I would support the national sales tax being bandied about with four provisos:
- It should be prebated to the taxpayer with the amount prebated determined based on income and an estimation of purchases.
- It should apply to everything including services, real property, and financial assets, i.e. not just things on which poor people spend most of their income.
- A percentage of the amount derived from each state should be returned to each state in the form of block grants without restrictions on how the money is spent.
- It should completely replace the income tax.
Otherwise I’d oppose it.
The first proviso ensures it would be progressive. The second also ensures progressivity as well as reducing the degree to which such a tax would pick winners and losers. 45 states have sales taxes as do many local jurisdictions. Without the third proviso a national sales tax could be quite hard, disastrous in fact on many states, counties, and cities that depend on sales tax revenue. The fourth reduces the total time and effort required to comply.
As usual the devil is in the details. Maybe I’ve missed something but that should just about do it.
I have no expectation that such a tax could ever be enacted since it would strip Congress of much of its power.
Even equities? The prebates would lead to major disagreements. Major administrative hassles. Assuming it replaces business income tax it might be worth destroying the tax industry. How would you do big purchases like homes?
Steve
Power and personal income.
steve:
I could waver on equities. Without the prebates and applicability to the things that rich people buy, a national sales tax as a replacement for the income tax would be terribly regressive and I would oppose it. The “administrative hassles” of the prebates would be less than those at present for the income tax. Taxing big purchases would be handled the same way commissions are—they’re bundled into the purchase price for purposes of the loan secured.
There is no theoretical reason you can’t tax the purchase of anything. And size of the purchase isn’t the issue. You can tax a hamburger, a car, a house, a million dollars of govt bonds or a million dollars of equities. Everything will reprice based upon the fully loaded cost of purchase vs expected utility of a good or service, or in the case of securities, the expected cash flow stream.
Just be aware that you are fixing the tax on securities, no matter the return. If you decide to tax the income stream along the way, or at sale, you have come full circle to an income tax.
But yes. This is just academic. Taxes give politicians power. They won’t give it up.