National sales tax

sillystring

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It's often called a "Fair Tax" where consumption is what drives taxation. It is so hard though to get Uncle Sam out of your wallet, especially when he is dug in like a tick right at the employer.

I've heard the pros and cons of a consumption tax, but I have never heard it discussed beyond Friedman enthusiasts or ever at the candidate/national level. I don't think there are problems with the idea, but rather other more vested interests which make it nearly impossible to hear about.
 

balsary

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It's often called a "Fair Tax" where consumption is what drives taxation. It is so hard though to get Uncle Sam out of your wallet, especially when he is dug in like a tick right at the employer.

I've heard the pros and cons of a consumption tax, but I have never heard it discussed beyond Friedman enthusiasts or ever at the candidate/national level. I don't think there are problems with the idea, but rather other more vested interests which make it nearly impossible to hear about.

That's what I'm getting at. You never here about it at a national level. At a time when both sides seem to view the current tax system as unfair, you'd think it would get more attention.
 

dandelion

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sales tax is a tax on goods, wherever they are made. Income tax is a tax on people working inside your country but not on those abroad. Higher income tax would push up prices of goods made in the US, whereas higher sales tax would affect foreign goods too. Sales taxes therefore help boost your home economy compared to a foreign economy.

Its also difficult to avoid sales taxes whereas there are many ways to evade income taxes. Rich people pay equally whenever they spend their money, and so do drug dealers or illegal workers.

Seems to me republicans do not favour taxes which bite equally in the rich!
 
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Dakota Kid

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Why isn't this ever seriously considered as a replacement for income tax? It seems like such a simple solution. Are there obvious problems with such a tax that I'm not seeing? I'm interested to hear what others here think of the idea.
I'm with you on this one, balsary. Why the hell do we need accountants to make sure we are paying the right amount of taxes? What a waste of money to placate the politicians that have given us such an effed up tax code :12:

But I will bet you a beverage of your choice, that Obamacare will ultimately be funded by a national sales tax. That will be the only way to keep it afloat.
 

Dakota Kid

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Seems to me republicans do not favour taxes which bite equally in the rich!
Not so fast, Dandelion. I'm no Republican, but I'm sure that they would agree to a national sales tax in short order, as long as it was a net wash on taxes received. I'm sure the tea party would be for it too, as it would allow anyone to pay as little taxes as you choose......just spend less.
 

balsary

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I'm with you on this one, balsary. Why the hell do we need accountants to make sure we are paying the right amount of taxes? What a waste of money to placate the politicians that have given us such an effed up tax code :12:

But I will bet you a beverage of your choice, that Obamacare will ultimately be funded by a national sales tax. That will be the only way to keep it afloat.

A flat income tax could solve that problem as well, but I like the idea of a national sales tax better.

If I were betting your side I would keep the bet small too.
 

balsary

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Under such a plan, the poor, who spend most of their money, would be taxed at a higher percentage of their income than the rich, who save most of theirs.

This strikes me as neither fair nor effective.

That makes sense. I think we can agree that the poor spend the vast majority of their income on necessities though. Just as food is often exempt from sales tax, so could rent/mortgage payments, utilities, healthcare, etc. There would be bugs to work out, as with any new system, but it eliminates the need for the IRS, and certainly would be easier to follow than the current tax code. No?

Do you find our current system to be fair and effective?
 
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orangeC

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You don't want the government with a new tax source. We would soon find ourselves paying a payroll tax on top of a national sales tax.
 

dandelion

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Under such a plan, the poor, who spend most of their money, would be taxed at a higher percentage of their income than the rich, who save most of theirs.

This strikes me as neither fair nor effective.
So investments too such as houses or shares should have tax upon them.
 

B_underguy1

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Under such a plan, the poor, who spend most of their money, would be taxed at a higher percentage of their income than the rich, who save most of theirs.

This strikes me as neither fair nor effective.

Indeed. Sales tax is the most regressive tax of all.
 

hypoc8

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I've never understood why going to a flat tax would be such a problem.
 

hypoc8

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Flattening tax scales creates massive income and wealth imbalance. You end up with a plutocracy.

If all the loopholes were closed and everyone were paying the same percentage of their income I really don't see how it could be any fairer. Everyone would be paying "their share".

I do understand at some point there would have to be some exceptions for the elderly, handicapped and such but I think it could work.
 

B_underguy1

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If all the loopholes were closed and everyone were paying the same percentage of their income I really don't see how it could be any fairer. Everyone would be paying "their share".

I do understand at some point there would have to be some exceptions for the elderly, handicapped and such but I think it could work.

It doesn't work. You've had 40 years of reducing taxes on the wealthy and look where we are.

We have a superclass of filthy rich people with more social and political power than the other 7 billion of us combined.
 

hypoc8

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It doesn't work. You've had 40 years of reducing taxes on the wealthy and look where we are.

We have a superclass of filthy rich people with more social and political power than the other 7 billion of us combined.

Like I said, close the loopholes.

Their taxes would go up.
 

B_underguy1

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Like I said, close the loopholes.

Their taxes would go up.

As would the cost of living and wealth disparity. You'd make the real problems worse in the hope of fixing something (the budget deficit) that is only a notional problem.
 

bar4doug

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Under such a plan, the poor, who spend most of their money, would be taxed at a higher percentage of their income than the rich, who save most of theirs.

This strikes me as neither fair nor effective.

But they pay the same amount based on how much they consume. So, the more you consume, the more you pay. How is that not fair?
 

vince

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Under such a plan, the poor, who spend most of their money, would be taxed at a higher percentage of their income than the rich, who save most of theirs.

This strikes me as neither fair nor effective.
That's right. Consumption taxes raise a lot of revenue but they are very unfair to lower income people.