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A sales tax is less likely to be evaded than an INCOME tax. Why do we work for a wage? So we can BUY things. Being forced to pay an income tax PI**ES everyone off. AND FORCE is used to collect income tax. The worst thing would be having BOTH a VAT and an INCOME tax.
I would not agree with that. The degree to which one will attempt to evade the tax depends a lot on the amount of tax to be evaded. If income tax was only 5% you would have a lot fewer people trying to evade income tax. If federal sales tax was 25% (as would likely be required to replace income tax) a lot more people would find ways to evade it.
For the first 10-15 years of e-commerce, the draw was you didn't pay sales tax on online purchases. As long as some products are tax exempt, one could ring up a taxable product as a non-taxable product. Or not ring them up at all. You can collect cash under the table for a product as easily as pay cash under the table for a wage.
For one thing the term sales tax (or VAT in case you are living somewhere that uses that instead) is misleading. Yes it's technically collected when buying something rather than being taken of your salary/income directly but in the end you are still using your salary/income to actually pay the tax. This means that in a way taxing sales/consumption is actually just a dumb way to tax somebody's income.
Secondly sales/consumption taxes have a greater chance of harming the economy compared to income taxes since they de-incentivize spending money on goods while also possibly having other unwanted side effects such as discouraging tourism.
You can debate how high or low income taxes should be but in any case I would argue that sales taxes are nonsense regardless of if one desires high or low taxes.
Actually, I would argue that ALL taxes in general except the income tax is stupid. If I could I would just instate a flat 50% income tax and then get rid of all other taxes except maybe certain kinds of tariffs.
And how do you deal with the bookies, the drug dealers, and the pimps that make $0 according to their tax filings, but spend 6 figures a year on conspicuous consumption?
Now do you see how a sales tax might actually be more effective at taxing people's consumption (or carbon footprint or similar type metric which seems to be gaining steam)?
We have 12% VAT taxes here in Ecuador. But only the large stores charge them. The local folk can go to farmers' markets or small tiendas and not pay them.
At age 65, all that tax is refunded. I "almost" feel bad about it since the property tax is only $45 and we don't pay income tax as retirees.
One must remember that almost 50% of population pays zero Federal Income Tax. If it was not for sales tax, they would make no contributions at all.
If everyone paid in maybe at least 5% of their pre-deduction income, I would consider being in favor of.
Well if you removed all the people living on paltry SS or SSDI alone and set those aside nearly all of the reaming folks pay 7.65% for fica/SS so to say they would make no contributions at all if it weren’t for sales tax is a lie
For one thing the term sales tax (or VAT in case you are living somewhere that uses that instead) is misleading. Yes it's technically collected when buying something rather than being taken of your salary/income directly but in the end you are still using your salary/income to actually pay the tax. This means that in a way taxing sales/consumption is actually just a dumb way to tax somebody's income.
Well, you're wrong.
Sales taxes tax discretionary spending, not income.
Um, you do understand the difference, right?
You have control over how you spend your money.
Quote:
Originally Posted by splattenburgers
Secondly sales/consumption taxes have a greater chance of harming the economy compared to income taxes since they de-incentivize spending money on goods while also possibly having other unwanted side effects such as discouraging tourism.
Tourists do not come to the US because sales taxes are cheaper.
Do you have an evidence to support your claim?
Yeah, I remember when a luxury tax was enacted which negatively impacted the sale of watercraft and private aircraft, but that was a luxury tax, not a sales tax. A luxury tax is certainly a type of sales tax, but it is not a sales tax per se, because it is a tax on specific items or a class of items and not on goods and services generally.
Quote:
Originally Posted by splattenburgers
You can debate how high or low income taxes should be but in any case I would argue that sales taxes are nonsense regardless of if one desires high or low taxes.
Sales taxes are not nonsense.
Throughout the world, real estate, whether residential, commercial or industrial, is exempt. That means persons who buy or lease residential, commercial or industrial properties are not taxed.
So, people who rent apartments are not taxed, but those who rent hotel/motel space are. I don't see an issue with that. You have a choice in the hotel/motel you want to use.
Insurance and legal services are not taxed. Medical services are generally exempt except for elective procedures, treatments, medical devices and related pharmaceuticals.
Clothing is taxed, but clothing for infants/toddlers is exempt, as are infant/toddler items such as bottles, nipples, teething rings, strollers etc.
Safety equipment, like child car seats and protective equipment for sports and work are generally exempt. Ohio does tax steel-toed safety shoes, but some States do not.
I have an Oscar de la Rente shirt. It cost me $0.50.
No sales tax.
So, I look cool, everyone thinks I'm stinky rich, but I paid practically nothing. I have another I bought at Valley Thrift Store which is a for-profit entity so I did pay a sales tax, unlike Goodwill and St Vincent de Paul where I buy my other clothes which are non-profits and exempt from sales tax.
The point being spending is discretionary and you can choose to pay sales tax or not or control how much sales tax you give up.
Unprepared food is not tax, but prepared food and food served in restaurants is (although no sales tax on carry-out food in Ohio, but Kentucky does charge sales tax for carry-out food).
Entertainment is generally taxed, but that's discretionary spending.
Quote:
Originally Posted by splattenburgers
Actually, I would argue that ALL taxes in general except the income tax is stupid.
No, the income tax is stupid.
You need an income.
You don't need $200 Nikes.
I would hope you're smart enough to understand the difference.
Throughout the world, real estate, whether residential, commercial or industrial, is exempt. That means persons who buy or lease residential, commercial or industrial properties are not taxed.
So, people who rent apartments are not taxed, but those who rent hotel/motel space are. I don't see an issue with that. You have a choice in the hotel/motel you want to use.
Insurance and legal services are not taxed. Medical services are generally exempt except for elective procedures, treatments, medical devices and related pharmaceuticals.
Clothing is taxed, but clothing for infants/toddlers is exempt, as are infant/toddler items such as bottles, nipples, teething rings, strollers etc.
Safety equipment, like child car seats and protective equipment for sports and work are generally exempt. Ohio does tax steel-toed safety shoes, but some States do not.
I have an Oscar de la Rente shirt. It cost me $0.50.
No sales tax.
So, I look cool, everyone thinks I'm stinky rich, but I paid practically nothing. I have another I bought at Valley Thrift Store which is a for-profit entity so I did pay a sales tax, unlike Goodwill and St Vincent de Paul where I buy my other clothes which are non-profits and exempt from sales tax.
The point being spending is discretionary and you can choose to pay sales tax or not or control how much sales tax you give up.
Unprepared food is not tax, but prepared food and food served in restaurants is (although no sales tax on carry-out food in Ohio, but Kentucky does charge sales tax for carry-out food).
Entertainment is generally taxed, but that's discretionary spending.
I'm not saying sales tax is nonsense but you inadvertently provided the best justification for that statement that I've seen. You just showed how sales tax is ridiculously complex, arbitrary, and inconsistent. And that didn't even include the various tax-exempt statuses or that there are hundreds of different tax rates when you include municipalities, transit authorities, redevelopment zones, and others that piggyback onto the state sales tax.
[quote=TexasLawyer2000;56849016]Sales tax is not a Federal tax. A large portion of the 47% that don't pay Federal income tax, do pay state income tax. So your statement is a bit disingenuous.
Your statement is a bit disingenuous - most that don't pay federal income tax, don't pay state income tax either because they are often tied together. Also there are 9 states that don't tax earned income at all (including Texas).
I evade sales tax all the time. I’m spread around several New England states. If I have a large purchase, I do it in New Hampshire to avoid the tax. I’ll be there next Wednesday picking up a $6,000 purchase. It doesn’t work for cars and boats that need to be registered and it’s not worth it for small items. My Vermont place at the ski resort is 30 miles from NH. It’s not like it’s any big deal since I’m driving through NH frequently.
Good for you Geoff. I totally support your strategy. Like I said earlier is that having BOTH an Income and a VAT would be HORRIBLE. One or the other. My choice would be a VAT for several reasons:
1. A VAT would allow the IRS to be done away with. I HATE THE IRS with a passion.
2. The UNDERGROUND economy would be forced to pay taxes that they are now evading.. You do realized that drug dealers and MANY criminals have huge amounts of money that they accumulate to purchase STUFF don't you?
3. A VAT is more competitive. Any product that is higher because of a huge VAT in one state will be cheaper in another state with a much lower tax. As an example Liquor and Cigarette taxes. Some states encourage BLACK Markets because of tax differences.
4. Products that are absolute necessities could be TAX exempt. Fairer to those with less income.
5. Under a VAT system the RICH would pay more in taxes or if they choose to SAVE instead of spend there would be more CAPITAL to invest because of the increased savings on deposit.
I evade sales tax all the time. I’m spread around several New England states. If I have a large purchase, I do it in New Hampshire to avoid the tax. I’ll be there next Wednesday picking up a $6,000 purchase. It doesn’t work for cars and boats that need to be registered and it’s not worth it for small items. My Vermont place at the ski resort is 30 miles from NH. It’s not like it’s any big deal since I’m driving through NH frequently.
I would not announce that you are evading sales tax “all the time” by shopping in the state without sales tax: I bet your own state has so called “use” tax.
In fact you are simply evading paying one of the taxes. You may get caught! Not worth it!
Here is a link for you from VT https://tax.vermont.gov/individuals/...eturns/use-tax
Massachusetts and RhodeIsland - the same- you must pay “ use tax”- which is equal to your state of residency sales tax for internet and out of state purchases.
The same in New York
The best deal in Rhode is no sales tax on boats/yacht - but it is only good for residents of RI or residents of the states without sales tax...
For example, if you are a resident of NY and buy a boat in RI the dreadful “use tax” is still due in NY https://www.tax.ny.gov/pit/file/sale...tax_return.htm
If you paid more in sales tax when buying out of state- you can claim the difference.
Let’s say you bought something for $1000 in LA with its State and City sales tax of 9%.
You can claim the difference of “overpaid” 3% if your state of residency only charges 6%
Last edited by Nik4me; 12-18-2019 at 03:56 PM..
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