Under our current byzantine tax schemes, it's virtually impossible for anyone who holds a job not in the tax field to understand how much he or she is paying to whom. And, since it's so difficult to understand one's own taxes, how can a person possibly understand where he or she stands compared to everyone else without listening to "advocacy journalists", an oxymoron, or devoting every waking hour to keeping abreast of tax laws while still holding down a job and having a life? Right. Difficult if not impossible.
We're all very concerned, understandably, that we pay our fair share of taxes, and no more. We're also concerned that OTHERS pay their fair share of taxes, and no LESS. We're concerned about the rich getting tax breaks, the poor being given a free ride, and the bulk of the tax burden being borne by the middle class. Well, there's a solution to this: A national sales tax to replace the national income tax and ALL other taxes, regardless of what we call them - payroll taxes, telephone taxes, FICA, including the ones not labeled as taxes. If we pay it to the government, IT'S A TAX!
Here's why this makes sense. First, it completely prevents the wealthy from receiving tax breaks; if they consume more, they pay more. To insure that items bought abroad aren't excepted when brought back to the US, they will pay tax, on a preset electronic schedule available to all via the internet, at the Customs checkpoint immediately upon return to the US. Anything bought abroad and shipped to the US will be subject to search and taxation before delivery. While that will require more manpower, it could be discouraged by doubling the tax rate, and the savings in IRS manpower should more than offset the increase required by Customs. (4 July 2010 addition - Another advantage of 100% of all imports being searched is that we virtually eliminate the possibility of anyone sneaking anything into the country that could be used by terrorists, e.g. fissionable materials, poisons, biological agents, et cetera.)
Second, the poor already pay sales taxes, and they have withholding and income taxes, so since they consume less, theoretically, then they PAY less when the national sales tax REPLACES all other federal taxes. This must be written into the Constitution as an amendment.
Third, the national sales tax would be IN ADDITION TO other state and local sales taxes, but this amount is offset by having more in a person's paycheck due to the repeal of all other federal withholdings. Basically, a person would receive his full paycheck minus any state, local, personal, or other non-federal withholdings. Employers would return to the employee in the form of increased wages that portion of an employee's federal tax THAT THE BUSINESS CURRENTLY PAYS (most people don't realize that employers pay HALF OF THE EMPLOYEE'S federal income tax out of the COMPANY'S funds), which should result in increased spending which will, in turn, increase revenues to the federal coffers AND increase business revenues.
Fourth, yearly filings of federal income tax would cease. It's a certainty that some lobbying group or another would protest that it would result in loss of jobs, but the system would work for the greater good. Perhaps those same people could be offered jobs with Customs on a priority basis.
Many have suggested that a flat tax would be the fairest system, but there will always be tax cheats if a filing system like that used for the current federal income tax scheme is used. A sales tax system should be much harder to cheat as long as the sole requirement be 'If you buy, you pay tax'. Simple is difficult to get around, in this case. When businesses/employers purchase raw goods, they're charged tax. When they sell those goods, they collect tax. No exceptions. When an employee is paid, she or he purchases food, shelter, clothing, and other items, and pays tax on each item. No exceptions.
To enact these changes, it would take an uncharacteristic move by the current US Congress: A true non-partisan effort. Not "bipartisan" and certainly not "unilateral". NON-partisan is the only way it would work - congressmen from both sides of the aisle, as well as third parties, would need to work together to draft and enact legislation that would repeal ALL other federal taxes (remember, if you pay it to the government, it's a TAX!)
Five states - Alaska, Delaware, Montana, New Hampshire and Oregon have no sales tax, so they would need to institute the system from scratch, and Hawaii would too although its "sales tax" is paid by businesses, not directly from the consumers.
That's it. One flat-rate federal sales tax everywhere in the United States. The more you spend, the more you pay. No exceptions. Originally posted 15 April 2010