Beowulf DW post=18.71728.767084 said:
I heard of this one guy who had an interesting idea on taxes: a 24% (or something like that) sales tax.
Eliminate every other kind of tax, and place everything on sales tax. Although the things we purchase will be much more expensive, we'll have more money with which to purchase the items we need/want. This will also force organizations that find ways around taxes (i.e. the mophia) to pay taxes, because they need food and other essentials just like anyone else.
A bit radical, but I like this idea.
There is a concept called the Fair Tax (www.fairtax.org I believe) which would replace all federal taxes (including Social Security and Medicare/Medicaid) with one retail sales tax. The problem with getting sales taxes passed is that the poor are still taxed. Accordingly, the Fair Tax pays each head of household a prebate based on the number of people in the household, the Fair Tax rate, and the current poverty level for a family of that number of people. In other words, if there are four people in your household, the current poverty level for a family of four is $2,000 monthly, and the current Fair Tax rate is 25%, then at the first of each month the head of household would receive a check (or more likely, an automatic deposit)for $500 to compensate you for the taxes your family will pay over the next month. If your family earns $2,000 per month (the poverty level for our family of four) then you pay no federal taxes whatsoever. If your family earns less than the poverty level then you pay no federal taxes plus you get a cash bonus (your $500 prebate less whatever taxes you actually paid) at the start of each month. If your family earns $4,000 per month then half your federal taxes are pre-paid. If your family earns $20,000 per month then 10% of your federal taxes are pre-paid. Thus the very rich would pay more IF they spend a good portion of their income or savings whilst the very poor (those at or below the poverty line) would pay NO federal taxes whatsoever. Only services and new purchases would be taxed.
There are several big advantages to this plan. First, the actual tax rate is there on every receipt. Second, everyone pays based on their spending, including illegal aliens, drug dealers, and those who live on inherited or saved wealth. Third, there would be no tax on investment income except when it is spent or taken out of the country, which would mean that the USA would rapidly become a huge center of investment worldwide. Fourth, savings be encouraged, not penalized. Fifth, Social Security and Medicare/Medicaid could not go broke; rather than being funded from a pilfered trust fund stuffed with IOUs, they would become just another government program (which they are already from the standpoint of payouts, just not from the standpoint of funding.) Six, the principle would be established that wealth belongs to he who earned it, with the government taking its cut when you spend your wealth (rather than the current standard where the government takes its cut first, like the Mafia, and you live on what they decide to leave you.) Seventh, the government would be unable to favor one group over another via the tax law; everyone would be equal. There would be no way to favor Company "A" over Company "B" via the tax code, as is currently common practice. Eighth, domestic companies and domestic production would be encouraged, rather than penalized as is now the case.
Of course, there are some potential downsides as well. First, although domestic goods would remain the same price overall (the new tax being equal to the old embedded taxes), imported goods would usually become more expensive, including both the Fair Tax sales tax and the producing country's corporate taxes if any.) Second, very poor working families with lots of children probably get more money now from Earned Income Credit, which has become another welfare program. Third, the Fair Tax currently depends on the assumption that your employer will give you that part of the cost of hiring you (matching Social Security and Medicare/Medicaid payments - your employer must pay the same amount as is held out of your check) as additional salary due to competition for good employees. Since some companies are in industries with a plethora of qualified potential employees, I think the law should mandate that the employee
must be given the matching Social Security and Medicare/Medicaid payments. Fourth, Congress would be unable to promise to take money from one company, industry, or group and give it to another company, industry, or group. Removing much of the reason to lobby the government (by giving money to members of Congress) as well as the much of what Congress does each session (i.e. arguing and cutting deals over whom to favor with the next amendment to the current bill), members of Congress would find themselves with less campaign money, fewer corporate-funded vacations (sorry, fact-finding missions to Hawaii), fewer jobs for otherwise unemployable family members and mistresses from corporations seeking breaks in taxation and/or regulation, and a LOT more time on their hands, who knows what foolishness Congress might pass?
