Fema Employment - What do you think about a federal sales tax in place of income tax ?

What do you think about a federal sales tax in place of income tax ?

Here's my thoughts.. Income tax in and of itself is counterproductive in a capitalist economy. If the govermnet taxes money before it is spent by the consumer, most of the economic potential of each dollar earned is lost immediatly. If we moved to a federal sales tax system, you would see immediate improvements in the economy and a better balance of wealth overall. Think.... In a federal sales tax system... If I spend 5 dollars, the fed gets paid, so does the waitress I just tipped. So I just created a job, and contributed my fair share... Now the waitress takes that five dollars and she spends it on whatever... The fed just got paid again, she just created another job, and the cycle continues until eventually the entire 5 dollars was taxed back into the fed anyway... but during each purchase it supported the continuation of someones employment, and best of all...> nobody involved with this particular 5 dollars was able to avoid paying their fair share of tax.

Public Comments

You should check this article out... http://en.wikipedia.org/wiki/Fairtax Sorry to answer a question with a wikipedia article, but I'm a staunch supporter of the Fairtax, and the more people know about it, the more likely we might see it enacted someday.
I agree with it. And NO IRS breathing down our backs.
At the moment, most families below $25000 pay little or no federal or state income tax. If you abolish the income tax and replace it with a federal sales tax, you will be forcing poor people to pay 8% (or whatever % you decide) income tax by default, and you will be forcing rich people to pay the same (people who are now paying 35%). You will be guilty of "tax cuts for the rich".
It is an interesting idea that is worth exploring. It is a naturally progressive tax as those who spend less pay less. It is also voluntary to a limited degree as in many cases you can spend what you please. i would need to see details of it before endorsing it though......
Great Idea. Let me decide when I pay taxes and how much. Now all we have to do is keep the Democrats away from regulating business so we can all have the money to spend and we're in good shape.
I have had this conversation before and what the other side says is that the wealthy tend not to buy as many things as the poor. Buying cheaper products means having to replace them more often. I think it would work if you put a higher federal tax on higher cost items, like yachts, expensive cars and the like. I am with you, run I will vote for it.
It is a bad idea. The tax would be incredibly regressive. Those earning low wages who want to do things like eat at a restaurant as you suggest, buy groceries, rent or own a home, pay for child care, pay for utilities, own or rent a car would be spending most if not all of their incomes on the sales taxes for those goods or services. The less they make the less their ability to avoid purchasing those items. For those earning higher wages, where saving/investing are a regular part of life, that money would go tax free - which would speed their accumulation of wealth. For those who are truly rich, living off massive wages and investment income whose money is reinvested in business and already funneled into tax free trusts, the benefits of such a system are beyond belief. After all, while they are likely to earn 3 times (or more) what a poor worker makes, it is unlikely that they will own 3 times as many homes, 3 times as many cars, buy three times as many clothes, eat three times as many meals. While they may be more likely to spend more per car/meal, etc. - unless you had a massively progressive sales tax (like 30% on yachts, luxury cars and fine wines) there is no way that they would pay enough for the system to be called anything but regressive. And with a real income disparity, crime becomes the tax on the rich.
If you going to spend the money immediately, it doesn't matter whether it's taxed before or after you spend it. Say you replace a 10% income tax with an equivalent sales tax of 11%. Under the income tax, the feds get $0.50 when you earn $5.00, leaving you with $4.50. You tip the waitress $4.50, leaving you with $0.00. Under the sales tax, the feds get nothing when you earn the $5.00, but get $0.50 when you tip the waitress, who is left with $4.50. The result is the same. A difference arises if you decide to invest the money, rather than spend it. Under a 10% income tax, you would have only $4.50 to invest. Under a sales tax, you would have $5.00 to invest, assuming that the sales tax did not apply to investments. For most investment vehicles, it would probably not apply. The result would be to defer the tax until the investment is cashed out and spent. However, a version of the income tax that would have the same effect was proposed over 15 years ago. It would allow a tax deduction for money placed in investments and tax all distributions from investments. It has never caught on, possibly because most Americans enjoy tax deferred investment through 401(k)s and IRAs already. Your belief that it is impossible to evade sales taxes ignores that sales tax evasion does occur.