While searching the “archives” of THE WANDERING TAX PRO for something else I came across my first post on the subject of the “Fair Tax” – a national sales tax.
While I am certainly not at all sold on the idea, since this is a time when alternatives to the current federal income tax system are being discussed and considered, and there has been talk of a VAT (value added tax), which I do not at all support, the idea of a national sales tax should also be seriously looked at.
I have decided to “reprint” this post from the true “infancy” of TWTP. It was originally posted on Tuesday, September 4, 2001 (I started TWTP in July of 2001). Here is the post in its entirety –
“I labored all through Labor Day, working on various amended returns and assorted “stuff”. I did, however, manage to take time out for dinner with family at the Lincoln Inn in the Heights section of Jersey City (best Chicken Cordon Bleu around).
The older I get, the more I agree with the old adage – ‘Children should be neither seen or nor heard’. Especially in restaurants!
SOAPBOX
This summer, Representative John Linder, along with 7 co-sponsors, introduced THE FAIR TAX ACT OF 2001, which has been sent to the House Ways and Means Committee to review.
The bill attempts to ‘promote freedom, fairness, and economic opportunity’ by abolishing the Internal Revenue Service and repealing the federal income, payroll (Social Security and Medicare), estate and gift taxes. The funds generated by these taxes would be replaced by a National Sales Tax of 23%.
While this particular bill, as written, is not the answer (it calls for a complicated registration of all households and a monthly sales tax rebate program), and certainly will not be passed by Congress, it does bring up a viable alternative to the current tax system – a national sales tax.
1) A national sales tax would be relatively easy to administer. Almost all of the 50 states already have a state sales tax, with all the appropriate collection and auditing functions in place. The national sales tax could be incorporated into the collection and compliance process of the various state sales taxes, with the states receiving a ‘commission’ from the federal government.
2) A national sales tax (with perhaps exemptions for food and clothing purchases) would eliminate the problem of the ‘underground economy’, which escapes taxation under the present system. Everyone, regardless of the source of their income, would pay sales tax at the point of purchase.
3) A national sales tax would encourage saving and investing. As the tax is assessed on retail purchases only, income from investing activities would not be subject to tax.
4) If under the national sales tax system corporate and business income taxes are abolished, along with the need for expense compliance costs, the savings would {I was naive – should have said ‘could’ - rdf} be passed along to consumers in the form of reduced prices and to stockholders in the form of increased dividends.
5) States like New Jersey have had much more success raising revenue from sales tax audits than from audits of income tax returns.”
I still agree with the 5 points made above.
While I am certainly not at all sold on the idea, since this is a time when alternatives to the current federal income tax system are being discussed and considered, and there has been talk of a VAT (value added tax), which I do not at all support, the idea of a national sales tax should also be seriously looked at.
I have decided to “reprint” this post from the true “infancy” of TWTP. It was originally posted on Tuesday, September 4, 2001 (I started TWTP in July of 2001). Here is the post in its entirety –
“I labored all through Labor Day, working on various amended returns and assorted “stuff”. I did, however, manage to take time out for dinner with family at the Lincoln Inn in the Heights section of Jersey City (best Chicken Cordon Bleu around).
The older I get, the more I agree with the old adage – ‘Children should be neither seen or nor heard’. Especially in restaurants!
SOAPBOX
This summer, Representative John Linder, along with 7 co-sponsors, introduced THE FAIR TAX ACT OF 2001, which has been sent to the House Ways and Means Committee to review.
The bill attempts to ‘promote freedom, fairness, and economic opportunity’ by abolishing the Internal Revenue Service and repealing the federal income, payroll (Social Security and Medicare), estate and gift taxes. The funds generated by these taxes would be replaced by a National Sales Tax of 23%.
While this particular bill, as written, is not the answer (it calls for a complicated registration of all households and a monthly sales tax rebate program), and certainly will not be passed by Congress, it does bring up a viable alternative to the current tax system – a national sales tax.
1) A national sales tax would be relatively easy to administer. Almost all of the 50 states already have a state sales tax, with all the appropriate collection and auditing functions in place. The national sales tax could be incorporated into the collection and compliance process of the various state sales taxes, with the states receiving a ‘commission’ from the federal government.
2) A national sales tax (with perhaps exemptions for food and clothing purchases) would eliminate the problem of the ‘underground economy’, which escapes taxation under the present system. Everyone, regardless of the source of their income, would pay sales tax at the point of purchase.
3) A national sales tax would encourage saving and investing. As the tax is assessed on retail purchases only, income from investing activities would not be subject to tax.
4) If under the national sales tax system corporate and business income taxes are abolished, along with the need for expense compliance costs, the savings would {I was naive – should have said ‘could’ - rdf} be passed along to consumers in the form of reduced prices and to stockholders in the form of increased dividends.
5) States like New Jersey have had much more success raising revenue from sales tax audits than from audits of income tax returns.”
I still agree with the 5 points made above.
,
I also still believe that children should be neither seen nor heard - especially in restaurants!
,
So what do you think?
TTFN
,
So what do you think?
TTFN
