Is a Federal Sales Tax the Solution for a Fair Tax System?

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In summary, the conversation is about a proposal for a "fair" tax system that involves eliminating federal income tax and establishing a federal sales tax on all transactions, with exemptions for basic necessities such as food, clothing, and shelter. The idea is similar to the Value-Added Tax (VAT) and Goods and Services Tax (GST) systems used in other countries. There is also a discussion about the history and purpose of income tax.
  • #1
Oltz
A "Fair" Tax system proposal

I have read this forum for several months on a wide range of topics. I finally have decided to attempt a contribution to the debate. This is entirely My Opinion and hypothetical at that. I honestly want to know if any of the forthcoming is even viable.

The conversations about Federal Income Tax , Payrol Deductions, Tax Burdens, Social Security and all forms of welfare (even pell grants) Have lead me to some conclusions and oppinions that may or may not be embraced as true.

Firstly This is a reform of Federal Inocome tax only payrol deductions are another topic.

The Left wants the rich to support the poor and corporations to pay aswell. They want everything to be counted dividends,interest, inheritance, But only if your AGI is over some arbitrary value.

They oppose a flat tax as 9 percent of 30,000 when your annual cost of living is 27000 is impossible but 9% of 300,000 is bearable. IE the same rate hurts the poor more because they rely on every dime they make to make ends meet.

The Right wants a "fair" system that has holes and dodges that allows you to "hide" some income.

Nobody says we shold tax the poor to death.

That being said here is my plan.

First we eliminate all Federal Income tax on everything (corprate,capital gains, estate...the works)
Second we establish a Federal Sales tax of X% this Tax will apply to every transaction by every company and individual on all purchaces EXCLUDING

Food at a grocery store or vendor (restaurants are a service and would be taxed)

Clothing/shoes at retail or department stores (designer clothing and things like wedding dresses or custom suits would be taxed accecories are not clothing)

Shelter no tax on Rent or Mortgage payments on first properties (payments on second or third homes or properties you rent out for income would be taxed)

Electric/Water/Gas/Sewage/Trash pickup (Phones tv and internet are still taxable expenditures)

Medical Care (elective surgery or cosmetic procedures would be taxed)

Child support/Allimony/gifts and any other transfer from person to person without the exchange of goods or service would be tax free

Education Tuition/books

Money does not exist until it is spent. Like at a casino Uncle Sam pulls his % out of every pot at the end of the hand. Right now he pulls his share out of your stack when you sit down regardless of if you play it all or not.

Essentially if your poor and you spend every dime you have on the basics to survive you will pay no tax.

If you are rich and spend every dime you have on "things" then you will pay a X% tax.

Keep in mind that you are taxed when you "use" money not when you make it so if you wanted you could hoard millions then take a year off and spend it all uncle sam would get X%
This includes ALL imports when the "goods" hit american waters the importer pays X% on purchase price/Market value of the goods ie I make cars but my engines are manufactured in germany I own the engines but when importing them it is as if I buy them from myself the second they enter the US at full price and am resposible for the tax. ie 2 I am best buy and get my samsung tv's from korea I pay the tax on the purshase of those tv's when they arrive here

All transactions invloving money are treated as a sale and are taxed Except between individuals ie i can give you all the money I want and nothing happens until you spend it

International bank transfers are taxed ie walmart transfers 40 Million dollars to china to pay factory workers that is an expenditure it is taxed

Does anyone have a fundamental problem with a flat tax like this that excuses the poor from paying on the things we all "need" and yet nobody no bussiness or company pays more then X% and you choose when and how to be "burdened" with tax

If you want to save a fortune for your kids and you are 18 years old spend the next 10 years living at a basic level paying no tax only doing the essentials then when you start your family you have a wad of money to give your kids a great life. In essence you waited to pay taxes until you wanted to have luxuries for your children.

Tax on "stuff" Not on Income

I hope some of this makes sense I will try to clarify upon request this is quite a ramble
 
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  • #2


Sounds like you would liketo implment a sales tax similar to the VAT as they have in the EU or the GST as in Canada. The final user is the one who ends up paying the tax, as all the intermediate firms and businesses involved in the steps leading towards the final product can apply for rebates of the tax in proportion to waht they paid applicable in the processing of that product.

The exemptions you listed are similar to the Canadian GST exemptions. The Federal government sets its own rate and the provinces set their own rate for a combined harmonized GST. Total tax rate vaties but an average is around 15% at the cash register.

There is still income tax in Canada, though, and the same discussion pops up now and then about flat tax, tax the rich, etc.

Income tax was initiated around the early 1900's to pay for the war effort, and has remained ever since.

Income tax is a tax on hard work, inteilligence, and of course good fortune - the more you make the higher the tax rate is on your next earned dollar.
 
  • #3


Something similar but with no exemptions or deductions every purchase is taxed and if you want to pass on that cost to your consumers then that is your risk at being priced out of the market. With the removal of corporate taxes the net effect should be close to nothing on operating costs, But the more write offs and deductions an industry typically uses the more they would notice a change.

Yes the Governemt would get to tax the same "good" more then once if it went through multiple hands to be procesed into a final product but at each transaction it owuld be taxed at its current value
i.e. a toaster sold to you from Sears is taxed Sears already payed taxes on the toaster the purchased from black and decker at whatever the wholesale value was on the toaster (less then what he charged you)
Black and decker already paid taxes on the raw metal and plastics they used in the manufacture of the toaster ect.

No dodge no loopholes you spend a dollar Uncle sam gets his 9 cents or whatever.on top

"Under the table" or undocumented workers/Illegal Aliens would not be exempt anymore as you are taxed at the point of sale. As would drug dealers and other "Criminal Income".


I as a "fiscal conservative" and a moderate republican could support this would anyone from the other side of the aisle?
 

Related to Is a Federal Sales Tax the Solution for a Fair Tax System?

1. What is a Fair Tax system proposal?

A Fair Tax system proposal is a tax system that aims to distribute the burden of taxes more evenly among individuals and businesses. It typically involves eliminating certain taxes, such as income and corporate taxes, and replacing them with a single consumption tax.

2. How does a Fair Tax system work?

A Fair Tax system works by implementing a flat consumption tax on all goods and services purchased. This means that everyone, regardless of their income level, will pay the same tax rate on their purchases. This eliminates the need for complicated tax brackets and deductions.

3. What are the benefits of a Fair Tax system?

One of the main benefits of a Fair Tax system is that it simplifies the tax system, making it easier for individuals and businesses to understand and comply with. It also encourages individuals to save and invest, as they are not penalized with higher taxes on their income. Additionally, it eliminates the issue of tax evasion and fraud, as the tax is collected at the point of purchase.

4. Are there any downsides to a Fair Tax system?

Some critics argue that a Fair Tax system could disproportionately affect low-income individuals, as they spend a larger portion of their income on consumption. There are also concerns about the potential for increased prices on goods and services, as businesses may pass on the cost of the consumption tax to consumers.

5. Is a Fair Tax system currently in place anywhere?

No, there is currently no country that has implemented a Fair Tax system on a national level. However, some states in the US, such as Texas, have a form of consumption tax in place. There have also been proposals for a Fair Tax system in the US at the federal level, but they have not been enacted.

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