What would/will a "consumption tax" do to the coin market?
topstuf
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Greenspan is just now floating (or re-floating) the idea of a national sales tax to reduce deficits and encourage savings. Also, Bush is floating the "enhanced savings" plans to add to IRA's to encourage more savings.
The second plan would probably kick the tar out of tangible investments as the ability to shelter interest and market gains on "traditional" investments would pull nearly EVERYONE into such a plan.
I have asked about the VAT (Value Added Tax) in Europe and been told that ...bullion.... (being a fungible item and thus classed as a true "investment") is exempt from VAT.
Here's a news snippet of the Greenspan idea.
Link to Greenspan suggestion
What would this do to rare coins? Many states now exempt coins from STATE sales tax in differing policies.
I would not think that a federal tax would be so generous.
Especially when what they REALLY want is people to invest in stocks and bonds.
The second plan would probably kick the tar out of tangible investments as the ability to shelter interest and market gains on "traditional" investments would pull nearly EVERYONE into such a plan.
I have asked about the VAT (Value Added Tax) in Europe and been told that ...bullion.... (being a fungible item and thus classed as a true "investment") is exempt from VAT.
Here's a news snippet of the Greenspan idea.
Link to Greenspan suggestion
What would this do to rare coins? Many states now exempt coins from STATE sales tax in differing policies.
I would not think that a federal tax would be so generous.
Especially when what they REALLY want is people to invest in stocks and bonds.
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And they are making it VERY difficult to do SIZEABLE cash deals.
on these items, you can't justify paying it again. I would classify collector coins as
"used". On the other had, if a coin gets slabbed, the slabbing process adds
value and can be taxed.
I think a VAT is a great idea.. but to cover the current receipts it would have to
be something like 25%!!! And that's 25% of every new item (including cars, homes,
TVs, what have you).
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The wealthy are all for it as very little percentage of their income is spent on "stuff."
What I am wondering is if the deferment of taxes on ...other...investments would take the steam out of coins.
Wealthier folks like deferred taxes. IRAs capped at 3000, 4000 or whatever are so piddly as to be nearly meaningless. I was born too early and retired too early for a Roth IRA but I can tell ya I wudda been in a Roth YEARS ago if it had been around.
A.....supplemental.....unlimited..(maybe)...IRA would be a real savings stimulus.
<< <i>I hope it never gets passed. Once any government gets a new tax, it gets addicted to it, and the resulting lower income tax rates would just creep back up. >>
I'm with you, coinhusker1. If this national sales tax gets passed, we will end up paying BOTH a national sales and a national income tax. Instead of working until late May to pay all of the taxes, we will be working intil July or August. The ONLY way that I could even consider suppoting a national sales tax would be if the 16th ammendment to the Constitution were repealed. That one authorized the federal income tax.
As for my personal situation, a national sales tax would probably put me out of business if the law is not uniformally applied to ALL coin dealers. Back when I lived in Massachusetts, I obeyed the law and the paid the tax. Most of the dealers at the shows did not. As a result they ate my lunch. Here in Florida there is no sales tax on U.S. coins, which means I get to play on a level playing field. I don't set up a shows in states that have sales taxes. It just takes too much revenue from me.
AND for those who say that I should just charge the sales tax, I'll tell you this. Back in Mass. I had situations where a buyer had agreed to the price and was getting ready to pay and then asked, "Is there a sales tax included in this price?" When I was honest and said, "Yes," they immediately declined to make the deal and walked away. Sales taxes are pits for honest coin dealers.
I can't believe that, sorry.
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Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
I am proud of the fact that I have TWO letters stating "Recommend acceptance as filed" from TWO audits.
One federal, the other, state.
And it IS hard to compete with tax scofflaws.
Worst part is that the "hinky" dealer always has little to lose. A "penalty" for an honest shop with a decent inventory.
Reason I wholesaled coins rather than put em out for the public. You can only take "so much" of the whining sleazeballs "winking" atcha to disregard the sales tax.
And $5000 is a piddly amount. If it's not, wow!
"Cash" isn't much of an option as I see it. The number of deals that DEPEND on ....PayPal.... is staggering and depressing.
I did not know that anybody had to pay tax on coins anyplace. Surprised to hear that.
I also don't buy that the "rich" don't buy lots of stuff, who purchases all those 100K toys and so forth that are out on the market. Certainly not me or anybody that I know.
I think a national sales tax would be a very good idea, but the transition period would be quite difficult.
We have to work for the inclusion of numismatics in the exemptions, such as stocks, real estate, etc.
My feeling is that there would be a deminimus, such as we have in MD, of $1000. to qualify for the exemption.
At least I hope so.
I firmly believe in numismatics as the world's greatest hobby, but recognize that this is a luxury and without collectors, we can all spend/melt our collections/inventories.
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Never, Never give government a new tax that becomes another source of revenue. There is no such thing as a temporary tax. Government might lower the other tax at first as a Trojan horse, but over time it will raise that tax as well.
Almost all Democrats and a minority of Republicans use taxes to take money from those who produce so that they can give paltry services to those who can’t or won’t take care of themselves. The idea is to induce those dependent people to vote to keep them in office. Don’t be fooled. Greenspan and others might have positive intentions when it comes to the national sales tax, but for your average liberal politician it will be a cash cow that will allow them to gain more control over other peoples’ lives.
Now, if there were no 1040 and everyone that occupies space and breathes air within our jurisdiction pays a consumption tax then I would be all over it...that is a great idea. You don't want to pay tax, don't buy anything. You want a new airplane or a double whopper with extra cheese, then you pay. You want to buy coins, the new ethic may well be "trade" for coins. I see bartering as a major way to get around this tax.
I can't believe that, sorry.
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A man with a wife and 2 kids and making $40K per year has to spend all or almost all of his paycheck on stuff. The same man making $400K does not have to spend all of his income on stuff to survive. A lot of what he spends would be discretionary. If he chooses to live splashy then he will pay the piper for it. If he chooses to live conservatively then he will pay way less under a VAT or consumables tax than he would under the current system.
The HR25/S25 bills in Congress right now would not tax most coins, except probably those sold directly by the US Mint. There are so many good reasons this bill should become law and the IRS abolished, not the least of which is the fact that income taxes are evil (as the founders knew). Only the wealthy benefit from income taxes as they have more opportunity to hide income.
Make April 15th just another day!
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This is a PREVAILING attitude in the US. It is gonna BREAK us.
$5000 will only earn $250 per YEAR in a safe (?) 30 year Treasury bond (actually not even that)
But America has GOT to learn that at SIX percent (available with SMALL risk) it takes a grand to get FIVE BUCKS A MONTH from investment.
The 400k guy knows he HAS to either save, invest, or trust OTHERS to take care of him later.
That's why I say $5000 is piddly. It won't do anyone any good. ESPECIALLY if social security is reduced or eliminated.
Lissen up folks! You.......NEED...... $150,000 per decade of your life if you are EVER to retire.
You can live on $100,000 per decade of life very FRUGALLY.
But for any standard at all.........you NEED $150K for every decade you are old.
Which means you do NOT retire at age 60 on less than $900,000.00 ($600,000 for MODEST means)
REALLY!
And the younger you are (with the greatest exposure to our government's idiocy) the more IMPORTANT that number becomes.
This is just arithmetic.
Not tryin to splash cold water on anyone, but this is a FACT. Cold and hard.......but a fact nevertheless.
<< <i>The person making $400,000 is still going to purchase things, why in gods name would he just save it all..... >>
Agreed, but most are not very likely to spend the entire $400K more likely half or less I would guess.
It's been known for years that sales taxes or value added taxes are basically regressive taxes. That's just a fact of life.
I understand basic economics thanks. Thay all live spashly...else why be rich?
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What many seem to have forgotten is we have the largest deficit ever and it is not going to go away without higher taxes.
The talk of SS reform, nat'l sales tax, etc. is all a distraction from the REAL issue...the gov't spends money they don't have! Until that stops forget about any scheme which gives the illusion taxes will go down.
The more things change the more they stay the same. Look for higher not lower taxes in the future.
<< <i>What many seem to have forgotten is we have the largest deficit ever and it is not going to go away without higher taxes. >>
No, the deficit will never go down until Congress controls spending. If you feed the pig more, it will only get fatter the deficit will ONLY get bigger.
I have a bumper sticker that says, "It's the spending, stupid!" That sums it up.
I would eat fewer coins
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There are too many special interest groups who influence our representatives that would be adversely impacted.
It would mean goodbye to interest deductions, state and local tax deductions, charitable deductions, etc.
Merchants who would be required to collect the new tax, would balk at the new responsibility.
Probably worse of all it would hurt the least wealthy unless some provision was included to rebate the tax to them. Unfortunately quite a few would struggle to do this.
We can't handle it and thankfully Congress would never agree on implementation..
<< <i>Thay all live spashly...else why be rich? >>
Not all rich folk live splashy or flaunt their wealth. I have known many well to do people who if you looked at them you would swear they were on welfare.
<< <i>There would be a lot more "CASH" sales and not just coins. >>
True although the States are not as prepared for further government theft as a lot of other countries ( like China ) are and have been. That's probably one reason why ATM cards and the like are being pushed so hard in Asia ( nobody keeps cash in a bank so they want to try and get it into banks so they can tax it) as people there are all too familiar with government theft. It'll take a while before people here truly get p'd off enough to take it underground to a large degree. But I think eventually that will happen.
I think a lot of the rarest material be simply stay "invisible" right from the get go.
IMHO
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>There are too many special interest groups who influence our representatives that would be adversely impacted. >>
I would guess accountants SIG's are against this, but can't see many others who would be. It would be great for manufacturing, as goods are cheaper to produce here since parts won't be taxed every time they pass hands. Our stuff gets cheaper to make and thus cheaper to export, and oooh, all imports are taxed 23% now, just like our goods. Don't you think all employers would like to stop paying 7.5% of everyones FICA? Accountants are smart people, I bet those that only prepared Income taxes can find new jobs.
<< <i> It will NEVER happen. >>
I'm usually so cynical too, but things do change. We didn't used to be taxed on our labor, we were freemen, someday I hope we can be again.
<< <i>It would mean goodbye to interest deductions, state and local tax deductions, charitable deductions, etc. >>
Is anyone really going to miss itemizing a tax return?
<< <i>Merchants who would be required to collect the new tax, would balk at the new responsibility. >>
Not when they are paid 1/2 % of tax collected. Merchants in all but a few states already collect sales tax, not much new responisibility.
<< <i>Probably worse of all it would hurt the least wealthy unless some provision was included to rebate the tax to them. Unfortunately quite a few would struggle to do this. >>
HR25/S25 includes a prebate. At the beginning of each month, you receive a prebate for spending up to the poverty level. For a single person, the poverty level is $9310, if you spent all that buying new stuff, you'd pay $2141 in sales tax. $2141 is what every single person gets prebated, $178 monthly. Hmm, seems that people living in povery aren't being taxed, isn't that what everyone wants? If you're living in poverty, and are able to buy more used goods, you may get more back from the government than you spend. Nice bonus on top of taking home your ENTIRE paycheck.
HR 25/S 25 - The Fair Tax Act of 2005 is currently supported by 26 HR's. It repeals the 16th amendment, eliminates payroll, income, estate and gift taxes, abolishes the IRS, and places a 23% sales tax on NEW goods ONLY at the consumer point of purchase. A system of income taxes and a higher national sales tax are evil, that's why this bill is the only one in the system now, and supported by 26 HR's so far.
Make April 15th just another day!
edited to fix a link
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Will it find no support? Support is easy to gather with enough distraction.
We vote democratically. One man, one vote. It is counterbalanced with special interest "contribution" but at the final element, if you can scare MORE people into thinking that their "old age" is threatened than there are "astute informed investors" such a tax would pass like spit through a goose. (spit?)
We are a VASTLY divided country by income. Becoming MORE so. And what affects those who pay thousands for itty bitty chunks of old "junky coins" has ABSOLUTELY no meaning to the guy who shops Walmart.
And now it's getting headlines.
When a trend moves into "prime time" it becomes a matter that could very likely come to pass.
Remember "trickle down?" And how the jobs all "trickled" to China?
It's easy to harm ignorant folks.
When people end up thinking that money is an "amount" rather than a "tool" they get confused and vulnerable.
<< <i>But I view this "consumption" tax as a death knell for coins (our particular interest). >>
I'm not sure how you can arrive at that conclusion. I'm not what you would call a "high income earner" by any means, but if the income tax and payroll taxes are repealed, I personally will take home 28% more of my paycheck than I do now. If the tax rate under the Fair Tax Plan is 23%, why would I care if I have to pay 23% more for coins? I have 28% more money to spend on them.
Under our current tax system, let's say I walk into a coin show with $1000 to spend on coins and I spend every dime of that money.
Now, under the Fair Tax Plan... since I no longer have to pay income and payroll taxes, I have 28% more money than before. This time I walk into a coin show with $1280 to spend on coins. Those $1000 in coins I purchased before will now cost $1230 because of the 23% Federal Sales Tax. I leave the show with the exact same coins I purchased under our current system and I still have $50 left in my pocket! Actually, that's unlikely. I'd probably use that extra $50 to buy another coin I wanted!
Rather than strike a death knell to this hobby, I think the opposite would be the case.
What about my purchases made from funds which have already been taxed at 31% years ago, do I now have to pay an additional 28% tax on the prchase?
Will slightly used automobiles/boats/homes/etc cost more than comparable new goods since the tax has already been paid on the used items?
If expenditures in the federal government don't change, then all of our discussion about how we collect taxes doesn't mean much. If you spend the same amount of money, then the tab must somehow be paid by someone. The people who must pay are the people who can pay.
<< <i>What many seem to have forgotten is we have the largest deficit ever and it is not going to go away without higher taxes. >>
BillJones is right on this, higher taxes are not the solution because the problem is that the government will just spend more than they get. You give them more and they just spend more. A good example of this was the Reagan tax cuts. Lots of people like to try and blame the huge buget deficits on those cuts. But those cuts actually resulted in a 25% INCREASE in tax revenues!! The problem was that the Congress increased spending by considerably more than the 25%. We gave them 25% more and they gave us bigger deficits. What makes you think that increasing taxes would make them spend less?