The National Sales Tax

[Ted]

I've heard a couple of radio talk show hosts talking about this idea. I guess it's being researched by Congress right now. Replacing the national income, payroll, and Medicare taxes with one national sales tax. Interesting idea. If you know of a good link for info on this, please post it here.

EDIT: Found one; here it is:

Sales Tax Info

[jn]

Yes I had heard some rumblings about this.  It's got a snowball's chance in.....

 

[Lurker]

Two major problems with a national sales tax...

1) It is even more regressive than the current tax system.  Low wage earners will pay a higher proportion of their income as tax than the wealthy.  And despite all Demo rhetoric the wealthy pay the majority of income taxes.

2) This undermines a major revenue source for states & cities.  Congress will hear so much negative feedback from their local constituants that it would be difficult for a law like this to pass.

If this organization wants a "fair tax" them it is simple.  Eliminate all deductions & loopholes in the current system.  Set 3-5 tax rates and use gross income as the tax base.

[Joe Vancil]

Lurker,

     I'm sure all the farmers are going to be happy about THAT, given the cost of making a crop, which usually means taking out a loan, and then they're to be taxed on the gross proceeds rather than on the net?

     I agree that it's more fair, but it should be on NET income - not on GROSS income.


                                                       Joe
 

[Lurker]

Lurker,

     I'm sure all the farmers are going to be happy about THAT, given the cost of making a crop, which usually means taking out a loan, and then they're to be taxed on the gross proceeds rather than on the net?

     I agree that it's more fair, but it should be on NET income - not on GROSS income.


                                                       Joe

But Joe, WHO then decides what are legitimate expense to offset gross income?

That is when we start to get special interests deductions, specific benefits for certain taxpayers, etc.  All it leads to is the same complicated tax system we currently have.  But it is also more fair than a consumption based tax.

Besides those farmers don't deduct the loans against income now.

[Ted]

1) It is even more regressive than the current tax system.  Low wage earners will pay a higher proportion of their income as tax than the wealthy.  And despite all Demo rhetoric the wealthy pay the majority of income taxes.

A lot of economists disagree. Supposedly, high-income people spend so much more than low-income that the proportions would be very similar to what we have now.

2) This undermines a major revenue source for states & cities.  Congress will hear so much negative feedback from their local constituants that it would be difficult for a law like this to pass.

I hadn't heard it would do away with existing municipal and state taxes. I obviously don't know for sure, so I can't say I know you're wrong. Just heard differently.


Can anybody foresee the possible effects this would have on the economy as a whole? Some say it would instantly make us ultra-competitive in the global job market. It seems to make sense in that light. Why wouldn't companies want to come back here if they don't have to deal with payroll and income tax compliance? Don't get me wrong. I agree it has little chance of happening, but it's an interesting topic, IMO.