The end of the IRS?

[widebody911]

Replace income tax with a national sales tax?

Discuss.

http://money.cnn.com/2005/03/14/news/economy/tax_consumption/index.htm

[84porsche]

This will put a great deal of tax preparers out of business. A great deal of tax preparers make a great deal of money filing extensions for clients. If they do something like this, their is no way to differentiate between classes (poor, middle, rich, etc.) - I would venture a guess that a system such as this would take at least 10-15 years to implement, not too mention training of people to handle this and a restruture of the administrative agencies to manage this new system. I do have a strange feeling that people will be doing things under the table more if a system like this comes about. Also, I would be curious how corporations and businesses would be taxed.

[Moneyguy1]

HEre comes a barter society!!

[bryanthompson]

good news, poor still won't have to pay any taxes :dontevenknowwhatkindofsmileytouse:

To protect low-wage earners who are excluded from income taxes today, a national sales tax would have an exemption for all taxpayers to offset the taxes on spending equal to or higher than the federal poverty level, now about $9,800 for an individual and $19,500 for a family of four. How would consumers get the rebate? The "Fair Tax" legislation envisions monthly rebate checks, about $188 for a single taxpayer or $375 for the family of four.

[RallyJon]

Has anyone really looked at the effect this would have on consumer behavior? Americans' massive consumerism--whether you think it's excessive or not--is a major driver for our economy.

Even with more money in their paycheck, I worry that most people would have a gut resistance to paying 30% or more on top of an item's price. I get annoyed now when I have to pay PA's measly 6% sales tax.

Sure people will still buy food and other necessities, but I bet that discretionary spending would drop significantly at first.

Edit--I see the NRF (not that they have an agenda or anything ) is already throwing fits about it.

[mikester]

Well...also money for federal taxes would no longer be coming out of your check. That's a big chunk of change you'd have back in your pocket until you bought something.

[bryanthompson]

I wonder if they would start taxing more internet purchases along with this? Also, how would this affect existing taxes on gas, cigs, and items like that? We could be seeing a 50%+ tax on some of those things if they just keep piling them on. yikes!

[ubiquity0]

Isn't tax on cigs already several hundred percent?

Wouldn't a 30% + national sales tax lead to a huge black market for everything? i.e. smuggle goods in from other countries & sell on the sly?

[widebody911]

Would they tax stuff bought in other countries?

[Moses]

National Sales Tax or the IRS?

We'll probably get both.

[skipdup]

Originally posted by Moses
National Sales Tax or the IRS?

We'll probably get both.

At first I laughed at this. Then I cried!

- Skip

[widebody911]

To protect low-wage earners who are excluded from income taxes today, a national sales tax would have an exemption for all taxpayers to offset the taxes on spending equal to or higher than the federal poverty level, now about $9,800 for an individual and $19,500 for a family of four. How would consumers get the rebate? The "Fair Tax" legislation envisions monthly rebate checks, about $188 for a single taxpayer or $375 for the family of four.

And there's your loophole...

[hoff944]

www.fairtax.org I'm very interested in this.

[kang]

I think some other countries are already doing this. How is it working out for them?

[mede8er]

The biggest upside to a national sales tax (more like 17%) will be capturing the spending of pimps and thieves who have billions in untaxed income......

Every Caddy and gold chain they buy would stuff national coffers very quickly......

[cegerer]

The US tax code has some 7.5 million words How could it possibly have spiraled out of control to this extent? For one, taxing income is a fundamentally flawed method of generating governmental revenue. But rather than revamp the system, it has been easier to simply afix patch after patch after patch as certain groups complain and lobby. The resulting incomprehensible mess encourages cheating. Put the blame on both the politicians for coming up with this crap and the citizeny themselves for not revolting against it. Until the withholding tax is eliminated and everyone is forced to make quarterly payments like us business owners, nothing will change.

A national sales tax has some good points but it puts the burden of collecting taxes on private businesses, encourages cheating, and would be complicated to administer. I still like Steve Forbes' idea: a simple flat rate post card. Fill in the amount you made and times it by a standard percentage (I think it was around 18%???). No deductions. No loopholes. Everybody pays the same percentage of their income.

[Ed Bighi]

Burden of collecting taxes on private businesses? We do that already at state level. The only difference would be the percentage and where it is sent. Big deal. Easy to do on our end. Not to mention sending my accountant packing already. Considering the thousands I spend on him every year, I would be a happy man not having to depend on him. And as far as the industry of tax preparation, what can I say. Like being a cancer or aids researcher, these are career choices based on problems. When someone makes a career choice based on a problem, one has to assume that someday that problem might be solved. After all, is it right for a problem that ails the entire population to artificially stick around in order to keep a small fraction employed?

Cheating on sales tax? To what benefit? I have been charging sales tax or rental tax to my customers since I was 19 and never have I seen the benefit of it on my end. To increase sales? For that purpose, it would only be a matter of time before you were busted. Quite easy when one is depending on a quantity of open mouthes in order to get a benefit from this cheating. The only time that I have seen sales tax being fudged is in Miami for the tourists from countries with big duties on imports. But in those cases, the cheating was not at national or state level. The customer paid the same regardless. The only difference is the second faux receipt of a far lesser value intened for the customer to present at customs in his or her country. But you want to see cheating in this system right now? Go to, again, Miami and get your car worked on. Then say you want to pay cash. Then see the difference in the price. While in other cities it might be a few dollars, in Miami you might get get to pay a third less. Sometimes half as much. Of course, this isn't done to charge the customer less sales tax. It is done to save the mechanic some income tax. And in that city nobody is a boy scout.

On the other hand, to see national sales taxes in action, just take a trip to the english islands throughout the caribean. Not those that charge income tax and have widespread emmigration. Go to those that charge only a national sales tax. While those places aren't perfect, they are good enough for even the poor to decide to stay. After all, having lived in South Florida for close to twenty years, among all the Cubans, Haitians, Nicaraguans, Brazilians and others, I had a tough time finding someone from Cayman, Costa Rica, St Kitts, Nevis, Bahamas, British Virgin Islands, Netherland Antilles, etc... And the few I found were only in town to finish school or to shop. All those places have no income tax. Funny how I seldom saw a single immigrant from those islands when I saw so many from places that tax income. Makes you think.

Do I want a national sales tax or flat tax? Yes, please. Or at least an exact replica of the swiss tax system where the cantons get most of the money and compete with each other for the lowest possible tax rate. Yesterday is not soon enough.