would it work if we got rid of income tax and just raise the sales tax about 20-33%?

Answer 1

We'd get Europe.

Seriously, sales taxes are regressive taxes on the poor. That is because the poor must spend all their money, whereas the middle classes and the rich can set money aside. Under your example, Madonna would pay less than 1% of her annual income in taxes each year while you would be shelling out some 20%+ of your annual income in taxes. If you think it's fair for the rich not to pay taxes, then by all means support a sales tax instead.

Answer 2

lizzit has given the most succinct argument against a sales tax that I have ever seen. Well said. in addition, no doubt some will think that we should have relief for low-earners. How do you show that you are a low-earner? Produce evidence of your income and expenses. If that isn't an income tax return, I don't know what is. Merely administering that would cost a fortune.

As for the transaction tax, this would lead to cash under the bed. Investment would plummet and consumer spending would fall. We'd be a third-world country before you can say "budget deficit".

The President's Commission came up with some good ideas worth a try at least, but I doubt anything will happen until the presidential election.

Answer 3

No it would not work.
You would miss those glorious dollars from taxing capital transactions - where people make heaps trading shares, commodities, real estate etc.
Also there is a tremendous cost of administering sales tax.
A better way would be to scrap all income and sales taxes and replace them with a transactions tax that could operate through the banking system. Just charging 5% on every transaction (would be 5% for each party = 10% all up) would increase government revenue as there would be a net to catch capital transfers - such as initiating investments, not just when things get sold.
If you want to increase the base then you can set a limit as to what size of transaction must go through the bank system and what can be in cash.

Answer 4

About a year and a half ago, President Bush ordered a commision be set up to reevaluate the entire income tax code. Everything was to be on the table, however they were to specifically consider complete replacement with a national sales tax.
The commision was established in January of 2005, and issued its report in October of 2005.

The result was that it is possible to replace the entire income tax code, although not the estate and gift portion, with the national sales tax. However the amount is also politically infeasible.

The percent they calculated was necessary about 55%. This is the amount before the State and local portion.

The panel did go on to suggest a number of reform options, and a couple of them have been enacted, including the uniform definition of a child.

Answer 5

The income tax is needed. We need to tax everyone at the same rate, such as 10% of all income irregardless of deductions and exemptions. Therefore if you make $10,000/yr your tax would be $1,000; if $100,000 it would be $10,000. This is really the only fair and equitable way.

Answer 6

(former IRS employee)

What we need to get rid of is the ** wage tax **
What we need to get rid of is the employee contribution to the Social Security Fund.
What we need to get rid of is the Medicare tax.

How can this be achieved, you say ?
- lower interest expenses
- lower defense spending
- increase corporate taxes
- vigorous pursuit of corporate deadbeats

Answer 7

No. I live in NH where there is no sales tax and it's wonderful!

Answer 8

I'd like to give it a try.

Answer 9

not for me. with my Social security& small pension I don't have to pay in anymore.