[lbo-talk] Progressive taxation vs flat tax

John Thornton jthorn65 at mchsi.com
Thu Aug 5 20:04:15 PDT 2004



>>>That is a fiction. Do the retail buyers forward a percentage of the
>>>purchase price to the tax office? If not, they aren't paying tax. The
>>>person who actually pays the tax pays the tax.(BB)
>>
>>You serious? On most purchases I make in NYC, 8.25% is added to the
>>price, which the merchant subsequently remits to the tax collector.(DH)
>
>Yes, I'm serious. You say the merchant remits the sales tax to the
>government. How can you interpret this as other than the merchant paying
>sales tax? (BB)

As a business owner I charge $300 for a product. I know how much of a margin I need to be profitable and that price reflects that reality. The sales tax in 5.65%. I charge that on top of the $300 making the total $316.95 the customer pays. That $16.95 goes to the government. Any retail seller passes all the sales tax on to the consumer. At the end of every period whatever the total I collect in the way of sales tax is separated from general revenue. I makes no difference to me if the sales tax is 1% or 8% I am not benefiting from it I am merely collecting it for the state. I am, in essence, the temporary tax collector for these funds.


>> The most reactionary states in the U.S. rely heavily on sales taxes
>> because they know who pays them - the masses, and not capital.(DH)
>
>You may very well think so, but unless that is their stated justification,
>then I think you will need to give reasoned argument. Even if they
>actually do think this is true, the retailers who bear the burden of such
>sales tax might well have different ideas.
>Are the retailers unanimous in their admiration for sales tax? If it
>doesn't cost them anything then they ought to be. You sure they wouldn't
>prefer to change the mix to other taxes?(BB)

I am ambivalent concerning the sales tax rate until it gets high enough to deter a sale. Maybe I am atypical in this regard but when meeting with other business owners they have pretty much say similar things. I run a small business, just under 3 million in sales so maybe for larger stores like Best Buy or Sears a different mind-set prevails. If I could eliminate sales tax I would as it is horribly unfair. A customer who buys a $200 item may be spending a weeks take home pay or just an hours pay depending on their income. They both pay $11.30 in sales tax which is almost 6% of of the first persons income vs. less than .01% of the others. Nothing even close to fair about that. Some retail items may be necessities. A new alternator for a car would probably be perceived as a necessity in some areas of the country where public transportation is non-existent. Groceries are the same way but some areas of the country do not charge sales tax on groceries or else charge a lower rate. Since the business pays taxes on its operation and income already why would they not pass on the sales tax to the consumer as is the intention? Do you think retailers want to increase their tax rate?


>> You rarely see business lobbying against sales taxes - but you see them
>> lobbying against corp and personal income taxes all the time.(DH)
>
>So they aren't unanimous. Of course different businesses are affected
>differently by the mix of taxes. Those businesses whose costs are heavily
>geared to labour, complain about payroll and income taxes, because they
>have to pay those taxes. Retail businesses are more affected by retail
>sales taxes. Corporations are most affected by corporation tax. The
>loudest voices will come from the most powerful, so it is unwise to
>presume that different capitalist sectors all speak with the same voice.(BB)

Payroll taxes are pretty well split with the business paying half and the employee paying half. This of course has nothing to do with sales tax. The sales tax has gone up and done over the last few years which is a minor pain but it really has no effect on my bottom line. I have no problem paying taxes like other business owners I know. Most of them bitch about payroll taxes, income taxes and especially property taxes. Property tax can effect sales if you are selling trucks and other heavy equipment. Other family members in reselling operations complain about paying too much in taxes too but sales tax is almost never mentioned unless it is going up and there is a fear it will adversely effect sales. I have no "shell corporations" with which to hide money and I don't move profits and losses around to reduce my taxes. I don't pay family members to hold fictitious titles in fictitious companies either. I really do not know how they do it but then again I don't care to.

John Thornton



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