http://www.foxnews.com/story/0,2933,140076,00.html

It would appear that members of Congress are taking a look at studying a National Sales Tax. So what would be our advantages and disadvantages if this were to be adopted? Certainly not having to prepare tax forms every April would be a big relief for a lot of people. But is this the way to go?

I'm ambivalent about the subject. On the one hand, the hassle of preparing tax forms is something I could do without. On the other, I'm not nuts about sales taxes. I was in TN for Thanksgiving. TN has no income tax, but does have close to a 10% sales tax, and the cost of all the tourist crap I bought in Nashville went up considerably. Also, I can just see the government instituting a VAT and then bringing back an income tax to boot. Or, starting a VAT at a certain level and then jacking it up every year. Canada has both a 7% GST, AND an income tax. I could see the US doing the same.

A national sales tax in lieu of an income tax would be hardest on the working poor, those that make too much money to get any assistance, but are either barely making ends meet or who are struggling just to get by month to month. Those people will pay a higher percentage of their income for the sales tax than those making a great deal more money. I can't imagine that the grocery bill for a family of four whose income is over $100,000 is 3 times as much as a family of 4 whose income is $30,000. (I still remember a member of either Reagan's or Nixon's administration defending a tax break for the higher income groups by saying that the lower income people would spend the extra money on non-durable goods, which he implied was not good for the economy. Speaking from experience, I can tell you that the biggest non-durable goods that the poor buy is usually called food.) Also note that much more of those who are the working poor have to pay for their own medical care that those who make $100,000+ a year.

The median family income in the US for a family of 4 is about $63,000 (US Census figures), yet Congress routinely describes the Middle Class as earning up to $300,000. How many of us actually have a friend who makes $300,000 or more a year? How close are you to the real middle class? Is your family over the median income? If so, knowing what you go through to make ends meet, imagine a family that makes half of what you make. Do you think that they need to spend more of their income on a sales tax?
I see this idea as just another way to move more of the tax burden on the poor, and am always surprised to see that many of the working poor somehow think that they will benefit from it.

Hourly wage/Yearly income*
Minimum Wage ($5.15)/$10,712
$7.50/$15,600
$10.00/$20,800
$12.50/$26,000
$15.00/$31,200
$17.50/$36,400
$20.00/$41,600
$25.00/$52,000

*63,000 a year {The median figure for a family of 4 (see above)} is $30.29 an hour.
$100,000 a year is $48.08 an hour

*Based on full time employment, 40 hrs a week, 52 weeks a year

JR, you were in Nashville and didn't let me know you were coming? Shame on you.

Our former Republican governor (yes, Republican) tried for his entire second term to get an income tax passed. He closed state parks, cut services, declared deficits (which are illegal here) and "proved" that the state would be bankrupt in two years if an income tax wasn't passed. (By the way, a state income tax has been ruled unconstitutional by the State Supreme Court on several occassions.) It caused the biggest political uproar in this state in my lifetime and many career politicians lost their jobs because of it.

So, no income tax was passed and just last year (the year that the state was supposed to be bankrupt) the current Democrat administration showed a surplus of $300 million. Our economy is growing. Unemployment here is significantly lower than the rest of the nation.

Now, I'm not advocating for a national sales tax for much the same reasons that DG states. I think it is particularly onerous on the working poor and lower income groups. However, I will point out that a national sales tax most likely would not be imposed on food or prescriptions.

Sorry, TC. My bad. Actually I was staying in Clarksville and only got to Nashville for a couple of hours. Next time I'll let you know. We can eat at the Hooters there by the river. I have a colleague who teaches at ETSU who kept me informed on the income tax brouhaha.

Food for thought:

Emancipating America from the Income Tax: How a National Sales Tax Would Work

by David R. Burton and Dan R. Mastromarco
Cato Institute - April 15, 1997