A National Sales Tax Ignores the Black Market

[jmowreader]

Assume the Bush boy gets his supporters' second most fervent wish and abolishes the federal income tax in favor of a federal sales tax. Watch what will happen:

At first, people will rejoice. No income tax! No IRS! We get to keep All The Money We Earn!

Then will come the realization that the one-dollar can of chili is now a $1.35 can of chili. Gee, this kinda sucks.

The $20 pair of jeans is now a $27 pair of jeans. This is starting to suck worse.

And the $20,000 Honda Accord you've had your eye on? It's now a $27,000 Honda Accord. This REALLY sucks. Accords aren't worth $27,000!

You're standing in the supermarket line, waiting to pay the 35 percent upcharge demanded by the new Federal Sales Tax Service, and a nice lady behind you starts commenting on it. "Yeah, I really hate having to pay that much too. Why don't you come by tonight? I think you'll enjoy yourself."

What the hell...you weren't doing anything else, now that tickets to bad movies have gone from $10 to $13.50.

You knock on the door, and an impeccably dressed couple greets you. There are a number of other couples there with you. After a few drinks, the lady of the house announces that "the festivities are about to begin" and leads you to the basement...where you notice that the pool table has been shoved to the side, racks of groceries dominate the space, and a cash register is parked by the door. "It's all tax free, and the prices are great! Fill your carts! It's just like the old days!" Yes, it's true, you've stumbled into a Snack House...the new version of a crack house, where instead of mind-altering substances canned goods are peddled under cover of darkness.

Apparently, these Snack Houses have been popping up all over America. Shoppers frustrated that the National Sales Tax has eliminated meats and fresh vegetables from their diets but their overall tax bill has not gone down have started selling black-market foodstuffs. Free of national and state sales taxes, and therefore a felony to possess, Snack House foods are estimated to hold a solid 40 percent of the market six months after the imposition of the tariff. Similarly, Wear Houses sell clothing, Tunage Houses sell CDs and DVDs, and House Houses sell building materials.

Where, you might ask, do these Houses get their merchandise? Simply put, hijackings are the key to the whole system. A truck loaded with computers for sale in Miami is pulled over by men armed with machine pistols, unloaded with speed and efficiency using a stolen forklift--the National Office of Snack House Control urges all forklift owners to chain the machines to the nearest beam, a tactic which has not slowed the crime rate but has drastically increased sales at stores that sell chain--then distributed to the House network for sale in Byte Houses.

One of the groups most affected by the House network is the American retailer. They order stuff, have it shipped in and wind up getting an empty truck because all of the stuff is now in the House supply channel. The A&P chain did try fending off this sort of activity by selling merchandise to the House network, reporting it as being stolen and reaping the profits. But after receiving a surprising amount of flammable orange juice, the kind that spontaneously combusts in the middle of the night and burns your distribution centers and stores to the ground with massive loss of life, A&P has cut off ties to the House network. There have been sweeping layoffs across this critical sector, the one part of the economy Bush hasn't figured out how to outsource to China, as a result of the stores having nothing to sell.

The government is fighting back, of course. The National Office of Snack House Control is authorized to use dynamite to destroy any building suspected even peripherally of being involved in the House network, and to execute by firing squad anyone found operating, supplying or purchasing from a House. It hasn't worked, though; not only do Houses thrive thanks to fiscal necessity and tight information control, they have incorporated, unionized their employees, purchased body armor for the people involved in the supply chain, started selling franchises and even started advertising. This campaign buys the back cover of major magazines, where they tell you that you should stay away from the illegal Auto House where you can buy a new Toyota Tundra for only $12,995, to not enter the illegal Snack House where Del Monte ketchup is on sale this week for 99 cents for a 24-ounce bottle, and to avoid at all costs the illegal Tunage House where Fahrenheit 9/11 Part Two is now on sale for only $14.95.

Plans are being made now to eliminate all of the Houses. A cabal of traitorous American Senators are planning to enter the Oval Office and hold pResident Bush at gunpoint until he repeals the National Sales Tax and reimposes the Federal Income Tax. When asked by this reporter where the senators got the guns, one casually mentioned "oh, we went to the local Gun House."

[ranosgol]

1. Sales Tax = Huge Tax increase for Middle America

The entire Federal Sales Tax or Flat tax agenda is to put an even larger burden of the taxes on the poor and the middle class. Steve Forbes proposed a Flat tax of 17 % for everyone that means that the top bracket would get over a 10 % tax cut while the lower wage earning people would see their tax burden increase by several percent. The average American hears no IRS they think tax cut but in reality it a massive tax increase for those who can ill afford it. The deficits would be so huge it is not really feasible. I do think a federal sales take is coming but it wont replace the Income tax it will just be another tax the average American must burden.

[zeemike]

2. Yes it would be a bad thing

That is why we need a VALUE ADDED TAX not a sales tax.
The tax then is collected at the point where value is added to any product or raw material.
It is the most fair of all tax systems that I know of.

[ayeshahaqqiqa]

5. Value Added Tax is a good idea

I believe this type of tax is used in Europe, isn't it? I do have one question-how is this tax employed when one purchases used items, like used cars or used clothing?

[ranosgol]

7. VAT is passed on to the consumer

VAT is nothing more than a different word for sales tax. The final consumer pays the tax, so if you buy something you pay the VAT not the company.

[snippy]

9. All taxes are passed on to the consumer.

Taxes are just another cost of doing business, like utilities, wages, insurance or any other expense. Whether it is an income tax, property tax, employment tax, or a value added tax, a business charges the consumer enough to pay the tax.

[zeemike]

13. It is not at all the same

VAT tax is on the value added to items and is collected at the point that the value is added...Manufacture, not at the point of sale. This makes collecting the tax easy and very difficult to cheat on.

[zeemike]

11. No value added

No tax

[kiahzero]

6. Or we could get rid of regressive taxes

Things like sales tax, and stick with progressive taxation like income tax.

[ranosgol]

8. The old system worked until Reagnomics ruined it.

The old system of the wealthiest sharing the lions share since they benefit most helped in part to developer the middle class.

[Zynx]

3. There's a lot wrong with the national sales tax.

Let me try to list all of the things I can think of:

1. You would cause widespread deflation as companies would have to reduce prices heavily to make goods, particularly houses, affordable.
2. Small businesses, which pay very little tax now, would get killed in all kinds of purchases with a 17-20% sales tax.
3. Lower income earners would get anhilated paying $3-5,000 a year in sales taxes where they now pay no income tax.
4. Capital equipment purchases would be made nearly impossible as their cost would go up dramatically for businesses.
5. 70% of Americans pay very little income tax, if any, now and would suddenly pay thousands.

[snippy]

10. Another thing wrong is that the IRS would have to be much bigger.

It would take a lot of manpower to verify that you paid the national sales tax when the plumber came out and fixed your leaky pipes. The Texas department of revenue (or whatever it is called) once issued a release saying it could administer a national sales tax in Texas if it tripled its number of employees.

[ayeshahaqqiqa]

4. There should be no sales tax on food and prescription drugs

Period. Many states have taken sales tax off these two items. As to getting rid of income tax and making a federal sales tax--with these limitations, I'm for it. Right now, the richest people don't pay taxes. Sure, I'll pay extra for my $1300 car. But so will the bozo who buys a $130,000 car. And I'll know that he has actually paid the tax. I'll pay extra for my $2 jeans at the thrift store because I will know it means that the rich person who buys a $200 pair of jeans will be doing the same thing. Maybe it will make it so people will decide they don't have to have as many things, and they will become more thrifty (that used to be a virtue, you know!)

[liveoaktx]

12. Flip Flop: Bush backs off already from his *sales tax quip*

http://story.news.yahoo.com/news?tmpl=story2&u=/ap/20040811/ap_on_go_pr_wh/bush_sales_tax

Administration officials on Wednesday denied that President Bush is considering a national sales tax, a day after the Republican incumbent created a stir by calling such a tax "an interesting idea that we ought to explore seriously."

[wurzel]

14. True story.

I was visiting some people in England. They have a 17% "value added (sales)tax". Their TV broke. The homeowner made a phone call. A guy came and fixed the TV. He obviously knew what he was doing. But I noticed his van outside was blank. No advertisement. I asked him about this. He laughed. He said. "If I was legitimate with a the sales tax these people couldn't afford to hire me. This whole economy now runs on the black market."

[htuttle]

16. Did the repairman swing in through the window on a rope...

...with a pistol in one hand?



That's my cousin.

[wurzel]

17. That's the guy!!!!! n/t

[sendero]

15. Ok, if we're going to dream...

... the perfect tax is what I would call the "progressive flat tax". This tax would work somewhat like the flat tax you've heard of, except it would be progressive, i.e. rise in proportion to income.

It is almost as simple as a flat tax and would combine the elements of tossing out mounds of complex deductions and formulas, while retaining the needed progressivity of the tax system.

Sales and VAT are non-starters with me, they are totally regressive. Low income people would be hit hard, and the rich would get yey another break. Not on your life. Plus, especially the VAT, would incur mounds of complex paperwork and hence be subject to more fraud.

[sweetheart]

18. Not true mate, study european VAT and get real

The consumption tax is a libertarian idea, not bush... he has simply
repeated it. There is no tax on food, medicine, printed material,
charitable contributions and life-staples.

It effectively achieves a zero-tax rate for those poor who only
purchase "needs". For those who want new cars, yes indeed, it is
when you waltz in to the dealer that you pay what you now pay
in income tax today. There is a difference however. There are
no forms, no billions wasted on IRS employees, no tax courts and no
system of tax advisors who suck the life out of an economy without
putting in any value.

On top of that, it is in your interests, given such a system to
not spend the money, as if you don't buy an "accord" you get to keep
ALL your earnings. Given that americans savings levels are way below
what will be needed to support us during retirement, this is a good
thing. Increasing the "savings rate" will put more money in to your
retirement where we are dangerously short as a society.

People are living longer, Social security is all but bankrupt and
based on a population assumption that is patently wrong. Radical
tax measures are indeed in order, and it is time democratic people
started thinking of their response to this move by Mr. Bush... an
intelligent response rather than this knee-kerk tripe.

Best would be to take the idea and make sure that people know that
it is not a neocon idea at all, but something that economists have
suggested for years as the smartest way to cure the ills of the
us tax system and its economic results.