An Interesting Topic..

Check out www.fairtax.org .

I would love to see the income tax replaced by a national sales tax. I am afraid that the logistics of gathering support among the American people to make such radical change in the way that the federal government raises revenue will be almost impossible to obtain.

I also think that obtaining the American people's support for a truly flat income tax would also be very, very difficult to obtain since it would require giving up itemized deductions for a lower rate. But I do think it would be easier to obtain such support compared to a national sales tax.

This is a great topic for discussion. Thanks for raising the issue.

 

National Sales Tax Continuing to Outpace Other Reform Proposals

An October 6 House Budget Committee hearing gave several GOP lawmakers a public forum to vet their tax reform proposals, but a national sales tax bill (H.R. 25) sponsored by Rep. John Linder, R-Ga., is looking increasingly like the Republican favorite.

Part of an ongoing GOP campaign to build momentum toward a major tax reform effort in 2005, the hearing appeared to be the public equivalent of last week’s closed-door House Republican Conference meeting on fundamental tax reform. Linder again made a pitch for his consumption tax proposal, while Rep. Michael C. Burgess, R-Texas, lobbied for his flat-tax proposal (H.R. 1783), and House Ways and Means Committee member Phil English, R-Pa., pushed for a hybrid of the two (H.R. 269).

“Consumption taxes are extraordinarily regressive,” said Ways and Means member Max Sandlin, D-Texas, testifying at the hearing. “It amounts to a massive tax increase on a vast majority of Americans.”

“It’s become clear in recent months that the Linder bill has more momentum than any other proposal,” a GOP leadership aide told Tax Analysts. Linder denied, however, that the hearing was held only for show, telling Tax Analysts that all the proposals would be given a fair shake.

“I think I’ll win the argument in the final analysis,” Linder said.

Democrats appeared to have no doubt which proposal Republicans would eventually back, using both of their witnesses and most of their questioning to hack at Linder’s bill.

- SOURCE

 

Implementation of a sales tax would be simple, Ken. Most states already collect sales tax...simply have them collect the extra percentage for the feds, and keep a few tenths of a percent to cover costs of collection.

I think a flat tax could not be simplified to the level that we are led to believe. The problem is that you have to define "income". That's easy for an hourly employee, or most salaried employees, as far as their paychecks go. But for interest and capital gains there would still be complications, and for everyone else, it would retain many of the present complications in defining income.

 

www.fairtaxvolunteer.org/news/PR092904.pdf

FairTax (national retail sales tax) zeros all federal taxes up to the poverty level for everyone and only wealthy/lavish spenders pay the maximum rate. Effective rates for the middle class go down (↓).

 

I agree.

My concern is with convincing the American people to say "yes" to making this change, especially since certain interest groups with vested interests in the current system will attempt to smear the idea.

 

Not to mention, anyone who owns a business can use a tax number to greatly avoid the sales tax.

It's being done now, and if the sales tax was considerably higher (would have to be, to pay for the federal government) then I have no doubt that more fraud would occur.

The losers? Guess who?

 

The losers? Guess who?

Not me! I'm buying everything slighty, gently used (except food & undies).

 

As I said that is the problem, getting from point A to point B, and convincing the American people that a national sales tax can be more fair and a lot easier for the average person to deal with.

That's why converting to a flat income tax system would be easier to convert to. With a large exemption on the front end, a flat income tax would continue to be progressive in nature, just as a national sales tax could continue to be progressive in nature with a large rebate provision on the front end.