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Old 04-22-2004, 12:52 AM   #1
Sakkath
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Default Sales tax

Originally Posted by Inmountains
I would rather see tax on what is spent, not on what is earned. This encourages more investment!!!
...
We shall have to discuss economics on another thread sometimes
Replacing income tax with sales tax is not a new idea; there are significant problems with it.

It would encourage investment - in countries other than the US. Anyone with money to spend would do so abroad so as to effectively bypass paying tax. The US dollar would plummet, pushing the deficit through the roof.

As people start to save instead of spend, the price of fixed-income investments goes up, pushing yields and interest rates down. That further depresses the dollar as Americans move their money overseas in search of higher returns.

There are some upsides (like the IRS all lose their jobs), and a hybrid system with Value Added Tax (as they have in the EU) can work quite well. But a purely based Sales based system is too open for abuse, and detrimental to the economy. The main winners would be the top few percent who are able to spend their money abroad.
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Old 04-22-2004, 07:14 AM   #2
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Investment isn't generally considered a sale, for the purposes of taxing, and certainly not by any sales tax proposal I've ever seen.

How exactly would a sales tax push investment to other countries?
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Old 04-22-2004, 07:53 AM   #3
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Sales tax is *FAR* easier to evade than income tax- we would see net collections plummet in this system I would imagine.

We need to make the tax system less complicated and more fair- I think we can all agree on that. Hell, I'm dreading next year's taxes since I'm getting married this year and my wife-to-be owns her own business. I've spent years doing my own relatively simple taxes and now I'm going to have all sorts of shit to deal with next year .

If anything, I'd rather see sales taxes abolished and income taxes adjusted accordingly- that would actually help stimulate spending. Ideally I'd love for income tax to be the only tax, though I know I'm grossly oversimplifying here since the system is so complicated as it stands now that the possibility of only having income tax is probably far-fetched beyond practicality.
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Old 04-22-2004, 09:19 AM   #4
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There are states who have no income tax and rely strictly on sales and property taxes for their budgets...Texas being one that comes to mind...and I dont see thier economies hurt by it so I am not sure I buy that argument.

I myself would much prefer a flat 15% tax rate on everyone...regardless of income. That to me is the only fair way to do it...though I know it will raise the hair on the back of the "Robin Hood Priciple" people here who believe that if Bill Gates had less money they would have more.
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Old 04-22-2004, 05:19 PM   #5
Maximus Faticus
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You have to remember that anyone who comes to this country would be paying taxes, not to mention drug dealers (or anyone selling something illegal) would have to start paying taxes too.
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Old 04-22-2004, 05:54 PM   #6
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If you guys want to discuss this topic you need to stop with the armchair theorising and examine a practical application of the system to see how it really works.

Your theories sound good but aren't how it works in practice. Trust me, I live in a country with "sales"/"consumption" tax and it works fine. Pick a few countries and examine their systems and I don't mean via the local version of the National Enquirer or one university professor's little paper pushing his personal theory wheelbarrow.
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Old 04-22-2004, 08:07 PM   #7
Maximus Faticus
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What country do you live in?
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Old 04-23-2004, 09:07 AM   #8
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What country do you live in?
A country that has an economy very close to Socialism. This is the only type of economy this would work in. The economic repercussions of imposing this tax are too detailed to go into (again).
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Old 04-23-2004, 09:26 AM   #9
Zaniel
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Originally Posted by Valleycrest
A country that has an economy very close to Socialism. This is the only type of economy this would work in. The economic repercussions of imposing this tax are too detailed to go into (again).
I live in Australia, hardly a socialist country, nice thriving free market capitalist economy actually thanks. Like I said, do some practical research before getting too attached to your theories.
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Old 04-23-2004, 09:43 AM   #10
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I live in Australia, hardly a socialist country, nice thriving free market capitalist economy actually thanks.
from the other thread
Yes we begrudge unemployment benefit thieves but we also enjoy knowing we have free health care and hospitals and universities etc for our entire lives.
We use a tiered system in Australia and I pay 48.5% of every dollar I earn over $60k to the government, 24.25% of any capital gain I make on any investment will go to the government.
You would consider this strongly capitalistic? I'd say you're closer to socialism than you realize. 48.5%...*gasp* are you kidding me?
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Old 04-23-2004, 10:04 AM   #11
Maximus Faticus
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You didn't answer my question Valleycrest.
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Old 04-23-2004, 10:25 AM   #12
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You didn't answer my question Valleycrest.
Maybe 'cause you didn't ask me.

Originally Posted by Maximus Faticus
What country do you live in?
Originally Posted by Zaniel
I live in Australia...
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Old 04-23-2004, 06:35 PM   #13
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Yes because our top marginal tax rate is obviously the key indicator of a state run economy ... good work.
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Old 04-24-2004, 05:54 AM   #14
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Yep your right, sorry Valley.
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Old 04-24-2004, 11:28 AM   #15
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I would very much enjoy hearing how to evade sales tax.
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Old 04-24-2004, 06:09 PM   #16
Zolmaz Zo'Boto
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Originally Posted by gojirra monk
I would very much enjoy hearing how to evade sales tax.
Buy through the internet. 6-month old computer. Anyone?


God Bless America
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Old 04-25-2004, 09:02 AM   #17
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Buying things over the internet doesn't magically stop the sales tax. I buy stuff from a company in the same state regularly, and I pay state sales tax each time. I suspect that if there were a national sales tax, I'd have to pay that too.

If used goods are exempted from the tax, some people could avoid it by buying used. But not everyone. Someone has to buy it new, and pay the tax, before it can be resold.
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Old 04-25-2004, 08:52 PM   #18
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We got to play with the Texas budget in my political science class, pretty much needed to raise $9.9billion by cutting funds or taxing. Internet tax was one I added along with increasing the sales tax to 6.75%, increasing cigarette tax and some other tobacco one.
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Old 04-25-2004, 09:36 PM   #19
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Where in Texas do you live? It is already at 8.25% in Austin. If I were you dreadscale I would just scrap all that and make a state income tax.
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Old 04-25-2004, 10:03 PM   #20
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Live in Edinburg for now (maybe in Austin in 2yrs lol).

If I'm correct mainly cities have the 8.25% but smaller areas have their 6.25% tax. The option only gave us to raise the minimum up to 6.75% or I would have raised it to 8.25%

We didn't really have much to choose from or make up any, we had 12 programs that we could tax and 12 programs that we could cut. Each was a certain amount and was shown but along with it came a certain amount of political hit. In the end the political hits were added up and if you finished with below 15 pol. hits you were guaranteed your governor seat, above
15-25 a slight chance of losing, 25-35 some competition and above 35 to start packing your things.

Income tax had a political hit of around 75, while the increased sales tax, cig tax, internet tax, tobacco-thing tax, and a 'rainy day fund' only cost me 15 political pts and got around $10bil
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Old 04-25-2004, 10:37 PM   #21
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Originally Posted by Valleycrest
A country that has an economy very close to Socialism. This is the only type of economy this would work in. The economic repercussions of imposing this tax are too detailed to go into (again).
For fuck's sake, Australia's GST is almost identical to most US state's sales tax. Different name and it's not added at the checkout like it is in the US. Apart from that, it's almost the same.
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Old 04-26-2004, 09:14 AM   #22
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That sounds like a pretty fun class Dreadscale. After thinking about I do remember something about Austin's taxes being a little higher because of Capital Metro.
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Old 04-26-2004, 09:33 AM   #23
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In Texas the State sales tax is 6.25 percent. Local area (county and city not sure how that is split but I think its 1 percent each) taxes have the option to impose a tax up to a max of 2 percent on top of it.
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Old 04-26-2004, 09:33 AM   #24
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Originally Posted by Ulujain
For fuck's sake, Australia's GST is almost identical to most US state's sales tax. Different name and it's not added at the checkout like it is in the US. Apart from that, it's almost the same.
Yeah, in functionality, it is the same. But 8.25% is a lot different then 30% or more sales tax. Example: Where I live, many people consider it a necessity to own a vehicle. Consequently a large portion of our local economy revolves around the sales and maintenance of automobiles. If we take a 8.25% state sales tax (could vary depending on state and county) and add the 23% proposed consumption tax (taken from the other thread) and we consider that someone is purchasing a $25,000 automobile, the amount of tax someone would be paying with this sort of tax would be nearly $8,000 and we haven't even been talking about licensing and registration costs which might add another $1,000. Now, if someone never knew any different, this would be an acceptable additional cost. But to those not used to paying this high of a tax, it would be viewed as a penalty and a deterrant. In many cases, people would opt not to buy the automobile because of the added expense the increased sales tax would bring. Compounding this problem by the importance of the automobile industry in the US, this one example can represent a significant problem with imposing a consumption tax in the US.

On a different note, my comment about socialism was uncalled for and ill-advised. It apparently has worked in Australia, but I don't think it will work here. I think my above example, however crude, illustrates the problems that I foresee.
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Old 04-26-2004, 09:41 AM   #25
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Originally Posted by Kanjien
There are states who have no income tax and rely strictly on sales and property taxes for their budgets...Texas being one that comes to mind...and I dont see thier economies hurt by it so I am not sure I buy that argument.
For the most part, yes that is correct. Texas also has no tax on most preparable foods. From what I know, a lot of Texas' budget money comes from is Sales Tax, Auto Tax, and Home Tax.

Originally Posted by Deadscale
We got to play with the Texas budget in my political science class, pretty much needed to raise $9.9billion by cutting funds or taxing. Internet tax was one I added along with increasing the sales tax to 6.75%, increasing cigarette tax and some other tobacco one.
What part of the state were you taxing? In Mesquite/Garland (Dallas suburb) our sales tax is 8.25%

EDIT: Nevermind, I should have read further
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