WTF? A 30% sales tax? End the IRS? Who's the wacko in Congress with this idea?

What does it matter?
I really don't care 1 way or the other.
I've seen this circus before. Every 2-4 yrs someone brings up some tax system they want to promote. And if a few weeks or months over. Nothing changes.

How's this better or worse than what we have?
The gov't needs X $$ to function. It collects it X ways.
All this is doing is shifting things around. The money still have to be collected and audited somehow.

 

From your post "
$77 + ($77 * tax) = $100
$77 * tax = $100 - $77
$77 * tax = $23
tax = $23 / $77
tax = 29.87% or 30%
So a 30% sales tax is equivalent to a 23% income tax."

So, if one today is in the 15 or 18% tax bracket, they are paying more of their income to taxes?
It will only benefit those in the 23% or higher tax bracket?

 

Nearly all state and local sales taxes do not tax most groceries and medicine, or personal services for that matter. But the problem with the bill is that the states will have to comply with the definitions of what is taxes in the National Retail Sales Tax calculation. And that can get very dicy.

Really, let's say it cost you and your family $1000 per month for all of your necessities, except rent and utilities. Let's further assume your salary is enough, minus the 30% taken out, is enough to pay your montly expenses without regard to the 30% tax you have to pay for purchases. Lets also further assume you pay your rent and ulilities first, and the $1000 is left over. This $1000 is for food, gas, and everthing else. But now, you have to pay 30% of that. So, that leaves about $700 for you to spend even though it cost you $1000 for all you other necessities. Which would you give up? Spme food and starve? Or gas which means you cannot get to work? Or something else, like delaying a doctor's appointment because you have been sick lately? How is that fair in any sense of the word?

It is true because there are always winners and losers to any tax system out there. And fairness is a dubious word, a word with multiple connotations and definitions. AS the adage goes, life is not fair, is it? Or is life fair because of Karma? Hence the point I was making. The whole point of any tax system is not about fairness, no matter how you define it. It is about funding the government functions whether at local, state, or federal level. And that is it.

The fair tax does no such thing. It is not designed to to that. Anyone who comes here and buys products will be subject to the tax, period. So, foreign visitors would now have to look at other countries with lower sales taxes to get the same thing. And that includes our own rich people living here. We have freedom of movement here. All you need is a passport and possibly a visa to go to any country in the world and we have some 38 countries where we do not have to have a visa to get in as long as we have a round-trip ticket. this is called tax competition. Countries and states that have low sales taxes or limited sales taxes are more inclined to have profits with substantial infrastructure for the tourism industry. It is why the Caribbean and Mexico are popular tourist destinations for Americans. Europe is affordable for most Americans because it has cheap transportation and generally cheap boarding if you don't go into the luxury. So is Asia. But with this bill, it will make the US the most expensive and thus get rid of the international tourist and that means fewer jobs and less GDP growth. And on a final note, even Grover Norquest, the father of the anti-tax movement is against this bill. And that says a lot, not to mention nearly all CPAs out there and they tend to be on the conservative side in financial matters.

 

In the tax system, each person and business entity is separate. So, a person who has a personal tax return may have one or more business entities. Some may be disregarded entities for tax purposes and some may not. But it all depends,. Some file just information returns, and some file information and income tax returns.

 

Why would prices increase?
Another poster claims they may reduce because some of the taxes into capital equipment(I think) will go down due to less capital taxes.

 

Why would states have to do that? And if the standards differ, cash registers are all electronic, this is simply coding Further, the final product of this bill very likely will exempt those same things.

30% is much too high. Further, studies have shown that simply paying everyone monthly payments in the amount of the poverty line would be cheaper than the current array of non-social security social safety network of various programs, and would solve this objection while also eliminating all poverty from the United States

First you argue that it's 'unfair' and now you argue that 'fair' is undefinable. If fairness is undefinable, then so is unfairness which vacates your point.

You're objecting that foreigners, making foreign purchases, outside of the US would not be subject to this tax? On what possible justification would you ever argue that such transactions are subject to US taxes?

With tax collection at the point of sale, the demand for CPA's would likely be reduced. The inability of some industries to rent-seek at the level they do now is hardly a valid argument against a much fairer and more easily complied with system.

 

Okay, if bread costs $5 a loaf and everyone has 30% more income or more, do you think the bread of loaf will still cost the same or will that price increase to maximize the profit utilization equilibrium now that aggregate supply increases and aggregate demand also increases, ie they both shift outwards. And that means higher prices, plus the tax.

 

Well you are here discussing it isn't it the job of the Congress do try and make things better and find ways to do things better. All the good reasons have been explained and are listed but all you seem to do is dismiss it out of hand. The auditing and collection and interference in your life would be entirely different. That is one of the great selling points.

 

GOP national sales tax talk backfires, as Dems see political gold

House Speaker Kevin McCarthy has backed his fellow Republicans into a corner with one of the promises he made to his far-right flank to land his job: opening the door to considering fringe legislation that would replace the income tax with a federal sales tax and abolish the IRS.

Most GOP members appear determined to distance themselves as much as possible from the idea, and McCarthy himself said this week he doesn’t support the legislation. But Democrats aren’t going to let the issue die quietly. They’ve been more than happy to use it as a cudgel to portray Republicans as dangerous radicals.
https://www.politico.com/news/2023/01/29/gop-fair-tax-sales-00079609

It isn't like they needed this lame brain idea to prove to the public their ideas are wildly unpopular. But it will be amusing to watch them continuously shoot themselves in one foot, then the other, as they role out their idiotic plans to "MAGA."

 

It's not just shifting things around.
It increases privacy for individuals by not having to report your banking and income. It also reduces the loopholes and over the top deductions that only benefit the rich.

 

Everyone doesn't have 30% more income to spend. Because that income in the pay check goes to taxes on a purchase.
And bread companies are still going to compete for your business. Unless there's a bread mafia doing price fixing.

 

I dismiss nothing out of hand, but your attempts at ad homs.
@Maquiscat has done an excellent job of explaining the 30% sales tax. I like what he's saying, but I reserve caution until it all gets explained.
Which is NOT the job of a media to do, they will relay information, but they don't have to investigate unless they think it will increase viewership which leads to ad revenue.
I dismiss out of hand your attempt to paint the media as bad because they won't do what you think they have to do.
It's up to Congress to sell it to the American people. Not the media.

 

If you read the bill, it literally says this, "To tax all consumption of goods and services in the United States once, without exception, but only once." This is in Title 2, section 1, subparagrah 2. It then goes on to give exceptions which include intangible property, certain used propery, investment income and purchases, and I think one or two more items.

Talk to the authors of the bill because that is what they set the rate for. It could go higher and it could go lower based on what the bill says. If revenues do not meet expenses, then the bill allows the rate to go higher.

for starters, I never said this tax scheme is fair. I have also said that no tax scheme is fair. Why, because in every tax scheme, there are winners and losers. The biggest winners in our tax scheme or businesses who use the accrual method of accounting are Qualifying Widows or Widowers with at least one qualified child, or Single, Married Filing Joint, and Head of Household with one qualified dependent. The losers are those who are filing Married filing Separately, Cash-based businesses, and a couple of other groups too complicated to answer here. My argument is that it is not fair and that difficult choices, especially among the poor and middle class would have to be decided because of the tax impact and with no room to maneuver.

I am not objecting to foreigners making foreign purchases. I am objecting because the tax scheme will run away foreign tourists in places like Florida, Texas, California, Virginia, NY, and elsewhere with large tourism industries embedded into the state or community. Nevada, for instance, would get damn expensive because everything will now cost 30% more, and their gambling and tourism industry would practically vanish. Do you really want that? Then we have retail that will get hurt the second most. Everything will be more expensive because of the tax, hence fewer jobs, and less GDP in retail. The Rich won't stay here and shop, they will go elsewhere, which nullifies any point about the rich paying the same amount. They won't. They will pay little, if anything at all, which now increases the pressure on the middle and lower-income classes who do not have that luxury on a daily basis. Get it now?

And if you still think I am arguing about fairness, I am not, and that is your problem first and foremost.

 

OK, agree.
But it's been pointed out by other posters, a 30% sales tax = 23% income tax.
So for all Americans in the tax bracket less than 23%, it amounts to a tax increase. IE, the poorer pay higher portion of income in taxes. Anyone above the 23% tax bracket gets a tax break.

 

Bread companies charge their prices based on availability. What the pro-NRST says is that you will have more money to spend on. Technically that is true. The problem is that if everyone has more money to spend, the bread is not going to cost the same. And businesses, according to the bill, are not the ones who will be collecting the tax, You will pay the tax to the state. And the bread companies are not going to care. they see higher disposable income, which means higher prices to obtain maximum profitiability.

 

There is no reason the cost of the goods themselves will go up.

No they won' t they will be well aware of the tax that will applied. If you are providing a consumer service you are supposed to apply sales tax now.

Why are you trying to tell me what I already know again?

Why are you trying to tell me what I already know again?

So what to both?

And those with higher sales taxes have lower income tax rates and lower property tax rates they may or may not have higher ad valorem, they have what their citizens decide they want. What's your point?

The Fair Tax is about FEDERAL not STATE it does not take away the state income tax if there is one.

It has nothing to do with what your state wants to do.

 

Like they do now, they send their remittance to the state and also one to the city and one to the county but they could very well just send it to the fed. And why would I be collecting it I am retired.

 

Disagree completely.
There's still market competition to keep prices in check.
They have to charge 30% more just because of the tax.

 

Except it is only those retailers that are required to do so. Those retailers are restaurants primarily, with some auto parts stores, grocery stores on the items that are subject, and a few others. That is a fraction of all the businesses out there. Now, it will be everyone, including you BTW. And your current business generally does not tax such items, do they unless specific rules are met.

 

Sorry a typo should have read "We already have the mechanism in place as all states and cities and towns THAT collect sales taxes, you just piggy back on it."

 

The way our market works, it is monopolistic competitiveness. This means that there are a few large employers and a whole bunch of small ones. The price leaders are the big firms who will set the price, and the rest will follow. Hence why there will be price increases. Why do you think specialty bakery shops are more expensive with the bread compared to what you buy on the shelf. And if you look on the shelf, you see many different brands, but most of those brands are only owned by a few companies, not many.

 

I still think you're off base on this. It is not going to happen.
As said, they automatically will add 30% to the price to cover the new tax.
From what has been posted, that 30% sales tax is equal to 23% income tax. So that sales tax will reduce the purchasing power of all those below the 23% income tax bracket.
For that reason, I am not inclined to favor this tax system. Most Workers are at or below the 15% bracket. So this will be an increase for the lowest wage earners.

 

If I look at my last year of paychecks in 2020 my federal withholdings was 28%. With The Fair Tax I would have ALL that money in my pocket to cover the tax, which would only apply to retail purchases, plus the prebate each month to cover the tax on essential items. Rent is not taxed.

 

Yea that would be a form of value added tax and all the nightmare with that.

 

https://taxfoundation.org/how-many-taxpayers-fall-each-income-tax-bracket
...
The lower wage earners will be paying higher portions of their incomes in this system. Retirees will be hit the hardest in all likely hood.