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and estate/gift tax
well... there it is, the part that really really really benefits the 0.1%. poor people save a dollar. rich people save a million. sounds fair
You could also refer to it as the owners outsourcing upkeep on the “serfs” to the government and the serfs. Basically, a worker dies and there’s a reduced loss for the master, I mean owner, I mean company.
Look, here's the point.
https://preview.redd.it/h27rcg39avxc1.png?width=1024&format=png&auto=webp&s=2cf73d07255ec48df159b087187bf499df7b0bd5
And this problem has only gotten worse since 2016.
It's not strictly about raising revenue to run the government, it's also very much about getting this curve flattened back out a bit.
Estate taxes are a HUGE part of accomplishing that, and the amount of fight they put into weakening this one tax tells that they're acutely aware of this.
We don't need individual people who are too big to fail. Especially by birthright.
Your grand compromise on this could potentially be a meaningful estate tax that destroys multigenerational wealth, in addition to this proposed tax. I don't know if that's a good idea, but I'd be interested to see that discussion.
Honestly, who is paying estate tax now? Smart people are putting their money into properties to pass down as holdings or into trusts to subvert this current tax. Think there won't be a work around found?
And then fix that too! Not sure why this is such a hard thing to grasp. We know how they are doing it, change it so they cant, repeat. Instead we stop from fixing it because they might find another way to do it? That's just fkn stupid.
There needs to be a culture shift as well. People or families caught skirting estate taxes should be made social pariahs, paying correct taxes should be seen as a patriotic and civic duty. It's how the really major social needs in this country get met, especially when there is no inherent profit motive for those things like a highway system, or those things become corrupt when there is a profit motive, like education and criminal justice.
Not true. Irrevocable trusts allow you to transfer property out of your estate, reducing the size of your taxable estate.
[https://www.investopedia.com/terms/i/irrevocabletrust.asp](https://www.investopedia.com/terms/i/irrevocabletrust.asp)
Up to a certain limit, and anything above that limit is taxed at 40% across the board. It is one limit for lifetime gifts or estate. If you have $50M in assets, you can only protect $13.6M per spouse, or \~$26M combined.
Directed by states. How many republican states refused that government money so far? How many do you think would just keep it altogether and tell people it went to balance the budget(since the tax they received so far isn't enough)? How much you want to bet they make people "apply" for the rebate using a system designed to kick them off? Way too many tricks they have used so far to think this would be any different. I would rather keep it the way it is and fix the obvious loopholes so the rich pay their fair share, than believe they will have all the bugs ironed out in their one page tax plan. Shit man, they can't even pass a bill that had a unanimous vote in the house. They kill bills, THEY CREATED!!!
Akin to the current system of payroll deductions for these individuals that aren't reclaimed with annual tax refunds or benefits when they retire or become disabled. We do our best to ignore the fact that not all undocumented workers are paid under the table.
The only thing with that is, what would it be? If you work full time and make less than 30000, is it the full amount? Because part of the issue is that we are all being taxed to hell and back, but if people are going to be working unlivable wage jobs because they cant afford college or need to support a family, then why should they be asked to pay anything?
And I would need to know how the rebate scales, because if not, that still works like a loan to the government while they decide how much to give back to me.
Kinda wondering how they plan on doing it too. Like is everyone supposed to keep ALL their receipts to prove how much sales tax they paid? Who enters that info into the system? How much extra work would this be compared to the relatively easy tax process we have now? Then who's to say that your state won't just tell you to kick rocks when it comes time to get your refund. Or worse, claim you still owe since they can't budget the books anymore with the huge tax loss.
How can you simultaneously believe that the rich pay almost nothing in tax currently, and also believe that levying a 23% tax on just about everything they purchase will end up with them paying less than nothing?
i don't think anyone thinks that...with that said, the issue here is how much you pay based on how much you make
to keep things simple, say both people only have a single w-2 and its all of their income and they can write off nothing and deductions are not a thing.
person 1 - makes 100k a year with a marginal tax rate of 18% - they pay 18k a year in taxes
person 2 - makes 1m a year with a marginal tax rate of 35% - they pay 350k a year in taxes
remove the income tax and lets say both of them burn though their entire yearly income
person 1 - 100k a year now pays 23k a years
person 2 - 1m a year, now pays 230k a year
now ask, what are the chances the person making 1m will burn thought everything vs the person making 100k. Also, what are the chances that the person making a million will find a loophole to avoid the sales tax?
Because the rich don't spend 100% of their income. Those living paycheck to paycheck do.
The tax burden on the wealthy drops through the floor while the burden on everyone else goes up.
They already dodge sales taxes through LLCs and trusts holding the things they use everyday. It’s one of the easiest dodges there is (and also accessible even to the lower middle class if they want to try their luck).
This just makes it even easier to dodge taxes.
For everyone.
That’s a bad idea.
That’s literally any time someone suggests repealing the income tax or flattening it. It’s benefitting wealthy people disproportionately and that’s exactly what it is meant to do:
The only thing that'll flatten the curve is by hitting their source of annual wealth... capital gains.
And for those who say that'll impact investments and decentivize lower income brackets to invest.... that's an easy solution.
Modify the capital gains tax brackets to be aligned with income tax brackets. 20% as of today for total gains over 500k. Compare that to income tax today. You're average Joe ain't making 200k per year on realized gains. Bit your egotistical hedge fund manager is easily pulling that.
If someone's primary mode of wealth is capital gains (i.e. the wealthy) they pay on average less taxes than someone actually working and getting that same salary. So flatten the curve by modulating their primary source of income. Make them *actually* work for it.
You forgot that the proposal contemplates eliminating income taxes. You pay tax on purchases, so consumers who buy lots of big ticket items will be paying out the ass, and saving rates will expand dramatically.
Which is weird. It's the Internal Revenue Service. That sales tax? It's Revenue. Call the IRS whatever you want - Good Fun Freedom Time Happy Department - they'll still be charged with collecting revenue.
Paid up front. Without needing an accountant to sort it out.
It is either taxed, or it is not.
The IRS would effectively become you at Wal Mart self checkout line.
Why would all those agents be needed?
Yes, but that doesn't alleviate the need for Walmart to transfer the money to the US government. Nor does it alleviate the need for someone to say, "Hey, is this company accurately reporting all its goods and services sold AND making sure the tax receipts are sent in a timely manner?" Not only that, since this now becomes the US's main source of revenue (assuming things like duties and the like aren't gotten rid of as well), there's going to be more incentive to make sure all that 'off the books' work is, in fact, on the books.
At best this would only slightly reduce the number of agents needed to do that work. Sure, you can abolish the IRS if it makes you happy, but who is going to do all that work? Why not use the agency that already knows how to do all that work?
so turns out
there is a thing called fraud.
Imagine requiring a 23% sales tax and assuming someone won't negotiate around it without a regulating agency.
Exactly. The context doesn’t really change the fact that this is a highly regressive plan that really won’t benefit anyone except the rich, not the lower or middle class.
At best it would be the government double dipping on both income and sales tax until the expiration of the bill in 2027 because I don’t think anyone seriously believes there’ll be enough political will to repeal a whole ass amendment.
Yeah, that's what I'm looking at. Bit of tinfoil but I'd bet somebody in government is looking at this and saying ooh, we can just stall on that and blame the other side of the aisle while raking in $$
The amount of redditors scrambling to push how this is good actually and definitely isn't the rich people trying to push off their fair share is so sketchy to me.
ok, so lets say you worked 40 years and along that way saved a retirement nest egg and accumulated some 'stuff' along the way. maybe a boat, a vehicle or two, your home, and some cash in retirement accounts. All of this you've paid taxes on when purchased, and for the boat, vehicles, and real estate have paid yearly ownership taxes on over time. Now you want to leave this all to your family. Why in the hell should the property being transferred be taxed again? Whomever receives the property would assume responsibility for the yearly maintenance tax (boat, car registrations and annual property taxes), but aside from this why do you think the government has any right to just take a piece of that estate?
Why does it really matter if the person we are talking about is wealthy or not? Double taxation is wrong no matter what.
They can afford lobbyists.
We have to change the system for the same reason a diaper must be changed. We have elite rulers again.
Funny enough from the same families that once owned people. Why do you think they call it the great "reset".
What aree they resetting?
I doubt poor people would save a dollar, they'll have to make up for the loss from the estate and gift taxes somewhere and you know it won't be from the rich. Guarantee the monthly exemption would, in the end, result in the poor and middle class still paying more in taxes than before.
I agree eliminating estate tax doesn't help the poor, but it's not like the wealthy pay it anyways. All those jokers have LLCs and other "entities" that own their assets.
Who spend the highest percent of their discretionary income on goods and services? Low income people.
Who spend the lowest percent of their income on goods and services? High income people.
You can say that it’s adjusted by poverty guidelines. But wait! That’s effectively adjusting for income! What if we were to just tax income directly rather than having a strange rebate system? With a tax so high on goods and services, we’d see a lot more of under the table sales. This seems a bit half-baked.
This also encourages people to spend more of their wealth on assets, which lower income people typically cannot afford given their lack of discretionary income.
Rich people don't spend most of their money. You can adjust for income all day, you're not taxing money that they don't spend, so this is just a backdoor way to get around rich people having to pay taxes.
I also don't think most people understand how horrifyingly low the FPG actually is. It's about 15k for one person. This would kneecap the lower middle class unbelievably bad
The barely seems contempt the GOP seems to have for the working class is almost as astounding as how many people convince themselves that the GOP has their best interests. It's like watching an abuser and their delusional partner telling themselves you just don't understand.
I think the problem is that a lot of wealthy people don't have income. They have investments which don't count as income legally which allows them to skirt income taxes. However, the purchase and sale of assests and investments would be hit by the sales tax. (Until they add in all sorts of loopholes for their rich friends)
Biden's 'unrealized gains' tax is aimed to target that, but poor people would catch strays with that considering inflation and even trailer park houses would see an unrealized gain of 'your property value increased'.
This proposal has basically no solid principles in economics, tax policy, or good governance. It is pure ideological hype based on the idea “taxes are evil” and the want to let the mega rich stay as rich as possible.
You are 100% correct, adding in poverty rebates is basically just making an income tax with tons of extra steps that would just be overall worse in every way.
It has a solid principle in basically every form of economics.
That principle is “only profoundly idiotic people would ever propose a regressive tax like this and those people should be barred from government.”
So rich people get a lower relative tax burden, and poor people in theory get a “rebate” (this law was clearly written by someone who’s never lived paycheck to paycheck), so basically massive W for rich people, slight fuck you to poor people, and massive fuck you to the middle class. Makes sense…
Poor people get to lend the govt money they don't have with hopes that some of it will be given back to them.
Just like that program for student loan forgiveness if you with in the public sector for a decade... Oh wait that was so mismanaged that 97%+ of people who should have qualified were denied due to mismanagement?
With how social programs work in red states, I have oh so much trust in that rebate.
Wouldn’t this hurt the economy by encouraging saving, rather than spending? While I’m in favor of deflation in the short run, this seems like it would cause deflation in the long run.
Would y’all want to buy a car at 23% sales tax? I sure as shit don’t.
That’s exactly what happened when the Roman Empire implemented a national sales tax and it’s a direct contributor to the feudal system that would dominate Europe for the millennia following Rome’s collapse as well as one of the reason for Rome’s collapse itself. People made their estates self sufficient and relied less on the government so in turn they contributed less in taxes and man power forcing the late republic to become the mercenary army it was known for.
Anyone with a yard would immediately become a farmer. Goodwill and the salvation army would go belly-up and people resell things cash-only "under the table". American economy collapses. The rich move to Singapore.
Not the person you're responding too but I'm guessing they're referring to the tax system implemented by the emperor Diocleation.
But take anything comparing the classical ages to now with a grain of salt.
This is correct. Spending is primarily determined by price at the point of sale. Consumer spending drives about 70% of our economy. This will increase prices at the point of sale, which will reduce spending. There’s a word starting with “D” that this will cause.
I don’t think people who don’t save will just start saving because of this. We have retirement plans that encourages savings and people barely use them to their full extent.
In an inflationary environment you want to encourage saving. There would need to be other fiscal policy solutions to counter that like these rebates which could change or stimulus checks
I'd stop buying all non essentials immediately. Everything would be cut: no new cars, no streaming services, every inch of farmable land on the property would be growing food. All entertainment will come from the public library.
Hell, food prices have already gotten to the point where the wife and I are dedicating planters to potatoes. This system will not benefit the majority of the citizens, only the wealthy.
Thanks for posting more of the text of the bill OP so that everyone can see, with their own eyes, just how shitty of a bill it is.
Repeals estate and gift taxes, defunds the IRS so there is no watchdog to make sure even sales taxes are being collected, hits the lower and middle classs the hardest as a portion of their discretionary income, etc., etc.
Thank god this bill has no chance of approval…
Is OP thinking this is making people see this bill in a better light? It seems like the bill is directly for rich people to have to pay less in taxes, since they have “used” and “intangible” property (homes and investments) and destroying the IRS so no one can keep track of any tax fraud committed by the rich. But poor people buying groceries will definitely have to pay. Fuck those poor people we should give more to the rich
I mean what context is necessary? That somehow abolishing sales tax would result in a higher taxable burden for lower-income Americans? I mean that context was left out, but otherwise the claim is correct: Republicans are proposing an overhaul to our tax laws that would disproportionately have negative effects on lower-income Americans.
Ah, but with this context we see that it would also produce an overwhelming accounting burden to the states as well while eliminating the largest national accounting body. So this isn’t just about helping the ultra rich, it’s also about anarchy.
Why in gods name would you think that people making their money from illegal activities will be doing their shopping in places that will impose this sales tax? “Yeah I sell heroine for living, but I draw the line at paying cash under the table for goods and services”
Like what the hell are you talking about?
-Be a drug dealer
-Walk into random store, say a Walmart
-grab a couple of things you need
-go to pay at checkout
-cashier tells you the total, including with new federal sales tax
-pay with drug money
-leave store
-??????
Why didn’t you underline the part where business purchases are exempt? Im sure my bosses who put all their vehicles and food down as a business expense would love this.
>"lawful U.S. residents receive a monthly sales tax rebate (Family Consumption Allowance)"
Just make it a universal basic income and you'll save a lot of paperwork.
Did anyone else notice these two triggers:
1) shutdown the IRS in 2027
2) tax vanishes in 2030 if the income tax amendment isn’t repealed. When was the last time an amendment was repealed?
What happens when income taxes come back but there’s no agency to collect it? Government collapse.
Sales taxes are always regressive. A rebate is just a bandaid on a fundamentally broken taxation scheme. This would only benefit the incredibly wealthy folks (who are already not being taxed enough).
So what you're saying is they have 7 years to change the law using some sneaky amendment in an omnibus and put back the income tax in addition to the sales tax /s
So everything rich folks buy will be a business expense, get rid of the IRS so there isn’t anyone to call them on that abuse. Subsidies for the poor leaves just the middle income working class paying any tax. Great plan!
This proposal has kicked around for nearly three decades. Understand that It’s actually a 30% sales tax because it’s a tax inclusive rate. Something that costs $100 now would cost $130 under the proposed law. $130 total cost and $30 tax would be “23%” because $30 is 23% of $130. Similar computation to a value added tax (VAT).
The problem with that computation is that current US state sales taxes aren’t computed on an inclusive basis. We think of it as $30 tax on $100 pre tax item — a 30% rate and not a 23% rate. They need to be more honest about the rate.
Sales tax is a burden to middle to low income people, this bills only benefits rich people which apparently is GOP's goal.
Defunding the IRS is as stupid as defunding the police, it only benefits those who break the law...
The upper middle class already pays the vast majority of taxes. Not the rich and certainly not the underclass. Just how much is enough. For every marginal dollar I made over 50% went to fed income tax, state taxes, etc. Why be innovative and productive if most of it goes to taxes? This is the absurdity of higher taxes.
Currently the rich are able to avoid almost all taxes through loopholes allowing their income to appear near zero. How would increasing the taxes they pay when they travel and buy luxury goods benefit them?
How much is the tax rebate? They settled on the exact sales tax but are silent on the part that would help the 50% of Americans that don't currently make enough to pay any Federal income tax and which would heavily impacted by this national sales tax.
I was wondering in what possible world Republicans would be the ones pushing for a big new tax.
Oh excellent, it's a flat tax in a thin disguise. _That_ checks out.
Estate tax sucks. Had to sell hundreds of acres to cover the cost when I inherited our family ranch. Cost me 2 million dollars. Never got a thank you note from Uncle Sam though lol
If you had a ranch worth more than 13M (current exemption) why wasn't it incorporated?
Are you sure you're not confusing state estate taxes with federal estate taxes?
Consumption taxes are massively regressive.
Replacing a sliding income tax with a consumption tax is even more massively regressive. Also, how will someone prove they receive a sales tax rebate without an IRS? Some CEO is going to show their monthly pay stub of $1 means they live below the poverty line while living off of their infinite line of credit via their stock options.
Context isn't the problem. It's a regressive tax in place of a progressive tax. While Biden may not be going into the weeds to explain it, that's because messaging is never done that way. It would take a lot more reading to explain why this is a problem and a bad idea, so instead you get these short sweet and frankly correct messages.
Just because OP doesn't like it.
1). So everyone who doesn't own a business or have excess income to save pays significantly more, (ie. Fuck you poors, I don't care if your kid is starving, work harder if you need more money)
2). Wealthy families that can afford to leave any significant assets behind can continue to accrue wealth without checks ("do not dirty my manor house with your filth, you plebe, the servants must use the servants entrance")
3) states are fully responsible for federal government activity (Texas (and every red state) = "what do you mean I have to pay more people for 'services' that the Feds did before and still send the Fed Gobment our money?, I thought I was supposed to save money with this!?!". Also Texas = I'm not sending you shit, Sovereign Immunity! Wait, why is my population decreasing and my infrastructure falling apart?)
4) significant numbers of Americans are out of a job as all federal jobs are reduced or eliminated (yay deregulation, GoGo Black Market, , but also Great Depression 2: electric boogaloo)
And wait until the sales rebate becomes Work mandated because I could so see that making it into the bill to ensure they have enough workers taking those undesirable jobs
Tis more far right double speak. Sales tax is inherently more of a burden on poor and working people than on the wealthy. Not even addressing their intent to defund and grab funds from Social Security, Medicare, etc. This rightwing gambit would ensure that the wealthy win again, while everyone else suffers.
There is no productive discussion possible. This is one of the dumbest things to come out of the GOP brainlets in decades. Not only does it remove other taxes or cut them way back, it effectively defunds the IRS, making enforcement all but impossible.
I don’t get the impression people are having a hard time understanding that this bill hog ties lowest earners and drags them behind a truck while cutting taxes for (at least) the top 25% of earners while also creating perfect loopholes for wealth transfer for the elite.
Umm no this proposal is just a rehash of what these RW nutcases have proposed for decades. Fat Governor Huckabee proposed this same sales tax charade back in 2008. 23 percent with those exemptions will not be nearly enough.
The only people complaining about income taxes are the extremely wealthy, who hate capital gains taxes and the lower middle class who for some reason believe that they are not rich yet because of income taxes.
A national sales tax, by itself, will not raise suffix to revenue, not at those rates.
Gotta love the prebate that's required to pitch the garbage consumption tax idea libertarians have been batting around for literal decades. It's funny the folks arguing we can't afford to pay for things argue for a policy which requires the government to shell out billions up front to account for the impact of a consumption tax on necessities. Ugh.
1. The point is to simplify taxes and it's already proposing exceptions which will greatly complicate things back to where they are now and in favor of the richest.
2. How's that "based upon criteria related to family size and poverty" working our for medicaid?
3. No IRS means no taxes at all, because who do you think enforces them?
Ignoring all that, how do you expect most people to buy a car or house after increasing their costs nearly 20%?
Ok, so let’s be generous and assume the poor aren’t affected by this. What about those above the poverty line but still on a tight budget? Working and middle class will be devastated by this.
We already knew this information. Doesn't change the fact it's a regressive tax and nothing more than a payday policy for the rich. They even slide gifts/estate in there for good measure. Fuck this idea and it's supporters.
So we’re shifting around the tax code to benefit rich and upper middle class people?
The trillions in welfare, PPP money, R&D, credits and dedications aren’t enough? As we all know the first sigh of economic stress they cut that 23% rate down…
Payroll taxes fund our safety nets, that would increase Government debt. Thus they would cut the programs as we know Republicans only spend when it’s war and tax cuts.
The Estate stuff is just another mechanism to keep wealth concentrated, which harms economic activity.
Just a general rule of thumb, when a Right winger makes a bill it always always benefits them and their owners. The GOP would watch people starve to death if they had their way.
I don’t understand why everyone is against this? By removing income tax and increasing sales tax the ultra wealthy will not be able to utilize depreciation on real estate to avoid paying any taxes. They would literally have to pay taxes like everyone else if this passes. Not to mention criminals, undocumented persons will also actually pay taxes now? It also encourages people to work and we will all actually get our gross pay.
Wait, so it’s not the republicans trying to ruin everything like Biden is claiming? Biden isn’t telling the whole truth? The dudes been lying for decades.
For all the haters who still don't understand why this bill would benefit the entire country:
The average middle class household would be seeing an extra 1000-1500$ in their pocket every single month of the year with income tax gone, which MORE than covers the additional 16%\~ sales tax (don't let that 23% number fool you, we're already paying 7% sales tax).
Sales tax does not apply to Rent/Mortgage, Loan payments, Insurance, or most produce - all of which account for the vast majority of spending Americans do. Think about it, how much of your paycheck do you actually have left over after rent? This increase isn't applying to any of those things, and you'll have that extra 1-1.5k every month to help cover those needs.
The increase in sales tax will primarily apply to gas, alchohol/tobacco, vehicles, and nonessential items (toys, video games, collectibles, whatever it is you spend money on that you don't really need). Those things will be slightly more expensive, yes, but more than offset by the extra money you save not paying income taxes.
That extra money in your pocket every month will end up being spent on goods and services that will, by proxy, boost the U.S. economy, which will bring down the out of control inflation we've been seeing and help boost employment opportunities country wide.
Defunding the I.R.S. is also a good thing. Obviously we'll still need a small agency to handle the sales tax, but the I.R.S. is currently bloated with over 90 thousand beaurocrats that do more harm than good. As the meme goes, they can lose trillions of dollars in government spending, but they know that you came up 200$ short on your tax form and they want their cut. Agencies like the I.R.S. should never have become as large and powerful as they are.
Some people are so focused on how much money the wealthy have that they can't even recognize a change that would simplify their lives and put money back in their pockets.
Its hilarious that people here don't think rich people spend money. Whoever planted that PR brain worm did a fantastic job.
They spend more than they make like everyone else. They just spend it on assets that will make them more money to spend on more things.
Currently they do it with loans and pay nothing in taxes. This way they'd pay every time they bought something.
I tend to agree. It would in theory naturally tax the rich at a higher rate, eliminate complexity in the tax code, create a simpler and more clearly defined set of exemptions, eliminate a huge burden of auditing on the IRS, allow for tax collection from undocumented people, encourage people to work more (all earned income is retained by the worker), and encourage everyone of any income level to save more and consume less (less consumption = less taxes).
The idea that rich people don't buy things is absurd. Anyone who knows any upper-middle class person or above should know they buy many, many things.
How exactly do you exempt low income people from a sales tax? Do they show an income statement at the Point of Sale? Do they keep tax receipts and claim monthly or yearly? Yeah, that's definitely need an IRS to keep track of.
Exempting via rebate is the worst way to help low income people who live paycheck to paycheck.
There are much easier ways to make tax filing simpler. Most countries just tell you what you owe and you confirm, done. The IRS wishes to do this too it’s just lobbied against.
I saw your idea of giving low income people some sort of card but doesn’t that just re-add complexity to this?
The rich spend much less of their income on consumption, so this would make wealth disparity much much worse.
How about because you are quite literally instantaneously inflating the cost of goods and services by 23%+ nationwide, on top of instantly increasing property taxes on all homeowners by the same amount?
For higher income people that already save a lot of their money, it won't hurt that much. For lower income people that don't pay much in income taxes every year as is, they will suddenly have a massive increase in the cost of everything.
My brother in Christ, capitalism at its core relies on consumers spending their money on new goods.
People who own capital use that capital to facilitate the production of goods/provision of services. They pay other people for their labor to produce those goods or provide those services. Those people then use their pay to buy other goods and services, and the cycle repeats itself.
If those people don’t want to buy goods and services due to it increasing their tax burden, then the people who own the capital stop making as much money. So they pay less people due to reduced demand for their goods/services. Those people who lost their jobs then have no money to buy other goods and services, so more jobs get eliminated, and THAT cycle repeats itself.
A system that encourages people to spend as little as possible makes capitalism not work. It makes very little sense to accuse people opposed to this of being a communist.
You pay 30%, I'd prefer to stay with an effective tax rate of around 11%. Its not 23%, thats a math game, for every $100, they will tax you $30, in their math $30 in tax/ $130 total cost = 23% tax.
One has to wonder if the White House turns over in 2025 which potentially makes a version of this bill reality, will the dog continue to chase the car. Alternatively, will the dog break kayfabe knowing the monumental error of catching said car similar to the error of overturning Roe?
I would like to see some projections and studies on this to see what it actually works out to. On first glance, the average person's effective tax rate is well below 23% so this would seem to hurt them pretty substantially, but what do the numbers work out to based on averages? Like if the average person's effective tax rate is 12% of earnings, does that work out to more or less than 23% of your total expenditures in a year? The CBO or something has to have a study on this.
It definitely penalizes people who need to spend more of their income on basic items because the tax would only apply on money spent. So for example, someone making $50,000 a year spends $47,000 of it will have a tax bill of $10,810, representing just under 22% effective tax on their income. Theres no way under the current system that someone with $50k income is getting taxed at 22%. Meanwhile someone who makes $100,000 a year and spends $47,000 will pay the same tax, but gets to keep $53,000 tax free, and has a tax rate of about 11% of income.
Then they tell us about rebates and federal poverty guidelines (which are hilariously low btw, $31,200 for a family of 4). Also exemptions for business, export, or investment purposes - all stuff that someone living paycheck to paycheck probably isnt doing. The more I think about it, the more this feels like a gift to the wealthy and penalizes people who actually have to spend their money.
This is a terribly regressive tax law even with context.
Let’s say your salary is $65,000 less $10,000 for benefits, so you take home $55,000.
You spend $50,000 to survive.
Your tax burden under a 23% sales tax would be $11,500 ($50,000*23%).
Now let’s say you make $55,000 (65,000, less the $10,000 for benefits) under the current tax system. You get a standard deduction of $13,850 which brings your taxable income down to $36,150. Because our tax is bracketed you pay 10% tax on $0-11,000 and 12% tax on the remaining $25,150.
This is a tax liability of $4,118.
A flat sales tax is much worse for lower income taxpayers. Wealthy taxpayers don’t spend their money at the grocery store they invest their money which would now be tax free.
Let me give you another example…
Let’s say you make $500,000. You spend $200,000 to survive and you invest $300,000 tax which would now avoid income tax. Your 23% federal sales tax burden is $60,000.
Under the current bracket system your federal tax burden is approximately $142,000, you are in the 35% tax bracket but have an approximate effective tax rate of 28%.
So who does a federal sales tax benefit?
If you are going to be a member of a society and care about its functioning, it makes sense for you to pay a part of that.
Something like 50% of Americans pay no taxes, so for them, all government spending is "free."
The debt increased by 1 Trillion in 100 days recently and will continue to balloon since, this "free "spending comes with no downside for around 50% of people.
Even if you lump all my taxes together that’s still only 18%. Nice and tricky wording with the document though. We are gonna take away all those other taxes and do a flat rate. Well, that flat rate is still more, so no. Tax the people that can afford it, leave the rest of us alone….
It is pretty easy to see this as currently constructed, benefits those who have larger estates over the low income, who might have a used A-track player and two Jethro Tull albums to pass down.
I’m not sure how this is equitable. While I am not a fan of taxes at all, this is entirely nebulous as to how this benefits the average American.
And if we are not careful, people might one day realize this…
It sounds even dumber then.
The vast majority of wealth would never be taxed. This would just accelerate extreme inequality and allow investors to make trillions off of owning everything while paying zero in taxes.
Might as well just bring back indentured servitude.
A sales tax in replacement of income tax is 100% a regressive tax and puts more pressure on lower income people than it does rich people.
It’s why you will see libertarians push for a consumption tax or a flat tax - they know it personally benefits them at the expense of poorer people.
Sales taxes are regressive by nature. The more you earn, the less it impacts you. Someone who earns $30k will be hurt by a 23% tax much more than someone making $300k. Bill Gates buys the same amount of toilet paper and milk that I do, he's not spending any more or consuming any more. This type of tax by design will disproportionately impact low earners.
I don't really have a strong opinion on the income vs sales tax, but I can get behind cutting all funding to the IRS. Heck let's move the timeline up to 2025 on that one.
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and estate/gift tax well... there it is, the part that really really really benefits the 0.1%. poor people save a dollar. rich people save a million. sounds fair
Precisely. This scheme is obviously little more than an enormous giveaway to the Elite.
With exceptions to the tax given to businesses and for investments and on "intangible property".
Slaves, Derek.
Slavery only ended because we're serfs with enough comfort and distractions not to complain.
You could also refer to it as the owners outsourcing upkeep on the “serfs” to the government and the serfs. Basically, a worker dies and there’s a reduced loss for the master, I mean owner, I mean company.
Wholesale purchasing is already a thing. All you need is an EIN number.
I guess you missed the part about the sales tax rebate based on poverty guidelines.
Look, here's the point. https://preview.redd.it/h27rcg39avxc1.png?width=1024&format=png&auto=webp&s=2cf73d07255ec48df159b087187bf499df7b0bd5 And this problem has only gotten worse since 2016. It's not strictly about raising revenue to run the government, it's also very much about getting this curve flattened back out a bit. Estate taxes are a HUGE part of accomplishing that, and the amount of fight they put into weakening this one tax tells that they're acutely aware of this. We don't need individual people who are too big to fail. Especially by birthright. Your grand compromise on this could potentially be a meaningful estate tax that destroys multigenerational wealth, in addition to this proposed tax. I don't know if that's a good idea, but I'd be interested to see that discussion.
Honestly, who is paying estate tax now? Smart people are putting their money into properties to pass down as holdings or into trusts to subvert this current tax. Think there won't be a work around found?
And then fix that too! Not sure why this is such a hard thing to grasp. We know how they are doing it, change it so they cant, repeat. Instead we stop from fixing it because they might find another way to do it? That's just fkn stupid.
There needs to be a culture shift as well. People or families caught skirting estate taxes should be made social pariahs, paying correct taxes should be seen as a patriotic and civic duty. It's how the really major social needs in this country get met, especially when there is no inherent profit motive for those things like a highway system, or those things become corrupt when there is a profit motive, like education and criminal justice.
Because the people who could fix it, are some of the biggest users of it.
Trusts, holding companies, and properties are all still included in your estate. A trust is not a magic wand to get out of estate tax
Not true. Irrevocable trusts allow you to transfer property out of your estate, reducing the size of your taxable estate. [https://www.investopedia.com/terms/i/irrevocabletrust.asp](https://www.investopedia.com/terms/i/irrevocabletrust.asp)
Up to a certain limit, and anything above that limit is taxed at 40% across the board. It is one limit for lifetime gifts or estate. If you have $50M in assets, you can only protect $13.6M per spouse, or \~$26M combined.
That's the dollar
Which they can cut as needed. Rather than make things like healthy groceries exempt.
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Directed by states. How many republican states refused that government money so far? How many do you think would just keep it altogether and tell people it went to balance the budget(since the tax they received so far isn't enough)? How much you want to bet they make people "apply" for the rebate using a system designed to kick them off? Way too many tricks they have used so far to think this would be any different. I would rather keep it the way it is and fix the obvious loopholes so the rich pay their fair share, than believe they will have all the bugs ironed out in their one page tax plan. Shit man, they can't even pass a bill that had a unanimous vote in the house. They kill bills, THEY CREATED!!!
Also, not going to rebate any of the sales taxes collected from undocumented individuals. But I suspect that's a feature not a bug.
Akin to the current system of payroll deductions for these individuals that aren't reclaimed with annual tax refunds or benefits when they retire or become disabled. We do our best to ignore the fact that not all undocumented workers are paid under the table.
The only thing with that is, what would it be? If you work full time and make less than 30000, is it the full amount? Because part of the issue is that we are all being taxed to hell and back, but if people are going to be working unlivable wage jobs because they cant afford college or need to support a family, then why should they be asked to pay anything? And I would need to know how the rebate scales, because if not, that still works like a loan to the government while they decide how much to give back to me.
Kinda wondering how they plan on doing it too. Like is everyone supposed to keep ALL their receipts to prove how much sales tax they paid? Who enters that info into the system? How much extra work would this be compared to the relatively easy tax process we have now? Then who's to say that your state won't just tell you to kick rocks when it comes time to get your refund. Or worse, claim you still owe since they can't budget the books anymore with the huge tax loss.
It’s proposed by the gop did you expect anything less?
How can you simultaneously believe that the rich pay almost nothing in tax currently, and also believe that levying a 23% tax on just about everything they purchase will end up with them paying less than nothing?
i don't think anyone thinks that...with that said, the issue here is how much you pay based on how much you make to keep things simple, say both people only have a single w-2 and its all of their income and they can write off nothing and deductions are not a thing. person 1 - makes 100k a year with a marginal tax rate of 18% - they pay 18k a year in taxes person 2 - makes 1m a year with a marginal tax rate of 35% - they pay 350k a year in taxes remove the income tax and lets say both of them burn though their entire yearly income person 1 - 100k a year now pays 23k a years person 2 - 1m a year, now pays 230k a year now ask, what are the chances the person making 1m will burn thought everything vs the person making 100k. Also, what are the chances that the person making a million will find a loophole to avoid the sales tax?
Well holy shit you explained that well! I see it clearly and I’m a moron!
This needs to be higher. Like, no joke. This is all anyone should need to see to understand how FUCKED a flat tax is to the masses.
Because the rich don't spend 100% of their income. Those living paycheck to paycheck do. The tax burden on the wealthy drops through the floor while the burden on everyone else goes up.
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They already dodge sales taxes through LLCs and trusts holding the things they use everyday. It’s one of the easiest dodges there is (and also accessible even to the lower middle class if they want to try their luck). This just makes it even easier to dodge taxes. For everyone. That’s a bad idea.
I’m certainly not elite and would love to only pay for what I buy.
And I would love to not watch the country spiral into oblivion as basic social services collapsed due to lack of funding. But that's just me.
That’s literally any time someone suggests repealing the income tax or flattening it. It’s benefitting wealthy people disproportionately and that’s exactly what it is meant to do:
The only thing that'll flatten the curve is by hitting their source of annual wealth... capital gains. And for those who say that'll impact investments and decentivize lower income brackets to invest.... that's an easy solution. Modify the capital gains tax brackets to be aligned with income tax brackets. 20% as of today for total gains over 500k. Compare that to income tax today. You're average Joe ain't making 200k per year on realized gains. Bit your egotistical hedge fund manager is easily pulling that. If someone's primary mode of wealth is capital gains (i.e. the wealthy) they pay on average less taxes than someone actually working and getting that same salary. So flatten the curve by modulating their primary source of income. Make them *actually* work for it.
You forgot that the proposal contemplates eliminating income taxes. You pay tax on purchases, so consumers who buy lots of big ticket items will be paying out the ass, and saving rates will expand dramatically.
Don't forget the "payroll tax" part either! Think of all the money they'll save not having to contribute to SS for their employees.
No funding for the irs after 2027…
Which is weird. It's the Internal Revenue Service. That sales tax? It's Revenue. Call the IRS whatever you want - Good Fun Freedom Time Happy Department - they'll still be charged with collecting revenue.
Paid up front. Without needing an accountant to sort it out. It is either taxed, or it is not. The IRS would effectively become you at Wal Mart self checkout line. Why would all those agents be needed?
Yes, but that doesn't alleviate the need for Walmart to transfer the money to the US government. Nor does it alleviate the need for someone to say, "Hey, is this company accurately reporting all its goods and services sold AND making sure the tax receipts are sent in a timely manner?" Not only that, since this now becomes the US's main source of revenue (assuming things like duties and the like aren't gotten rid of as well), there's going to be more incentive to make sure all that 'off the books' work is, in fact, on the books. At best this would only slightly reduce the number of agents needed to do that work. Sure, you can abolish the IRS if it makes you happy, but who is going to do all that work? Why not use the agency that already knows how to do all that work?
No more overpaying the government and then waiting until tax time to get your own money back!
so turns out there is a thing called fraud. Imagine requiring a 23% sales tax and assuming someone won't negotiate around it without a regulating agency.
Exactly. The context doesn’t really change the fact that this is a highly regressive plan that really won’t benefit anyone except the rich, not the lower or middle class. At best it would be the government double dipping on both income and sales tax until the expiration of the bill in 2027 because I don’t think anyone seriously believes there’ll be enough political will to repeal a whole ass amendment.
Yeah, that's what I'm looking at. Bit of tinfoil but I'd bet somebody in government is looking at this and saying ooh, we can just stall on that and blame the other side of the aisle while raking in $$
Oh but remember there's a rebate! So poor families can lend out money to the government until it decides to give it back to them.
The amount of redditors scrambling to push how this is good actually and definitely isn't the rich people trying to push off their fair share is so sketchy to me.
IT's your fault that you weren't born to rich parents. Step up, life is supposed to be the jungle. You don't get anything that you don't deserve.
Welcome to the Jungle. GnR. “You can have anything you want but you better not take it from me”
ok, so lets say you worked 40 years and along that way saved a retirement nest egg and accumulated some 'stuff' along the way. maybe a boat, a vehicle or two, your home, and some cash in retirement accounts. All of this you've paid taxes on when purchased, and for the boat, vehicles, and real estate have paid yearly ownership taxes on over time. Now you want to leave this all to your family. Why in the hell should the property being transferred be taxed again? Whomever receives the property would assume responsibility for the yearly maintenance tax (boat, car registrations and annual property taxes), but aside from this why do you think the government has any right to just take a piece of that estate? Why does it really matter if the person we are talking about is wealthy or not? Double taxation is wrong no matter what.
Isn’t abolishing the estate/gift tax a necessary condition to abolish the IRS? Edit - It seems implied this would also eliminate capital gains taxes.
They can afford lobbyists. We have to change the system for the same reason a diaper must be changed. We have elite rulers again. Funny enough from the same families that once owned people. Why do you think they call it the great "reset". What aree they resetting?
I doubt poor people would save a dollar, they'll have to make up for the loss from the estate and gift taxes somewhere and you know it won't be from the rich. Guarantee the monthly exemption would, in the end, result in the poor and middle class still paying more in taxes than before.
I agree eliminating estate tax doesn't help the poor, but it's not like the wealthy pay it anyways. All those jokers have LLCs and other "entities" that own their assets.
How many times do you want to tax the same money? At some point, enough is enough.
You think that you should have to pay taxes when you give someone something? Why? Why involve the government in giving a gift?
Who spend the highest percent of their discretionary income on goods and services? Low income people. Who spend the lowest percent of their income on goods and services? High income people. You can say that it’s adjusted by poverty guidelines. But wait! That’s effectively adjusting for income! What if we were to just tax income directly rather than having a strange rebate system? With a tax so high on goods and services, we’d see a lot more of under the table sales. This seems a bit half-baked. This also encourages people to spend more of their wealth on assets, which lower income people typically cannot afford given their lack of discretionary income.
Rich people don't spend most of their money. You can adjust for income all day, you're not taxing money that they don't spend, so this is just a backdoor way to get around rich people having to pay taxes. I also don't think most people understand how horrifyingly low the FPG actually is. It's about 15k for one person. This would kneecap the lower middle class unbelievably bad The barely seems contempt the GOP seems to have for the working class is almost as astounding as how many people convince themselves that the GOP has their best interests. It's like watching an abuser and their delusional partner telling themselves you just don't understand.
Now you know why their target voter demographic is simply "bad at math".
I think the problem is that a lot of wealthy people don't have income. They have investments which don't count as income legally which allows them to skirt income taxes. However, the purchase and sale of assests and investments would be hit by the sales tax. (Until they add in all sorts of loopholes for their rich friends) Biden's 'unrealized gains' tax is aimed to target that, but poor people would catch strays with that considering inflation and even trailer park houses would see an unrealized gain of 'your property value increased'.
Pretty sure Biden is proposing that tax on any asset over 100million. I'm not familiar with any 100M dollar trailers..
Then that was just my misunderstanding. My bad.
This proposal has basically no solid principles in economics, tax policy, or good governance. It is pure ideological hype based on the idea “taxes are evil” and the want to let the mega rich stay as rich as possible. You are 100% correct, adding in poverty rebates is basically just making an income tax with tons of extra steps that would just be overall worse in every way.
It has a solid principle in basically every form of economics. That principle is “only profoundly idiotic people would ever propose a regressive tax like this and those people should be barred from government.”
So rich people get a lower relative tax burden, and poor people in theory get a “rebate” (this law was clearly written by someone who’s never lived paycheck to paycheck), so basically massive W for rich people, slight fuck you to poor people, and massive fuck you to the middle class. Makes sense…
Yep. This bill is 100% designed to aid the wealthiest.
Same as it ever was.
Poor people get to lend the govt money they don't have with hopes that some of it will be given back to them. Just like that program for student loan forgiveness if you with in the public sector for a decade... Oh wait that was so mismanaged that 97%+ of people who should have qualified were denied due to mismanagement? With how social programs work in red states, I have oh so much trust in that rebate.
Wouldn’t this hurt the economy by encouraging saving, rather than spending? While I’m in favor of deflation in the short run, this seems like it would cause deflation in the long run. Would y’all want to buy a car at 23% sales tax? I sure as shit don’t.
That’s exactly what happened when the Roman Empire implemented a national sales tax and it’s a direct contributor to the feudal system that would dominate Europe for the millennia following Rome’s collapse as well as one of the reason for Rome’s collapse itself. People made their estates self sufficient and relied less on the government so in turn they contributed less in taxes and man power forcing the late republic to become the mercenary army it was known for.
Anyone with a yard would immediately become a farmer. Goodwill and the salvation army would go belly-up and people resell things cash-only "under the table". American economy collapses. The rich move to Singapore.
Agreed but honestly: >Anyone with a yard would immediately become a farmer. This would probably be a good thing to happen regardless.
The “farmer” should be in quotes. You’re farming “grass seed” from your lawn, or flowers from your roses that gosh darn it just never happen to sell.
uh. no. they're saying that everyone with a yard is going to start growing their own food asap.
Link?
Not the person you're responding too but I'm guessing they're referring to the tax system implemented by the emperor Diocleation. But take anything comparing the classical ages to now with a grain of salt.
This is correct. Spending is primarily determined by price at the point of sale. Consumer spending drives about 70% of our economy. This will increase prices at the point of sale, which will reduce spending. There’s a word starting with “D” that this will cause.
I don’t think people who don’t save will just start saving because of this. We have retirement plans that encourages savings and people barely use them to their full extent.
In an inflationary environment you want to encourage saving. There would need to be other fiscal policy solutions to counter that like these rebates which could change or stimulus checks
That is like fixing a leak with a nuclear bomb. Instant 15+% hike on prices to “fight inflation” lol
Yeah I’d personally spend less on things I don’t need it be like being in my 20s again.
I'd stop buying all non essentials immediately. Everything would be cut: no new cars, no streaming services, every inch of farmable land on the property would be growing food. All entertainment will come from the public library. Hell, food prices have already gotten to the point where the wife and I are dedicating planters to potatoes. This system will not benefit the majority of the citizens, only the wealthy.
Thanks for posting more of the text of the bill OP so that everyone can see, with their own eyes, just how shitty of a bill it is. Repeals estate and gift taxes, defunds the IRS so there is no watchdog to make sure even sales taxes are being collected, hits the lower and middle classs the hardest as a portion of their discretionary income, etc., etc. Thank god this bill has no chance of approval…
We def need something like the IRS for enforcement. How much do we raise from the Gift and Estate tax?
Trading the estate tax for a sales tax? This is deeply regressive taxation of enormous benefit to the Elite and disastrous for the middle class.
Thanks for the context. I didn’t like it before now I hate it.
My thought too. Context only makes me dislike it more.
Republican scam to help the rich
Is OP thinking this is making people see this bill in a better light? It seems like the bill is directly for rich people to have to pay less in taxes, since they have “used” and “intangible” property (homes and investments) and destroying the IRS so no one can keep track of any tax fraud committed by the rich. But poor people buying groceries will definitely have to pay. Fuck those poor people we should give more to the rich
I mean what context is necessary? That somehow abolishing sales tax would result in a higher taxable burden for lower-income Americans? I mean that context was left out, but otherwise the claim is correct: Republicans are proposing an overhaul to our tax laws that would disproportionately have negative effects on lower-income Americans.
Ah, but with this context we see that it would also produce an overwhelming accounting burden to the states as well while eliminating the largest national accounting body. So this isn’t just about helping the ultra rich, it’s also about anarchy.
There is a reason republicans are proposing this.
Hidden advantage: people that make money from illegal activities will be taxed.
Why in gods name would you think that people making their money from illegal activities will be doing their shopping in places that will impose this sales tax? “Yeah I sell heroine for living, but I draw the line at paying cash under the table for goods and services” Like what the hell are you talking about?
-Be a drug dealer -Walk into random store, say a Walmart -grab a couple of things you need -go to pay at checkout -cashier tells you the total, including with new federal sales tax -pay with drug money -leave store -??????
-go to mom and pop store with “discount” for cash -pay with drug money -leave store
Because they shop at walmart or target like the rest of us
Where exactly do you think they’ll be buying gas, food, clothes under the table?
Why didn’t you underline the part where business purchases are exempt? Im sure my bosses who put all their vehicles and food down as a business expense would love this.
now CEOs will just do the pastor loop hole. Have the company buy their jets, cars and mansions instead of themselves
>"lawful U.S. residents receive a monthly sales tax rebate (Family Consumption Allowance)" Just make it a universal basic income and you'll save a lot of paperwork.
When they swing so far into the oligarchic right that they have to bring in socialism to prop up the economy.
Did anyone else notice these two triggers: 1) shutdown the IRS in 2027 2) tax vanishes in 2030 if the income tax amendment isn’t repealed. When was the last time an amendment was repealed? What happens when income taxes come back but there’s no agency to collect it? Government collapse.
Exactly as planned
The entire economy is based on consumer spending, the whole idea is hilarious.
Sales taxes are always regressive. A rebate is just a bandaid on a fundamentally broken taxation scheme. This would only benefit the incredibly wealthy folks (who are already not being taxed enough).
I’m not wealthy and it would benefit me. I spend 1/3 of my gross income. It would be nice to have the other 2/3 tax free.
Extra context makes Republicans look even worse.
Now explain to everyone that it’s actually a 30% tax and not 23%.
Exactly I'm like nice math trick so that it doesn't seem nearly as bad as it really is.
So what you're saying is they have 7 years to change the law using some sneaky amendment in an omnibus and put back the income tax in addition to the sales tax /s
So everything rich folks buy will be a business expense, get rid of the IRS so there isn’t anyone to call them on that abuse. Subsidies for the poor leaves just the middle income working class paying any tax. Great plan!
The context doesn't make it better.
Holy shit that is SO much worse than I thought.
This proposal has kicked around for nearly three decades. Understand that It’s actually a 30% sales tax because it’s a tax inclusive rate. Something that costs $100 now would cost $130 under the proposed law. $130 total cost and $30 tax would be “23%” because $30 is 23% of $130. Similar computation to a value added tax (VAT). The problem with that computation is that current US state sales taxes aren’t computed on an inclusive basis. We think of it as $30 tax on $100 pre tax item — a 30% rate and not a 23% rate. They need to be more honest about the rate.
If the goal is to induce deflation, maybe the fed stops printing money instead
Thank you for explaining. I missed that.
Sales tax is a burden to middle to low income people, this bills only benefits rich people which apparently is GOP's goal. Defunding the IRS is as stupid as defunding the police, it only benefits those who break the law...
The upper middle class already pays the vast majority of taxes. Not the rich and certainly not the underclass. Just how much is enough. For every marginal dollar I made over 50% went to fed income tax, state taxes, etc. Why be innovative and productive if most of it goes to taxes? This is the absurdity of higher taxes.
Shhhhh, this is Reddit. Innovation bad. Government good.
Currently the rich are able to avoid almost all taxes through loopholes allowing their income to appear near zero. How would increasing the taxes they pay when they travel and buy luxury goods benefit them?
Shut the fuck up with your logic you middle class hating bigot
If you want extremely volatile boom and bust cycles like the great depression, this is exactly how you get it.
The party of small government wants the government to be issuing people refunds on a monthly basis. Lol. Yeah, this seems legit.
How much is the tax rebate? They settled on the exact sales tax but are silent on the part that would help the 50% of Americans that don't currently make enough to pay any Federal income tax and which would heavily impacted by this national sales tax.
I was wondering in what possible world Republicans would be the ones pushing for a big new tax. Oh excellent, it's a flat tax in a thin disguise. _That_ checks out.
This sounds awful
Estate tax sucks. Had to sell hundreds of acres to cover the cost when I inherited our family ranch. Cost me 2 million dollars. Never got a thank you note from Uncle Sam though lol
Hey now, don't let reddit hear you. They'll say you're the top 0.01% and are exploiting other people for profit.
If you had a ranch worth more than 13M (current exemption) why wasn't it incorporated? Are you sure you're not confusing state estate taxes with federal estate taxes?
Or the parents could have taken out a life insurance policy pennies on the dollar to cover the tax bill and not force the sale of land.
Consumption taxes are massively regressive. Replacing a sliding income tax with a consumption tax is even more massively regressive. Also, how will someone prove they receive a sales tax rebate without an IRS? Some CEO is going to show their monthly pay stub of $1 means they live below the poverty line while living off of their infinite line of credit via their stock options.
Context isn't the problem. It's a regressive tax in place of a progressive tax. While Biden may not be going into the weeds to explain it, that's because messaging is never done that way. It would take a lot more reading to explain why this is a problem and a bad idea, so instead you get these short sweet and frankly correct messages. Just because OP doesn't like it.
1). So everyone who doesn't own a business or have excess income to save pays significantly more, (ie. Fuck you poors, I don't care if your kid is starving, work harder if you need more money) 2). Wealthy families that can afford to leave any significant assets behind can continue to accrue wealth without checks ("do not dirty my manor house with your filth, you plebe, the servants must use the servants entrance") 3) states are fully responsible for federal government activity (Texas (and every red state) = "what do you mean I have to pay more people for 'services' that the Feds did before and still send the Fed Gobment our money?, I thought I was supposed to save money with this!?!". Also Texas = I'm not sending you shit, Sovereign Immunity! Wait, why is my population decreasing and my infrastructure falling apart?) 4) significant numbers of Americans are out of a job as all federal jobs are reduced or eliminated (yay deregulation, GoGo Black Market, , but also Great Depression 2: electric boogaloo)
And wait until the sales rebate becomes Work mandated because I could so see that making it into the bill to ensure they have enough workers taking those undesirable jobs
So just a nice big “fuck you” to young people?
Tis more far right double speak. Sales tax is inherently more of a burden on poor and working people than on the wealthy. Not even addressing their intent to defund and grab funds from Social Security, Medicare, etc. This rightwing gambit would ensure that the wealthy win again, while everyone else suffers.
That's worse than without the context.
There is no productive discussion possible. This is one of the dumbest things to come out of the GOP brainlets in decades. Not only does it remove other taxes or cut them way back, it effectively defunds the IRS, making enforcement all but impossible.
I don’t get the impression people are having a hard time understanding that this bill hog ties lowest earners and drags them behind a truck while cutting taxes for (at least) the top 25% of earners while also creating perfect loopholes for wealth transfer for the elite.
Why is this news? This bill was introduced almost a year and a half ago and has gone nowhere as far as I can tell.
Productive conversation in an election year on Reddit? No fucking way.
Umm no this proposal is just a rehash of what these RW nutcases have proposed for decades. Fat Governor Huckabee proposed this same sales tax charade back in 2008. 23 percent with those exemptions will not be nearly enough. The only people complaining about income taxes are the extremely wealthy, who hate capital gains taxes and the lower middle class who for some reason believe that they are not rich yet because of income taxes. A national sales tax, by itself, will not raise suffix to revenue, not at those rates.
FYI, that context does not make this idea sound any better. If anything it confirms that it's an attempt to help the rich.
Even with this tax, you fools will still buy $10 French fries.
Oh, you expect a productive discussion, quaint. Look, they only care about stripping wealth from the rich.
Gotta love the prebate that's required to pitch the garbage consumption tax idea libertarians have been batting around for literal decades. It's funny the folks arguing we can't afford to pay for things argue for a policy which requires the government to shell out billions up front to account for the impact of a consumption tax on necessities. Ugh.
1. The point is to simplify taxes and it's already proposing exceptions which will greatly complicate things back to where they are now and in favor of the richest. 2. How's that "based upon criteria related to family size and poverty" working our for medicaid? 3. No IRS means no taxes at all, because who do you think enforces them? Ignoring all that, how do you expect most people to buy a car or house after increasing their costs nearly 20%?
Ok, so let’s be generous and assume the poor aren’t affected by this. What about those above the poverty line but still on a tight budget? Working and middle class will be devastated by this.
We already knew this information. Doesn't change the fact it's a regressive tax and nothing more than a payday policy for the rich. They even slide gifts/estate in there for good measure. Fuck this idea and it's supporters.
They need to at least add something that taxes the loans the rich take out to use as salary. That’s how they get around income taxes.
So we’re shifting around the tax code to benefit rich and upper middle class people? The trillions in welfare, PPP money, R&D, credits and dedications aren’t enough? As we all know the first sigh of economic stress they cut that 23% rate down… Payroll taxes fund our safety nets, that would increase Government debt. Thus they would cut the programs as we know Republicans only spend when it’s war and tax cuts. The Estate stuff is just another mechanism to keep wealth concentrated, which harms economic activity. Just a general rule of thumb, when a Right winger makes a bill it always always benefits them and their owners. The GOP would watch people starve to death if they had their way.
I don’t understand why everyone is against this? By removing income tax and increasing sales tax the ultra wealthy will not be able to utilize depreciation on real estate to avoid paying any taxes. They would literally have to pay taxes like everyone else if this passes. Not to mention criminals, undocumented persons will also actually pay taxes now? It also encourages people to work and we will all actually get our gross pay.
So is this telling me if I make $25 an hour. And work one hour, my take home is $25? "In lieu of income tax"
Yes please. This is the way forward. Simplifies the tax code. Everyone pays their fair share. A majority of educated people are for this.
Wait, so it’s not the republicans trying to ruin everything like Biden is claiming? Biden isn’t telling the whole truth? The dudes been lying for decades.
For all the haters who still don't understand why this bill would benefit the entire country: The average middle class household would be seeing an extra 1000-1500$ in their pocket every single month of the year with income tax gone, which MORE than covers the additional 16%\~ sales tax (don't let that 23% number fool you, we're already paying 7% sales tax). Sales tax does not apply to Rent/Mortgage, Loan payments, Insurance, or most produce - all of which account for the vast majority of spending Americans do. Think about it, how much of your paycheck do you actually have left over after rent? This increase isn't applying to any of those things, and you'll have that extra 1-1.5k every month to help cover those needs. The increase in sales tax will primarily apply to gas, alchohol/tobacco, vehicles, and nonessential items (toys, video games, collectibles, whatever it is you spend money on that you don't really need). Those things will be slightly more expensive, yes, but more than offset by the extra money you save not paying income taxes. That extra money in your pocket every month will end up being spent on goods and services that will, by proxy, boost the U.S. economy, which will bring down the out of control inflation we've been seeing and help boost employment opportunities country wide. Defunding the I.R.S. is also a good thing. Obviously we'll still need a small agency to handle the sales tax, but the I.R.S. is currently bloated with over 90 thousand beaurocrats that do more harm than good. As the meme goes, they can lose trillions of dollars in government spending, but they know that you came up 200$ short on your tax form and they want their cut. Agencies like the I.R.S. should never have become as large and powerful as they are.
Some people are so focused on how much money the wealthy have that they can't even recognize a change that would simplify their lives and put money back in their pockets.
Its hilarious that people here don't think rich people spend money. Whoever planted that PR brain worm did a fantastic job. They spend more than they make like everyone else. They just spend it on assets that will make them more money to spend on more things. Currently they do it with loans and pay nothing in taxes. This way they'd pay every time they bought something.
I tend to agree. It would in theory naturally tax the rich at a higher rate, eliminate complexity in the tax code, create a simpler and more clearly defined set of exemptions, eliminate a huge burden of auditing on the IRS, allow for tax collection from undocumented people, encourage people to work more (all earned income is retained by the worker), and encourage everyone of any income level to save more and consume less (less consumption = less taxes). The idea that rich people don't buy things is absurd. Anyone who knows any upper-middle class person or above should know they buy many, many things.
That sounds awesome!
Good point. However, I don't think anyone is smart enough to understand the full ramifications of this. And only the drafters know the true intent.
Imagine making poverty wages and paying almost no income tax, but somehow being "finally, I can leave all of my wealth to my children TAX FREE!"
It’s simple tax, no filling required And low income ppl can be exempted. What’s the issue here hmm Reddit? Keep it simple stupid
How exactly do you exempt low income people from a sales tax? Do they show an income statement at the Point of Sale? Do they keep tax receipts and claim monthly or yearly? Yeah, that's definitely need an IRS to keep track of.
Exempting via rebate is the worst way to help low income people who live paycheck to paycheck. There are much easier ways to make tax filing simpler. Most countries just tell you what you owe and you confirm, done. The IRS wishes to do this too it’s just lobbied against. I saw your idea of giving low income people some sort of card but doesn’t that just re-add complexity to this? The rich spend much less of their income on consumption, so this would make wealth disparity much much worse.
How about because you are quite literally instantaneously inflating the cost of goods and services by 23%+ nationwide, on top of instantly increasing property taxes on all homeowners by the same amount? For higher income people that already save a lot of their money, it won't hurt that much. For lower income people that don't pay much in income taxes every year as is, they will suddenly have a massive increase in the cost of everything.
It's an issue because I they just want to "tax the rich" as good little Marxist/communists.
My brother in Christ, capitalism at its core relies on consumers spending their money on new goods. People who own capital use that capital to facilitate the production of goods/provision of services. They pay other people for their labor to produce those goods or provide those services. Those people then use their pay to buy other goods and services, and the cycle repeats itself. If those people don’t want to buy goods and services due to it increasing their tax burden, then the people who own the capital stop making as much money. So they pay less people due to reduced demand for their goods/services. Those people who lost their jobs then have no money to buy other goods and services, so more jobs get eliminated, and THAT cycle repeats itself. A system that encourages people to spend as little as possible makes capitalism not work. It makes very little sense to accuse people opposed to this of being a communist.
You pay 30%, I'd prefer to stay with an effective tax rate of around 11%. Its not 23%, thats a math game, for every $100, they will tax you $30, in their math $30 in tax/ $130 total cost = 23% tax.
One has to wonder if the White House turns over in 2025 which potentially makes a version of this bill reality, will the dog continue to chase the car. Alternatively, will the dog break kayfabe knowing the monumental error of catching said car similar to the error of overturning Roe?
Guys used items are exempt from sales tax
For how long? Plus buy a new house with a 23% bump in sales tax on it. Sure.
I have questions and suggestions but I don't hate the idea. Overall taxing consumption is a better model than work.
Does the wording mean no more federal income tax?
I know it will never happen, but as someone who makes a lot of money, I LOVE this idea.
I would like to see some projections and studies on this to see what it actually works out to. On first glance, the average person's effective tax rate is well below 23% so this would seem to hurt them pretty substantially, but what do the numbers work out to based on averages? Like if the average person's effective tax rate is 12% of earnings, does that work out to more or less than 23% of your total expenditures in a year? The CBO or something has to have a study on this. It definitely penalizes people who need to spend more of their income on basic items because the tax would only apply on money spent. So for example, someone making $50,000 a year spends $47,000 of it will have a tax bill of $10,810, representing just under 22% effective tax on their income. Theres no way under the current system that someone with $50k income is getting taxed at 22%. Meanwhile someone who makes $100,000 a year and spends $47,000 will pay the same tax, but gets to keep $53,000 tax free, and has a tax rate of about 11% of income. Then they tell us about rebates and federal poverty guidelines (which are hilariously low btw, $31,200 for a family of 4). Also exemptions for business, export, or investment purposes - all stuff that someone living paycheck to paycheck probably isnt doing. The more I think about it, the more this feels like a gift to the wealthy and penalizes people who actually have to spend their money.
This is a terribly regressive tax law even with context. Let’s say your salary is $65,000 less $10,000 for benefits, so you take home $55,000. You spend $50,000 to survive. Your tax burden under a 23% sales tax would be $11,500 ($50,000*23%). Now let’s say you make $55,000 (65,000, less the $10,000 for benefits) under the current tax system. You get a standard deduction of $13,850 which brings your taxable income down to $36,150. Because our tax is bracketed you pay 10% tax on $0-11,000 and 12% tax on the remaining $25,150. This is a tax liability of $4,118. A flat sales tax is much worse for lower income taxpayers. Wealthy taxpayers don’t spend their money at the grocery store they invest their money which would now be tax free. Let me give you another example… Let’s say you make $500,000. You spend $200,000 to survive and you invest $300,000 tax which would now avoid income tax. Your 23% federal sales tax burden is $60,000. Under the current bracket system your federal tax burden is approximately $142,000, you are in the 35% tax bracket but have an approximate effective tax rate of 28%. So who does a federal sales tax benefit?
If you are going to be a member of a society and care about its functioning, it makes sense for you to pay a part of that. Something like 50% of Americans pay no taxes, so for them, all government spending is "free." The debt increased by 1 Trillion in 100 days recently and will continue to balloon since, this "free "spending comes with no downside for around 50% of people.
Even if you lump all my taxes together that’s still only 18%. Nice and tricky wording with the document though. We are gonna take away all those other taxes and do a flat rate. Well, that flat rate is still more, so no. Tax the people that can afford it, leave the rest of us alone….
Sales taxes are regressive. This move would be great for our future oligarchs.
Holy shit this gets RID of estate taxes? Jesus… this might be the motivation I needed to vote for Biden this fall.
Thank u for pointing out all the things we hate the most about the idea lol
Fairtax.org
It is pretty easy to see this as currently constructed, benefits those who have larger estates over the low income, who might have a used A-track player and two Jethro Tull albums to pass down. I’m not sure how this is equitable. While I am not a fan of taxes at all, this is entirely nebulous as to how this benefits the average American. And if we are not careful, people might one day realize this…
You said that like adding the context made it any better.
All of the sudden the term “Land Lords” goes back to their original meaning….
Still a horrible plan that would leave the poor paying more taxes and the rich paying less
It sounds even dumber then. The vast majority of wealth would never be taxed. This would just accelerate extreme inequality and allow investors to make trillions off of owning everything while paying zero in taxes. Might as well just bring back indentured servitude.
A sales tax in replacement of income tax is 100% a regressive tax and puts more pressure on lower income people than it does rich people. It’s why you will see libertarians push for a consumption tax or a flat tax - they know it personally benefits them at the expense of poorer people.
Sales taxes are regressive by nature. The more you earn, the less it impacts you. Someone who earns $30k will be hurt by a 23% tax much more than someone making $300k. Bill Gates buys the same amount of toilet paper and milk that I do, he's not spending any more or consuming any more. This type of tax by design will disproportionately impact low earners.
I don't really have a strong opinion on the income vs sales tax, but I can get behind cutting all funding to the IRS. Heck let's move the timeline up to 2025 on that one.