You know, I have heard from some republicans that Bush wanted to implement a program that would remoev income tax, and the tax you would pay would be only on things you buy.

http://www.fairtax.org/

http://boortz.com/nuze/200408/08032004.html

Now, seems fine and dandy, but I only have these to say.

1) the plan calls for the retail tax to be 24%, now being canadian with the GST (7%) it is a pain in the ass jsut to add that much to it. For example:
I buy a 100 000 dollar car, now the car will cost 107 000 in canada. BUT the us plan will cause it to go from 100 000 to 124 000. A bit much, believe me 7% is a big enough pain but 24% is insane.

2) The reason (although the average canadian HATED GST) we got GST here was to put less strain on the busniesses who had to pay major taxes on their work. So, now this tax may help businesses, ahead of people? Is this a possiblity?

Bush likes this because the rich spend less on taxable items than the poor. Almost everything the poor people buy would be taxable. So the poorer you are, the larger your tax burden.

Would this be on top of the state tax? And if so, would it be cumulative (ie, 24% of the total after the 5%?)

A national sales tax would be a good idea only if it werent a replacment but if it were used as a supplement, you slightly lower the income tax and put a small tax rate. A national sales tax. would cause the lack of spending and the oversaving that occurs in Europe. Mixed system maybe, but as a reaplcement, a pure consumption tax system would not be a good thing for our country.

Yeah, It always struck me as a sure recipe for a depression. Why would you want to discourage people from consuming in a consumer based economy? How is saving on not paying taxes on the stock you own in a company going to make money when the company goes under from not selling anything? I'm the confused one here...

Hmm, I hadn't thought of that, but I thought the problem with Americans is that they save too little. So maybe a smallish sales tax complimented by a reduction in income taxes would help rectify that.

But I feel the need to distinguish between payroll and income taxes. When the politicians say "income tax" they mean the "income tax". Not including the payroll (social security and medicare) taxes. Most people don't realize that. Hey, I didn't, not until recently.

So if the wipe out the income tax and put in a sales tax to replace it, while keeping the payroll taxes, the beneficiaries would indeed be the rich.

This is an awful idea. Sales taxes are regressive: they hit the poor far harder than the rich. Income taxes are progressive: the rich pay a higher rate than the poor.

Sales taxes are good for discouraging spending(and encouraging savings, which is a good thing), but using them to replace income taxes would put a much larger tax burden on the poor.

Sales taxes are a classic tax on the poor. It helps, if you have such a tax, to exempt certain stuff (in Britain food, childrens clothes and I think books are exempt) but even so Bush's plan seems to be a case of rob the poor and feed to rich.

I just assure myself that this will never get pass the Senate and hopefully not the House either.

Oh, it'll pass the House. It'll probably pass the Senate, too; in the classic Republican "put it in some unrelated but large bill in conference, and try to rush it through a vote in the Senate before anyone can read it" style.

Why do you think every Republican Congresscritter chose to break into their winter holiday, to vote in person to remove the `Republicans get unlimited access to IRS records' clause in the omnibus spending bill? It was because the Democrats said they wouldn't let the GOP do it by proxy unless the GOP agreed to wait 48 hours between handing over a bill to the houses and actually voting on it. The GOP couldn't have that; 48 hours is long enough for someone to actually read the bills, and publicize whatever they find. So back to Washington they all went.

PS, it's not a Bush idea, its a cabinet idea, meaning that one of his party members though ti up. Don't think Bush is smart enough for that.

I don't think books are VAT exempt - and when you say children's clothes you mean clothes under a certain size. I was a very tall child, and so had to pay tax on my clothes, while very small adults can get away with cheaper clothes.

Bit irrelevant, but a source of major irritation for me.

A national sales tax is....misguided.

WHY would anyone think it's a good idea to give people a disincentive for consumption? With a national sales tax, people will be given an incentive to buy their goods foreign instead of domestic. This is...dumb. Just, dumb. Not only will people save more and spend less, that money they do spend will go to foreign goods.

Also, taxing everybody the same percentage is fundamentally unequal. Because every next dollar you make is worth less than the last dollar you made. Money has diminishing marginal gain. 24% of poor people's money helps them a lot more than 24% of rich people's money. That's why progressive income tax is actually a way to tax everbody fairly. A rich person would get about the same amount of value from 35% of their income as a poor person would get from 15%.

A national sales tax would probably apply to all goods purchased in the country, not just domestic goods. Also, here in Canada, if you go to a foreign country and purchase things, some of it will be subject to the GST(our national sales tax). The amount that's exempted from the GST depends on how long you spend outside of the country.

One of the major points of a sales tax is to be a disincentive to consumption. Decreasing consumption means an increase in savings. Savings leads to investment, and investment causes an increase in the rate of expansion of the economy

good point.