Why not a national sales tax instead?

[Pandora]

I have been reading the threads on flat tax and all the arguments for and against. But I keep wondering why no one seems interested in a sales tax instead or a VAT tax.

I don't mean a national sales or VAT tax on top of the existing taxes. I mean for it to replace the income tax.

When you tax a persons income it seems to me you are encouraging them not to work as much. I have personally turned down over time because they take so much taxes out of my check when I get over time, by the time I have paid the baby sitter exc.. There isn't enough left to make it worth my while.

And not everyone pays income tax. I read the complaints that the rich never pay their fair share, no illegals pay it and I highly doubt drug dealers, pimps and prostitutes claim their income to the state or federal government.

If we had a Sales or VAT tax (replacing the income tax) then everyone including illegals, drug dealers, pimps and prostitutes would pay the tax.

The tax would also encourage savings (something Americans need to learn to do) and promote working since every dime is yours.

The poor would pay very little since they don't buy much. The middle class would probably pay the same as they are now and the rich would really get soaked.

I do not believe in double taxing so the only time a car would be taxed is when its new off the lot. Mostly the rich would end up paying a tax like that. The middle class would buy cars a year old or something and avoid the tax and the same for the poor only their cars would be older.

The rich would get soaked on eating out since they go to the higher price places, and even food for home would cost far more than low income or even middle class people.

If the government did not bring in enough revenue at a 10 percent tax they could up it to 15 percent and if they charged too much at first, they could always lower the tax the next year

haha I already see the flaw.. The idea that the government would give some back.

But seriously, am I missing something? Wh wouldn't this be a more fair tax,
And just think of all the money we would save not having IRS workers

 

[pocketfullofshells]

one first problem is in what you stated as a good thing..savings....the US economy does not like savings...it likes spending...when you have to give a 28% tax on everything..you spend a lot less then when its taken out of your check and you never saw it in the first place. The econ is doing poorly right now for that very reason..people are not spending....corperations are just sitting on huge sums of money and loading up there paychecks.

capitalism hates saving.

 

[pocketfullofshells]

Also fairness..

a man makes 10,000 a year..thats not even enough to live on very well at all in the US. he spends...100% of his income...he does not have the benefit of savings, he is poor. He pays 28% of his income to taxes...leaving him with now just above 7,000 real income to live on.

Man B, makes 100,000 a year...he saves 20,000 a year....he pays taxes only on 80,000 now..54,400 a year spending cash he has now...so his percent of income taxes as a percent is lower then that of a guy who can barley pay for food and rent...

now you take a man like warren Buffet...he under the current system pays about 17% tax...( average of richest 400 Americans in 2006) Do you think the sales tax would make them pay higher? if so, why do you hate the job creators...when you say raise the max tax rate under the current system its class warfare and your a commie...so why is it all of the sudden Flat tax and sales taxers claim that..they also claim that the reason this system would work better it would stop those who don't pay enough in taxes...

Think about this..why is it that no other major econ has a sales tax to pay for everything? The US did not become the worlds biggest supper power with a sales tax.

but if you want a system where your big mac meal at McD's now cost 9 bucks, and a 30,000 car costs 39000, a new home costs not 200,000 but 256,000 ( Also every homeowner in the US can know there housing costs just went up, as you can't deduct a mortgage anymore)

Speaking of Mortgage Deductions...if your really really sick...no more writing off medical bills...you get to pay 28% tax on your medical bills...also your Medical insurance...

Also whats the Budget next year for the US...Just guess at what people may or may not spend and hope your right? Hope when you budget nothing bad happens that throws off your guess? something that could be really bad and maybe even slow spending a lot? Well if it does you can be happy to know that the worse it gets, the less money the goverment will have to deal with the problem...

 

[Pandora]

Also fairness..

a man makes 10,000 a year..thats not even enough to live on very well at all in the US. he spends...100% of his income...he does not have the benefit of savings, he is poor. He pays 28% of his income to taxes...leaving him with now just above 7,000 real income to live on.

Why is he paying 28%? I would think 28% is too high of a national sales tax

B, makes 100,000 a year...he saves 20,000 a year....he pays taxes only on 80,000 now..54,400 a year spending cash he has now...so his percent of income taxes as a percent is lower then that of a guy who can barley pay for food and rent...

Its his spending cash that would be taxed not his savings.

you take a man like warren Buffet...he under the current system pays about 17% tax...( average of richest 400 Americans in 2006) Do you think the sales tax would make them pay higher? if so, why do you hate the job creators...when you say raise the max tax rate under the current system its class warfare and your a commie...so why is it all of the sudden Flat tax and sales taxers claim that..they also claim that the reason this system would work better it would stop those who don't pay enough in taxes...

Mr. Buffett makes most of his income from his investments, in particular from dividends and capital gains that are taxed at a rate of 15%. His other tax is payroll tax, those rates are different percents than his employees Income tax. He doesn’t make “Income” like you and me, he already made that and now he lives on the interest of that income, a totally different tax.
Even if you raised the taxes ten times higher than they are now it wouldn’t effect him, he has already made the bulk of his money and is living on it, he only pays on the interest.
A national sales tax would take huge amounts of money from him “tax wise” that it is not taking now

about this..why is it that no other major econ has a sales tax to pay for everything? The US did not become the worlds biggest supper power with a sales tax.

I think we became a super power because of the kind of people we had during the time we became a super power, those kinds of people are mostly gone and a new breed of ..... people are living off thier hard work

if you want a system where your big mac meal at McD's now cost 9 bucks, and a 30,000 car costs 39000, a new home costs not 200,000 but 256,000 ( Also every homeowner in the US can know there housing costs just went up, as you can't deduct a mortgage anymore

A big mac at 9$ How high of a tax are you talking about? And your dear fearless leader is considering ending the mortgage deduction already

of Mortgage Deductions...if your really really sick...no more writing off medical bills...you get to pay 28% tax on your medical bills...also your Medical insurance...

Where are you getting the 28% Why does your national sales tax have to be so high?

whats the Budget next year for the US...Just guess at what people may or may not spend and hope your right? Hope when you budget nothing bad happens that throws off your guess? something that could be really bad and maybe even slow spending a lot? Well if it does you can be happy to know that the worse it gets, the less money the goverment will have to deal with the problem...

If in the first year the tax did not bring in enough to run the government you would raise the tax the following year. That would probably get people to buy more. Most people will buy if they think its going to cost more later.

I don’t know if it would work or not, I just know I think its stupid to tax people on what they make instead of what they spend and I think everyone should have skin in the game (see I sometimes agree with obama)

Our current system is not working at all, it needs to go. I would welcome a flat tax or fair tax over the current system but I would rather see a tax on what we consume over what we earn.

 

[PLC1]

capitalism hates saving.

Capitalism depends on savings. How else can people get a share of industry except by investing? Investing is the life blood of capitalism.

Of course, a certain amount of consumer spending is necessary, too, in order for there to be a market.

So, why not a sales tax instead of an income tax? Currently, the government's income is about 17% of the GDP. If we had a tax of, say, 20%, with 3% dedicated to paying down the debt, why couldn't that work?

Of course, everything except savings and investment would have to be taxed, no exemptions for real estate housing, medical care, groceries, utilities, services, or anything else that tends to be exempted from sales taxes.

Taxes would be pretty high, still, though. 20%, on top of the nearly 10% we pay in Calli would put a real damper on large purchases.

 

[GenSeneca]

The "Fair Tax" could only work if we repealed the 16th Amendment and I don't trust the politicians of either party to be given a free hand at altering our Constitution.

That aside, I like the concept of the fair tax but I do not like the "prebates" that it offers. The idea is to give people a check for the amount of money they will pay that year in fair taxes to cover necessities. You get that money ahead of time and that's why it's a prebate rather than a rebate after you've paid taxes. I could see the prebate system being a source of abuse and corruption.

There is also the chance that we pass the "fair tax" but fail to repeal the 16th, leaving us with both an income tax and a massive new sales tax. I'm sure government would rejoice but that would not appeal to me.

 

[Pandora]

The "Fair Tax" could only work if we repealed the 16th Amendment and I don't trust the politicians of either party to be given a free hand at altering our Constitution.

That aside, I like the concept of the fair tax but I do not like the "prebates" that it offers. The idea is to give people a check for the amount of money they will pay that year in fair taxes to cover necessities. You get that money ahead of time and that's why it's a prebate rather than a rebate after you've paid taxes. I could see the prebate system being a source of abuse and corruption.

There is also the chance that we pass the "fair tax" but fail to repeal the 16th, leaving us with both an income tax and a massive new sales tax. I'm sure government would rejoice but that would not appeal to me.

But you don't like the idea of abolishing all those taxes and having a sales tax instead?

What don't you like about a sales tax, do you think Pocket is right about it?

 

[steveox]

 

[GenSeneca]

But you don't like the idea of abolishing all those taxes and having a sales tax instead?

What don't you like about a sales tax, do you think Pocket is right about it?

As I said, I think the concept is great and it's one that I support in theory. However, we would have to repeal the 16th or else we'd be stuck with both a national sales tax AND an income tax. Repealing the 16th requires a constitutional convention in which the politicians can propose any amendments to the constitution they want, not just those which were used to call the convention.

Pocket is right that the fair tax is suggested to be in the high 20's, 28% is therefore reasonbly accurate. I have even seen it proposed as high as 36%, in order to more evenly redistribute wealth to the lower classes through the prebates.

 

[Pandora]

As I said, I think the concept is great and it's one that I support in theory. However, we would have to repeal the 16th or else we'd be stuck with both a national sales tax AND an income tax. Repealing the 16th requires a constitutional convention in which the politicians can propose any amendments to the constitution they want, not just those which were used to call the convention.

Pocket is right that the fair tax is suggested to be in the high 20's, 28% is therefore reasonbly accurate. I have even seen it proposed as high as 36%, in order to more evenly redistribute wealth to the lower classes through the prebates.

Well, I want to know what you think about just a national sales tax instead of what we currently do. The fair tax isn't fair, I dont like how they ruined it with the progressive stuff .

I think you are right about repealing the 16th, I can see that as a problem if it were not repealed.

But the rest of the fair tax irritates me, its still taking from those and giving to those who have. The tax rate on the fair tax is high but in part isn't that because they want to cut checks to everyone under a certain income level? What I am talking about is different.

Just an across the board tax on all NEW items. The exact rate if it's a pack of cigarettes or a beer or a bible or a nature valley granola bar. New houses and New cars, not used ones. Couldn't the rate be much lower since what I am talking about doesn't cut checks to a bulk of the population?

 

[ProudLefty]

This cry for a tax that is fair and the same for everyone is conflict. It can't be the same for everyone and still be fair. That isn't how life works.

It is quite easy to make a case that our current tax laws are about as fair as it gets. These laws were made with compromise, patience, a review of the facts, and the input of nearly everyone. There is a reason America gives a deduction for home mortgage interest, for instance. We know from experience that the families who live in their own homes are more successful as families and as citizens than families who rent. Successful families are good for all of us. We all are better off that more own their homes than rent. It is indeed fair that we use our tax codes to encourage home ownership.

 

[ProudLefty]

You posted that image upside down. And yes. we are on the right track finally!!!

 

[ProudLefty]

Pandora, the problem with a VAT tax is that it is a regressive tax. The opposite of a progressive tax. The poor pay more, the rich pay less. That seems hardly fair that the rich pay less than the poor.

 

[clarkatticus]

I have posted in the past for a national sales tax. We would not tax food, meds and med services. Take the budget and adjust the tax to that automatically. The poor will no longer buy what they cannot afford and the rich will pay more for what they want, automatic means testing. Special taxes for financial transactions and other "money-making-money" deals that produce no products other than perpetual wealth.

 

[Pandora]

I have posted in the past for a national sales tax. We would not tax food, meds and med services. Take the budget and adjust the tax to that automatically. The poor will no longer buy what they cannot afford and the rich will pay more for what they want, automatic means testing. Special taxes for financial transactions and other "money-making-money" deals that produce no products other than perpetual wealth.

no taxes on food? so all the shrimp and caviar you want with your 100 dollar a pound kobe beef? seems like another way to help out the rich to me