Not to mention that we would not need the IRS any longer which would save a ton. We would just have to think of an option for homes, cars, boats, etc...
Seems to have bailed Russia out and we can't keep doing what we are doing and expecting it to get any better right? Simply crazy to me that the tax system we have now gets mishandled the way that it does. This could also fund no cost hospitals the way Brazil has. You can have insurance and go to the state of the art hospitals or walk into a free county hospital.
To swap income tax for sales tax makes more sense. This could also help fix our illegal alien problem. I only have a problem with illegal aliens because they use government programs and our education system but they don't pay taxes. I think the House should swap immigration reform for a flat federal sales tax because anytime something is sold, tax will be paid no matter who you are. So in essence everyone is paying taxes, not just the 1% or just the 99%, ALL 100% will pay according to what they use. I would much rather have all 1625 of my paycheck every 2 weeks and determine how I will spend it than the 1087 I get because of income taxes and medicare taxes and social security taxes which I will never see. At least with a flat sales tax I am not being promised something there is no way my generation will ever see.
This is a great idea and we should push for it. We would then be able to tax the 60 billion dollar a year drug trade. That drug dealer that buys a luxury boat or car would then be taxed. This would generate a big stimulus to our economy. We would have less need for the tax attorneys, the huge IRS department (whose budget this year is 13.3 billion dollars) and CPA's to do these tax returns.
This would be a win - win for all of us, rich or poor.
A national sales tax would fall evenly on all citizens regardless of their income. No matter who purchased, for instance, a washing machine, they would have the same tax placed on the purchase price; there would be no level of differing taxes based on income. For this to be truly equitable there must be no exemptions for luxury goods, such as yachts, to shield the rich.
With the current tax bills and medical insurance going sky high since Obamacare, the only way to equally share the pain is through a Federal Sales Tax. Not on staple foods, clothing, except Luxury items. Hit everyone the same way. Lower incomes who buy more food and basic clothing will not be hit as hard as the ones buying Vineyards and G6's. How much odes the Goverment pay the IRS in salaries to harass middle income Americans? Why not just turn the IRS into tha sales tax collecting agency and get rid of a tax program that has turned the 1040 into a lesson in Astro-Physics and Nuclear Reactor Engineering?
I live in Texas where there is no state income tax. However, we have one the highest sales tax rates in the nation. Our sales tax works as our income tax and everyone is subject to except when purchasing food or services such as plumbing. I feel the same will work for the rest of the country!!! This will not hurt the poor, it will ensure that wether you are buying a ford fiesta or a Maserati you will be paying your "fair" share!!!
I see a lot of people saying it would hurt the poor but it's simple math. If a low income person spends 100% of their check, say $600 and are taxed 10% that's $660 dollars. If a rich person spends 10% of their check, $600 dollars and are taxed 10% that's $660 dollars. The rich just have 90% they can't spend if they don't want to be taxed. The tax remains the same dollar for dollar. It doesn't affect the poor as much as the rich. More spent money, more taxes paid. Less spent money, less taxes paid. The poor WOULD NOT have more of a burden.
There are a lot of "rich" people out there that blow 1000's a day on crap only to turn around and claim it back in deductions. With a sales tax these 1000's in spent money would turn into 100's in tax income.
For the middle and lower class it would mean keeping more of your check to start, let you save money back, and move up the chain. The only safe gaurds that would need to be put in place is "passing the buck" which a lot of companies currently do. Raise the price of items to make up for the tax they have to pay. The IRS wouldn't be able to be closed, it would just get smaller and keep an eye on big businesses to make sure they aren't trying to take advantage of the consumer by trying to pass on the tax as a "cost of living increase".
So as per my W2 and my tax return I am left paying 15.3% total in federal tax. So if every person and business pays exactly the same then it's a simple done deal. And I do mean everyone, every time. Disney just bought Lucas for four billion plus. Place the same 15% sales tax on that. Bam! It would absolutely fix everything.
Provide an incentive for saving and investing while taxing consumption. Also decrease the tremendous cost of tax compliance for millions of Americans as well as corporations every year. I'm an accountant and realize that thousands of CPAs would have to find new work if tax were to be simplified to this point. In reality though, they are smart individuals who can help a business grow and should not be troubled for finding jobs. The overall increase in savings & investing leads to smart spending which drives the up tax revenues and produces a more active economy. Reduce government limitations and entitlements but increase education and public communication so that we have a voting population who is knowledgeable and driven on the issues. Our bi-partisan system has failed as both sides are deceptive.
Those with more income generally buy more any way, and generally buy more expensive items.
Food, medical, housing (to an extent), clothing (to an extent), should not be taxed. Those are the necessities of life.
If a person of greater wealth wants to buy "bling", they pay more in taxes. Those who are on a lower budge pay less.
No income tax, but tax on what is purchased.
The leak is in spending; fix the leak and then we'll figure out how to decrease taxes. Otherwise, this is just an alternative way to raise money that will be wasted. Many people confuse *lower* taxes with *fair* taxes - which is an oxymoron in the first place: "fair" and "tax" shouldn't even be in the same phrase.
If you actually do the math, you'll find that this doesn't lower anything; just moves the costs from the rich to the poor. I think those who earn their money should keep it - including the rich. But creating a vast economic gap between the rich and the poor is not exactly the way to avoid a 1780 France. Do we really want to eat cake?
Think about it. Say, someone makes $30,000/year. Under current (2014) brackets, they'll pay income tax (15%) on $21,074 of it. That's a $3161.10 tax liability. Fair Tax is going to be about 23%. Let's say they spend $1300/month on rent, utilities, and groceries (all supposedly exempt from a nation-wide tax...But since when has our government agreed to permanently exempt anything?), and the remaining $1200/month goes to gas, clothes, non-grocery items, furniture, electronics, entertainment, and dining out. That's $14400/year, which, in a 23% tax comes to a $3312 tax liability.
And that's if our notoriously waffling government keeps it at 23%.
Besides hurting those with lower income, we're tempting people to buy internationally, producing a shortage of American jobs - and tempting people not to buy at all, which is good for long-term economy, but fatal short-term. We shouldn't punish for earning money, but should we punish for providing the means for people to earn money - i.E., buying? We're supposedly putting the IRS out of business, which sounds great, except we're transferring the workload from them to the shoulders of the sales tax collectors - businesses. That will be doable for the large retail stores, but small businesses spend hours every month (I know; I used to be a bookkeeper for a small store) filing taxes. Do we really want to make it harder for them to make ends meet?
The tax system needs serious work. But I think people are so in love with the "Fair Tax" name, they aren't paying attention to the ramifications.
In the past few years, the income of the top 1% has increased 275%, and the flat tax would just worsen this! The rich would have no income tax, and the sales tax would be a mere part of their yearly income. In addition, why should we tax those making $50,000 yearly the same amount as those making $1,000,000 yearly? Furthermore, if we decrease the salary of the poor, a chain reaction will occur, as they will be forced to use more healthcare provided for them.
Many people buy things in the store, including kids. With sales tax, kids would have to pay more for the things they like. A little kid also doesn't have to pay income tax, seeing how they don't make money. I think that federal income tax is the better way to go.
No matter how gleefully supporters argue that a federal sales tax will encourage people to save, they are merely obfuscating the fact that this saving comes at the expense of spending that creates demand, and it is always demand that creates economic growth. Nothing supply-siders say about giving businesses money to "create jobs" addresses the basic economic fact that it is demand that creates jobs.
People do not create businesses in order to add jobs to the economy, they crate businesses to make money, and the only way they can make money in a capitalist system is by meeting demand. No demand, no business. No demand, no new jobs.
Therefore any, and all, arguments supporting supply-side stimulus are merely ideological, and are not accurate.
Federal sales tax sounds like a good idea at first, but there are many problems with it. Among these problems would be that it discourages consumption, which in the long run, hurts our economy. It is also unfair because it taxes the poor at a much higher rate than anyone else. If a poor person has to spend 100% of their pay check to get by, then they get taxed on 100% of their pay check. Whereas a rich person might only spend 20% or 30% of it, leaving them largely untaxed.
There are basic needs that every person, rich or poor, must have. To tax heavily the basic needs and services that everyone must purchase is to place an undue burden on the poor. Certain basic things would become completely unaffordable for those who didn't have much money. The rich and poor would basically be paying the same taxes, but it would cripple the poor while not affecting the richest. This is not a humane concept.
If income taxes were eliminated and replaced with sales taxes, the hardest hit would be the lower class, who can't afford to save money and have to spend everything they have simply to keep on going from day to day. The wealthy, by contrast, would save all their money, investing it in ways that wouldn't be taxable, thus maintaining a 'rich get richer' feedback loop that would ultimately destroy the economy.
Everyone (rich and poor) needs to buy things like food, clothes, utilities and these expenses often take up the majority of poorer peoples income. If they are paying the same tax levels on these as those who earn a lot more money, their percentage of tax paid is going to be much higher than those on higher incomes which is unfair. Income taxes also have their problems but ideally under this system those in poverty should pay less tax and is thus a more equitable system.
I live in a state where there is no income tax, but we pay a 9.25% sales tax on everything we buy. The problem with sales tax is that the people who can least afford to pay it have to carry the burden of it. Those who are able to pay the extra, might not seem bothered by it. I can understand the temptation to use a sales tax, especially on unessential items. But, when you buy $100 dollars worth of groceries, then have to pay an extra $9.25 on top of that, it will bust your budget if you have a limited income. Now, suddenly, you are out of the $10 you needed to buy diapers for the kids. This is the kind of regressiveness that a sales tax can cause.
A sales tax appears to be equal across the board. It is not, however, due to the fact that there is a certain amount of things that are necessities that everybody must purchase. If the income tax is abolished, lower income people will pay a greater percentage of their income in tax than higher income people, simply because lower income people spend a greater percentage of their income than higher income people do.