"The Official Portrait of Miss InDiana"

"The Official Portrait of Miss InDiana"
aka "Miss Victory"

Wednesday, February 27, 2008

A new property tax repeal plan

To get this plan enacted, a lot of lawyers, cpas, and consultants will have to be ignored. This is the only "fair" way to finance government according to the plan's author. We wouold appreciate as much feed back as possible on this plan.

REPLACING PROPERTY TAXES WITH SALES TAXES
PROPERTY TAXATION MUST BE REPEALED

CURRENT PLAN
6% sales tax on goods = approximately 6 billion per year
no sales taxes are collected on foodstuffs, prescription medications, or prescription
medical devices or supplies, or prescription hearing, vision, or dental devices. This
would remain the same under the following dissertation.

I will present two anecdotal experiences on sales taxes applied to services as well as goods. However, I think that these are very realistic presentations of the current economy.

1. If you engage an electronic technician to repair your TV or Stereo or other home electronic devices the total charges might be as follows. QUALIFICATION: I operated an electronic service business for many years and the total charges for the repairs in most cases were as follows. The total repair charge was in most cases broken down to 63% service call and labor –round to 60% - and 37% for parts(goods taxable at 6%) – rounded to 40 %. Now let us apply this to the current income that is generated by taxing goods only and apply the increase of income which would be provided by taxing services as well at the current rate of 6%
The 40% is equal to approximately 6,000,000,000 per year.
The proposed 60% would be equal to 9,000,000,000. per year.

Well I guess that would cover the loss of property taxes ( 8.2 billion per year) and then some. And this doesn’t include the tax income from professional services which I do not have income information for but which I suspect would be equal to or greater than the 3-1/4 % income tax.

In my opinion, with the added income from professional services, the overall sales tax could be reduced to 3% or maybe even 2% and still provide the needed revenue to finance our bloated local and state government. And really help the lower income families in our state.

2. Let us try another non-anecdotal service payment from just the last year. The clothes dryer wouldn’t heat, so my son and I checked out the obvious things like the circuit breaker and the heating coils – both ok. So I called a recommended repair service. Their service technician determined that a sensor had failed and an upgrade “kit” was required to solve the problem. This diagnosis proved to be true and the charge for the repair was $125.00 plus $1.80 for sales tax on parts(goods). Now this breaks down to $95.00 for service call and labor and $30.00 for parts(goods) Now let us apply this to the current income generated by goods only @ the current 6% sales tax and apply the gain in tax that would be generated by a sales tax on services at 6%. The services would be approx. 80% and the parts(good) would be 20%.

20% collected would be = to approx. 6,000,000,000
80% collected would be = to approx 24,000,000,000.

I would guess that this kind of revenue would “super finance” state and local government.

Now let us cut the sales tax rate to 3%.

The income on goods would be approx. $3,000,000,000.
The income on services would be given these two examples somewhere between
$12,000,000,000 and $9,000,000,000.
More than enough to finance state and local government. This doesn’t include the tax income from personal services such as attorney’s fees, CPA fees, and consulting and lobbying fees. I think that the income from these fees would allow the lowering of the sales tax to probably 2% and still fund state and local government before we reorganize it and cut out the “pork”, “fluff”, “patronage”, and payoffs.

I also think that we should apply a “pilot” (payment in lieu of tax) to businesses and non-profits and churches which would be much less than the current property and inventory taxes. Again, PRESCRIPTION MEDICINE, FOODSTUFS, MEDICAL SUPPLIES, MEDICAL TESTS, HEARING DENTAL AND PSYCHOLOGICAL SERVICES should be exempted from sales taxes.

This formula would be a boon to lower income earners and senior citizens and a huge attraction for groups wishing to attract new business to Indiana. Just think - More businesses, more employees, and more tax payers. The state would flourish and be a leader in innovation for all other states. And all this before we reduce the bloat in government.


Maurice H. Gunyon
Indianapolis

12 comments:

Anonymous said...

Sounds logical to me- Ask for a meeting with one of the legislators and see how it goes.

HOOSIERS FOR FAIR TAX said...

This plan definitely needs presented to our legislators.

Wonder how they will get around the "math" on this one?

Anonymous said...

STUPID !!!>This fee will be passed on to the client...how do you think they will pay the new legal fees etc.. this will cause??

Anonymous said...

Maybe the lawyers will lower their rates to cover the new taxes and give the break to their clients....or people will have to cough up the money to pay the tax on services.

It's better than having to cough up the money to pay the tax on our houses which we will lose if we don't.


The reality is that people who pay for services are more likely to be able to afford the tax. If you don't want to pay tax on the plumber's labor, you can always fix the sink yourself, you know.

As far as lawyers go, generally people who hire lawyers can afford them...unless of course you are a low life criminal in which case you'll still get your legal defense for free from the public defender.

Anonymous said...

As a lawyer who has practiced family law, many cannot afford attorney fees. And many small practices cannot afford to lower bills. The taxes will already hurt middle class family law clients who can barely afford to litigate one of the most tragic events in ones life. Said litigation often includes your very right to be in your own child's life. Think again.

varangianguard said...

This plan seems a mite short on administration, enforcement and collections details. Plus, its math is fuzzy.

In its present form, no one will take it seriously in the Legislature.

Develop more specific details, and show exactly where your math assumptions come from, then try it out.

Anonymous said...

4:36....as a single woman who owns her house, I cannot afford the increase in my property tax bill...should I lose my home so a lawyer doesn't have to charge tax? Maybe I should just arrange my life in such a way that I don't have to pay for a lawyer. Or look for someone that I can afford AND pay the service tax.

Service tax is a far better alternative than losing one's home. If a few lawyers suffer, so be it. I think the world will go on if a few lawyers have to do with less.

Anonymous said...

So a lawyer losing her ability to support her family is okay? BTW, most lawyers are not rich, and many blue collar workers actually make more than lawyers. Taking someone's ability to earn a living is just as serious as losing a home.
And once again, needy people who obtain legal services are hurt as well. It might be easy and smug to say arrange your life in away you do not need a lawyer. Most clients I had were caught by surprise that they needed one, as their entire lives crumbled, homes destroyed, and custody battles fought.
This should not be about pitting one group against another. Real solutions involve cutting spending, and depending on the government to support you. I am for ridding income and property taxes, and puting government back to basics!

Anonymous said...

SO a lawyer having to charge a service tax is going to go out of business? Gee, then the world will surely suffer without lawyers!

That is a baseless argument. Just like the shoes on my feet (which are a necessity) require a sales tax, people will find a way to pay a service fees on lawyers and plumbers when they need them.

Grow up and quit whining!

Anonymous said...

Then charge a service tax for medical services also!

Anonymous said...

The outlined plan excludes medical, just like our sales tax excludes food.

Anonymous said...

I know. I think legal should also be excluded for more reasons than can be posted on the blog. If the professional services of legal are included, then medical should too.