Would a federal sales tax be more equitable than the current federal income tax?

Discussion in 'Politics Discussion' started by JoshPosh, Aug 28, 2015.

  1. JoshPosh

    JoshPosh Guest

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    Here's a interesting subject that has not been discussed much. A friend of mine sat down one day and talked about it in detail. The idea is to introduce a federal sales tax and eliminate income tax. In theory, that should free up a lot of time and energy spent by the IRS, including citizens, in accounting hours, illegal immigrants paying at the store for goods because they don't pay for taxes anyways, and there will be less tax sheltering loopholes in the system. The money you earn will be yours. That should teach or curve the standards in which we live by teaching us to adapt and change they way we shop for basic needs.

    Those are just some of the key points that we had talked about just last night, and it was something that was brought up briefly in the Republican debate. Now before everyone starts bashing this thread, please be constructive. If you disagree then do it gracefully and back it up with a thought process and not emotions. I'm tying to involke a decent idea of trying to improve the US situation and not personal trolling.
     
  2. JR Ewing

    JR Ewing Super Moderator Staff Member

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    I would be very agreeable with either reducing income taxes to 15-25% or so for top earners, OR going to some sort of lower flat tax, OR some sort of consumption tax without an income tax.
     
  3. SteakTartare

    SteakTartare Senior Investor

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    ^ Agreed. There are various alternatives being proffered (e.g., flat tax, fair tax, consumption tax, etc.) and they all have pluses and minuses. But I'd take any one of them over the monstrosity that is the current tax code.
     
  4. baudwalk

    baudwalk Senior Investor

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    The problems with the current federal tax code are the social engineering aspects added into the 90,000 pages of regulations. Back in 1979 I had constructed a VisiCalc spreadsheet, using one disk, calculating federal and state income taxes, including table lookups, for a single person or a family. At the time, VisiCalc couldn't do forms, but it did print out line numbers, labels, dollar entries and percentages. T'was done on a 64k Apple II with a green screen and Epson MX-80 printer. Four or five years later I migrated the spreadsheet to a DOS PC, using VisiCalc then MultiPlan and (probably) Lotus 1-2-3. I finally gave up rolling my own after 8 or 10 years; the social engineering made coding too darn complicated. Later TurboTax came along, but that was consistently problematic too, prone to coding errors and endless updates in each year, and I dumped that after 6 or 8 years of frustration. No one in Congress cares so long as their favorite special exemption benefits their constituents. Pfft. Where have you gone, Steve Forbes? Sigh...
     
  5. petesede

    petesede Guest

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    One of the fears of a national sales tax is that it would instantly cause people to save money ( everything would cost more). Overall this seems like a side benefit and certainly is more intelligent overall, but at the same time, the moment when we make the switch would cause an instant slowdown in consumer spending, which would hurt whichever political party is in power at the time of the change over. The economy would instantly shrink by a very noticeable amount. I think both parties have champions who would like a national sales tax (without income tax), but neither party is going to be the one who pulls the trigger and does it, because in order to do it, you need to be in power... and when the economy shrinks .. you are going to be the one who gets blamed.

    It is the same rational as to why social security will never be fixed. Both sides want to fix it, but neither wants to be the one who takes the political hit for actually doing it. You always see the party not in power being the one pushing for it, because they know the other side will get blamed for it.

    Politics 101 - never do anything good for the country if it makes your party look bad.
     
  6. norms options

    norms options Well-Known Member

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    I think a sales tax is a better alternative to an income tax. Taxing our income is, essentially, penalizing us for trying to improve our lot in life. This is what America is supposed to be about--the opportunity to make your life what you want it to be. It seems as time goes on there have been so many other minor taxes added to the income tax that there is really not much left over for us to potentially grow our own net worth at a rate that makes it even worth working ourselves silly for 40-50 years. The sales tax is on consumption, which to me just makes more sense intrinsically.
     
  7. walta

    walta Member

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    As someone who has gone through years of tax audits with the IRS, I lean towards the idea of a federal sales tax. The sheer amount of red tape is piled up in my filing cabinet makes me roll my eyes in disgust. And no, I did not break any of the rules.

    If you have ever dealt with the IRS, you know that each department does not have access to your complete profile. Or at least, this is the line I get. Not uncommon to spend hours on the phone being transferred around.

    So yeah, I pay my taxes. I have no problem contributing, but I do have a problem with the current system. Granted my response is personal and emotional, it is based on personal experience facts.

    At the same time, I understand the caution of consumers buying less; yet, as an economy based on spending more then we save, a federal sales tax has potential.
     
  8. gmckee1985

    gmckee1985 Senior Investor

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    I don't really care about equity in the tax system. The less taxes everyone pays the better. I am for an across the board reduction in taxes for every working America. We need to simplify the tax code for sure. Make it easier to understand and do away with the IRS.
     
  9. JR Ewing

    JR Ewing Super Moderator Staff Member

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    I personally pay a CPA to do my returns, and if there are ever any issues, I never deal with the IRS myself - I call my attorney. Whatever money I spend hiring others is worth me not having to deal with those cockroaches.
     
  10. walta

    walta Member

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    Yeah, lesson learned. Seriously need both a CPA and attorney on retainer. On a good note, son plans to protect himself from this hassle and retain these much needed professionals.

    One year sending notices from THEM needing another 30 day extension to review. Now, all of the sudden get a reply back that does not even address the issue. Been a lovely week receiving four irrelevant notices.

    Years ago use to get freaked out with IRS notices, nowadays its like getting junk mail. So yeah, I would celebrate to a change in this system. Of course, as mentioned above doubtful any politician would advocate with sincere action a change in the system that actually occurred.
     

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