Tuesday, May 4, 2010

Reasons the National Sales Tax will not be enacted

Three reasons the National Sales Tax will not be enacted,
no matter how good it is, or how well it is explained.
by Carl Anderson, Peninsula Tea Party

1. Congressional Control.
Congress will not give up the ability to reward their friends and punish their enemies through manipulation of the tax code. If in fact we can't trust Congress to curb spending, then:

a. A tax rate limit (or ceiling) must be included in the amendment to curb the bureaucratic appetite for more money to do good things for us.

b. A balanced budget requirement must be included to prevent runaway deficit spending of money they don’t have to do good things for us.

c. Congress must write and approve the specific language of an amendment and then send to the states for ratification. A Constitutional Amendment this complex, and removing so much congressional power, is extremely likely to be picked apart and bogged down for many years, or just killed outright before it begins.

2. States Rights and Ratification.
If States are NOT required to eliminate state income taxes as a means of raising revenue, much of the record keeping savings, etc. will not be realized.

a. States are unlikely to ratify elimination of one of their primary means of raising revenue. Tracking deductible and non-deductible expenses, keeping receipts for proof to State agencies is just as arduous and aggravating as to doing it for Federal agencies. Employers will still deduct state income tax withholding from paychecks and contribute for unemployment compensation, and prepare W2s for the state etc. Record keeping may be significantly reduced, but accountants will still be needed and want sufficient compensation to maintain their livelihood.

b. If States are forced to add to existing sales taxes to make up for lost income tax revenues, the total sales tax rate could quickly and easily become unmanageable. If States choose to eliminate their income taxes by adding a 30 percent sales tax, this could bring the total sales taxes to exceed 50 percent on goods and services.

3. The Law of Unintended Consequences.
The vast unknown and unknowable actions and reactions to the new circumstances are bound to create vast unknown problems.

a. Used vs. New Products. If only new products are taxed, many people would go to extremes to avoid purchasing new products. Repair businesses would thrive. Old houses would be upgraded or repaired while new house construction and sales would become rare. Automobiles would be restored and new technology and safety features would have a much smaller market. Many new product industries would suffer and fail.

b. Income Status. Many factors in our lives are dictated by our income. Tuition assistance for school as well as grants such as Pell Grants, scholarships, housing assistance, and any manner of welfare considerations. Without an income tax return to use as proof of income level, agencies will have new problems to accurately and honestly evaluate and determine eligibility.

c. Many people look for ways to get over on the system or get something for nothing. New scams will be added to inevitable black market transactions and bartering. The solution to new and unforeseen problems will require new laws. Laws are reactive and will not keep up with new scams. The myriad of new laws will re-grow the bureaucracy.

d. Elimination of the IRS and elimination of the myriad of convoluted rules and regulations will tend to put a vast army of accountants, tax preparers, lobbyists, and bureaucrats out of work. We may need more tax dollars to provide unemployment payments and retraining programs to help these unfortunate souls whose careers we have destroyed.

No comments:

Post a Comment