Economy

[buzzcon]

Please excuse my naive question. Why not just have a flat federal sales tax. The more you spend the more you pay. Do away with income taxes. This would eliminate all the loopholes and EVERYONE would pay their fair share. I believe it would do away the IRS as well. It's simple and no one would be able to cheat.

I can see the flaw because then the wealthy would not have a way to dodge taxes and the poor (like myself) would pay as well.

Am I over-simplifying it?

 

[A.Nonymous]

I am a huge fan of a national sales tax. The objections to it seem to be the claim that it wouldn't raise nearly enough money as we need. People also claim that it unfairly punishes poor people who would end up paying a larger percentage in taxes. I'm not an economist and haven't done the hardcore analysis of the issue TBH so I don't know how valid either of these claims are. States certainly manage to support themselves on a sales tax. Some states have no sales tax at all and manage to stay afloat. It would be interesting to study exactly how those states do that and what income streams they use. Maybe that would be practical on a national level. Maybe not.

 

[buzzcon]

Some states rely in an income tax plus a sales tax. It could spawn a good debate.

 

[A.Nonymous]

Some states rely in an income tax plus a sales tax. It could spawn a good debate.

It absolutely could and it's one that should happen on a national level.

 

[ElasticNinja]

I am a huge fan of a national sales tax. The objections to it seem to be the claim that it wouldn't raise nearly enough money as we need. People also claim that it unfairly punishes poor people who would end up paying a larger percentage in taxes. I'm not an economist and haven't done the hardcore analysis of the issue TBH so I don't know how valid either of these claims are. States certainly manage to support themselves on a sales tax. Some states have no sales tax at all and manage to stay afloat. It would be interesting to study exactly how those states do that and what income streams they use. Maybe that would be practical on a national level. Maybe not.

Well, as I said before, a national sales tax would have to be around 30% to abolish income tax and fund the federal government. There would also need to be a big increase of excise duties on fuel, alcohol etc, which would be a good thing. This would require states and local govt to stop levying sales taxes, and they would all have to implement progressive income tax systems. Now, a 30% sales tax is not impossible. Its 28% in Hungary and 25% in Sweden. But it would hit the poorest fairly hard, and require an increase in transfers. To account for the loss of income tax to the states, the federal government would need to institute a German (or Australian) style transfer union, based o GDP per capita and or services and taxation.

 

[A.Nonymous]

I don't know that the states would need to change their tax structure at all. Certainly the feds don't have the authority at present to dictate what kind of tax structure the States adopt. Currently some states have no income tax at all and remain solvent. Other states (hi California) have high taxes and are teetering on the edge. It all depends on how the state is run. I'm not sure why the States would need to change their tax structure at all.

I don't entirely buy that the poorest would be hit fairly hard. I don't think it would be all that difficult to simply grant a refund to those living at the poverty level. That's how I would propose handling it.