National Sales Tax

[choo choo charlie]

I've heard a lot of talk in the news media about replacing the Federal Income Tax with a National Sales Tax. Under this arrangement people would pay taxes as they spend money rather than as they earn it. It is partly endorsed because people who engage in under-the-table business transactions are not taxed with the current system. Is there anyone out there who opposes this idea? Could you help me understand why this is not a good idea? Does anyone think this is a good idea? I would like to know why. Thank You everyone.

[SeanH]

Without getting into how it works, I suspect you will find a lot of people oppose a national sales tax because they believe it would it would be imposed with the current income tax system still in places. It would end up being another tax on top of taxes.

I'll leave it to other people to comment on whether it would be regressive or difficult to understand.

[greenskeeper]

aka "consumption tax"

the "sticker shock" would be the tax rate I suppose, much higher than the avg 6% sales tax most states have.

I often wonder what the actual tax rate is in this country when you add all the taxes (income, sales, road fuel tax, etc)?

[LuckyRobin]

Our state and county sales tax is already 8.7%. I'm not sure how I would feel about a national one on top of that. Only if it replaced income tax it might not be so bad. It would also need to be a flat and unchanging rate. I wouldn't want it to rise by a penny every time Congress got it into their heads to fund something else. There are also some things that should not be taxed. Our state does not tax food (except soda, chips and candy or restaurant meals). I would not want to see a sales tax on food.

[jpg7n16]

Originally Posted by choo choo charlie

I've heard a lot of talk in the news media about replacing the Federal Income Tax with a National Sales Tax. Under this arrangement people would pay taxes as they spend money rather than as they earn it. It is partly endorsed because people who engage in under-the-table business transactions are not taxed with the current system. Is there anyone out there who opposes this idea? Could you help me understand why this is not a good idea? Does anyone think this is a good idea? I would like to know why. Thank You everyone.

I don't like it. It's a regressive tax system idea. I also don't like the 'Fair' tax idea either.

Understanding Taxes - Theme 3: Fairness in Taxes - Lesson 2: Regressive Taxes

http://www.irs.gov/app/understanding...hm03_les02.pdf

For a smaller income earner, it may take nearly 100% of their income to meet necessary expenses. Meaning that they have to spend nearly 100%, meaning they are charged tax on nearly 100% of income.

But for someone who is a high income earner, it doesn't take nearly 100% of income to make ends meet - and they have the freedom to cut back on spending, where others don't necessarily have that priviledge.

In other words, people who make enough money can limit the tax they pay but people with low incomes cannot.


And what makes them think that if people can earn money under the table, they wouldn't be able to spend money under the table?? Foolish thinking IMO.

[feh]

Originally Posted by jpg7n16

I don't like it. It's a regressive tax system idea.

This. And since it is regressive, it would never become law.

[snafu]

National sales tax charged in Canada since 1991, originally 7% has been lowered to 5%. It's called Gods and Services Tax and is charged on both goods and services like plumber, lawyer etc. though not charged on medical doctors. While it isn't charged on most food it's charged on 'junk foods,' restaurant and ready-to-eat foods. There is a rebate formula for people whose income is under $53,330. paid three times a year.

The best thing about it is that there is no wiggle room, everyone pays, even politicians. Higher income folks consistently buy more expensive stuff and since they're not SAers they buy much more stuff. Understand that your northern neighbors have a different history and culture. We pay much higher tax rates with much fewer exemptions. For example, in our particular community we pay about $ 1.50 tax on each gallon of gas for our vehicles.

Visitors to Canada get the tax refunded if they chose to complete the form.

[thefrugaltoad]

If I understand the question we would do away with the federal tax and replace it with a regressive national sales tax? Very bad idea. Would drastically cut taxes of wealthy and drastically increase taxes as a percentage of income for others. Must be a republican proposing this.

[Scanner]

I very much support VAT (nearly the same as a consumption/sales tax) replacing income tax. That way everyone has skin in the game.

The fairest way to do it is apply it to oil. . .very hard to get around paying it that way.

[choo choo charlie]

What about crack cocane dealers? They don't pay any income tax at all.

[jpg7n16]

Originally Posted by choo choo charlie

What about crack cocane dealers? They don't pay any income tax at all.

And the people who buy crack pay no sales tax either.

[EEinNJ]

It's a great idea, though it already exists in some areas. Just take a look at your phone bill. Airport security and boarding fees is another that comes to mind. There's also taxes on ammo and hunting products. On the state level, there are myriad excise taxes, on tires, cars, cigarettes, hotel accomodations etc.

A sales tax doesn't have to be regressive, if basic necessities like food and clothing are excluded. It could be as simple as anything bought on-line that isn't subject to state sales tax.

[bjl584]

Originally Posted by jpg7n16

I don't like it. It's a regressive tax system idea. I also don't like the 'Fair' tax idea either.

Understanding Taxes - Theme 3: Fairness in Taxes - Lesson 2: Regressive Taxes

http://www.irs.gov/app/understanding...hm03_les02.pdf

For a smaller income earner, it may take nearly 100% of their income to meet necessary expenses. Meaning that they have to spend nearly 100%, meaning they are charged tax on nearly 100% of income.

But for someone who is a high income earner, it doesn't take nearly 100% of income to make ends meet - and they have the freedom to cut back on spending, where others don't necessarily have that priviledge.

In other words, people who make enough money can limit the tax they pay but people with low incomes cannot.


And what makes them think that if people can earn money under the table, they wouldn't be able to spend money under the table?? Foolish thinking IMO.

I think there was some sort of proposal that went along with this whereby people would receive a monthly rebate check from the govt. on items that were necessity items. It sounds fairly complicated. I don't know if it could be pulled off.

[humandraydel]

Originally Posted by feh

This. And since it is regressive, it would never become law.

It is not necessarily any more regressive than the current income tax system. People with lower incomes will just pay little to no federal sales tax.

Personally, I like it because it encourages investment. And savers would benefit in the form of lower taxes.

[maat55]

I'm 100% for the Fair Tax.

Americans For Fair Taxation:

Why should I have to file a tax return? Our current tax code is rediculous. Check out the frequently asked questions.

[DRILLINDK]

I haven't read any of the other post's, but I'm all for a national sales tax to replace all other taxes.

Still don't understand why I'm being forced to pay for others laziness and incompetence.

[krantcents]

A national sales tax would unfairly place a more of a burden on poor people. Since almost all their income is spent on food, and other necessities. Unless there is a huge exemption for people who earn less than X. I think I would be more in favor of a flat tax at a much lower rate and take away all the exemptions. The one issue is the mortgage interest deduction! How to handle this since housing is such an important aspect of our society.

[EEinNJ]

Doing away with income tax and replacing it with a sales, flat, and/or VAT, even if it resulted in just as much revenue, would take away government influence on our lives, and they're not going to give up that power.

One of the tools Government has to implement policy is the tax code. To encourage home ownership, the mortgage deduction. Saving energy, credits for insulation, windows, etc. Preventing families from retaining and passing wealth to the next generation, estate taxes. Saving for retirement, there's IRA's. It's not just about money to operate government, it's about control.

[maat55]

Originally Posted by krantcents

A national sales tax would unfairly place a more of a burden on poor people. Since almost all their income is spent on food, and other necessities. Unless there is a huge exemption for people who earn less than X. I think I would be more in favor of a flat tax at a much lower rate and take away all the exemptions. The one issue is the mortgage interest deduction! How to handle this since housing is such an important aspect of our society.

The Fair Tax prebates tax expenditures up to the poverty level.

[maat55]

Originally Posted by EEinNJ

Doing away with income tax and replacing it with a sales, flat, and/or VAT, even if it resulted in just as much revenue, would take away government influence on our lives, and they're not going to give up that power.

One of the tools Government has to implement policy is the tax code. To encourage home ownership, the mortgage deduction. Saving energy, credits for insulation, windows, etc. Preventing families from retaining and passing wealth to the next generation, estate taxes. Saving for retirement, there's IRA's. It's not just about money to operate government, it's about control.

Is this control permitted in the Constitution?