Behold a dark horse.

[joanmcq]

Yeah who lied worse? Actually I heard that during the famous 'I did not sleep with that woman' he he was pointing a finger at Janet Reno with an emphasis on 'that'.

[taxxcpa]

National Sales tax

No CG tax, no income tax, no AMT, no SS or Medicare tax, no estate tax, just a 23% national retail sales tax.

Although it might put tax practitioners out of business, and would be considered 'regressive', the negatives would be largely offset by the reduced administrative costs to administer and audit a sales tax.

There would still need to be audits, but mostly it would be just audits of retailers. A few of the issues the auditors would have to deal with is:
Purchasers issuing resale certificates for items bought for their own use.
Sellers collecting the tax but underreporting their taxable sales
Distinguishing between 'sales' and charges for 'services.'

The list could go on and on, but there is no way the possible audit problems could be as extensive as the income tax. And even if they were, there would be so much fewer people to audit.

There are also some proposed gimmicks that would offset the 'regressive' nature of the tax such as some kind of universal refund for all citizens which would have the effect of repaying the sales tax by lower income people while just refunding a portion to us fat cat tax preparers..

[erchess]

In this electronic age

it should be possible to get rid of physical money in favor of debit cards. Every time money changed hands, including donations to charity, the requisite percentage would be deducted as the funds left the spender's account and went into the recipient's account. Come to think of it, there could be tax exempt transactions because electronic records would exist and the facts could be examined at leisure. If it were deemed desirable, there could continue to be coins and smaller bills up to the $5, 10, or even 20. To make things simpler, just exempt transactions up to the specified amount from tax.

I would be opposed to this sort of system because it would not be progressive, but for those opposed to progressive taxation it's hard for me to see what the principled objection would be to this sort of system. I personally think that after a couple of years there would be unstoppable social pressure for a return to an income tax but it might be much simpler than what we have now, at least at first.

[Bees Knees]

I would be opposed to this sort of system because it would not be progressive, but for those opposed to progressive taxation it's hard for me to see what the objection would be to this sort of system.

My state sales tax is not progressive. My real estate tax is not progressive. My phone service tax is not progressive. My electric bill tax is not progressive. My propane tax is not progressive. My city water tax is not progressive. My garbage pickup tax is not progressive. My airline ticket tax is not progressive. My gasoline tax is not progressive. My auto license tabs tax is not progressive. My driver’s license renewal tax is not progressive. My passport renewal tax is not progressive. My canoe license renewal tax is not progressive. My hotel room tax is not progressive. My Twins / Vikings stadium surtax is not progressive. My liquor tax is not progressive. My lotto ticket tax is not progressive. My kitty license tags tax is not progressive. My fresh air tax is not progressive. My sunlight tax is not progressive. My full moon tax is not progressive...

Why does a national sales tax have to be progressive?

[erchess]

Why does a national sales tax have to be progressive?

It doesn't have to be progressive. In fact it is in my opinion hard to make it progressive. For example I don't think that refunding x dollars to everyone each month or year makes a lot of sense. I suppose you mean to ask why it should be progressive.

When the income tax was first passed during the Civil War it was assumed that only the very wealthy would have to pay it at all. However there was substantial support for the idea that everyone whose income was above a certain level should pay a given sum of tax. In today's terms that could mean that only people with say a million dollar annual income would pay tax at all but that someone on that level would pay the same amount of tax as Bill Gates. Lincoln felt that this was obviously unfair and his point of view carried the day. Everyone paid the same percent on their taxable income but those with higher income paid more tax. I don't know exactly when the idea of having the richer people pay higher percentages came up, but it does seem to have been taken for granted by the time the Income Tax was revived to pay for WW I. My point is simply this: If you don't agree with me that the total tax burden in the country should be progressive, I don't think that I or anyone else can change your mind. Likewise, I don't think that you can change mine. I also think that there are more Americans who agree with me than there are who agree with you, but I could be wrong. The national discussion about taxation that is going on as part of the upcoming Presidential Election seems to me to be a very good thing.

[joanmcq]

A sales tax would still need to be policed, because it would drive business to the black market to avoid sales taxes, just a the cash economy avoids income taxes. Erchess's idea of doing away with money may work for awhile (but what about those folks deemed not creditworthy enough to have a bank account?), but the 'big brother' aspects of that could really irritate a lot of people. And for anyone who's read 'The Handmaiden's Tale' where half the population was disenfranchised, and a political coup ocurred, by simply cutting off their credit....

[Bees Knees]

I didn’t say I think it should be a flat tax. I said it in the context of what is a fair tax.

Personally, I want it as progressive and as complicated as it possibly can be. Let’s add a second, third, and forth, tier AMT, and really complicate it. The more complicated, the better.

My point is you will never have a fair tax because nobody can agree what a fair tax is. Besides, we make our living because the tax system is more complicated than a sales tax, real estate tax, gasoline tax, garbage tax, or fresh air tax. Replacing the income tax with one of these “fair” taxes puts us out of a job. Why would anyone be for that?

[joanmcq]

Oh, I love each and every one of the 'Tax Accountants Continued Employment Acts of 200_' .(fill in the year) as I call each and every 'tax simplification' act passed.

Who's complaining?

[veritas]

My Twins / Vikings stadium surtax is not progressive.
Why does a national sales tax have to be progressive?

GO PACKERS!

[taxxcpa]

Should tax be progressive?

There are pros and cons to making the tax progressive. Theoretically the income tax is "fair" since you pay a higher percent if you earn more and you get an EIC if you earn less. However, the burden of administering a tax with all the complications and the number of cheaters results in a lot of UNfairness to those poor suckers who don't cheat and don't have any loopholes. Consequently an unfair tax (sales tax) might end up being fairer since there would be less cheating and less administrative costs.

It was pointed out that people would evade a sales tax through underground economy transactions. That would not be anything new since people do the same thing in evading the income tax. While some cheating would occur, it would be more difficult than evading income tax since you would be taxed on everything you spent for consumption items. The only way you could spend and avoid tax would be if the seller failed to charge the tax.
Under the income tax almost everyone files a return. With a sales tax, only seller would need to file returns and there would be fewer people to audit and probably a higher percent could be audited.

Also, there could be some gimmicks added to remove the burden from the lowest income people.

The big problem for many is that they just can't stand to see Bill Gates, Warren Buffett and Carlos Slim escape paying through the nose. They would be the big winners since they would escape a lot of the sales tax since they make a lot more than they can spend. If they don't spend it, however, they invest it and grow the economy.

[bertrans]

Fair Tax/Flat Tax

If this sort of proposal is ever passed, I predict that the bill will read something like the following;

Resolved this day, etc.
Effective upon the implementation of this bill, all income, of whatever sort, will be taxed at a rate not to exceed or be less than 23%, with the following exceptions:


ALL OF TITLE 26 USC !