Those of us in the middle class are carrying the load of debt in this country. We need to get everyone who benefits from the commons to pay there fair share. We could save millions if not billions of dollars which could be used to keep our military at top levels of readiness. We need to have the best to keep China and Russia in check so there ruthless governments cant spread there corrupt way's.
At the rate the Government is spending , it might be the easiest way to reduce the National Debt and the $100's of billions in interest we are paying each year. That money used for interest could go to more important things. If we had a growing surplus , that interest could go onto the budget.
Sales consumption tax works for me. No tax on basics, housing, food, clothing and medicine/medical. When it comes to housing I mean those paying rent. If you are buying a home than maybe a 1 or 2 % tax which helps over infrastructure (sewer, power, safety, ..Ect). Personal vehicles 5 to 10 % for infrastructure ( roads, bridges, safety). Everything else 12 to 17%. EVERYONE pays including corporate America and city, county, state and fed governments no exemptions. Medical/prescriptions/dental/vision exemption except for elective procedures (ie...Tinted glasses vs standard or standard dentures vs implants, appendix removal vs tummy tucks or implants that change or modify your appearance).
Fair tax would save on tax prep hassle and cost, reducing compliance costs and tax evasion. It would also drastically reduce congressional corruption and the corporate lobbying industry weight on consumer prices, as there would be no tax code into which to lobby tax favors. A federal sales tax should include a monthly prebate to each household to cover the taxes on a poverty level of spending, or exempt certain goods from taxation like most state sales tax programs do. The trade balance and domestic jobs should see improvement, as imports would now be subject to the sales tax and domestic producers would not have the expense of income taxes. To make it more progressive than The Fair Tax, however, I would include a small (like 0.1%) tax on investment transactions (trade value, not earnings), except for trades within retirement or eductational savings accounts.
This idea is so simplistic, fair and easy to implement it will probably never happen. Not to mention the fact that the entire IRS department would be out of work.
Plenty above have provided the necessary facts and figures. I just wanted to add to the "Yes" column of votes.
It would follow the same processes as used in states with sales tax; it would involve fewer entities as only sellers would be dealing directly with the government; it would be fair because I believe that in most or all states with sales taxes, essential items such as food, medicine, etc. are not taxed at all, so non-essential items only would be taxed. Of course, there will be lobbing over what items are "essential"...
Federal Sales tax would discourage spending (incentivize saving) which is good for long term stability. Also u could give a flat credit back which takes out the regressive aspect. Current income tax disincentivizes hard work, which is stupid. We should encourage work, and allow people to keep what they earn.
A Federal sales tax on everything but uncooked food would not harm poor people. As a matter of fact removing Federal Income tax on wages would help poor people. Income taxes on wages did not exist until 1951 and it was 1% and money made on money (Capital Gains Tax) was taxed on an average of 40%. If capital gains went back to 40% and not assessed on savings and individual retirement accounts and there was a federal sales tax of 7% on all but uncooked food federal income would be increased 42% more than enough to pay off the deficit in 10 years and there would be no business tax except on the 7% of purchases world wide so they would have a great decrease in taxes as well and no need for a minimum wage as incomes would increase.
In 2016 the IRS sent out 25 billion in fraudulent tax refunds. This was double what it was in 2015. Over a 10 year period taxpayers will likely be defrauded out of 1/4 trillion dollars due to the incompetence of the IRS. With a 5% national sales tax combined with and a 15% rate on those with incomes between 100-250k and a 25% rate on anything over 250k would generate more than enough revenue to operate the government, pay down the debt. Additionally because the 51% who pay no tax would not be required to file a return IRS staff could be reduced and fraud rates would be reduced also. This would also allow us to reduce the corporate income tax rate to 15% which makes us competitive in the world. If Washington can't live on that then I suggest we vote them out and start over.
Everyone would pay, visitors from other countries, illegal activities, cash transactions etc. No corporate tax is needed. Nobody would lobby for tax breaks. The politicians wouldnt control the tax laws. Nobody would get to deduct anything for any reason or cheat the system. The poor would pay a very small amount everyday, that they wouldn't even notice. The wealthy would pay more and that's why we will never see a federal sales tax. It's too simple and makes too much sense, so it will never happen.
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.
While it sounds right on the outside, a tax such as this is really no better or different than an income tax. The income tax is figured on a progressive scale that has people who earn more paying a higher percentage than those earning less. Since richer people have more money, they obviously buy more stuff, and would, once again, pay more in taxes. Therefore, a tax like this would achieve nothing and look very underhanded and bad on our government's part.
A national sales tax would be inequitable to the poor who spend more of their income on purchases than the wealthy. The purpose of our tax system is to tax the wealthy more than the poor. They benefit more from our society than the poor and should pay more. The problem with the current system is that it has become so complicated with the constant changes. The progressive nature of the tax system would be benefited by simplifying it, but not creating a national sales tax.
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.
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.
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.
Give the government a chance and they will make it worse. The less they do the slower they over tax us and spend more money that the US does not have. If they CHANGE from an income tax to a sales tax it might work if certain exceptions like those in NY State are used. Food and Medical should not be taxed.
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.