To Tax or Not to Tax

[entipy]

Would you be in favor of a National Sales Tax to replace the Income Tax? Why or why not?


http://moneycentral.msn.com/content/CNBCTV/Promos/P91797.asp

[kittyroze]

I'll read up on it more when I have the opportunity...

But until then, I definitely believe in more taxes, however they are applied. Religious persons tithe...so what's so wrong with taxing? Taxes will actually go directly to benefit everyone...tithing usually goes for another new roof or sound system for the church.

[LizardKing]

Properly applied it would be a great idea, as long as it remained low such as 2-3%. A national sales tax instead of income tax would also cut back on government due the ease of collection, we could do away with the IRS and eliminate tax loopholes while still maintaining revenues needed to run the federal gov't. This would result in having to pay less taxes overall because everyone would pay a fair share based on how much they consume.

[LizardKing]

After posting I Googled this subject and found the following:



The FairTax is now before the U.S. Congress. The House version is HR 25 and the Senate version is S 1493. Listed below is a summary of the bill and a link to the bill on the Library of Congress web site. Additionally, any national retail sales tax proposal will need to be accompanied by a proposal to repeal the Sixteenth Amendment to the Constitution. See: HJR 45 (http://thomas.loc.gov/cgi-bin/query/z?c107:H.J.RES.45:)
Support the Linder/Peterson
Fair Tax Act of 2003
HR 25 (http://thomas.loc.gov/cgi-bin/query/z?c108:H.R.25:) S 1493 (http://thomas.loc.gov/cgi-bin/query/z?c108:S.1493:)





Summary of HR 25/S 1493


Imposes a 23% (tax-inclusive) sales tax on the purchase of new goods and services in the U.S.
Lets workers keep their entire paycheck and retirees keep their entire pension.
Abolishes the IRS and ends all audits of individual taxpayers.
Replaces the federal income tax. Frees individuals from ever filing a tax return again.
Replaces all payroll taxes including Social Security and Medicare taxes. Current Social Security and Medicare benefits would not change.
Replaces corporate and self-employment taxes.
Eliminates all hidden federal taxes.
Provides a universal rebate equal to the sales taxes paid on essential goods and services to ensure that no American pays taxes on necessities.
Replaces all estate, gift, and capital gains taxes.
Dramatically lowers tax rates for low- and middle-income Americans.
Closes all tax loopholes.
Brings accountability to tax policy.
Lets American-made products compete fairly.
This isn't quite what I had in mind and seems kind of high but I think I would support it, because in the long run the only time it would really hit hard is when you buy large, expensive products and most people don't do that on a regular basis.

Here's another one that sounds a little better.

This study demonstrates how the individual and corporate income tax, the capital gains tax, the estate and gift taxes, and non-trust-fund excise taxes all could be replaced with a national sales tax (NST). The NST would exempt low-income Americans from tax and raise the same amount of revenue currently collected. The ideal NST plan would include the following features:


A 15 percent sales tax on the final purchase of goods and services at the retail level. The NST would be similar to state sales taxes. The rate should decline in future years to 10 to 12 percent as economic growth allows more revenue to be raised at a lower rate and government downsizing continues.
A universal rebate for every household, exempting all consumption up to the poverty level. That would mean that the first $18,588 of consumption each year for a family of four would be tax-free. The rebate could be provided as a refundable credit against the payroll tax.
Reimbursement to states and retailers of the cost of collecting the national sales tax.
Abolition of the Internal Revenue Service. The states should bear the primary responsibility for administering the national sales tax. The IRS would be abolished, and a much smaller, less intrusive federal excise tax bureau would collect trust fund excise taxes such as the gasoline tax. The Social Security Administration would enforce and collect payroll taxes.
Full Text of Policy Analysis No. 272 (HTML) (http://www.cato.org/pubs/pas/pa-272.html)
© 1997 The Cato Institute

[kittyroze]

What I worry about is a flat-rate tax on people of all income levels

[thestarsfall]

well up here in canada we have general sales tax, and provincial sales tax (except for in alberta), AND income tax.....

..so you americans are getting off easy...


...supposedly the income tax was supposed to be temporary (only during the war) but then the government realized that they got alot of money from us so they continued....

[Sterling]

Some downsides:

1: It's regressive. In other words it taxes the poor proportionately more than the rich.
2: It discourages consumer spending.
3: It eliminates tax breaks for various things. Which is both good and bad. Many tax breaks are just bribes for the middle-classes (e.g. mortage interest relief). Other tax breaks are highly desireable: for example, charitable giving being deductible. Expect giving to decline significantly under this regime.

I'm not saying that it's a terrible suggestion, there are many things to recommend it. But it's not all good.

[Lilith]

In Europe there are income taxes and there are sales taxes (that are pretty steep, too).

However, I don't feel that it's bad, because here, for example, one gets free health care and paid-for education from the government for those taxes. In USA, that is unlikely to be the case if the government got more money--they'd just order cushier seats for the Congress and the House or gold toilets or something. The current powers-that-be there are much like Saddam in that they take money from their people and give little or nothing back. It might change if a better person gets the presidency next year, or not. It'd almost surely change if Hillary became prez, for example--I'd love that.

It also does not matter how the government gets that money, so again, I am not sure that the proposal will do any good--for the above reason, and the reasons that Sterling mentioned (like tax breaks and discouraging consumer spending).

OK... I rambled but I think I got the point across. It's not how you are taxed, it's how much, and what will be done with that money. Or something--I haven't had coffee yet.

[entipy]

well up here in canada we have general sales tax, and provincial sales tax (except for in alberta), AND income tax.....

We pretty much have that same thing here. We have federal income tax, state income tax, social security and medicare, state sales tax, and local sales tax. :)

And our average American earner really doesn't get much back from paying that in - other than government employees' wages and public education K-12. We don't have anything cool like health-care.

[thestarsfall]

i love canadian health care....yay for OHIP

[entipy]

:p

[Romantic Gent]

I would favor a national sales tax depending on the percentage. I lived for 3 years in the Bahamas and the only tax we had was duty on all purchases. This in effect was nothing more than a sales tax. As the rich spend more than the poor it in effect taxes everybody proportionately. It sure was nice to get a raise and keep it all. It also eliminates the need for the dreaded tax collectors for individuals. Businesses would still need to be audited just as they are today for sales and use tax.

[Bassmama]

We pretty much have that same thing here. We have federal income tax, state income tax, social security and medicare, state sales tax, and local sales tax. :).


We also have (in New York anyway) County taxes, sometimes town taxes, gasoline taxes, real estate taxes, & thousands of other taxes. We're getting screwed & not having any fun!

[Boozer]

Bass, don't forget the tax on money spent out of state.

[Romantic Gent]

Just remember this national sales tax is only addressing eliminatinating Federal Taxes. We would stlll have all the other taxes everyone has been talking about. Georgia has sales tax, county sales tax and each county can have (I'm not sure) 2 or 3 special option sales taxes. The good thing is that possibly states would adopt the same kind of state tax. Wow a world where individuals wouldn't have to ever file a tax return of any kind. What a nice budget we could do also as we would know exactly how much tax we were paying everytime we purchased something.

OK I do auditing work everyday I want to relax so no more tax talk on Saturday LOL.

[entipy]

We would stlll have all the other taxes everyone has been talking about.

Yeah, that's one of the main concerns I have with it, too.

[Augustus]

A national sales tax would most likely not work. No one is sure how high it would have to be to generate the same amount of revenue as an income tax (you can't assume everyone will buy the same amount as they do now), and estimates vary from 20%-100% tax. It also would be unfairly slanted against poor families, some of which now pay no taxes because they don't make enough money, who would now see the price of food and goods explode.