I agree that the federal income tax is an abomination, but we might disagree on why. IMO it is too easily manipulated and unfair. Why should the government be entitled to what we earn? True, if we are to have government, we must pay for it. The question is about how we do so.
I would like to see the federal government paid for, to the extent that it can be, by tariffs and sales and use taxes - although I think there should be limits on use taxes.
I think federal sales taxes have much to recommend them, but only if they replace individual income taxes. Before anyone brings up the potential regressive nature of federal sales tax schemes (regressive in that they impose an unequal and unfair burden on those with little or limited income), Iâll state that tax credits could be devised based on agreed upon âmarket basketâ purchases that are usual and normal for US households - to be set by congress and signed off by the POTUS, not set by bureaucrats. Congress should be placed on the record every year for those choices.
For example, based on household income reports - total income, no exemptions - qualified households would receive payments for sales taxes paid in the prior year based on the federal sales taxes that would be paid on the âmarket basketâ of goods and services. Households that do not qualify due to limited income would get no such relief. Using âtax creditâ payments eliminates making distinctions at points of purchase. If proved to be unworkable or too easily and fraudulently abused, a âfed sales tax exemptionâ card could be issued and used for purchases. Obviously, this would add expenses and would require extreme measures to prevent such cards being counterfeited. For that reason, I prefer a tax credit plan.
A federal sales tax would, then, be a consumption tax. A few things should be exempt from sales taxes - food, medicine, health care, etc (again determined annually by congress, on the record) - and some items should be taxed at higher rates (vacation homes, luxury products (generally, again chosen by congress). The rich would pay their fair share based on consumption. (BTW, the oft heard lament that he wealthy donât pay their fair share is a DAMNED LIE.
Federal sales taxes could be applied to purchasing stocks, bonds, and most real property with exceptions made exempting owner-occupied homes up the the national home sales price, for example. This would tax extreme consumption without taxing average home owners.
The wealthy pay for most of the cost of running the country. Only lying politicians say that they donât pay their fair share because there are so many people who are unaware of what income stratums pay what percent of taxes (or theyâre just so gullible/stupid that they believe the party line). Politicians exploit that green-eyed monster: envy.
Some form of sales tax scheme could also be developed for company and corporate taxes, but the framework and exemptions would have to prevent such taxes from raising the cost of capital and consumer goods beyond reason. Iâm certain that honest actuarial data could be used to create a scheme for corporate taxes.
One huge benefit would come from the ease of collection of sales taxes. First, eliminating income taxes relieves employers of the burden of calculating, withholding, remitting federal taxes. Those selling taxable products would collect federal sales taxes at the point of sale just like they do state and local taxes and would report and remit them just as they do those taxes today to state agencies. States would then forward those revenues to the federal treasury. No individual would be required to file an income tax return unless they qualified for and sought legal tax credits as described above.
The filing of federal income tax returns is a multi-BILLION dollar cost burden that taxpayers bear, needlessly. Reducing the number of household income tax filings would mean fewer IRS employees and would go a very long way toward removing the ability of the IRS to weaponize its powers against any element of society. Instead of setting bureaucrats against citizens, force the bureaucrats to develop policies and let the marketplace collect the taxes.
