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[MRB]

I don't know what to think of this 999 tax thing. Kind of sounds like a flat tax, which would work, but also sounds like a federal sales tax which is bad. Don't know which way to go here. No empirical data on how it exactly works.

[oldognewtrick]

...But the payroll tax will be eliminated.

[MRB]

Is that just the FICA deduction or the state as well. Also what about the matching deductions of Social Security and Medical taxes withheld? And another thing; What about workmans comp. Will it be reformed? Too many questions.

[rivalarrival]

Originally Posted by Eddie_T

Drug dealers don't pay income tax but if they purchase any legal consumer goods or materials they will pay the sales tax. I think we must be talking about apples and oranges here as the drugs I am speaking of are never sold in a drug store.

1. Drug BUYERS pay income tax on their earnings. The money they use to make their purchases has already been taxed under an income tax plan. Under a sales tax plan, it has not been taxed yet.

2. The purveyors of legitimate products and services pay income tax on their earnings, even if they are purchased by a drug dealer.

3. Drug DEALERS neither collect sales tax nor pay income tax.

4. As they are untaxed under Hermie's 999 plan, the price of illegal drugs (like heroin or cocaine) drops relative to the price of any legitimate, taxed product, including legal drugs like alcohol or tobacco.

5. This same concept makes theft MORE PROFITABLE under sales tax plan than it does under an income tax plan.

No, sales tax DOES NOT tax criminal behavior. Whether the consumer purchases the legitimate goods directly, or he purchases drugs and the drug dealer purchases the legitimate goods, the total tax collected is the same. NO ADDITIONAL TAX IS LEVIED ON THE CRIMINAL ACTIVITY WITH EITHER SALES TAX OR INCOME TAX. This is a blatant falsehood. It is a lie, one I originally heard propagated by advocates of the so-called "FairTax". It was a lie when they said it, it is a lie when it is repeated about any sort of sales tax.

The ACTUAL EFFECT of a sales tax is to make theft more profitable, and to decrease the cost of illegal drugs relative to legitimate products.

[Eddie_T]

Al Capone paid little income tax if any. If federal sales tax had been in effect he would have paid it on all his legitimate purchases of consumer goods.

[rivalarrival]

Originally Posted by Eddie_T

Al Capone paid little income tax if any. If federal sales tax had been in effect he would have paid it on all his legitimate purchases of consumer goods.

Al Capone didn't pay income tax, and went down on income tax avoidance. With sales tax, he wouldn't have. Prosecutors were unable to pin Capone's illegal business activities on him, but they were able to prove he had a ton of money and hadn't paid income taxes on any of it.

With a sales tax, prosecutors would have had to have proven the business he was engaged in beyond a reasonable doubt. As Cain (and FairTax advocates) have stated, sales tax only applies to new items, not used. In other words, there are perfectly legitimate means under which one may acquire tax-free money. That is "reasonable doubt"

Capone went down on Income Tax avoidance. He would not have gone down on Sales Tax avoidance.

FURTHERMORE, the money Capone had coming in was already taxed before he received it, and the businesses that sold him legitimate products paid income taxes on the sales. Capone wouldn't have collected sales tax any more than he paid income tax. His illegal business dealings were untaxed in either case. Sales Tax DOES NOT collect any additional revenue from illegal business.


Also, you commented awhile back that a member of the 47% wouldn't have paid income tax, so if he bought drugs, his money would have been untaxed. I don't think this applies to Cain's plan, but FairTax has a prebate system, where every taxpayer in the nation is paid a certain amount to cover the taxes on basic living expenses. The 47% STILL wouldn't pay any net sales tax under such a system. Their money would effectively be untaxed whether under income tax or "FairTax".

[Eddie_T]

I am not talking about the fair tax, with 999 drug pushers will have to pay the tax on all legitimate consumer goods they purchase. To go a step further, even home brewed meth labs would have to pay it on their raw materials used to produce the meth as well as their consumer goods. If any loopholes are provided the criminal element and the freeloaders will be the first to step through just as they do with the present system.

[rivalarrival]

Originally Posted by Eddie_T

I am not talking about the fair tax, with 999 drug pushers will have to pay the tax on all legitimate consumer goods they purchase. To go a step further, even home brewed meth labs would have to pay it on their raw materials used to produce the meth as well as their consumer goods.

Where did they get the money to purchase the supplies for meth? Ultimately, from legitimate sources, where it was subject to income tax. The supplies they purchase then count as income to the purveyor, who also pays income tax. The criminal activity is already taxed as much as it would be under a sales tax, you are wrong.

REPETITION DOES NOT IMPLY VALIDITY. Repeating the same flawed argument over and over again does not make it any more valid. I've clearly demonstrated how the idea of sales tax in general does NOT create an additional tax on criminal activity. I've clearly demonstrated how a sales tax makes criminal activity MORE PROFITABLE.

The only counterpoint you've brought up is the case where the drug buyer is a member of the 47% who don't pay income taxes. I've touched on the "FairTax" fallacy, but let's hit Cain's head on: The sales tax portion of Cain's plan is regressive. It will increase taxes on the bottom 47%. Whether a drug dealer or a legitimate worker/consumer, taxes collected will increase. So yes, sure, you're increasing the taxes that criminal pays. YOU'RE ALSO INCREASING THE TAXES THAT EVERYONE IN THE 47% PAYS. That's NOT increased taxation on criminal activity, that's an increased tax on being poor. (Incidentally, it's not just the 47% whose taxes will increase, but the bottom 95% to 99%)

[Eddie_T]

Originally Posted by rivalarrival

Where did they get the money to purchase the supplies for meth? Ultimately, from legitimate sources, where it was subject to income tax. The supplies they purchase then count as income to the purveyor, who also pays income tax. The criminal activity is already taxed as much as it would be under a sales tax, you are wrong.

You are tying to muddy the waters. What makes you think a manufacturer of meth gets any legitimate income? The income tax of others has nothing to do with the meth lab, but the meth manufacturer wants that money to spend and that's where it will hit the tax system.

[rivalarrival]

Originally Posted by Eddie_T

You are tying to muddy the waters. What makes you think a manufacturer of meth gets any legitimate income? The income tax of others has nothing to do with the meth lab, but the meth manufacturer wants that money to spend and that's where it will hit the tax system.

Adam has a legitimate job, he's a contractor, he pays his own income taxes.
Bob is a drug dealer.
Charlie provides a generic service. For simplicity sake, he has no expenses, every cent he brings in is pure profit.

Scenario 1.
Adam collects his $1000 paycheck. He spends $200 on income taxes. He purchases $800 worth of services from Charlie. Charlie pays $160 in income taxes.

Scenario 2.
Adam collects his $1000 paycheck. He spends $200 on income taxes. He purchases $800 worth of drugs from Bob. Bob purchases $800 worth of services from Charlie. Charlie pays $160 in income taxes.

Scenario 3.
Adam collects his $1000 paycheck. He spends $200 on income taxes. Bob steals that $800, and uses it to purchase $800 worth of services from Charlie. Charlie pays $160 in income taxes.

Scenario 4.
Adam collects his $1000 paycheck. He purchases $1000 worth of services (including taxes) from Charlie. Charlie collects $360 worth of taxes and sends them to the Federal government.

Scenario 5.
Adam collects his $1000 paycheck. He purchases $1000 worth of drugs from Bob. Bob purchases $1000 worth of services (including taxes) from Charlie. Charlie collects $360 worth of taxes and sends them to the Federal government.

Scenario 6.
Adam collects his $1000 paycheck. Bob steals that $1000 and uses it to purchase $1000 worth of services (including taxes) from Charlie. Charlie collects $360 worth of taxes and sends them to the Federal government.

In all 6 scenarios, Adam ends up with $0, Bob ends up with $0, Charlie ends up with $640 in his pocket, and the federal government ends up with $360 in their coffers.

Your theory only holds water so long as Scenario 5 and/or 6 collect more tax than Scenarios 1, 2, 3 *and most importantly, 4*. I do not dispute that a sales tax can collect less, more, or the same amount of taxes as an income tax. Move the tax rate wherever you want to move it to collect the amount you want to collect.

What I dispute is the idea that a sales tax somehow adds a tax on illegal activities. IT DOES NOT. Scenarios 5 and 6 collect no more taxes than Scenario 4, despite their only differences being an illegal transaction. Any change you make that adds a tax on illegal activity has the side effect of adding that tax on legitimate activity as well.

Can we be done with this fallacious idea now? Can we stop repeating this lie?