I favor a consumption tax instead of an income tax, but NO LOOPHOLES. No exemptions, no exceptions, no ten million page tax code.
5% on every sale. That's my plank.
Current federal tax rate.
| Effective Total Federal Tax Rate (Percent of gross income) | |||||||||||||
| Income Category | 1977 | 1979 | 1981 | 1983 | 1985 | 1987 | 1989 | 1991 | 1993 | 1995 | 1997 | 1999 | 2001 |
| All Families | 22.2 | 22.4 | 20.4 | 20.9 | 20.9 | 21.6 | 21.5 | 21.5 | 22.0 | 22.6 | 22.9 | 22.9 | 21.5 |
Data from IRS collections statistics and The Bureau of Economic Analysis as compiled in tabular form by the Congressional Budget Office.
http://www.cbo.gov/showdoc.cfm?index=1545&from=4&sequence=0
5% on every sale.
With a cascading sales tax as any tax paid on sales to business must ultimately be passed on through to the final consumer (hidden from view no less.)
How do you figure on keeping the voter informed of the tax burden he actually pays as the percentage multiplies with each level of sales it passes through. How much burden on the economy occur in the compliance costs and enforcement of a cascading tax.
Cascading taxes are not nice at all. Sounds alot like a Tobin tax, a VAT on steroids:
Table 1 : Effective Tobin Tax on a Two-Way Transaction (1)
| Turnover | 1 day | 1 week | 1 month | 3 months | 1 year | 5 years |
| Effective Tax Rate (annual %) | 73 | 10.4 | 2.4 | 0.8 | 0.2 | 0.04 |
| Annual Tax Paid on $24 million Deal (2) | 17.5 | 2.5 | 0.6 | 0.2 | 0.1 | 0.0 |
(1) Based on a nominal tax rate of 0.1 per cent. The horizon of the transaction, motivated by speculation or financial arbitrage, is as indicated in each column.
(2) Average size of a financial swap in the inter-bank market. The figure indicates the amount of tax paid if $24 million were invested for one year and taxed at the effective annual rate.
Actually, although I spoke carelessly, I had in mind 5% on every *retail* sale.