Hugh.
The devil is always in the details. Who determines what are necessities and what items are not? What will have the VAT tax or what will be exempt. If you exempt food or edible items from the tax, that is pretty much how most state sales tax work and most people understand that and can relate to that.
But then we wonder if all foods should be exempt? Should caviar be exempt? Should expensive cuts of meat or expensive seafood be exempt? They are not necessities, but they are food? What about pet foods? Will this type of tax cause greedy food suppliers to increase the cost of food? Is food and clothing a necessity? Will clothing and shoes be exempt? If so, will that include all the expensive designer brands? What about schools supplies?
Here in Texas we do have a tax exempt weekend in August where parents can buy schools supplies, clothing and shoes for the their kids and even adults. I could go on and on, but I think you get my point. We end up with some government official making unrealistic determinations as to what is a non-taxable necessity, and if they want more revenue, the list of tax exempt items begins to shrink.
Then we also have the issue of state and local sales taxes. The Federal government cannot control how the states and local sales taxes are applied and they may not agree with what should be exempt or the limits are. That is something that would either require a Constitutional amendment, or a state by state change. I just think the state and local governments have too much power and freedom to charge fees, increase taxes, and tax things that were never taxed before just to enhance revenue and continue the expansion of their power.
A simple flat income tax of about 9% to 12% with the first $10k or perhaps $15k of each individual's income is exempt. There are no other exemptions or exceptions. That is the simplest to manage and most cost effective. It certainly would justify reducing the size of the IRS since they would only need to verify income and most of that is done by computer, so the only audits would be based on hidden income like gambling, tips, and other cash transactions, which has always been an issue. It also still gives the IRS the ability to track illegal money and charge gangsters and drug dealers with Income Tax evasion if they don't pay their taxes.
The other issue is that currently incomes from Wages are taxed and additional 13% for Social Security and Medicare, while incomes from dividends, investments and annuities are not. Since these sources of income are mostly exclusive the wealthiest Americans they already have 13% savings over the average American worker. We need to collect Social Security and Medicare taxes on all sources of income, or we need to phase it out over a long time period so that we dont pull the rug out from those who are approaching retirement age.
These are just some of my random thoughts about taxes and why I favor a Flat Income Tax and eliminating all the exemptions and exeptions we have in our current tax laws.
Rich
The devil is always in the details. Who determines what are necessities and what items are not? What will have the VAT tax or what will be exempt. If you exempt food or edible items from the tax, that is pretty much how most state sales tax work and most people understand that and can relate to that.
But then we wonder if all foods should be exempt? Should caviar be exempt? Should expensive cuts of meat or expensive seafood be exempt? They are not necessities, but they are food? What about pet foods? Will this type of tax cause greedy food suppliers to increase the cost of food? Is food and clothing a necessity? Will clothing and shoes be exempt? If so, will that include all the expensive designer brands? What about schools supplies?
Here in Texas we do have a tax exempt weekend in August where parents can buy schools supplies, clothing and shoes for the their kids and even adults. I could go on and on, but I think you get my point. We end up with some government official making unrealistic determinations as to what is a non-taxable necessity, and if they want more revenue, the list of tax exempt items begins to shrink.
Then we also have the issue of state and local sales taxes. The Federal government cannot control how the states and local sales taxes are applied and they may not agree with what should be exempt or the limits are. That is something that would either require a Constitutional amendment, or a state by state change. I just think the state and local governments have too much power and freedom to charge fees, increase taxes, and tax things that were never taxed before just to enhance revenue and continue the expansion of their power.
A simple flat income tax of about 9% to 12% with the first $10k or perhaps $15k of each individual's income is exempt. There are no other exemptions or exceptions. That is the simplest to manage and most cost effective. It certainly would justify reducing the size of the IRS since they would only need to verify income and most of that is done by computer, so the only audits would be based on hidden income like gambling, tips, and other cash transactions, which has always been an issue. It also still gives the IRS the ability to track illegal money and charge gangsters and drug dealers with Income Tax evasion if they don't pay their taxes.
The other issue is that currently incomes from Wages are taxed and additional 13% for Social Security and Medicare, while incomes from dividends, investments and annuities are not. Since these sources of income are mostly exclusive the wealthiest Americans they already have 13% savings over the average American worker. We need to collect Social Security and Medicare taxes on all sources of income, or we need to phase it out over a long time period so that we dont pull the rug out from those who are approaching retirement age.
These are just some of my random thoughts about taxes and why I favor a Flat Income Tax and eliminating all the exemptions and exeptions we have in our current tax laws.
Rich
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