"To replace Income Tax with Nat'l Sales Tax requires a tax rate of 60%"

[Bush_Eats_Beef]

A Note on the Required Tax Rate in a National Retail Sales Tax: Preliminary Estimates for 2005-2014

The Brookings Institution, August 12, 2004

William G. Gale, Senior Fellow and Arjay and Frances Fearing Miller Chair, Economic Studies

http://www.brook.edu/views/papers/gale/20040812.htm

The main finding is that to replace the income tax on a revenue-neutral basis over the next 10 years would require a sales tax rate of more than 26 percent. To replace all federal taxes on a revenue-neutral basis over the next 10 years would require a sales tax rate of about 60 percent.

This estimate is predicated on several assumptions: (a) the intended statutory sales tax base would be a very broad measure of consumption; (b) about 20 percent of that base would be eroded due to avoidance, evasion, or legislative action (i.e., loopholes), and (c) the NRST would have a demogrant equal to the poverty threshold for each family times the sales tax rate.

Note also that the rates quoted are tax-exclusive tax rates: that is, they represent the rate at which items would be "marked up at the cash register." For example, if an item costs $100 before sales tax, and a $25 sales tax is added, the tax-exclusive tax rate is 25/100 = 25 percent. The same rate can also be quoted as a tax-inclusive rate of 20 percent, where the tax-inclusive tax rate is defined as the tax ($25) divided by the total cost to the consumer ($125).

Thus, to replace the income tax would require a 21 percent tax-inclusive rate and to replace all federal taxes would require about a 38 percent tax-inclusive rate.

[punpirate]

1. That's another reason why the right...

... is pushing a flat tax--it would inevitably further starve goverment from providing social services. The rates bandied about as feasible would barely fund defense, intelligence, black world and debt service. That's all the right wants to fund, anyway.

[w4rma]

3. The problem with their theory is that progressive social programs are VERY

popular.

[punpirate]

4. Given the tenacity that Bush...

... has gone after SS, I don't think it matters to them one whit.

They perceive they have their hands on the steering wheel, and they're determined to take the country in the direction they wish, rather than in the direction of the wishes of the people. Popularity has little to do with their particular ideological agenda....

[vpigrad]

2. The only good thing that would come out of a 60% tax rate...

is that people would have to notice how much money the repukes waste on useless garbage like weapons and the extremely large amounts of money they pay to their thugs in the military. When people actually see the money come out of their pocket, rather than just seeing it as a line on a paycheck, it would really mean something. This would hurt the poor, but it would make the world a safer place because repukes could no longer get away with using our money to terrorize the rest of the world.

[ComerPerro]

6. No. I wish I had your optimism, but no.

They will do the exact same thing they are doing now:

They will rally against social programs, and will use immigrants and people on Government Aid as scapegoats.

Nevermind the fact that the Glorious Leader is spending untold billions on an illegal, unjustified war that was sold on lies and threats. We gotta stop those programs like medicaid and public education, that cost about 1/1000 the price of the war.

[napi21]

5. I would like to see all the assumptions they made.

I don't buy into the story as stated.

IF, and it's a big if, all sales and services were taxed at a Federal Rate, I really question that rate would have to be more than 15% at most.

Remember, I said EVERYTHING that is sold. Homes, remodels, food, cars, fuel, repairs, legal fees. We're talking about the entire US economy here.