Before the sales tax takes effect, won’t there be a buying binge? Afterwards, won’t there be a buying drought? If so, doesn’t that cause a debt spike to finance purchases before the ‘sale’ ends? The implications for banking and currency policy are way too complicated for me to foresee.
Isn’t it true that the rate is not really 23% but 30% at least, because it’s tax-inclusive?
And even this does not count dynamic effects in which changed behavior and evasion narrow the base and raise the rate.
How do we determine the interest portion of mortgage payment?
If non-specified, business will simply give big discounts on price and then make up for it in the interest calculation, as interest is deemed non-taxable. These calculations are highly malleable and can become very complex. Homes will be financed with low-ball prices and high interest rates, and sup-prime mortgages will skyrocket.
If a cap is put on excludable interest, then at what rate? Federal rates? That makes the Fed a tax-setting agency and hyper-politicizes monetary policy.
Jerry Bowyer is a radio and television talk show host.
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