Sunday, November 27, 2005

3 pluses of a U.S. sales tax

[Ed says Nay] Dallas Morning News | Scott Burns:
"My personal belief, which is supported by a significant amount of research, is that working Americans would benefit more than 'rich' Americans – however they are defined – if our wretched tax system was buried and replaced with a national sales tax."
The dividends that Scott Burns believes a national sales tax will bring each has flaws:
  1. He criticizes the current income tax for being crafted by special interests to the detriment of skilled workers. Who does he think is going to craft a national sales tax and why does he think the system will be any less corrupt?
  2. He states that the rich don't benefit from the income that exceeds their immediate needs, at least until it is eventually spent on consumption. That might be so if they took their income and buried it in their backyards. But they don't. They buy things with it -- stocks and bonds and real estate. These purchases (the rich prefer the term investments) have a value. They directly benefit the owners in the form of dividends, interest, power, prestige. With a national sales tax, buy bread to fill your stomach and pay taxes. Buy the bakery to stoke your ego and escape the tax man. Something's wrong.
  3. He criticizes the current system, with its income tax and employment tax, as fostering claims of inequity. Why does he think the claims of inequity will disappear with a national sales tax? His column was prompted by a reader complaining about the 'rich' escaping taxation under a national sales tax. So, complaints of inequity of a national sales tax are already being raised. Expect the chorus of complaints to grow only louder if a serious proposal emerges.

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