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Real-estate is a different type of property than items you buy over the counter. Land does not have to be bought and sold to change hands. We don't charge sales tax on real-estate purchases. No one does to my knowledge. The reason is... it's nonsensical. The tax that is appropriate for real-estate is property tax... not sales tax. Property tax is a tax over time on property. Property tax is not a sale tax. The contract you sign when you buy the property essentially includes a lien on the home that you will pay the property taxes for the region. These property taxes are what it costs to be a land owner in a region of the country. Sales taxes only apply to over the counter type items that you purchase. You can buy items in another state and bring them to your property... but you can't move your land. Though you may be able to move the home on your land to another piece of property... you cant move the land itself, well not without permission from said government that regulates types of use of the land.Land is not a thing that you can tax just once and be done with it... land lasts forever... the taxes have to be done over time for it.I don't think you connected with my question, either that or I didn't connect with your answer. When you say flat property tax, I assume you mean only property owners pay it. Unless I misunderstand that, who doesn't need police or fire? Why should only property owners pay for it?
Also, when you say groceries are not taxed, that's not actually true. It is true milk buyers are not paying sales tax, but they are paying all other taxes, they are baked into the price of the milk. Nothing should be exempt from the flat sales tax, it warps prices again, which was the whole point of getting away from our absurd tax code
Property owners pay it, but when they have renters, they get the money to pay their property taxes from their renters... so renters in essence also pay property taxes... to cover police and fire just not directly.
Bam, exactly! So of all the taxes, why do you pick this one and say let's keep another tax? The whole point of the sales tax was to keep it flat and efficient? Why arbitrarily pick this one and saw let's keep it?
By your own provided evidence there can be no flat tax because some products require the use of other products that have already been taxed. Thus products that include these "inherited" costs would also have price "warping." IOW there is no perfectly flat tax no matter how you do it. However... the system we use in most states that do sales and property tax and no income tax at all, while exempting very basic necessities has been FANTASTIC. I'm telling you, it is the best system.
No, you tax the primary sales market only, so there aren't embedded taxes for the components of their products just like my business doesn't have to pay sales taxes on the components of our products now. There would be some, like when we buy office supplies and that sort of thing. Remember though I didn't say the sale tax was perfect, only that it's the best option
What do you mean? You keep paying the sales tax, it's not a one time deal.
I still don't get why you just pull out property tax. How what is different between that and every other tax rolled into a national sales tax?
The difference is land requires special types of services that are "on-going." However, land may be only purchased once. Thus the folks that are living perpetually on family land, over time, would be taking advantage of EVEYRONE ELSE who does not also live on said family land. Thus the amount of sales taxes needed would quickly double again and then again then again ... to pick up for the fact that no will be buying new homes any more cause they can't afford to pay sales tax on the home as the sales tax rate spirals out of control.
Property tax in TX is about 2% per year, sales tax is 8%. People live in their home their entire life. Let's say you pay 50 years property tax that's 100% of the sales price / value of the property paid over 50years. To make up for the loss of the tax revenue for 100% of the value of your home that 8% would have to go up significantly. My educated guess is you'd be looking at around an 80% sales tax rate to cover the loss of property taxes over time. Or you'd have to do a retro active sales tax on existing homes of around 50% of the value of all owned property in the state to be placed in a savings account for withdraw by the state over time.
I'm not sure if we're on the same page or not. I'm going to back up. Selling land is the secondary market. Reselling houses is the secondary market. So I wouldn't charge sales tax on either. I would charge sales tax on the sale of a new home less the value of the land. Keep in mind that is not a tax increase over today. Today you don't directly pay a tax, but all the income and business and other taxes are baked into the price of the home. So also I would charge sales tax on building the home, but not on reselling it. That is keeping taxes in the same place as today, just converting them all to a single tax.
In terms of ongoing taxes, we calculate the cost of fire, police, roads, schools, whatever is baked into the property tax and put it in the sales tax like every other tax. That's the whole point of the sales tax, to eliminate all other taxes and have one simple, direct tax.
One other point you touched on though is there would be probably three tax rates, the Federal, State and local.
So say the Federal rate is 20%, the State 5% and the local 2%, you would pay a 27% tax and the money would be dispersed to the three. Again, no different than today, just calculated differently