what about stoping payroll tax and have federal sales tax on everything but food?

Answer 1

This is a good question, and it comes up periodically, amongst candidates for the Senate and House. Once the candidate gets elected, we generally never hear about the issue again, since this is a really hot button issue in Washington, and hardly anybody has the necessary brass marbles to tackle it.

By "payroll tax" you probably mean income tax. There are a lot of things to recommend this. It would simplify our lives to not have to file a 1040, every year. It would simplify operations for employers, who would be relieved the burden of much tax info filing and distribution of W2s, and such.

The arguments against it are generally that such a tax would encourage the development of a huge black market in virtually all consumer goods. Obviously, most IRS employees are against it, since it would eliminate most of their phoney-baloney jobs. It would also save us 4 billion dollars a year in IRS operational costs. The folks at H&R Block are definitely very much against it. Many wealthy people are opposed to the idea since they would have to find all new ways to shelter their income, and still manage to buy the things that make them feel special.

Whether or not it would end up saving you money would depend on the specific federal sales tax rates levied. It would also still be up to the states to decide if they are willing to follow suit, or continue their own state income tax programs. States like California would be very unlikely to follow the feds on this issue.

Answer 2

Payroll tax is the deductions that come out of each paycheck. Those include Social Security, Medicare, federal withholding, and state withholding. It may also include things like state disability. The amount of your withholdings is determined by how much you make in a pay period and may or may not have any relation to what your actual tax liability is. For example, I manage a movie theatre which is a very seasonal business. During the summer months my employees get more hours per pay period which means they have more taken out in federal and state withholding. But during the fall and spring they work very few hours and most won't have anything withheld for state or federal. But at the end of the year when they file a tax return, most of them will not have made enough money to have any tax liability and will get a 100% refund of any state or federal withholdings. Hopefully this makes a little more sense.

Answer 3

I used to oppose a federal sales tax on the grounds that it would be regressive. Now that the federal income tax is also regressive, I support it, as no one would ever again have to worry about filing, and tax lawyers would have to find a different field in which to steal. Mind you, we're talking here about adding, say 30% to the price of everything, from socks to learjets, so pushing this on a public used to getting painless deductions from every paycheck would not be easy.

I personally would prefer a tax on net worth, since that is where inequality really shows. But fat chance.

Answer 4

Look at "The Fair Tax" which has been proposed by Neil Boortz and Congressman Linder. This does much the same thing you are asking about but is revenue neutral, meaning there will not be a loss of funding to the government from what is not raised.

Answer 5

the problem with a federal sales tax is that the rich don't use the same percentage of their wages on goods as the poorer groups do. so the overall treasury would decrease with a heavier burden on the poor of this country the ones that can least afford it.

nothing wrong with a flat tax but there needs to be different levels for different income levels.

Answer 6

It may not be feasible to impose federal sales tax for it my affect the below average income earners. As for foods, how do you define? Find dining are also foods.

Answer 7

Well sure, if you want everyone to pay 25-30% more for everything they buy, and have the poor pay more and the rich pay less than they do now.

Answer 8

sounds great !