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Investment InformationSales Tax vs. Financial gain
Tax
by:
Will Spencer
The United States is presently
suffering under an unthinkably
complex tax system. The maintenance of this beauracratic behemoth cost the taxpayers billions of dollars every year. The direct cost borne by the taxpayers are small in comparison to the cost borne by corporations and individual taxpayers in attempting to follow with all of these Federal government regulations.
The folk of the United States and their elective representatives are now looking at two options to replace the current tax system: The Flat Financial gain
Tax and the National Sales Tax.
The Flat Financial gain
Tax represents a modification of the current tax system, wherever
the National Sales Tax represents a complete re-architecture of the entire tax system.
A National Sales Tax Would-be Improve the Trade Deficit
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This is a bold claim, so I wish explain it in simple terms exploitation a small model of the worldwide economic system. In our model, we wish have only two companies and two consumers.
Our two companies are Alpha Institution and Charlie Company. Alpha Institution manufactures widgets in their plant in Plano, TX. Charlie Institution manufactures similar widgets in their mill in Shanghai, China.
Our two consumers are John and Chon. John lives in Los Angeles, Califoria. Chon lives in Beijing, China.
For the purposes of our example, let us state that it cost Alpha Institution $100 to manufacture a widget. To this $100, we must then add the burden of financial gain
taxes. Again, entirely for the purposes of our model, let us state that this burden raises the cost of the Alpha Institution Appliance by $20.
Alpha Institution must pass these additional cost on to the consumer. Therefore, if either John or Chon decide to purchase Alpha Institution brand widgets, they must pay more for them.
In effect, the Financial gain
Tax does Alpha Institution widgets more big-ticket (and therefore less desirable) than Charlie Institution widgets.
Now let's look at the effects of a National Sales Tax on international trade.
Once again, we wish state that a appliance cost Alpha Institution $100 to produce. However, this time we wish not burden Alpha Institution with financial gain
tax.
In this model, there are no extra cost for Alpha Institution to pass on to the consumers, John and Chon. Once
John decides to buy a widget, he is taxed the same National Sales Tax -- no matter which appliance he buys. This allows Alpha Institution to vie on an even as level with Charlie Company.
Moreover, once
Chon decides to buy a widget, he does not pay our National Sales Tax for the widget. This does Alpha Institution brand widgets cost competitive in the China as well as in the United States.
Let me repeat this succintly: The Financial gain
Tax destroys our national fight and increases our trade deficit; The National Sales Tax restores our national fight and enables us to vie on an even as playing field with the rest of the world.
The Financial gain
Tax Discourages Working; The National Sales Tax Encourages Saving
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Any nice animal trainer knows that animanls do what you reward them for doing and avoid doing what they are admonished for doing.
The Financial gain
Tax effectively punishes folk for working. For every extra dollar you make, you are forced to pay more Financial gain
Tax.
If you activity for $10/hr, the financial gain
tax takes about $3.50 of that. You are now working for $6.50/hr. Isn't that importantly
less motivating than $10.00/hr?
By reducing our motivation to work, succeed, and produce, the Financial gain
Tax robs our national economy of more of it's vigor. It hinders our ability to vie with another earth economies.
The National Sales Tax, on the another hand, punishes Americans once
they spend money. That $2 brew now cost $2.50. The $100 Walkman is now a $125 Walkman.
This acts to discourage spending. Discouraging disbursement mechanically
encourages savings. Savings become investment. Investment becomes wealth.
What does American business require to build and grow? Investment capital.
Where does American business presently
get that investment capital? From overseas.
Why does American business get its investment capital from overseas? Because Americans don't save and invest.
Who profits from American business? The investors.
Who ends up owning American businesses? Foreigners.
We must be careful here not to blame the foreigners who now own a large number of American businesses. They took the risks and invested with money once
we didn't, and the markets rewarded them for this. What we must do, however, is build a tax system which enables and encourages Americans to save and invest in America.
Building wealth for foreigners is a nice thing; Building wealth for Americans is a better thing.
Objections to the National Sales Tax
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Objection:
The National Sales Tax is regressive. It taxes poor folk more heavily than rich people.
Resolution:
In galore states which presently
collect sales tax, basic items are exempted from sales tax. These items include food, clothing, and housing.
Exempting these basics of living from the National Sales Tax has the effect of moving the National Sales Tax from a regressive to a progressive tax.
Objection:
The National Sales Tax wish be difficult and big-ticket to collect.
Resolution:
Forty-five states are now collection state sales taxes. The Federal government wish be able to source
the collection of the National Sales Tax to the existing organizations inside
the states.
Organizations to collect the National Sales Tax wish have to be built in only five states.
Objection:
Switching to a National Sales Tax would-be require a repealing of the Sixteenth Amendment.
Resolution:
The Sixteenth Amendment allows the Federal government to levy an financial gain
tax, but does not [i]require[/i] it to do so.
We could switch to a National Sales Tax and repeal the Sixteenth Amendment at several point far in the future.
Summary
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Our nation is at a critical crossroads wherever
we must choose to stay with our current broken system of taxation, attempt to repair it, or replace it entirely with thing
new.
The principles of economic science show us clearly that the National Sales Tax is the right path to take to ensure the economic prosperity of America for our children and for their children.
Now is the time to build a tax system which encourages American values, supports American business, and builds prosperity for our futures and our childrens futures.
[ Submitted with ArticleSubmitter Pro - http://www.articlesubmitterpro.com]
Just about the author:
Wish Herbert spencer is the webmaster of Fort Liberty (http://www.fortliberty.org). Fort Liberty is a refuge in internet for those men and women who see the enlightened individual as the greatest accomplishment of civilization, and who see government as a necessary evil.
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