Why doesn't the concept of a National Sales Tax--elimination of Income Tax catch on more?

Question

See:
www.fairtax.org

...bigger pay checks...no tax returns...

A much smaller IRS would be needed--downward pressure on taxes.
Less Accountants would be needed--downward pressure on the costs of goods.
(These math people can be retrained into the booming Tech industry)

Answer 1

Several reasons.

1. A sales tax is a regressive tax. It disproportionally affects the poor. The monthly rebate is a cute idea, but fraud on that would be rampant.

2. The IRS wouldn't be any smaller -- it could even grow. Who do you think would be charged with managing the rebates to the poor? The numbers of field agents would increase massively in order to fight the black market in untaxed goods, for one thing.

3. People could cut their tax bill simply by avoiding discretionary spending. That would have an adverse impact on the economy. Only the relatively well-off could avail themselves of that "tax cut" though. Poor folks don't spend much beyond basic necessities.

4. Black marketing in untaxed goods would sky rocket. It's already a small problem with alcohol and tobacco in high-tax areas. Black marketing is typically the bastion of gangs and organized crime elements. Imagine dealing with those types for a TV, DVD or your Captain Crunch.

5. Tax returns from businesses would increase astronomically -- someone has to collect and remit the "fair tax". The accountants would have just as much work on their hands -- maybe even more.

6. In order to fight black marketing activities, the IRS would eventually get the "right" to enter your home at any time to verify that everything there was tax-paid.

7. The reporting burden on businesses that pay consumers -- employers, banks, brokerages, would go through the roof. The IRS would have to track everyone's income in real time to combat fraud on the low-income rebate feature. It would be MASSIVELY more invasive and complex than the current income tax system is.

Beware of the "Law of Unintended Consequences" when you wish for something.

Answer 2

The earnings tax has the outcome that the wealthy pay a lot more beneficial of the completed tax bill than center type voters do: the right 10% of earners pay 70% of the taxes. (in the previous the Bush tax cuts, it grow to be 60%.) A sales tax would flatten this out: the middle type would pay more beneficial, and the wealthy would pay a lot less. Draw your human being end as to if this may be desireable.

Answer 3

The only problem I have with it is the history of such taxes. Look at gasoline. The tax is built in and has been climbing every year. Do you know how much you pay in tax on each gallon of gas?

Taxation must be closely monitored, otherwise the government just keeps jacking it up. Otherwise, I like the idea myself.

Answer 4

1. sales tax is a regressive form of taxation--poor people would take a proportionally larger hit than George W.'s friends.
2. right now we have a patchwork of state taxation schemes--some states have income tax, some have sales tax, some have both, some have none--and states are generally resistant to giving up control to Uncle Sam.
3. consumption has been strong in recent years and has kept the economy going but NST would put a stop to that

Answer 5

You answered your own question.

The main reason this would never fly is that it would eliminate thousands of federal jobs.

Our government NEVER eliminates jobs, never.

So although it would end up being a more fair tax system, it will never happen. The federal worker's unions are just too powerful.

Answer 6

I wish I knew. It makes perfect sense. Pay tax on what you spend. We could eliminate the IRS.

Answer 7

Few politicians have the "right stuff" required to suggest such a drastic change in our tax system. England has been doing it for years, very successfully.

Answer 8

it boils down to one word...liberals. tax and spend would lose alot of its zip and lower income and special interest would see whose really paying for all the welfare schemes as they would have to physically pay the money to the government. this would be a bad way to educate the masses for a party whose cheif appeal is "equal treament" and "feel good" economics.