Should we get rid of the IRS & just pay 4-5+% more tax on the items we want?

Question

I never was fond of the idea that taxes were taken from your pay check, then you go into a store and your taxed there as well, so when one of the candidates for the 2008 election brought up the idea of getting rid of the IRS and replacing it with a flat tax rate on thing we purchase I was happy.

This will I believe make it easier for online sellers, like me, to sell items and wouldn't have to worry about keeping the books, it will also make those underground businesses, i.e. Drug dealers, Prostitution, etc have to pay taxes as well.

(Question raised about that last part, I was always under the assumption that underground businesses were illegal because they didn't pay taxes, atleast this is how laws were set in the beginning to prevent these businesses. So what would the outcome be, without the IRS and a taxable market place?)

good point Charlie, I already pay $.06 on every dollar, though I don't think it would be much of a heart ache paying and extra $.05 it think people would not like the idea that someone somewhere is paying $.06 less to the dollar then they are. Which would potential create a fluctuation in the tax collected each year due to people moving in area without state taxes, and because it for the sell of item people could always purchase items in areas with lower state tax.

I think you forget the power of the consumer, just think on averaged how much an American spends a day x Blank% weather its 5-30%, 5% on those dollars amounts to alot of money, then just think of how much the average American spends this time of the year, the holidays x 5%. So it doesn't have to be 30%. So I don't think it would be hard to raise the revenue, since being a tax on purchase, and not pay everyones dollars would be passed through the system, that mean tourist, illegals, and even black marketer at some point taxes would be collected, thus taken the strain from tax payers pockets.

Also I to don't think you could get rid of the IRS, but I guess its being used as a metaphor for the system in place now.

Answer 1

I don't know about the 4 or 5%. From my perspective, with 2 kids in college, and my wife having just graduated from college, I don't know how it would work out for me. Since I already pay 6% in state sales taxes, and without deductions for interest on my mortgage (which I'll be losing in a year) I would have to sit down and "do the math".

But just from a simplicity point of view, it sounds good.

Thewre would be some inequity based on the state you lived in, with people in states that have no sales tax effectively making 5,6, or 7% more than those in sales tax states.

Answer 2

First off, if you got rid of the income tax, you'd need a sales tax at about 30% to raise the same amount of revenue.

Secondly, who would collect the tax? Call it what you wish, it would be the same folks who currently bring you the IRS.

Next, with a tax that high, black marketing would be a major issue. How do you plan on dealing with that?

Lastly, with that high a tax, the poor and middle class would bear most of the burden. Great idea if you're rich. Not so hot if you're not.

If you think that 5% would cover it, you're either dreaming or grossly mis-informed.

Answer 3

Bostonianinmo provides a solid answer and solid comments.

Answer 4

I think it would be GREAT ! If your a big buyer your a big tax payer.

Answer 5

I'd go for that.