Quote:
Originally Posted by R4ND0M_AX3
Scott,
The biggest issue I have with your idea is the classification of things for the different tax brackets. Is soda a luxury item because I don't really need it? Is an STi a luxury item because it's not an efficient commuter vehicle? Why not just a flat sales tax period? More expensive things will pull in more total tax.
Think there would also need to be a way for the merchant to divy up the collected sales tax to the different localities in the most efficient way possible. Wouldn't be a big deal for brick-n-motor stores but online retailers would need to cut a check to every individual city (worst case)
Totaly agree on the Social Security part.
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Staples & Luxury items are already labeled and taxed as such under the current tax codes. For example, there is no sales tax on milk, but there is on soda. Luxury tax is currently defined more along the lines of a max price on a particular class of items, which makes it specific to certain industries and hurts the luxury manufacturers especially hard in slow economic times. I think I'd change my definition of luxury items to not include a threshold price, but to do it the same as staple items. So all "sports cars" are taxed at the luxury rate, while all sedans are not. Or all non-commercial boats are considered "luxury" items, while fishing boats are not. Basically anything that you buy specifically for fun only are luxury items... so Xbox's would be luxury, but computers would not.
The real goal of the luxury tax would be to allow the tax code to apply to all people regardless of income, such that low income families can get buy easily because most of the money they spend is on 60% staple items, 30% general, and only 10% luxury. But rich mo-fos that spend a ton of money on sports cars, boats, vacation homes, will be paying 10% staple, 40% general and 50% luxury rates.
A popular alternative method is to really go with a flat sales tax across the board, but give tax credits in the form of cash refunds to low income folks. But this sort of thing would fit into a re-worked welfare program IMO. But IMO welfare needs to be overhauled to be a performance based system like the rest of the gov't. Something along the lines of requiring recipients to meet milestones that push them to get off welfare in order to continuing to receive it... like educational steps.
For example, a single mother with 3 kids wants to receive welfare, instead of giving her money based on the current requirements, how about the government pays her to go to college. Require her to spend a minimum of 25 hours / week in classes in exchange for a welfare wage that pays enough to feed, cloth, and house her and her family. Also include funds for day care if her kids are young. Might as well throw in free healthcare as well.
Sure it will be expensive as hell on a per-case basis, but hopefully it will end long term dependency on welfare.
With regards to Kevin's comments... a switch from income tax to sales tax would generate economic issues during the transition, so it would likely need to be done during a period of prosperity, but in the long term I doubt there would be a fundamental difference in the controls over the economy. Fed loan rates would still apply for manipulation of inflation. Plus, I imagine that being able to trade stocks on the market w/o taxation would do wonders for boosting the economy opposite the slowdown found at the sales counters across the country.