National sales tax: Pros and cons?

iVillage Member
Registered: 03-29-2003
National sales tax: Pros and cons?
44
Tue, 09-07-2004 - 10:49pm
I'm curious what everyone's opinion is on replacing our current tax code with a national sales tax.

I admit that I have not yet taken the time to do a lot of research on the pros and cons, but it sure sounds good to me so far.

One of my biggest beefs with the current tax code is that it penalizes higher earners just because they earn more. Not a good way to encourage productivity and self-reliability.

And it allows a lot of loopholes and uncollected taxes. A national sales tax might actually collect more taxes since fewer things could be hidden.

The main argument I can think of against it is that it would hurt the poor. But if clothing and food items were exempt (as they are in some states already), that should take away that argument.

What do you all think?

Carrie

 

 

Photo Sharing and Video Hosting at Photobucket ths

iVillage Member
Registered: 04-16-2003
Thu, 09-09-2004 - 1:26pm
I agree, but there is an interesting repercussion thay may lead to a rude awakening. There is a basic tenet in behavior science that says you get what you reward. Now taxing consumption is certainly punishing consumption (so to speak), particularly if you are consuming on credit. This new tax will increase the debt you carry. Today we reward consumption and punish saving, if we reverse this, what will happen to the economy. How quickly can people stop consuming and supposedly start saving. For an economy that depends upon consumption, we will in effect slow the economy. Is this something that we want to happen?
iVillage Member
Registered: 04-16-2003
Thu, 09-09-2004 - 1:31pm
<< people receive services that shouldn't be supplied by the federal gov't and we expect it.>>

I assume you are not referring only to individuals. Don't forget corporate welfare, defense waste, and pork (including establishment of a rain forest in Iowa and a bridge to nowhere in Alaska>


Edited 9/9/2004 2:05 pm ET ET by hayashig

iVillage Member
Registered: 04-16-2003
Thu, 09-09-2004 - 1:52pm
As your article points implies, and I have stated many times we are returning to the 19th century, the part know as the gilded age, (an ownership society) which had an income distribution similar to a third-world nation. To those Republican's on this board, is this what you want?

"Bush's top economic priority has always been to cut taxes on the wealthy; as he famously said, the "have-mores" are his political base. The marginal income-tax rate, the estate tax, the tax on dividends, and the proceeds of the profits tax all fell sharply in his first term. His second term could finish the job, shifting the tax base to consumption, perhaps even abolishing the income tax for a value-added tax (as Republican Speaker Dennis Hastert now suggests). Virtually the whole tax burden will then fall on the middle class, on working Americans, and on the poor.

"As revenues fall, spending programs will come under new attack. But not defense spending: The Pentagon's budget will remain inviolate. Indeed, the military may demand still more spending, as the true costs of stabilizing Iraq gradually become clear. New arms races--with North Korea over missiles and missile defense--and new conflicts, perhaps with Iran or China, may come into view. We will need many more soldiers and much more money if such conflicts occur. And so, given the budget deficits ahead, the battle royal will be fought over what remains of federal social spending. With Alan Greenspan at his side, Bush will challenge Congress to slice, dice, and eviscerate. The privatization of Social Security--an invisible issue right now--will surely resurface once the votes are safely cast in November.



<>

"Bush's second term may see a crisis of the dollar, now heavily reliant on reserve-asset stockpiling by China and Japan, which own a huge proportion of our debt paper. In effect, those countries are sending us cheap goods in return for expensive paper, working hard for no current material reward. Will they continue this odd behavior for four more years, even if tensions erupt over Korea or Taiwan? Or will China, especially, diversify into euros, or perhaps into commodities, aggravating global inflation? Will the neglected states of Latin America, increasingly alienated from the United States, set off a banking crisis with debt defaults? We'll see. The dangers are real, and we are totally unprepared.

"All of this brings to mind the late 19th century, a time of budding empires, rapacious trusts, Social Darwinism, and populist upheaval; when economic battles raged over plutocracy and consumption taxes, chronic unemployment, rising poverty, and financing wars of conquest; and when the world economy was dominated by financial panics and the commodity cycle. George Bush and his allies have been modeling themselves on William McKinley, the champion of vested interests in the Gilded Age.

"Fortunately for America, McKinley was succeeded by Teddy Roosevelt, a progressive Republican who fought the monopolies and favored the environment, and then by Woodrow Wilson, a Democrat who brought us the income tax and inspired the search for a global system of collective security. True, it took another generation to break finally with rule by the corporate rich. But eventually, there did come the Great Depression and Franklin Roosevelt, who gave us public works, Social Security, the National Labor Relations Act, and the SEC."

"The cozy plutocracy of McKinley and his successors--Taft, Harding, Coolidge, Hoover--could not stand before the needs of the modern world. It can't be brought back now. Bush's effort to do so will bring misery for many, perhaps for many years. But the final outcome is not in doubt. Bush's second term, if it comes, will fail, and America will thereafter change course; democracy and common sense will assert themselves in the end.

http://www.washingtonmonthly.com/features/2004/0409.galbraith.html

James K. Galbraith is Lloyd M. Bentsen Chair in Government/Business Relations at the Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin, and chair of Economists Allied For Arms Reduction (www.ecaar.org).








All of this brings to mind the late 19th century, a time of budding empires, rapacious trusts, Social Darwinism, and populist upheaval; when economic battles raged over plutocracy and consumption taxes, chronic unemployment, rising poverty, and financing wars of conquest; and when the world economy was dominated by financial panics and the commodity cycle. George Bush and his allies have been modeling themselves on William McKinley, the champion of vested interests in the Gilded Age.

Fortunately for America, McKinley was succeeded by Teddy Roosevelt, a progressive Republican who fought the monopolies and favored the environment, and then by Woodrow Wilson, a Democrat who brought us the income tax and inspired the search for a global system of collective security. True, it took another generation to break finally with rule by the corporate rich. But eventually, there did come the Great Depression and Franklin Roosevelt, who gave us public works, Social Security, the National Labor Relations Act, and the SEC.

The cozy plutocracy of McKinley and his successors--Taft, Harding, Coolidge, Hoover--could not stand before the needs of the modern world. It can't be brought back now. Bush's effort to do so will bring misery for many, perhaps for many years. But the final outcome is not in doubt. Bush's second term, if it comes, will fail, and America will thereafter change course; democracy and common sense will assert themselves in the end.




Edited 9/9/2004 2:06 pm ET ET by hayashig

iVillage Member
Registered: 05-18-2004
Thu, 09-09-2004 - 1:53pm
"I assume you are not referring only to individuals. Don't forget corporate welfare, defense waste, and pork (including establishment of a rain forest in Iowa and a bridge to nowhere in Alaska>"

I am and I agree. (Wait did we just agree!?...***writes down date and time***)

:)

People & corporations both are too dependent. Some more than others.

iVillage Member
Registered: 04-16-2003
Thu, 09-09-2004 - 2:00pm
This demonstrates the idea that the rich don't stimulate the economy, it is the middle-class that keeps the wheels of capitalism turning. The larger the middle class the better the economy.
iVillage Member
Registered: 04-16-2003
Thu, 09-09-2004 - 2:13pm
No we don't agree, I was reminding you that it isn't the poor individuals that consumes the most governments funds.

Didn't you learn that the world isn't fair? IMO the government should try to level the playing field. At the most it shouldn't lend its support to the powerful against the powerless. This is where we don't agree. I do not believe that a wealthy nation should have millions of children going to bed hungry.


Edited 9/9/2004 2:15 pm ET ET by hayashig

iVillage Member
Registered: 03-18-2000
Thu, 09-09-2004 - 2:46pm

>"What about citizens that work overseas? "

I believe they are already income tax exempt on most/all income "<


>"No developed country other than the U.S. imposes any tax on the foreign earned income of its citizens living and working abroad. In addition, the U.S. imposes tax on not only the compensation of its citizens resident abroad, but also on amounts that are paid merely to reimburse the higher costs of living overseas, such as higher housing costs, and education costs for American children incurred due to a lack of appropriate public education overseas. This substantial income tax cost is further increased because the hospital insurance (Medicare) tax is also imposed on these reimbursed costs."<


>"The U.S. foreign earned income exclusion, contained in Section 911 of the Internal Revenue Code, partially ameliorates the effects of the U.S. approach of taxing the worldwide income of Americans living and working overseas. Under Section 911 a U.S. citizen working and residing overseas is entitled to exclude from U.S. income tax a portion of foreign earned income. The exclusion amount was $80,000 in the early 1980's, then reduced to $70,000, until the late 1990's, and has over the past few years risen to its current level of $80,000. Given the extent of inflation over this period the exclusion amount would need to at least double to be equivalent in real value to the amount excluded twenty years ago."<


Quotes from...... http://www.apcac.org/position/2003/taxes.htm

cl-Libraone~

 


Photobucket&nbs

iVillage Member
Registered: 03-23-2003
Thu, 09-09-2004 - 2:51pm

So if the state is doing it why cant the feds? It is a matter of being responsible. Like I said this is a pipe dream, gov't doesn't shrink it always grows.


Actually, they aren't doing it well...and there's a drive to change over to a state income tax.


iVillage Member
Registered: 03-18-2000
Thu, 09-09-2004 - 3:28pm

>'Now taxing consumption is certainly punishing consumption (so to speak), particularly if you are consuming on credit. This new tax will increase the debt you carry."<


Good point!!!


Statistics confirm the change:

 


Photobucket&nbs

iVillage Member
Registered: 05-18-2004
Thu, 09-09-2004 - 3:43pm
"No we don't agree, I was reminding you that it isn't the poor individuals that consumes the most governments funds. "

**shrugs** Nevermind was just lightening it up a little.

I dont believe the gov't is the great equalizer nor should it be. But I don't feel like having this arguement with you again.