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A federal sales tax?

I am not quite sure what you are getting at. If you are saying that collecting a federal sales tax is nothing then you would technically not correct as there are states that do not collect sales tax they would have to initiate some mechanism.

That's not a big deal, virtually nothing.

I am not proposing a sales tax of any kind. I am proposing a transaction tax which is a different animal and much more encompassing and yet limited. I am proposing taxing the flow of money. So when somebody transfers money they are taxed. They buy and sell stocks they are taxed they then move that money to another account they are taxed. Every time that money moves it is taxed. By keeping the percent taken very low it makes avoidance pointless and relatively painless.

I'd be willing to give the idea consideration. While the Fair Tax has a ton of literature about it (including extensive debate about specifics), what is available on this transaction tax?
 
A federal sales tax?

“Fair Tax” proponents generally propose transfer of our major federal tax revenue sources should be accomplished within a single year, if not upon a single date. I do not believe the U.S. Congress would or should ever be so imprudent. those fair tax proponents are insisting that their proposal should never be passed, and enacted.

Providing the legislation is drafted to keep their promise to grant sufficient compensating consideration for the poor, I perceive real net economic benefits to be derived if we incrementally enact replacing all or any portion of taxes upon incomes with a sales tax. Incremental enactment is the superior and the most prudent enactment for this application.

Each incremental enacting step should simultaneously increase the sales tax, reduce taxes upon incomes and grant additional compensating consideration to mitigate the additional sales taxes impact upon the poor; those compensating provisions need not be limited to tax provisions.
The consequential revenues realized after each incremental step will better guide reconciliation for the next step’s scheduled tax modifications.


The initial enactment step will enact the sales tax and eliminate the portions of FICA taxes (which are funded by both employees and employers) that do not fund the ordinary Social Security retirement program, (eliminating FICA funding for such programs as Supplemental Security Income (SSI) and disability insurance benefits). Within that same initial or the next step, half of FICA's remaining tax rate (that’s paid by both employees and employers), should also be eliminated.

FICA is our most regressive federal tax. It’s proportionally a greater burden upon the working poor. (Retaining a portion of the payroll tax that funds social security retirement benefits also retains a portion of the program’s insurance concept).
Before any of the new federal sales tax contributes to our general tax revenues, I advocate Congress “ear-mark” specific portions of the sales tax rate for the funding of specific social programs. This would be a continuous reminder of each of those programs costs to individual sales transactions and eliminate repeating the canard that the poor don’t pay taxes. This lie’s particularly untrue regarding the working-poor.

Individuals and their dependents’ incomes are (proportionally to their actual incomes), more accurately reflected by their aggregate purchasing transactions rather than by the tax forms they submit for the purposes of reporting their incomes. Costs due to tax evasions, compliance, administration, and enforcement are less for general flat rated taxes based upon gross sales rather than taxes upon net incomes.

I believe a federal sales tax rate to entirely replace USA’s tax revenues derived from taxes upon enterprises' and individuals'net incomes and payrolls would be politically unacceptable and economically less than feasible). If incremental enactment were to begin, I believe after one of the incremental steps the congress would recognize this and interrupt sales tax increases.

If I’m incorrect, sales tax would entirely replace federal taxes based upon net incomes.

Replacing any portion or all portions of our taxes upon net incomes with a sales tax would be net beneficial to our economy.
Respetfully, Supposn


Quite right that taxes should be slowly changed under most situations. This is true of most legislation.

From the calculations I have seen, a well organized VAT has a major advantage to transaction tax is that the price increase to the end price is independent of the number of steps between companies. Why should it be more expensive to have a good be worked on in successive specialized companies compared to doing it all in one vertically integrated corporation?
 
Lets think out side the box for a moment. Most states that have a sales tax ALSO have an income tax. Probably a bad idea to have the two concurrent because lets face it neither will go the way of the dodo bird. There will almost always be some excuse to not get rid of one of the forms of taxation. In order to change from one type of taxation to another you HAVE to go cold turkey, otherwise no tax goes away and you just get taxed more.

The best tax there is that is the least regressive and captures the most money with the least attempts at fraud is a transaction tax at less than a percent rate. It hits everyone but hits those with the most money the most. Rich people tend to move money, a lot of money, a lot of times. A transaction tax will hit them the hardest while at the same time making sure EVERYONE has skin in the game but are equally impacted. It impacts the FLOW of money, its velocity if you will. That means its in the governments interests that the money flow is as maximum capacities, which is good for you and I, because the more we make the better off we are.

Pirate Mk1, you apparently hadn’t noticed and/or didn’t care that I’m a proponent of both an income and a sales tax. States that tax both sale and net incomes do a much better job of collecting their tax revenues. The purpose of taxes is to obtain sufficient tax revenue for operating the government; it’s not expected to please the taxpayers.

Collecting government’s major tax revenues base upon both net incomes and gross purchases enables lesser rates for each of those tax systems. That’s important because as the rates for a tax method increases, that tax exerts greater influence upon their tax-payers’ behaviors; lower sales tax rates do not effectively influence purchasing decisions but higher sales tax rates do that.
[This is also the great harm due to the many exceptions, inclusions, and other loop holes within our taxing of individuals and enterprises’ net incomes. The federal government is in effect choosing winners, and/or losers, and effecting the manners by which enterprises and individual conduct their financial and commercial practices. The consequences of decisions primarily determined by tax rates rather than what would have otherwise been chosen, too often are not to our nation’s and/or to the taxpayers’ best interests.]

We would be pleased if the wealthy paid more and we paid a lesser portion of our government’s tax revenues. But even if that occurs, we’d continue to need more equitable and effective taxing systems. Just taxing the transactions of the wealthy will not provide sufficient tax revenue.
I’m among those believing a federal tax upon general sales transactions would be an improvement.

Wealth’s abilities to directly or indirectly purchase preferential access to the ears of elected officials and administrators enables enactment of government regulations and laws that are more favorable to them.

They individually and in aggregate purchase more than we do and (proportional to their actual annual net incomes), it’s not their income tax returns but their purchases that proportionally more accurately reflect their comparative true incomes.

The extent of economic improvement due to replacement of any portions of our taxes based upon our net incomes or gross payrolls would be much dependent upon the accompanying modifications of our remaining taxes and other regulations. To the extent that we do it foolishly, we’ll accomplish less or possibly do ourselves net economic harm.

Respectfully, Supposn
 
Quite right that taxes should be slowly changed under most situations. This is true of most legislation.

From the calculations I have seen, a well organized VAT has a major advantage to transaction tax is that the price increase to the end price is independent of the number of steps between companies. Why should it be more expensive to have a good be worked on in successive specialized companies compared to doing it all in one vertically integrated corporation?

JoG, VAT’s THE superior method for administrating a general sales tax. I’m aware of its advantages but I’m unaware of a single disadvantage to other sales taxing methods.

Unlike producers of USA products, there’s currently no U.S. federal taxes imbedded within the prices of imported products reaching their USA port of entry. The producers contributed nothing to U.S. to our federal tax revenues. Thus, prices of products imported into the USA, (and enjoy the price advantages due to lower foreign wages) are at an additional price advantage due to taxes.

Imported products reach the USA at prices that usually exclude the producing nation’s major tax. All European Union nations and most other nations levy a Value-added tax, (i.e. a VAT) upon sales and trade transactions. Because the products within every link of a commercial chain of transactions carry the explicit total VAT thus far within the chain, governments can and do waive and refund those entire VATs to exporters of their nations’ products.

The USA cannot do the same because we have no method to estimate, much less to determine the amount of taxes imbedded within the prices of our exports.
Importers of USA products pay their government’s full VAT upon those products. Their nation’s products are at no tax disadvantage to goods imported from any other nation (including the USA).

Respectfully, Supposn
 
Do you not understand how luxury goods work? Price and therefore taxes are a very insignificant part of a person's decision in purchasing the product. No one has ever decided against a Ferrari because it was $5,000 too expensive. No one has ever decided against buying a Coach handbag because it costs $200 more. If that was the case then explain how London and Paris with their 20% VAT taxes are by far two of the most important major locations for the luxury goods sector. If you care about how much tax you pay, you are not a luxury consumer.
LOL!! No, they probably wouldn't care about a tax that low - and just think of the great shape we'd be in by adding a few million dollars to our annual 3.5 trillion dollar tax collection effort with the "Carjosse Ferarri tax"!!!
 
Well we still have the "gas guzzler tax" and sales of Dodge Hellcats have not been effected. In fact there is now a Jeep Hellcat and a Charger one too. Most all "super cars" are sucject to that tax and sales just keep increasing. No one cares if they want that car....and can afford it. Here's a list of cars subject to the tax in 2016

https://nepis.epa.gov/Exe/ZyPDF.cgi/P100OA3I.PDF?Dockey=P100OA3I.PDF
No one cares, huh? So we can triple the tax to bring it in line with a luxury tax and sales won't be affected at all? Makes you wonder why Dodge doesn't simply tack on another 10,000 to the sticker price since "no one cares."
 
That's not a big deal, virtually nothing.



I'd be willing to give the idea consideration. While the Fair Tax has a ton of literature about it (including extensive debate about specifics), what is available on this transaction tax?

Not much because no one has really put forth a real proposal. The European Union was wanting it as an additional tax on top of everything else, which is just dumb as it adds to peoples tax burden in an already heavily taxed situation.
 
Iguanaman, we’re straying from the topic of this thread. Administrating concepts various sales taxes share many essential similarities.
The purposes and economic consequences of a federal general or a luxury tax upon our economy can be expected to substantially differ.

A luxury sales tax’s annual revenues are expected to be much less the revenues based upon upon all or almost all general sales transactions. It cannot be expected to replace or substitute for any substantial portion of our federal taxes based upon our nation’s aggregate payroll amounts, or based upon the net incomes of those subject to our corporate or individual income taxes.

The same can be said for attempting to replace a substantial portion of any major federal tax revenue source with a transaction tax that’s not applicable to general sales transactions.

Respectfully, Supposn
 
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Pirate Mk1, you apparently hadn’t noticed and/or didn’t care that I’m a proponent of both an income and a sales tax. States that tax both sale and net incomes do a much better job of collecting their tax revenues. The purpose of taxes is to obtain sufficient tax revenue for operating the government; it’s not expected to please the taxpayers.

Collecting government’s major tax revenues base upon both net incomes and gross purchases enables lesser rates for each of those tax systems. That’s important because as the rates for a tax method increases, that tax exerts greater influence upon their tax-payers’ behaviors; lower sales tax rates do not effectively influence purchasing decisions but higher sales tax rates do that.
[This is also the great harm due to the many exceptions, inclusions, and other loop holes within our taxing of individuals and enterprises’ net incomes. The federal government is in effect choosing winners, and/or losers, and effecting the manners by which enterprises and individual conduct their financial and commercial practices. The consequences of decisions primarily determined by tax rates rather than what would have otherwise been chosen, too often are not to our nation’s and/or to the taxpayers’ best interests.]

We would be pleased if the wealthy paid more and we paid a lesser portion of our government’s tax revenues. But even if that occurs, we’d continue to need more equitable and effective taxing systems. Just taxing the transactions of the wealthy will not provide sufficient tax revenue.
I’m among those believing a federal tax upon general sales transactions would be an improvement.

Wealth’s abilities to directly or indirectly purchase preferential access to the ears of elected officials and administrators enables enactment of government regulations and laws that are more favorable to them.

They individually and in aggregate purchase more than we do and (proportional to their actual annual net incomes), it’s not their income tax returns but their purchases that proportionally more accurately reflect their comparative true incomes.

The extent of economic improvement due to replacement of any portions of our taxes based upon our net incomes or gross payrolls would be much dependent upon the accompanying modifications of our remaining taxes and other regulations. To the extent that we do it foolishly, we’ll accomplish less or possibly do ourselves net economic harm.

Respectfully, Supposn

To be honest we only need one tax and it only needs to be a less than a percent. We would be taxing everyone and everyone would have a similar tax "impact", which is why people like a progressive tax scheme. I don't particularly care it its progressive or not, this tax just happens to be. I am not talking of a sales tax I am talking a transaction tax, which is a different animal. The tax is on the FLOW of money, every time money is moved it is taxed. Last I checked the daily flow of money in this country is around 14+ trillion in the financial sector alone, 20+ trillion altogether. That's daily. We all move money at some point. If we tax at a small and I mean very small rate of under 1%. Say .5%probabley less then avoidance of the tax becomes a greater burden than paying the tax and therefor people will pay it willingly especially if there are NO other taxes. Further collection is far easier because you are only collecting from financial institutions. I am not saying it is perfect, but I am saying it is the least burdensome least felt and yet still effective tax.
 
To be honest we only need one tax and it only needs to be a less than a percent. We would be taxing everyone and everyone would have a similar tax "impact", which is why people like a progressive tax scheme. I don't particularly care it its progressive or not, this tax just happens to be. I am not talking of a sales tax I am talking a transaction tax, which is a different animal. The tax is on the FLOW of money, every time money is moved it is taxed. Last I checked the daily flow of money in this country is around 14+ trillion in the financial sector alone, 20+ trillion altogether. That's daily. We all move money at some point. If we tax at a small and I mean very small rate of under 1%. Say .5%probabley less then avoidance of the tax becomes a greater burden than paying the tax and therefor people will pay it willingly especially if there are NO other taxes. Further collection is far easier because you are only collecting from financial institutions. I am not saying it is perfect, but I am saying it is the least burdensome least felt and yet still effective tax.

Iguanaman &Pirate Mk1, regarding taxing of transactions that would not be considered as subject to general sales tax transactions:

The suggestion is for the U.S. congress pass taxes upon what’s generally transaction of high dollar values that generally, but not necessarily required to be done by money transferred between banks and other such financial institutions. A tax similar to the Stamp Act Great Britain tried to levy upon its North American colonies. It may not provide the substantial relief from taxes upon incomes and those tax regulations many inequities; but its contributions to the U.S. federal budget would be welcome.

Such a proposal would attract substantial support along a good portion of our nation’s political spectrum.

The problem’s wealth’s abilities to directly or indirectly purchase preferential access to the ears of elected officials and administrators, hinders passage of regulations and laws the wealthy perceive as unfavorable to them.

Respectfully, Supposn
 
Iguanaman &Pirate Mk1, additionally,regarding taxing of transactions that would not be considered as subject to general sales tax transactions:

Many of the transactions we may wish to tax are regulated and within state’s rather than federal jurisdictions. Those states are confronted with the problem of enterprise’s simply relocating their headquarters or the state within which they file those transaction’s documents.

Thus, it becomes less feasible (or effectively unfeasible) for a states’ government to tax a transaction that can be almost as effectively accomplished by entities legally registered within other states.

Respectfully, Supposn
 
Penalizing spending in a consumer economy is dangerous business. I would support a "luxury tax" that applies to certain expensive items though. Like a 10% tax on cars over $150,000. Otherwise there is nothing more regressive and unfair than the "fair tax".
the most unfairness in taxes is making one person pay more for the same level of government service than another
 
If you are paying for luxury goods you are not really going to care how much tax is on it. People who buy luxury goods will not go out their way to buy luxury goods just because it is 10% cheaper. Hell paying more is part of the appeal.

No one ever got rich by not caring about costs.
 
The 'FairTax' has been shown time and time and time again to be unworkable and IMO, unAmerican

It would lead to a MASSIVE black market and tremendous limitation in free enterprise.

Under a FairTax, you have to get permission from the government to have a sale. What kind of **** is that?

It's a horrible idea.
 
The 'FairTax' has been shown time and time and time again to be unworkable and IMO, unAmerican

It would lead to a MASSIVE black market and tremendous limitation in free enterprise.
Under a FairTax, you have to get permission from the government to have a sale. What kind of **** is that?
It's a horrible idea.

DA60, general sales tax has been more accurate than any other methods governments have employed to collect tax revenues and proportionally indicate taxpayers’ comparative incomes or wealth.
Sales taxes are now collected within most USA states, territories, and the District of Columbia.
Refer to https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States
and to
https://www.debatepolitics.com/economics/73794-value-added-tax-e-vat-sales-tax-method-6.html

Sales taxes are limitiations upon free enterprise? "Under a FairTax, you have to get permission from the government to have a sale"?

Respectfully, Supposn
 
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DA60, general sales tax has been more accurate than any other methods governments have employed to collect tax revenues and proportionally indicate taxpayers’ comparative incomes or wealth.
Sales taxes are now collected within most USA states, territories, and the District of Columbia.
Refer to https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States
and to
https://www.debatepolitics.com/economics/73794-value-added-tax-e-vat-sales-tax-method-6.html

"Under a FairTax, you have to get permission from the government to have a sale"?
Respectfully, Supposn

General sales taxes and FairTax are two very different things.

And yes, under FairTax you have to get permission to have a sale.

FairTax is a 30% tax on new stuff (they call it 23% inclusive - but that is deliberately deceiving to make it sound better. If you pay $100 for a widget under FairTax, $77 is for the widget and $23 is for the tax. $23 is 30% of $77. It is a 30% sales tax as most people relate to sales tax).

If I cannot sell a product for $100 and I want to have a sale, I would have to ask the FairTax people (I assume the IRS) for permission because if people could have sales whenever they wished, than they could just sell the $100 widget to a middleman for $1 (and pay a few cents in FairTax). Buy it back from the middleman for $2 and Presto! The widget is now used. So I can sell it - still brand new in essence, but used officially - to the public for $102 instead of the $130 my competition has to sell it for and I will see my sales go through the roof.
And the FairTax people would lose a ton of tax income.
To stop this from happening, the IRS would require everyone get permission to sell their new items for a greatly reduced price.

So that would mean everytime I have to clear out a product that is not moving, I have to wait for permission - God knows how long that would take - from the IRS first.
And what if they said 'no'? Than I am stuck with a product that I cannot sell.


And I can name dozens of other problems and ways around the FairTax that people would take because it only applies to new items.

I guarantee you, it would never work in America.
 
The 'FairTax' has been shown time and time and time again to be unworkable and IMO, unAmerican

It would lead to a MASSIVE black market and tremendous limitation in free enterprise.

Under a FairTax, you have to get permission from the government to have a sale. What kind of **** is that?

It's a horrible idea.

But, on the flip side, we already have a underground network of peddlers and contractors who are avoiding their taxes.

I know at least a dozen smaller licensed AC/R, plumbers, roofers, painters, and handymen who offer to do the work cheaper for cash instead of checks. There are antique malls and professional flea markets in the area renting spaces to peddlers who pay zero taxes on their sales. I had been guilty of it on occasion when I was starting out. I will bet that there are many on this forum who have done the same.
 
But, on the flip side, we already have a underground network of peddlers and contractors who are avoiding their taxes.

I know at least a dozen smaller licensed AC/R, plumbers, roofers, painters, and handymen who offer to do the work cheaper for cash instead of checks. There are antique malls and professional flea markets in the area renting spaces to peddlers who pay zero taxes on their sales. I had been guilty of it on occasion when I was starting out. I will bet that there are many on this forum who have done the same.

No doubt that is true.

But can you imagine how much black market there would be when people can save 30%?

All a company has to do is say it's entire inventory was stolen - but not claim it through insurance, so no insurance fraud - and just sell the stuff on the black market out of the back of trucks (this is assuming the IRS won't let them have huge discount sales). $800 iPhones - that under FairTax cost $1040 - cost only $900 from the 'truck'.

And Canada and Mexico would get gigantic sales increases as Americans flood over the borders to buy stuff without the 30% tax and smuggle it back in.

I don't like that FairTax period.

But the main problem is the fact that it only applies to new items. It is just too easy to get around that..and there is WAY too much incentive.
 
No doubt that is true.

But can you imagine how much black market there would be when people can save 30%?

All a company has to do is say it's entire inventory was stolen - but not claim it through insurance, so no insurance fraud - and just sell the stuff on the black market out of the back of trucks (this is assuming the IRS won't let them have huge discount sales). $800 iPhones - that under FairTax cost $1040 - cost only $900 from the 'truck'.

And Canada and Mexico would get gigantic sales increases as Americans flood over the borders to buy stuff without the 30% tax and smuggle it back in.

I don't like that FairTax period.

But the main problem is the fact that it only applies to new items. It is just too easy to get around that..and there is WAY too much incentive.

But that stuff is all happening right now DA.

I'm not sure if it would increase or decrease. But I do know that most people will always take the path of least resistance.
 
But that stuff is all happening right now DA.

I'm not sure if it would increase or decrease. But I do know that most people will always take the path of least resistance.

But where in America (let alone all across America) is there a 30% tax on all new goods?
 
But, on the flip side, we already have a underground network of peddlers and contractors who are avoiding their taxes.

I know at least a dozen smaller licensed AC/R, plumbers, roofers, painters, and handymen who offer to do the work cheaper for cash instead of checks. There are antique malls and professional flea markets in the area renting spaces to peddlers who pay zero taxes on their sales. I had been guilty of it on occasion when I was starting out. I will bet that there are many on this forum who have done the same.

I also favor a sales tax (over an income tax) but with exemptions (exceptions?) for labor, housing, food, clothing, utilities and medical care. As with any taxation system - the devil is in the details.

Taxation of labor (by a labor "sales" tax) is done in Texas to a significant (yet not full) extent. Your flea market example brings up another tricky idea - exempting or ignoring the sale of used goods or the sale of (any?) goods by "non-professional" (unlicensed?) sales agents.

Vehicles (in Texas) are taxed in such a way that it makes their sale taxed whether new or used - it is assessed upon title transfer/recording.
 
Where is there a 30% tax on all new goods?

Better question, how much are the costs of goods/services increased due to the taxation on all things required to produce those goods and services ??
 
... We tried this back in the 90's. It was a miserable failure.

Taylor, I must have missed something? I don't know what you mean by this?
Respectfully, Supposn
 
if you are paying for luxury goods you are not really going to care how much tax is on it. People who buy luxury goods will not go out their way to buy luxury goods just because it is 10% cheaper. Hell paying more is part of the appeal.

you need read about the yacht tax
Yacht Tax 1990 Rescinded | Boat-builders fight to stay afloat as luxury tax pulls down sales - tribunedigital-baltimoresun


Sales of boats that cost more than $100,000 fell by 56 percent one month after the tax went into effect, according to the National Marine Manufacturers Association. Some boatyard owners, who report no sales this year, have been forced to lay off workers or declare bankruptcy.
 
I also favor a sales tax (over an income tax) but with exemptions (exceptions?) for labor, housing, food, clothing, utilities and medical care. As with any taxation system - the devil is in the details.

Taxation of labor (by a labor "sales" tax) is done in Texas to a significant (yet not full) extent. Your flea market example brings up another tricky idea - exempting or ignoring the sale of used goods or the sale of (any?) goods by "non-professional" (unlicensed?) sales agents.

Vehicles (in Texas) are taxed in such a way that it makes their sale taxed whether new or used - it is assessed upon title transfer/recording.

Ttwtt78640, I would suppose if there’s any transfer of ownership required by a state, that state’s collecting any of their taxes due to that item before they’ll issue the state’s document required by the new owner. That’s the experience I’ve encountered within NY and NJ. You provide documentation that the tax has been paid or that cirumstances permit the state’s waiving the tax, or you pay the tax prior to the state issuing their required document.

That’s why casual sales of used items by non-commercial enterprises or persons generally evade sales taxes if no documentation is required. Otherwise, new or used items pay sales taxes in NY, NJ or I suppose any other state that levies a sales tax. There are exclusions for gifts, not for sales of new or used items.
If a state did not require sales taxes for services, every bill would indicate almost the entire price as being attributed to services with nothing or nominally small prices for goods.

Respectfully, Supposn
 
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