Taxes
I wrote this on a myspace blog around a year ago. It needs to be refined, but I decided I just wanted to get it out here. Hopefully it will provoke thought and discussion.
Reasons NOT to Have a Federal Sales Tax (Or Brie's Tax Policy, Part 1)
How many of you think we should have a federal sales tax rather than the established federal income tax? The thought that many of you would probably raise your hands makes me feel sick. Sure, it sounds great at first, but the more I contemplate it, the worse it sounds.
First of all, I believe that we should always think very seriously when it comes to taxes because taxes are part of what started the American Revolution. Granted, it was specifically the issue of taxes without represenation, but when it comes to the issue at hand, I might add, it was not only a tax, it was a sales tax.
So here it is--my list of reasons I think a federal sales tax (the same, I believe, as the proposed Fair Tax) would be downright stupid:
1. Such a tax would be bad for the economy. People buy less when things are more expensive--especially if the actual price is more than stated on the item. In my experience, I more readily buy things now that I live in Fairbanks, AK where there is no sales tax than I did when I lived in Washington (state) which had an 8% sales tax (at the time; I don't know what it is now). Many people have enough trouble figuring out their finances without the added difficulty of a sales tax. If people refrain from spending because of this hassle the economy will suffer. Just look at California; it's on the verge of bankruptcy. In many places, such as Washington, if you show them your Alaska or Oregon IDs (or any other state where there is no state sales tax), you will be exempt from their sales tax. I know from experience, that in California where the sales tax is horrendous, they will not even do this courtesy. I'm sure there are many other reasons for the state of California's economy, but I can't help but wonder if this contributed. Especially with the current state of the country's economy, it is extremely important to encourage spending, not make it more difficult.
2. It would take away personal responsibility. When you make a purchase, it is often anonymous; once you leave the store, you disappear. Of course, one might argue, "Why would it matter? It's impossible to cheat on such a tax." But it's not impossible to cheat on it. You could use fraudulent bills. It's unlikely, but possible. But the biggest problem is not concerning the government getting cheated. It's about the tax-paying citizen being cheated. In the middle of a purchase, most people do not have the time or energy to figure out all the taxes to make sure they are not being cheated. The government could do the cheating, or the businesses themselves could overcharge the customer in the name of taxes. To see how easy this would be dig out the Candid Camera episode tape when they convinced customers of the existence of a ridiculous sales tax. It took a long time for anyone to question it. The fact is, when personal responsibility is taken away, freedom is also taken; it opens the door to tyranny.
3. It would hurt those who give to charity. If you're like me, you love charities such as Operation Christmas Child. This program requires that you buy items to send to the children rather than simply donating money (though you can do this, as well). Under a federal sales tax, you would be taxed on these items immediately, and there may not be any way to be reimbursed. Under the current system, you may receive a refund on your income tax if you report such items. You are, therefore, never taxed for buying these items at all (by the federal government, at least), freeing up your money for other needs.
4. It would put small businesses out of business. Sales go through so many levels--especially in manufacturing that by the time the items reach the consumers the prices would be outrageous! This is because every time a sale is made that sale would have to be taxed. Since this would be a set percentage tax, each time the product being manufactured is improved upon (given higher value) the tax would be higher, making the product more expensive. In addition, at each level those selling the product would have to bring up the price just to make a profit. By the time it reached a small "mom and pop" store it would be too expensive for the customers to buy. Other small businesses (such as plumbers, contractors, etc.) would go out of business simply because they could not afford the tools and materials to perform their services and to maintain their facilities. And forget starting a business; you can't afford to buy what you need to start until you've made a profit (which won't happen until you buy those supplies).
5. It would put families out of business. Anyone who has a large number of children, pets, or other dependents would go bankrupt trying to provide for them. With the federal income tax, there are tax rebates and refunds for those who have dependents (even more for those who have dependents who are disabled or in school). But a federal sales tax would not only demand that they pay these taxes they would normally be exempt from, but it would require that they pay those taxes now. Those who have more children or more parents who are dependent on them must buy more, but that does not mean that they have a higher income. There are also those who have special needs, such as those who have food allergies. While food items may be exempt from the tax, nothing else would be and buying less expensive food would not be an option for these people to cut the edge off of the price of their other purchases.
6. A Federal Sales Tax Could Infringe on States' Rights. I am no expert in this field, but since the individual states have sole jurisdiction to any commerce that takes place within their borders, I would suggest that a federal tax on these activities would be illegal. Since I am not certain of this, I will leave this open. If anyone has any insight as to the legality or illegality of such an action, I would appreciate your input.
7. It could put towns and communities out of business. Since a federal sales tax would be on top of any state sales tax, county sales tax, and town sales tax it would increase prices significantly for the residents of those towns. The residents' inability to do their business in town due to the prices could cause whole towns to go bankrupt, especially since small communities often run primarily on their sales tax.
8. Spending isn't what taxes are about. This is by far the most significant reason I am against the so-called "Fair Tax". I have to observe that in protesting the government's outrageous spending and taxing, some of the people have forgotten what taxes are about, as well. Taxes are not about who is spending more--they aren't about the individuals spending at all. Taxes are about living in this country. Taxes go for improving roads, bridges, and other transportation; to public education, social programs, hospitals, and other things that benefit society as a whole. It makes sense to tax according to one's income because taxes are what you give back to the country which has allowed you to thrive to the point of that income. Paying taxes isn't about giving money to the government; it's about giving money to your country so that it can function.
Paperwork
If being against the federal income tax is about the paperwork, well, eventually, people would realize the problems mentioned above and the paperwork would come back--and it would be worse because you would be filling it out every time you went to the store! As it is now, you have to file your taxes once a year. It's a pain, but when it's done, it's done.
Even with this kind of paperwork, it would be a lose-lose situation. Either the family or the business would go bankrupt. If the consumer were to fill out forms at the store to get discounts then the store would go out of business because they wouldn't get a return/reimbursement from the government in time to pay their bills with it. But if the consumer has to wait until later to file for a reimbursement from the government (due to family size, etc.), the family would go out of business!
Conclusion
There is nothing fair about one person making a fortune and yet not being taxed because he hoards his money while a poor laborer is taxed into the ground because he answers the call of duty to buy things to give back to those who have less than he does.
It is not the government's business at all how much someone spends (as long as there are no discrepancies in regard to his income). A citizen of the United States has the right to hoard his money or to give back; that is his business. But our country does need money to function. We need to pay those we hire, we need to pay for the projects we sponsor and benefit from. This is why a federal tax is necessary. We are all citizens, so we ought to each give a part for this. Since America is about freedom and thriving, we will not run people into the ground by demanding the same amount of money of all people. This is why we tax according to income. Income is the only sure way to make sure we do not over-tax someone.
But in America, we believe that "all men are created equal", therefore it would be wrong to make someone give a bigger part just because he has more money. That is why we go by percentage rather than by straight amount. It's a beautiful system, actually (albeit, imperfect). In this way we are fairly taxed according to what we are able.
Reasons NOT to Have a Federal Sales Tax (Or Brie's Tax Policy, Part 1)
How many of you think we should have a federal sales tax rather than the established federal income tax? The thought that many of you would probably raise your hands makes me feel sick. Sure, it sounds great at first, but the more I contemplate it, the worse it sounds.
First of all, I believe that we should always think very seriously when it comes to taxes because taxes are part of what started the American Revolution. Granted, it was specifically the issue of taxes without represenation, but when it comes to the issue at hand, I might add, it was not only a tax, it was a sales tax.
So here it is--my list of reasons I think a federal sales tax (the same, I believe, as the proposed Fair Tax) would be downright stupid:
1. Such a tax would be bad for the economy. People buy less when things are more expensive--especially if the actual price is more than stated on the item. In my experience, I more readily buy things now that I live in Fairbanks, AK where there is no sales tax than I did when I lived in Washington (state) which had an 8% sales tax (at the time; I don't know what it is now). Many people have enough trouble figuring out their finances without the added difficulty of a sales tax. If people refrain from spending because of this hassle the economy will suffer. Just look at California; it's on the verge of bankruptcy. In many places, such as Washington, if you show them your Alaska or Oregon IDs (or any other state where there is no state sales tax), you will be exempt from their sales tax. I know from experience, that in California where the sales tax is horrendous, they will not even do this courtesy. I'm sure there are many other reasons for the state of California's economy, but I can't help but wonder if this contributed. Especially with the current state of the country's economy, it is extremely important to encourage spending, not make it more difficult.
2. It would take away personal responsibility. When you make a purchase, it is often anonymous; once you leave the store, you disappear. Of course, one might argue, "Why would it matter? It's impossible to cheat on such a tax." But it's not impossible to cheat on it. You could use fraudulent bills. It's unlikely, but possible. But the biggest problem is not concerning the government getting cheated. It's about the tax-paying citizen being cheated. In the middle of a purchase, most people do not have the time or energy to figure out all the taxes to make sure they are not being cheated. The government could do the cheating, or the businesses themselves could overcharge the customer in the name of taxes. To see how easy this would be dig out the Candid Camera episode tape when they convinced customers of the existence of a ridiculous sales tax. It took a long time for anyone to question it. The fact is, when personal responsibility is taken away, freedom is also taken; it opens the door to tyranny.
3. It would hurt those who give to charity. If you're like me, you love charities such as Operation Christmas Child. This program requires that you buy items to send to the children rather than simply donating money (though you can do this, as well). Under a federal sales tax, you would be taxed on these items immediately, and there may not be any way to be reimbursed. Under the current system, you may receive a refund on your income tax if you report such items. You are, therefore, never taxed for buying these items at all (by the federal government, at least), freeing up your money for other needs.
4. It would put small businesses out of business. Sales go through so many levels--especially in manufacturing that by the time the items reach the consumers the prices would be outrageous! This is because every time a sale is made that sale would have to be taxed. Since this would be a set percentage tax, each time the product being manufactured is improved upon (given higher value) the tax would be higher, making the product more expensive. In addition, at each level those selling the product would have to bring up the price just to make a profit. By the time it reached a small "mom and pop" store it would be too expensive for the customers to buy. Other small businesses (such as plumbers, contractors, etc.) would go out of business simply because they could not afford the tools and materials to perform their services and to maintain their facilities. And forget starting a business; you can't afford to buy what you need to start until you've made a profit (which won't happen until you buy those supplies).
5. It would put families out of business. Anyone who has a large number of children, pets, or other dependents would go bankrupt trying to provide for them. With the federal income tax, there are tax rebates and refunds for those who have dependents (even more for those who have dependents who are disabled or in school). But a federal sales tax would not only demand that they pay these taxes they would normally be exempt from, but it would require that they pay those taxes now. Those who have more children or more parents who are dependent on them must buy more, but that does not mean that they have a higher income. There are also those who have special needs, such as those who have food allergies. While food items may be exempt from the tax, nothing else would be and buying less expensive food would not be an option for these people to cut the edge off of the price of their other purchases.
6. A Federal Sales Tax Could Infringe on States' Rights. I am no expert in this field, but since the individual states have sole jurisdiction to any commerce that takes place within their borders, I would suggest that a federal tax on these activities would be illegal. Since I am not certain of this, I will leave this open. If anyone has any insight as to the legality or illegality of such an action, I would appreciate your input.
7. It could put towns and communities out of business. Since a federal sales tax would be on top of any state sales tax, county sales tax, and town sales tax it would increase prices significantly for the residents of those towns. The residents' inability to do their business in town due to the prices could cause whole towns to go bankrupt, especially since small communities often run primarily on their sales tax.
8. Spending isn't what taxes are about. This is by far the most significant reason I am against the so-called "Fair Tax". I have to observe that in protesting the government's outrageous spending and taxing, some of the people have forgotten what taxes are about, as well. Taxes are not about who is spending more--they aren't about the individuals spending at all. Taxes are about living in this country. Taxes go for improving roads, bridges, and other transportation; to public education, social programs, hospitals, and other things that benefit society as a whole. It makes sense to tax according to one's income because taxes are what you give back to the country which has allowed you to thrive to the point of that income. Paying taxes isn't about giving money to the government; it's about giving money to your country so that it can function.
Paperwork
If being against the federal income tax is about the paperwork, well, eventually, people would realize the problems mentioned above and the paperwork would come back--and it would be worse because you would be filling it out every time you went to the store! As it is now, you have to file your taxes once a year. It's a pain, but when it's done, it's done.
Even with this kind of paperwork, it would be a lose-lose situation. Either the family or the business would go bankrupt. If the consumer were to fill out forms at the store to get discounts then the store would go out of business because they wouldn't get a return/reimbursement from the government in time to pay their bills with it. But if the consumer has to wait until later to file for a reimbursement from the government (due to family size, etc.), the family would go out of business!
Conclusion
There is nothing fair about one person making a fortune and yet not being taxed because he hoards his money while a poor laborer is taxed into the ground because he answers the call of duty to buy things to give back to those who have less than he does.
It is not the government's business at all how much someone spends (as long as there are no discrepancies in regard to his income). A citizen of the United States has the right to hoard his money or to give back; that is his business. But our country does need money to function. We need to pay those we hire, we need to pay for the projects we sponsor and benefit from. This is why a federal tax is necessary. We are all citizens, so we ought to each give a part for this. Since America is about freedom and thriving, we will not run people into the ground by demanding the same amount of money of all people. This is why we tax according to income. Income is the only sure way to make sure we do not over-tax someone.
But in America, we believe that "all men are created equal", therefore it would be wrong to make someone give a bigger part just because he has more money. That is why we go by percentage rather than by straight amount. It's a beautiful system, actually (albeit, imperfect). In this way we are fairly taxed according to what we are able.