Thursday, September 22, 2005
What's Wrong with a National Sales Tax
Recently on the Tavis Smiley show on television, I saw and heard Neal Boortz having his fifteen minutes of fame. He made his pitch in favor of abolishing the federal income tax and the Internal Revenue Service. The funding of the federal government would be made by a national sales tax. About twenty-five percent of the cost of products purchased would be this sales or “value added” tax.
Neal Boortz and John Linder have written a book called “The Fair Tax Book.” Mr. Boortz is an author and nationally syndicated libertarian talk-show host.
Mr. Boortz made the following arguments in favor of a national sales tax:
1. The revenue to the federal government would be the same as at present.
2. The average individual would pay approximately the same effective tax as at present. Instead of the money being deducted from his paycheck, it would be taken in the form of a higher price for goods purchased.
3. To counter the argument that a sales tax is a special burden to the poor, Mr. Boortz advocated vouchers that would be issued to persons of low income to offset the sales taxes they would pay.
4. By getting rid of the IRS, power would be shifted from the politicians to the people.
I can’t argue against his first point.
His second point ignores the sales taxes that states now impose. Here in California I pay an 8 percent sales tax on all items except food. Mr. Boortz would add an additional 25 percent sales tax, so that on non-food items I would be paying 33 percent of the money I spend on purchases in taxes. That’s a bit more than I pay now in combined sales and income taxes.
I don’t know how the voucher scheme in point 3 could be implemented. Absent the IRS, how could the federal government determine who is poor enough to qualify for vouchers? If not the IRS, some other inquisitive bureau would have to be created to keep track of the actual incomes of all residents, particularly those who might qualify for vouchers.
My big argument is with point 4. Power would be shifted all right, but not from politicians to the people but from poor and middle-class people to the rich. I mean economic power. Consider my situation and that of Bill Gates. I am a middle-class person living in retirement. I own my house and I have enough savings to provide the income for an adequate life style. Bill Gates, the richest man in the country, has a net worth that is about fifty thousand times greater than mine. Unless he is even dumber than I am about investing, his income must be at least fifty thousand times my income. At the present time I pay about 20 to 25 percent of my gross income in federal and state income tax. Now Bill Gates may be 50,000 times as rich as I am, but he doesn’t eat 50,000 times as much, he doesn’t have a house that’s 50,000 times as expensive as mine, and his expenses for entertainment, clothing, haircuts, etc., aren’t 50,000 times as great as mine. Under Mr. Boortz’s sales tax system he would pay considerably less toward the expense of running the government than he does now. Economic power would be shifted from people like me to people like Bill Gates.
Pardon my French, but I think Mr. Boortz is full of merde.
Neal Boortz and John Linder have written a book called “The Fair Tax Book.” Mr. Boortz is an author and nationally syndicated libertarian talk-show host.
Mr. Boortz made the following arguments in favor of a national sales tax:
1. The revenue to the federal government would be the same as at present.
2. The average individual would pay approximately the same effective tax as at present. Instead of the money being deducted from his paycheck, it would be taken in the form of a higher price for goods purchased.
3. To counter the argument that a sales tax is a special burden to the poor, Mr. Boortz advocated vouchers that would be issued to persons of low income to offset the sales taxes they would pay.
4. By getting rid of the IRS, power would be shifted from the politicians to the people.
I can’t argue against his first point.
His second point ignores the sales taxes that states now impose. Here in California I pay an 8 percent sales tax on all items except food. Mr. Boortz would add an additional 25 percent sales tax, so that on non-food items I would be paying 33 percent of the money I spend on purchases in taxes. That’s a bit more than I pay now in combined sales and income taxes.
I don’t know how the voucher scheme in point 3 could be implemented. Absent the IRS, how could the federal government determine who is poor enough to qualify for vouchers? If not the IRS, some other inquisitive bureau would have to be created to keep track of the actual incomes of all residents, particularly those who might qualify for vouchers.
My big argument is with point 4. Power would be shifted all right, but not from politicians to the people but from poor and middle-class people to the rich. I mean economic power. Consider my situation and that of Bill Gates. I am a middle-class person living in retirement. I own my house and I have enough savings to provide the income for an adequate life style. Bill Gates, the richest man in the country, has a net worth that is about fifty thousand times greater than mine. Unless he is even dumber than I am about investing, his income must be at least fifty thousand times my income. At the present time I pay about 20 to 25 percent of my gross income in federal and state income tax. Now Bill Gates may be 50,000 times as rich as I am, but he doesn’t eat 50,000 times as much, he doesn’t have a house that’s 50,000 times as expensive as mine, and his expenses for entertainment, clothing, haircuts, etc., aren’t 50,000 times as great as mine. Under Mr. Boortz’s sales tax system he would pay considerably less toward the expense of running the government than he does now. Economic power would be shifted from people like me to people like Bill Gates.
Pardon my French, but I think Mr. Boortz is full of merde.
