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POLITICS: US Federal Sales Tax in the Works

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posted on Mar, 5 2005 @ 01:20 PM
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Federal Reserve Chairman Alan Greenspan started pitching the idea of a flat federal sales tax this week. At some point, food, health and housing likely will be taxed. For the short term, Greenspan is recommending a gradual transition, with a "hybrid" approach that includes a federal sales tax plus federal income taxes. The US government already overhauled corporate tax and accounting regulations, and according to critics, took the tax burden off corporations.


 



www.siouxcityjournal.com
Iowa 5th District Congressman Steve King wore a pleased look as he scanned down the front-page article Friday.

King, a second-term Republican from Kiron, read that Federal Reserve Chairman Alan Greenspan said Thursday a national consumption/sales tax could spark the economy.

On another topic, King continued his strong support for creating personal accounts within Social Security, while announcing he is in favor of raising the cap on payroll taxation beyond the current level of $90,000 annually.

King has been advocating a national consumption tax for years, saying it would be the best replacement for federal income tax, which he would like to end.

In an interview Friday at the Journal, King said if the Fair Tax - a national consumption tax proposal in U.S. House of Representatives HR25 bill - is implemented, the cost of complying with federal income tax policies would be gone immediately. In its place, King said, an approximate national sales tax of 23 percent would be levied on new purchases.

King said tax reform and Social Security reform should be undertaken at the same time, not separately.

...........................

(Greenspan) also warned that efforts to overhaul the system would inevitably create winners and losers.

Speaking in the layperson’s language he said “We have to improve America’s savings habit and accelerate economic growth. And we can do this by a tax system that is based on how much you spend, rather than how much you earn.” He suggested a combination of the income tax and consumption tax as the best route to go.

..."consumption tax could be either a national sales tax or a value-added tax (VAT)." ... "Necessities such as food and clothing would now take a larger share of their income," he said. A social rights activist said "It might be acceptable and may even work if food and other basic needs were exempted."

There were critics, one of whom said "a consumption tax may be the only way to develop a healthy economy, if the nation were in its infancy. We obviously don’t need it."

Most economists agreed that it would hit the lower income people harder than it would the higher income households; because the latter group manages to save more while poorer families ended up spending their income each month. That meant they would have to pay taxes on all those expenditures.

As the debate about the consumption tax goes on unabated, few would think about how corporations have, during the past few years, abused the tax-shelter system duping the government to the tune of almost $2 billion, since Congress initiated the largest overhaul of corporate tax and accounting regulations.

Consumption tax anti-poor, say economists

............

Replacing the tax on income with one on spending could boost growth, but likely opposition means a hybrid may be the best approach to reforming taxation, Federal Reserve Chairman Alan Greenspan said on Thursday.

Lending his voice to U.S. President George W. Bush's call for a tax code overhaul, Greenspan backed the goal of simplifying the system and said any revamp should broaden the revenue base and lower tax rates as a way of boosting the U.S. economy's potential.

..."A simpler tax code would reduce the considerable resources devoted to complying with current tax laws, and the freed-up resources could be used for more productive purposes," he said. "Thus, greater simplicity would ... engender a better use of resources." ..."Over the years, economists have disagreed about the size of the efficiency gains that might be achieved from a broader base and lower rates,... "

...Democrats say consumption taxes are likely to place a heavier burden on lower-income Americans, who do not have the luxury of squirreling away hard-earned money, than the current income tax system does.

Greenspan says hybrid tax system best reform route

...............

New York Democratic Congressman Charles Rangel Friday responded ...saying that equal taxation is unfair.

Rangel responded that any tax of that nature, such as a national sales tax, would be an injustice.

"When you have a tax, where you pay the same tax whether you're wealthy or you're poor," Rangel said, "that's not fair."

Congressman Charles Rangel: Equal Taxation 'Not Fair'




Please visit the link provided for the complete story.


Anyone who wondered how on earth we were going to pay for the war in Iraq, and all the juicy new corporate contracts, plus pay down the US National Debt too - here's your answer. "Spark the economy" and "boost growth" my Aunt Fanny's fat butt. We're talking more pork and more of the load on the shoulders of the new-age poor. Just like it used to be in the good old days before all those pesky revolutions.

We're looking at federal consumption taxes plus income tax, no bankruptcy allowed, no class action protections, no health insurance, no cheap drugs, rapidly rising housing costs, no Social Security, cutbacks in everything decent, mandatory employment, and military enforcement of the new rules by NORTHCOM.

Expect public schools to close their doors and send our kids off to be indentured to the local corporate manor.

It's the Bushkrieg Blitzkrieg. Shock and awe on the home front. If anyone's still having trouble getting the big picture, be sure and check out all the secondary links.



New Bankruptcy Law Protects Rich: Squeezes Troops, Everyone Else
Mad Cow Madness
Bush Pushes to Limit Class-Action Suits
Poison DUst: Depleted Uranium Kills
Patriot Act II.
The Final Solution


Related News Links:
www.pbs.org
www.pbs.org




posted on Mar, 5 2005 @ 02:59 PM
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Well if we could vote to get rid of the Federal Income Tax then I wouldnt mind it. According to Iowa 5th District Congressman Steve King, who supports eliminating the income tax, products would drop in price because corporations should have no excuse to cover the cost of the taxes levied on them, even though we know the really big ones get huge tax breaks. I suggest everyone write or call their local representative in case this does come up in congress to express that if we have to charge a Federal consumption tax we better lose our income tax. I mean with a move like that, the rich won't even be immune. They have the biggest tax breaks anyways on income, but with this they cant avoid paying taxes on products. We get to keep ALL of our income and learn how to spend a little smarter.

I am in favor of a Federal consumption Tax with the condition of eliminating the Income Tax.



posted on Mar, 5 2005 @ 03:07 PM
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Originally posted by DYepes


with a move like that, the rich won't even be immune. They have the biggest tax breaks anyways on income, but with this they cant avoid paying taxes on products. We get to keep ALL of our income and learn how to spend a little smarter.

I am in favor of a Federal consumption Tax with the condition of eliminating the Income Tax.




If you eliminate income tax and rely on consumption tax, then ordinary Americans carry the major load. Most people spend most of their income on food, health and shelter - which would be taxed. Ordinary people would have nothing left. Also, rich people buy their goodies under the table and in other countries.

Not a fair solution, IMO.



.



posted on Mar, 5 2005 @ 04:12 PM
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The problem with this has already been stated. And I fully agree with it.

Think of all of the billionaires and multi millionaires. Do you believe they will ever spend all of that money? You know, those Top 1% percenters shoulder their share of the tax revenue. Unless you want record deficits, I would suggest they do not implement this. Let's just say Bill Gates makes a billion dollar a year. Let's say he spends a whopping 100 million dollars a year between upkeep of homes, utilities, etc. That means a tenth of what he would normally pay would go to the federal government. A tenth of what he earned that year would be taxed. Say, right now for his billion, he would be taxed 25% as an example. 250 million dollars. If we keep the same rate of taxation, he would only give 25 million dollars. Can our government actually make due without all of the money that would be given to them? We are recording huge deficits right now. It will be much worse if we didn't keep the Federal Income Tax.

I could be wrong on all of this, but this is what I see.



posted on Mar, 5 2005 @ 04:24 PM
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Oxman, you nailed it. Depressing hugh. Sofi--somedays you make me want to go postal. Good post.



posted on Mar, 5 2005 @ 11:43 PM
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I'm in favor of a national consumption tax. For every new purchase, it would create a surplus of tax revenues that goes back right into the state and local services, not at the federal level (which is where federal income tax goes to). I would just keep federal income tax in place, for now.

Consumption tax is NOT anti-poor. I've seen poor or low-income people buying too much stuff at Walmarts, K-Marts, Krogers, Costcos, other big-box retail stores, etc. and still have enough money to spend on other things. Go to a poor neighborhood, visit a Walmart there and you get a pretty good idea how much stuff those "poor" people are buying in quantities! Hell, you can see many fancy SUVs luxury cars and big pick-up trucks in those "poor" neighborhoods. Must be drug or welfare money.

Critics who states consumption tax is anti-poor are idiots.



[edit on 3/5/2005 by the_oleneo]



posted on Mar, 6 2005 @ 12:52 AM
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I assume this would work the same as state sales tax - exemptions to corporations since they don't consume, only resell.

Again, all the tax burden is on the largest consumers - middle and lower class. The rich would be buying from overseas and exempt.

And I'm sure the States are not about to give up their Sales Tax. We will end up with 30-35 percent tax on purchases. And you think cars and homes are expensive now!!!



posted on Mar, 6 2005 @ 12:56 AM
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I see, so Bush's "tax cuts" have proven incompatible with his administration's call for liberal spending. Therefore, they will slide in the national sales tax to take its place. Ultimately, it will mean we pay more taxes than we did under the so-called "liberals." Yea, I can tell there is a difference between the two major parties, one yells louder than the other.



posted on Mar, 6 2005 @ 04:13 AM
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I was interested in replacing the Federal Income tax with a sales tax at 17% (this was the rate talked about a few years ago). At 23% I am definitely against a federal sales tax. With this kind of national sales tax, the only people who will save money are the rich. The rich don't need to save money at the expense of everyone else in the nation. This nation already has very large deficits. It woudn't be too smart to make the working class too broke to pay their bills or spend money. This is a recipe for an economic depression. It may be coming.

Saying this will save money for the average American is baloney. Tax software costs anywhere from $20 to $60. It's even free online in some cases. Let's see if my tax increases by 8% with no mortgage deduction, that would be say for instance 8% of say $40,000 (example only) a tax increase of about $3,200. If you subtract the tax compliance cost of a whopping $60, you come out behind by about $3,000 less per year. Bill Gates will save millions though. I would have to cut back my spending drastically along with most other average Americans. Brilliant plan for an economic depression in my opinion. Now they say they want to ease us into this plan. That's terrible.
I guess I now know how Bush wants to pay for all of those tax cuts and spending on Iraq. Even if I suddenly got a big pay increase and moved into the upper middle income bracket, I would still be against this plan because I believe it would be an economic disaster for the country.

I forgot to add that corporate America would save big time in taxes as well. I do not believe we need a big business tax break right now at the expense of all the working class of the US. Big business sales to average Americans will drop dramatically if this plan goes through in my opinion. Net revenue by business may decrease in an economic depression as well. I don't like the national sales tax.

[edit on 6-3-2005 by orionthehunter]



posted on Mar, 6 2005 @ 04:19 AM
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A Federal sales tax would most likely exempt all necessities such as food, clothing etc. and perhaps totally exempt all lower priced goods and probably allow some kind of refund for low income people who still end up paying some tax. Don't slam the plan until you see a concrete proposal.



posted on Mar, 6 2005 @ 10:16 AM
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So let me see if I get this right. The taxes will be on only "luxury" items. And we will be able to pay everything? Right...


I just wish we would just do a flat rate taxation. Somewhere in the neighborhood of 10-12 percent of what we earn. It would be far more fair than the above listed system. It would shut up those who currently think the tax code is unfair. Middle Class probably won't be affected that much. And, the poor have had it way too easy for a while. Let them pay ten percent like the rest. Tax exemption does not count. How does that sound?



posted on Mar, 6 2005 @ 10:58 AM
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Thanks sofi for this thread, I was waiting to see when the issue was going to come out in the boards.

Greenspan is a very smart man, he knows that our deficit is getting bigger and that our economy is getting the impact with the result of the borrowing to support our presence in the middle east.

Greenspan is trying to tell the administration that it needs to start working on lowering the deficit but nobody is listening, very soon the interest are going to skyrocket and then then people is going to start screaming.

He is trying to find a solution, lets see what happen.

We need to understand that we have a problem.



posted on Mar, 6 2005 @ 11:38 AM
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Ok, I use this example often: To keep it simple, lets say a national sales tax at the retail level of 20%.

If a rich person buys a house for $1,000,000, they will actually pay $1,200,000. That individual just paid $200,000 in taxes with one single purchase, more than most middle class or poor people will ever pay in their entire lives.

Now for rich people to still keep living like rich people, they will end up paying so much more than any of us normal people when they buy their diamonds and fru-fru art, get their liposuction, and renew their Viagra perscriptions. You folks don't get it at all. A tax system based on what you consume rather than what you earn hits the rich right where they can take it. We want to keep them rich. When they buy that $5000 gold-plated umbrella stand for a house they spend two days a year in, they are going to pay an extra $1000 to our rich Uncle Sam for it, and many of those people make purchases like that on a regular basis. It will add up, quickly.

Me, I don't need things that cost that much so I'm going to pay less taxes, and frankly, I don't care how poor you are, if you weigh 300 pounds, you could probably stand to be paying a little more for food anyhow.

A consumption tax is the only method that gives the citizen direct control over how much taxes they will pay. The savings gained in not having to hire tax attorneys and accountants will be massive in itself. The stress reduction gained from the average American not having to struggle through the intentionally confusing and bloated tax code will be a major contribution to almost everyone's general health, except of course for those parasites who have been feeding off this situation for so long. With our current tax system, you are basically encouraged to hire someone to help you cheat on your taxes. When the tax code is so complicated that you can't work through it without violating it, that is the end result.

What those opposed to it won't admit is that they are opposed to it because with control comes responsibility, and they just don't trust you enough to take responsibility for your own success or failure, or they are the ones profiting from an inequitable system.

America is all about excess and extremes these days. How blatantly superficial can you get? How much can you waste and still be able to ignore it? Sucess is measured by how much you can afford to waste on shiny things that serve little or no fuctional purpose at all. Our current system just maintains this status quo by wrapping it with entire industries designed to perpetuate it and make it too complicated to think about changing. It encouages the wasteful mindset, which in turn contributes to a whole host of other problems.

This is the same mindset that uses 6 gallons of water to dispose of 2 pints of urine, millions of times per day. Think about that for a minute. It's who we are because that is the system we were born into. If we want to change this type of thinking, we need to change the systems that encourage it.

[edit for spelling]

[edit on 6-3-2005 by Ambient Sound]



posted on Mar, 6 2005 @ 11:52 AM
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Originally posted by Ambient Sound

If we want to change this type of thinking, we need to change the systems that encourage it.





I agree - Americans are locked into an 'over-consumption' mentality. I also agree that we need to change the system that encourages it.

For more information on the system that encourages over-consumption, check this out:

Neuro-Marketing: Straight to the Brain


.



posted on Mar, 6 2005 @ 12:03 PM
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We must be careful here to make sure no hybrid system developer. There should be a constitutional amendment abolishing the income tax if a sales tax is instituted. If we allow the Federal government to retain the power of an income tax, you will eventually have to pay both a large sales tax on goods and an income tax on salery. The single most difficult thing for a government to do is to relinquish power. In this case taxes == buying power, be careful that this is not just a shell game to tax you more.

However I agree with a pure consumption tax, it is ultimatly more fair than any system. For the simple fact that it removes the onorous burden of tax compliance for the individual citizen. We have a system now where no individual citizen can compute their own tax as any arbritary time. Hence refunts and underpayments. Think about this, if I asked you today, right now, how much you owe the government for your income so far in 2005, could you give me the right answer? More importantly, could anybody? If not than we have a system that is too complicated. Imagine having a bill coming up in the future that is approx 10-50% of your income and not knowing the actual amount till just before you owe it.



posted on Mar, 6 2005 @ 12:51 PM
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Originally posted by soficrow
I agree - Americans are locked into an 'over-consumption' mentality. I also agree that we need to change the system that encourages it.


Wanted to see a perfect evidence of over-consumption mentality? Go to any poor neighborhood (I don't care how poor) in any American city that have a Walmart or big-box retail/grocery store and you'll see it all from them "poor" folks carting around huge quantities of consumption products.


Also notice how fat some of those "poor" consumers with overweight children. Where did they get the money to feed all that stuff to them and their children?



posted on Mar, 6 2005 @ 12:55 PM
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A more biased presentation of the facts as I've ever seen

PBS - Bastion of the liberal veiwpoint.

Charles "bring back the draft" Rangel - Tax expert!.

Earthtimes.org - "who are active agents of change" - code for socialist agenda.

Yes I am attacking this sourcing, chiefly because there was no balance provided by the author - the gist of this article was a forgone conclusion long before the sourcing was found as back-up to the abject negativity presented here-in as factual information about the consumption tax.

The tag here should be "I report and I decide"

Now lets get some omitted facts from the other side of the consumption tax issue without "Madcow Madness" or other distractions.





Americans for a Fair Tax



If you were in a 23-percent income tax bracket, the federal government would take $23 out of your paycheck for every $100 you made. With the FairTax, if the federal government gets $23 out of every $100 spent in America, the same total revenue is delivered to the federal government. This is revenue neutrality. So, instead of paycheck-earning Americans paying 15.3 percent of their paychecks in Social Security/Medicare payroll taxes, plus an average of 18 percent of their paychecks in federal income tax, for a total of about 33 percent, consumers in America pay only $23 out of every $100. Or about 30 percent at the cash register when they elect to spend on new goods or services for their own personal consumption. And this tax is collected only on spending above the federal poverty level, providing important progressivity.



Thumbnail Sketch of the Fair Tax



No federal sales tax up to the poverty level means progressivity like today's tax system.
To ensure no American pays tax on necessities, the FairTax plan provides a prepaid, monthly rebate (prebate) for every registered household to cover the consumption tax spent on necessities up to the federal poverty level. This, along with several other features, is how the FairTax completely untaxes the poor, lowers the tax burden on most, while making the overall rate progressive.


HR 25 the Fair Tax Bill of 2005
To view the actual FairTax bill introduced into legislation, click on the above link. This will take you to Thomas' online resource for government. Type in "HR 25" in the "Search by Bill Number" box.



SEC. 1. PRINCIPLES OF INTERPRETATION.
`(b) Purposes- The purposes of this subtitle are as follows:

`(1) To raise revenue needed by the Federal Government in a manner consistent with the other purposes of this subtitle.

`(2) To tax all consumption of goods and services in the United States once, without exception, but only once.

`(3) To prevent double, multiple, or cascading taxation.

`(4) To simplify the tax law and reduce the administration costs of, and the costs of compliance with, the tax law.


Rebuttals
In PDF format but very informative.


A policy paper published by Cato Institute in 1997 but still applicable by substituting the current tax pecentage required to finance the crop of government giveaway programs now in existence.

A Policy Paper from The Cato Institute

Is a Fair Tax in Americas Future ?



Effect of FairTax on families
The FairTax would provide every family with a rebate of the sales tax equal to spending up to the federal poverty level. The rebate would be paid in advance and updated according to the Department of Health and Human Services poverty guidelines. Based on the 2003 guidelines, a family of four would be able to spend $24,240 annually tax free. They would receive a monthly rebate of $465 each and every month ($5,575 annually). Therefore, no family would pay tax on essential goods and services, and middle income families would be effectively exempt from tax on a large portion of their annual spending.



I believe that if all the so called poor in America really knew the above, then we would see rioting in the streets until this tax bill was enacted, replacing the vote buying scheme now in existence.

Now one could say my sources are biased and I would agree they are very pro-consumption tax but now the reader of this thread has the information to make an informed decision about the pro's and con's of this issue.

In the face of data that 180 degree diametrically dispels the tired assertions of the socialist left idea of the poor not benefitting from a "Fair Tax" bill one has to dig further to surmise the basis for such adament opposition.

My opinion is made up that the real reason consists of the lefts knowledge that were people enabled to control and influence their own financial destiny free of the "class warfare" ideology promoted by the currently unfair tax system - then their own political influence would diminish to such an extent that they would become irrelevent in the political landscape.

A few fundamental questions come to mind,

Would you rather the government control your checkbook at the point of a gun - or would you rather control it yourself through sound decision.

Sound decision being such as - not buying those $3000 dollar "bling" wheels on a $35,000 dollar income because there is a decision to made whether or not you want to pay the tax or save the money. In the current system you sit back and wait until your non-earned income credit comes back and buy the wheels with the windfall - of course everytime you vote, you will always vote for the politician that keeps the windfall coming because in the end you could give a rats behind what effect it has on net taxpayers families.

Unfortunatly stagnation both economically and politically sets in as the government continually gains more control of your everyday affairs under the current tax code

BTW: I am extremely opposed to any and I mean any attempt to combine Income and Consumption tax, that would be the politicians dream come true - unlimited control of the U.S. economy and political sytem by giving favor to those that offer support (see my signature).

Beware anyone proposing both in existence at the same time.


Phoenix



posted on Mar, 6 2005 @ 01:20 PM
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Originally posted by Phoenix
A more biased presentation of the facts as I've ever seen

Yes I am attacking this sourcing, chiefly because there was no balance provided by the author -




Phoenix - I provided 6 external links; 3 were mainstream, 3 were alternative. FYI - 2 of the "alternative" links were to PBS, and both provided pro and con presentations - they were there to explain both sides of the issue.

IMO - I provided 2 pro-tax references, 2 anti-tax references, and 2 links that explained both sides of the issue.

My mainstream sources:

Pro-tax: SiouxCity Journal

Pro-tax: Reuters

Anti-tax: CNS News


Given your criticisms, am I to understand that ATSNN now has an editorial policy requiring all reporters to provide links to BOTH pro-Bush propaganda and critical "liberal" coverage of the issues?


.



posted on Mar, 6 2005 @ 01:44 PM
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HR 25 has a snowball's chance in hell of passing or even being discussed. It's a 43 percent sales tax. He describes the sales tax as being 14.91 percent, but the real tax is almost 30 percent of the total purchase price since you have add the Social Security and Medicare taxes to the phony rate.



`(3) COMBINED FEDERAL TAX RATE PERCENTAGE- The combined Federal tax rate percentage is the sum of--

`(A) the general revenue rate (as defined in paragraph (4), and

`(B) the old-age, survivors and disability insurance rate, and

`(C) the hospital insurance rate.

`(4) GENERAL REVENUE RATE- The general revenue rate shall be 14.91 percent.


And since this tax is included as part of the purchase price of the product, you're actually paying 43 percent since their definition of a 30 percent tax rate is a total purchase price inclusive of 30 cents tax on the dollar. You'll pay 70 cents for the product and 30 cents of taxes on top of it. That's a 43 percent tax rate.


[edit on 6-3-2005 by lchoro]



posted on Mar, 6 2005 @ 01:45 PM
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okay..... the poor, the elderly, the disabled, and well, let's throw some of the ones just too lazy to go out and get a job.....
will they be exept from this tax, or will they be paying also. and, if they are not exempt, will their benefits be increased to help compensate for the tax? And, well, if it is, isn't this like saying we're facing close to a 50% sales tax? since well, not only are we paying for our own purchases, but the also, the increased cost of these programs.

the only way to get out of this is to cut the danged spending!!! increasing the cost of living for the poor and elderly ain't gonna help that much, I don't think.



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