Monday, March 27, 2006
National Sales Tax: A Closer Look At $$$ Figures...Part 3
Continuing on part 2... Imagine no income tax, no more waiting for W2s and trying to figure out how many allowable exemptions to take this year, no more giving the government an interest free loan, and imagine saving tax free...That's what started this series, but now it's time for a deeper look. What would be a reasonable "tax rate"? I'm thinking about 10-20% would be a ballpark figure of what I would expect to pay. I did some digging to try and find out, what if we really switched to a national sales tax? Well, I found some info at www.taxpolicycenter.org that listed Total US Income tax collected in 2003. Total US Income Tax (2003): $1,683,184,679,000 (reference) Then I needed to find some data on how much sales is done in the US that would be subject to the national sales tax. So I looked up retail sales information for 2003. On a side note, in my search I noticed everyone talks about percent increases in consumer spending, but no $$$ figure to go with it! But I finally found some data at census.gov. Total US Retail Sales (2003, not seasonally adjusted, reference): $3,275,407,000,000. Wait, wait, wait...If you noticed and said, "OMG, I have to pay 50% tax??!?!" Hold on for a sec. Be sure you consider the whole picture... 1. You no longer have federal income tax being witheld from your paychecks! That's a big boost each pay period. 2. Tax credits would still be given depending on your exemptions. 3. Retail sales data above might not be complete. 4. Government can always get more budget conscious. (ha!) So if the US Census Retail Sales data is accurate, then $3.3 trillion would be taxed, which would mean a fifty percent tax! Could you imagine?? Is it worth it? I don't know. It would definitely get me spending less and saving more. Some odditities I found while searching for total US Retail Sales data...This other site reported annual retail sales in 2003 in the US of $59 trillion! That's a huge difference compared to the $3.2 trillion reported by the census. Although, $59 trillion sounds a little un-realistic. That would mean a national sales tax rate of 3%. :) So what's the real number? Beats me! But it would make a huge difference in whether people would support a drastic change like national sales tax. Another issue, what would happen to retirement accounts? Tax free would certainly lose its appeal. When I first started this series on national sales tax, I was all for it. After seeing the possible $$$ figures, I still am. It would get tourists, tax evaders, and immigrants all contributing to the country they are visiting or living in, and that sounds fair to me. I do have some concerns, but when you look at the concept in its fundamental state, it makes sense. This is the reason I believe it would work...Not to mention all the lost productivity due to hours of brain mangling tax work can now be spent freely. How do you put a monetary value on that?
Posted by freedumb at 3/27/2006 07:24:00 AM