The debate over whether we are better served by a national sales tax vs the current income tax plans currently in place comes up every election year. Other than those times, it seems to hide in the shadows of the news neglected as a viable course to consider for the betterment of the American system. I would be quite happy to pay an additional sales tax and eliminate the annual ritual of income taxes.

The purpose of taxes is to fund the government. Both systems will bring money into the government. We just need to determine which is the better way to go about it. The sales tax needs to be fair and will have to have ways to not penalize the lower income members of society when compared to the current income tax system as would be one assumption considering we have a scaled income tax.

First, a sales tax rate needs to be set then from there it can be modified. Basic necessities such as food would be exempt from the tax. Certain other items can be taxed under special provisions such as a higher rate for some luxury items or a lower rate for almost necessry items. This would allow for less taxes to be paid by those that cannot afford them, and also provide them with their full income over the course of the year. Too many people wait until tax returns come in so they can catch up on their expenses over the previous year (ie. pay down credit cards/bills).

Next, the sales tax would eliminate the "loop holes" that the wealthy use. If they spend a lot, they will pay more in taxes - basically simple. Obviously, it can't be that simple though. The wealthy population does pay a large percentage of the income taxes gathered and they would have to keep spending to continue paying taxes or there could be shortages. Luckily the wealthy did not make their money by putting it in a savings account - they invested it by spending it. I do not believe these behaviors will change. If the rates are set properly they will still be paying approximately the same in taxes each year.

Removal of income taxes would also eliminate a whole level of expenses associated with collecting income taxes. The addition of a national sales tax will not create a whole new department as sales taxes are already collected and a system is in place - it would just be expanded to handle a larger capacity. Overall, I believe it will save the government money. (No I have not done an actual cost comparison though just a logical assumption)

Yes, I would apply this system to businesses as well otherwise it would not completely eliminate this department. I would not implement it at the same time though. I would phase in one first then change businesses over later. This part would require a much larger change in the way people think of doing business. Currently a business does not pay sales taxes on the costs of materials used to make their products, so they have to keep track of who is exempt from which sales taxes. They do pay on their income. This part of the discussion can needs to be very in depth do to the ramifications on the business world from large corporations to small start-ups, so it will require its own discussion later. For now, lets keep with the individuals so I can do more research into the effects on businesses.

I have a hard time finding benefits to the income tax system over the sales tax. It seems it is mostly a tool for getting elected by the public or for wealthy infuential people to gain benefits from their elected officials with a tax break here or a tax break there. This form does give the government a little more control over how much it can return to certain people each year. They can offer lower tax brackets, exemptions for homes, charity, and education. This can be matched through a sales tax as well. Certain necessities having lower or no sales tax would benefit the lower income more. Scholorships and grants for low income can be increased to make up the difference in education. Primary residences can be exempted from sales tax. Charities may suffer a little since they are used as tax breaks by some, but spending $10,000 to save a couple thousand in taxes is not why most give to charity.

Just because something is done a certain way and we are used to it, does not mean that it is the best way. I hope to see a sales tax one day soon. It can be fair to all Americans, still serve its purpose to the government, eliminate the IRS from year end audits of individuals, and save a little stress come mid-April.