You have selected Option Two for summary of a NATIONAL SALES TAX proposal.
SUMMARY: ELIMINATES THE IRS
A completely new kind of federal tax is being proposed by Indiana Senator Richard Lugar that would radically change the way you and I pay taxes. This proposal is a retail sales tax and would eliminate the federal income tax and all the withholdings, exemptions and paperwork that go with it. Instead it would adopt a national sales tax much like state sales taxes already in use across the country. Consumers would pay the tax whenever they make a retail purchase. Excluding food and medical supplies is under debate; current proposals include these as taxable items. The national sales tax rate is proposed initially at 17%. The overall strategy is... instead of taxing what people earn, the government would tax what people spend to encourage savings and investment.
- It would eliminate the income tax.
- There would be no tax forms for citizens to fill out.
- It would eliminate the need for the IRS. Tax revenues could be handled by the Treasury.
- It would be administered just like current state sales taxes.
- All taxes would be collected by retail businesses as they sell goods and services.
- It would be very compatible with ever increasing electronic transactions like credit cards etc.
- It would tax all citizens at the same rate so that only those who spent more would pay more taxes.
- It would encourage savings and investment.
- It completely eliminates the ability of political groups to interfere with economic issues of taxation for special political interests.
- It would save the country an estimated $600 billion a year spent in complicated tax compliance.
- It would collect taxes from everyone living in this country, including aliens and illegal aliens- adding billions of dollars to the nation's treasury.
- It would tax the underground cash economy in the U.S. because people who currently evade taxes would be taxed equally when they bought goods and services.
- Analysts say it could dramatically increase the tax revenue collected while reducing the impact on individual citizens.
- The cost of compliance is estimated at only $1-5 billion per year for businesses, as much as 500 times less than the current system. However there is no cost of compliance for consumers.
- It would place a greater burden on businesses, especially retail sales, to collect and be liable for the taxes.
- Food and medicine are not exempt from sales taxes, having some impact on the poor and elderly.