A House divided cannot stand

[ZNPaaneah]

I once read a book where the thesis was to replace the entire tax code with a sales tax. The benefits were that you could target it, so that luxury items have a higher tax rate and essentials like milk and bread could have no tax.

The benefits were that it is much easier to collect, it eliminates the annual tax form, and it eliminates all kinds of loopholes. You can't raise taxes on the rich because they have a multitude of dodges. They can establish a residence overseas, etc. What the government does have authority over are the consumers purchasing any and all things in this country.

There would be a tremendous savings from simplifying the process, the tax code, and eliminating the cheats. It would also encourage savings. No tax on capital gains, no tax on investment income, only tax on things you buy and pay for.

So, what was the issue. The issue is that the sales tax rate would have been around 40% and how much you are paying in taxes would have been completely transparent to the people every single day.

I agree -- let's make the tax rate completely transparent. Let's simplify it. Let's eliminate the loopholes.

The entire concept of "trickle down" economics is that those with money will spend it. Well, when they do they'll pay taxes, and if they buy luxury items they'll pay luxury tax rates.

This approach saves us the most money by reducing the cost for the IRS and for tax accountants. It encourages business because we don't have corporate tax. That in turn will encourage exports. It also allows us to collect maximum tax from imports. It is fairest to the poor because we can eliminate tax on essential food items. Also it allows us to tax luxury items (the thousand dollar hand bag, etc). There is no penalty for investment that leads to jobs. There is no penalty for investment income. We are now collecting tax on anything bought via the internet.

It is possible that people would drive to Canada or Mexico to buy stuff, but when they declare it coming back in we could tax them as well.

It doesn't increase the total cost, instead we could expect the total cost to decrease. We could also expect the total tax rate to decrease since we have less fraud and a more efficient and effective way to collect the tax. Also the US doesn't hold your taxes for a year before giving them back as a refund. The only downside is that Americans see how much they are paying in taxes.