Budget Stretcher Articles - A 23% Federal Sales Tax!! But Wait!

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A 23% Federal Sales Tax!! But Wait!
By Terry Rigg

We are so used to having our federal income tax, social security and medicare taxes withheld from our paycheck, most of us don't realize there are efforts to change this dramatically. There is a group going around saying that we should pay 23 cents on every dollar we spend in a federal sales tax. They must be crazy!

Wait a minute. If we are going to pay a sales tax to cover our income and social security tax, we won't have anything except our state and local taxes coming out of our pay. Even that doesn't add up to 23%. What are they talking about?

What if they told you that, not only would you not have federal and social security taxes withheld from your paycheck, you would see the following things happen:

Elimination of the Internal Revenue Service, saving an estimated $420 billion annually
April 15th would be just another day
You would not have tax records to keep BECAUSE YOU WOULD NOT HAVE TO FILE INCOME TAXES
And, no forms, no deadlines, no prepayments, no penalties, no audits, and never again an abusive IRS that can claim your assets without due process!
Even illegal income would be taxed when it is spent
Only new items will be taxed
No American will pay taxes on necessities
Cost of goods and service are estimated to decrease by 20% to 30% because manufactures and other companies will not be required to pay taxes (TAXES WILL ONLY BE PAID ON NEW MERCHANDISE AT THE RETAIL LEVEL)
No tax on ANY investments
Each taxpayer will receive a rebate equal to the taxes paid on necessities such as groceries and medicine, in advance of those purchases

Seniors and low income families would be protected

This list could go on and on about the advantages of a National Sales Tax. The truth is that our current system of taxation is totally out of control. The 10s of thousands of pages of tax laws have even the best tax minds confused.

Yes, 23% does seem like a lot of sales tax to pay in addition to any state sales tax you might have. You could wind up paying 30% on a car purchase of $20,000. Lets look at some of the possible savings with a sales tax.

Sales tax on car purchase - $6000
Final Cost of Car - $26000
Cost of car will be reduced about 20% because the manufacturer doesn't pay any taxes under this plan. What is the cost of the car? $16000
Sales tax on car purchase - $4800
Final cost of Car - $20, 800

But Wait Again! You will be buying this car using your entire paycheck. NO DEDUCTIONS. That's hard to calculate. I can almost guarantee it will be below the initial $20000 price tag. Besides, $20,800 is only 4% above the price of the car, far less than most state's sales tax.

If you don't think companies will reduce their prices even though they aren't paying taxes, just imagine an entire nation knowing they are manufacturing their goods 20% to 30% cheaper and not passing that savings on to them. In addition, sooner or later one of their competitors will reduce their price, and the war is on.

To find out more about the National Sales Tax just visit Americans for Fair Taxation at http://fairtax.org/default.asp You can also view a comparison of the different tax systems at http://www.lafayettesbest.com/category/summary.html

Terry Rigg is the author of Living Within Your Means - The Easy Way and editor of the Budget Stretcher web site. To Subscribe to The FREE Budget Stretcher Newsletter and receive The Complete Budget and Bill Organizer absolutely free just visit his home page at http://www.homemoneyhelp.com

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