Stephen Moore's genius idea: Replace the income tax with a national sales tax (1 Viewer)

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RushRoom

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https://www.foxnews.com/politics/st...eplace-the-income-tax-with-national-sales-tax

Stephen Moore’s Big Idea: Replace federal income tax with national sales tax


Stephen Moore, a member of President Trump’s economic recovery task force and an economist at FreedomWorks, has a bold idea for how to reinvigorate the economy: abolish the federal income tax, and replace it with a national sales tax.

On the face of it, it may seem like a radical notion especially since essentially all Americans nowadays have grown up having a chunk of their income pulled out by the IRS every year. But Moore notes that the income tax is a relatively new invention in the U.S. -- having only been introduced in the early 20th century.

On the state level, having a sales tax and no income tax is hardly novel, with a number of states having exactly this set-up. But doing so nationally would mark a radical upheaval of the current tax system, and at a time when the U.S. is spending trillions of dollars on stimulus -- although Moore maintains it could raise more revenue than the current system.

Whether such an idea would find bipartisan support is uncertain -- presumptive Democratic nominee Joe Biden has called for increasing income taxes on high earners -- but Moore believes that, at a time when the economy needs stimulating, his plan would be “rocket fuel.”

Genius idea, on many fronts.

1. EVERYONE pays fair share, no questions asked. ONE percentage of EVERY income group. A homeless stewbum buys a bottle of cheap hooch for $3.00, he pays 30 cents in taxes. A doctor buys a $200,000 Mercedes S Class sedan, he pays $20,000. Poor, 30 cents. Rich $20,000. See the difference.

2. Jobs would FLOW like a river. Companies from overseas would FLOOD our shores with factories, not having to worry about the tax code? Hell, we'd NEED to give amnesty even to MS13 animals, just to have enough workers for the high paying jobs.

3. Revenues would SOAR, since they would be indexed to the economy, rather than Congress's power to use the tax code to buy favors.
 

The moose

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There are certainly better and "fairer" ways of paying tax.

even if there were not, the plan you're discussing is completely unworkable unless you tax enough to cover the amount of income currently generated by the income tax.

Napkin math tells me you'd need to tax nearly 22% on every single transaction. Further, you'd burden small business with the responsibility of collection and payment to the government.

When it comes to the fair aspect, a flat tax on all income is completely regressive and I find that to be completely unfair. And that's before we come to the fact that those who make a comfortable living don't spend every dollar they earn so they would be paying a far lower effective tax rate.

In summary, unless you're willing to put a 25% sales tax on everything your proposal fails. And, it's an unfair and regressive tax that puts the burden of funding government more heavily on the young, poor, old and middle class.

In other countries they use a VAT. You might research it.
I think vat is like 20%.

I would think that vat is a much easier sell when it also includes insurance like it does in England.

The only other thing people fail to see is England has a real tax on the rich in income tax is over thirty percent is you make over like 50k pounds.

They truly pay tons of tax besides the vat. But we could argue they do get a bunch for what they pay.
 

J-DONK

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Sales tax is inherently regressive, and would not have been supported by the Founding Fathers.

Thomas Jefferson said:
Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise.
It's hard to believe with historic income inequality anyone is proposing a sales tax. The common sense solutions are: higher income tax rates, abolish capital gains rates, higher estate tax rates, and higher property tax. These are the most progressive tax measures you can take to potential restore equality.
 

The moose

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Sales tax is inherently regressive, and would not have been supported by the Founding Fathers.



It's hard to believe with historic income inequality anyone is proposing a sales tax. The common sense solutions are: higher income tax rates, abolish capital gains rates, higher estate tax rates, and higher property tax. These are the most progressive tax measures you can take to potential restore equality.

Yeah back in the good old days uncle Sam got forty percent of his tax money from booze. Infact the income tax was passed so we could have prohibition.

So yeah the government has always taxed to help the wealthy. Unless the wealthy drank a thousand times more than the poor how on earth could that be fair.

The sad thing is without campaign finance reform and reeling in money thrown at politicians it will never truly get even and I never expect to to but it has to get better.
 

UncleTrvlingJim

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So, there are benefits to a national sales tax - if you want to encourage savings (which as a benefit would help the nation survive situations like the one we find ourselves in now). You can do things to make them less regressive -- give a national rebate of say $3000 or whatever number is appropriate to make the purchases one needs to survive tax free. You can have progressive tax rates on luxury items, etc.

This of course would have a lot of ramifications on our economy b/c we are so consumer driven - it would likely be a big hit. But I do think trying to encourage savings would have long term benefits.
 

dtc

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The irony of this whole thing is pretty much any system would work as long as it was tweaked in a way that fixed the problems that make it regressive and complicated. The current system, for all the hate and ridicule it receives, is at it's core, very fair. Were we to have politicians who would remove the special carve outs for the rich and influential, it would be an ideal system.

As for fair, the current system is a flat tax within income brackets with exclusions and adjustments. Everyone pays the same rate on the same income level unless, of course, they're rich and able to cheat the system by managing the method by which they are paid. The recent "tax cuts" put in place a couple of years ago, did nothing to correct it and, in fact, placed a higher burden on lower income people and those in the upper middle classes while giving mass discounts to those making millions.
 

TraumaRN

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It's a re-packaged european VAT. It screws the poor. The poor consume every penny they make. The rich can never spend all their money. It is really that simple. A flat tax makes more sense than that in terms of fairness.
 

TraumaRN

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So, there are benefits to a national sales tax - if you want to encourage savings (which as a benefit would help the nation survive situations like the one we find ourselves in now). You can do things to make them less regressive -- give a national rebate of say $3000 or whatever number is appropriate to make the purchases one needs to survive tax free. You can have progressive tax rates on luxury items, etc.

This of course would have a lot of ramifications on our economy b/c we are so consumer driven - it would likely be a big hit. But I do think trying to encourage savings would have long term benefits.
We already do that by allowing 401K contributions which come directly off your tax burden. My husband is a CFP. Guess what? People still don't save. I wish it were that easy. Capital gains taxes are lower than earned income. People still don't save. Many can't some are just consumers and spend all they make. Now they will do 401K to get the match plus tax deduction. Thank goodness b/c pensions are rare unless you work for the Govt now.
 

wardorican

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You're triggered very easily.

The lowest income group is the homeless stewbum.

Go ahead. Make the case that MS 13 (which basically targets innocent people for stabbings) are not animals.

We'll wait.
No, you are just showing yourself to be someone not worthy of engaging in conversation.

If you can have this chat without being a tool, then I'm sure you'll have much better feedback.

Regarding a direct consumption tax, the main problem is that for most folks, we consume a huge portion of our income on the basic necessities, i.e. living consumption.. housing, food, transportation, etc.. i.e. any family making less than 100k/year is going to be taxed on almost everything they do. A family making 500k/year is probably not spending that much more than the 100k/year family on taxable goods. They're more likely to be saving, investing, etc. So, their tax burden is less than the poorer family.

personally, I think a national sales tax is more regressive than a flat income tax.

the reality is, that the more you have, the easier it is to pay a higher tax on excess wages.
 

SFIDC3

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Capital gains taxes are lower than earned income.
It is not an apples to apples comparison. One of the provisions of the tax code I really want them to reform (and I think it is something that keeps many folks from getting to financial security) is to prevent your capital gain as actually counting for taxable income as well. It is the very definition of double-dipping....
 

J-DONK

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It is not an apples to apples comparison. One of the provisions of the tax code I really want them to reform (and I think it is something that keeps many folks from getting to financial security) is to prevent your capital gain as actually counting for taxable income as well. It is the very definition of double-dipping....
How does this double-dipping apply to ceo compensation? It's the most obvious loophole to pay someone in stocks if they can afford to wait a few years to be compensated. Not to mention 84% of all stocks are owned by the top 10% of Americans. This isn't some issue you can paint as the dastardly government trying to tax you twice. It's a very simple concept, "income is income" it all gets taxed the same.
 

SFIDC3

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How does this double-dipping apply to ceo compensation? It's the most obvious loophole to pay someone in stocks if they can afford to wait a few years to be compensated. Not to mention 84% of all stocks are owned by the top 10% of Americans. This isn't some issue you can paint as the dastardly government trying to tax you twice. It's a very simple concept, "income is income" it all gets taxed the same.
Oh I agree, it doesn't, see my last line about loopholes (which I forgot to put in, so nevermind....)....but by the time the non-uberwealthy call in an investment gain, it gets taxed 15%, another potential 4% if the amount is large enough (and usually done because the money is needed for something critical and timely - ie medical expenses or the like) for the fed, and usually the state gets some of that also.

So for the non-uberwealthy you probably are in the end paying a total tax rate close to regular income tax. For the uberwealthy there are a ton of loopholes and strategies to avoid paying what they should...I totally agree....

the tax code favors the wealthy because the wealthy wrote it.....
 

The moose

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The irony of this whole thing is pretty much any system would work as long as it was tweaked in a way that fixed the problems that make it regressive and complicated. The current system, for all the hate and ridicule it receives, is at it's core, very fair. Were we to have politicians who would remove the special carve outs for the rich and influential, it would be an ideal system.

As for fair, the current system is a flat tax within income brackets with exclusions and adjustments. Everyone pays the same rate on the same income level unless, of course, they're rich and able to cheat the system by managing the method by which they are paid. The recent "tax cuts" put in place a couple of years ago, did nothing to correct it and, in fact, placed a higher burden on lower income people and those in the upper middle classes while giving mass discounts to those making millions.

I could not agree more. I am completely fine with the way the tax code is except for the loopholes.
How does this double-dipping apply to ceo compensation? It's the most obvious loophole to pay someone in stocks if they can afford to wait a few years to be compensated. Not to mention 84% of all stocks are owned by the top 10% of Americans. This isn't some issue you can paint as the dastardly government trying to tax you twice. It's a very simple concept, "income is income" it all gets taxed the same.

That is the amazing thing about all of it. Back in the Clinton administration they passed legislation that any pay over a million bucks was not to be taken off the books for the corporations taxes. So the loophole is a performance based stock pay. The key here is you don't have to turn profit to get it. They still all get paid in down years and it is a complete write off for the corporations. So that I don't know what kinda dipping but it sucks for us.

Heck during the housing crash banks they all still got the performance pay in stock options.

And don't forget you don't have to cash in the stocks to have the capital you can get loans against it trade it.

Think about this with all the tax cuts rather than save for a rainy day like now they bought back stocks inflated the market then handed out billions in stock pay to people so they would pay even less in taxes all around.

The system is rubbish. Needs to be flat and no real loopholes.
 

V Chip

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One of the provisions of the tax code I really want them to reform (and I think it is something that keeps many folks from getting to financial security) is to prevent your capital gain as actually counting for taxable income as well. It is the very definition of double-dipping....
How is it double dipping?

I mean, I know what you're going to say... "someone already earned the money (and presumably paid taxes on that income) so if they invest it they get taxed again! That's double dipping!" Right?

But it isn't.

First, who knows if the money invested was earned and had taxes paid on it. That's a pretty decent assumption, but it isn't true for everyone who invests.

Second... it isn't double-dipping. If I earn $100,000 after taxes (and save it over time, or just that's the post tax money I have) and use that to, say, buy tools and wood to make woodcarvings to sell, you're saying any income I make from selling my woodcarvings shouldn't be taxed? That any money earned from anything other than being an employee shouldn't be taxed? The "double-dipping" line of "reasoning" basically says if a person starts their own business -- no matter where they got the money to start it (investing in themselves or their own business), or even if they used money to start it at all, they shouldn't be taxed on any income they gain from that business.

So perhaps you'll say that "no, I mean money you invest in the market or some real estate or some other "investment" not working as a business owner." But it's the same thing -- if you have money to invest/speculate, why shouldn't any income you make from that investment/speculation be treated the same as if someone didn't have extra money laying around to buy stocks or real estate and instead invested their extra time into another job to make more money?

Maybe you'll say "but stocks provide business with money and help to spur the economy and make jobs and such." In actuality, most stock/investment transactions don't -- they are simply one person selling a partial ownership to another person, just like someone might sell a cow, or a car, or a computer. It's not really investing in a company -- for most transactions, that ship sailed long ago at the IPO.

But even again, why should it matter more than someone investing their time into labor? If someone works 80 hours a week at two jobs to make money, how is that more worthy of taxation than someone who works 40 and invests, or has a cushion of cash to invest?

Maybe you'll say "well there's risk involved! The money invested could decrease in value!" And? Is not any business venture risky? Should we not tax businesses at all, nor the income derived from owning a business? Starting a business is far riskier than buying stocks or real estate.

Maybe it will be "we should be giving advantages to saving and investing and planning for the future." Well that makes some sense... but again how is that better than someone who saves and invests and plans for their future by working a lot more to make more money to save? What if people don't want to take any risk at all and just want to save in savings/CDs, bonds, or even under their mattress? And if everyone saves, say, 25% of what they spend now, our economy would be negatively impacted -- which who knows, might be a good thing just to have people with more in reserve.

Or maybe you're saying that dividends only (not capital gains) shouldn't be taxed, because the business pays taxes on business income but then when paying dividends, those get taxed again? To me that's a cost of the business, like the business buying computers and paying sales taxes with some of their profits, or buying additional services that they pay tax on -- and the person receiving the money pays taxes on as well.

I just don't see the logic in the idea that investment taxation is "double dipping."
 
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DaveXA

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The irony of this whole thing is pretty much any system would work as long as it was tweaked in a way that fixed the problems that make it regressive and complicated. The current system, for all the hate and ridicule it receives, is at it's core, very fair. Were we to have politicians who would remove the special carve outs for the rich and influential, it would be an ideal system.

As for fair, the current system is a flat tax within income brackets with exclusions and adjustments. Everyone pays the same rate on the same income level unless, of course, they're rich and able to cheat the system by managing the method by which they are paid. The recent "tax cuts" put in place a couple of years ago, did nothing to correct it and, in fact, placed a higher burden on lower income people and those in the upper middle classes while giving mass discounts to those making millions.
You touched on something that always bugs me. In our system, most smartly planned estates and stupid rich people pay ridiculously low effective income tax rates. No one who knows what they're doing pays more than 20%. I've done taxes for some of these people many moons ago, and the difference between nominal and effective rates are mind boggling. A lot of rich/wealthy people don't pay much, relatively speaking anyway.

In fact, a lot of people making 100k-200k are paying higher effective rates that those making 200k and up. It's still fairer than a flat or national sales tax, but the top rates in the current system needs to be revamped to make things a bit more equitable.
 

dtc

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You touched on something that always bugs me. In our system, most smartly planned estates and stupid rich people pay ridiculously low effective income tax rates. No one who knows what they're doing pays more than 20%. I've done taxes for some of these people many moons ago, and the difference between nominal and effective rates are mind boggling. A lot of rich/wealthy people don't pay much, relatively speaking anyway.

In fact, a lot of people making 100k-200k are paying higher effective rates that those making 200k and up. It's still fairer than a flat or national sales tax, but the top rates in the current system needs to be revamped to make things a bit more equitable.
Oh, it drives me insane knowing that people making 10 or 100 times what I do pay less as an effective rate. Hell, the Trump tax cuts don't seem to have saved me anything because of the way business expenses were treated.

I swear, all income should be taxed at the same rate no matter where it comes from except maybe some exemptions for CG on personal residences.

I think most people who complain about our current system are ignorant to how it works and I think that if they realized that were we to tax all income at the same levels that people making 10s of millions off passive income would then pay the same rate as a successful small business owner making 3-400k per year.
 

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I just don't see the logic in the idea that investment taxation is "double dipping."
Perhaps double dipping is the wrong adjective....instead how about unfair tax code where the uber wealthy and corporations pays less in taxes on capital gains than the average person (due to loopholes and such that favor the uber wealthy and corporations)....and leave it at that....

Because guess what might happen if they (uber wealthy and corporations) pay their fair share? It could mean lower/fairer tax rates for those that actually deserve a break.....

Dave brings up another great example of this above....
 

dtc

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Perhaps double dipping is the wrong adjective....instead how about unfair tax code where the uber wealthy and corporations pays less in taxes on capital gains than the average person (due to loopholes and such that favor the uber wealthy and corporations)....and leave it at that....

Because guess what might happen if they (uber wealthy and corporations) pay their fair share? It could mean lower/fairer tax rates for those that actually deserve a break.....

Dave brings up another great example of this above....
If all income was taxed the same except a few items like primary residence CG, it would mean lower rates for everyone.

The folks paying themselves in stock options and dividends are paying less than a 400k per year doctor. That's crazy and unfair.
 

SFIDC3

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If all income was taxed the same except a few items like primary residence CG, it would mean lower rates for everyone.

The folks paying themselves in stock options and dividends are paying less than a 400k per year doctor. That's crazy and unfair.
Agreed....
 

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