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The Road To Washington Businesses will collect the taxes and send them to the state. The state then sends the money to Washington. States will be able to keep a percentage of what they collect to compensate them for their service. In addition, all retail businesses will be able to keep a percentage of collections to offset their paperwork costs. Unless we pay the states to do it, we will have to recreate a huge, duplicative bureaucracy here in Washington to do it. We don't need another IRS.
None of Their Business Under any tax system -- income or consumption -- businesses do not pay taxes. Businesses only collect taxes for the government in the form of higher prices or lower wages. Business taxes and compliance costs are simply costs of doing business that are reflected in their bottom line. Under any tax system, only consumers pay taxes. But consumers have no one else to whom they can pass the cost of the tax along. So, if businesses only collect taxes, and only consumers pay them, we should set up our tax system to reflect that economic reality. By eliminating the business taxes and compliance costs hidden in the price of every good or service and exposing those burdens in a single, flat sales tax rate that consumers pay, the NRST creates the simplest and most economically efficient system yet proposed.
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No Double Duty The purchase of used property is taxable. However, an important rule of the NRST is that the government only gets to tax something once. The seller of the used property gets a credit for the un-consumed value of the used item. A couple of examples to help clarify: - A person buys a $10,000 car. Assume a 10 percent NRST rate, making the tax due on the car equal to $1,000. If the taxpayer sells the car for $7,500 a year later, the new buyer will pay a tax of $750. Because the original owner only "consumed" $2,500 of the value of the car, he will get a credit for the "un-consumed" portion, or $750, which can be applied to a new car. Therefore, the government does not get to tax that same vehicle over and over again. - This also applies to appreciating assets. Assume a person buys a $100,000 home. A tax of $10,000 will be paid over the life of the mortgage. If the owner later sells the home for $125,000, he will receive a credit for $10,000 that can be applied to his new home. While we're talking houses, mortgage payments would be taxed, but only the principle. Interest payments are not consumption, they can not be taxed. |
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