National sales tax?

Question

Is a national sales tax the only fair way to tax? When ever a transaction for new goods is made, be it wholesale or retail, a flat percentage tax is paid. This goes for business buying supplies, families buying supplies, etc. That way you pay according to your consumption.

Answer 1

I am in favor of a national sales tax replacing all other taxes. It is one way to see, every day, how much we actually pay in taxes.

Answer 2

I've heard this kicked around some but the thing I wonder about is how could the taxes for large ticket items be spread out so someone buying two new cars and a new home wouldn't have to pay the full tax on those items in that same year.

Another thing I'd be concerned with is what is going to happen to all the taxes I'm paying on things I buy now? This national income tax is going to be paid out on top of all present taxes. Could hurt lower income folks.

Answer 3

Proportionately speaking, the middle and lower classes will pay much higher taxes than the upper class. Look at it this way: one flat tax on all products. Three guys, one with $10, the second with $20, and the third with $100,000. They each go to the store to buy a $10 gallon of milk. The first guy pays a hundred percent tax. The second guy pays a fifty percent tax, and the third guy pays a .01 percent tax. Fair? Forget about whether it would support the economy, or what the actual tax rate would be, or whether that rate would have to be raised at all, or whether this country and all of us can actually afford it. Under the so-called Fair Tax, the more money you have, the less you pay in taxes.

Answer 4

Canada has a national sales tax ( GST ) that applies to almost everything with some exceptions .It works pretty well.No one likes paying taxes but The GST is not hidden.You see it on your receipts.The drawback to it is it starts an underground economy.People will pay cash to avoid the tax for services and goods. It's more fair than income tax.

Answer 5

I am a tax accountant and have advocated a national sales tax for a long time. It really is the only fair way to tax people, the more you spend the more you pay. The poor will pay less because they buy less and up the line. The issue will be what items will be excluded, I say only medicine and food are exempt. Everything else is subject to the tax, cars, boats and houses.

Answer 6

No, it's a very regressive tax. People who make enough to put a lot of money away don't pay tax on that money, or on the money they make with that money. But people who make just enough to live and can't save any money pay a huge tax on every cent.

People who own businesses and are able to buy things for themselves but charge them to the business don't pay taxes on those things--houses, cars, even airplanes. But people who can't buy a house and spend their money for food and rent don't get a break at all.

The whole idea of -every- conservative tax proposal is to shift the burden of taxation from the rich to the middle class. Why should YOU pay taxes so some rich guy doesn't have to?

Answer 7

Consumption taxes are inherently regressive, they hit the poorest (those who tend to spend all thier income, and more besides, if they can manage to get credit) hardest, and the richest (who tend to invest or loan much of thier income) the least. If such a tax aplies to capital goods, they also discourage economic development, as they make capital equipment more expensive relative to unskilled labor.

I know I often criticize Keynesian policies, but this is basic (and sound) Keynesian economic theory here (the famous Keynesian Cross - google it). People with low incomes spend all thier income, people with high incomes save much of thiers. Sales taxes don't tax savings, but spending. The poor and middle class tend to borrow money to buy things, so they'd pay the tax, then pay back the borrowed money with tax-free interest.

Really, if you're a 'soak the rich' type, this is the last thing you'd want to try.


Actually, an 'income tax' really would be a fair tax - if it were a tax on income. The American Income Tax, though, as applied to ordinary Americans, is not an income tax, but a revenue tax...

Answer 8

Great for the rich. Unless stocks &bonds etc are also taxed. What about the resale of existing cars?

Sales tax hits the poor harder than the rich as a percentage of "discretionary income."

Answer 9

The problem is it will greatly reduce spending, which will cripple the economy. As sales are lower, so is government collections. Then the government will say, hey, we need a more stable revenue source, let's have a small income tax where the witholding is direct, just like social security.

Answer 10

tax people for what they use and take social security for what they make....It would tax the users and the overusers of resources...so much crap is being made and just thrown away...but you would have to reward those with a lot of money for investing in society or commercial activities that would stimulate the economy....the rich don't pay taxes now, they tack all expenses onto the price of what they make anyway and pass it on to consumers