Would you support a per item tax to replace our Fed. tax system?

Question

YOU would then be in control over the amount you pay for your Fed. taxes. The taxes you would pay would be determined by the cost of the consumer item. If you didn't want to pay the higher tax on a $200 pair of shoes you would have the choice of choosing a $25 pair with the lower tax.

Your courteous opinions appreciated.

Lauren G - The current Fed tax system would be scrapped and we would pay those through purchasing as we do our sales tax. It would be fair to everyone. Everyone doesn't report their income, but everyone makes purchases, hon.

Also, for the low income people, what's to say we couldn't allow them to have a card like the one used now for food stamps (EBT?)which they could show when making purchases of necessity items and get a reduced tax at the checkout?(of course they would have to qualify for that reduction)

Answer 1

I absolutely would support a national sales tax. It would be very difficult to replace the current tax system, but in theory, I would be for it replacing all other taxes. Here's my reasoning:

Taxes are applied at virtually every point on the economic cycle. Taxes slow down economic activity at every point (value added taxes, tariffs, payroll taxes, corporate taxes, property taxes paid by the corporations, AND personal income taxes all take away from each individual's buying power: probably 15 cents on the dollar of what you spend on a consumer item is actually paying for the item, the rest pays for taxes), yet most people only see income taxes affecting them. Moving all taxes to a single point on the economic cycle that everyone participates in helps everyone see what our government consumes, and would make everyone more sensitive to government spending.

However, replacing all of these taxes all at once would be irrational and economically destabilizing. What can be done is implementing at least a small national sales tax. This would punish spending, and reward saving (savings are at an all time low in our country and we should take more steps to encourage it, instead of punishing it by taxing interest and dividends.) As time goes by, we could continue to increase the tax, while reducing others, and take steps towards replacing the current tax system. I don't think this will actually happen because Congress has an incentive to keep us unaware of all of the taxes we are paying.

Answer 2

You would need to have a system that gives relief to low-earners. Otherwise the tax burden on average working people would go through the roof. I have a nice home, live comfortably but not extravagantly and have an effective rate of 8% without claiming any fancy deductions. The best estimate I have seen is that a national sales tax would run at about 17-19%. Why should I vote for my taxes to double? I am a median wage-earner with prospects. There are a lot of me about.

So, if you implement some sort of scheme to rebate the vast majority of Americans, what sort of bureacracy do you think would be required? Something like the IRS perhaps? How would one prove that one was entitled to relief? W-2's and 1099's? How would you report that to the Rebate Authority? Some sort of tax return?

The Tax Law Commission put some excellent ideas on the President's desk last year. They also put some idiotic ones there too, but I'm sure they can be weeded out. What the commission does not envisage is the replacement of income tax with sales tax. I wish I could find the link to the report. I read it on the AICPA website, but it looks as if it may have been moved to the members only section.

Answer 3

I absolutely despise the tax system. If you think about it, dear, we already pay a "per item tax". It is called sales tax, and it is a certain percentage of what the purchased item costs. The only exception is parishable grocery items. So. In reality, you, I, and all other hard-working American's are being taxed TWICE. Once on income tax (which pisses me off SO bad. Out of each check, there are about 3 days that I dont get paid for....taxes...) and the other time on sales tax. I could rant all day about taxes and how much money they take from me that I work VERY hard for.

Where's the control in that?


Rose, I see what youre saying.

It reminds me that there is hardly a middle class anymore and it is because of cheaters. I do not cheat, and you do not cheat, but we're the ones putting food in the mouths of the rich?

You're absolutely right. I would love to scrap Fed. That would even contribute more equally to taxes because then we'd have more money? (In a sense)....I didnt mean to contradict you with my earlier answer!

Answer 4

I think I understand the tax you are explaining. The problem with that tax is that it unfairly taxes those at the bottom of the economic scale. If you don't make much money, there is no "choice" in buying the cheaper item and a higher percentage of your income goes to pay taxes because a higher percent of your income is going to buy essentials. I live in a state where we don't tax things like clothes and food and I think that is good because it unfairly taxes the poor. The tax you describe is a regressive tax. I think everyone should pay a fair share, I just don't think unfairly taxing the poor is the way to set up our tax system.

Answer 5

It sounds as if you are proposing something quite similar to the VAT tax (value added tax) that is used in Europe. The biggest downside to this tax approach is that it is regressive rather than progressive. By this I mean that it hits the poor and middle-class much harder than it does the upper classes. Regressive taxes that are based on the value of products which is how sales tax is determined). The price of shoes, using your example of $25 represents a higher percentage of a poor person's income than do the $200 pair for a wealthy person. So since we already have sales tax (regressive) and federal income tax (progressive) I want to stick with the complicated system we already have.

Answer 6

No, because even though it would probably cut my taxes, it would fall most heavily on the low income people who can't afford it. To replace the revenue generated by the current system, a "national sales tax" would have to be very high.

Answer 7

ANYTHING but the current tax system.
My tax burden is around 25%.
The American Revolution was fought partly over taxes at 8%.
The best plan I've heard of is the Fair Tax.
The link is to a blog about it if your interested.

Answer 8

I personally dont like the per item tax, I have lived in states with both, and now I live in Tn, and the taxes are 9 cents on the dollar, they just keep going up, I would stick with federal.

Answer 9

Judy: you have given many of the best answers I've seen in this category this week. You are dead wrong on this one. A national sales tax would fall most heavily on those that SPEND the most. Low income people CAN'T spend as much as high income people. Please take a basic economics class. I believe they are still offered at a few colleges in this country.

Answer 10

A federal sales tax to replace income tax would have to be huge. It would negatively affect retail businesses & companies that manufacture products. I'd like to see an across the board flat tax on income. One that the super rich cant avoid with the multiple loopholes they now employ.