Flat Rate Income Tax or National Sales Tax?

Question

What about the Hall-Rabushka plan? Is it dead and only the sales tax/VAT people proposing an alternative to current system?

Answer 1

No, the flat income tax is not dead. Hall-Rabushka was popular in the 1980s and many in the Reagan admin were supporters but it went nowhere. I provide a link below to the latest book on it. It is much better than the current system and far superior to a VAT or National Sales Tax. The "FAIR" tax is not fair-it would be a boon to the rich and crush the poor with a huge sales tax. Fraud would be everywhere (easier to cheat than current system).

Although not quite "Hall-Rabushka," I support a Flat Rate Income tax of 15% with $10,000 exemptions per adult and $5000 per child. A family of four would have $30,000 income tax free. There would be no "Married" or "Single" tax rates, thus no "Marriage Penalty." A maximum of 2 adults could file together with their legal children as dependents. All income above that would be taxed at 15% with no preferential treatment to any "type" of income. The standard deduction and almost all itemized deductions would be eliminated. The "Earned Income Credit" would be eliminated (it is a massive fraud and a disincentive to earn more than $15K per year) and replaced with a fully refundable $1000 child tax credit.

Passage of this tax would likely require that the Estate Tax remain in place, but I would limit it to15% of any estate over $10,000,000 This would actually add revenue as many tax dodges would be eliminated.

This is simple and fair. It will not happen and niether will the "FAIR" tax because special interest groups own Washington, DC and want the tax code riddled with special provisions for their members. The Internal Revenue Code is a politicians playground. It is a Christmas tree of goodies for a select few here and there. They use it to try and mold your financial behavior to their whims. We will not get true tax reform until we get politicians with backbone...

Answer 2

The black markey would explode if we went to a national sales tax only. Twenty-three percent is an absolute joke and would kill the economy since everything would see an instant increse in cost of 23% (talk about inflation!). Does not matter if you pay less in income taxes, since most people do not actually pay taxes (many make money on the current system, see EIC and Additional Child Tax Credit). The most likely thing that will happen is no change to current system, but the feds will add a sales tax anyway, but more like 1 or 2 %. That way it doesn't seem to effect everything, but would bring billions in increased revenues. Except in the few states that do not have sales tax, the businesses that collect it are already use to sending in their payments, adding another envelope wouldn't be overly burdensome. This won't happen without an amendment to the constitution, and you can see how easy those are to pass, lol. Much easier to just find an activist (liberal or conservative) judge to say they can do it and we're all stuck with the result.

Answer 3

i am probably the only person in the world to favor the sales tax due to the fact that i like simplicity. but politicians make more money out of keeping things complex so the average joe doesn't challenge it. really. and they make out handsomely, at that.

Answer 4

Neither. Both are regressive and shift the tax burden down from the rich to the poor and middle class.

Answer 5

The current system will NOT be changed for many years to come.