Just found another site that discusses a national sales tax in which there would be no payroll taxes for FICA and Medicare, but in this proposal the national sales tax rate would be 23% plus the state taxes, or more than 30% in many cases.
One of the ways that people with means accumulate those assets is careful management of their money. While there are plenty of spendthrifts who blow lots of money to keep up with the Joneses, there are more people who judge their purchases based on value. I'm the type of person who goes to fairly extensive lengths to avoid taxes; Judge Learned Hand pointed out that we have a duty to do so. If there was a combined national and state tax of 30% on purchases, I would have to severely moderate my purchases, because there that much of an increase in price places an enormous burden on value. That $100 fishing rod, costing $107 with current sales tax, suddenly doesn't look as appealing at $130. I would either buy a less expensive item or consider eliminating the purchase entirely. If I can avoid giving the government my money by simply moderating or avoiding a purchase, I'd jump on the opportunity.
I don't think I'd be alone; therefore my prediction would be that non-essential spending would drop drastically, tax revenues would plummet, and either the tax rate would have to be increased or alternate forms of taxation would have to be found.
As a case in point, I used to live in Massachusetts in the '60's, where licquor sales were in state stores, and were highly taxed. The legislation kept raising the tax rate, until it reached a critical point -- prices were so high, including taxes, that people simply stopped buying as much booze, and tax revenues went down -- way down! I predict a similar thing would happen if there was a national sales tax on top of the state taxes.
One of the ways that people with means accumulate those assets is careful management of their money. While there are plenty of spendthrifts who blow lots of money to keep up with the Joneses, there are more people who judge their purchases based on value. I'm the type of person who goes to fairly extensive lengths to avoid taxes; Judge Learned Hand pointed out that we have a duty to do so. If there was a combined national and state tax of 30% on purchases, I would have to severely moderate my purchases, because there that much of an increase in price places an enormous burden on value. That $100 fishing rod, costing $107 with current sales tax, suddenly doesn't look as appealing at $130. I would either buy a less expensive item or consider eliminating the purchase entirely. If I can avoid giving the government my money by simply moderating or avoiding a purchase, I'd jump on the opportunity.
I don't think I'd be alone; therefore my prediction would be that non-essential spending would drop drastically, tax revenues would plummet, and either the tax rate would have to be increased or alternate forms of taxation would have to be found.
As a case in point, I used to live in Massachusetts in the '60's, where licquor sales were in state stores, and were highly taxed. The legislation kept raising the tax rate, until it reached a critical point -- prices were so high, including taxes, that people simply stopped buying as much booze, and tax revenues went down -- way down! I predict a similar thing would happen if there was a national sales tax on top of the state taxes.
