A guy at work thinks we should get rid of the income tax and go with a national sales tax on EVERYTHING that would drastically increase with items like top of the line cars, boats and other high end luxury items. I think its a VERY bad idea as it seems to punish people for spending money.

Personally, I think a 10% flat INCOME tax would be the way to go. Everyone has the same weight on their shoulders.

Good or bad ideas about either one?

I think the flat tax idea is a good one.  It's much simpler.  My money is mine.  If I buy expensive things, I'll pay more money in taxes, and if I buy less expensive things, I'll pay less, even though either would be at the same rate.  10% wouldn't be too bad.

I wonder how it would affect online shopping, tho!  


{edited to note} I'm thinking more of the flat SALES tax, not flat INCOME tax... my bad...

The most effective approach would be election of a President and Congress that are interested in doing the right thing by cutting out wasteful spending and weaning the states and their municipalities from the Federal budget.

Did you ever notice how much of the cost of virtually every local capital project taken on by your county or city is funded by the Federal government?  My guess is that the average is 70%, and I guarantee that some creative argument is required to justify the spending under the Interstate Commerce clause of the Constitution.

To bad the US budget is too large for the average citizen to read so we coould comprehend where the  money is really being spent.

I think a flat rate is ridiculous.
I think a flat FEE would be best.  If I go to a restaurant and order a burger, are they going to charge me based off my income?  If I make $100k/yr and someone else makes $10k/yr then why should it cost me 10 times more for the [b]same[/b] goods and services?
The cable company charges me $40/month.  If my neighbor makes twice as much as me, do they charge him $80/month for the same service?  See how ridiculous this is????  In the income tax case, he would be effectively paying twice what I am paying for the same service.  Taxes effectively scale everyone down to the same level so everyone is economically equal.
Property taxes are the same problem.  Why should someone who has the same Police, Fire, etc (CIty stuff), and school pay more than another person for the SAME services just because his house is bigger?????
And why do I pay school taxes for my neighbor's kids to go to school?

Tax words.  That way woman, idiots, and people who believe they deserve special treatment will pay more.

Sgtar15

I could really care less whether the government screws us over via an income tax or via a sales tax.  The key for tax relief is to cut spending.  Drastically.

SuperAlpha

Your post made me think a little, and this is something that occurs to me -

"To each according to his needs, from each according to his abilities."

Hence, I can only conclude that a nation such as ours with a large national bureaucracy, heavy taxes on those of us that work and pay them, and a large population of parasitic citizens that contribute nothing, has slid down fully down the slope to Socialism.

I guess I am a Libertarian, at least that is what my disgust with the current social and political climate in the US indicates.  We need to turn closer to the Founding Principals wherein the Federal government provides for a common defense and regulates interstate commerce.

You are correct in that a flat tax is unfair in that the cost of services is not spread around fairly.

I disagree with respect to property and sales taxes - these are really taxes on personal choice, hence everyone is permitted to determine the amount of tax paid.

The topic is complex, and I wish we could throw ideas around in person instead of through this clunky medium.

What is the difference if you are taxed when you make the money or when you spend it?

I think 10% would be very low. I am lucky when I get 50% of my gross wage as net.

I think 20-25% might be closer, including State, medicare, SSN, type componenets.

I also think that a flat tax sounds great, but there's a whole bunch of people, me included, that have signifigant deductions on the fed taxes. So it may be tough when those people realize flat=no deductions.

Well I have not put a great amount of thought into it but, what if there is NO deductions?
A Flat 10% of your income at the end of the year. For every dollar you make you pay a dime to help provide the country with the things it needs (not wants).




I think you miss read that or were you arguing against the sales tax idea? I don't like the sales tax idea at all. The sales tax idea would not be based on your income and thats the problem. you are correct, why would you pay more for a burger then the other guy? But if we all chipped in 10% of INCOME TAX at the end of the year I think it would be fair. We all FEEL the same burden

Personal choice should not affect the price you pay for COMMON services.

That is my understanding of flat taxes, no deductions. It is appealing in it's simplicity. It also destroys the arguement that people who succeed financial face negative incentives as they move into higher "tax brackets". It should also limit those people that find a way to pay little or no taxes currently, with innovative tax planning.

But, a lot of people in the lower incomes wouldn't want a flat tax, they would pay more. People that are used to "writing off" and "deducting" a whole bunch of stuff regardless of tax bracket would also less than happy with a flat tax, in all likelyhood.

Flat tax is brilliant in it's simplicity, but difficult politically.

How about this -
Everyone pays the same price for all basic services provided by the government, and I mean everyone.  In this case, a family with one child pays less than a family with 3 kids, even though their burden on services such as fire departments and highways is (probably) identical. The burden on the school system is balanced.  

Anyone interested in taking a crack at the value of basic services the government ought to provide?  Who will determine what those services are?  For example, I don't want to pave every inch of rural road in the country, I prefer gravel and dirt rosds, therefore I don't want to pay for paving.  [By the way, this is how I really feel about excess paving.]

Are deadbeats that fail to pay their services tax eligible for government services, and how do we prevent them from consuming this commodity?

What do we do about the cost of basic services exceeding the income of (for argument) 30% of the population?

Then, do we add a tax on consumption beyond beyond the basic services paid for?  This turns out to be punitive for low to middle income earners, has no effect on the spending on extremely wealthy people.

So if I own a house worth $100,000 on a 1/2 acre lot, with $50,000 in property in the house, I should pay the same as the guy with a $1,000,000 house on 5 acres, and $200,000 in property in the house? I think not. He has more to protect. If we both had a fire, fewer firefighters could stop a fire in my house, that his house. He should pay for that type of service based on how much is being protected.

Where have you been? Cable companies already do this. It's the natural evolution of charging what the market will bear. Only they use market segmentation and charge what each segment will bear. Why do you think when you call, they have menu selection for english and spanish? It's not for making illegals life better. It's for market segmentation and the prices are better on the spanish option.

My wife is from Mexico and we always compare prices from english and spanish customer service reps. DirecTV, Sprint, and AT&T always come up with "discounts" on the spanish side without my wife asking for it. They call it a "discount" to avoid discrimination.

Maybe I did not make myself clear. The sales tax idea is NOT based on INCOME. SALES TAX would increase with the more luxurious items such as boats and cars. I think the guy at work was suggesting that a tax on a small minor item would be perhaps 5% while a boat would be 30%. So a guy buying a burger making one million a year would pay as much tax as a guy on welfare. I don't like it because it increases the RATE/PERCENTAGE with different items. It is a penalty for buying nice things.


I do like the idea of a once a year FLAT tax with no deductions of ANY kind of 10%. You pay exactly 10% of what your W2 shows as pay or entitlements.

Tax the rich and provide for the poor. Nothing else will work in this country.

I believe in the flat rate income tax.  10% total.  8% going to the feds and 2% going to the state.  Get rid of sales tax, marriage penalty, death tax and all that other BS.  This way, the "poor" can't say it is unfair.  Why should someone get a $10 per week pay raise and end up paying an extra $20 in taxes because it pushes him into the next tax bracket?  That is a $10 loss of pay.  Bracketing is great on drag racing, but not on taxes.  Right now we keep hearing that the tax cuts are unfair to the poor and only for the rich.  The problem is that the ones that put nothing in are getting all the benefits and when something is actually done to help those that pay the taxes, the moochers whine about it.  I make about $45000 per year.  This makes me rich according to the liberals.  I can guarantee you that I am not rich.  I pay property taxes for other peoples kids to go to school.  OK, I can see that because I know that it cost more for me and my sister to attend school than my parents paid in property taxes.  Education is the responsibility of all.  But when someone says that because I work my ass off for what I have, I should pay more income tax so some crack whore in the projects can get her welfare cheese, then I have a problem.  A flat rate income tax is the answer.

Rip, here in Australia we abolished a whole raft of different sales tax rates at the wholesale level and moved over to a flat 10% sales tax on everything except basic food items at the retail level. Before the 10% sales tax came in we had the type of system you're talking about, different wholesale tax rates for different items, with the "luxury" goods getting the highest rates. That system was scrapped because over time it had become more and more complicated, and more and more difficult to administrate (can you really trust the politicians to keep their hands off it and not mess it up?). Even if the current flat sales tax had included food, there is no way in hell that the revenue raised from from a flat 10% sales tax would be enough to finance government coffers at all levels (fed, state, local). Govt services would have to be cut to the absolute bone (and I mean [B]absolute[/B]).

Some people will say that's probably a good thing, and to be honest I can think of a few areas of govt budget that could do with some serious reductions (The current federal administration here in Australia presented it's budget bill for the upcoming financial year a couple of weeks ago. Welfare soaks up 1/3 of the entire federal budget), but there would be a lot of services that would be so financially crippled that they will cease to function effectively. How many people here are willing to give up public funded education in favour of user pays? Public health care? How much of a cut would the defence budget have to take? Do we want any kind of welfare safety net for the genuinely needy? What about publicly funded infrastructure such as major roads, or do we want to pay tolls on every road we use? Public safety (law enforcement, courts and emergency services)? What level of direct cost to ourselves are we ready to accept for the sake of reducing the level of indirect cost (the tax system)? What effect will a fully user pays public infrastructure system have on the communities we live in?

Also, how many state sales taxes have never risen? In the UK, Canada and New Zealand where they have national sales tax systems, the sales tax rates have all gone up over time.

A more effective way of coming up with an alternative budget would be to look at what services need to be funded from the tax purse, and make everything else user pays. What services do you want to pay for directly and what do you want paid for from taxes? How many other people can you talk into agreeing with you?

10% flat tax through sales tax would only fund a fraction of the current services financed out of the public purse today. A flat sales tax rate of 25% would probably be a more realistic figure if you want to have any hope of abolishing personal income taxation (What about corporate taxes? If you're going to rely on sales turnover to fill the tax coffers, you want as much money circulating through the sales system as possible. Taking a scalpel to corporate taxes would certainly help with that), but over time more and more demands will be placed on the tax purse (unless someone can develop a quantum leap that can deliver public services for a fraction of the current cost) and the politicians won't be able to resist tinkering with the system. With more and more tinkering over time things will end up being just as messed up as they are now. I like to think of it as "political entropy".

Maybe we should all be saving up for our own private islands where we can declare ourselves independent nations.

Income tax in ANY form implies that the government is ENTITLED to a portion of your labor.  In essence you are a SLAVE working on Master Government's plantation.  Also with income tax, you will have those who will evade payment even if the rate is a flat 10%, and you still have to waste hundreds of millions of dollars for the beauracy to push paper, review statements, and to catch and then prosecute folks trying to evade.

National sales tax is the fairest way to obtain funds for government expenses/services.  The system ot collect sales tax is already in place, and the overhead expenses of auditors and agents can be reduced by over 90%.  HOWEVER, your co-worker is wrong to believe that by adding a "luxury" tax on certain items is a means to generate even more revenue.  IT JUST WON'T WORK!!  I was living in coastal NC when the Clinton 35% luxury tax on certain items went into effect.  In that area, the custom boat building industry almost collapsed overnight.  The only companies to survive were the ones who would sit down with a potential buyer and sell a bare hull.  Then they would add custom features, keeping careful not to go over the magic "luxury" price tag at any given point, thus avoiding the luxury tax on the whole boat.



Rip (and everyone else who reads this!), check out these links.  They go into great detail to explain how and why a NST is the way this country should pay for government services.  [url]http://www.salestax.org/[/url]
and
[url]http://www.scrapthecode.com/[/url]

That would be the FLAT FEE that I have been referring to.

That isn't how brackets work.