a national sales tax system not on a national flat income tax system.

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Sorry, I thought you were discussing a national sales tax.

Dirty Harry said:

The national sales tax would be simple. All the infrastructure is already in place and most things already have a sales tax. All you have to do is raise the rate. The IRS could then be dismanted.
Sales tax has been around forever. It is not ridiculously complex at all.

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I take it you are either a full time student or a public worker no?

First of all, there is significant cheating in reporting of sale tax to state revenue departments that exists today. Generally, for sales of goods, state auditors either compare a firm's sales and reported taxes with a known benchmark, namely a clean business or they audit the inventory. Most states never had the funds to fully state such departments in the first place. So do you realize you are saying that the poor system of ensuring compliance at the state level could be used nationally in realistic, simple and accurate way?

Tell me, what department at the federal level is going to hire literally hundreds of thousands if not millions of auditors to ensure compliance if we get rid of the IRS?

It gets worse for services. Many professional services have internal discounting systems on rates. They'd simply report the discounted rate to the government while charging a higher rate to their clients. You'd have to audit many of them to ensure compliance.

While you are correct that sales taxes have been around you ignore that cheating on sales taxes has also been around forever. States right now cannot assure complete honest compliance. What on Earth makes you think the federal government can do it?

The main reason to end a progressive income tax is to castrate a dem congress that gets power by promising those in the lower brackets that they will be given everything they want if they vote for dems because the dems will only raise the top brackets to pay for that pandering.

If there was a purely flat tax, everyone would pay more if they voted for dem socialists

TurtleDude said:

The main reason to end a progressive income tax is to castrate a dem congress that gets power by promising those in the lower brackets that they will be given everything they want if they vote for dems because the dems will only raise the top brackets to pay for that pandering.

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You know, reasonable people don't hold extreme views like that. By the way, I like how you ignored how the 2004 nomination campaign had republicans all preaching that to voters. Vote for me and I'll get you everything back.

Still, better to tax then to borrow.

If there was a purely flat tax, everyone would pay more if they voted for dem socialists

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Except there will never be a pure flat tax. There isn't a pure flat tax anywhere.

obvious Child said:

I take it you are either a full time student or a public worker no?

First of all, there is significant cheating in reporting of sale tax to state revenue departments that exists today. Generally, for sales of goods, state auditors either compare a firm's sales and reported taxes with a known benchmark, namely a clean business or they audit the inventory. Most states never had the funds to fully state such departments in the first place. So do you realize you are saying that the poor system of ensuring compliance at the state level could be used nationally in realistic, simple and accurate way?

Tell me, what department at the federal level is going to hire literally hundreds of thousands if not millions of auditors to ensure compliance if we get rid of the IRS?

It gets worse for services. Many professional services have internal discounting systems on rates. They'd simply report the discounted rate to the government while charging a higher rate to their clients. You'd have to audit many of them to ensure compliance.

While you are correct that sales taxes have been around you ignore that cheating on sales taxes has also been around forever. States right now cannot assure complete honest compliance. What on Earth makes you think the federal government can do it?

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I take it you must still be in kindergarten. There is more tax cheating in the present income tax system than there is in sales tax reporting. A business won't stay in business long if they cheat on sales tax.
States have a reliable system of sales tax collecting already in place. It would be easier to keep the thousands of businesses honest than the millions of individual tax payers that cheat. If a business cheats they lose their license to operate. Simple..
The states would collect the sales tax and forward the federal share to them. It is simple and would be much easier to implement than the present system. The machinery is already in place.
State sales taxes work just fine.

Dirty Harry said:

I take it you must still be in kindergarten.

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Your insults need work. Note how my observation was based on your ignorance of the workings of the business world where yours was a pedestrian attack on general intelligence. Try again and put some effort into it for a change.

There is more tax cheating in the present income tax system than there is in sales tax reporting.

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At an individual personal income tax level yes. Not so much on a business level. That's partially due to the nature of how business income flows through. Change that and you'll see changes as to how people cheat. It is somewhat easier to go after individuals rather then businesses.

A business won't stay in business long if they cheat on sales tax.

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Because....

States have a reliable system of sales tax collecting already in place.

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Are you serious? States have awful systems to sale tax collecting. States cannot deal well with cash based accounting! Under the table transactions occur all of the time and states have virtually no way of stopping them short of auditing inventory. Saying I'm in Kindergarten and then making that statement is pretty ironic. Tell me, if the systems are so reliable, why is there billions in unreported state sale tax from New York to Florida to Hawaii? :rofl

Do you know the difference between a credit sale and a cash sale? :2wave:

It would be easier to keep the thousands of businesses honest than the millions of individual tax payers that cheat. If a business cheats they lose their license to operate. Simple

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LOL. No, it wouldn't be easier to keep thousands of businesses honest. States right now cannot enforce compliance on cash sales. Only a fool thinks that without a huge army of federal auditors that a national sales tax is viable. And you have to PROVE first that a business was cheating. How are you going to do that without a huge army of auditors?

The states would collect the sales tax and forward the federal share to them.

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Which they don't do well as it is. It is amusing how you think that states who cannot enforce compliance could be the mechanism for national sales tax. Yes, let's take a dysfunctional system that misses billions in sales tax and use it as the foundation for a national system. That couldn't possibly go wrong at all!

It is simple and would be much easier to implement than the present system. The machinery is already in place.

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Ah yes. Machinery that doesn't work well, doesn't catch sales, has a real problem with cash sales, doesn't deal with the problem of professional service discounts and use as the foundation for a national system.

State sales taxes work just fine.

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Clearly, you are either a public worker or a full time student. Obviously, you've never worked in the private sector a day in your life.

obvious Child said:

I take it you are either a full time student or a public worker no?

First of all, there is significant cheating in reporting of sale tax to state revenue departments that exists today. Generally, for sales of goods, state auditors either compare a firm's sales and reported taxes with a known benchmark, namely a clean business or they audit the inventory. Most states never had the funds to fully state such departments in the first place. So do you realize you are saying that the poor system of ensuring compliance at the state level could be used nationally in realistic, simple and accurate way?

Tell me, what department at the federal level is going to hire literally hundreds of thousands if not millions of auditors to ensure compliance if we get rid of the IRS?

It gets worse for services. Many professional services have internal discounting systems on rates. They'd simply report the discounted rate to the government while charging a higher rate to their clients. You'd have to audit many of them to ensure compliance.

While you are correct that sales taxes have been around you ignore that cheating on sales taxes has also been around forever. States right now cannot assure complete honest compliance. What on Earth makes you think the federal government can do it?

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Your claims seems to be that it would be impossible to collect all of the tax money with a universal sales tax. Even though this is true, there is no reason that it would be much different then what we have today.

"As a percentage of gross domestic product (GDP), tax evasion in 2001 is beyond 2.6 percent, compared to 1.6 percent in 1991. This represents over 16 percent of taxes due."

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Americans For Fair Taxation: Ask the Expert

Do you think that statistic is wrong? 16% tax evasion existed in 2001, so it is hard to imagine that a fair tax would be much worse.

Also, I find it really interesting that if only a sales tax is used for federal revenue, then there would a around a 90% reduction in files for taxes.

If anything, a sales tax would function better, and with the increased economic growth of eliminating the income tax, revenues are sure to be higher in the future with a sales tax instead of an income tax.

Anyone still has the same reasons to evade any taxes that they might have, so there needs to be more evidence for a claim that a universal sales tax would have more tax evasion then the current income tax.



and regardless, even if there is tax evasion, there is models that factor in pessimistic assumptions, and that will just mean that the rate must be higher to get more full revenue from large companies that are guaranteed to pay full taxes.

It seems like the rate would be between 40% and 30%, and if that is, then so be it. Tax evasion doesn't refute that, because predictions have it factored in.

"Using a formula that corrects for the faulty assumption about government spending, William Gale, director of the economic studies program at the Brookings Institute, calculates that a 39.3 percent exclusive rate would be necessary for revenue neutrality. (We used the lower Advisory Panel number). A more recent study by FairTax supporter and Boston University economist Laurence Kotlikoff – working from Gale’s formula and adopting the same basic assumptions – determines that a 31.2 percent exclusive (or 23.8 percent tax-inclusive) rate would be sufficient."

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FactCheck.org: Unspinning the FairTax



I just think that if someone is against a universal sales tax for distribution reasons, because it would increase the percentage of the tax burden to the middle class from what we have now then that is understandable. but the whole idea of some insane levels of tax evasion is being used as a scapegoat.

Lets just assume that it would be 39.3%, to give the pessimists the benefit of the doubt, and the proposal still holds up.

nerv14 said:

Your claims seems to be that it would be impossible to collect all of the tax money with a universal sales tax. Even though this is true, there is no reason that it would be much different then what we have today.

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Not quite. My claim is to have a reasonably accurate sale tax, we'd need a monster legion of auditors to ensure compliance. That would mean significant expansion of the government, bureaucracy, taxes to support it and more interference. Practical application of a sales tax in the compliance department is not realistic. Right now states are losing billions upon billions from under reported cash sales. The notion that the current compliance system could work well is pretty insane, especially when higher taxes creates incentives to cheat. Poor compliance with more cheating = worse outcome.

Do you think that statistic is wrong? 16% tax evasion existed in 2001, so it is hard to imagine that a fair tax would be much worse.

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Hard? I'd imagine it would have grown since then. And what is in that 16%?

Also, I find it really interesting that if only a sales tax is used for federal revenue, then there would a around a 90% reduction in files for taxes.

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Probably more then that. Under the Fair Tax proposal, I'd say something like 95-99% reduction. That doesn't mean that it will be honest.

If anything, a sales tax would function better, and with the increased economic growth of eliminating the income tax, revenues are sure to be higher in the future with a sales tax instead of an income tax.

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Come again? All you'd be doing is moving income tax burden to sale tax burden. Furthermore, higher taxes on sales has been shown to decrease economic activity. It's questionable to say if revenues would be higher on either.

Anyone still has the same reasons to evade any taxes that they might have, so there needs to be more evidence for a claim that a universal sales tax would have more tax evasion then the current income tax.

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I'm not sure you understand. A national sales tax system would have the same problems as current state sale tax which currently have not been addressed. And without a drastic increase in auditors to ensure compliance, there will be more cheating. Note, I'm not saying that a national sale taxes is impossible, only that getting it honest and accurate is not realistically viable due to the requirements of the necessary compliance. And it is bloody easy to evade in a sale tax system. Unrecorded cash sales have always plagued sale tax systems. As I've stated before, to catch them you either need a clean benchmark or audit their inventory. Now apply that nationally at a federal level.

A smaller not is also important about how illegal immigrants would be forced to pay the sales tax, while they currently are evading the income tax.

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IMO, that matters little compared to the necessary auditors we're going to need for such a system.

and regardless, even if there is tax evasion, there is models that factor in pessimistic assumptions, and that will just mean that the rate must be higher to get more full revenue from large companies that are guaranteed to pay full taxes.

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Which will cause decreases in activity and increases in black market sales. I fully expect with a national sales tax that many firms will offer lower prices to those who pay in cash and won't report the sales.

It seems like the rate would be between 40% and 30%, and if that is, then so be it. Tax evasion doesn't refute that, because predictions have it factored in.

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Seriously? The black market with a sales tax that high would be immense.

but the whole idea of some insane levels of tax evasion is being used as a scapegoat.

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The issue isn't necessary the level of tax evasion. It's the level of compliance enforcement people we're going to need.

States right now can't enforce sale taxes well. What on EARTH makes anyone believe that the federal government can do it well with current resources?

Having to audit millions of businesses' inventory alone makes me think a national sales tax is a brain dead idea.

obvious Child said:

You know, reasonable people don't hold extreme views like that. By the way, I like how you ignored how the 2004 nomination campaign had republicans all preaching that to voters. Vote for me and I'll get you everything back.

Still, better to tax then to borrow.



Except there will never be a pure flat tax. There isn't a pure flat tax anywhere.

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Reasonable to a far left moonbat has different meaning to a net tax payer who is tired of being told I need to pay more so politicians can buy the votes of people like you. There are plenty of flat taxes. a hunting license comes to mind.

RightinNYC said:

I provided you with numbers about income tax distributions and income distributions.

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And I provided you the numbers showing the progressive tax system was instituted 96 years ago, and has been maintained by both parties, to compensate for the fact that the top 20% of the population own 80% of the country's wealth.

TurtleDude said:

Reasonable to a far left moonbat has different meaning to a net tax payer who is tired of being told I need to pay more so politicians can buy the votes of people like you.

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lol. How's the Kool-aid? Btw, I paid a fair amount of taxes last fiscal year. You can cut the crap.

There are plenty of flat taxes. a hunting license comes to mind.

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That would be an incorrect statement. A hunting license is a fee. It is not a tax any more then a bus fee is a tax or a camping permit. A tax would be a percent levied upon a net base amount. A hunting license is a one time payment not based on a base amount.

TurtleDude said:

The main reason to end a progressive income tax is to castrate a dem congress that gets power by promising those in the lower brackets that they will be given everything they want if they vote for dems because the dems will only raise the top brackets to pay for that pandering.

If there was a purely flat tax, everyone would pay more if they voted for dem socialists

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Only problem is how do you get all us socialists in this country, even though we are not as socialist as we were 40 years ago when the top tax bracket paid 90% in taxes, to vote in a majority of far right conservatives who are for a regressive tax?

obvious Child said:

Not quite. My claim is to have a reasonably accurate sale tax, we'd need a monster legion of auditors to ensure compliance. That would mean significant expansion of the government, bureaucracy, taxes to support it and more interference. Practical application of a sales tax in the compliance department is not realistic. Right now states are losing billions upon billions from under reported cash sales. The notion that the current compliance system could work well is pretty insane, especially when higher taxes creates incentives to cheat. Poor compliance with more cheating = worse outcome.



Hard? I'd imagine it would have grown since then. And what is in that 16%?



Probably more then that. Under the Fair Tax proposal, I'd say something like 95-99% reduction. That doesn't mean that it will be honest.



Come again? All you'd be doing is moving income tax burden to sale tax burden. Furthermore, higher taxes on sales has been shown to decrease economic activity. It's questionable to say if revenues would be higher on either.



I'm not sure you understand. A national sales tax system would have the same problems as current state sale tax which currently have not been addressed. And without a drastic increase in auditors to ensure compliance, there will be more cheating. Note, I'm not saying that a national sale taxes is impossible, only that getting it honest and accurate is not realistically viable due to the requirements of the necessary compliance. And it is bloody easy to evade in a sale tax system. Unrecorded cash sales have always plagued sale tax systems. As I've stated before, to catch them you either need a clean benchmark or audit their inventory. Now apply that nationally at a federal level.



IMO, that matters little compared to the necessary auditors we're going to need for such a system.



Which will cause decreases in activity and increases in black market sales. I fully expect with a national sales tax that many firms will offer lower prices to those who pay in cash and won't report the sales.



Seriously? The black market with a sales tax that high would be immense.



The issue isn't necessary the level of tax evasion. It's the level of compliance enforcement people we're going to need.

States right now can't enforce sale taxes well. What on EARTH makes anyone believe that the federal government can do it well with current resources?

Having to audit millions of businesses' inventory alone makes me think a national sales tax is a brain dead idea.

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Even the problems with tax evasion with a very high 39.3% sales tax have already been factored in to come up with that tax level. Therefore, any doubts about tax evasion at 39.3% tax rate is irrelevant because the 39.3% already has tax evasion factored in there.

So if we assume that the sales tax would be 39.3% to generate the same amount of income taxes that we have today, is there any other problems you have about the fair tax?

and could you show me some information about the sales tax not working at the state level? I think all of that information is factored in to determine the 39.3% tax rate that I am talking about.

obvious Child said:

The ability to manipulate taxes pales in comparison to manipulation via spending.

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I tend to believe that any true tax reform would have to be in tandem with a Constitutional amendment denying Congress any ability to use federal taxpayer dollars for any form of charity or earmarked funds of any kind. By denying elected leaders ability to use taxpayer funds to buy votes, that would take care of most of the problem.

It is when you discuss it in the context of marginal utility. Taking $10 from someone who only has $100 is pretty painful and needs that $10 for basic necessities compared to someone who has a million and taking $100,000 from them who doesn't need it to live. Essentially the really poor person's marginal utility of every dollar is higher then the rich person's.

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The margin of utility must be the individual's responsibility and not the government's however heartless that might sound. It is not the government's role or responsibility to make everybody rich or even ensure that everybody has the basic necessities of life. It is the government's role and responsibility to create an environment where each person can aspire to acquire the basic necessities of life and much much more.

However since the poor spend almost all their income on basic necessities, a sales tax would tax them on all of their income while the rich would be taxed on a relatively small portion of theirs. The only way to get around that is to exempt some things from the tax or exempt some individuals from the tax or use some form of rebate or prebate, and then it becomes very complicated very fast with all sorts of opportunity for corrupting manipulation of the system.

The person making $100 most likely does that by choice or it is a temporary condition, and he should not be exempt from his obligation and privilege as a citizen to contribute to the necessary federal treasury. To exempt him means he has a lot of incentive to vote to protect his exemption which will likely override any other concerns. But if government action affects all citizens by the same proportion, he will likely look to vote for good government that benefits all rather than one who will look to benefit him personally. Again for almost half the working population to be paying little or nothing in federal income taxes is very unhealthy for us all.

nerv14 said:

Even the problems with tax evasion with a very high 39.3% sales tax have already been factored in to come up with that tax level. Therefore, any doubts about tax evasion at 39.3% tax rate is irrelevant because the 39.3% already has tax evasion factored in there.

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Eh. Estimates always change when reality comes a knocking.

So if we assume that the sales tax would be 39.3% to generate the same amount of income taxes that we have today, is there any other problems you have about the fair tax?

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Compliance. Doesn't matter what rate you have if you can't enforce it.

and could you show me some information about the sales tax not working at the state level? I think all of that information is factored in to determine the 39.3% tax rate that I am talking about.

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See my previous posts. Numerous states across this country have problems with cash sales. You're going to have to audit inventory to force compliance. That itself renders national sales tax unrealistic.

obvious Child said:

lol. How's the Kool-aid? Btw, I paid a fair amount of taxes last fiscal year. You can cut the crap.



That would be an incorrect statement. A hunting license is a fee. It is not a tax any more then a bus fee is a tax or a camping permit. A tax would be a percent levied upon a net base amount. A hunting license is a one time payment not based on a base amount.

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your definitiion is not authoritative.

I pay more in taxes than 99.8% of the country.

I get nothing more in return. However, I cannot outvote 10 people who pay nothing

that is disgusting. there is no incentive for net tax consumers to vote for fiscal sanity when they keep getting without being taxed.


The koolaid is consumed by people like you who think a progressive tax is not going to ruin this nation

A "fee" is something which goes to cover a specific service or specific cost. What specific service or cost does a hunting license "fee" go toward?

Harshaw said:

A "fee" is something which goes to cover a specific service or specific cost. What specific service or cost does a hunting license "fee" go toward?

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It helps offsets cost of rangers who look out for good use of public lands, for evaluation of wildlife populations so that they know how many hunting licenses can be issued without excessively depleting it, printing and issuing of the licenses along with publications outlining the rules and regulations, and other necessary administrative functions. If we want the government to have a role in protecting our environment and the creatures that occupy it, it is a quite reasonable fee for services.

AlbqOwl said:

It helps offsets cost of rangers who look out for good use of public lands, for evaluation of wildlife populations so that they know how many hunting licenses can be issued without excessively depleting it, printing and issuing of the licenses along with publications outlining the rules and regulations, and other necessary administrative functions. If we want the government to have a role in protecting our environment and the creatures that occupy it, it is a quite reasonable fee for services.

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It's probably the one non crazy fee/tax that we have.

AlbqOwl said:

It helps offsets cost of rangers who look out for good use of public lands, for evaluation of wildlife populations so that they know how many hunting licenses can be issued without excessively depleting it, printing and issuing of the licenses along with publications outlining the rules and regulations, and other necessary administrative functions. If we want the government to have a role in protecting our environment and the creatures that occupy it, it is a quite reasonable fee for services.

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Fair enough.

obvious Child said:

Eh. Estimates always change when reality comes a knocking.



Compliance. Doesn't matter what rate you have if you can't enforce it.



See my previous posts. Numerous states across this country have problems with cash sales. You're going to have to audit inventory to force compliance. That itself renders national sales tax unrealistic.

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You can make as many claims that you want that a universal sales tax would be unworkable from tax evasion, but I just showed you a real study (from skeptics non the less) who said that a 39.3% tax would generate enough revenue.

If that isn't good enough for you, then I am not sure what can be.


I looked at your other post before and there was your comment about poor tax collection of sales taxes at the state level. But I don't see any evidence for that or how your unsupported claim refutes the information that I have found.



and where are you getting that all inventories need to be audited? Today not everyone's income tax report is audited, and tax evasion is low enough. Just the possibility of being audited is what makes sure that people pay their taxes, it works with the income tax, so it will work with even less collection with a universal sales tax.

you show some evidence about how inneficent sales tax collection is to prove me wrong...