Would you support a national sales tax over paying a federal income tax?

Question

It would seem to me that the argument against a national sales tax is that it would hurt the poor.....the poor are already VERY screwed.

Answer 1

Yes, because it's the principle of the thing. People should not be penalized (taxed) for producing something. They should be penalized when they use up resources.

The problem is that a national sales tax to completely replace the income tax would need to be something somewhat substancial, like 25-35%. When you have tax rates that high, you're going to get a very large black market & have many people evading taxes.

The other problem is that the politicians may enact a national sales tax & decide to keep the income tax too. Now that would REALLY suck.

Answer 2

I'm split on this issue and let me explain why. I live in Fla. We don't have state income tax but do have sales tax. State income tax has fail because we have a large number of seniors on fixed incomes, and a large number of people who work in low wage service industries. Sales tax is popular because tourism is big here so we get many out-of-state and foreign visitors. Also we have a large number of illegals (another subject). By having a Sales tax, we get tax revenue from everyone that goes to the store and buys something. Whether they live here or not. Because Sales taxes are regressive, food and prescription drugs are tax exempt. There is a higher tax on hotel rooms, and prepared food at a restaurant is taxed.

Here's my problem with the current Federal Income Tax. Taxes should exist for one purpose only - Generate Revenue for basic government services. Politicians use the tax code to reward or punish, to boost one segment of the economy, or to push policy. To me, this is unconstitutional. Taxation or any other government policy should not be used to benefit one group of citizens at the detriment of another. This is social engineering. Currently our economy is 70% based off consumer spending. Shouldn't we have a tax system that is reflective of our economy? Because of the Income Tax, we have created a black market in the work force. Right now there are many workers who are not paying income tax because employers will find a way to pay them under the table.

I agree that a high national sales tax would really hurt the poor and middle class. If Income Tax was replaced by a high sales tax tommorrow, it would be very detrimental to the economy.

Rather I would support a low National Sales tax (say 5%) with exemptions placed on food, prescriptions, and the first $50 of clothing. Put a NST cap of $1000 on any one item. Leave the Coporate Income Tax and an Income Tax on Passive Investment Income. Also leave in place FICA. Considering the volume of transactions that go on in this country daily, (consumer spending) the Federal Government should be able to generate enough revenue to provide necessary services.

Answer 3

It would be a terrible deal for the poor and middle classes. It would be a massive break for the wealthy.

Proponents of the mis-named Fair Tax assume that the wealthy spend all of their money. This is an exceptionally naive assumption. The wealthy are wealthy because they hang on to their money, not spend it! (OK, the odd Paris Hilton excepted.) The truth is that the poor spend virtually every penny they get covering basic necessities. The middle class may live better but they do spend most of their income on necessities and "conspicuous consumption" items. The wealthy on the other hand spend a tiny fraction of their holdings and would therefore pay a substantially lower portion of their total income and pay less tax proportionally.

The Fair Tax is a massively expensive national sales tax, levied at 30%. That's on top of existing state and local sales taxes. Those state and local taxes run as high as 8.75% to 10% in some areas. So, if you bought a new $200,000 home you'd pay an additional $60,000 tax on top of the purchase price. Or if you bought a new $20,000 car you'd pay an additional $6,000 just to get your tags.

Even with the so-called "prebate" that is supposed to cover the tax on basic necessities the tax levy of the typical American would rise substantially. Additionally there would be massive fraud on the prebate that would require that the IRS would have to track the composition of family units in real time because the prebate is not a flat per-citizen payment.

Black marketing activity to attempt to avoid the tax would negate the touted benefit of extracting tax dollars from the underground economy such as criminals, illegals, etc. It would just generate a new class of tax cheat: The average American. This would lead to draconian new laws as the government attempts to combat illegal black marketing activity. Imagine an IRS field audit at your home, digging through your underwear drawer looking for the tax stamps on your gruns or digging through your trash looking for untaxed Cocoa Puffs boxes.

The current tax code does need some cleaning up, no question about that. The AMT needs to be re-set to 1969 inflation adjusted dollars and then permanently indexed to inflation. Capital gains taxes need to be graduated just like the basic income tax is -- they can still be taxed at a lower rate to encourage investment but even Warren Buffett agrees that he pays too little tax because of the way they're taxed now.

What we DON'T need to do is to collapse the economy with the "Fair Tax" and that is exactly what would happen -- the new housing industry would collapse overnight, as would the auto industry and other big-ticket industries. The fallout from the loss of jobs would quite literally trigger another Great Depression and lead to widespread public unrest. No thanks!

As soon as any politician goes on board with the "Fair Tax" or "Flat Tax" they are stricken from my list of people I'm willing to expend a vote on. I don't begrudge the wealthy what they have, but I'm NOT ready to give away the farm for their further benefit.

Answer 4

No. Sales taxes by their very nature are regressive. They hurt the poor more than the rich.

The "Prebate" added to the Fairtax would alleviate some of this but it would be very very expensive to administer and fraud would be vast. (Two issues the Fairtax doesn't address)

Like it or not, the "fairest" tax we have is the income tax. The feds didn't choose to go with an income based tax on a whim.

Answer 5

i'm with you one hundred%. in spite of the undeniable fact that, we first could desire to repeal the sixteenth. modification and then write and ratify the twenty 8th. modification. of course the sixteenth. modification will must be in effect until the twenty 8th. modification turns into regulation. This modification will must be written with language exempting nutrition, prescription drugs and the acquisition of your popular place of abode. a trip domicile could be taxed. there'll must be language secure which will pay, month-to-month, each and every family members an quantity equivalent to what a family members of that length, residing at or below the poverty line, could spend month-to-month on the national Retail sales Tax. This "pre-bate" will insure that the undesirable are no longer taxed unduly. Language can be needed to require a 2/3 majority of the domicile and Senate to improve the NRST. of path, this would possibly not in any respect ensue by means of fact it may get rid of too lots potential from Congress.

Answer 6

Absolutely. If you are referring to the "Fair Tax" plan then I whole heartedly support it. The National Sales Tax (consumption tax) would provide for an equitable collection of tax revenue across the spectrum.

Answer 7

Yes. best and most fair tax. But what would we do with all those tax preparers, accountants and attorneys? Unempoyment would skyrocket!

Answer 8

No it penalizes the pour.

Well, maybe depending on what is exempted from the tax...

Food, clothing, education?

Answer 9

Yes - in Europe they call it "Value-Added Tax."

Answer 10

definitely