With a 15 percent national retail sales tax, I would have to earn $11.50 in order to pay the $1.50 in national retail sales tax and net the $10.00 needed to buy the article of clothing. In the case of an income tax or of a national retail sales tax, the taxes reduced my ability to consume because I have fewer dollars to use for consumption.
So, the question is this: If all taxes are really consumption taxes, shouldnt we replace the present income tax system with a national retail sales tax that accomplishes the following:
1. Frees individuals from filing any type of federal tax returns. In 1996, there were 120 million 1040 individual income tax returns filed. 120 million Americans were forced to spend in excess of 2 billion hours trying to calculate the amount of income taxes owed to the federal government. This is absurd.
The national retail sales tax requires no federal individual tax returns of any kind. Individual Americans will pay their taxes when they make purchases of retail goods and services. No receipts, no guilty until we can prove our innocence, no tax returns, no audits, no hassle. What a concept!
2. Requires only simple returns from retail businesses. Does anyone believe that businesses pay taxes themselves? A businesss taxes are passed through to the consumer through higher prices and then paid to the government. All taxes are ultimately paid by consumers. In fact, many economists believe that prices of consumer goods and services are between 12 percent to 20 percent higher than they otherwise would be because of our ridiculous income tax system.
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