As a Republican, I'm not crazy about taxes. However, I'm willing to pay them if I know that they are going to be spent wisely. But I'm putting my foot down on an idea that is gaining momentum: to replace the federal income tax with a national sales tax.
Now, I'm not totally opposed to the idea if it is combined with the federal income tax. Many European nations and Canada do just that. But under a plan introduced by Representative Gil Gutknecht, a Republican from Minnesota, the IRS would be abolished and replaced by a, get this, 23% federal sales tax.
I think I hear the sounds of jaws dropping.
I think this is a disatrous idea and would wreck the economy. Let's say that we are going to by a $20,000 car. If we were under this system, you would have to add in the 23% sales tax, which would raise the price by about $5,000. And let's not forget the state sales tax, which in Minnesota is 6%, which would add another $1200 or so. So, that 20K car is now about 26K. Now think that this would be applied to most goods and services. In an economy that lives or dies on consumption, it would be a big mess.
Also, sales taxes are by nature regressive. They affect the poor more than the rich. Income taxes do the exact opposite. This might hit the poor pretty hard because they have to by things while the well-off can afford to not buy as much.
Listen, I'm all for reforming how we tax ourselves, but this is a stupid idea. I hope it dies a nice death in committee.
Posted by Dennis at November 16, 2004 12:05 AMdirectx - disegni - divx - dolci - download - downloads - edonkey - emoticons - emulatore - emulatori - fiat - firewall - ford - frutti-mare - gastronomia - gemello - getright - giochi - gioco - grafici - henne - hummer - humor - icona - illusioni - insalata - jeep - kaspersky - kazaa - lamborghini - letteratura - libri - manuale - manuali
Posted by: directx at October 19, 2005 11:38 AMI think a change is needed, for two major reasons.
1. Many people are not taxed but earn a very good living. Whether it is under the table or cooking the books when self employed, it is very common.
2. The IRS as an organization is anti-democracy. They insist, by force of law, that you provide them intimate details of your personal and financial life.
I think the examples posted by some may be a bit extreme. Most people that dont pay taxes now wont be buying a 20k vehicle. They would be buying a used vehicle or using mass transit, depending on location.
I doubt that the structure of the taxes would be such that they cripple the poor. We have spent the better part of a century building a safety net and even fiscal conservatives, like me, are not going to allow people to starve to death for a change in tax code.
The bigger issue with this kind of tax is that it crushes people with children. Having children removes fiscal flexibility. If you have 4 kids you must buy a larger vehicle, larger home, more clothes, more food, etc. The combined loss of deductions and added weight of a sales tax would impact them most of all.
How do you prevent the wealthiest americans from buying goods in other countries? I dont think you can do it easily.
I think we could combine the impact of the reform of social security with a tax code revision that helped balance it out, maybe. I offer this for consideration. The rich need to do one thing consistently, invest. With SS being expanded to allow investments in diverse funds those funds will rise in value. That will make them very appealing investment vehicles that could afford a larger tax applied to them.
If you did this without the SS reform or some other comparable type of boost, the wealthy would divest from US investments and move money to international funds that were more "investor friendly".
I dont have a good fix but I do applaud the administration and congress for thinking a bit outside the box.
We have a bunch of smart people on this blog. How do we "repair" the problems (assuming that you consider them problems) listed at the top of this msg but keep a fair tax code?
Posted by: mike at November 16, 2004 06:56 PMI believe Sen. DeMint also supports this and when asked about the regressive issue, he stated he would allow for tax credits to the poor. And who was to administer the tax credits? That's right, the abolished IRS!
Why would the Republicans support such a scheme? I have attempted to think of a situation where this would have a positive effect on the economy but I cannot envision it. Can anyone counter the problem of 'sticker shock' that Dennis explains in his essay?
Posted by: EG at November 16, 2004 12:01 PMA sales tax punishes people for spending money. What a great way to stimulate the economy! In areas like mine, not far from Canada, it encourages people to cross the border to do their shopping because they can get GST (federal) and provincial sales tax rebated at the border.
Posted by: Brian at November 16, 2004 09:28 AMAnd it likely will. We may be in the era of borrow and spend, but even the most wreckless Congressional spender can see that this would slam the economy into a brick wall.
Posted by: Mark Kittel at November 16, 2004 07:54 AM