THE FLAT SALES TAX
Chuck Muth's News and Views
November 1, 2005
Last week South Carolina's two GOP Senators, Jim DeMint and Lindsey Graham, introduced a tax reform plan that would completely eliminate the personal income tax and replace it with a national consumption tax. But unlike a national sales tax plan, which imposes the tax at the retail level of sales, the DeMint-Graham plan cuts the tax equally in two. Half would be paid by businesses on the value-added they produce, and half paid by consumers at the cash register." (emphasis mine-ed.) The plan in effect replaces the personal income tax with a national sales tax and the corporate income tax with a value added tax. The sales tax rate is 8.5%, which is comfortably below the 10% pain threshold for most Americans when it comes to sales taxes. The business VAT would also be 8.5%. Sen. DeMint had once proposed a single 23% national sales tax, but during his 2004 Senate campaign he paid a price in the polls for suggesting such a high rate."- Stephen Moore, Political Diary, 10/31/05
The problem? Business does not pay taxes. Taxes are collected by businesses and passed on to the consumer in the form of higher prices. I like the 8.5% or even doubling it to a 17% national sales tax. But don't be fooled by a business tax. You, the consumer will be paying any business tax, so you will be paying 17%, not 8.5% as proposed by Senator DeMint and Graham.
South Carolina citizens, you need to let your senators know that you are on to them, or teach them some basic economics.
5 comments:
I have removed a post that, while the content was something I support wholeheartedly, had absolutely nothing to do with the topic or content of this post.
If the poster would care to comment on another post of mine relevant to the topic, I will be most happy to allow it to stand.
Once again, I have removed a post from an anonymous individual who posted a comment that had no relevance to the topic at hand. I have other posts that are indeed relevant and would be more than happy to allow posts pertinent to that topic.
Anonymous, please do not post off-topic comments. Your topic is very important, but not to the matter of concern in this post. If necessary, I will ban you from posting at all.
The other problem with the flat tax is that it disproportionately affects the little guy. It has the net effect of lowering taxes on the wealthy and raising them on everyone else. Rich folks will pay some miniscule percentage of their income, since their income far exceeds their expenditures, whereas your average lower- or middle-income person will be paying a much larger percentage of his income than he currently pays in income tax. It's intended as a subtle way of lowering taxes for the rich and and raising them on everyone else, while giving the appearance of being "flat" or "fair". Your point is also well taken, of course -- no business will pay a penny extra -- we'll all bear the burden instead. Just another political boondoggle designed to fool mathematically-challenged people into handing over more of their hard-earned dollars.
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