You touch on many of my concerns in the final section of the column. Here's another: what about people who have paid their income tax and have saved enough money to live on, who will now be hit, taxed twice, with a national sales tax when they go to spend that money?
Rather than focus on how we're taxed to support the hugely bloated governments at all levels, I think we should focus on sharply paring down government, particularly at the federal level. At least 90% and probably more like 99% of what the federal government gets up to is not authorized by the Constitution, which also expressly forbids any activity not explicitly authorized by it. In plain language, most of what the government does is illegal, abetted by the near complete corruption of the nation's courts, which are charged with keeping the other branches in line.
If government spending were reduced to 5% of current levels, I wouldn't much care what sort of taxing system was employed to finance it.
I am a retired tax professional (JD, LLM in Taxation, CPA, co-author of a 3-volume tax treatise, and lecturer), with no stake in ANY tax system (I would pay LESS tax under FT). This is a brief summary - for details, see Web: http://sceldridge.wix.com/sceldridge & YouTube video https://youtu.be/wiVLf1vrQX8
FT is 30% sales tax, not 23%. If an item costs $100 before adding FT, you add $30 (not $23), for a total of $130. They deceptively divide the $30 FT by the total $130. Pretty sneaky, eh? When exposed, they babble that it “compares to” a 23% income tax, but FT is a SALES tax of 30%. The 30% FT would be added onto virtually every dollar you spend on goods and services.
The Prebate is not a refund of FT paid, as advertised. It would be a (today) $750+B NEW ENTITLEMENT, with EVERYONE receiving a big monthly federal check. It is financially/ politically unwise to create yet another huge entitlement that automatically increases annually and could be increased even more by Congress at any time.
FT (Prebate) has the poor pay no part of the fed govt, pay nothing for their personal SS/Medicare benefits AND give them a big tax welfare check. FT (Prebate) extends tax welfare to the non-working poor – and also takes the next Progressive Cloward-Piven step towards giving SS/Medicare to all regardless of work, by removing the tax cost of reporting SS Wages, which “invites” fraud in reporting them (as also noted by other authors).
The Prebate purports to merely repay the poor for any FT they pay (as if we all agree with that), but it would actually pay them far MORE by “assuming” the poor spend more than the underlying HHS Poverty Guidelines and that they will pay FT on all of their purchases (but they WON’T) – see http://sceldridge.wix.com/sceldridge#!ft-increases-tax-welfare/copu
Many FT’ers still market the original FT lie that we get a big raise (no Income & P/R taxes) AND FT prices would be the same as today’s - that can’t be true. FT is merely supposed to change the method of paying the same total tax dollars we pay today, so if you get a big raise, prices must go up by the same total dollar amount (except for minor savings in compliance costs). Retail prices would rise by nearly the full 30%. Even the AFFT’s in-house economist later admitted that prices would rise substantially, but prices would rise even higher than AFFT admits - see http://sceldridge.wix.com/sceldridge#!ft-will-increase-prices-by-nearly-30/czaa
FT results in a combined fed+S/L 30-45% initial in-your-face sales tax that would spark a
taxpayer revolt that would destroy our retail-sales-sensitive economy - that’s 30% FT (not 23%) plus 0-15% S/L. Those rates might go up to (say) 60-75% at an illustrative 30% evasion/avoidance rate (incredibly, FT “assumes “zero evasion, zero intentional reduction in spending, and zero migration from new to used goods – instead of increasing the FT rates, the $600-$900B shortfall will more likely result in a new Income tax, see below).
The FT’s 30% rate is actually closer to 50%. FT hides another appx. 20% in taxes (but FT’ers deceptively say “the FT is fully transparent - just look at your receipt and you will see all of the FT you will pay”). 1) 12+% is hidden by having fed + S/L govts pay FT (which is likely unconstitutional) – ultimately, they must get that money from us, 2) The fed budget will rise for a) SS & all fed pension COLAs caused by FT’s 30% price increase, and for b) fraudulent new SS benefits “invited” by FT’s removal of the tax cost for reporting SS Wages (as noted by other authors ), 3) FT economists have admitted that the FT is 5% short. See https://sceldridge.wixsite.com/sceldridge/fts-hidden-taxes
USED goods are advertised as exempt from FT, but that is a cruel hoax because the buyer won’t be able to prove that FT was paid by the seller(s) AND that none of the listed credits against FT were claimed, all as required by the Bill. And because the price of all used goods will rise to reflect the higher cost of new goods, the buyer will incur FT twice, once implicitly in the higher price of used goods and once explicitly because he can't prove the seller(s) paid FT.
Contrary to AFFT claims, FT’s new IRS (i.e., STAA) may well be even more invasive than today’s IRS - the buyer is liable to pay FT and receive/show a receipt, and STAA may audit consumers – see FT Sec 101(d). Also, we may well have to file an “Annual FT Summary”. See http://sceldridge.wix.com/sceldridge#!the-myth-that-the-irs-is-abolished-/c1tu0
As also noted by Cato Institute (see http://bit.ly/1vNxnq3 ), FT leaves us more vulnerable to wind up with both a NEW Income Tax and FT (instead of dramatically increasing FT’s already high explicit 30% rate). Congress would surely repeal FT’s laughable Sunset Clause and (with the 16th Amendment surely still in place) would use the excuse of the large revenue shortfall from evasion/avoidance to enact a new Income Tax which I believe is Congress’ true ultimate objective (i.e., to grab even more of our money to redistribute to those who will vote for them).
To summarize, the FT required a much higher tax rate. AFFT simply “assumed” away 20-30% evasion/avoidance, hid 12% by taxing fed +S/L govts, reduced the rate by 5%, and ignored the FT-caused fed budget increases - to get the rate down to 30%. Then a clever AFFT lawyer twisted the statute’s words deceptively, making 30% superficially appear to be “only” 23%.
Seniors would start to pay for SS/Medicare again and some would pay a 2nd-3rd tax on their earnings. Many middle-class seniors would pay more FT than they would have paid in Income Tax. Many would lose purchasing power because of 1) the nearly 30% price increase and 2) the higher S/L & federal taxes required because both govts must pay FT and can only get those funds from us, and 3) higher federal taxes due to nearly 30% higher SS & federal pension COLAs and fraudulent SS benefits. See https://sceldridge.wixsite.com/sceldridge/seniors
FT promises grand economic benefits which are all entirely unpredictable - mere Hype & Change. FT employs marketing hype and hyperbole, making countless undeliverable claims.
Instead, we need a Flat Income Tax; No Deductions/Exemptions/Credits,10% rate, business income taxed only once on a very simple basis - IRS is neutered, 1-page tax filing, everyone pays, evolutionary. See A Very Flat Income Tax, http://sceldridge.wix.com/sceldridge#!page-2/cjg9 Let your representatives in Congress know that this is what you want.
Twelve Reasons the Tax Swap Proposal (a.k.a. “Fair” Tax) Is a Really Bad Idea
First let’s call the “Fair” Tax what it is: a proposal to swap the federal personal income tax for a 30% federal sales / consumption tax. And while some taxes may be worse than others, there is no tax that is inherently “fair.” Therefore, a more accurate descriptor of this proposal is the Tax Swap. Or a National Sales Tax (which is what Brian McClinchey seems to prefer).
1. Raising the sales tax is marketing suicide
Have you ever actually tried to sell a price increase? A thirty percent price increase?
That’s what a new 30% sales tax amounts to: a dramatic price increase on most of the things that everyone buys. Ouch!!!
Take note of ads in newspapers, on the Internet, on radio, or TV. Notice how many of them were bragging about a price increase? Have you heard any of them say, “Call today, and you’ll pay an additional 30% more for your (fill in the blank)!”
Consumers – and voters – are extremely sensitive to prices they pay out of pocket.
A candidate who runs on raising the price of everything that everyone buys is committing marketing suicide.
A new five percent sales tax would be a marketing nightmare. Running on a new 30% sales tax is marketing suicide. It severely discredits any candidate who runs on it claiming to be fiscally conservative.
It doesn’t matter that it’s a replacement tax. Voters will see it as a price increase, no matter how you try to justify it. You can bet your opponents will.
It doesn’t matter if you say their prices will go down and that they’ll pay the same in the end for goods.
First, they are not likely to believe they’ll ever see prices drop because they are not economists – and you’re not going to turn a voter into one. Arguments presented in a campaign must be very simple, or you just won’t have time to sell it to most audiences.
Second, they won’t believe you any more than they believe any politician trying to sell them a tax increase. Proposing a new tax is an extremely high negative that even Democrats avoid. When they do push a tax, it’s always on “the rich” or “corporations” --smaller groups that are easy for them to demonize without losing a lot of votes.
The Land Value Tax (aka Single Tax) has all of the advantages you list for the national sales tax with none of its drawbacks. With sales taxes you disincentivize sales, which is to say you depress economic activity. Land, however, is perfectly inelastic in its supply, thus taxing it cannot reduce its availability. All it does is increase its efficiency of use. You should educate yourself on the Land Value Tax (sometimes called the Single Tax) and the efforts of Henry George in his magnum opus "Progress and Poverty." Maybe start by going to YouTube and searching "for the land is mine DVD restored" and watch that. I can't imagine anyone proposing an overhaul as sweeping as this and not having it be the Single Tax, but instead a national sales tax. No sane and informed person would, so I have to assume you're simply uninformed. That's fine. Do the research. If you do you'll soon "see the cat" as they say.
Thanks for the clear concise explanations. But, this system while of good intent, will end us up right back where we are.
The problem isn't the "tax system". The problem is the "government". No matter the income steam, until the government (or sometimes euphemistically called a 'giver-n-ment') has to balance its own books, is held to living within its income revenues, and is made to stop spending Other Peoples Money (OPM) like a high teenager with a platinum card, we will be unfairly overtaxed, the country will fall deeper in debt and sooner or later our society will fafe away as it self immolates.
A constitutional amendment mandating a balanced budget is the first step.
A constitutional amendment placing a cap on a fair tax percentage is a must.
There can be NO carve outs, exceptions, no UBI pre-bate schemes.
And there must be a significant (~50%) reduction in federal (and state) spending.
Then we can have a conversation about a new tax idea.
How about no federal taxes on individual or corporations, instead a tax on revenue collected by the states, based on percentage with a hard cap on the dollar amount with a pre pay budget rule in place.
11. The IRS won’t go away because it will need to administer the new consumption tax.
The Tax Swap proposal sells itself as a way to get rid of the dreaded IRS. But does it?
A replacement consumption tax still needs to be administered. The exemptions it proposes - both those in the initial proposal and the many that would inevitably be added - would still need to be administered. They may call it a different name, but like today’s IRS, it will collect taxes, impose red tape, conduct audits, and impose severe penalties.
If you don’t think collecting a sales tax is intrusive, try asking a few retailers who now collect a sales tax for their state whether they find it intrusive. They despise filling out forms, charging customers and paying sales tax collections as much as you hate filing taxes and sending a check to the IRS.
And then ask a few retailers who live in one of the states, like New Hampshire, with no sales tax how excited they are about this proposed intrusion into their businesses and having to report their every transaction to the IRS. (Make sure you’re ready to run in case they decide to start throwing large objects at you.)
These small retailers are another key constituency for advocates of fiscal responsibility. If you propose an across-the-board consumption tax, you will alienate this important constituency that would otherwise be strong supporters of your campaign.
…And then ask them if a national sales tax might open the door to their state politicians collecting a new state sales tax – since retailers would have to collect it for the feds anyway.
The IRS, or its equivalent tax collection agency, will also demand money to “crack down” on the black market to stop those who avoid the consumption tax. More Big Government policing, similar to today’s IRS.
The best way to get rid of the IRS is to simply end the income tax and cut spending. Replace it with nothing -- except you and every American keeping the money you earn.
12. Simply ending the income tax and replacing it with nothing has already proven to be a winning campaign platform.
In 2002, voters in Massachusetts almost passed a ballot measure to end the state income tax.
In one of the most Big Government states in the country, 45% of voters said “Yes” to ending the state income tax and taking $9 billion out of a $23 billion state budget, despite the fact that the media overwhelmingly opposed the measure. Every newspaper in the state, with the exception of one small newspaper in western Massachusetts, editorialized against it. The Boston Globe published three editorials and numerous columns urging “vote No on 1.”
Yet 885,683 voters in the small state of Massachusetts said Yes to ending the income tax. Good luck getting a percentage like that running on a Tax Swap.
When the initiative ran again in 2008, 914,420 voters said Yes to ending the income tax. Despite $7 million in “Vote NO” ads by the Teachers Union and virtually no ads for “Vote YES.”
What these initiatives showed is that bold tax revenue reductions that put money back in the pockets of taxpayers (which the Tax Swap does not) – without hitting them with another tax (which the Tax Swap does) - have high potential to attract votes.
If these twelve reasons are not enough for you to reconsider any inclination you might have to support a Tax Swap, rest assured that they are all reasons many voters will reject the idea and why your opponents and the media will attack you for it.
“But,” you say, “a Tax Swap bill already has sponsors in congress. It could get passed!”
Why would you want it to? It would not shrink government. It would divide and conquer taxpayers. It would keep Big Government big. And it runs a serious risk of saddling Americans and retailers with both an income tax and a federal consumption tax.
The fact that the “Fair” Tax has a high number of in today’s congress is likely an indicator that it’s a bad idea. At least 99% of the bills that get traction in congress do so because they keep Big Government big. Bills that seriously challenge the Big Government status quo die a quick death.
“But,” you say, “it’s better to tax spending than earnings because it encourages people to save.”
This assumes politicians are competent to be the arbiters of what the proper ratio between savings and spending should be. But politicians are distinctly unqualified to make such decisions. Remember, these are the people who have run up deficit spending in recent years to astronomical levels – and have demonstrated no intention of balancing the federal budget - ever.
People don’t need the government to tell them to save. They just need lower overall taxes and fewer government intrusions so they can save.
Say No to the Tax Swap (“Fair” Tax).
Say Yes to simply ending the income tax and cutting spending!
8. The Biggest Danger of the Tax Swap: Bait and Switch
The Tax Swap threatens to become a bait-and-switch proposal. We could easily end up with both a national consumption, or VAT, tax -- and still be stuck with the income tax.
This happened with a tax swap proposal in Nevada in 1981. Gov. Robert List proposed the “tax shift” to reduce the property tax in exchange for a new sales tax. Within four years, the property tax was back to where it was in 1981 while Nevadans were saddled with a new sales tax. The governor's tax shift became known as the tax shaft.
The Tax Swap proposal assumes that today’s lawmakers will keep their word and will implement a bill as originally proposed. But that almost never happens. As a bill winds its way through committees and budget negotiations, it rarely ends up how it started – and it almost always gets worse, not better.
We’ve already seeing evidence of how the Tax Swap proposal will play out. In 2011, it wasn’t getting much air play and remained unknown to most voters. But pundits were talking about the prospect of a new national sales tax – with no mention of getting rid of the income tax – on national TV.
Circa 2011, Bill O’Reilly and Glenn Beck debated on the O’Reilly Show whether a new consumption tax was a good way to reduce the deficit. On this “conservative” talk show, there wasn’t even a mention of getting rid of the income tax! Talk of the Tax Swap aids and abets this dangerous trend.
As reported in The Hill newspaper, “According to several sources, talks are under way on Capitol Hill to create a consumption tax, perhaps a VAT, that would be added to the current tax system to help the country get out of debt. There has been no serious discussion on implementing the FairTax, these sources said.”
It should be clear to anyone who understands how things work on Capital Hill that, if the Tax Swap has any influence at all on policymakers, it will be to help saddle the nation with a VAT or sales tax – while the income tax remains.
9. Selling a consumption tax as “optional” is misleading.
Requiring people to pay a sales tax takes the fruits of their labor, as do all taxes. It is absurd to suggest that buying products and services is optional. It is a necessity to stay alive and to do many of the things worth living for.
10. The proposed consumption tax rate starts obscenely high -- and will continue to rise.
Tax rates almost always rise – a lot.
If the Tax Swap creates a new consumption tax at the frighteningly-high rate of 30%, we should expect it to rise after people move their purchases to the black market or barter to avoid it. Politicians will react by raising the rate to get the revenue they desire. They will insist that revenue can’t go down (a point of view aided and abetted by advocates of the Tax Swap!)
You don’t need to look hard to see that today’s politicians constantly raise taxes. Just look at the 2015 budget deal (negotiated end-of-year 2014). Or the 2014 deal. Or the 2013 deal. Or the year before that. Or the year before that. Or just about ANY YEAR IN THE LAST 100 YEARS.
Today’s income tax started at graduated rates in the range of 1-7% in 1913 and is now 10-35%.
If a federal consumption tax starts at 30%, how high will it rise?
5. Your opponents will use the Tax Swap to bury your campaign.
The media and your opponents will present a Tax Swap proposal as a tax increase.
That makes you look like a tax hiker. And as one who advocates freedom and reducing government, it makes you look hypocritical to boot.
Even if you have a well-funded campaign and can buy enough ads to get your explanation heard, you won’t be able to overcome the fact that your Democratic and Republican opponents will be much better funded.
Plus, they will have the media on their side.
Your opponents have no interest in helping to promote your explanations of how the Tax Swap ends the income tax or any other positive point you could make in its favor. They will crush and discredit you as being one more politician who raises taxes. This has already been done against proponents of the “Fair Tax”. Examples: here and here.
6. The Tax Swap proposal is harder to sell than simply ending the income tax.
Past attempts to cut taxes suggest that bold tax cut proposals do as well or better than moderate ones.
The reasons for this are twofold. First, opponents of a bold tax cut will fight a modest tax cut with equal force. In fact, they’ll fight just as hard against anyone who opposes a tax increase. They always advocate for more Big Government and fight against anyone who stands in their way. So you have nothing to lose by trying to avoid their opposition. You’re going to get it anyway, no matter how bold or how weak your stance.
Second, the revenue neutral Tax Swap misses out on the biggest benefit for voters of simply ending the income tax: More money in their pockets.
Ending the federal personal income tax allows us to give back (as of 2014) an average of $11,525 to every household in the U.S. – every year – that they now pay in the federal income tax – a huge selling point. The Tax Swap offers no such benefit because most voters will pay for it in the new sales tax. It is, after all, a revenue-neutral proposal not designed to give taxpayers relief.
In short, the appeal of the Tax Swap is relatively narrow, while the opposition to it will be very broad.
7. Revenue-neutral proposals miss out on another critically important benefit of bold tax cuts: Jobs.
Any measure that reduces government revenue, i.e., it shifts substantial resources out of government coffers and into the private sector, creates jobs. This is another huge selling point for simply ending the income tax that the Tax Swap cannot claim.
This job creation benefit of reducing total revenue has been substantiated by a study by the Beacon Hill Institute in 2010 which showed that for every government job lost due to spending cuts, two jobs are created in the private sector.
More jobs means more job opportunities – giving workers more choices for satisfying jobs and higher pay.
4. Tax Swap proposals squander the opportunity to go on the offensive and make government small
Freedom is the absence of Big Government. To advance freedom, advocates for small government must proactively advocate for shrinking it dramatically.
Campaigns of advocates for small government should go on the offensive, constantly selling the virtues of boldly reducing the size, scope, authority, taxation, spending, assets and/or liabilities of Big Government.
Take past Libertarian candidates as an example. In 2014, over thirty Libertarian candidates running for federal office pledged that, if elected, they would work to end the personal income tax, balance the budget, and roll back spending to the year 1998 – a plausible and attractive proposal with no new tax. In 2016, 42 Libertarian federal candidates made the same pledge.
In 1996 and 2000, Libertarian Harry Browne ran for president on an even bolder platform. Ending the personal income tax, the corporate income tax and the FICA tax – while completely privatizing Social Security. He proposed cutting federal spending from $1.9 trillion to a mere $100 billion in total spending.
Volunteers, donors, and voters who heard Browne’s bold proposals were wild about them. LP membership grew threefold during his campaigns – by far the greatest growth rate the party has ever achieved.
Despite Browne’s effectiveness, you may still feel uncomfortable proposing to completely and immediately end the federal income tax. That’s OK, because there are alternatives.
As a federal candidate, one option is to propose to simply balance the budget. Today this requires a sizable cut. That alone would make a huge difference, and would stop the devaluation of the dollar – which is, in effect, a hidden tax. You’re saving taxpayers thousands of dollars every year by balancing the budget and stabilizing prices that they now lose to nonstop inflation. Plus, it’s an easy proposal to defend. You can paint your opponents who refuse to balance the budget as reckless and irresponsible – which they are.
Another alternative is to propose first balancing the budget, then phasing out the income tax and cutting spending accordingly. Pick a time frame you’re comfortable with, for example, a 3-year plan. But don’t go as far out as a 10-year plan – that’s too far off. History has shown that Congress has repeatedly violated its long-term plans, and they're not credible. Ten-year plans are used by today’s Big Government politicians as a way to avoid cutting government spending. We need to break this precedent and show that we can cut spending now.
Note that the LP platform calls for ending the income tax, but does not call for any replacement tax:
All persons are entitled to keep the fruits of their labor. We call for the repeal of the income tax, the abolishment of the Internal Revenue Service and all federal programs and services not required under the U.S. Constitution. We oppose any legal requirements forcing employers to serve as tax collectors. Government should not incur debt, which burdens future generations without their consent. We support the passage of a "Balanced Budget Amendment" to the U.S. Constitution, provided that the budget is balanced exclusively by cutting expenditures, and not by raising taxes.
3. The Tax Swap aids and abets Big Government tax hikers
Many advocates of fiscal responsibility agree: 90% of what the federal government spends is either pure waste or does more harm than good. If they were to carefully scrutinize most state budgets, they would likely arrive at a similar conclusion: Most state budgets can and should be cut by a very large percentage. Most services that are viewed by voters as proper functions of government – roads, police, firefighting, and schools - are, and should be, funded locally. (Local governments are also over-funded and in need of downsizing.)
Therefore the fact that the Tax Swap aims to be “revenue neutral” is not a virtue, but a drawback. It leaves money on the table for Big Government politicians to spend on regulations, prohibitions, war, spying on its citizens, and meddling in personal freedoms.
Proponents of the Tax Swap have already gone on record selling “revenue neutral” as a good thing – when it should be sold as a bad thing. Advocates for fiscal responsibility should eschew, if not outright denounce, any policy like the Tax Swap that advocates keeping Big Government big.
What’s worse, introducing and promoting a consumption tax feeds directly into the agenda of Big Government advocates who would love advocates for fiscal responsibility to help them sell a massive new tax.
Advocates for fiscal responsibility should NEVER help to sell a new or increased tax. Our opponents may raise taxes anyway, but they should have to scratch and claw for every tax hike they pass. We should force them to cash in whatever goodwill they have with voters to raise a tax, and especially to introduce a new tax. Don’t take them off the hook by promoting the alleged “virtues” of a consumption tax.
2. Who do you want to divide and conquer? Taxpayers? Or advocates of Big Government?
By promoting one tax over another, you’re helping proponents of Big Government because it divides, rather than unifies, taxpayers. Taxpayers are the last group any fiscal conservative should want to divide.
Swapping the income tax for the sales tax will cause taxes to go down for people in middle- and high-income brackets and will cause taxes to go up for those who do not currently pay, or who pay very little, income tax.
A tax swap could be viewed as a direct attack on the latter group, which includes many poor seniors on Social Security and the working poor, both important constituencies.
Working poor already lean strongly against new taxes.
Senior citizens already paid tax on their income. Why should they pay it again on a consumption tax?
Both are large constituencies important to any candidate running for office.
To threaten these groups with a tax hike, especially one that will be viewed as favoring those who are better off, is more marketing suicide.
Consider that low-income voters are already severely overtaxed, even if they pay no income tax today. They pay property tax – either directly as homeowners or indirectly as renters. They pay sales tax in most states. Most pay state income tax and FICA tax. And they pay many of the hundreds of direct and indirect taxes that everyone pays.
Plus they have much less discretionary income to pay those taxes. Any tax increase on this group is a heavy burden.
Plus, this is probably the group that is disproportionately harmed by Big Government (e.g. small business regulations) and which sees very few benefits to themselves. They’re on our side. It would be disastrous to be seen as harming this group even more with a tax increase.
Running on a new tax shifts the overall tax burden to these groups - no matter how many complicated exclusions for the tax you want to list. Your opponents will nail you on it and alienate these core constituencies. You will be pegged as another rich guy or woman who doesn't like paying the income tax or paying accountants - and who doesn't care a whit about everyday taxpayers who need and want to buy goods for their families.
And of course those exclusions, aimed at mitigating this point, add complexity to taxes, which is exactly how the IRS became the beast that it is today, loaded with provisions to appease one group or another and opening the door for special interest lobbying.
It’s best to avoid the whole debate about whether one tax is better/worse, more/less fair than another. They’re all bad and they’re all unfair. This is the wrong debate to be having and gets big-spending politicians off the hook. We need to turn the heat on Big Government spenders – not taxpayers!
The goal should be to get our opponents fighting over where to cut spending – not advocates of liberty fighting over whom to tax.
Instead, it’s far better to propose broad tax and spending cuts that cut taxes for most if not all taxpayers – and that never raise anyone’s tax.
The more broad-based the tax cut, the more it benefits everyone -- so there’s nothing for tax-cutters to fight about.
Not sure how anyone with economic sense can support this.
Ask yourself who enforces this. Who? Your local authorities. You want the fed involved with local politics? You want to see more walk around money, election meddling, and more welfare with no accountability at the local level?
Imagine the shake down as local authorities come knocking on your door demanded you to prove that you already paid for your stuff inside your home. What if you received gifts or paid cash? How do you prove this? Talk about a smugglers paradise!
What do you think happens when the majority of the income comes from a small number large businesses? Who you you think laws will be made for?
What is to stop lawmakers from implementing income and sales tax?
If you want to fix taxes, then take the fed budget and divide it by the latest census (adjusted assuming 20% will contribute) and ask everyone to contribute up to a voluntary flat, up to equal mount, with no filings, interest, or liens. Simple
You touch on many of my concerns in the final section of the column. Here's another: what about people who have paid their income tax and have saved enough money to live on, who will now be hit, taxed twice, with a national sales tax when they go to spend that money?
Rather than focus on how we're taxed to support the hugely bloated governments at all levels, I think we should focus on sharply paring down government, particularly at the federal level. At least 90% and probably more like 99% of what the federal government gets up to is not authorized by the Constitution, which also expressly forbids any activity not explicitly authorized by it. In plain language, most of what the government does is illegal, abetted by the near complete corruption of the nation's courts, which are charged with keeping the other branches in line.
If government spending were reduced to 5% of current levels, I wouldn't much care what sort of taxing system was employed to finance it.
I am a retired tax professional (JD, LLM in Taxation, CPA, co-author of a 3-volume tax treatise, and lecturer), with no stake in ANY tax system (I would pay LESS tax under FT). This is a brief summary - for details, see Web: http://sceldridge.wix.com/sceldridge & YouTube video https://youtu.be/wiVLf1vrQX8
FT is 30% sales tax, not 23%. If an item costs $100 before adding FT, you add $30 (not $23), for a total of $130. They deceptively divide the $30 FT by the total $130. Pretty sneaky, eh? When exposed, they babble that it “compares to” a 23% income tax, but FT is a SALES tax of 30%. The 30% FT would be added onto virtually every dollar you spend on goods and services.
FT admits readily (advertises) that it is MORE Progressive (more welfare) – see http://sceldridge.wix.com/sceldridge%23!fairtaxs-progressive-socialist-heart/c1hzm
The Prebate is not a refund of FT paid, as advertised. It would be a (today) $750+B NEW ENTITLEMENT, with EVERYONE receiving a big monthly federal check. It is financially/ politically unwise to create yet another huge entitlement that automatically increases annually and could be increased even more by Congress at any time.
FT (Prebate) has the poor pay no part of the fed govt, pay nothing for their personal SS/Medicare benefits AND give them a big tax welfare check. FT (Prebate) extends tax welfare to the non-working poor – and also takes the next Progressive Cloward-Piven step towards giving SS/Medicare to all regardless of work, by removing the tax cost of reporting SS Wages, which “invites” fraud in reporting them (as also noted by other authors).
The Prebate purports to merely repay the poor for any FT they pay (as if we all agree with that), but it would actually pay them far MORE by “assuming” the poor spend more than the underlying HHS Poverty Guidelines and that they will pay FT on all of their purchases (but they WON’T) – see http://sceldridge.wix.com/sceldridge#!ft-increases-tax-welfare/copu
Many FT’ers still market the original FT lie that we get a big raise (no Income & P/R taxes) AND FT prices would be the same as today’s - that can’t be true. FT is merely supposed to change the method of paying the same total tax dollars we pay today, so if you get a big raise, prices must go up by the same total dollar amount (except for minor savings in compliance costs). Retail prices would rise by nearly the full 30%. Even the AFFT’s in-house economist later admitted that prices would rise substantially, but prices would rise even higher than AFFT admits - see http://sceldridge.wix.com/sceldridge#!ft-will-increase-prices-by-nearly-30/czaa
FT results in a combined fed+S/L 30-45% initial in-your-face sales tax that would spark a
taxpayer revolt that would destroy our retail-sales-sensitive economy - that’s 30% FT (not 23%) plus 0-15% S/L. Those rates might go up to (say) 60-75% at an illustrative 30% evasion/avoidance rate (incredibly, FT “assumes “zero evasion, zero intentional reduction in spending, and zero migration from new to used goods – instead of increasing the FT rates, the $600-$900B shortfall will more likely result in a new Income tax, see below).
The FT’s 30% rate is actually closer to 50%. FT hides another appx. 20% in taxes (but FT’ers deceptively say “the FT is fully transparent - just look at your receipt and you will see all of the FT you will pay”). 1) 12+% is hidden by having fed + S/L govts pay FT (which is likely unconstitutional) – ultimately, they must get that money from us, 2) The fed budget will rise for a) SS & all fed pension COLAs caused by FT’s 30% price increase, and for b) fraudulent new SS benefits “invited” by FT’s removal of the tax cost for reporting SS Wages (as noted by other authors ), 3) FT economists have admitted that the FT is 5% short. See https://sceldridge.wixsite.com/sceldridge/fts-hidden-taxes
USED goods are advertised as exempt from FT, but that is a cruel hoax because the buyer won’t be able to prove that FT was paid by the seller(s) AND that none of the listed credits against FT were claimed, all as required by the Bill. And because the price of all used goods will rise to reflect the higher cost of new goods, the buyer will incur FT twice, once implicitly in the higher price of used goods and once explicitly because he can't prove the seller(s) paid FT.
Contrary to AFFT claims, FT’s new IRS (i.e., STAA) may well be even more invasive than today’s IRS - the buyer is liable to pay FT and receive/show a receipt, and STAA may audit consumers – see FT Sec 101(d). Also, we may well have to file an “Annual FT Summary”. See http://sceldridge.wix.com/sceldridge#!the-myth-that-the-irs-is-abolished-/c1tu0
As also noted by Cato Institute (see http://bit.ly/1vNxnq3 ), FT leaves us more vulnerable to wind up with both a NEW Income Tax and FT (instead of dramatically increasing FT’s already high explicit 30% rate). Congress would surely repeal FT’s laughable Sunset Clause and (with the 16th Amendment surely still in place) would use the excuse of the large revenue shortfall from evasion/avoidance to enact a new Income Tax which I believe is Congress’ true ultimate objective (i.e., to grab even more of our money to redistribute to those who will vote for them).
To summarize, the FT required a much higher tax rate. AFFT simply “assumed” away 20-30% evasion/avoidance, hid 12% by taxing fed +S/L govts, reduced the rate by 5%, and ignored the FT-caused fed budget increases - to get the rate down to 30%. Then a clever AFFT lawyer twisted the statute’s words deceptively, making 30% superficially appear to be “only” 23%.
Seniors would start to pay for SS/Medicare again and some would pay a 2nd-3rd tax on their earnings. Many middle-class seniors would pay more FT than they would have paid in Income Tax. Many would lose purchasing power because of 1) the nearly 30% price increase and 2) the higher S/L & federal taxes required because both govts must pay FT and can only get those funds from us, and 3) higher federal taxes due to nearly 30% higher SS & federal pension COLAs and fraudulent SS benefits. See https://sceldridge.wixsite.com/sceldridge/seniors
FT promises grand economic benefits which are all entirely unpredictable - mere Hype & Change. FT employs marketing hype and hyperbole, making countless undeliverable claims.
Instead, we need a Flat Income Tax; No Deductions/Exemptions/Credits,10% rate, business income taxed only once on a very simple basis - IRS is neutered, 1-page tax filing, everyone pays, evolutionary. See A Very Flat Income Tax, http://sceldridge.wix.com/sceldridge#!page-2/cjg9 Let your representatives in Congress know that this is what you want.
Brian,
I think I'd like such a tax, but i don't see it happening. Time tells all.
Cheers
PS - we were once co-workers...
From a paper I wrote circa 2015:
Twelve Reasons the Tax Swap Proposal (a.k.a. “Fair” Tax) Is a Really Bad Idea
First let’s call the “Fair” Tax what it is: a proposal to swap the federal personal income tax for a 30% federal sales / consumption tax. And while some taxes may be worse than others, there is no tax that is inherently “fair.” Therefore, a more accurate descriptor of this proposal is the Tax Swap. Or a National Sales Tax (which is what Brian McClinchey seems to prefer).
1. Raising the sales tax is marketing suicide
Have you ever actually tried to sell a price increase? A thirty percent price increase?
That’s what a new 30% sales tax amounts to: a dramatic price increase on most of the things that everyone buys. Ouch!!!
Take note of ads in newspapers, on the Internet, on radio, or TV. Notice how many of them were bragging about a price increase? Have you heard any of them say, “Call today, and you’ll pay an additional 30% more for your (fill in the blank)!”
Consumers – and voters – are extremely sensitive to prices they pay out of pocket.
A candidate who runs on raising the price of everything that everyone buys is committing marketing suicide.
A new five percent sales tax would be a marketing nightmare. Running on a new 30% sales tax is marketing suicide. It severely discredits any candidate who runs on it claiming to be fiscally conservative.
It doesn’t matter that it’s a replacement tax. Voters will see it as a price increase, no matter how you try to justify it. You can bet your opponents will.
It doesn’t matter if you say their prices will go down and that they’ll pay the same in the end for goods.
First, they are not likely to believe they’ll ever see prices drop because they are not economists – and you’re not going to turn a voter into one. Arguments presented in a campaign must be very simple, or you just won’t have time to sell it to most audiences.
Second, they won’t believe you any more than they believe any politician trying to sell them a tax increase. Proposing a new tax is an extremely high negative that even Democrats avoid. When they do push a tax, it’s always on “the rich” or “corporations” --smaller groups that are easy for them to demonize without losing a lot of votes.
The Land Value Tax (aka Single Tax) has all of the advantages you list for the national sales tax with none of its drawbacks. With sales taxes you disincentivize sales, which is to say you depress economic activity. Land, however, is perfectly inelastic in its supply, thus taxing it cannot reduce its availability. All it does is increase its efficiency of use. You should educate yourself on the Land Value Tax (sometimes called the Single Tax) and the efforts of Henry George in his magnum opus "Progress and Poverty." Maybe start by going to YouTube and searching "for the land is mine DVD restored" and watch that. I can't imagine anyone proposing an overhaul as sweeping as this and not having it be the Single Tax, but instead a national sales tax. No sane and informed person would, so I have to assume you're simply uninformed. That's fine. Do the research. If you do you'll soon "see the cat" as they say.
Thanks for the clear concise explanations. But, this system while of good intent, will end us up right back where we are.
The problem isn't the "tax system". The problem is the "government". No matter the income steam, until the government (or sometimes euphemistically called a 'giver-n-ment') has to balance its own books, is held to living within its income revenues, and is made to stop spending Other Peoples Money (OPM) like a high teenager with a platinum card, we will be unfairly overtaxed, the country will fall deeper in debt and sooner or later our society will fafe away as it self immolates.
A constitutional amendment mandating a balanced budget is the first step.
A constitutional amendment placing a cap on a fair tax percentage is a must.
There can be NO carve outs, exceptions, no UBI pre-bate schemes.
And there must be a significant (~50%) reduction in federal (and state) spending.
Then we can have a conversation about a new tax idea.
How about no federal taxes on individual or corporations, instead a tax on revenue collected by the states, based on percentage with a hard cap on the dollar amount with a pre pay budget rule in place.
(cont - last)
11. The IRS won’t go away because it will need to administer the new consumption tax.
The Tax Swap proposal sells itself as a way to get rid of the dreaded IRS. But does it?
A replacement consumption tax still needs to be administered. The exemptions it proposes - both those in the initial proposal and the many that would inevitably be added - would still need to be administered. They may call it a different name, but like today’s IRS, it will collect taxes, impose red tape, conduct audits, and impose severe penalties.
If you don’t think collecting a sales tax is intrusive, try asking a few retailers who now collect a sales tax for their state whether they find it intrusive. They despise filling out forms, charging customers and paying sales tax collections as much as you hate filing taxes and sending a check to the IRS.
And then ask a few retailers who live in one of the states, like New Hampshire, with no sales tax how excited they are about this proposed intrusion into their businesses and having to report their every transaction to the IRS. (Make sure you’re ready to run in case they decide to start throwing large objects at you.)
These small retailers are another key constituency for advocates of fiscal responsibility. If you propose an across-the-board consumption tax, you will alienate this important constituency that would otherwise be strong supporters of your campaign.
…And then ask them if a national sales tax might open the door to their state politicians collecting a new state sales tax – since retailers would have to collect it for the feds anyway.
The IRS, or its equivalent tax collection agency, will also demand money to “crack down” on the black market to stop those who avoid the consumption tax. More Big Government policing, similar to today’s IRS.
The best way to get rid of the IRS is to simply end the income tax and cut spending. Replace it with nothing -- except you and every American keeping the money you earn.
12. Simply ending the income tax and replacing it with nothing has already proven to be a winning campaign platform.
In 2002, voters in Massachusetts almost passed a ballot measure to end the state income tax.
In one of the most Big Government states in the country, 45% of voters said “Yes” to ending the state income tax and taking $9 billion out of a $23 billion state budget, despite the fact that the media overwhelmingly opposed the measure. Every newspaper in the state, with the exception of one small newspaper in western Massachusetts, editorialized against it. The Boston Globe published three editorials and numerous columns urging “vote No on 1.”
Yet 885,683 voters in the small state of Massachusetts said Yes to ending the income tax. Good luck getting a percentage like that running on a Tax Swap.
When the initiative ran again in 2008, 914,420 voters said Yes to ending the income tax. Despite $7 million in “Vote NO” ads by the Teachers Union and virtually no ads for “Vote YES.”
What these initiatives showed is that bold tax revenue reductions that put money back in the pockets of taxpayers (which the Tax Swap does not) – without hitting them with another tax (which the Tax Swap does) - have high potential to attract votes.
If these twelve reasons are not enough for you to reconsider any inclination you might have to support a Tax Swap, rest assured that they are all reasons many voters will reject the idea and why your opponents and the media will attack you for it.
“But,” you say, “a Tax Swap bill already has sponsors in congress. It could get passed!”
Why would you want it to? It would not shrink government. It would divide and conquer taxpayers. It would keep Big Government big. And it runs a serious risk of saddling Americans and retailers with both an income tax and a federal consumption tax.
The fact that the “Fair” Tax has a high number of in today’s congress is likely an indicator that it’s a bad idea. At least 99% of the bills that get traction in congress do so because they keep Big Government big. Bills that seriously challenge the Big Government status quo die a quick death.
“But,” you say, “it’s better to tax spending than earnings because it encourages people to save.”
This assumes politicians are competent to be the arbiters of what the proper ratio between savings and spending should be. But politicians are distinctly unqualified to make such decisions. Remember, these are the people who have run up deficit spending in recent years to astronomical levels – and have demonstrated no intention of balancing the federal budget - ever.
People don’t need the government to tell them to save. They just need lower overall taxes and fewer government intrusions so they can save.
Say No to the Tax Swap (“Fair” Tax).
Say Yes to simply ending the income tax and cutting spending!
(cont)
8. The Biggest Danger of the Tax Swap: Bait and Switch
The Tax Swap threatens to become a bait-and-switch proposal. We could easily end up with both a national consumption, or VAT, tax -- and still be stuck with the income tax.
This happened with a tax swap proposal in Nevada in 1981. Gov. Robert List proposed the “tax shift” to reduce the property tax in exchange for a new sales tax. Within four years, the property tax was back to where it was in 1981 while Nevadans were saddled with a new sales tax. The governor's tax shift became known as the tax shaft.
The Tax Swap proposal assumes that today’s lawmakers will keep their word and will implement a bill as originally proposed. But that almost never happens. As a bill winds its way through committees and budget negotiations, it rarely ends up how it started – and it almost always gets worse, not better.
We’ve already seeing evidence of how the Tax Swap proposal will play out. In 2011, it wasn’t getting much air play and remained unknown to most voters. But pundits were talking about the prospect of a new national sales tax – with no mention of getting rid of the income tax – on national TV.
Circa 2011, Bill O’Reilly and Glenn Beck debated on the O’Reilly Show whether a new consumption tax was a good way to reduce the deficit. On this “conservative” talk show, there wasn’t even a mention of getting rid of the income tax! Talk of the Tax Swap aids and abets this dangerous trend.
As reported in The Hill newspaper, “According to several sources, talks are under way on Capitol Hill to create a consumption tax, perhaps a VAT, that would be added to the current tax system to help the country get out of debt. There has been no serious discussion on implementing the FairTax, these sources said.”
It should be clear to anyone who understands how things work on Capital Hill that, if the Tax Swap has any influence at all on policymakers, it will be to help saddle the nation with a VAT or sales tax – while the income tax remains.
9. Selling a consumption tax as “optional” is misleading.
Requiring people to pay a sales tax takes the fruits of their labor, as do all taxes. It is absurd to suggest that buying products and services is optional. It is a necessity to stay alive and to do many of the things worth living for.
10. The proposed consumption tax rate starts obscenely high -- and will continue to rise.
Tax rates almost always rise – a lot.
If the Tax Swap creates a new consumption tax at the frighteningly-high rate of 30%, we should expect it to rise after people move their purchases to the black market or barter to avoid it. Politicians will react by raising the rate to get the revenue they desire. They will insist that revenue can’t go down (a point of view aided and abetted by advocates of the Tax Swap!)
You don’t need to look hard to see that today’s politicians constantly raise taxes. Just look at the 2015 budget deal (negotiated end-of-year 2014). Or the 2014 deal. Or the 2013 deal. Or the year before that. Or the year before that. Or just about ANY YEAR IN THE LAST 100 YEARS.
Today’s income tax started at graduated rates in the range of 1-7% in 1913 and is now 10-35%.
If a federal consumption tax starts at 30%, how high will it rise?
(cont)
5. Your opponents will use the Tax Swap to bury your campaign.
The media and your opponents will present a Tax Swap proposal as a tax increase.
That makes you look like a tax hiker. And as one who advocates freedom and reducing government, it makes you look hypocritical to boot.
Even if you have a well-funded campaign and can buy enough ads to get your explanation heard, you won’t be able to overcome the fact that your Democratic and Republican opponents will be much better funded.
Plus, they will have the media on their side.
Your opponents have no interest in helping to promote your explanations of how the Tax Swap ends the income tax or any other positive point you could make in its favor. They will crush and discredit you as being one more politician who raises taxes. This has already been done against proponents of the “Fair Tax”. Examples: here and here.
6. The Tax Swap proposal is harder to sell than simply ending the income tax.
Past attempts to cut taxes suggest that bold tax cut proposals do as well or better than moderate ones.
The reasons for this are twofold. First, opponents of a bold tax cut will fight a modest tax cut with equal force. In fact, they’ll fight just as hard against anyone who opposes a tax increase. They always advocate for more Big Government and fight against anyone who stands in their way. So you have nothing to lose by trying to avoid their opposition. You’re going to get it anyway, no matter how bold or how weak your stance.
Second, the revenue neutral Tax Swap misses out on the biggest benefit for voters of simply ending the income tax: More money in their pockets.
Ending the federal personal income tax allows us to give back (as of 2014) an average of $11,525 to every household in the U.S. – every year – that they now pay in the federal income tax – a huge selling point. The Tax Swap offers no such benefit because most voters will pay for it in the new sales tax. It is, after all, a revenue-neutral proposal not designed to give taxpayers relief.
In short, the appeal of the Tax Swap is relatively narrow, while the opposition to it will be very broad.
7. Revenue-neutral proposals miss out on another critically important benefit of bold tax cuts: Jobs.
Any measure that reduces government revenue, i.e., it shifts substantial resources out of government coffers and into the private sector, creates jobs. This is another huge selling point for simply ending the income tax that the Tax Swap cannot claim.
This job creation benefit of reducing total revenue has been substantiated by a study by the Beacon Hill Institute in 2010 which showed that for every government job lost due to spending cuts, two jobs are created in the private sector.
More jobs means more job opportunities – giving workers more choices for satisfying jobs and higher pay.
(cont)
4. Tax Swap proposals squander the opportunity to go on the offensive and make government small
Freedom is the absence of Big Government. To advance freedom, advocates for small government must proactively advocate for shrinking it dramatically.
Campaigns of advocates for small government should go on the offensive, constantly selling the virtues of boldly reducing the size, scope, authority, taxation, spending, assets and/or liabilities of Big Government.
Take past Libertarian candidates as an example. In 2014, over thirty Libertarian candidates running for federal office pledged that, if elected, they would work to end the personal income tax, balance the budget, and roll back spending to the year 1998 – a plausible and attractive proposal with no new tax. In 2016, 42 Libertarian federal candidates made the same pledge.
In 1996 and 2000, Libertarian Harry Browne ran for president on an even bolder platform. Ending the personal income tax, the corporate income tax and the FICA tax – while completely privatizing Social Security. He proposed cutting federal spending from $1.9 trillion to a mere $100 billion in total spending.
Volunteers, donors, and voters who heard Browne’s bold proposals were wild about them. LP membership grew threefold during his campaigns – by far the greatest growth rate the party has ever achieved.
Despite Browne’s effectiveness, you may still feel uncomfortable proposing to completely and immediately end the federal income tax. That’s OK, because there are alternatives.
As a federal candidate, one option is to propose to simply balance the budget. Today this requires a sizable cut. That alone would make a huge difference, and would stop the devaluation of the dollar – which is, in effect, a hidden tax. You’re saving taxpayers thousands of dollars every year by balancing the budget and stabilizing prices that they now lose to nonstop inflation. Plus, it’s an easy proposal to defend. You can paint your opponents who refuse to balance the budget as reckless and irresponsible – which they are.
Another alternative is to propose first balancing the budget, then phasing out the income tax and cutting spending accordingly. Pick a time frame you’re comfortable with, for example, a 3-year plan. But don’t go as far out as a 10-year plan – that’s too far off. History has shown that Congress has repeatedly violated its long-term plans, and they're not credible. Ten-year plans are used by today’s Big Government politicians as a way to avoid cutting government spending. We need to break this precedent and show that we can cut spending now.
Note that the LP platform calls for ending the income tax, but does not call for any replacement tax:
All persons are entitled to keep the fruits of their labor. We call for the repeal of the income tax, the abolishment of the Internal Revenue Service and all federal programs and services not required under the U.S. Constitution. We oppose any legal requirements forcing employers to serve as tax collectors. Government should not incur debt, which burdens future generations without their consent. We support the passage of a "Balanced Budget Amendment" to the U.S. Constitution, provided that the budget is balanced exclusively by cutting expenditures, and not by raising taxes.
(cont)
3. The Tax Swap aids and abets Big Government tax hikers
Many advocates of fiscal responsibility agree: 90% of what the federal government spends is either pure waste or does more harm than good. If they were to carefully scrutinize most state budgets, they would likely arrive at a similar conclusion: Most state budgets can and should be cut by a very large percentage. Most services that are viewed by voters as proper functions of government – roads, police, firefighting, and schools - are, and should be, funded locally. (Local governments are also over-funded and in need of downsizing.)
Therefore the fact that the Tax Swap aims to be “revenue neutral” is not a virtue, but a drawback. It leaves money on the table for Big Government politicians to spend on regulations, prohibitions, war, spying on its citizens, and meddling in personal freedoms.
Proponents of the Tax Swap have already gone on record selling “revenue neutral” as a good thing – when it should be sold as a bad thing. Advocates for fiscal responsibility should eschew, if not outright denounce, any policy like the Tax Swap that advocates keeping Big Government big.
What’s worse, introducing and promoting a consumption tax feeds directly into the agenda of Big Government advocates who would love advocates for fiscal responsibility to help them sell a massive new tax.
Advocates for fiscal responsibility should NEVER help to sell a new or increased tax. Our opponents may raise taxes anyway, but they should have to scratch and claw for every tax hike they pass. We should force them to cash in whatever goodwill they have with voters to raise a tax, and especially to introduce a new tax. Don’t take them off the hook by promoting the alleged “virtues” of a consumption tax.
(cont)
2. Who do you want to divide and conquer? Taxpayers? Or advocates of Big Government?
By promoting one tax over another, you’re helping proponents of Big Government because it divides, rather than unifies, taxpayers. Taxpayers are the last group any fiscal conservative should want to divide.
Swapping the income tax for the sales tax will cause taxes to go down for people in middle- and high-income brackets and will cause taxes to go up for those who do not currently pay, or who pay very little, income tax.
A tax swap could be viewed as a direct attack on the latter group, which includes many poor seniors on Social Security and the working poor, both important constituencies.
Working poor already lean strongly against new taxes.
Senior citizens already paid tax on their income. Why should they pay it again on a consumption tax?
Both are large constituencies important to any candidate running for office.
To threaten these groups with a tax hike, especially one that will be viewed as favoring those who are better off, is more marketing suicide.
Consider that low-income voters are already severely overtaxed, even if they pay no income tax today. They pay property tax – either directly as homeowners or indirectly as renters. They pay sales tax in most states. Most pay state income tax and FICA tax. And they pay many of the hundreds of direct and indirect taxes that everyone pays.
Plus they have much less discretionary income to pay those taxes. Any tax increase on this group is a heavy burden.
Plus, this is probably the group that is disproportionately harmed by Big Government (e.g. small business regulations) and which sees very few benefits to themselves. They’re on our side. It would be disastrous to be seen as harming this group even more with a tax increase.
Running on a new tax shifts the overall tax burden to these groups - no matter how many complicated exclusions for the tax you want to list. Your opponents will nail you on it and alienate these core constituencies. You will be pegged as another rich guy or woman who doesn't like paying the income tax or paying accountants - and who doesn't care a whit about everyday taxpayers who need and want to buy goods for their families.
And of course those exclusions, aimed at mitigating this point, add complexity to taxes, which is exactly how the IRS became the beast that it is today, loaded with provisions to appease one group or another and opening the door for special interest lobbying.
It’s best to avoid the whole debate about whether one tax is better/worse, more/less fair than another. They’re all bad and they’re all unfair. This is the wrong debate to be having and gets big-spending politicians off the hook. We need to turn the heat on Big Government spenders – not taxpayers!
The goal should be to get our opponents fighting over where to cut spending – not advocates of liberty fighting over whom to tax.
Instead, it’s far better to propose broad tax and spending cuts that cut taxes for most if not all taxpayers – and that never raise anyone’s tax.
The more broad-based the tax cut, the more it benefits everyone -- so there’s nothing for tax-cutters to fight about.
Not sure how anyone with economic sense can support this.
Ask yourself who enforces this. Who? Your local authorities. You want the fed involved with local politics? You want to see more walk around money, election meddling, and more welfare with no accountability at the local level?
Imagine the shake down as local authorities come knocking on your door demanded you to prove that you already paid for your stuff inside your home. What if you received gifts or paid cash? How do you prove this? Talk about a smugglers paradise!
What do you think happens when the majority of the income comes from a small number large businesses? Who you you think laws will be made for?
What is to stop lawmakers from implementing income and sales tax?
If you want to fix taxes, then take the fed budget and divide it by the latest census (adjusted assuming 20% will contribute) and ask everyone to contribute up to a voluntary flat, up to equal mount, with no filings, interest, or liens. Simple
If a national sales tax were to be used. I would first require repeal the 16th Amendment to the United States Constitution.
To propose an alternative tax is to propose an additional tax. It's that simple.