# Various kinds of Tax reform: Bush's 2nd term **URL:** \ **Category:** Great Debates\ **Created:** [November 8, 2004, 6:16pm UTC](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681 "2004-11-08T18:16:05Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [November 10, 2004, 3:13pm UTC](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681/41 "2004-11-10T15:13:50Z")
> [@JMS@CCT](#): > > Actually, there is no proof that the 16th amendment was ever properly ratified. [The Master speaks.](http://www.straightdope.com/classics/a5_127.html) ---
**Author:** ![Dewey\_Cheatem\_Undhow](https://avatars.discourse-cdn.com/v4/letter/d/13edae/32.png) [@Dewey\_Cheatem\_Undhow](https://boards.straightdope.com/u/Dewey_Cheatem_Undhow)\ **Post date:** [November 10, 2004, 3:25pm UTC](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681/42 "2004-11-10T15:25:46Z")
> [@JMS@CCT](#): > > For the benefit of those who aren’t familiar with the 16th amendment (the constitutional mandate the IRS claims as its authority to lay and collect the income tax), here it is: > > " **The Congress shall have power to lay and collect taxes on incomes, from whatever sources derived, without apportionment among the several States, and without regard to any census or enumeration."** > > Actually, there is no proof that the 16th amendment was ever properly ratified. There is only documentation of a handful of States haveing ratified it. But even if it was, the intent of the Congress that wrote it was not to create any new taxing authority, but to assure that “sources” of “income” would not be taxed. “Income” was defined, in four landmark Supreme Court decisions closely following the inseption of the 16th amendment, as corporate profit. If this is the case, no individual or individually owned business could have an income. The tax the IRS lays and collects from individuals is therefore a tax on sources, or gross revenues, which the 16th does not authorize. You are wrong. Please see [Dan Evans’ Tax Protester FAQ](http://evans-legal.com/dan/tpfaq.html) for details. ---
**Author:** ![Steve\_MB](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/steve_mb/32/5339_2.png) [@Steve\_MB](https://boards.straightdope.com/u/Steve_MB)\ **Post date:** [November 10, 2004, 4:02pm UTC](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681/43 "2004-11-10T16:02:43Z")
> [@Malodorous](#): > > not to mention the huge welfare department that would be needed to figure out how much to refund all the low-income people for thier sales Nope – the refund is a flat per-captia amount (an approximation of the tax someone would pay on low-end basic necessities for a year) in every proposal along these lines I’ve seen. ---
**Author:** ![Steve\_MB](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/steve_mb/32/5339_2.png) [@Steve\_MB](https://boards.straightdope.com/u/Steve_MB)\ **Post date:** [November 10, 2004, 4:08pm UTC](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681/44 "2004-11-10T16:08:33Z")
> [@Ravenman](#): > > 1. 22% of retail item’s cost is the “embedded cost” of retail items, arising from “the payroll taxes and corporate business and income taxes paid by every manufacturer, shipper, wholesaler, merchandiser and retailer having any connection whatsoever with the product you have purchased. These taxes are all added to the cost of consumer goods.” (see link in OP for cite for the quoted material in these premises.) > 2. “As soon as these taxes vanish, economists agree that competitive market pressures will immediately cause prices at the retail level to fall.” That means, once businesses stop paying payroll taxes, and presumably cut worker pay by the same amount at which workers had been paying income taxes, the price of retail items will be reduced by around 20%. Er, the payroll taxes and corporate business and income taxes are a different thing from the individual worker’s income taxes. The 22% savings comes from eliminating the former, not the latter. Again, if your employer could hire/retain people capable of getting the work done adequately for 20% less money, he would have already done so. ---
**Author:** ![Steve\_MB](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/steve_mb/32/5339_2.png) [@Steve\_MB](https://boards.straightdope.com/u/Steve_MB)\ **Post date:** [November 10, 2004, 4:13pm UTC](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681/45 "2004-11-10T16:13:37Z")
> [@Ravenman](#): > > Ha! When was the last time you read the Constitution? 1912? It’s time to get a new edition that includes the 16th Amendment. There are two separate issues here: 1. Is the federal government allowed to have an income tax at all? 2. Is the federal government allowed to use any and all methods to detect and punish failure to pay up? The answer to question 1 is clearly “yes” (moonbat arguments to the contrary notwithstanding). The answer to question 2 is, just as clearly, “no” – the Sixteenth Amendment did not repeal any of the various protections pertaining to search and seizure, self-incrimination, etc (the IRS’ tendency to act as if it did notwithstanding). ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [November 10, 2004, 4:20pm UTC](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681/46 "2004-11-10T16:20:17Z")
> [@JMS@CCT](#): > > 1. First and foremost, it eliminates the IRS and the IRC. Period. The flat tax doesn’t. The IRS is an outlaw government agency that routinely violates American citizen’s 4th and 5th amendment rights to due process of law, right to privacy, liberty and property. Above all else, it needs to be abolished. Although the IRS says the filing of individual tax returns is"voluntary" (without distraint, coercion or force), they make a mockery of this in practice, and the courts, by and large, let them get away with it. > > 2. Whereas the income tax, in reality, provides a choice only at the risk of substantial loss of property and liberty, the fair tax–which is a pure retail consumption tax–actually provides a real choice of whether or not one wants to pay it. It is conceivable that one could live without paying the tax (used items, and resale items are non-taxable). > > 3. Since the fair tax is based solely on retail consumption, the “rich” will definitly pay their “fair share.” As to your aruments that the IRS is "Outlaw’ and that it claims it tax system to be voluntary and it isn’t- I invite you to this page: [http://www.militia-watchdog.org/suss5.asp#voluntary](http://www.militia-watchdog.org/suss5.asp#voluntary) [http://www.militia-watchdog.org/suss6.asp#enforce](http://www.militia-watchdog.org/suss6.asp#enforce) The US does indeed use a “voluntary” system of compliance. But taxes aren’t voluntary at all- here is what is meant by "voluntary ":“_to the extent that income taxes are said to be voluntary, however, they are only voluntary in that one files the returns and pays the taxes without the IRS first telling each individual the amount due and then forcing payment of that amount. The payment of income taxes is not optional, however, … and the average citizen knows that the payment of income taxes is legally required.")_ Not only that, but the Courts even go so far as to ridicule dudes who have your definition and understanding of the term “voluntary” as applied to US taxation: " _He alleges he does not have to pay taxes because it is a voluntary system and he chooses not to participate. … the court came to the rather quick and obvious conclusion that the words coming from the Debtor’s mouth made no more sense than the words written on the Debtor’s pleadings_.” As to the IRS " routinely violates American citizen’s 4th and 5th amendment rights to due process of law, right to privacy, liberty and property."- again false. The GAO actually did a study, as opposed to a few scattered "lifeboat cases’ and has shown otherwise. But if you want “jackbooted thugs” try dealing with your average State tax agency- the CA BoE and FTB make the IRS look like Cub Scouts. 1. I don’t see where they differentiate between re-sale or used items. And, if the collecting Retailer doesn’t fully comply we again have the risk of “substantial loss of property and liberty”. 2. On every one of these systems, if it is indeed “revenue neutral” (which I doubt) then the Middle class MUST end up paying higher taxes, because the rich will pay less. Since I doubt the tax will be collected on $$ spent outside the USA, or on “buying” stocks or real property, the rich “spend” a much smaller % of their income that the middle class does. Thus, _ispo facto_- they will pay less, and thus- we will have to pay more. The idea that prices will go down, thus we’ll actually nearly pay no taxes is silly beyong belief, and shows that whoever wrote that hasn’t even taken High Scool Economics. Complete fantasy. You, I, and 90% of the posters here will pay more. GWB & his rich buddies will pay less. Also- there is a huge problem with **Compliance**. Already there is a nice booming black & underground economy that skips paying sales taxes at a mere 8% local/state rate. If that rate is now 30% or higher (22 or 235 + 8% or so State rate)- the complain problems will be enourmous. Dudes will sell at Fela markets and such, many will skip across the border and do the weekly grocery shopping there. Much stuff will be bought by mail from out of the country. (and the rich can evade these taxes easier). This will reduce tax collections, and they’ll have to raise the tax- to 30%? making the Sales tax alsmot 40%? And then compliance will be harder. Finally the whole thing about the “monthly check to cover the tax on the cost of basics” is something which requires a huge beauracracy and massive recored-keeping on the part of anyone who want to get that check. If you read the actual proposal, you’ll have to file a tax return MONTHLY, and save reciepts for everything you paid sales tax on during that month. :eek: Good luck on that! ---
**Author:** ![Steve\_MB](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/steve_mb/32/5339_2.png) [@Steve\_MB](https://boards.straightdope.com/u/Steve_MB)\ **Post date:** [November 10, 2004, 4:21pm UTC](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681/47 "2004-11-10T16:21:26Z")
> [@Ravenman](#): > > So, you would agree that if companies A, B, and C held the line on employee pay, the price of retail goods, without an addition of the NST, would stay constant? So if A, B, and C all produce widgets today at a cost of $100 per box, and they kept the pay of their staff constant after the NST went into effect, a box of widgets would then cost $100 PLUS $23 in sales tax. Right? > > So, what happens if company D and E cut their employee pay by 22%, as I expect they might do? Do you really think that companies D and E would go out of business because they couldn’t find workers for that lower wage? My expectation is that they’d eventually find workers This begs the question – if they can find workers at the lower pay level, why haven’t they already done it? ---
**Author:** ![JMS\_CCT](https://avatars.discourse-cdn.com/v4/letter/j/bbe5ce/32.png) [@JMS\_CCT](https://boards.straightdope.com/u/JMS_CCT)\ **Post date:** [November 10, 2004, 4:31pm UTC](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681/48 "2004-11-10T16:31:46Z")
> [@Malodorous](#): > > Well, I suppose that if you devolve responsibility for collecting taxes to the state, you would indeed get rid of the IRS, but this would lead to more problems. For starters, part of the purpose of tax reform is to simplify things. Do you really think anything would be simplified by basically breaking the IRS into 50 seperate agencies. Also, I have a seriously hard time beliving this system will function without some sort of central gov’t control for things like interstate transactions, international transactions, collection from state agencies, etc. etc. etc. > > Answer: I don’t believe I said the IRS would be broken up into 50 separate agencies, nor did I say the Federal Government’s authority would be eliminated. The U.S. Treasury Department would still ultimately be responsible for collecting taxes; it would just do it through individual state taxing agencies rather than the IRS. > QUOTE: > The majority of taxes are paid by the upper class. It’s dubious we can squeeze the poor for much more money, so “spread the tax burden more evenly” is equivalent to raising taxes on the middle class. > > Answer: That depends on what statistics you look at, whether they’re from a liberal (the upper class pays very little), or conservative (they pay most of them) source; and what income level and above is considered “upper class.” The last numbers I looked at said those in the $200,000+ annual income level paid 26% of the taxes. With the poor paying little or nothing, That leaves the majority of the burden on everyone else inbetween. If you will go to [www.fairtax.com](http://www.fairtax.com) you can access the comparison of the effective taxes that will be paid at different income levels for both the income tax system and the fairtax system. > > QUOTE: > No doubt lots of people manage to avoid paying a lot of the income tax. But this will be true of a sales tax as well. People will trade, smuggle, stretch deffinitions, etc, as a 25% sales tax gives people a lot of impetous to find ways around paying it. Business’s will set up virtical monopolies so they can produce their own raw materials rather then purchase it from another entity. Loopholes and cheats are something that we’ll need to solve under any system, and I don’t see how a sales tax will be any easier to control this sort of thing under. If anything, it seems to me to be easier to make unnoticed sales and purchases then it is to earn untracked income. > > Answer: It’s true, there will have to be inforcement in any system, but that enforcement will be on retail business establishments, not individuals, which can be handled by the state agencies already in place. This is a vastly reduces the number of controlees. The vertical monopoly thing isn’t an issue because we’re talking about a pure retail sales tax (on new items only), not a value added tax. > > QUOTE: > > How would the gov’t monitoring your every sale and purchase make it less intrusive. You might still have to report income as well, so that they can make sure no one is cheating. Also the current tax system is expressly allowed by the 16th amendment, and thus in accord with the constitution. > > Answer: The monitoring will be on retail businesses, not individuals. About the 16th amendment: see the answer to this in my last post. > > QUOTE: > > Japan has one of the highest savings rates in the world, and their economy is in the dumper because of it. People need to consume to keep the economy going. Witness the letter that came with everyones tax cut telling them to spend the money. Also, I’ve never heard of anyone in the US complaining that their isn’t enough investment capital floating around. In fact, during the dot-com boom, the complaint was that their was too much capital, and not enough worth while businesses to spend it on. Answer: Consumption is something that is natural to man; saving isn’t. I don’t think we need to worry about folks not consuming. Raising the level of savings is not a panacea, but it is a huge step in the right direction. The next step after abolishing the income tax is to take away the FEDs power to manipulate interest rates, and let the market set the rates. The FED created the dot-com boom, by creating massive amounts of capital through the lowering of interest rates. Of course, as we now know, the whole thing was built on a foundation of paper (credit), which didn’t hold up, and eventually crashed–basically the same thing that happened to Japan. Heavy debt financing is the reason for most business failures. With a revitalized equity capital base, this will not be so much the case. ---
**Author:** ![Malodorous](https://avatars.discourse-cdn.com/v4/letter/m/e47774/32.png) [@Malodorous](https://boards.straightdope.com/u/Malodorous)\ **Post date:** [November 10, 2004, 6:16pm UTC](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681/49 "2004-11-10T18:16:38Z")
> [@Steve MB](#): > > Nope – the refund is a flat per-captia amount (an approximation of the tax someone would pay on low-end basic necessities for a year) in every proposal along these lines I’ve seen. You mean you get the same amount regardless of circumstances. That seems unlikely. What if I live somewhere where the cost of living is higher, what if I have kids, what if I have special needs that increase the amount of sales tax I have to pay. Do I need a car, that would make a huge difference in the amount of sales tax I’d pay. If I’m at the top of the income range that qualifies for the refund, do I get the same amount as somebody at the bottom? If I’m at the top of the income range, should I take a raise that will make me not qualify for the refund. If I put a lot of money into savings, am I still rebursed for all the stuff I didn’t buy? That might be the proposal, but the fact is that congress won’t be able to resist the pressure to pass a lot of complexity into this system that will need a large organization to monitor. It’s not only the poorest of the poor after all, that spend most of thier income on retail goods. Also, this refund is supposed to deal with the regresstivity of the sales tax. I don’t have any numbers to support this, but my gut feel is that simply refunding people for their bare necessities is going to fall far short of making this a progressive, or even an income neutral tax. ---
**Author:** ![Malodorous](https://avatars.discourse-cdn.com/v4/letter/m/e47774/32.png) [@Malodorous](https://boards.straightdope.com/u/Malodorous)\ **Post date:** [November 10, 2004, 7:02pm UTC](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681/50 "2004-11-10T19:02:56Z")
> [@Steve MB](#): > > Er, the payroll taxes and corporate business and income taxes are a different thing from the individual worker’s income taxes. The 22% savings comes from eliminating the former, not the latter. > Again, if your employer could hire/retain people capable of getting the work done adequately for 20% less money, he would have already done so. The Payroll tax _does_ come out of your income (thus the name) and goes to entitlement programs. If the employer keeps this money, then employees will indeed make less money, as **Ravenman** says. If they don’t then this tax will stay in the embedded tax. Corporate taxes can be used to cut the embedded tax without cutting payrolls, but thats only one of three sources of the embedded tax and so I doubt it will make the 20% difference in final price the NST advocates are talking about. Also note that the entities who do pay corporate tax (share holders who recive dividends, and the company itself) will also have seen their expenditures rise due to the sales tax, and will either have to get used to being able to buy less stuff or will hang on to the extra money to compensate. ---
**Author:** ![JMS\_CCT](https://avatars.discourse-cdn.com/v4/letter/j/bbe5ce/32.png) [@JMS\_CCT](https://boards.straightdope.com/u/JMS_CCT)\ **Post date:** [November 10, 2004, 7:10pm UTC](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681/51 "2004-11-10T19:10:24Z")
[QUOTE=DrDeth] As to your aruments that the IRS is "Outlaw’ and that it claims it tax system to be voluntary and it isn’t- I invite you to this page: [http://www.militia-watchdog.org/suss5.asp#voluntary](http://www.militia-watchdog.org/suss5.asp#voluntary) [http://www.militia-watchdog.org/suss6.asp#enforce](http://www.militia-watchdog.org/suss6.asp#enforce) The US does indeed use a “voluntary” system of compliance. But taxes aren’t voluntary at all- here is what is meant by "voluntary ":“_to the extent that income taxes are said to be voluntary, however, they are only voluntary in that one files the returns and pays the taxes without the IRS first telling each individual the amount due and then forcing payment of that amount. The payment of income taxes is not optional, however, … and the average citizen knows that the payment of income taxes is legally required.")_ Not only that, but the Courts even go so far as to ridicule dudes who have your definition and understanding of the term “voluntary” as applied to US taxation: " _He alleges he does not have to pay taxes because it is a voluntary system and he chooses not to participate. … the court came to the rather quick and obvious conclusion that the words coming from the Debtor’s mouth made no more sense than the words written on the Debtor’s pleadings_.” Answer: Where do you get this definition of “voluntary?” Webster defines the word thus" " Acting by choice or spontaneously; acting without being influenced or impelled by another. Free, or having power to act by choice; not being under restraint; as, man is a voluntary agent; without destraint, compulsion or coercion. Proceeding from choice or free will." If there is no choice in whether or not one files an income tax return then, according to the above definition, this is not voluntary. What you are saying is that compliance is not really voluntary, but mandatory. Why doesn’t the IRS just say this, and all the confusion would be cleared up? Because if the tax was not based on voluntary compliance (by individuals) it would be unlawful. The 16th amendment gives the government authority to tax income (profit), not “sources” of income, e.g., wages, salaries, interest, dividends, rents, etc. This is well established in at least four landmark Supreme Court cases. I never said that I don’t have to pay taxes or that I don’t pay taxes. What I’m saying is that the government’s present tax system is operating on a very deceptive and flimsy basis, and needs to be changed. As for the average citizen knowing the tax isn’t really voluntary: The last time I checked we were still a nation under the rule of law, not the mob, and the government and its various agents are not exempt from it. ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [November 10, 2004, 7:12pm UTC](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681/52 "2004-11-10T19:12:31Z")
One benefit to scraspping the income tax and replacing it with some kind of NST, is that this would put out of business the huge industry that exists to avoid taxes. For example, there are specialized lawyers and accountants who spend all day figuring ways to avoid taxes 9this is completely legal). There are also criminal enterprises that operate without paying taxes 9this is illegal). At one time , the Mafia owned and ran casinos, racetracks, hotels…all of which operated without paying taxes. The incomes of prostitutes, gamblers, and bribe-takers are also untaxed. Does anyone have some real numbers of how much tax evasion and avoidance costs the economy? This is an activity that is essentially useless…it provides no benefit (except to those whose taxes it lowers). I’d be willing to bet that lawyers groups (like the ABA and ATLA) are mightily opposed to a NST-it would put many of their members out of work! ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [November 10, 2004, 7:27pm UTC](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681/53 "2004-11-10T19:27:59Z")
[QUOTE=JMS@CCT] > [@DrDeth](#): > > As to your aruments that the IRS is "Outlaw’ and that it claims it tax system to be voluntary and it isn’t- I invite you to this page: > > The US does indeed use a “voluntary” system of compliance. But taxes aren’t voluntary at all- here is what is meant by "voluntary ":“_to the extent that income taxes are said to be voluntary, however, they are only voluntary in that one files the returns and pays the taxes without the IRS first telling each individual the amount due and then forcing payment of that amount. The payment of income taxes is not optional, however, … and the average citizen knows that the payment of income taxes is legally required.")_ Not only that, but the Courts even go so far as to ridicule dudes who have your definition and understanding of the term “voluntary” as applied to US taxation: " _He alleges he does not have to pay taxes because it is a voluntary system and he chooses not to participate. … the court came to the rather quick and obvious conclusion that the words coming from the Debtor’s mouth made no more sense than the words written on the Debtor’s pleadings_.” > > Answer: > Where do you get this definition of “voluntary?” Webster defines the word thus" > > " Acting by choice or spontaneously; acting without being influenced or impelled by another. Free, or having power to act by choice; not being under restraint; as, man is a voluntary agent; without destraint, compulsion or coercion. Proceeding from choice or free will." > > If there is no choice in whether or not one files an income tax return then, according to the above definition, this is not voluntary. > > What you are saying is that compliance is not really voluntary, but mandatory. Why doesn’t the IRS just say this, and all the confusion would be cleared up? Because if the tax was not based on voluntary compliance (by individuals) it would be unlawful. The 16th amendment gives the government authority to tax income (profit), not “sources” of income, e.g., wages, salaries, interest, dividends, rents, etc. This is well established in at least four landmark Supreme Court cases. > . The term “voluntary compliance” when applied to Taxation has a specific meaning.It means just lkie the Courts have ruled above- you “volunteer” to the IRS your income, deductiosn and then volunteer how much you owe. They do not -normally- tell you how much you owe first (of course, if your taxes are wrong, due to an audit, that’s different)… The 16th Ad has been challenged many many times in court, and it has help up. Read that cite, why don’t you? I am not going to debate (for the Nth time0 the Legality of Income taxes. Cecil has already ruled on that, anyway. ---
**Author:** ![Malodorous](https://avatars.discourse-cdn.com/v4/letter/m/e47774/32.png) [@Malodorous](https://boards.straightdope.com/u/Malodorous)\ **Post date:** [November 10, 2004, 7:28pm UTC](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681/54 "2004-11-10T19:28:47Z")
**ralph** , the issue of tax avoidence doesn’t go away with a national sales tax. Prostitutes who don’t report income from their work, for example, are not going to report thier sales of blow jobs (hmmm…one word or two?) either. They’ll pay tax when they go to the grocery store, but that will be compensated by thier not having to give part of the price of their services up to the gov’t. More generally, while some forms of illegal income will be taxed through sales, this will be more then compensated by blackmarket selling and unreported sales. In fact, I’d wager that it will be harder to monitor people for unreported sales then it will be for unreported income. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [November 10, 2004, 7:34pm UTC](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681/55 "2004-11-10T19:34:16Z")
> [@ralph124c](#): > > One benefit to scraspping the income tax and replacing it with some kind of NST, is that this would put out of business the huge industry that exists to avoid taxes. For example, there are specialized lawyers and accountants who spend all day figuring ways to avoid taxes 9this is completely legal). There are also criminal enterprises that operate without paying taxes 9this is illegal). > Does anyone have some real numbers of how much tax evasion and avoidance costs the economy? This is an activity that is essentially useless…it provides no benefit (except to those whose taxes it lowers). > I It is a rather large figure. But all this woudl do is replace those Criminals who don’t pay their taxes with everyday law abiding citizens who dn’t pay their taxes. Retail would slump, as many would buy their goods through the black market. Hey look- right now I bet you can go to a “Flea market” or “Farmers market” andyou’ll find that few of the dudes there- many of whom do that full time- collect and pay no sales taxes. And that’s for what- 7 or 7%?? How much larger will that sort of market get if the tax is 30%? ---
**Author:** ![Malodorous](https://avatars.discourse-cdn.com/v4/letter/m/e47774/32.png) [@Malodorous](https://boards.straightdope.com/u/Malodorous)\ **Post date:** [November 10, 2004, 8:13pm UTC](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681/56 "2004-11-10T20:13:25Z")
> [@JMS](#): > > The vertical monopoly thing isn’t an issue because we’re talking about a pure retail sales tax (on new items only), I was wondering if this is supposed to be a pure retail tax. The article was vague. I don’t think that your going to raise enough money on a pure retail tax though. The [Census bureau](http://www.census.gov/mrts/www/data/html/nsal03.html) gives the total amount of retail sales in 2003 as 3.7 trillion. The national budget is something like 2.1 trillion. Therefore we need a sales tax of 57%. Notice to that the retail numbers include somethings that might be exempt like pharmacuticals (163 billion), grocceries, gas (268 billion) and used cars (70 billion). Also note that it includes the purchases made by people that will be refunded their sales tax to attempt to make the thing progressive. It also includes retail that will probably be driven into fleamarkets, blackmarkets, bought overseas, etc. etc by the NST. Also the federal budget will almost certainly grow relative to sales in the coming years, if for no other reason then that the gov’t will be paying its own sales tax on things, and will also have to raise social security payments to compensate the elderly for higher prices. In the end, I estimate you’ll be looking at a NST at close to 75% In short, there’s no you can tax retail, come up with adaquate income to support the gov’ts expenditures and keep prices low enough to avoid having congress dragged out in the streets and shot during the ensuing tax revolt. ---
**Author:** ![Jonathan\_Chance](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jonathan_chance/32/701_2.png) [@Jonathan\_Chance](https://boards.straightdope.com/u/Jonathan_Chance)\ **Post date:** [November 10, 2004, 8:26pm UTC](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681/57 "2004-11-10T20:26:10Z")
Which is why I say it needs to apply to ALL transactions, from a pack of gum to Disney selling ABC. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [November 10, 2004, 8:31pm UTC](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681/58 "2004-11-10T20:31:21Z")
> [@Steve MB](#): > > This begs the question – if they can find workers at the lower pay level, why haven’t they already done it? It happens every day. Walmart pays its workers less, and mom-and-pop stores are going out of business. Steel minimills don’t have to pay huge sums for health care and pension benefits for their workers, and the large US steel corporations are slowly drowning in their own red ink. If businesses didn’t have market pressures, I would but that most of them would be happy to pay their workers more; but that is just a fantasy world. Why do you think so many businesses oppose raising the mimimum wage? What I’m saying, again, is that the eliminiation of income taxes would radically change the markets for labor. This is because the eliminiation of the income tax would mean that all workers would suddenly have a windfall of disposable income. I do not believe for two seconds that the labor market would sustain a system in which workers’ take-home salaries would increase by a staggering 20% overnight. But there’s another aspect of the NST idea that’s dangerous. Most proposals I have heard so far have admitted that the poor would have a hard time paying a new sales tax since, as everyone knows, the poor currently pay very little in the way of income taxes. So, most proposals have it that each month, a poor person would get a check from the government which could be applied to necessities. A gigantic welfare program. First, I don’t think it would take long for the same fiscal conservatives who support the NST to start complaining about the massive amount of welfare spending that the Federal government would have created. If fiscal conservatives don’t like welfare under an income tax system, why would they like it under a national sales tax system? It strikes me as an extremely hollow promise to create a welfare check for necessities at the outset of the program when there is consensus that it would be needed, but there is no way to guarantee that the welfare would not be cut down the line. Second, the idea of Federal welfare payments in perpetuity to large numbers of Americans seems to have a fundamental fairness problem. Would low income folks in New York City receive the same amount as poor folks in, say, Redlands, California? The folks in NYC would certainly have higher necessity costs (groceries more expensive, more need for winter heat, etc) than those in outlying areas. Or would there be a complex system for determining the amount of welfare each time someone moves? In short, it occurs to me that the income tax system is simple in conception and complex in execution. An NST might be simple in execution, but the more one examines it, is terribly, terribly complex in conception. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [November 10, 2004, 8:42pm UTC](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681/59 "2004-11-10T20:42:29Z")
What about a flat tax system of some kind? Is it workable? I read Cecil’s article years ago with him blasting such a system, but could a modified system be used? If not, exactly what kinds of changes to the tax code COULD be used to make the system easier, more fair and less cumbersome? Or is the current system as good as it gets? -XT ---
**Author:** ![19ForMe](https://avatars.discourse-cdn.com/v4/letter/1/439d5e/32.png) [@19ForMe](https://boards.straightdope.com/u/19ForMe)\ **Post date:** [November 10, 2004, 10:09pm UTC](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681/60 "2004-11-10T22:09:40Z")
Trying to make the tax law easy (simple) and fair is probably not possible. The complexity is created by the desire for fairness. The IRS doesn’t even expect people to figure out the correct Earned Income Credit. Some provisions in the law are base on giving people options. For example, you can contribute to the IRA or the Roth IRA. You can deduct foreign taxes paid or take a credit for the foreign taxes paid. If you sell your comic book collection to a friend $200 per month for two years, you can recognize the income now or over the course of the payments. All these things create complexity in an effort to be fair. [Previous page](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681.md?page=2) [Next page](https://boards.straightdope.com/t/various-kinds-of-tax-reform-bushs-2nd-term/273681.md?page=4)