Won't a national sales tax hurt comsumer spending?

[TheFarseer]

Or is that a naive and simplistic view? It seems to me, that if stuff is 30% more expensive, I wouldn't want to buy as much. It also seems to me that people will be going crazy finding ways to beat it. Lawyers will be bartering with doctors and it will be full of loopholes. I hear that low income people will have a chance to get a refund. How is that going to work? Will they have to save their receipts? The whole thing just sounds like a disaster.

[Worst Username Ever]

1. Seems it would penalize those with kids, too. n/t

[TexAsh]

46. Hunh? More cash to spend & lower tax rate. What's the Prob?

If, under the FairTax, wage earners will take home more pay while prices remain about the same, and every honest person who pays their taxes today will pay a lower rate, HOW would the FairTax hurt housholds with kids?

LEARN MORE about the FAirTax, then GET BEHIND IT!:
http://citizen.home.texas.net/FairTax/

[Inland]

51. What a load! Prices stay the same with a 23% tax! Hoot!

How do prices remain the same, when a 23% sales tax is added on? How dumb does one have to be to understand that its 23% tax added on your diapers, 23% added on your drugs, 23% added on your toys, 23% added on your rent, 23% added ON YOUR TEEN BABYSITTER.

In fact, let's make it easy and look at your website and see what expense for children ISN'T going to be 23% more expensive. Hm. College tuition. Anything I missed?

So the only wage earners that would be helped are those who pay 23% of their wages in taxes. Not a marginal rate of 23%, but 23% total. Everyone else is either worse off or horribly screwed, and you don't have to be a math whiz to figure it out.

[sabbat hunter]

57. sales tax

will a VAT tax include drugs/food

david

[Inland]

60. Two things

Not a VAT, because the sales tax is for retail sale only, and yes, the sales tax will be on food, drugs, rent, water, electricity--in order to hold it down to the low, low rate of 23%. If there are exemptions, of course, the rate has to be higher.

[aquart]

2. Yes.

It also gives government a chance to monitor everything you buy.

[TexAsh]

35. No

Our government now has the chance to conduct "lifestyle audits" if they think you are living beyond your means and MIGHT be avoiding paying taxes. If you resist a lifestyle audit, they can enforce this policy with firearms.

The FairTax is a grassroots proposal to get the government OUT of our lives!

LEARN MORE about the FairTax:
http://citizen.home.texas.net/FairTax/

[madmax]

3. Will this tax be an additonal tax to the state tax I already pay

on everything except food?

[sabbat hunter]

33. well

according to most plans the national sales tax or more accurately a VAT tax would include everything, including food and medicines.


david

[TexAsh]

36. FairTax is NOT a VAT

Yes, the FairTax is assessed on everything - including government spending.

Exemptions are a slippery slope right back to where we are today, allowing lobbyists to offer campaign contributions in exchnage for tax loopholes. Taxing clothing means the wealthy will be taxed on silk shirts. Taxing food means no exemption for champagne and caviar.

No, the FairTax is not a VAT (value-added tax), which is assessed everytime raw materials are improved as they progress through the process toward the consumer. Under a VAT, wheat is taxed when harvested; again when it is milled, and again when it is sold as bread. This hides taxes from the consumer (and voters).

The FairTax is assessed ONLY on transactions of retail services and new goods - not used goods.

LEARN MORE about the FairTax
http://citizen.home.texas.net/FairTax/

[Dark]

41. So if only new goods are taxed, wouldn't production jobs be hurt?

No one would be buying new stuff, only used. That's what happened during the Great Depression. People stopped buying goods, not for the same reasons, but they did the same thing. They didn't buy new goods because the ones they purchased lasted so long.

[TexAsh]

43. Goodwill no competition for Old Navy

Sure, used items will be less expensive, just as they are today. And that is likely to be a very helpful resource, especially for low income earners.

But are we really worried about American consumers putting aside their penchant for buying new stuff? How much used stuff gets people's money today? It is certainly less expensive, but most folks want to buy something that is fashionable or technologically current.

Can you imagine Old Navy being put out of business by Goodwill Industries?

Furthermore, because federal withholding will be a thing of the past, people are going to have a lot more cash to spend. More take home pay has never put American consumers on a tight budget in the past, now has it?

PEOPLE! PEOPLE! PEOPLE! Are we going to get stuck looking desperately for things that might be wrong with this idea of reverting to a tax system that is more in keeping with the principles set down for us by the Founding Fathers who warned us AGAINST the danger and folly of income taxes?

LEARN MORE about the FairTax and then GET BEHIND IT!:
http://citizen.home.texas.net/FairTax/

[sabbat hunter]

58. big businesses

will pay FAR less (if any) taxes. how can that be fair?


they will buy their goods overseas, thus be exempt from the 'sales tax' and avoid paying taxes.

the rich will pay less money than they pay now.

how is that fair?

you want fair how about the following

eliminate the ceiling of 88k on SS taxes.

exempt the first 30k from any federal taxes of any kind.

raise the taxes on those making 200k /yr back to what they were before the bush tax cut.
eliminate the local tax deduction for those making more than 1million per year.
index the AMT.



a simple tax (ie VAT/national sales tax) does not = Fair.

david

[justa]

55. how can this not be a form of a VAT.

"the FairTax is assessed on everything - including government spending"

if tax is assessed on every sale, then every time an item moves up the chain of manufacturing it would be taxed an additional 23%. So then this is passed on to the business at the next and they add another 23%. So you still would have a compound tax added at every step of manufacturing and make products much more expensive than the 21% hidden tax that your web site states is added now.

This sounds very fishy to me.

[vinny9698]

4. This way the poor wind up paying the deficit. bush's plan to cut the defic

If there are rebates, most poor people do not bother to fill out the forms. There are plenty of homeless, migrants, that do not have a stable address. People will just not bother to fill out forms.

[TheFarseer]

7. I've heard about rebates with state sales tax

They're going to sell it as just as progressive as an income tax because of the rebates but I don't think it will work out like that. Besides that, it will inherently be much more regressive than income tax.

[durablend]

19. The rebates will be a joke anyway...

You can bet the gubermint will cacluate it out to where anything more than a stark household budget on welfare will be considered "extravegant" (and non-qualifying)

[TO Kid]

20. That's how it is in Canada

When the GST was brought in, they also brought in a rebate that was a maximum of $75 per quarter for singles. When I was receiving it, it was clawed back starting at $20k (povety in Toronto is ~$25k) and reduced to zero at $30k. Meanwhile I was paying about $4,000 a year in income taxes.

[TexAsh]

37. FairTax is from grassroots, Not Bush

The FairTax is a plan that has been developed, proposed, and advocated by grassroots activists for more than 14 years - long before Dubya was elected governor of Texas! How can this be HIS plan?

Has there been a shortage of welfare applications that suggests a pattern? What percentage of the populace might fail to apply for a guaranteed FairTax rebate?

Is the objection to the FairTax that it is not absolutely foolproof?

The current tax system includes a payroll tax (social security and Medicare) that takes more income from 74% of Americans than the income tax. It is not subject to any tax deductions and is probbaly the most regressive tax system ever devised.

The FairTax eliminates withholding for both income and payroll taxes.

Is vinny9698 actually trying to defend the current system?

LEARN MORE about the FairTax
http://citizen.home.texas.net/FairTax/

[htuttle]

5. Speaking of bartering

It would create an opening for an alternative currency to grow.

We have a local currency of sorts here in Madison called 'Madison Hours'. It has a very limited circulation, as most alternative currencies have.

If there were a 30% sales tax, however, it would make the use of an alternative currency MUCH more attractive (30% more attractive, to be precise).

Just another step down the road toward the collapse of the US empire.

[Sapphocrat]

8. I like the idea, a lot...

...but the fed usually crushes any "alternative currency" plans, and there's something in federal law (can't tell you what, as I'm no expert) that can be used to shut down or tax all bartering schemes.

Come to think of it, it was our own dear Bobby Kennedy who went after the state of Nevada in the '60s to stop the use of casino gaming tokens as currency. Even I remember a time you could just about any mix of slot-machine tokens to buy groceries, gas... everyone accepted it, without question.

Sad, too -- I have more confidence in the financial stability of most casinos than I do in the federal reserve.

[Sapphocrat]

6. Well, there are models to look to...

A general GST (Goods and Services Tax) is still a relatively new thing in both Canada and Australia. Has consumer spending been hurt in those countries? (I don't know if it has or not.) Caveat: I'm not certain the GST is a flat, across-the-board federal thing; I think it may vary province-by-province, or state-by-state. (Canucks, Aussies, correct me here.)

I think you may be right on the possibility that under-the-table bartering will increase.

[candy]

9. It absolutely will increase bartering and also the black market

[politicat]

10. Like we need a bigger black market....

Sigh.

If you haven't read Eric Schlosser's Reefer Madness, now is the time. The American Black Market is something like 30% of the US economy. There's a strong correlation between black market as significant part of economy and crime and poverty.

That said, should a national sales tax be implemented, I would consider it my patriotic duty to keep that type of government poor.

Pcat

[candy]

17. Agreed! I'm a smoker(cigs) and the cigarette black market----

is booming because of high taxes.

[TO Kid]

18. I don't call it a black market

I call it a healthy dose of civil disobedience. It worked in Canada in the early 1990s when the smuggling forced a 50% cut in tobacco taxes.

[TexAsh]

38. It couldn't possibly increase the black market

The IRS itself says that nearly 40% of the populace is out of compliance witht he tax code! How can it be worse than that?

However, here's how the FairTax can make it better:

The FairTax reduces tax evasion in several ways:

* Because tax rates decrease, tax evasion is less profitable.

* The increased fairness, transparency, and legitimacy of the system will induce more compliance, simply because it is much easier to comply than to conspire with others to evade taxes.

* Businesses need answer only one question to determine the tax due:
How much was sold to consumers?

* The FairTax reduces the number of tax filers by about 90 percent. This will enable tax administrators to focus on non-compliance more effectively, increasing the likelihood of discovering and stopping tax evasion.


LEARN MORE about the FairTax:
http://citizen.home.texas.net/FairTax/

[foreigncorrespondent]

13. In Australia...

...the GST is an across-the-board federal thing. Most of that money apparently goes back into the states though.

It hasn't hurt spending down here, simply because it is on the stuff we just can't go without.

[TO Kid]

16. Canadian GST

The impact of the GST on consumer spending here was minimal, primarily because it replaced a tax that was hidden- the old Federal Sales Tax was collected from manufacturers and importers at rates ranging from 8% to 13% and the GST was collected at the retail level at 7% across the board. Because the economy was slumping when the FST was abolished, most retailers were pressured into passing on the savings to the consumer so the net cost was only a slight increase for most consumers. At the same time, income tax rates were reduced and the tax system simplified by reducing the number of income brackets from eight to three, resulting in a slight increase in disposable income for most taxpayers (myself included, and I was below the poverty line at the time).

A similar tax in the USA would be a very bad idea because it would be completely new- the only way it would be palatable would be to combine it with a HUGE reduction in income tax rates. I don't see that happening anytime soon.

[IronLionZion]

11. Check this link out

summary of the plan
http://www.fairtaxvolunteer.org/smart/sketch.html

and the faq: http://www.fairtaxvolunteer.org/smart/faq.html

Goods are supposed to be cheaper (before this tax) because all the hidden taxes are removed instead of being passed on to the customer.

some important things to note:
1. THE 3 MOST CERTAIN THINGS IN LIFE: DEATH, TAXES, AND TAX EVASION.
2. RICH PEOPLE AVOID TAXES LIKE THE PLAGUE
3. CORPORATIONS DO NOT PAY TAXES. PEOPLE PAY TAXES.

I'm very interested in this plan but haven't yet made a decision to support it. I'm wary of anything endorsed by Dick Cheney, but some Democrats have endorsed it too.

[stevebreeze]

24. If corporations do not pay taxes why do then spend million lobbying

to lower their taxes? The answer is simple most of corporate taxes come out of profits. That portion of the corporate coffer that is goes to stockholders, either through dividends or higher stock prices.

[TexAsh]

39. Corporations only COLLECT taxes

The idea that fat cats will simply pay taxes out of their pockets rather than increse prices is unreasonable.

Corporate taxes influence corporate pricing. No business can survive that fails to include the cost of doing business with Uncle Sam in their pricing.

Just like any other business expense, businesses MUST pass on the burdens of taxes and tax compliance costs to its customers. Many large corporations - and industries in general - spend big bucks to lobbyists whose job it is to secure tax breaks for their clients. The goal is to reduce taxes as a business expense.

The problem with this system is that it HIDES business taxes and associated costs in higher prices - paid by consumers.

LEARN MORE about the FairTax:
http://citizen.home.texas.net/FairTax/

[RPM]

12. Damn straight it would hurt consumer spending....

As a regressive tax, it would almost necessairly impact the lower end of the income spectrum disproportionately. In doing so, the change would increase the amount of tax that these folks would have to pay, leaving them with less money to buy useful items (and useless shit). Needless to say, the impact on consumer spending would be huge...

Even if a person would pay the same tax between a national sales tax and the current system, the sales tax would have 2 big impacts:
1. With a tax on spending so high, and the tax on saving (dividend & capital gains) so low, more folks would save then spend - hurts consumer spending
2. The national sales tax, independent of the savings option, would likely have a chilling effect on spending - would make people think twice about spending...

I understand trying to get people to save more; the result of more savings would likely be lowered cost of finanicing for companies. But what good is the added capacity that cheap financing can buy in a consumer economy where there is a diminished ability to consume. <thats the rub> Unless, of course, there is a move underway to add non-consumer business capacity (hmmmmm, military perhaps).

Just a thought.

[Name removed]

22. Deleted message

Message removed by moderator. Click here to review the message board rules.

[TexAsh]

47. No way! FairTax is MORE progressive than the income tax

Let's find out what we are talking about before we criticize.

Go the the link below; click on "Progressive or Regressive?"

THEN, if you still think it stinks, let's hear your argument.

LEARN MORE about the FAirTax, then GET BEHIND IT!:
http://citizen.home.texas.net/FairTax/

[ausiedownunderground]

14. Can work if implemented correctly!

Down here in Oz The AWOL Chimp's surrogate "love child" actually got elected on introducing a national sales tax we call (The GST) short for Goods and Services Tax. He pulled it off by reducing income tax for all taxpayers and at the same time not applying it to some Goods and Services such as Food and Selling your house. He also increased weekly pensions and unemployment benefits. This was the carrot to convince the voters to accept it. The rate was set at 10% and this has not changed. However over the past 5-6 years that we've had it, the reduced income tax bribe's and increased social security benefits have turned out not to have been enough to compensate for it. Currently we are paying more tax and this can be seen by the large Government surplus's being generated here in Oz. Intrestingly, a lot of people at the time argued that the compensation being offered was not enough over time and this has panned out to be correct. However, thats not to say that if implemented in another way that it would not be a good way to "Democratically" tax people. That is you have the choice when to consume resources and pay the government tax rather than have the government tax you through "income tax". At the moment in Oz we get taxed both ways and the government has been "reaping" huge amounts of money at the expense of the people.
The GST or sales tax has its advantages. It has collected a lot of "black economy transactions" that the old Income tax method could not catch. This has been shown by the larger than expected revenue raised for the government by the tax over time. However because we still have income tax a lot of the tax evasion and avoidance schemes still go on, particularly by the wealthy who are best equipped to create "grey area" tax loopholes and exploit those loopholes. In Oz the middle class still carries the greatest tax burden as a percentage of income.
If America was to introduce this type of tax i suggest you don't fall for the "bribe" on income tax reduction. Over time it won't compensate most people enough!!!! This tax should only be introduced if Income Tax is fully removed. The tax should also be applied to ALL Goods and Services with no exemptions. People only pay tax when they decide to consume resources!! The wealthy will still want to buy their Plasma TV's and flashy cars and houses, but will not have the luxury of being able to use the Income Tax system to minimise the tax they pay. All sectors of society will start to pay their fair share of tax based on their consumption.
The other advantage to this is that the government can use the tax to control consumption by varying the rate of the tax. Lower it when the economy's looking wobbly and raise it when its running red hot! This reduces the need for Monetary Policy (i.e Interest Rates) to be used as the fiscal weapon of mass destruction all the time. This policy instrument is slow acting and tends to only hurt certain areas of the economy.
I must admit like most OZZIES i believe The AWOL Chimp and his gang are completely "looooopeeeeey" on everything they do, but i was amazed (I had to read it 3 or 4 times to convince myself) when i read recently that The AWOL Chimp had actually suggested looking at this type of tax. IF IMPLEMENTED RIGHT!!!!! it is a tax that could possibly help the middle and lower classes at the expense of the wealthy and super wealthy classes in evening up where the government gets its tax take from - I don't think The AWOL CHIMP has realized that yet. If IMPLEMENTED WRONG!!!! it becomes just another tax added to all the other taxes payed by people and increases the government's coffers! only.

[TheFarseer]

15. Maybe we should have both taxes

until we are out of debt and then see which one people like better. Of course my first thought whenever he does something is "how does this help rich people?" Thanks for the preview

[TexAsh]

40. Maybe NOT!

The WORST thing we could do is allow the governement to assess both income and sales taxes at the same time.

But, hey - they're doing that already! We have income taxes, and we have excise taxes on gasoline, tires, tobacco, even phone lines. More than that, our taxes on business are shifted over to consumers in the form of higher prices.

Let's fix this mess!

LEARN MORE about the FairTax:
http://citizen.home.texas.net/FairTax/

[SouthStar]

21. Prices would not jump 30%

Prices would not jump 30% because of a National Retail Sales Tax. That is a common misconception. @ 21% of the price of a retail product today is imbedded taxes. Those would go away.

I am no expert on this issue, that is for sure.

And regardless of the tax system or structure people will do all they can to find loopholes and avoid paying taxes as much as possible.

[durablend]

23. Business AIN'T giving that revenue back

Prices would not jump 30% because of a National Retail Sales Tax. That is a common misconception. @ 21% of the price of a retail product today is imbedded taxes. Those would go away.

I am no expert on this issue, that is for sure.

Which is painfully obvious from your post...if you honestly think business is going to give that % back to the consumer you're smoking some potent dope (and/or Kool Aid).

Consider it as free revenue for the stockholders and/or the CEOs because you're not going to see any of it.

[SouthStar]

27. Business will have to reduce retail price

Competition will cause the current imbedded taxes cost once removed to lower the price of products.

The invisible hand at work.

[TO Kid]

28. That's what happened here

When the hidden Federal Sales Tax was replaced with the GST, most retail prices dropped in a matter of days. All it takes is one retailer to start it and the rest have little choice in the matter.

[sabbat hunter]

59. less taxes

or businesses would keep the prices high and pocket the profits.

just check out gas prices. price of a barrel of oil has dropped but the price at the pump hasnt, and oil companies are showing record profits.

david

[stevebreeze]

25. you bet it will hurt consumption.

The good part( in the conservative mind) is that it is incredibly regressive. We will transfer a lot of money form ordinary people to the economic elite.
Take a look at how sales taxes are distributed among income groups here at Citizens for tax justice.
http://www.itepnet.org/wp2kst.htm

Check out the distribution of burden in any state with a property tax. In my state,IL, the rich pay 1% of income in sales tax. That is compared to 7.8% for the lowest quintile and 4.7% of income for the middle quintile.

[Magnulus]

26. Poison

The sales tax is one of the most regressive taxation schemes around. It's pure poison that's sugar-coated to make it easier to swallow, but that doesn't make it any less of a poison. Sales tax=poor grannies eating cat food.

[American Tragedy]

29. Of course it will

That's what I've been trying to tell people. America is the consumer society, and that is a large part of its economic strength. Why would you want to design your tax system around negatively reinforcing consumption, especially knowing that even poor people buy quite a lot of products? Moreover, retired folks will go from paying no taxes at all to paying approximately the same rate that I do. It's patently unfair.

One of the most pragmatic justifications for Social Security is that the money is inevitably spent and circulates. It enables people who would otherwise be unable to participate in the economy and benefits everybody. Supply-side economists seem to overlook this: You can manufacture millions of automobiles, but it doesn't do a lot of good when nobody is able to buy them.

[TexAsh]

48. Please don't confuse "any nat'l sales tax" with FairTax

End of All Hope has good intentions, but bad information.

There IS a way to tax consumption directly (rather than filtered through corporate income taxes and compliance costs, which are passed onto consumers anyway) without any harm to low income earners or retirees ...

LEARN MORE about the FairTax, then GET BEHIND IT!:
http://citizen.home.texas.net/FairTax/

[Lefty48197]

30. A flat tax will destroy our economy and then our nation

Only the stupidest idiots on the planet are advocating a flat tax. Oh yeah, all of the Republicans are now prepared to advocate it.

[TexAsh]

49. Not Flat Tax - FairTax

A flat income tax is exactly how today's income tax started, in 1913.

No one here is talking about a flat income tax, Lefty.

LEARN MORE about the FairTax, then GET BEHIND IT!:
http://citizen.home.texas.net/FairTax/

[Justin54B20L]

31. Instead of a flat sales tax how about

a progressive sales tax? I mean would it be so hard to implement a scaling progressive sales tax? That is to say, have sales taxes increase with the MSRP of items in managable price brackets. I.e. $0.01-$5.00 at 7% $5.01-$10.00 at 8% and so forth. I'm no economic expert so my ranges and percentiles would be adjusted by experts, but atleast something along those lines.

[LiberalAndProud]

32. A nightmare for retailers who have to collect & remit the tax.

And impossible to audit. Nightmare.

[TexAsh]

45. Retailers are PAID to collect taxes under the FairTax

LiberalAndProud - Have you read anything about this proposal?

The nightmare is happening NOW! Some small businesses spend $700 on tax compliance for every $100 they pay in taxes!

PLEASE LEARN about the FairTax ...

http://citizen.home.texas.net/FairTax/

... THEN, if you still don't like it - fine, share your concerns.

MEANWHILE, THE FACTS ARE:

Retailers under the FairTax will receive one-quarter of a percent of the taxes that they collect and submit to the state. Each state that collects taxes will also collect a percentage of what they send to the US Treasury.

The FairTax diminishes the number of returns submitted to the Treasury (through the IRS) by NINETY PERCENT. That should make enforcement and auditing a little bit easier, don't you think?

[justa]

54. actually,

Your web site states that it cost them $382 to pay 100 not $700 to pay 100. just wondering what I am missing.

[TexAsh]

34. Would YOU spend less after a 15% pay raise?

First, prices under the FairTax should not be higher because businesses will experience dramatically lower costs. Remember: No more income taxes & No more tax compliance costs!

(Today, many small businesses actually pay more to comply with the tax code than the taxes themselves!)

In a free-market system, if competitors can capture market share by reducing prices, they will do so. (Think "gas price wars" & WalMart.) So, prices should remain stable after implementation of the FairTax because the new sales tax rate is offset by equivalent business expense savings.

However, consumers under the FairTax will take home a FULL paycheck, amounting to a 15% pay raise for the vast majority of wager earners.

QUESTION: Who is going to spend LESS as a result of a 15% pay raise?!

The fact is that the FairTax offers EVERYONE a rebate of the taxes on poverty-level spending. No receipts are required.

LEARN MORE about FairTax:
http://citizen.home.texas.net/FairTax/

[Dark]

42. Wait, explain this to me.

The fact is that the FairTax offers EVERYONE a rebate of the taxes on poverty-level spending. No receipts are required.

So, if Bill Gates were to spend the same amount of money on NEW goods as someone who makes fifteen thousand a year, they would both be paying the same amount in taxes to the government?

I know you may say "Gates isn't going to spend that little on goods!"

But he doesn't have to. He only has to spend that little on NEW goods. He can buy a hundred times more than the pauper and not pay a single cent.

And that means a very unstable and unreliable source of revenue for the government. Which means Republicans would have to cut funding to certain programs because they don't have enough money as it is to wage a war, cut taxes, and provide services.

Wait, you know what, I think I understand. . .

[TexAsh]

44. Spending is a MORE STABLE tax source than income

"What if Bill Gates decides to spend all his money on used items?"

Please get real; I'm begging you!

The fact is that ANYONE could avoid paying taxes under the FairTax if they lived in a cave, ate wild berries and wore a racoon pelt loincloth. Is THAT going to happen? No. But if it did, the increase in savings would shrink interest rates even further, making buying a home more affordable for first-time home buyers and making opening a business more affordable for the entrepreneurs who create jobs.

By the way, spending is a MORE STABLE tax base than income because, even when our incomes fluctuate, people borrow funds or spend savings in order to cover their expenses. Spending happens!

LEARN MORE about the FairTax, then GET BEHIND IT!:
http://citizen.home.texas.net/FairTax/

[Dark]

50. I can see what you mean about some spending happening.

You're right, people would have to purchase NEW food because you cannot purchase used food (or at least I hope you can't. Ewwww!)

But this country's sales come from merchandise. It doesn't come from food sales. But merchandise can be bought used. And I do believe that when people are paying thirteen hundred dollars for tv's that used to be priced at one thousand dollars, they will begin to look into used material.

And, thus, people could avoid paying taxes by simply spending up to the poverty level on food and other 'new-only' goods while purchasing all other items as used if they can find them. Computers, cars, electronics, appliances, people will go to e-bay and such for cheaper used items.

Even if said goods aren't manufactured in the US, they ARE sold by retail salespeople. If they can't hock appliances out to consumers after they see items costing an additional thirty cents for every dollar, they aren't going to have a job much longer. And without income, they aren't going to shop.

I'm not saying that everyone would do this, but the rich would guard their spending or direct it towards 'lightly used' items and many economical shoppers who do buy some things new now would switch over, and many others would decrease their shopping for new items.

Income IS more reliable as spending, as income results from spending, and supposedly increases with spending. But income can be gained also from gifts, stocks, the lottery, inheiritance, and so forth. The sales tax would only be on the sale of new items.

Also, from the site you mentioned, the estate tax is elimnated, which means ONLY spending will fuel the government.

[Inland]

53. Well, you ignore the real problem. Taxing services, and foreign purchases

The US economy is full of small service providers who can cheat on the sales tax as easily as they cheat on the income tax--in fact, more so, since today if a business purchases a service, it has to issue a 1099 to the janitor or lawyer to get its income tax deduction, so the janitor or lawyer gets caught. If the business and the janitor decide to not pay the tax, how do you catch them?

And why wouldn't Bill Gates buy an island off Vancouver and just take his billions there and avoid the 23% tax entirely? Fact is, the very rich don't have to buy diapers at Osco. When you buy big, you can live overseas, and at a 23% discount, he can commute.

[Jim__]

56. Yes, if I had less disposable income

Which, for most people in the 15% income tax category, will be the case. Right now, 15% (less deductions) is their federal income tax; this is to be replaced by a 30% consumption tax. Again, most people in the 15% bracket are spending their entire income on consumption - now, with a 30% consumption tax, they'll have less to spend.

[Inland]

52. Of course. You are TAXING consumer spending at a horrific rate.

Not only will people have an incentive to spend less and save more (one of the admitted goals of the sales tax crowd) but for all those who can't save now, they will purchase fewer goods and services. How much less, we don't know, since some producers will go out of business due to the decreased demand, and lower pretax prices will ensue, but until policy makers figure out how the US economy works without huge consumer purchasing from the position of debt, anything that depresses the consumer demand is dangerous.