Federal Sales Tax

[A18]

How many dollars worth of goods and services are sold each year on a consumption level?

Anyone know?

Or at least, does anyone know what the economic term to describe this is? I can do a Google search if I have that much.

[A18]

Thanks.

Unless I'm making some mistake...that means that all things being equal, a 10% federal sales tax would be necessary. That's too high, IMO.

If we cut the budget in half though, a 5% sales tax seems very reasonable to me. Maybe cut it a little more, since it's a consumption tax.

[A18]

Correct, but since the point is to repeal the income tax, it wouldn't actually matter that prices are higher.

[A18]

http://www.cato.org/pubs/pas/pa-272.html

This study, while outdated, calls for 15 percent sales tax on the final purchase of goods and services at the retail level.

This would take the place of "individual and corporate income tax, the capital gains tax, the estate and gift taxes, and non-trust-fund excise taxes." It would not replace the payroll tax.

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Are there any statistics on what percentage of that consists of food and clothes?

[A18]

That is completely, blatantly, 100%, without exception false, and people need to quit repeating it.

People have more money. Prices go up, people's incomes go up in proportion. No net effect.

A federal sales tax would not be regressive if we made the first several thousand dollars of consumption tax free with a simple rebate paid by the Social Security Administration.

Chart:


Alternately, we could exempt food, clothing, rent, etc.

[A18]

The idea was to have this tax be very regressive - taxing stuff you need to survive, but not taxing investments. The tax rate would have to be huge. This is a terrible idea.

A 15% sales tax is not huge.

[A18]

The idea was to have this tax be very regressive - taxing stuff you need to survive, but not taxing investments. The tax rate would have to be huge. This is a terrible idea.

A 15% sales tax is not huge.

It would have to be more than that

No, and it could actually be less, if we didn't repeal corporate taxes.

I already went over the two ways we could make it progressive.

[A18]

With a 15% rate? Individual and corporate income tax, the capital gains tax, the estate and gift taxes, and non-trust-fund excise taxes.

I don't know how much money the government collects from the corporate income tax, so I don't know what the effect would be.

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Any number substantially higher than 15% is a plan to repeal payroll taxes, which we wouldn't do.

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No, it only requires a rebate.