Wednesday, December 22, 2004

The National Sales Tax

Now... ya'll let yourselves be swindled by the Republicans over the whole estate tax thing (Link). Now I am seeing ya'll get swindled again. The whole notion of the National Sales Tax being supported by lower and middle income people just baffles me. It is a fact that the rich will pay less in taxes. Not even Boontz can argue otherwise... and it is a fact that the government needs money to operate. Where you think the money to pay for the US government will come from? It is not going to magically appear. The tax burden is going to be shifted from the upper to the middle and lower class. The Republicans can spin this anyway they want (embedded tax, blah, blah, blah), but at the end of the day, the rich get another tax break and everyone else gets screwed. It looks like Bush is reluctant to try the national sales tax, but he is still looking at eliminating taxes on investments. This will mean you will not be able to deduct your state income tax paid, Social Security would have increased taxes, and the incentive for employers to pay part of your health insurance would be eliminated. Is the tax code complicated? Yes, but would you rather spend an extra hour or two figuring out your taxes or pay an extra thousand or two in taxes.

Bush's Tax Overhaul May Be Incremental

(Link to Full Story)


WASHINGTON - President Bush's campaign to make the tax code simpler, fairer and more pro-growth is likely to involve incremental changes to the current system rather than a sweeping effort to scrap the venerable income tax for a radically new approach, such as a national sales tax.

But the changes Bush will propose are still expected to generate huge opposition, especially if he suggests scrapping favored tax breaks such as the deduction for state income tax payments.

Tax experts in close contact with the administration say signs are pointing toward a plan that will seek to improve the income tax code, rather than replace it with a single-rate flat tax with no deductions, a national sales tax or Value Added Tax, all ideas that gained prominence among conservative Republicans in the 1990s...

While retaining the current income tax system, this option would eliminate the Alternative Minimum Tax, which was designed to make sure the rich paid their fair share of taxes but is now ensnaring more middle-income taxpayers. The proposal also would significantly expand opportunities for people to set up savings accounts where their investment earnings would be tax-free, something the administration has been pushing for two years.

Eliminating the AMT, which covered 3 million mostly wealthy taxpayers in 2004 but will raise the taxes of 23 million taxpayers by 2008, would cost the government an estimated $600 billion over 10 years.

To pay for that and the more generous savings accounts, the "least radical" proposal would eliminate the itemized deduction for state and local income taxes, while imposing a tax on Social Security (news - web sites) benefits and employer-provided health care benefits.

1 comment:

Anonymous said...

Look at the website of the organization that is pushing the national sales tax: They have sample tax returns that show how they believe their system will benefit lower income citizens. The problem is that for their numbers to work, they figure in what they call "cost of hidden taxes and compliance" under the current system. While they are correct that corporations today do pass their tax costs on to the consumer, they are wrong in assuming that the cost of goods and services will go down when those "hidden costs" are removed. While some very competitive industries may see lower prices, the majority of prices will stay the same, and the corporations will pocket the savings from no longer having to comply with income tax laws.

--don from