To: phil_will1
...We believe that a sales tax, because of its visibility, would serve to exert downward pressure on the rate... Damn straight it would! Unless I've totally underestimated the stupidity of the constituency.
Now, what would individual states likely do to get their cut of tax revenue? Tack on addition percentages in addition to the NATIONAL sales tax, only tax income - through withholdings & returns, or some combination of these two just as it is done now?
134 posted on
02/12/2004 10:53:51 AM PST by
LowCountryJoe
(Shameless way to get you to view my FR home page.)
To: LowCountryJoe
"Now, what would individual states likely do to get their cut of tax revenue?"
States would, in all likelihood, "harmonize" their tax systems voluntarily to the new federal sales tax. There are several reasons for that, not the least of which is that with no federal 1040 to piggy-back on, any state wishing to continue taxing income would have to develop their own income tax system from the ground up - a daunting task.
The most significant change for most states (in addition to abandoning their income tax) is that they would begin charging a sales tax on services (personal only) for the first time. This would roughly double the sales tax base. In many states, it is believed that this expansion of the sales tax base would be enough to
(1) offset the loss of income tax revenues
(2) lower the sales tax rate
(3) address other state and local revenue problems, such as property taxes.
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