2/1/2005
If I had a hammer
There are several posts at here about the Fairtax. Click here, here, here and here for background.
Here’s my question, The NRST is reality. I buy a $10 hammer. At the bottom of my receipt I see that state sales tax of 6.5% is added to the cost of the hammer. I’ve just shelled out $10.65. Under the NRST, ceteris paribus, would I see $2.30 or $3 at the bottom? Will I pay $12.95 or $13.65 total?
Nate
Florida
Dear Nate:
If your sales tax today is 6.5 %, then the receipt for that $10 hammer reads $10.00 + $0.65 sales tax = $10.65 total. After the NRST goes into effect & the manufacturer of the hammer removes the hidden 22% corporate Income Tax, the Social Security “contributions, any excise taxes, “compliance costs,” etc., the hammer should be priced below $7.50.
When the manufacturer sells that hammer to the retailer, the price won’t have any of those hidden taxes in it. Assume the new retail price is exactly $7.50. The new sales tax rate will be 23 + 6.5 = 29.5%, so the receipt will read $7.50 + $2.21 sales tax = $9.71 total. The cost to you for that hammer will probably go down somewhat. Considering that your paycheck will have grown by “half,” that purchase should look like a pretty good deal.
The cost of government will be graphically shown every time you buy something. Everything will be out in the open & above board. That will induce citizens to keep the pressure on to make Uncle Sam become – dare I say it? – “frugal” & make it difficult for Congress to raise the rate.
Pete
Illinois
Cross Posted to the Wide Awakes
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The Wide Awakes linked with The Fairtax Blogburst–come one, come all!
The Wide Awakes linked with If I had a hammer
February 1st, 2005 at 5:38 am
If I had a hammer
There are several posts at Cao’s blog about the Fairtax. Click here, here, here and here for background.
Here’s my question, The NRST is reality. I buy a $10 hammer. At the bottom of my receipt I see that state sales tax of 6.5% is added to the…
February 1st, 2005 at 8:27 am
The toughest part about achieving that fair tax dream is going to be the transition. If I’m selling hammers for $10 now and suddenly the government says, “okay, all your previous tax burdens are gone, now charge a fair price for your hammer under the new rules.” Most people will act like the oil cartels and wait to see what the other guy does with the price of his hammer (i.e. — comparable goods and services) before he lowers his price.
However, having said that, the people who understand their personal math the fastest will benefit the greatest in the long run because they will have the benefit of repeat customers at the lower price. (i.e. - greed kills)
Uncle Jack
February 10th, 2005 at 9:12 pm
Can anyone help push me in the right direction to start my own blog?
February 10th, 2005 at 9:21 pm
The free market would take care of anybody who would raise the price on a hammer. They would lose sales! People have lost site of what the free market produces, lol…the Fairtax would bring that into play.
Plus, we would clearly see what we are spending in terms of taxes and people would be able to better control what they throw at the government–because they would SEE it. It would no longer be concealed.
February 10th, 2005 at 9:24 pm
I agree with Raven, contact Lisa at Elegant Webscapes to start your own blog. If you want, you can just start one at blospot. I would not suggest you try starting one at tblog.
Blospot is free, you have some templates to chose from, and then if you want to get fancy, Lisa can help you with a design–and even getting hosted for your own domain.
February 19th, 2006 at 5:36 pm
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