Gravel: Eliminating the IRS and the Income Tax ?

[Flabbergasted]

What do you all think of this idea?

http://www.gravel2008.us/issues


There is only one one entity in the U.S. that pays taxes; the individual. Business and corporations do not, they merely collect taxes from consumer of their products and pass on the taxes to the government. The Fair Tax proposal calls for eliminating the IRS and the Income Tax and replacing it with a progressive national Sales Tax on new products and services. To compensate for necessities, such as food, lodging, clothing, etc there would be a “prebate” to reimburse taxpayers for the taxes paid on necessities.

[Name removed]

1. Deleted message

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

[Flabbergasted]

2. A buddy tells me to watch that movie. What do you think of the idea?

[Deja Q]

3. All I know is, a flat tax is ludicrous.

Everybody paying $33% of their income; that $10k taken out of a person who makes $30k/yr is going to hurt far more than the $900,000 coming from the guy who makes $3 million/yr...

If corporations provided living wages, then I'd see no gripes about a flat tax. As it stands, slave wages are becoming the norm.

[mtnsnake]

4. He's not talking about a flat tax. He's talking about eliminating income tax

and replacing it with a "fair tax", which would be "a progressive national Sales Tax on new products and services".

[Donnachaidh]

7. and it starts at 23 PER CENT with local Sales taxes STILL in play and not included in the

calculations. So how would you like to be actually be paying OVER 30 Per Cent in sales taxes?

That's TWICE what Canadians pay!

How FOOLISH does someone have to be to buy into this nonsense?

*Fair* tax - *Flat* tax -- both the same. Both just another way to make the poor poorer. I sure wanna be a part of THAT. :sarcasm:

[Turbineguy]

12. Well there would be a way

to make it more progressive (sales tax already is) by charging higher rates for certain things. A yacht for example might have a higher rate.

But all tax policy results in social engineering. Who's to say what is a luxury item and what is not? Given the number of products and services out there and the constant stream of new ones, a huge (hugh?) bureaucracy government would result from the need to classify these. Then lobbyists would try to get products re-classified at lower rates. There would still be lots of work for Republicans.

Sometimes the results of tax policy are interesting. In Italy (I do not know it it is still that way) automobiles were taxed on engine displacement. The result was to foster development of small displacement high performance car engines.

[Donnachaidh]

13. oh yeah, everyone is going to be good and pay the flat tax

I *wish* I had that sort of cock-eyed optimism.

The sad reality check -- the WEALTHY will ALWAYS find a way to get out of paying their fair share. ALWAYS.

So we're left with the idiots who propose flat taxes to the masses, who then don't take the time to DO THE MATH and open their eyes about fixing the PRESENT system for the equality that COULD be there.

Yet another WEDGE ISSUE to keep people from paying attention to the REAL crimes being pulled in Washington.

And we always chide the thuglicans for voting against their own self-interests. They aren't the only fools out there. :sarcasm:

[Greyhound]

23. Doesn't work, the yacht buyers just but their yachts from Canada or

some other country, and the "free trade" treaties we've been suckered into prevent any "protectionist" policies from being implemented to compensate. The only result in the end is the yacht builders lay off their workers and move operations outside the US.

[Tejanocrat]

34. A sales tax isn't "progressive" and you can't make it progressive.

A sales tax inherently taxes consumption, and poor people use a much higher portion of their income to consume goods than a wealthy person.

You can make a sales tax less regressive by exempting certain items like food, clothes, and medical care, but the poor still use a much higher percentage of their income for consumption.

You can try to make sales tax less regressive by imposing even higher taxes on luxury goods, but once you start talking about a 1/3 tax on luxury goods, it creates a financial incentive to purchase those luxury goods outside the taxing authority's reach (i.e., you buy your yacht in the Bahamas, you travel to South Africa on your engagement trip and buy your engagement ring while out of the country, you buy your Mercedes and BMW on the grey market, etc.).

This isn't JUST a bad idea. It is an idea that shows an inform grip on reality, which is not surprising from the same candidate who wants to wholly privatize Social Security.

[Flabbergasted]

45. "Wants to wholly privatize Social Security?" Really?

[Tejanocrat]

52. Here's what his website says:

"SOCIAL SECURITY

Senator Mike Gravel wants to put real money in the Social Security Trust Fund, investing it properly and identifying the interests of individual beneficiaries so they can leave their surplus funds to their heirs. He also calls on Congress to stop raiding the Social Security Trust Fund. This is key to ensuring that Social Security will be around long after the Baby Boomers are gone for the next generation of Americans who have paid into it."

http://www.gravel2008.us/issues#social_security

His plan where you invest Social Security funds and you can pass them to your heirs sounds like they are private funds to me.

[lumberjack_jeff]

61. A big yacht builder is nearby.

They conduct their sales 200 miles offshore to avoid Washington State sales tax. They'll do the same thing to avoid federal tax.

The fair tax is the worst kind of snake oil. A 30% sales tax would suppress commerce and still be insufficient to supply our revenue needs AND it would create a black market economy unlike any you've ever seen before, which would then create a regulatory/investigatory industry which creates requires more taxes in a vicious feedback loop.

http://www.itepnet.org/sale0904.pdf

[papau]

14. a 60% sales tax is a piece of crap - the shift in taxes from rich to middle class is massive and the

tax rate needed to reproduce the current budget without an FIT is over 60% if you try to include exemptions for things that are the purchases of the poor and lower middle class. Indeed he goes further, or if you prefer, in an alternate direction to help the poor, and has everyone on a welfare check called a "prebate" - the cost of which becomes more massive the greater the progressiveness of the sales tax plan. Folks - we are not talking about a Vermont/Dukakis sales tax that is progressive as one can get and therefore yields little tax. For a Democrat to pretend otherwise is disgusting. You'd think a person running for president would know how fake saying "25% sales tax" is when what you mean that out of the $100 paid $25 was tax, making the sales tax rate 33.3% (25 divided by 75) at a minimum (based on Newt's "best estimate 25%" development). Indeed in Gravel's recent Washington talk on this he used 30% as his number, as he explained he's excluding grocery store purchased meat, fish, fruit, and vegetables, all prescriptions and some level for housing purchases. And for Gravel not to mention those 25% "best estimates" assume massive budget reductions, or rather deficit increases for his "prebate", is criminal. Indeed the use of "revenue neutral" is a obvious con job once you realize he wants only to reproduce the FIT tax takings that we have now after the massive Bush tax cuts for the rich - those tax rates Bush gave us that produce tax takings that produce a $500 to $600 billion increase in the National Debt every year after Clinton had finally achieved a year (1/1/2000 to 12/31/2000) that actually decreased the national debt (the "budget deficit" numbers are also con jobs under Bush - look at the debt increases because Bush can't screw that number up).

There is no way to do a good sales tax on services and we are mainly a service economy. And what the heck does "new products and services" mean - as if re-sales or old services do not get taxes?

Gravel's Pentagon papers Democratic Party points are well spent long ago and he should join Zell in the GOP. Stealing McGovern's 1970's $1000 to every family annual payment idea and making it non-progressive does not make him a progressive.

Which of course means the needed tax rate numbers claimed are lies - but I guess that was not unexpected, now was it?

From Gravel's "for President" web site:

DEMOCRATIC PRESIDENTIAL CANDIDATE

MIKE GRAVEL IS FOR REAL TAX REFORM:

· ABOLISH THE INCOME TAX AND THE IRS

· SET UP A PROGRESSIVE SALES TAX



It’s called a FAIR TAX.

The way in which a government raises revenue is a critical indication of how fair it will be to its citizens.

The U.S. Income Tax system is unfair to its citizens and crippling to the economy.

Both the Income Tax and the Sales Tax systems are generically progressive:

· with Income, you’re taxed on what you earn

· with Sales, you’re taxed on what you spend

But the U.S. Income Tax system is unfair and regressive because Americans earning less than $97,400 pay a larger portion of their income in taxes than those who earn more than $97,400.

The following applies to both Income and Sales tax systems:

· To be fair, a tax system must have total transparency––each taxpayer must know what s/he is paying and what everyone else is paying.

· To be fair, a tax system cannot have any exceptions. One exception opens the door to those who can afford to game the system.

· To be fair, a tax system must be simple. The more complex it is, the easier it is to game the system.

Our income tax code is riddled with exceptions and incentives that the 30,000 lobbyists in Washington have secured and continue to secure for their clients. Little wonder the code is incomprehensible and has a compliance cost to the private sector of $270 billion a year.

After serving eight years on the Senate Finance Committee, my choice to meet the fairness criteria is to junk the income tax with all its exceptions, close the IRS, and establish a sales tax––without exceptions.

Much demagoguery swirls around issues of taxation:

· “Soak the rich” is one approach, but it never happens regardless of whether the liberals or conservatives hold political power. The wealthy have the money to game the system.

· “Tax the corporations” is another approach, but corporate taxes are built into the cost of products or services, so consumers are actually paying those taxes, too. It’s a hidden sales tax.

I subscribe to a sales tax system, most of which is included in what is called the Fair Tax. The Fair Tax meets the fairness criteria: simplicity, transparency and no exceptions.

What sales tax rate will be applied to all new products and services?

The goal is to keep tax reform revenue-neutral. It is not a tax-cut program. Whatever the tax rate on new goods and services that will produce the same amount of money currently raised by the income tax is the sales tax rate. Best estimates indicate that the rate would be somewhere between 20 and 25%. Also, best estimates indicate that it would take a year to transition from one system to the other.

The PREBATE

One of the most exciting features of the Fair Tax is the monthly payments to individuals and/or families to reimburse them for the tax they pay on the essentials of life (food, shelter, clothing, medicine). The amount of the Prebate is calculated by multiplying the cost of essentials by the tax rate. The resulting tax is divided into 12 equal payments and sent on the first of each month to consumers who have registered annually for the program. The progressiveness of the Fair Tax can be determined by adjusting the amounts selected for the prices paid for essentials, which should not be taxed in the first place. However, giving these essentials an exception from the sales tax opens the door for wealth to game the system and we are back with the problems we have in the income tax system.

The Congress will never enact such a radical reform because it dilutes their power to control and focus the economy to accomplish social goals and ,of course, limits their ability of Congress to reward their special-interest friends who donate money to their political campaigns. In my judgment, Americans will have to vote to enact the National Initiative, becoming legislators like their elected lawmakers, in order to make the Fair Tax the law of the land. (www.NationalInitiative.us)

Fair Tax Facts

· Taxes you on what you spend––not on what you earn. So American consumers with low or moderate incomes will automatically pay less in taxes.

· Government revenues from individuals are presently funded by payroll deductions from 110 million workers, and from corporate taxes. Under the Fair Tax, government revenues will be funded by more than 300 million consumers, including visiting tourists, and tax cheats who previously reported little or nothing to the IRS.

· Eliminates federal deductions on your paycheck for income taxes, Social Security and Medicare.

· Social Security and Medicare will be fully funded by the Fair Tax.

· Restores individual privacy. The government no longer needs to know where you work, what you earn, or what you do with your earnings.

· Saves up to $270 billion per year that federal tax compliance currently costs our economy.

· Dramatically reduces the price of new products and services, estimated at 20-25%, because corporations no longer need to hide these costs in the retail prices that are now passed on to consumers. This reduction equals the present income taxes being paid.

· Creates jobs and economic growth in the U.S. by reducing operating costs to companies.

· Encourages international investment in the American economy.

· Businesses, and state and local governments collecting the sales tax will keep a small percentage to reimburse themselves for the cost of collecting and forwarding the funds to the U.S. Treasury.

· Encourages the re-use products and the purchase of tax-free, pre-owned products.

· Changes our consumption-based economy to a savings-based economy, warding off the oncoming fiscal crisis over commercial and private debt.

· Saves about 300,000 trees each year that are currently needed to produce all the paperwork for IRS compliance and tax forms.

· Makes U.S. goods more competitive overseas and more affordable at home, thereby increasing job creation while reducing our balance of payments deficit.

· Eliminates corporate taxes and the costs of compliance. These costs are currently hidden in the price consumers pay for the company’s product or services.

· Changes the American economy – the largest economic entity in the world – into the largest tax haven in the world, enticing international investments in the American economy. Also creates a level of growth (estimated at 10%) and prosperity that will permit the nation to lower government debt and balance the budget, better finance education, health care, transportation, and the rebuilding of our national infrastructure.



Mike Gravel for President

PO Box 948, Arlington, VA 22216-0948

703.652.4698

www.Gravel08.us

www.NationalInitiative.us

Paid for by Mike Gravel for President 2008

[dansolo]

54. Is he lumping in FICA with income taxes?

$97,400 sounds suspiciously like the level where FICA stops being taxed. If this is how he is figuring the "unfairness", then he is being disingenuous at best. He claims that he is talking about income taxes. If he was really concerned about the regressiveness that the FICA contributions introduce, then the cap on contributions should be eliminated. This whole deal is a scam.

[SharonAnn]

16. That would be an "unfair" tax. Poor and wealthy pay exactly the same tax on an item.

Gasoline, Food, clothing, etc.

The very wealthy don't spend that much more on these things. Even if they buy twice as much as a poor person, it's still an insignificant portion of their income.

The standard sales tax rate would have to be over 30%.

Wealth wouldn't be taxed. Unfair really high income wouldn't be taxed. Only what you buy would be taxed.

Of course the wealthy are promulgating it. They can steal even more this way.

And, don't you think they'll be in there right away with their lobbyists carving out exemptions for things they buy?

Yup.

[unlawflcombatnt]

51. It's a Flat Tax, disguised by the word "progressive"

I read through his tax proposals and there's nothing "progressive" involved. It's simply another national sales tax, and a "flat" tax at that.

This is just another proposal by a rich guy designed to appeal to other rich people. It's a way that the highest income earners can pay less tax, and throw the burden on lower income earners.

His rhetoric about "Corporations passing their taxes on to consumers" is just
Right-Wing, supply-side B.S. Corporations charge as much as they can to make as much money as possible. If their taxes are eliminated, they'll charge EXACTLY the same amount, because they'll make the most money at that rate. The difference will be that their exorbitant after-tax profits will become even more exorbitant.

It's just amazing to see how the rich elite keep pushing for a flat tax so their already low taxes will be even lower. It's even more amazing to read such a dishonest self-serving scam from a Democrat.

Our revenue deficit isn't because of "too many loopholes" in the tax system. It's because the tax rates are too low on the top earners, and because income from labor is taxed at twice the rate that investment income is taxed at, and that some capital gains, like those from the sale of homes, aren't taxed at all.

unlawflcombatnt

Economic Populist Forum

[Salviati]

5. Likewise, I usally say that I'd feel better about a flat tax...

... as long as all income is treated the same. None of this crap about investment income, dividends, capital gains buisness. All income is income and should be hit with the same 33% flat tax hammer. That usally shuts up the proponents of the issue, as it exposes the true goals of it's core supporters, to soak the wage earner.

[Greyhound]

31. If you did tax all income, regardless of origin, the rate needed to be

revenue neutral, would be much lower than 33%.

The one and only exemption should be a flat, per person, COLA adjusted amount, probably around $20,000 - $25,000, whatever the number for living is. A family of four would pay the tax on all income after the first $80,000 - $100,000, so said family making $60,000 pays no income tax at all, while the same family that makes $200,000 pays $5,000 - $6,000 at a 5% rate, while the family that makes $1,200,000 pays $55,000 - $56,000, and Lee Raymond (assuming the same 4 family members) would have paid $19,995,000 - $19,996,000 on his $400,000,000 compensation package.

At 15% the numbers are family 1 still pays no tax, family 2 pays $15,000 - 18,000, family 3 pays $165,000 - $168,000,and the Raymonds pay $59,985,000. But wait, there's more...

Since we are now taxing income instead of profit, we use the $371 Billion income figure, instead of reported profits, at 15% the Exxon-Mobile tax bill is now $55,650,000,000, the 5% bill is $18,550,000,000. As you can see the cost of our government (society) is shared much more equitably with this system. And we haven't even really calculated the additional revenue generated from stocks, bonds, inheritance, etc. Do you think such tax evasion schemes as stock options would be so popular if they were taxed at value as income the recipient doesn't actually receive, especially when they'd have to pay the taxes again when the option is exercised? What about off-shoring, not nearly so attractive when the company pays based on income instead of profits, is it?

One of the happy side effects of this taxation plan, beside putting much more money in the hands of those who spend it, is that the true costs of business are better reflected. Consider this, what does it cost us (society at large) for them (Exxon) to have $36Billion that they cannot hide? How many people will die this year from the pollution their product creates? Who's going to pay the price of the effects of global warming? Exxon-Mobile? Guess again, and where's that money going to come from if the producers don't pay for it?

[napsi]

20. A National sales tax to replace the income tax is the only

way to make sure the rich pay their fair share. Rich people are consumers. They consume everything from 2nd and 3rd homes to automobiles, clothing, vacations, boats, planes etc. A national sales tax in my opinion would be a huge incentive for the middle class to save money. Think about it. If your gross pay is $700 per week you get the entire $700 not $468 after with-holding. You decide what you will consume and what you will keep.

Based on what I have read about it the first 30K is exempt which means the rebate covers neccesities. This means that anyone earning less than 30K pays nothing. Perhaps I am being naive but I see this as a great opportunity for every economic class. After doing the math in my individual situtation, I come out ahead of where I am as of April 16, 2007.

[Greyhound]

26. Here's what should give you a clue why this is a fallacy.

If you spend most or all of your income, you don't get rich. The stuff that wealthy people buy is insignificant in the overall economy and that means that the poorer you are the more you would have to pay, or IOW, it is another huge tax cut for the wealthy and a massive tax increase on the poor.

[whistle]

6. Every country which has a value added tax (national sales tax)

...installed that tax system along with an income tax. Having a pure Nationl Sales Tax will be regressive. There is no way to eliminate the regressive character of a national sales tax.

<snip>
National sales tax is bad, backward plan
Written by Mac Diva
Published October 26, 2004

When I say that discussions in the blogosphere start with a bias to the Right, I can rely on someone denying that. Then the someone will go on to say the South had a right to secede from the Union or there is no difference between a non-viable fetus and a person. Some people in Bloggersville do not realize how far out their beliefs are. Robert H. W. Welch, the founder of the John Birch Society, would be at home here. Language he was fond of, such as 'pinko,' 'Commie' and 'statist,' is tossed around rather, well, liberally. A recent blog entry by Dave of The Big Lowitzki's Random Ravings is demonstrative. Though he is not a Right Winger, he found himself discussing a topic with a far Right bias. Dave considered proposals for imposing a national sales tax. He blogged his analysis at Blogcritics.


There was a lot of talk recently about creating a national sales tax in place of an income tax, supposedly causing more "fairness". I strongly agree with the assumptions that this will create more fairness, and strongly disagree with an idea of a national sales tax. Here is why:

First, we need to take a look at what a national sales tax would look like. Lately there has been much talk centering on the possibility of replacing out current income tax system with a national sales tax system. Fairtax.org has a somewhat clear look at what this look would like. Politicians like Tom Delay (Rep., House Majority Leader) and Dennis Hastert (Rep., Speaker of the House) have begun to address this system, with Hastert saying that he will attempt to push this sometime next year. Even George W. Bush chimed in this week saying that this is an idea "that we ought to explore seriously," though him and his administration have since attempted to back away from those original comments.

There are different national sales tax proposals floating around, but I will try to give an overall summary. The national sales tax plan would set a flat sales on good purchased. There are different ideas of what this would like - do services get taxed? What about homes? Healthcare? Used goods? But generally, we would expect to pay a percentage on everything that we purchased. Fairtax.org states that a 23% rate on all goods would be necessary to meet the nation's current budget. Along with this tax rate, most proposals include a rebate. In the Fairtax.org plan, the rebate would be a flat amount based on the poverty level, which would mean a family of four would receive a $361 monthly rebate, regardless of your income.


It is commendable that Dave rejects the idea of a national sales tax, which would be inherently regressive. But, it is odd to actually be discussing such a plan, which is a flat tax proposal in disguise. Mainstream thinkers in economics, law and public policy would not consider a national sales tax because it would conflict with federalism, as well as be unworkable. However, in the Rightward blogosphere those issues are ignored.

One of the impressions one gets looking at some of the material supporting a national sales tax is that it has not been considered and rejected. It has been, before the barrier of federalism arose.

The Tax History Project tells the tale.


One of the most sustained periods of interest in a national sales tax came during the early 1940s. . .

Treasury officials evaluated sales tax plans according to several criteria, including revenue yield, equity, and administrative concerns. In addition, resurgent inflation during the early war years prompted officials to consider what effect sales taxes might have on rising price levels.

Generally speaking, Treasury tax specialists consistently attacked federal sales taxes as regressive. As one report put it, "All general sales taxes apply the principle of ability to pay in reverse; they are regressive instead of progressive." Moreover, officials insisted, sales taxes would likely create "very unequal economic effects among taxpayers." As one report put it, "the general application of a constant formula must necessarily induce haphazard and undesirable results."

Treasury also cited various administrative problems as impediments to a national sales tax, including the need for a new collection mechanism. Furthermore, efforts to craft a list of exempted items were certain to prove nettlesome. Some studies saw a future clouded with protracted wrangles over very specific exemption lists.

As the costs of war mounted, the Roosevelt administration considered softening its stance. But, ultimately, it rejected a federal sales tax.

As late as 1942, Roosevelt was still reading to reporters from a briefing sheet entitled "Evils of the Sales Tax." Equity concerns made a federal sales tax unpalatable, Roosevelt insisted. The levy, he said, "violates the ability to pay. It falls more heavily on the poor; it is, in fact, a 'spare-the-rich' tax."
<MORE>

http://blogcritics.org/archives/2004/10/26/011246.php

[unblock]

10. and most countries with vat are more "socialist" in terms of services

to me, any national sales tax proposal still sounds like socialism for the rich, capitalism for everyone else. sticking a "prepate" and a "progressive" label on it is an improvement, but good window dressing always imrpoves the view.

[unblock]

8. progressive is better than not. to that end i like it. but i much prefer a tax on income

the problem is that income isn't taxed properly at all at this point. way too many deductions, way too weak enforcement, and way too little progressivity to compensate.

a purely sales-based tax lets people escape by living modestly but earning huge incomes and investment returns. i don't think that's right at all. people have and wield economic clout not just by purchasing goods and services, and should be taxed accordingly.

my own simple solutions are either to jack up the progressivity (top marginal tax rate of around 60% feels right for multimillionaires) or to more effectively limit deductions.

the gravel2008 link mentions how much "tax code compliance" costs. well, this is only so because we let it. if deductions aren't permitted for people earning more than $500,000, e.g., then tax compliance becomes much easier. tax compliance only costs so much because there are so many deductions to take advantage of that are worth MORE than the compliance costs.

[seemunkee]

9. How about a single tax rate with the first $50K per person exempt

I honestly don't know the issues around this but wondered if this would be the most fair way. 33% for ANY income over 50K for everyone.

[unblock]

11. you still want some progressivity.

the percentages used are NOT the complicated part. that's just the "look up your tax in the table" part at the very end of your work. simple, really. it's the scapegoat because so many people hate math and/or hate the sound of the high percentages.

the complexity is in determining what's income and what's deductible and so on. limit THAT and it becomes much easier.

so i say, keep the multiple marginal tax brackets, but limit or even eliminate the deductions for people making over a certain amount. to that end, i agree with you, though perhaps we differ on the particulars.

[AJH032]

28. it kind of is that way already

Itemized deductions (as well as dependency exemptions and some other deductions) phase out with higher income levels, and AMT often eliminates certain deductions and credits for higher income tax payers.

[flaminbats]

15. I think a national sales tax is a necessity..

but unlike Gravel, I don't think replacing the income tax is the solution.

I think we need a national sales tax to pay for this war in Iraq, to keep Social Security solvent as the baby-boomers retire, and to pay down the national debt over time. IMO this will only work in addition to the repeal of the Bush tax cuts.

I don't think our progressive tax rates are complex or difficult to understand, but reporting every source of income on a K-1 and paying the alternative minimum tax is!

[xchrom]

17. some of the responses here have been very interesting.

i know we HAVE to do something.

i have strrong socialist inclinations -- so my thinking runs more to making the rich pay more -- however somehow -- our taxes have become involved with ''excusing'' economic flight from the u.s. -- and laws need to change so that our jobs stay here.

i'm in favor of eliminating deductions -- however -- i think the future of social security -- well the future of paying for a lot things is in jeopardy because of trade imbalances, debt, deficit all of which has been compounded by this ''endless war''.

we. are. in. trouble.

[The Magistrate]

18. If He Abolished The I.R.S. Over This, Sir

Next day he would have to set up a new agency, with powers to audit and inspect every business of whatever size in the country, and chartered to suppress cash transactions at all levels.

A tax in this form makes every merchant and provider of services both an agent of the government for collection and conveyance of taxes, and a potential thief of the taxes it is charged to collect and pay over to the government.

[Flabbergasted]

21. Good Point. But would the new agency be more effective?

Although costly to set up at first, it may be more effective than the IRS in the end considering the massive cost of running the IRS and the fact it is constitutionally forbidden. I'm just asking?

[w4rma]

25. No. It would be more big brotherish though. (nt)

[Flabbergasted]

29. I don't see how? nt

[Solon]

32. The blackmarket for all sorts of items would explode...

Think about it, you would raise the prices of items by as much as 30% in many cases, and the poor and middle class would be the ones who will fund most of the black market. Items smuggled in from other nations, from toasters to PCs will be items that people will buy, tax free, to avoid paying a tax they can't afford. Hoping that food and utilities is exempt won't shrink the market, and Internet commerce will expand exponentially faster than it is now. Imagine paying upwards of 40 dollars for a music CD in the states, or ordering it, tax free, from Canada, for less than 20 bucks, which would you do?

The people least affected by this national sales tax would be the rich, they already pay far less for necessities in proportion to their income compared to the middle or lower classes. Because of this, they may actually be the most reliable payers into the tax, at least for small ticket items, where convenience outweighs the cost, but, it still wouldn't be enough to just pay the running costs of the federal government. So we would need a larger, more pro-active I.R.S., one that scours the Internet and audit people's bank and credit card statements to make sure they aren't circumventing the tax. They will also have to audit the sales of every single merchant in the country to make sure that they actually charge the tax, etc.

[Flabbergasted]

35. A blackmarket in toasters? Come on... nt

[w4rma]

36. Why not? There would be a huge profit to be made on the black market with black market prices

being so much lower than legal prices.

[Flabbergasted]

37. Very few people would take the risk to go over the US national border to

sell any legal product. The risk is massive and the reward small comparatively. If anyone were to analyze the numbers compared to the risk it would be a dead loser.

[w4rma]

38. Go over the border? People wouldn't need to. Smuggling operations would be booming.

That profit margin is big enough to fund *lots* of stuff.

[Flabbergasted]

39. I know it wouldn't be worth the time and risk for a smuggler.

[w4rma]

41. Why? Hardly any ships at all get searched. It's really unlikely that one would get caught.

And that's if you were hardly trying. If you used some of those profits on bribes then you'd never get caught.

[Flabbergasted]

44. Who on earth would ship a freighter of legal domestic goods to America to sell illegally?

Why wouldn't they just sell the goods to Walmart and let people buy the shit. It would be such an easier transaction and with no risk and huge profit.

[w4rma]

55. Because they can and wth a much larger profit. (nt)

[The Magistrate]

40. Look Into The History Of the Excise, Sir, In Old England

Just this sort of smuggling was a major industry, involving items as various and apparently innocuous as lace and ingots of tin. When a thirty percent differential meets a potential mass market, sharp-eyed types seize the day....

"When the going gets tough, the pros get wierd."

[Flabbergasted]

43. If your dealing with a product that is illegal and small like drugs its one thing.

What is the risk vs the gain? Some products would be worth the ratio for example: gold watches, but any potential buyer is also facing prosecution so the whole ratio becomes more difficult. How much time would it take to sell? Transportation costs?

[The Magistrate]

47. It Depends On Where You Start, Sir

A couple of trailer-loads of toasters picked up off the dock at the manufacturer's facility, taken directly to retail market, offers a mark-up ranging towards fifty percent even before the allowance for what can be above normal price and still below taxed price. In a circumstance like this, the most 'respectable' business types will work eagerly with crooks. U.S. tobacco manufacturers worked directly with smugglers to evade Canadian cigarette taxes, for example. Crime industrializes very easily; there is a lot more overlap between the things than is commonly appreciated.

[Flabbergasted]

49. I'd be interested in reading about....

"U.S. tobacco manufacturers worked directly with smugglers to evade Canadian cigarette taxes,...."?

[The Magistrate]

50. It Is Fairly Well Known, Sir

Canada sued, but no crime was committed under U.S. law. Basically, though they could well have expected less sales to Canada in consequence of steeply raised taxes, they kept up the same production levels, selling them off into their distribution chains normally, and somehow, the stuff wound up in Canada, sold without tax stamps. The idea the people in charge did not know that would occur with x percent of the production runs is a joke in poor taste. Canadian distillers did the same favor for U.S. bootleggers during Prohibition, and so did European ones.

[Flabbergasted]

56. I was in the dark. Thanks.

[Solon]

53. You never heard of cigarette smuggling, have you?

Granted it could be considered an extreme example, but this black market is HUGE for a legal product. In Mexico, they don't have special taxes on cigarettes, so you can buy them on the cheap there, truck them over by thousands of cartons into the United States, and make a huge profit of them. Individually, the profit is small, somewhere around a dollar or two a pack of cigs, however, taken together, this is millions of dollars in profits, all to circumvent a tax.

[The Magistrate]

59. That Is Done, Sir, Even Between States

Several tobacco producing states have taxes so low, relative to the rest, that it pays quite well to purchase quanties legally in them, and truck them for black market sale in places like Chicago or New York. It is not a street-corner trade, of course, but fed into distribution chains ending in corner stores and bars and such, alongside wholly legal product.

[Solon]

60. Actually, you are right...

I live close to the Mississippi river, on the Missouri side, and I just didn't give a thought to how drastic the prices change between Missouri and Illinois. I remember going to Belleville, to go to a friend's house, and that cigs at the nearest store were close to 4 bucks a pack, in Missouri it averages out to about 2 and a half to 3 bucks a pack. Of course, I was somewhat upset that they wouldn't accept my Missouri Driver's license as an ID at the time, which was stupid, being only about 20 minutes, depending on traffic, from St. Louis, and the fact that I WORKED at a convenience store that stated you can accept IDs from bordering states, I argued with them. My buddy had to buy them for me, which was stupid.

[Hippo_Tron]

19. The current progressive income tax is fine, just make the rich pay their fair share

And more importantly raise the rates on capital gains and dividends.

[Greyhound]

22. It's still a terrible idea that leaves the overwhelming majority of the taxes paid

by those that benefit least from the system and can least afford to pay them. His "cost of a suit" metaphor shows just how lopsided it is. Even the old progressive system of the 60's is better than any of the national sales tax proposals.

The advocates of this system are just selling a monthly government check and hoping nobody notices who is paying the bills.

[Flabbergasted]

46. You always make alot of sense. Thanks.

[w4rma]

24. If a large tax should be eliminated it should be the sales or payroll tax. *Not* the income tax.(nt)

[AJH032]

27. Payroll taxes (other than FICA) are income taxes

just in prepaid form.

[w4rma]

30. You know what I mean. I mean the large tax on people who make under ~$85K. (nt)

[AJH032]

42. actually I'm not quite sure what you mean

:shrug:

[Greyhound]

33. Kicking for another round, though I'm pretty sure the shooting will drown it out. n/t

:kick:

[sendero]

48. Right wingers dream..

.... fortunately, it will never happen.

Folks act like you could "abolish the IRS". Sounds nice, but does anyone REALLY think that collecting a sales tax would be that much easier?

Does anyone really think that Congress will EVER give up the unbridled power that comes with the ability to levy taxes and give tax breaks?

Folks have been floating this idea for years, it's a joke.

[Mass]

57. No, Income Tax is the most progressive tax that exists.

It should just apply fairly to ALL revenues and not only to work revenues.

A progressive sales tax as described here is way too hard to put in place and fixes your priorities for you and is basically unfair.

[Clark2008]

58. Yet another Democrat I can't vote for in the primaries.

I swear to God - I have NO CLUE who to vote for. They pretty much all suck. And the Republicans suck worse.

This is sad.