We've discussed the National Sales Tax before and I won't go into it too much here, other than to remind you that it really does place an undue burden on those with the lowest incomes.
A good amount of Mr. Williams' article I agree with. Yes, government spending needs to be reduced. Yes, it would be nice to simplify the tax code to dramatically reduce the bureaucratic and compliance costs associated with it. And yes, I don't think Congress will do anything about it either.
However, his economic analysis is incorrect on two points. First off, he ignores the positive effect government spending has on the economy if it is spent domestically. (For instance, that $40 of our purchasing power may be reduced from gov't spending, but what if we were the vendor that the gov't paid $40 to?) Additionally, Mr. Williams stated that a national sales tax would create greater economic incentives. There would be greater incentives to save and invest. But consumption would take a nosedive.
Finally, changing the tax code to use a national sales tax would be incredibly complicated. Would it replace solely our income tax - so that our payroll taxes that pay for social security, unemployment insurance, medicare, etc. would remain? Because if payroll taxes were also eliminated then we would also have to recalculate methods of how we qualify for social security and other government transfer programs.
So once again I'm back to saying that I could accept a flat tax, provided it had low income excemptions to not unduly burden the poor, but there's no way we should go to a national sales tax.
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You called?
We've discussed the National Sales Tax before and I won't go into it too much here, other than to remind you that it really does place an undue burden on those with the lowest incomes.
A good amount of Mr. Williams' article I agree with. Yes, government spending needs to be reduced. Yes, it would be nice to simplify the tax code to dramatically reduce the bureaucratic and compliance costs associated with it. And yes, I don't think Congress will do anything about it either.
However, his economic analysis is incorrect on two points. First off, he ignores the positive effect government spending has on the economy if it is spent domestically. (For instance, that $40 of our purchasing power may be reduced from gov't spending, but what if we were the vendor that the gov't paid $40 to?) Additionally, Mr. Williams stated that a national sales tax would create greater economic incentives. There would be greater incentives to save and invest. But consumption would take a nosedive.
Finally, changing the tax code to use a national sales tax would be incredibly complicated. Would it replace solely our income tax - so that our payroll taxes that pay for social security, unemployment insurance, medicare, etc. would remain? Because if payroll taxes were also eliminated then we would also have to recalculate methods of how we qualify for social security and other government transfer programs.
So once again I'm back to saying that I could accept a flat tax, provided it had low income excemptions to not unduly burden the poor, but there's no way we should go to a national sales tax.
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