Do you think getting rid of income tax and charging a flat 30% (or so) sales tax would be better?

Question

That way, people with more money, who buy more stuff, pay more taxes? People who can't afford as much, who buy less stuff, pay less?

Not only that, but it would allow a +/- situation for luxury items, while food and other basic essentials would/could cost less.

I'm no economist, but people who make 100,000 bazillion a year need to give a little more. I heard a statistic that 90% of the US wealth is in 10% of the population..... Well, I feel that everyone has a right to make as much money as they want, just that they pay their fair share and not have fancy loopholes and exceptions to hide behind.

I also think that a more simple tax filing could be done to compensate for people who give to charities, etc... much like we do today. You could get a flat refund amount for a specific size donation, OR there could be a gift-matching system.

What do you think?

MSDC,

I tried to e-mail you but it's not available:

You seem to now a little about the subject, it would seem to me that all the money would have to be spent at some point.... You could technically put it into savings and keep it forever, but what would be the point? Eventually the money would have to be spent.

What about the opposite? Taking only income and not items?

DUHHHH.... I mean TAXING only income, not items. :-)

Answer 1

Nope.
A flat 30% sales tax is what is currently known as a "regressive" tax. That is to say, it levies a heavier burden on the poor. Notice that the tax affects purchases, so the more you save the less you are taxed. But, the less money you have, the less you can save. So, poor people who cant save will be taxed at 30%. Better off people who can save 20% of their income will be taxed at 24%.
The error in your reasoning is that you assume that there is no savings.

Answer 2

OK, let us begin by looking at the current tax system

We have, what is called a "Progressive Income Tax." Which means that the more you make, the more you pay. The higher your income, the higher your percentage up to a maximum of about 35%

A so called "Flat tax" is not really an even tax, but is actually regressive (the less you have, the more you pay).
To illustrate why it is regressive, let us look at two fictional people, Bob and Steve.
Bob makes $10,000 a year (he is poor)
Steve makes $100,000 a year (he is rich)
Bob pays 30% of his income (3,000) and has $7,000 left to live on.
Steve pays 30% of his income (30,000) and has $70,000 left to live on.
Sounds pretty fair right? Except prices are not based on income, they are the same price for everyone.

They both buy groceries for 4 people: $3,600 a year ($300 a month)
They both buy a car:
Bob buys a total junker ($5,000) and pays $1,200 a year (100 a month)
Steve buys an Accord ($36,000) and pays $7,128 a year (594 a month)

All they have is a car and food (no house yet) and lets look at their situations:
Bob has $2,200 left or 31% of his income left
Steve has $89,272 left or 81% of his income left

So is it "fair" that Bob and Steve pay an equal percentage of their income?

I agree that the tax code needs to be simplified. Actually middle class people pay higher tax rates because of their ignorance of tax breaks that rich people pay accountants to find. However, a flat tax is an over-simplification that would hurt poor people.

Answer 3

11% is an imaginary huge style, via fact that many states have a 5 to eight p.c. tax which does no longer even pay for the state budgets, you could discover 11% is a huge determination made as much as sound solid. i've got seen calculations that should place removing of all earnings taxes at a 40% revenues tax. a minimum of they confirmed their artwork. you additionally should be conscious that the folk who declare this might nevertheless make inventory purchases exempt, as they at the instant are. i've got continually got here upon it humorous that paying for a vehicle includes ales tax, yet no longer paying for area of a enterprise. 11% is only an absurd huge style. Calculate what you pay in earnings tax, that proportion could be closer to fact. it rather is all earlier you initiate figuring how lots of the economic equipment could be a black economic equipment, like Sweden's or the Netherlands. Now think of how intrusive the government might prefer to be to definitely assemble this variety of tax. I take it you have on no account run a employer, as every physique who has run one is customary with of which you spend very much of time making advantageous the money would not disappear. each franchise concerns that the interior of sight proprietors are robbing it, each boss could hassle that his workers are robbing him. Now think of the quantity of forms and hardship the state might prefer to flow with the aid of to come to a decision how lots actual employer became finished. ordinary adequate in case you sell some thing you could count huge style. impossible to calculate once you are the third of the economic equipment that sells provider. Is the government going to count huge style soda cups like a McDonald's to make advantageous it gets paid on each soda? How does it count huge style motel rooms bought or haircuts given? Throw out the IRS and the next day might initiate a miles less useful forms attempting to do a similar artwork.

Answer 4

i have another solution.
charge only income tax and get rid of any other tax, incl. sales tax.
what do u think of that?