Why is there not more support for a national sales tax?

Question

I do not understand why a national sales tax is not instituted in this country. This would be the best way to generate income on a federal level. Even drug-pushers, and organized crime woul dbe chipping in due to the fact that anything they buy would be hit by this tax. It also forces those who consume more to bear the brunt of the load (i.e. wealthy and expensive lifestyles will supplement more based on their participation - buying more expensive goods and services).

Answer 1

Let's think about this, a little. A Flat tax? On the surface, it sounds great! So, why not?

In the beginning, around 1913, as I recall, that is exactly what we had.... an across the board flat tax. So, what happened?

Yep... special interest groups... Generally, congress voted to give American citizens incentives to conduct many aspects of their lives in certain congressionally-defined "wholesome" ways. It got to the point that the income tax system became a plan of wealth redistribution, and, in some respects, it still is that way (refer to the refundable Earned Income Credit, a euphemism for Low-Income Credit.)

There is so much complaining that the rich are getting richer and the poor are getting poorer, which is actually the case. Is it the fault, though, of the current income tax system? Would it surprise many people to learn that the "the rich" would love a national sales tax, as their proportional tax burden would be greatly lightened?

And who are the rich, anyway? Would it surprise a lot of people to realize that, when both spouses earn a paycheck, that when the paychecks are totaled, if they earn $60,000, or so, a year, that those people are considered to be "rich," by the majority of politicians in congress, right now?

But let's get off of politics and get back to the question at hand... a national sales tax... a flat tax... a "regressive" tax.

As opposed to the current, "progressive," income tax system, a flat tax penalizes the poor and rewards the rich!

Let's take two families, for example. Family A earns $20,000 and Family B earns $200,000 for the year. Assume a 10% flat tax.

On the surface, proponents of the flat tax would cheer, "Yeah! Soak the rich for the $20,000 (200,000 * 10%), while we give a break to the "poor" family and only request a "fair" share of $2,000 (20,000 * 10%)!" And, you know what? I fear that the majority of American voters would vote that into law!

But look what happened! Family B, which paid the $20,000 tax has no problem living on the remaining $180,000 (200,000 - 20,000), while Family A, which was already struggling to survive on $20,000 a year, now, is devastated to find out that it has to sacrifice further on its living necessities, because it only has $18,000 (20,000 - 2,000) left!

Similarly, let's suppose that the income tax system were abolished, and, instead, we just had a national sales tax of 8%. Let's suppose that Family A spent all $20,000 on sales taxable necessities of life. Its national sales tax liability was $1,600 (20,000 * 8%) of what it spent. Family B, on the other hand, does not need to spend its money on all sales taxable necessities, but let's suppose it spent twice as much as Family A; hence, its family lifestyle was twice as nice as that of Family A, yet it only paid $3,200 (40,000 * 8%) in sales tax, and it is left to invest the remaining $156,800 (200,000 - (40,000 + 3,200)).

Now, would you rather be Family A and have nothing left over, and, even, be deeper in debt, or would you rather be Family B and have $156,800 left over. Further, if you were Family A, and you knew that the national sales tax enabled Family B to keep $156,800, while you had nothing but debt, would you still be in favor of the "regressive" national sales tax?

It's time for people to wake up and realize that popular movements, such as the "flat tax," or a "national sales tax" is actually very bad for those who are struggling to survive, and those who lobby for such do not have the interests of the financial middle class, or the interests of the financial lower class, in mind!

Sometimes, it seems that congressmen and women try to convince, out of emotion (whether it be greed or envy), the less financially-knowledgeable American citizens, that they (Congressmen and women) are smart, and the rest of us are not, and that we need to depend on them (while they line their pockets with huge congressional salary increases, sometimes, buried in proposals, such as "Stop the War" legislature)!

Don't you think it's time for each American citizen to learn the truth about money and how it works?

Phil
http://www.phillipfostercpa.com/money.html

Answer 2

I wouldn't have a problem with it if it was a sales tax on NON ESSENTIALS. For example, groceries, utilities, and housing should not be taxed. I think a flat sales tax is unfair and a disproportionate tax to people who are very poor. People who do consume more should bear more of the brunt of the load. But no one has ever come up with a good plan for this. The worst kind of tax is Oregon's INCOME TAX and excessively high PROPERTY TAX - everyone has to work and have a place to live, and the high price of prop. tax is passed on in the form of higher rent - and both income and rentals are taxed at the same rate for everyone, rich or poor. urgh - that is one tough place to make ends meet if you make $1000-$1500/mo.

Answer 3

Probably because most people realize that the brunt of the change from the current system to a national sales tax would fall on the poor. Yes, the rich would pay more than the poor because they'd buy more - but the already DO pay a LOT more than the poor, and wouldn't pay as much proportionally under a national sales tax as they do now.

But you're right, a major plus would be that the people now working under the table would be paying their share.

Answer 4

The support isn't there because so many lobbyists fight it. Just think of everyone that would be put out of business- rich tax lawyers and CPAs, tax return preparation companies, lobbyists for and against different tax issues, the entire IRS. (Wouldn't that be a day to celebrate?)

While I don't advocate a national sales tax for the reasons stated by others, I am in whole support of the FairTax bill. It is almost identical to a national sales tax, except it addresses these problems to make the tax a more level playing field. In other words, to make it a more 'fairtax'.

The FairTax bill is a lot more fair than the current tax code. It would eliminate many tax loopholes for the rich and corporations. You would get your entire paycheck each week. Social security tax, income tax, and many other taxes would be eliminated. The hassle and headaches that occur every year around April would be a thing of the past.

Find out about The FairTax bill that some members of Congress are trying to get passed. See if your representatives are on the list. If not, contact them. Get the word out about this important bill for American taxpayers.


For more information on the Fairtax bill in general and getting rid of the IRS specifically, try out this site: http://www.squidoo.com/abolishirs/

Find out about Tax Freedom Day here, which is the date that you actually get to keep your paycheck instead of stuffing the government's pockets. It will probably make you sick at your stomach, but it may spur you on to push the passage of the FairTax bill-
http://www.helium.com/tm/204965

Answer 5

Because a sales tax is a regressive tax. It does not take into consideration the ability of the taxpayer to pay the tax. Regressive taxes disproportionally affect the poor who have no ability to control their spending on essential goods and services.

Anyone who thinks organized crime would pay the tax is fooling themselves. Any time a tax is levied on a class of goods (look at alcohol and tobacco) black marketing of those goods rises to attempt to avoid the tax.

Only the naive or the ultra rich see a national sales tax as any kind of solution. The naive don't know any better, and the wealthy would see a tax cut.

Answer 6

Too big of a lobby when you think of all the attorneys, accountants, etc. that would have to find something else to do. Plus just imagine the pandering politicians who would talk about how "cruel" it is for poor people to actually have to {gasp!!} pay a little in to get it all and more back out.

Answer 7

you answered your own question

It also forces those who consume more to bear the brunt of the load (i.e. wealthy and expensive

who do you think make the rules/laws?? the poor?????