What if the tax system was changed not to a flat tax but a flat sales tax. Say 14% it would be more of an income tax than an income tax is. The wealthy who want there Mercedes and BMW's would pay a higher premium to get them. With this we would have a much better system in my view.

this idea has been kicked around for a long time but thought to be too radical and would be objected to by the dems...

Another idea is the idea of a "spending tax"...i.e., if you save the money...you aren't taxed on it...now that sounds pretty neato...just think of all the investment dollars that would come from that baby...every savings account turned into a "liquid 401k" overnight...not bad!

how then do we convince the dem's to see the light or is that even possible?

The reason why it will never happen is that those with large incomes will never stand for paying more. The Tax Reform Act of 1986 under Reagan was a very fair tax plan, but it was gutted within a short time because of the minimum tax provision. The wealthy were mightily peeved at having to actually pay the minimum tax. It more than doubled my tax liability in one year, and it hit a lot of people much harder than it hit me.

Same with a consumption tax. You have any idea what that would do, on top of a state sales tax, to those with large disposable incomes? If you could demonstrate how they could mostly avoid the tax by leasing all their possesions from their own closely held offshore leasing companies, you might find a little support, otherwise forget it.

Oh, and the working poor, such as the enlisted folks in the military, you know, the one's busy defending your freedom, who either pay no tax or get an earned income credit would also get hosed down as well from a flat tax.

Otherwise, great suggestion....

oc

Personally, I am for a flat national sales tax; however, 14% would not cut it. According to an article in the New York Times, the national retail sales tax rate required to sustain the federal bureaucracy would be somewhere between 30% and 56%[1]. By the way, that article was written six years ago when federal spending totaled $1.652 Trillion Dollars. The estimated budget for 2004 is $2.318 trillion dollars.

Dumping the current 17,000 page IRS Tax Code and replacing it with a realistic national sales tax rate of 38% is a great idea. The reason bureaucrats do not even like discussing the idea, is because the current income tax system intimidates and confuses the average American. Plus it only requires Tax-Payers to think about their tax burden once a year (i.e., in April).

It is just not in the federal bureaucracy’s best interest to have Americans collectively reminded on a routine basis just how much money they are paying in taxes. If American Tax-Payers started noticing they were paying a $38 National Sales Tax, an $8.25 State Sales Tax and a $1.25 Local Sales Tax every time they spent $100 at their neighborhood Wal Mart, Voters would revolt.

[1] “The 23 Percent Solution?” (January 23, 1998, The New York Times OP-ED, Page A25).

The problem with a sales (spending) tax system is that it directly punishes those who spend money, and thus promotes no spending (saving). The US economy is fueled by quick spending, so your tax solution would kill the worlds greatest economic engine.

And I agree with Sam. Ignorance is bliss when it comes to taxes. To have to raise taxes, its better for a government to have smoke and mirrors.

Also... if it ain't broke, don't fix it.

Please, please, please understand the reason I support a national sales tax is so Tax-Payers won’t be ignorant about the amount of taxes they are paying and because I believe our current system is broken. If the government needs to use smoke and mirrors to raise taxes, then the taxes shouldn’t be raised in the first place. Our federal bureaucracy is too large and a national sales tax would help drive that point home to American Tax-Payers by reminding them on a daily basis just how much money it takes to feed that bureaucracy. When it comes to being governed, ignorance is never bliss.

You have been misled. Spending cannot fuel an economy, only production can.

Exactly. Conversely, it is better for taxpayers -- ie, us -- when government cannot employ said smoke and mirrors.

The system is broken. Gerald Scully has calculated that any tax level above 12% of GDP impedes growth, reducing production and employment. The Federal tax level has moved between 18% and 20% of GDP in the last few years. In 1992, after Bush I's tax hike, it went as high as 20.7% of GDP.

An analysis of US tax policy 1960-1992 (Dunkelberg/Skorburg) calculates that each 1% rise in the Federal tax burden reduces economic growth by 1.8%, and employment by 1.14%.

Americans spend 5.5 billion hours annually on tax compliance. That is equivalent of a company with 200,000 full-time employees. This is a sunk cost that does not make us any better off. If the tax code was just half as complex, the economic gains would be measurable.

As oddlycalm already implied, the complex tax code benefits the most wealthy, imposing higher tax costs on the middle class. He used the point to argue that a change is impossible to bring about, which is probably true, but it is another point in which the current system is broken.

The system of taxation in the US is so broken it's not even funny.

__________________
None love freedom heartily, but good men; others love not freedom, but license.
- John Milton

In a service-driven economy such as ours, a high sales tax is growth-inhibiting, not to mention inherently regressive.

There is a certain base level of things that everyone needs to buy to survive - food, water, electricity, gasoline, clothing, housing, etc. Forcing low-income Americans to pay extremely high taxes on these items would drive them into poverty and beyond.

This economy we have is spending-driven. "Production driven?" Please. We hardly have any production here anymore. Everything's imported from China and Taiwan and India and Mexico. Service industries long ago overtook manufacturing as the economic engine of the United States. Just 15 percent of Americans are employed in manufacturing while 40 percent are in the service sector.

Fact of the matter is, if the working class, who do most of the consuming in this country, don't have any money to spend consuming stuff, our economic engine collapses. Adding a 40 percent sales tax is going to radically discourage consumption - and that is NOT good.

Baloney.

That is a valid concern, but a poor argument against reform. Designing policies exclusively around the poor is not only misguided, but often counter-productive. For instance, to make sure the poor doesn't starve, it is not neccessary to nationalize or even regulate the food industry.

It would be perferctly possible to exonerate neccessities such as food from a sales tax. Many states already do this.

As the productivity in production skyrockets, it is perfectly natural that employment in those industries falls as a percentage of the economy. Amercian manufacturing output has in fact increased, even through the last decades.

So you think that the American economy runs because we work divorce suits, mow lawns and give massages to each other? Please explain this theory carefully.

Discouraging consumption increase savings, other things being equal. Increased savings leads to more capital formation. More capital formation leads to more economic growth. How is that NOT good?

__________________
None love freedom heartily, but good men; others love not freedom, but license.
- John Milton