My brother is an accountant, so he probably won't really like this post too much, but I support a consumption tax instead of an income tax. There, I said it.
So I submit to you, the Committee of the Whole, my initial ideas on a consumption tax. (That way, if I have any hair-brained ideas, I can change my mind!! ;-) )
I know it's not an easy proposition. Because after all, there is still the behemoth known as the IRS. Any Consumption Tax would probably need a Constitutional amendment at the same time to repeal the 16th Amendment. Ron Paul reminded us of this a couple years ago:
One tax reform idea tacitly endorsed by Federal Reserve chairman Alan Greenspan calls for a national retail consumption tax to replace the existing income tax. Absent the outright repeal of the 16th Amendment, however, we cannot be sure that an income tax would not reappear at some point. One can easily imagine popular support for retaining the income tax on the “very rich,” which of course is how the 16th amendment originally was sold to a gullible public in the 1910s.He also said
A pure consumption tax like the Fair Tax would be better than the current system only if we truly did away with the income tax by repealing the 16th amendment. Otherwise, we could end up with both the income tax and a national sales tax. A consumption tax also provides more transparency and less complexity. But the real issue is total spending by government, not tax reform. In other words, why change the tax structure if spending stays the same?I recently listened to an interview of presidential candidate Mike Huckabee on The Right Balance with Greg Allen. Here are some notes that I took of the interview (I had to pull over to the side of the road a couple times to type them into my Palm Treo 700WX smartphone, as I was en route to work while listening to TRB).
Governor Huckabee said that there is already a 22 percent built-in tax for everything we consume, because corporations pass their costs along at that rate--after all they don't pay taxes, you do! The US already has the highest corporate tax rate in the world, which encourages corporations to hide their companies and accounts "off-shore". The part that I really like about his plan is that each family that lives below the poverty level would receive a consumption tax rebate check to bring them back up to the poverty level.
Here are some concerns:
- Will we need the IRS to send all the rebate checks out?
- How complicated would it be for companies to upgrade their computers and cash registers to account for this new tax?
- How long (if ever) would it take for corporations to reduce the cost of the goods they sell to us by 22% to match the taxes they no longer have to pay?
Getting rid of all the current income tax loopholes would be much better.