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From CNN : Bush says national sales tax worth considering


NICEVILLE, Fla., Aug 10 (Reuters) - President George W. Bush said on Tuesday that abolishing the U.S. income tax system and replacing it with a national sales tax was an idea worth considering.

"It's an interesting idea," Bush told an "Ask President Bush" campaign forum here. "You know, I'm not exactly sure how big the national sales tax is going to have to be, but it's the kind of interesting idea that we ought to explore seriously."

Republican economists who speak regularly to the White House have said that the Bush campaign has been mulling the idea of an overhaul of the tax code as part of an agenda for a second term should Bush win reelection.

Some lawmakers have floated ideas of simplifying the tax code by putting in place a "flat" income tax rate or a national sales tax. But those ideas have so far not gained much traction in Congress. Opponents say such a system would not be in the best interests of the poor and the middle class who would pay the same tax rate as the wealthy even though they have less disposable income.

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Originally posted by Quicksand:
Bush thinks lots of things are worth looking at. Like, dictating who can get married and who can't, or, say.... those darn Iraqi WMD's.

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Originally posted by Arawaen:
A. It doesn't eliminate state income tax only federal.

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B. There are no shelters or deductions (though some items may be exempt, such as food is under state sales tax.)

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C. Not sure what you mean by social security taxes. The collection of social security (taken from your paycheck) or taxes on actual social security payments? It wouldn't affect the former, but the latter should be free of tax.

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The supporters tend to suggest a 26% sales tax would be necessary to replace the income tax. Others have said at least 30% and probably with budget cuts. Budget cuts would mean more economic burden on states which would raise their assorted taxes to compensate.

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Overall it helps the rich and hurts the poor, as in the rich would pay less taxes, but the poor would pay more.

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It would probably also lead to a substantial black market (just think of the problems we have with cigarettes).

It seems an unlikely switch because taxes are used so frequently in an attempt to control society (flat taxes mean no more tax incentives) and I doubt politicians are going to willingly give up that kind of power.

While the neo-cons like the idea, their popular support comes from people who I think misunderstand how income taxes works (not to say that the IRS and income tax isn't in need of serious reform).

Barring deductions, incentives and shelters, every American pays the same tax rate on a given amount of money. A person that makes $20,000 and a person that makes $40,000 pay the same rate on the first $20,000 [figures are totally arbitrary]. If a tax bracket break raises the rate for the second individual, he only pays it for the amount above that limit. The first person doesn't pay that rate because he didn't make any money above the break. The graduated income tax system is not that the rich pay more, but that every person has to pay more out of what is disposable income and the more disposabe it becomes the higher percentage of it you are to contribute to the community's coffers. At least that is how I understand the system to work. The special cases (i.e. deductions, incentives, and shelters) are what makes it so immensely complicated.

EDIT: Apparantly the rates I read were drastically low, given the article in the National Review. If those are correct, it is even more unlikely to ever happen.

Arawaen

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Originally posted by Arawaen:

I have never liked the concept of land-based tax, always struck me that the government owned the land (despite claims of private property) and I had to pay them rent or they would evict me.

Arawaen

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