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All a VAT tax will do is raise prices for EVERYTHING....Each little step of manufacturing is taxed...a sales tax is the better option.
If you don't want to pay the tax, don't buy it!
Everyone would have more money in their pocket, and each would be responsible for how much tax they want to pay, buy what they purchase. And, those with more money would ultimately pay more, because they buy more!!!
This plan is incredibly regressive. Those who can barely afford to put food on their table today would end up starving. The end result is that this will drive up income disparity. The poor and middle class will get poorer (and have even less purchasing power) and the wealthy will get wealthier.
We have a consumer based economy. Essentially wiping out a good bit of the consumer pool with this plan will have dire economic consequences.
Plus, we'll likely see a black market / under the table system pop up as the working poor and lower middle class simply will not be able to survive by purchasing items through traditional markets.
The flat tax is a ploy by the 1% to allow themselves to get richer while the rest of the country gets screwed. Unfortunately, they do a good job selling it as a good idea to those who can least afford it.
This plan is incredibly regressive. Those who can barely afford to put food on their table today would end up starving. The end result is that this will drive up income disparity. The poor and middle class will get poorer (and have even less purchasing power) and the wealthy will get wealthier.
We have a consumer based economy. Essentially wiping out a good bit of the consumer pool with this plan will have dire economic consequences.
Plus, we'll likely see a black market / under the table system pop up as the working poor and lower middle class simply will not be able to survive by purchasing items through traditional markets.
The flat tax is a ploy by the 1% to allow themselves to get richer while the rest of the country gets screwed. Unfortunately, they do a good job selling it as a good idea to those who can least afford it.
The problems you list with respect to black markets / under the table work and reduced economic activity already exist with the current system. Any system where any one activity is heavily taxed will create inefficiencies and avoidance. In this you aren't really making an effective argument against the OP's idea, but rather an argument against having any one single dominant tax target, instead having a diverse tax base -- and as our current system at the federal level is massively slanted toward taxing payrolls and income, you actually are unintentionally making a case for a federal sales (or VAT, or property, etc.) tax in lieu of current levels of income and payroll.
There is an economy here that only does cash business. Drug trade, illegal medical, construction, food services, etc all cash businesses and these people pay no income taxes they only collect refunds and the only tax they have to pay are sales taxes and tolls if they have to. A lot of people that carry a lot of cash only goes to mom & pop stores that are cash businesses too. These are the folks that charge very little and you can't figure out how they can charge so little. Because they don't pay any taxes. The IRS can't go after them because they have no books, no bank acct, or anything the IRS can use their abusive powers to collect so the IRS largely ignores cash only businesses and people.
I see people suggest that income taxes discourage people from increasing their income. That's arguable. If somebody doesn't want a high paying job because of taxes, I'm sure somebody else will be willing to take it.
But you can't deny that sales taxes discourage people from spending.
Japan has a national sales tax. Every time they raise it, the economy takes a hit because people reduce spending, and the smaller businesses go out of business. Just last year they raised it 3%, and public spending dropped even lower than economists predicted. The reason is because the cost of everyday necessities increased so much that people are budgeting less for luxuries, and saving more money for future cost-of-living increases.
The last time the sales tax went up, a few years ago, businesses dropped prices to offset the tax increase. Yet spending dropped anyway, and the country went into a recession.
When they dropped it last spring, the opposite happened. Businesses used the sales tax increase as an excuse to raise prices on food and necessities--things they know consumers need to buy anyway. Dairy products increased 20-30%, and meats went up 30-50%! Not much change in produce, but staples like sugar and flour went up. I noticed that the prices on the cheapest brands went up the most, probably because manufacturers knew there would be a greater demand for cheaper things. So poor and middle class families are hurting, and Japan is back in a recession again. (Although personally, I don't think it ever really got out of the recession.)
Sales taxes discourage spending, and that puts people out of work.
Another point I'd like to make is that the country were to institute a national sales tax and do away with income taxes, the sales tax would need to be about 20-30% in order to generate as much tax income as the income taxes they would be doing away with.
How many of you really want your cost of living to increase that much? Housing costs, utility costs, food costs, medical costs, everything up any extra 20-30% more than what you're paying now. It would probably be even more, if businesses decide that they need to increase prices to offset their increased business costs. (After all, if there is no more tax on income, there are also no tax deductions for business costs.)
Will your boss give you a raise to cover the increased cost of living? Or will they use it as an excuse to suggest their employees take pay cuts, because the government isn't taking money from their income anymore?
If you want to entrench an economic autocracy even more firmly in place a National sales tax is a great idea.
As I am opposed to autocracy in any form I would prefer an Income Tax based on all income from all sources with a base deduction equal to the 90th percentile. Let the people that own and, through political collusion, run the country, pay for their indulgence.
As a small biz owner, a consumption based tax would hurt my business. Businesses are in favor of having taxes handled by consumers in the form of income taxes. Which is why it would never fly as big businesses would bulk at the idea of them becoming tax collectors and hurt sales.
As a small biz owner, a consumption based tax would hurt my business. Businesses are in favor of having taxes handled by consumers in the form of income taxes. Which is why it would never fly as big businesses would bulk at the idea of them becoming tax collectors and hurt sales.
This should give you a clue why it won't work.
You have an interesting perspective as a small biz owner. Let me give you a bit of perspective from the large business point of view.
Currently, the IRS collects in the neighborhood of $350 Billion in tax revenue from corporations, and this $350 Billion is about 11% of total IRS receipts.
Corporations employ large departments of tax accountants and tax attorneys to comply with federal tax laws. Estimates are that corporations collectively spend about $300 BILLION to comply with the tax law ("fill out the forms"). Just to be clear, corporate tax returns are trade secrets and not public information. Pick any of the Fortune 50 - their corporate income tax return filed with the IRS averages about 20,000 pages to 25,000 pages (of course, these are filed electronically, not in paper.
Spending $300 Billion to comply with the tax law so you can then forward $350 Billion to the IRS is horribly inefficient.
I believe we should completely eliminate corporate income taxation entirely, and make up the $350 Billion in lost receipts by raising personal income taxes (yes, on people like me). This would have the added benefit that hundreds of thousands of corporate tax attorneys and tax accountants could be redeployed into jobs where they actually contribute to GDP -- such as the food preparation industry. Moreover, the wide swath of IRS employees who focus on corporate taxation could also be redeployed into such high value-add jobs as hotel room service & housekeeping.
You have an interesting perspective as a small biz owner. Let me give you a bit of perspective from the large business point of view.
Currently, the IRS collects in the neighborhood of $350 Billion in tax revenue from corporations, and this $350 Billion is about 11% of total IRS receipts.
Corporations employ large departments of tax accountants and tax attorneys to comply with federal tax laws. Estimates are that corporations collectively spend about $300 BILLION to comply with the tax law ("fill out the forms"). Just to be clear, corporate tax returns are trade secrets and not public information. Pick any of the Fortune 50 - their corporate income tax return filed with the IRS averages about 20,000 pages to 25,000 pages (of course, these are filed electronically, not in paper.
Spending $300 Billion to comply with the tax law so you can then forward $350 Billion to the IRS is horribly inefficient.
I believe we should completely eliminate corporate income taxation entirely, and make up the $350 Billion in lost receipts by raising personal income taxes (yes, on people like me). This would have the added benefit that hundreds of thousands of corporate tax attorneys and tax accountants could be redeployed into jobs where they actually contribute to GDP -- such as the food preparation industry. Moreover, the wide swath of IRS employees who focus on corporate taxation could also be redeployed into such high value-add jobs as hotel room service & housekeeping.
You forget that a Corporation is an entity itself, regardless the type of Corp, it has to file income tax just like you and me. So if we switch to a consumption based tax, everything that a corp spends on will be subjected to sales taxes. This will kill or closed the loop-hole that many of the creative ways that corps are doing to help the 1% dodge use/sales tax.
Another reason why CEOs won't like it. They are basically living on company expenses tax free while the rest of us spend after tax dollars.
Why would anybody ever say that? What the government does in the United States has nothing to do with the dictates of religion.
This nation was founded on Judeo-Christian values, one of which is "first fruits" - the doctrine that the first 10% of one's income should be returned to God.
10% is what God is due, thus, 10% is in excess of what the govt is due.
"...render to Caesar the things that are Caesar's, and to God the things that are God's." Mark 12:17 KJV
Quote:
Originally Posted by vision33r
You forget that a Corporation is an entity itself, regardless the type of Corp, it has to file income tax just like you and me. So if we switch to a consumption based tax, everything that a corp spends on will be subjected to sales taxes. This will kill or closed the loop-hole that many of the creative ways that corps are doing to help the 1% dodge use/sales tax.
A sales tax imposed upon businesses will essentially be a VAT tax, which will exponentially increase consumer prices.
Quote:
Originally Posted by Gaylenwoof
The basic principle to consider is this: Does society have a moral right to force your neighbor to give your friend enough water to keep on living?
If you believe that the rich neighbor has a moral duty to share his water
Believing that the neighbor has a moral obligation to share his water is altogether different than believing that government should have the authority to take his water from him.
The first belief places the obligation on the neighbor to voluntarily do what is right.
The second, which is rooted in Marx's statement "to each according to his needs, from each according to his abilities," assumes two things: that the need of the one is more important than the property of the other, and that some third party is morally justified in usurping the neighbor's free will and moral conscience.
Last edited by Oldhag1; 02-19-2015 at 11:32 AM..
Reason: Merge
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