But is there a down side?
As compared to the income/payroll tax system we have today?
Yes! for politicians. If retail sales tax is implemented as an across the board replacement the real burden of the tax system we live under would become apparent to everyone, even the welfare folks that don't perceive the burdens laid on them today.
An enlightening article on that score covers the mechanism on how the current Federal tax system propagates and is embedded into consumption expenditure:
DO YOU PAY YOUR INCOME TAX
AT THE SUPERMARKET?
by D. Sherman Cox J.D. L.L.M. Taxation
The total contribution of the federal tax system(including taxes in gross wage/salaries) to the price of retail consumption goods and services is 36% for federal taxes alone. Wages and the taxes on them are paid for out of sales receipts to business,(i.e. consumption expenditure). If we add in the cost of compliance of more than $600billion/year, the percentage that truely represents the burden on the family due to the Federal income payroll tax system increases to about a 47% of family consumption expenditures.
Tax as % of current family retail expenditure = fed/(1-state-fed-savings) =
23.5/(1-.235-0.102-0.012) = 36.09%
Current total Federal tax revenues are about $1,900 billion, by a very conservative estimate more than $600 billion (Paine '97, Pilla '95, AGCCA 2000, Williams 2000) additional dollars are passed on in consumption prices due to the business costs of complying with the federal income/payroll tax laws.
Percent total current federal burden (taxes + compliance costs) of consumption dollars = 36*(1900+600)/1900 = 47.36% as passed through consumption prices.
Reduce the taxes on business and simplify them in any way possible ultimately means a lower prices and higher standard of living for all citizens.
Under a National Retail Sales Tax, (NRST) nearly all those costs would disappear, the taxes immediately paid by businesses would be bannished from the shelf price of goods and services for a solid benefit of a 20-30% decrease in shelf prices. The best statistics I have seen suggest around a 22% decrease in retail shelfprices, which, with the NRST in place, would not significantly change the total amount one pays for a basket of goods.
That means we would see a net expansion of dollars availble in the form of the difference between what folks see as takehome pay now and the gross pay they would receive without Tax witholding & SS/Mediscare payroll taxes.
So is there a downside citizen? You tell me. I haven't been able to discern one especially when one considers the advance in liberty and financial privacy that a retail sales tax provides to individuals.
This doesn't mean I have to become a libertarian, does it?
Nope, not unless yah want to :O) Legislation has already been proposed and just needs a solid show of citizen support behind it.
Billy Tauzin offers one solution, a 15% retail sales tax that replaces all income taxes but doesn't touch SS/Mediscare payroll taxes, that comes close to meeting the essentials of what it takes to reverse trend?:
H.R.2717
Sponsor: Rep Tauzin, W. J. (Billy)(introduced 8/2/2001)
Title: To promote freedom, fairness, and economic opportunity for families by repealing the income tax, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
John Linder (R Texas) offers a more comprehensive bill to kill all income and payroll taxes outright, and provide a revenue neutral replacement:
H.R.2525
SPONSOR: Rep Linder, John (introduced 07/17/2001)
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
Refer: http://www.fairtax.org & http://www.salestax.org
Other bills, moving in the proper direction are:
To get the ball rolling and focus Congress Critter's attention:
H.R.2714
Sponsor: Rep Largent, Steve(introduced 8/2/2001)
Title: To terminate the Internal Revenue Code of 1986.
A bill to prohibit he imposition of any tax by the Internal Revenue Code: (1) for any taxable year beginning after December 31, 2005.
the modification then enactment and ratification of:
H.J.RES.45
Sponsor: (introduced 4/25/2001)
Latest Major Action: 5/9/2001 Referred to House subcommitte.
Title: Proposing an amendment to the Constitution of the United States relative to abolishing personal income, estate, and gift taxes and prohibiting the Untied States Government from engaging in the business in competition with its citizens.
(Modified to prohibit all income, payroll, gift estate taxes as HR2525 calls for, or we will see European VAT style hidden taxes along with payroll excises to take over in the place of the of the current individual income tax(i.e. personal income tax) that Ron Paul amendment prohibits.)
And to keep em reminded that there is indeed a Constitution to pay attention to:
H.R.175
Sponsor: (introduced 1/3/2001)
Latest Major Action: 2/12/2001 Referred to House subcommittee
Title: To require Congress to specify the source of authority under the United States Constitution for the enactment of laws, and for other purposes.