OMG, Bush Floats NST?

[MKSheppard]

http://www.csmonitor.com/2004/0813/p03s ... html?s=hns

WASHINGTON - George W. Bush is known for liking bold, sometimes even risky, initiatives - ideas like sending a man to Mars, or revamping the US immigration system, or overthrowing the dictator of Iraq.

But is the president really ready to take on the American tax system? A comment Tuesday at a town-hall meeting in Florida has reignited the long-simmering debate in conservative circles over whether Washington should rethink the way it levies taxes.

When a supporter asked President Bush about scrapping the current tax code and replacing it with a national sales tax, he replied favorably: "I'm not exactly sure how big the national sales tax is going to have to be, but it's the kind of interesting idea that we ought to explore seriously."

Since then, White House spokesmen have not ruled out the idea. Nor have they ruled out that Bush may announce a big new initiative on the tax system at the Republican convention. Some of the president's economic advisers are known to support reforms to simplify tax collection and promote savings and investment.

Rep. Bill Thomas (R) of California, chairman of the House Ways and Means Committee, also favors looking at alternatives and told reporters that his committee will do so. And in a new book, House Speaker Dennis Hastert (R) of Illinois calls for replacing the current system with either a national sales tax, a value-added tax, or a flat income tax.

Democratic presidential nominee John Kerry jumped on what he called the Bush "proposal," saying it would harm the middle class. "Were the Bush proposal to be adopted, many Americans would be paying more than 20 percent in national sales taxes" on top of state taxes, he said.

Not all conservatives like the idea of instituting a national sales tax. Bruce Bartlett, a former Treasury Department official under the first President Bush, writes this week in National Review online that even a 23 percent national sales tax, as proposed by Rep. John Linder (R) of Georgia four years ago, vastly undercalculates the rate that would be needed to replace all federal revenue.

For now, the question is whether Bush really wants to inject this bold new idea into an already issue-laden campaign. "They have other things they want to talk about," Mr. Hastert told the Associated Press recently. But Bush is known for his on-message discipline - and so perhaps his quick comment wasn't a gaffe at all.

[Xenophobe3691]

I repeat my previous statement. Is he willing to utterly revamp the entire Federal Government structure to conform to its pre-1913 days, before the Income Tax?

[Illuminatus Primus]

Yay! Bush for regressive taxation, what a surprise!

[Enforcer Talen]

. . isnt the income tax the bit which keeps the middle class?

[JME2]

. . isnt the income tax the bit which keeps the middle class?

Yep and this keeps with Bush's world view of the have-nots and the have-mores.

[Stuart Mackey]

Well NZ has had a Goods and Services Tax {GST, or Grab Snatch Take}
since the 80's and its not a bad system so long as you rationalise the income tax into one or two brakets.

[Bugsby]

You have to wonder, is this just a really bad idea, or is this an election-year ploy? Is this a straw man for Kerry to knock down to serve some other aim, or is it a genuine initiative. Damn, I hate the paranoia of election year politics...

[Master of Ossus]

The idea of having some sort of national sales tax on certain items is not in and of itself bad. Particularly for things like tobacco and alcohol that cause serious societal costs. However, I still oppose a plan to REPLACE the income tax system with a sales tax system. It may be an interesting idea, but I would have to see a LOT more data leaning in a good direction before I tacked my name behind something like that.

[Darth Wong]

Yay! Bush for regressive taxation, what a surprise!

The last time this subject came up, people ranted about how it was more "regressive" than income tax in exactly the same unsubstantiated way, and that was pretty much where they left it.

[Darth Wong]

In any case, if George W. Bush is floating this idea, I'd suspect that his handlers have some scheme in mind about trying to get Kerry to react to it and then spinning the shit out of his reaction.

[Stuart Mackey]

The idea of having some sort of national sales tax on certain items is not in and of itself bad. Particularly for things like tobacco and alcohol that cause serious societal costs. However, I still oppose a plan to REPLACE the income tax system with a sales tax system. It may be an interesting idea, but I would have to see a LOT more data leaning in a good direction before I tacked my name behind something like that.

I dont think you could replace income tax, allthough Roger Douglas mooted it for NZ when he was Minister of Finance, but if you have a tax on all goods and services it does allow you to reduce income tax.

[CaptainChewbacca]

They're trying to force Kerry to defend the IRS, which is an unpopular thing to do.

[Xenophobe3691]

They're trying to force Kerry to defend the IRS, which is an unpopular thing to do.

Well then, an excellent answer would be that stuff like Social Security, Medicare, Medicaid, Welfare, and all that fun stuff would be going down the drain, along with a huge portion of income...

[The Dark]

Yay! Bush for regressive taxation, what a surprise!

The last time this subject came up, people ranted about how it was more "regressive" than income tax in exactly the same unsubstantiated way, and that was pretty much where they left it.

It is regressive because of the fact that the poor must spend a larger proportion of their incomes to survive. Example:

Let's suppose it takes 10 dollars a day to survive. Poor person earns 12 dollars a day, and has no income tax. They spend the $10, and can save (or spend on luxuries) $2. Rich person earns $50. They have a 50% income tax. They are taxed $25, spend $10 on necessities, and have $15 to spend on luxuries or to save. $2 poor, $15 rich.

Now let's make it a sales tax. The average tax rate was 25%, so that's a loose ballpark number to use for the sales tax. Poor person earns $12. They spend $10 on necessities, plus $2.50 in tax...they have -$0.50 in income. Rich person earns $50. They spend $10 + $2.50 on necessities, and now have $37.50 to use on luxuries. The poor now are actually earning negative income, the rich have 250% more luxury money. It is a simple law of economics (ask anyone with a degree in it...wait six months and you can ask me) that any "flat tax" has empirically proven to be regressive in its burden.

[Darth Wong]

Yay! Bush for regressive taxation, what a surprise!

The last time this subject came up, people ranted about how it was more "regressive" than income tax in exactly the same unsubstantiated way, and that was pretty much where they left it.

It is regressive because of the fact that the poor must spend a larger proportion of their incomes to survive. Example:
<snip>

Thank you for not bothering to read the previous thread to which I referred, not bothering to research the examples of real, working national sales tax implementations in Canada and Britain, and assuming that necessities would not be exempted. It's always enjoyable to hear someone spout that which is simultaneously condescending and ignorant.

[Iceberg]

The last time this subject came up, people ranted about how it was more "regressive" than income tax in exactly the same unsubstantiated way, and that was pretty much where they left it.

It is regressive because of the fact that the poor must spend a larger proportion of their incomes to survive. Example:
<snip>

Thank you for not bothering to read the previous thread to which I referred, not bothering to research the examples of real, working national sales tax implementations in Canada and Britain, and assuming that necessities would not be exempted. It's always enjoyable to hear someone spout that which is simultaneously condescending and ignorant.

This, I presume would be the Goods and Services Tax that I've heard many of my Canadian friends complaining about because of its (a)high expense and (b)lack of progressivity?

[Keevan_Colton]

Or VAT as the british cousin is known.

[Darth Wong]

This, I presume would be the Goods and Services Tax that I've heard many of my Canadian friends complaining about because of its (a)high expense and (b)lack of progressivity?

It's easy to bitch about any kind of tax. There's no such thing as a tax which will receive rave reviews from those who pay it. But the GST is not more regressive than income tax.

[Illuminatus Primus]

I don't see how it possibly is equivalent to a graduated income tax.

And besides, living in a state which has foresaken the income tax in favor of just a sales tax, and the amount of corruption from the exact same kind of politician implementing it and supervising its "reform" (George Bush vs. Jeb Bush) has made me rather cynical about this.

And besides, my dad is one of those Mid Western scrounging types who, despite making more money than he deserves as a doctor, doesn't buy all that much ostentacious crap. None the less, I feel he should pay a share of that back, even if it is his post-tax perogative to not do anything with it.

[Darth Wong]

I don't see how it possibly is equivalent to a graduated income tax.

Since there are far fewer loopholes through which the Paris Hiltons of this world could shelter their wealth (or pretend that they don't have any at all), I don't see why it can't be.

And besides, living in a state which has foresaken the income tax in favor of just a sales tax, and the amount of corruption from the exact same kind of politician implementing it and supervising its "reform" (George Bush vs. Jeb Bush) has made me rather cynical about this.

Those ass-clowns could turn anything into a "rich-get-richer" scam.

And besides, my dad is one of those Mid Western scrounging types who, despite making more money than he deserves as a doctor, doesn't buy all that much ostentacious crap. None the less, I feel he should pay a share of that back, even if it is his post-tax perogative to not do anything with it.

Well you see, I personally think that people who live that way should be rewarded, as compared to people who splurge. The biggest problem with such a system has been elucidated before, and it has nothing to do with class warfare: it would discourage spending in favour of saving.

[Jalinth]

I don't see how it possibly is equivalent to a graduated income tax.

Since there are far fewer loopholes through which the Paris Hiltons of this world could shelter their wealth (or pretend that they don't have any at all), I don't see why it can't be.

And besides, living in a state which has foresaken the income tax in favor of just a sales tax, and the amount of corruption from the exact same kind of politician implementing it and supervising its "reform" (George Bush vs. Jeb Bush) has made me rather cynical about this.

Those ass-clowns could turn anything into a "rich-get-richer" scam.

And besides, my dad is one of those Mid Western scrounging types who, despite making more money than he deserves as a doctor, doesn't buy all that much ostentacious crap. None the less, I feel he should pay a share of that back, even if it is his post-tax perogative to not do anything with it.

Well you see, I personally think that people who live that way should be rewarded, as compared to people who splurge. The biggest problem with such a system has been elucidated before, and it has nothing to do with class warfare: it would discourage spending in favour of saving.

Having a VAT type tax is a good supplement to the income tax but shouldn't replace it. It needs to be a VAT tax, a simple sales tax is regressive. Someone earning $10,000 will spend much more on hard goods than services - at $100,000/year the ratio tends to reverse (they need and can afford professionals). VAT does catch your Hilton sisters of the world. Main problem is that ithe very wealthy can avoid the tax by just going to another country if you are talking about services. Those countries might or might not have a VAT, but you are still losing money from the system.

Also, the GST is not that simple - I work in the field. Some businesses get complete flow-through of the tax (they recover 100% of what they pay in GST), some get none (doctors, dentists, banks) and others are mixed (financial planners). Real estate is very messy and so are situations where you have interlocking companies - trying to get things to work properly can be painful, especially when you need to get both the income and GST in sync.

For the US tax system, both parties have been blaming the messenger for most of the problems. The IRS doesn't impose or constantly change the law, Congress does. They change things so often that even the experts have a hard time trying to figure things out. Look at Bush's tax cuts - how does anyone actually plan when the rates are going to this until year X, and then revert back to the old system (in theory). Also, the US code has so many phase in, phase-outs, penalities, addbacks, bonuses, etc... that it is a mess. Basically they are trying to legislate social outcomes through the tax code. They also get unexpected (or at least unannounced) results - everyone has been buying SUVs and claiming they are entirely business use to get "bonus" depreciation w/o any real restrictions - so they've encouraged a large number of people who really don't need these vehicles for work purposes (a car will do fine) to get these gas guzzlers.

They need to revert back to a more simple system - a few brackets, basic and easily understandible exemptions, consistent treatment. Any special exemptions need to be justified and examined. Does morgage interest really help the taxpayers or is it a subsidy for the middle to upper class? Medical - should these expenses be deductible at all, if so - why such a large threshold before they can be claimed.

I could go on.

Canada's system is better (in my admittedly biased view), but we are moving steadily towards the US system with credit piled on deduction piled on exemption piled on etc...

[jegs2]

Mike brought up loopholes. The filthy rich that so many want to fleece in income taxes have legions of tax lawyers and accountants at their beck and call. They laugh in our collective faces all the way to the bank come income tax time. With a national sales tax, the more you spend the more you pay, so it's self-adjusting. Additionally, higher-priced items could have a heavier tax (expensive toys generally bought only by the rich). Since everyone, poor to rich, has to buy stuff all the time, the income tax loopholes the rich gleefully vault through would become moot.

[Quadlok]

This, I presume would be the Goods and Services Tax that I've heard many of my Canadian friends complaining about because of its (a)high expense and (b)lack of progressivity?

It's easy to bitch about any kind of tax. There's no such thing as a tax which will receive rave reviews from those who pay it. But the GST is not more regressive than income tax.

Bullshit it isn't more regressive! You're just pissed that the rich can avoid their taxes.

This is similar to what The Dark said that you chose to dismiss, but here goes: In my area there is a 8.6% sales tax on basicly everything except non-ready-to-eat food items. This includes thing such as stoves, hot plates, and microwaves that would be neccesary to prepare that food. Now, if you're dirt poor, you likely won't be able to buy the neccessary appliances, and so will have to purchase foods that are taxed, wereas those who are more wealthy can afford to prepare their food, or even have someone around to prepare it for them, which isn't taxed either.

Also, its easy enough for those who can to drive over to the next state over with no tax, or to use the internet, which also often has no sales tax. That, along with the food thing, makes this sort of tax more regressive than a properly constructed income tax.

[Howedar]

This is similar to what The Dark said that you chose to dismiss, but here goes: In my area there is a 8.6% sales tax on basicly everything except non-ready-to-eat food items. This includes thing such as stoves, hot plates, and microwaves that would be neccesary to prepare that food. Now, if you're dirt poor, you likely won't be able to buy the neccessary appliances, and so will have to purchase foods that are taxed, wereas those who are more wealthy can afford to prepare their food, or even have someone around to prepare it for them, which isn't taxed either.

So poor that you can't cook, yet you can afford to eat at McDonald's. Right.

Also, its easy enough for those who can to drive over to the next state over with no tax, or to use the internet, which also often has no sales tax. That, along with the food thing, makes this sort of tax more regressive than a properly constructed income tax.

A national sales tax would tax all US purchases, and out-of-country purchases would or could be subject to a duty.

[Quadlok]

This is similar to what The Dark said that you chose to dismiss, but here goes: In my area there is a 8.6% sales tax on basicly everything except non-ready-to-eat food items. This includes thing such as stoves, hot plates, and microwaves that would be neccesary to prepare that food. Now, if you're dirt poor, you likely won't be able to buy the neccessary appliances, and so will have to purchase foods that are taxed, wereas those who are more wealthy can afford to prepare their food, or even have someone around to prepare it for them, which isn't taxed either.

So poor that you can't cook, yet you can afford to eat at McDonald's. Right.

Yes, right; there are many people who do just that. It doesn't make to much sense, but it's true.

Also, its easy enough for those who can to drive over to the next state over with no tax, or to use the internet, which also often has no sales tax. That, along with the food thing, makes this sort of tax more regressive than a properly constructed income tax.

A national sales tax would tax all US purchases, and out-of-country purchases would or could be subject to a duty.

Yes, because we all know who well the tax and import laws are currently enforced,especially towards the upper class, so obviously if their combined it will work wonderfully. And if by all purchases you include essentials such as food and clothing, than it is a regressive tax.

The problem with this sort of tax is that it would require a tremendous amount of restructuring to the current system to make it work, and then would require even more time and effort assuring proper enforcement. It simply isn't any better than the current system. All it would do is replace old loopholes with new ones, and if not properly constructed has the potential to be manifestly unfair to the middle and lower class.