Can anyone give me even ONE **good** reason why THIS wouldn't work **very** WELL?

Question

How can nearly all of the candidates for President (not to mention also most of those who are in Congress) possibly *not* realize that ALL of the complex problems associated with federal taxation would be eliminated FOREVER (and overnight!) by replacing the IRS with a National Sales Tax? It would be 100% fair to everyone, and the government would still glean just as much revenue. (And -- the people would have ALL of their income available to spend, as they chose. Which would make them wonderfully happy and content.) It's THAT easy!

Answer 1

With all due respect to people who preach about "fairness"...WAKE UP!! Life isn't fair. I think this plan is very interesting for the following reasons:

1. THE RICH WILL END UP PAYING MORE IN TAXES: many people that replied spoke as if both rich and the poor will purchase the same amount of everything in the same quality; hence poor will end up paying relatively more tax and therefore it's not fair. This argument is very flawed. The poor might spend $6.99 for a meal at McDonald's but the rich will spend $169.99 for a meal at gourmet restaurant. The poor will stay at a Red Roof In for $50/night while traveling but the rich will stay at the Ritz Carlton or St. Regis for $600/night. The poor will purchase milk at the local convenience store for $2.79/gallon but the rich will purchase milk at Whole Foods for $5.89/gallon. Also perhaps a more extensive luxury tax system could be implemented?

2. CURRENT SYSTEM IS VERY BIASED TOWARD THE RICH: The current system allows the wealthy with means to avoid taxation through variety of loopholes; hence many don't pay taxes at all. But by replacing such loopholes with a flat National Sales Tax, they are guaranteed to pay at least something (AMT??...yeah that's working well...it's mostly the middle-income people that pay it now).

Answer 2

It's not going to work, because the rich will have more money left over after paying sales tax, especially if it's the same rate for everyone. If I have to pay sales tax on a gallon of milk and Bill Gates has to pay sales tax on a gallon milk, we'd both pay the same amount of tax on the milk, but he'd have a lot more money left after the tax than I would. A national sales tax at the same rate for everyone would hurt the poor very much, and hurt the middle class, but not hurt the rich much at all.

Answer 3

Tell the couple with a child and income of $20,000 a year how fair your new system is, when instead of paying no federal income taxes under the current law and getting and earned income credit of over $2000, they end up paying a couple thousand or more in additional sales tax. I'm sure they will see how great it is, and not worry about the missing thousands of dollars from their budget.

Answer 4

That's easy! The wealthy LOVE the idea since they'd save a bundle! (The wealthy amass wealth, they don't spend it all, contrary to the flawed logic of the "Fair Tax" proponents.) When you take the burden off of one group it has be made up by another. That would then fall to the middle class and the poor.

Since the rate would have to be 25% or higher there would be a LOT of black marketing activity trying to bypass the tax.

The "pre-bate" feature would generate more tax fraud than any other credit or payment scheme in history due to the amount of money involved.

There you go. Three solid reasons why such a tax is a TERRIBLE idea. And exactly the reason that it has zero chance of ever being passed.

Answer 5

Not fair to everyone - it hits the poor proportionally harder than the rich - it is a regressive tax. The poor spend proportionally more of their income on sales tax than income tax - most poor people pay no income tax at all and some make money (heard of the Earned Income Credit?). Rich people pay proportionately less sales tax than the poor. Income tax is progressive, especially as it is currently structured - rich people pay more proportionately (regardless of what the Democrats will tell you). Given what my family pays for income tax, it would work for me, but it isn't going to fly with a Democratic Congress. And generally the public does not support it - they also all want a flat tax until they learn they will lose their home mortgage deduction. So don't hold your breath. Taxes are used for social engineering in this country.

Answer 6

Here's one. It's regressive unless you tax all purchases. That would include investments such as real estate, stocks, bonds, etc. Otherwise the wealthy will pay a very low percentage in tax and the very poor will pay a very high percentage in tax.

As with all taxes, the devil is in the details. In this case, defining what is subject to the national sales tax.

Answer 7

One good and simple reason.

The cost of compliance.

It would cost a billion or so to change systems as we know it just to handle the new type of system. Sure, a one time change, but billions more in potential revenues will fall through the cracks during the process.

Change is very, very costly.

Answer 8

Who's to say that the politicians don't realize this? There are a great many simple solutions to our country's problems. But, the current tax system favors the wealthy, who also happen to be the major contributors in political campaigns. Most of the rhetoric you hear on the campaign trail is merely to appease the masses. The real policies are made behind closed doors by America's richest 1%. Sad but true.

Answer 9

Because sales tax takes the same amount from everyone and that's not good. People with higher incomes who can afford to pay more should pay more.

Answer 10

It does work. In Canada we charge a Goods and Services Tax (Federal), everyone pays the same amount then each province has Provincial Sales Tax (Provincially) these funds are directed to the province that they are paid in. Though if you purchase a product in a province that you don't live in you pay the tax and then get a rebate on it from the province that you paid it in. The Federal tax is used for federally run programs and the provincial for provincially run programs.