A different type of tax plan. A national sales tax of say 2%...eliminate the income tax. Now everyone will say that it won't work, it unfairly favors the rich and hurts the poor, blah, blah, blah. Food would not be taxed under this provision. As for soaking it to the rich...create a luxury tax that would tax homes over say $500,000, cars over $60000. Here's the simple truth...This is a tax as you spend plan...The more you spend, the more you are taxed...The less you spend the less you are taxed. There are no more tax returns, there are no more tax loopholes. Business are charged on what they purchase, not what they earn. For example, a business is charged charged for the raw materials it purchases and those are taxed. What that business makes and then sells are not taxed. Think of it from the regular Joe's perspective, I make a good living...But every two weeks I am charged over $400 in income tax...That does not include SSN, medicare and all others...Think of all I would get back in my check...it's over $20k a year. That's money I could set aside for an emergency fund, investments other than my 401k, I could pay for a new car every two years. The other side of this is that the Federal Government could be downsized...A limited IRS, not the goliath it is now.
No it would still tax at the retail level, just not food. Also resale places like goodwill and others would not be taxed by the federal sales tax...Not taxing the poor and middle income people. Let's face, when people in this country, and most other "Western" countries have more money, they spend it. So look at your check, see how much the government takes out for income tax, and then imagine that that money was back in your wallet every payday. I would bet that 95 out of 100 people surveyed would be envisioning what to buy...Not retirement savings, not kids college funds, etc.
Let's assume the US has about $5 trillion in RETAIL sales and this includes food. Someone will surely know an accurate number but this is the number I'll use here. The current federal government is spending ~$4 trillion per year. In order to extract $4 trillion in government revenue from $5 trillion in retail sales the 'national sales tax' rate would need to be about 80%. This means an item with a retail price of $1.00 will have a total price after tax of $1.80. If you wanted to use a 2% national sales tax rate, in order to generate $4 trillion in government revenue, you would need to have about $200 TRILLION in retail sales (if my math is correct)...which is impossible. One of the things I hate about all the flat tax and national sales tax, etc. is the first thing all of them do is start excluding certain sales, or have higher rates on luxury items, and giving tax credits to people based on what they earn. When you do this it brings us right back to where we are today with our progressive IRS tax system and deductions and credits. So...IMO...all of these tax policy ideas are just BS aimed at punishing the wealthy and excluding the so-called poor...
Once it's there, it will grow. Plus, this government would never, ever institute a new tax in exchange for eliminating an old one. No, they would tack it onto whatever we have now. And like I said, it would then grow in the future. It's what they do.
PRO 1: It would eliminate the income tax. All taxes would be collected by retail businesses as they sell goods and services. PRO 2: There would be no tax forms for citizens to fill out. It would eliminate the need for the IRS. the Treasury could handle Tax revenues. It would be administered just like current state sales taxes. CON 2.1: IRS officials would STILL be needed to ensure that businesses paid their proper share of sales taxes. PRO 2.11: The states administer the sales tax under the NRST (HR2525). PRO 3: It would tax all citizens at the same rate so that only those who spent more would pay more taxes. CON 3.1: A national sales tax is essentially a tax on consumption. Since low income families spend almost every penny they earn on subsistence items, they would pay A HIGHER PERCENT OF THEIR EARNINGS IN TAXES. HIGHER INCOME families could afford to PUT A portion of their earnings into savings investments. PRO 3.11: There is a rebate, based on family size, low income families will in effect pay no tax at all up through the poverty level. In addition, only new things are taxed (not used ones). PRO 4: It would encourage savings and investment. PRO 5: It would collect taxes from everyone living in this country, including aliens, illegal aliens, AND THE underground cash economy adding billions of dollars to the nation's treasury. PRO 6: the CURRENT COST OF tax compliance IS estimated AT $600 billion a year. IT IS estimated THE NATIONAL SALES TAX WILL ONLY COST BUSINESSES $1-5 billion per year. CON 8.2: A homeowner who buys an existing home would not pay sales tax on the purchase, but a renter would pay sales tax forever on his rent. (Also, most states tax rental property at higher rates than they tax owner-occupied homes, so a sales tax on top of the "extra" property tax would be heaping more tax on top of an existing unfair tax.) For renters who want to buy a home but are unable to do so, a sales tax applied to rent but not to purchase effects an unconscionable tax penalty for not being able to buy a home, and transfers many billions of dollars from lower-income renters to higher-income homeowners. Basically a national sales tax would be a consumption tax...Yes I believe food should be exempt...And yes I believe that some items should have a luxury tax attached to them. However, let's not forget one of the best things about this plan is that used items are not taxed...The poor (I've been there) and the middle class (where I am now) usually don't buy new cars, houses and such, When I didn't have a lot of money...I often shopped for clothes at Goodwill and thrift stores...These are not taxed. And a national sales tax immediately downsizes the Federal Government. Also, I have lived in Europe where this system is in place....Do I believe it is perfect...No, but having more money in my pocket and not in the hands of the Federal Government is better than it is now.
Any tax system that collects $4 trillion in taxation will be funding a $4 trillion government, therefore, no matter the tax system in place government will not be reduced. You 'might' reduce some IRS employees but it will increase elsewhere. Further, any jobs you actually eliminate would be a hit on the economy. If you have rebates and luxury taxes, etc. you end up with the same tax demographic we have today which is the bottom earners paying little to nothing and the higher earners paying the bulk of the taxes. Current tax compliance does not cost the government $60 billion per year?! You think other systems will cost less but they won't...the IRS still must administer and enforce a tax system involving $4 trillion per year which is riddled with rebates and luxury taxes and making sure every business forwards all tax receipts, etc. Regarding those 'used' items not being taxed, what happens when an item originally costs $10 but is sold used for $20? Lastly, it is impossible for you or me or anyone to have more money in their pocket with a different tax system unless the tax system forces a redistribution of money...
