what would we be paying if we replaced the income tax with a federal sales tax like bush talked about in 04?

Question

what would happen with social security?

Answer 1

I don't recall Mr Bush saying anything about that. There has been a bill languishing in committee in the House for about 10 years now called the "Fair Tax" bill. But I don't recall him saying anything about it.

At least two of the current Republican candidates have expressed support for it, Mike Huckabee and Ron Paul. Mr Paul is one of the bills sponsors. That's unfortunate for them as it seriously chills there chances of being elected, IMHO.

The "Fair Tax" is a huge (30% or more) national sales tax on virtually all goods and services. That's on top of current state sales taxes that exceed 10% in a few locales and average around 7% nationwide. As others have accurately pointed out, it would cripple the housing industry (imagine a $60,000 tax on a new $200,000 home!) and most big-ticket industries such as the auto industry, etc.

It's based upon the premise that the rich would pay their "fair share" but what its proponents don't say out loud is that the wealthy pay far more tax as a portion of their income now than they would under the "Fair Tax" proposal. The wealthy don't spend all of their income, they tend to hang on to it. The poor and middle class spend a much larger portion of their incomes on goods and services, both essentials and non-essentials. The wealthy would get a massive tax break and the poor and middle classes would bear the brunt of the load unless services and benefits were slashed drastically.

It would also have it's own problems with fraud and tax evasion that the proponents won't address. Needless to say, Congress would have to pass new and probably very draconian laws to combat those issues. Imagine a tax audit team hitting your neighborhood and sifting through your trash for evidence of untaxed goods, or worse, digging through your underwear drawer looking for untaxed gruns! NO THANKS!

Answer 2

The most likely result would be that the average taxpayer would pay more. The richest taxpayers would pay less, the middle class would pay more, and the poor would pay a lot more.

With the current tax system the richest 10% pay more than halve of the income taxes. If that is true then the other 90% would have to pay more just so it can be fair for the rich

Most people already think they pay too much in taxes, i wonder what would happen if their taxes went up with something like the fair tax proposal?

I can see many problems with the Fair Tax; it would be bad for the housing industry or any other big ticket purchase, bad for the poor, retired, middle class. The only people it would favor would be the rich.

Answer 3

Bush talked about a national sales tax rather than an income tax? I don't remember that one.

There is currently a proposal called the "Fair Tax" that is being touted by a couple of the current candidates.

As to social security, the fair tax people glibly say "it would be funded" but as in many other areas are very short on details. Since benefits now depend on contribution levels, that would obviously have to change since there wouldn't be direct contributions to it and there would be no records of who paid what in consumption tax.

Answer 4

It would be a mess, many states have income tax based on what the federal tax is. Also income tax funds social programs like child care credits and earned income credits. So if they wanted to continue to give tax breaks to people like blind, over 65, parents, homeowners, energy conservers they would need to set up an entirely new system to encourage people to do things like buying homes and having children. Then you would find people saying it wasn't fair to the poor so want exemptions for food, rent and most things people need to buy.
They don't respect the ability of people to get around taxes like that so will collect much less than they expected to collect so will raise the rates. My guess is 40% federal plus 10% state sales taxes.

Answer 5

there would be an economical mess, bush talks about alot of stuff