National Sales Tax?

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I heard in the US presidential debates about the possibility of a 25% national sales tax to replace income tax for the most part, maybe lowering them to 1-5%.

Would this work?

I personally think that it may be a good idea. It increases what people pay, but at the same time you're not taxed directly. If people wanted to buy goods and services, the extra would be tax. At the same time, you can spend all your money how you like and not have a sum automatically taken away.
My only concern is sales to foreigners. Prices might be more expensive for exports.

Perhaps it should only apply to an individual consumer who buys goods and services for themselves within the nation?

Last edited by Anubis on 22 Sep 2007, 1:09 pm, edited 1 time in total.

I think a "consumption tax" is a wonderful idea, especially in a consumer oriented society such as our, but it'll never fly in a consumer oriented society such as ours. I think food, clothing, shelter, medicine and medical services should be exempt. The tax should be double on luxury items like food prepared in resteraunts, clothing made from live animals, jewelery, motel rooms, medicine and medical services exceeding $1,000,000/year. What about those gray areas? Are we going to tax mutual funds? What about the purchase of a house or small business? Of course the lobbies for the hospitality industry, et al, will spend hugh amounts of money to protect their interests.

You would think like most national sales taxes you could get it deducted.

Last edited by 0_equals_true on 22 Sep 2007, 7:44 am, edited 1 time in total.

I think it is just some and mirrors to the fact that some people need to contribute more.

It would seem to me that replacing the income tax with a national sales tax would shift the burden of paying tax to the poorest people, since no tax would be levied on money not spent or money spent overseas... So a guy who makes low wages and spends all of his money would pay a much higher rate than a guy who earns millions but only spends 10% of his income...

It is an interesting idea to have a national sales tax, I am not sure that it would be incredibly wise given that we would have to create a new bureaucracy to handle the subsidy that all tax payers would get back(at least under fair tax systems). I think that this new system would create its own loopholes and even though I like how it would encourage investment, it still can have problems with people finding ways around the tax.

Exactly! That's the reason I'm opposed to sales tax. Thankfully I live in Oregon where we don't have it.
Taxes that end up with poor people paying a higher percentage of their income are called "regressive taxes". The sales tax is the best example of a regressive tax.

the fair tax also sounds like a good idea. the IRS came after me awile ago because i did my taxes wrong (of course) so ontop of owing a rediculous amount of money they charged me two years of peneltys and intrest! let me tell you i thought about sucide a couple of times then. and to top it off i was having a hard time keeping a job just to pay them. the government can take pretty much anything you own exept your childrens school books and canned food in your house to sell it. its freaking terrible i tell yah

If we exempt food, clothing, shelter, medicine and medical services then those so poor that they only spend money on those things would pay no tax, those that spend 90% of their income on those things wouldpay tax on 10% of their income. Those that spend 10% of their income on those things would pay tax on 90% of their income, unless they invest it in exempt opportunities.

At least 'twould be a more honest way
of having a regressive tax than is now
in place - presuming that they included
social security in it.

Oh, but noes - we can't touch that. Even
though it's thrown into general revenues,
and has the tendency of diverting money
from poor black men to wealthy white women.

There is no reasonable equity of distribution under the current INCOME tax system. What's more, the TAX CODE has become a TINKERERS' PARADISE for 53% of the lobbyists who game it in Washington DC. It's a lucrative business, and the U.S. TAXPAYER pays for ALL of it in higher prices (a hidden tax which is incomprehensible to the average working person).

Prices AFTER FairTax would look SIMILAR to prices BEFORE FairTax - NOT 30% HIGHER - as opponents contend; competition would see to it. The FairTax rate on new items would be 29.9% (on the new, reduced cost of items because business isn't taxed under FairTax - thus lowering retail prices by 20% to 30%), or 23% of the "tax inclusive" price tag - this is the way INCOME TAX is figured (parts of the total dollar).

The effective tax percentages that would be paid are calculated by crediting the monthly "prebate" (rebate of tax on necessities) against all likely spending that citizen families (sized 1-member, and greater) are likely to spend. (Dept. of HHS would serve as the basis upon which prebates would be calculated. A single person might receive ~$200/mo. A family of four might receive ~$500 - in addition to receiving their WHOLE paycheck.) With regard to these effective percentages that different (current) income groups would pay under the FairTax, Prof.'s Kotlikoff and Rapson (10/06) have said,

(From study: http://snipurl.com/kotcomparetaxrates ) "...the FairTax imposes much lower average taxes on working-age households than does the current system. The FairTax broadens the tax base from what is now primarily a system of labor income taxation to a system that taxes, albeit indirectly, both labor income and existing wealth. By including existing wealth in the effective tax base, much of which is owned by rich and middle-class elderly households, the FairTax is able to tax labor income at a lower effective rate and, thereby, lower the average lifetime tax rates facing working-age Americans.

"Consider, as an example, a single household age 30 earning $50,000. The household’s average tax rate under the current system is 21.1 percent. It’s 13.5 percent under the FairTax. Since the FairTax would preserve the purchasing power of Social Security benefits and also provide a tax rebate, older low-income workers who will live primarily or exclusively on Social Security would be better off. As an example, the average remaining lifetime tax rate for an age 60 married couple with $20,000 of earnings falls from its current value of 7.2 percent to -11.0 percent under the FairTax. As another example, compare the current 24.0 percent remaining lifetime average tax rate of a married age 45 couple with $100,000 in earnings to the 14.7 percent rate that arises under the FairTax."

Further,

(From study: http://snipurl.com/kotftmacromicro ) "...once one moves to generations postdating the baby boomers there are positive welfare gains for all income groups in each cohort. Under a 23 percent FairTax policy, the poorest members of the generation born in 1990 enjoy a 13.5 percent welfare gain. Their middle-class and rich contemporaries experience 5 and 2 percent welfare gains, respectively. The welfare gains are largest for future generations. Take the cohort born in 2030. The poorest members of this cohort enjoy a huge 26 percent improvement in their well-being. For middle class members of this birth group, there's a 12 percent welfare gain. And for the richest members of the group, the gain is 5 percent."

Some people think that a uniform, simple rate is fairer, but I don't. Charging everyone the same Rate is not the same as charging them the same Amount. Although it might be 25% for everyone, that 'uniform' rate translates to very different amounts for different people.

When I buy a gallon of milk or a loaf of bread or sign up for a membership at a gym, they don't calculate the price based on my income. Only some acupuncturists and new-age psychologists have such a sliding scale. Everyone in a store pays the same price for a gallon of milk, and that is fair.

The cost should be the cost. Divide government spending by the number of people, get one amount that everyone pays for the benefits of living in America. Everyone pays the same amount, with no attempts to shift the burden (which inevitably involves arbitrary decisions and the redistribution of wealth).

It seems bizarre that a thread started by an Englishman on this subject doesn't mention that we have such a system in this country; though perhaps it's indicative of the ignorance of many of our citizens as to how much of their income the state does grab. We pay 17.5% value added tax on purchases. Also, insurance premium tax on taking out an insurance policy; there are several rates up to 17.5%. Property purchase attracts stamp duty at various rates, too. Of course, we still pay income tax, and national insurance.

And Gordon Brown still hasn't got enough. It's a slippery slope; you Yanks best not start down it.

Oh, but we've grown so fond of tax cuts in this country. First President Bush, who loves to spend money as much as the previous administration, then Governor Christ, whose property tax cuts have left counties, municipalities, and universities with inadequate funding...

That's governor Crist. Originally from a longer Greek name meaning Christ, but people here are very touchy about that. Just like the people that have no problems with the Mexican guy named Hay-zoos who can't understand why anyone would name their kid Jesus.

And for the record, the effects of the tax cuts haven't hit yet. Not by a long shot. Some still need to be approved by the people, who will imitate California's stupidity with Proposition 13 and then wonder why the fire and police and education are suffering. That's the problem with democracy - people often get the governments they deserve.

I know how he spells his name! I was making fun of the governor for Christ’s sake! I know that’s probably more offensive to Jesus than the governor, but I’m sure He’s above taking offense at that sort of thing.

We the people have some different ideas about the meaning of “trickle down” economics.

The budget of every University in Florida has been cut 10% as a direct result of the governor's tax cuts, and the effects of the tax cuts haven't hit yet? So it’s gonna’ get worse?