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re: I'd be interested to hear everyone's opinions of a national sales tax...
Posted on 1/30/23 at 12:50 pm to HubbaBubba
Posted on 1/30/23 at 12:50 pm to HubbaBubba
quote:
I am keenly interested in the effect on housing.
Currently, contractors pay a sales tax on the goods incorporated into the price of the house. Say, 8% for tax. They also pay sales tax on hammers, saws, heavy equipment, etc., but these are all credited through business depreciation.
So, if the builder can reduce costs by 8%, a $500k house theoretically can be sold for $463k.
But the buyer now has to pay a 30% sales tax on a NEW home, so would now pay $602k for the same house.
True, they are using no-tax dollars, so the value of the dollars are jacked 30%. But the additional amount paid for the new house costs everybody because it elevates surrounding property values, which increase local taxation, and raises the cost of existing used homes. This would have an effect on rental rates, which would rise as the values of property and property taxes rises.
I know that NEW homes under the Fair Tax would be taxed, but if pre-owned homes are not subject to sales taxes, this would be a great wealth-building tool to drop your non-taxed money into.
Anyone that is familiar with the Fair Tax who understands how this portion of the proposal effects economic impact in the housing sector, please chime in.
ALl things being equal the cost of production has absolutely nothing to do with the market price of a product or service. If it did you would not have to manage costs in any manner to have a viable business. There is no market function which indicates that an increase or decrease in cost of production has any impact on market price. It will impact the quantity demanded for certain but not price. If no one can produce a pepperoni pizza at a price which would make it a viable choice for consumers there will be no demand nor supply for pepperoni pizza.
If the market would support a price for the house before the sales tax of $500K the market price for that home would be $500K after the sales tax. A buyer in the market at $500k might want it but they would not be able to buy it and would instead be looking at houses that would have been around $400k with no sales tax and the inherent costs of taxation of other types. If production costs drove market prices managing a business would be the simplest job on the planet. Instead you must balance production costs against market prices otherwise quantity demanded will shrink to zero.
In your scenario there would be fewer buyers capable or willing to buy the home at $602K. All things being equal the market price is $500K regardless of the cost of production.
0
Posted on 1/30/23 at 1:00 pm to Volvagia
quote:
You do get that in order to be revenue neutral, there won’t be much “option” to cut back.
And that’s ignoring general price increases due to supply chain taxes.
You can do the same thing now...earn less, spend less, your tax burden will be less. It will be more of your income but the total amount will be less. It is entirely possible to earn $13,850 in the US this year and have a federal tax liability of $0 for a single person. You will pay about $1050 in payroll taxes plus any state income tax plus any taxes inherent in the cost of goods and services you purchase. You would also have to earn another $1050 or so in order for your employer to "match" your payroll taxes (it comes out of your salary they just claim the contribute it on your part the lying SOBs). You would have no federal tax burden, would probably actually get some money back over what you paid in due to the EIC and you could choose how much you were willing to pay in the form of inherent taxes in the goods and services you buy. You wouldn't live large but you'd have zero federal liability directly.
Posted on 1/30/23 at 1:16 pm to AwgustaDawg
I would much rather pay for all my shite with pre-tax dollars v post-tax dollars.
Posted on 1/30/23 at 1:49 pm to Volvagia
quote:
ou do get that in order to be revenue neutral, there won’t be much “option” to cut back.
The same issue exists with the income tax. We can all bring our incomes to zero and stop paying. Apply for food stamps and housing.
Posted on 1/30/23 at 3:11 pm to td1
quote:
I would much rather pay for all my shite with pre-tax dollars v post-tax dollars.
Who wouldn't....but in our current system you can have a heaping pile more post tax dollars per year, more than needed and plenty to live as large as you'd like, than you can pre-tax dollars. You will still pay the taxes that are inherent in every good and service you purchase though.
Posted on 1/30/23 at 5:48 pm to TrueTiger
quote:
The same issue exists with the income tax. We can all bring our incomes to zero and stop paying. Apply for food stamps and housing.
Okay?
Absurd extremist rebuttals aside, you seem to be willfully ignoring that the tax burden is going to be higher for the middle class.
You will NOT pay a similar rate under a sales tax system as you presently do.
This isn’t opinion. Every analysis of this puts the needed value as high as 30%
Posted on 1/30/23 at 6:57 pm to Volvagia
quote:
Every analysis of this puts the needed value as high as 30%
And my take home pay will be 30% more and now I'm more in control.
Posted on 1/30/23 at 7:05 pm to TrueTiger
quote:
And my take home pay will be 30% more and now I'm more in control
Except your effective rate right now isn’t 30%
Playing the odds, you prob pay 15-20% income taxes.
That’s what you don’t seem to get. The tax will be more regressive than present.
Your tax burden will close to double.
This post was edited on 1/30/23 at 7:06 pm
Posted on 1/30/23 at 7:11 pm to slaughlin
A 30% sales tax seems dumb, honestly.
It slows down transactions and optimizations while further rewarding tax evaders and criminal enterprises. Maybe you remove physical money from society.
There will NEVER be a pleasant or "fair" way to extract wealth from people by force.
It slows down transactions and optimizations while further rewarding tax evaders and criminal enterprises. Maybe you remove physical money from society.
There will NEVER be a pleasant or "fair" way to extract wealth from people by force.
Posted on 1/30/23 at 7:25 pm to slaughlin
quote:
... as a replacement for the federal income tax. Who would benefit the most? Who would be hurt the most? Overall a good idea or no?
I’m for anything that reduces the bloated inefficient federal government.
Posted on 1/30/23 at 7:39 pm to Volvagia
Probably worth it to get the IRS out of my life.
Posted on 1/30/23 at 7:48 pm to BeepNode
quote:
It slows down transactions and optimizations while further rewarding tax evaders and criminal enterprises.
Huge incentive for black market everything.
Posted on 1/30/23 at 7:52 pm to TBoy
quote:
Huge incentive for black market everything.
Right. A 30% federal sales tax reeks of "We're from the government and we're here to help". What could possibly go wrong?
If you want lower taxes, just lower the tax rates. If you want them to be more "fair" then flatten the rates.
Posted on 1/31/23 at 6:49 am to TBoy
T-Biff, i believe you're the intellectually impaired, baw
you're describing a Tax-exclusive system
This Fair Tax would be tax-inclusive making the rate 23%
https://mr.cdn.ignitecdn.com/client_assets/fairtaxorg/media/attachments/56c4/af23/6970/2d7c/197c/0000/56c4af2369702d7c197c0000.pdf?1455730467
you're describing a Tax-exclusive system
This Fair Tax would be tax-inclusive making the rate 23%
quote:
C. Tax-Inclusive Versus Tax-Exclusive Rates
We now need to clarify the difference between tax-inclusive and tax-exclusive sales tax rates. An example
will help. Suppose a worker named Joe earns $125 and
spends all of his earnings. Suppose further that he pays a
tax of $25. If he were subject to an income tax, he would
earn $125 before tax, $100 after tax, and spend $100 at the
store. Thus, he would need to earn $125 to spend $100. In
the case of a sales tax, he would earn $125 and pay $125
at the store. Of the $125 paid by Joe at the store, the store
would remit $25 in sales tax, meaning that Joe ends up
with just $100 worth of goods and services.
We may think of the tax rate as $25/$100 = 25 percent,
which is the tax-exclusive rate (te); alternatively, we may
report the tax rate as $25/$125 = 20 percent, which is the
tax-inclusive rate (ti
). The 23 percent FairTax rate in H.R.
25 is a tax-inclusive rate, as is the current personal
income tax, whereas most state-level sales taxes are
quoted on a tax-exclusive basis. For ease of comparison,
we report tax rates in both ways in Table 5.
https://mr.cdn.ignitecdn.com/client_assets/fairtaxorg/media/attachments/56c4/af23/6970/2d7c/197c/0000/56c4af2369702d7c197c0000.pdf?1455730467
This post was edited on 1/31/23 at 6:52 am
Posted on 1/31/23 at 8:31 am to CelticDog
My retort is that the USA may implement a federal VAT tax but would either refuse to get rid of the Income Tax OR would re-implement the Income Tax at a later date.
Posted on 1/31/23 at 9:44 am to Champagne
quote:
My retort is that the USA may implement a federal VAT tax but would either refuse to get rid of the Income Tax OR would re-implement the Income Tax at a later date.
Right. Kind of "the devil you know" scenario.
We are accustomed to income taxes with respect to budgeting our finances and filing requirements.
I don't trust the Federal government at all. I don't believe a flat tax would be a replacement tax; it would just be an additional way for the govt to diversify their revenue streams.
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