Twist that pretzel, now put it in the oven!

[Just2Honor]

Here's a sneaky Obama backed tax that is now HB 4646. O's administration hopes to pass it under the radar or wait until after the election. It places a 1% tax on all transactions going through a bank, credit union, etc. So if you get $1000 SS deposited in your bank account, they will deduct $10 for this tax and send it to the Feds. $2000 pension coats you $20. Your paycheck that goes to a bank costs you 1%. I buy something from you and you deposit the money in the bank--costs you 1% Now how much is all his spending costing you?

[Guest Lester Weevils]

I'm not against a natl sales tax if it replaces income tax and income tax is abolished, but there will be warts. Ain't no ideal way. When you add all the expected and unexpected warts together, perhaps a natl sales tax would STILL be superior to an income tax, but then again perhaps not. The income tax system has more warts than a boatload of witches, but we know most of the income tax warts. Though I dare say the congresscritters who passed the law long ago, were not aware of all the warts. It would have been impossible for them to a priori ennumerate all the warts, just as it would be impossible for us to a priori ennumerate all the warts of a natl sales tax.

I don't think the Fair Tax variant of a natl sales tax could get thru congress after the CBO and numerous third-party number crunchers get thru finding the predictable warts. But maybe some variant could pass.

Ain't hating on the Fair Tax. Just the proposed rules of that one would not be popular with all circles and possibly would distort the economy in undesirable ways. Though of course the income tax also distorts the economy in undesirable ways.

====

OK, one issue with all sales taxes-- It seems generally true that old adage, "If you want less of something, tax it."--

If you tax income then there may be a few non-rich nutcases who decide not to work in order to avoid paying tax. There may be a few rich nutcases who decide not to work so hard or to spend money in unproductive expenses to avoid paying some tax. But in general, unless the tax rate is crazy-high, most folks either by necessity or greed will continue to work even though the income is taxed.

But if you tax sales, then a lot more people have the ability and motivation to reduce their purchases in order to avoid tax. By taxing purchases, people would be less inclined to buy stuff unless it is a matter of necessity. Perhaps not everybody is so petty, but I can see myself saying, "Well, it would be nice to have a new computer, but the old one still works and I'm not gonna buy a new one until the old one goes up in smoke because I don't want Uncle Sam to get 20 percent tax on it." Betcha dollars to donuts a natl sales tax will supress economic activity, but dunno by how much. Less Economic Activity -> Fewer People Working -> Fewer People Capable of Purchases -> Even Less Economic Activity -> ad infinitum. It would hit a calculus limit after a few iterations. Wouldn't go all the way down to zilch. But I don't think it would be a good thing to discourage economic activity.

====

Assume that congress is incapable of cutting spending (I'll bet money on it) and so the Fair Tax has to be revenue neutral with the old Income Tax. The Fair tax excludes many things from taxation. Most things a working man needs to buy are taxed, but such as stocks and bonds and political donations (i.e. buying congresscritters) would not be taxed. Sales tax buying socks, but no sales tax buying bonds and no sales tax buying congresscritters.

Rich folk won't spend as big a percentage of their stash on taxable items, but the working man will spend near 100 percent on taxable items. So if the tax is overall revenue neutral, and Steve Forbes total tax bill goes down, then the working man's tax bill will rise to make up the difference. That is what I was harping on earlier-- Maybe you will be happy to pay a bigger total tax in the name of fairness, and in such case it will prove that you have excellent integrity of principles to get reamed even more by the tax man in the name of fairness.

====

There are a couple of other obvious warts, but I gotta go back to work and make some money for uncle sam.

Edited April 11, 2012 by Lester Weevils

[Guest 6.8 AR]

Lester, how many people will quit buying things because of a sales tax? Especially when the cost of goods sold

will decrease due to the lack of income tax and corporate taxes tacked onto the process until it gets to the consumer.

When numbers have been crunched, it is a wash. Eventually it becomes a surplus and the sales tax could be reduced,

with the properly vetted and elected representatives doing the job.

It will give a good incentive to save money, also, since there will be more disposal income to work with.

For your information, the Fair tax excludes purchases of used items and taxes only new items. You and I would

probably buy a used Yugo for a few years before we could afford a new Jaguar.

When the cost of goods goes down what difference does it make whether you are paying a sales tax or an income tax?

I think the answer is more freedom. Being used to a system doesn't make it right. It just means you're used to it.

[Guest 6.8 AR]

And, why do you care what rich folks spend their money on, anyway? It's their money. I'm more concerned with what I have,

or don't.

[hkgonra]

The same amount , or the same rate? Big difference.

Same amount. Flat fee.

Do you pay more at the grocery store for the same item based on your income ?

[Guest Lester Weevils]

Lester, how many people will quit buying things because of a sales tax?

Hi 6.8

I know of one, and betcha I'm not the lone ranger. Earlier admitted that I don't know the magnitude of economic activity suppression, but because "If you want less of something, tax it" is usually a very reliable paradigm, then the taxing of economic activity WILL suppress it to some degree. The thang with those economic factors, is that tiny percentage changes can sometimes have huge results after they filter thru the system a few times. The various economic multipliers.

Am not claiming that a natl sales tax or even the Fair Tax is DEFINITELY worse than Income Tax. Just pointing out obvious warts and there are experts at finding warts, if the tax comes close enough to reality to get them looking into it.

It will give a good incentive to save money, also, since there will be more disposal income to work with.

For your information, the Fair tax excludes purchases of used items and taxes only new items. You and I would

probably buy a used Yugo for a few years before we could afford a new Jaguar.

When the cost of goods goes down what difference does it make whether you are paying a sales tax or an income tax?

I think the answer is more freedom. Being used to a system doesn't make it right. It just means you're used to it.

Yep, the exclusion of used items could also seriously distort the economy. I think it would encourage a "flea market" mindset and hurt retail sales and suppress manufacturing.

I'm just picking 20 percent rate because if the rate isn't "in the ballpark" of the income tax rate it seems unlikely to be revenue neutral. Say I want to buy a new $30,000 Jeep. Neglecting TN sales tax, that will be $36,000 to drive it off the lot. If I can find a slightly used Jeep, maybe it would be worth $34,000 to buy the used Jeep. Save me $2000 for about the same product. The value of the used jeep is $4000 higher than its original retail price! Gonna be hard for manufacturers and dealers to move product competing against last-years product that has a higher retail value that the new stuff you are trying to sell.

Same dynamic trying to sell new houses or new any kind of new-manufactured durable goods.

How much new land is up for sale? Is there such a thing as non-used land? A miserly daddy warbucks can live in a shack and buy up half of TN while you pay his share of the taxes. Don't worry, he'll be happy to rent some of that land to you.

And, why do you care what rich folks spend their money on, anyway? It's their money. I'm more concerned with what I have,

or don't.

It don't matter to me. I'm just pointing out the obvious-- The rich feller who spends his stack cornering the market on stocks, bonds, used land, used houses, used gold, and paying about the same tax bill that you pay-- Not the same percentage-- The exact same amount-- If uncle suger gets less money from the rich feller he'll have to get more money out of you.

If you are willing to pay extra tax because that set-up sounds a lot more fair, then it means you are a very virtuous upstanding citizen to be so dedicated to "doing the right thing." My congratulations!

Edited April 11, 2012 by Lester Weevils

[Guest Lester Weevils]

Same amount. Flat fee.

Do you pay more at the grocery store for the same item based on your income ?

The 2011 federal budget was $3,598,000,000,000. Divide that by about 313,338,000 people. Each person's annual dues are $11,482.81 to belong to the club.

So please remember to add up all the people in your household, multiply by $11,482.81, and be sure to send in the check postmarked no later than April 15. I feel sorry for people with big families. On the other hand, it would save me a whole lot of tax money and sounds like a bargain.

[Guest A10thunderbolt]

The bottom line is the. Current system rewards lazy people, economics is simple(though the Gov cant seem to figure it out) there is more demand for goods than supply to get more supply people have to work but people are paid not to work but they still are part of the demand, get more people to support themselves and you get a more stable economy and the cost to live goes down (Not the value of the dollar necessarily but the amount of physical work to produce a comfortable LIVING) The Gov is good at twisting things like how gas has gone up so much because of. Demand ill bet we use less fuel now than ten years ago due to more efficient cars and trains the difference in price is due to the value of the dollar going down. The US Gov cant control the world wide market for oil if other country's are willing to supply more wealth per barrel that's what will set the overall price.........,...I Think

[Guest 6.8 AR]

I think you're right, A10.

[Guest A10thunderbolt]

Ah, don't listen to me I was home-schooled.

And my History Books Still said FDR Saved us from the Depression.

Edited April 12, 2012 by A10thunderbolt

[hkgonra]

The 2011 federal budget was $3,598,000,000,000. Divide that by about 313,338,000 people. Each person's annual dues are $11,482.81 to belong to the club.

So please remember to add up all the people in your household, multiply by $11,482.81, and be sure to send in the check postmarked no later than April 15. I feel sorry for people with big families. On the other hand, it would save me a whole lot of tax money and sounds like a bargain.

The current federal budget is about 90% over budget. At least 90% is not in the Constitution.

I was only responding to people paying their fair share. The only fair tax is one that is blind to race color creed sex income or any other discriminating factor.

[E4 No More]

Lester, how many people will quit buying things because of a sales tax? Especially when the cost of goods sold

will decrease due to the lack of income tax and corporate taxes tacked onto the process until it gets to the consumer.

When numbers have been crunched, it is a wash. Eventually it becomes a surplus and the sales tax could be reduced,

with the properly vetted and elected representatives doing the job.

It will give a good incentive to save money, also, since there will be more disposal income to work with.

For your information, the Fair tax excludes purchases of used items and taxes only new items. You and I would

probably buy a used Yugo for a few years before we could afford a new Jaguar.

When the cost of goods goes down what difference does it make whether you are paying a sales tax or an income tax?

I think the answer is more freedom. Being used to a system doesn't make it right. It just means you're used to it.

I don't believe for one second that companies would lower their prices. They would add it to their profit margins because that is what we are accustomed to paying.

[E4 No More]

The 2011 federal budget was $3,598,000,000,000. Divide that by about 313,338,000 people. Each person's annual dues are $11,482.81 to belong to the club.

So please remember to add up all the people in your household, multiply by $11,482.81, and be sure to send in the check postmarked no later than April 15. I feel sorry for people with big families. On the other hand, it would save me a whole lot of tax money and sounds like a bargain.

Sweet! My wife and I only owe $22,965.62

[Guest Lester Weevils]

Sweet! My wife and I only owe $22,965.62

Yep, the more I think about it, the better hkgonra's tax plan sounds. At least until I retire. Then it might get tricky keeping current with the club dues.

[hkgonra]

Yep, the more I think about it, the better hkgonra's tax plan sounds. At least until I retire. Then it might get tricky keeping current with the club dues.

$1148 per year per adult is difficult ?

[Guest 6.8 AR]

I don't believe for one second that companies would lower their prices. They would add it to their profit margins because that is what we are accustomed to paying.

Why do you think that? It happens all the time, even in the system we have right now. Technology causes price shifts

all the time. Why can't a change in the tax structure, if it reduces a burden on production? Competition usually

sets prices in a free market.

[E4 No More]

Why do you think that? It happens all the time, even in the system we have right now. Technology causes price shifts

all the time. Why can't a change in the tax structure, if it reduces a burden on production? Competition usually

sets prices in a free market.

Over a great deal of times, perhaps, but not for awhile. They aren't exactly itching to sell stuff cheaper for our benefit.

[Guest A10thunderbolt]

Someone is always looking to sell something for less than the other guy. It would be almost immediate due to company's looking to get a jump on their competition.

[E4 No More]

Someone is always looking to sell something for less than the other guy. It would be almost immediate due to company's looking to get a jump on their competition.

Good luck with that.

[Guest Lester Weevils]

$1148 per year per adult is difficult ?

Hi hkgonra

If my calculation didn't lose any trailing zeros, it would be $11,482.81. Or a mere $45,931.24 per year for a family of four. Might be a little bit of a stretch for some folks.

Maybe it would be your figure if they quit spending all the stuff you believe to be unconstitutional. I'm not saying your belief is wrong. Just never tried to figure it out. It is a nice fantasy but ain't gonna happen unless/until we go full zimbabwe mode, have a mass die-off and reboot.