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[font=Palatino, Georgia, Times New Roman, Times, serif][size=+2]National sales tax[/size][/font]
[size=-1]Posted: December 22, 2004
1:00 a.m. Eastern
By Dr. Walter E. Williams
[/size] [font=Palatino, Book Antiqua, Times New Roman, Georgia, Times] [/font] [font=Palatino, Book Antiqua, Times New Roman, Georgia, Times][font=Palatino, Times New Roman, Georgia, Times, serif] [size=-1] ? 2004 Creators Syndicate, Inc. [/size] [/font] [/font]



[font=Palatino, Book Antiqua, Times New Roman, Georgia, Times]Rep. John Linder, R-Ga., has authored H.R. 25 "To promote freedom, fairness and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national sales tax to be administered primarily by the States." Before we look at whether a national sales tax is a good idea, how about a little Economics 101 just to convince you that government spending, not government taxation, is the true measure of governmental impact on our lives? [/font]

[font=Palatino, Book Antiqua, Times New Roman, Georgia, Times]Keeping the numbers small, suppose the annual value of what Americans produce, our gross domestic product, is $100. If government spends $40 of it, of necessity the government must force us to spend $40 less. There are several ways this can be done. Government could tax us $40. Government could borrow, thereby driving up interest rates and reducing private spending. Government could simply print money, which would cause inflation and reduce our purchasing power. Finally, government could employ some combination of the three. [/font]

[font=Palatino, Book Antiqua, Times New Roman, Georgia, Times]The bottom line is that if government spends $40 of our GDP, we can't spend that same $40. There's no question that tax reform is needed, but tax reform is secondary to a much larger issue ? federal spending. From 1787 to 1920, except during war, federal spending was a mere 3 percent of GDP, compared to today's 20 percent. If the federal government takes only 3 percent of the GDP, just about any tax system is relatively non-oppressive. However, if government were to take 50 percent, 60 percent or 70 percent of the GDP, you tell me what tax system would be non-oppressive. [/font]

[font=Palatino, Book Antiqua, Times New Roman, Georgia, Times]There's no question that some forms of taxation are worse than others. In addition to its economic disincentive effects and intrusions on personal privacy, our income tax has huge compliance costs estimated to be between $250 billion and $500 billion each year. [/font]

[font=Palatino, Book Antiqua, Times New Roman, Georgia, Times]Abolition of the IRS and the income tax code it enforces, replaced by a national sales tax, would create greater economic incentives, enhance personal privacy, and lower tax compliance cost by an estimated 90 percent. [/font]

[font=Palatino, Book Antiqua, Times New Roman, Georgia, Times]There'd also be greater faith and allegiance to our founders' constitutional vision, expressed in Article I, Section 9, which says, "No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken." The founders feared the abuse and the government power inherent in an income tax. [/font]

[font=Palatino, Book Antiqua, Times New Roman, Georgia, Times]Another benefit of a national sales tax is that being taxed 23 percent to 30 percent with every purchase we become more aware of the cost of government. Income taxes and corporate taxes conceal that cost. [/font]

[font=Palatino, Book Antiqua, Times New Roman, Georgia, Times]Before we accept a national sales tax, there are two minimal requirements. First, there must be a repeal of the 16th Amendment so Congress can't hit us with both an income and sales tax. Second, there must be a constitutional amendment fixing the national sales tax at a certain percentage that can only be increased by a three-fourths vote of the House of Representatives. [/font]

[font=Palatino, Book Antiqua, Times New Roman, Georgia, Times]People have advocated a national sales tax or a flat income tax for years, and I don't want to rain on their parade. But here's my prediction: Congress will never enact a sales tax or a flat tax. Why? The two most powerful congressional committees are the House Ways and Means Committee and the Senate Finance Committee. Both dispense tax favors to different Americans that come at the expense of other Americans. With a sales or flat tax, their Santa Claus roles, not to mention campaign contributions, would be diminished. On top of that, they'd have restricted opportunities for social engineering through fiddling around with the tax code. [/font]

[font=Palatino, Book Antiqua, Times New Roman, Georgia, Times]My personal preference is a constitutional amendment limiting federal spending to a fixed percentage, say 10 percent, of the GDP. You say, "Williams, why 10 percent?" My answer is that if 10 percent is good enough for the Baptist Church, it ought to be good enough for the U.S. Congress.[/font]





[font=palatino, times new roman, georgia, times]Dr. Walter E. Williams is the John M. Olin Distinguished Professor of Economics at George Mason University in Fairfax, Va.[/font]
 

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Mystic Knight of the Sea
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I'm all for it. Also, NO exemptions for anyone, no churches, no organizations, no age, nobody, ABSOLUTELY NONE!!!

It'l never happen though. Tax accountants, lawyers, politicians.... too many special interests.

Bah humbug!!! :(
 

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DorGunR said:
...[font=Palatino, Book Antiqua, Times New Roman, Georgia, Times]The bottom line is that if government spends $40 of our GDP, we can't spend that same $40. [/font][font=palatino, times new roman, georgia, times]..[/font]
The premise of Keysian economics, the economic theory underpinning the New Deal by which FDR was able to avoid a communist revolution in the USA during the depression, is that this bottom line is quite wrong: That there is a multiplier effect, and that when the government spends $40 of our GDP, that $40 stimulates the economy and increases the GDP.
 

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National Sales Tax is BAD. Did I say BAD?

Sure, it will replace income tax ... for awhile. Then, we will have income tax and national sales tax, as well as all the other State and local taxes we already pay.

New taxes are ALWAYS bad.
 
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