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Author: AcmeFool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76397  
Subject: Re: Are retirement accts really the best strateg Date: 5/12/2007 3:49 PM
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The NJ tax code on 'what is taxable and what is not taxable' is over 300 pages. Same for most states.
...
And how many tens of thousands of pages will that run? And how much money will be tied up waiting for rebates? And how many people (millions ) will the gov't employ to process that paperwork?


All of this is covered very clearly in the available literature. Read up and you'll know that this system is significantly simpler than any state-based sales tax.



How do you handle things like rentals? You rent an apartment. Do we tax your rent, at say 23%, the national sales tax rate? So you pay $1000 for rent, plus another $230 in tax. On your utility bills is another 23% tax.

The 23% is included in the price of goods -- if you are charged $1000, the tax is included. You do not have a fee and then add 23% on top.



Of course, state gov't who have 'income taxes' would change them to be higher state income taxes. That might have to be another 5 or 8% tacked on on top of the 23%, so you might have 35% tax levels. Many states now take a percentage of your fed tax bill, or your federal 'taxable income'...like VA was 6.25% of taxable income. SInce you wouldn't have to report that, they would just add another 5-8% sales tax (in addition to what they already have)....

And your point is?

Eliminated state income taxes and replacing them with sales taxes does not mean that you are now paying more to the state.



Maybe...but folks will still buy 'all they can afford' and 'all they can finance'.

This seems to be a no-brainer - it isn't going to happen. People can save now if they want. They just choose not to.


You completely ignore psychology.

Currently, you will pay the same in taxes whether you spend all of your money or save all of your money. With a national sales tax, this would not be the case. The psychology of saving is strong in this system.

There is significant proof (from the experiences of other countries) that using a national sales tax promotes savings that income taxes do not.



No, people like drug dealers will still deal in the underground economy, set up phony businesses to allow for deductions...you'll get some additional consumption tax, but a lot of it won't be there.

Again, there is significant proof that sales tax systems lose less to underground and illegal portions of the economy than do income taxes.

Acme
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