Imagine getting a huge raise in your paycheck or huge increase in your business bottom line. That is what is going to happen when we replace income tax collection with a national sales tax on new goods and services.
About 25% of our pay goes towards taxes plus, approximately, 8% in payroll taxes. People and businesses spend a lot of hours and money just in compliance. Around 6 BILLION hours and around $200 BILLION in just complying with the tax code.
When we buy an item, part of that item's cost goes to the federal government as taxes. At every point of manufacture, an item is taxed, including packaging and advertisement. These are called embedded taxes. These embedded taxes will be eliminated by the national sales tax.
A national sales tax would eliminate all corporate taxes and make American corporations competitive in the world market. It would be attractive for foreign companies to do business in the U.S. because of the tax-favorable situation. Because of the abundance of money, there would be more jobs and everyone’s purchasing power would be increased.
Look at all the taxes that a national sales tax would eliminate:
· The individual income tax
· The alternative minimum tax (AMT)
· Corporate and business income taxes
· Capital gains taxes
· Social Security taxes
· Medicare taxes and all other federal payroll taxes
· The self-employment tax
· Estate taxes
· Gift taxes
No more gotchas from the IRS and politicians will not be able to use this for class warfare. Some of this information was extracted from The Fair Tax Book. Let me know what you think about this or if you have other suggestions concerning a national sales tax.