Thursday, January 19, 2023

Sales tax versus income tax

Sales tax versus income tax


 Sales tax versus income tax


The United States currently suffers under an unimaginably complex tax system. Maintaining this bureaucratic behemoth costs taxpayers billions of dollars each year. The direct costs borne by taxpayers are small compared to the costs borne by corporations and individual taxpayers in trying to comply with all these federal government regulations.

The people of the United States and their elected representatives are now considering two options to replace the current tax system: the flat income tax and the national sales tax.

The Single Income Tax represents a modification of the current tax system, where the National Sales Tax represents a complete re-architecture of the entire tax system.


A national sales tax would improve the trade deficit

This is a bold statement, so I'll explain it in layman's terms using a small model of the global economic system. In our model, we will have only two companies and two consumers.

Our two companies are Alpha Company and Charlie Company. Alpha Company manufactures widgets at its plant in Plano, TX. Charlie Company manufactures similar devices at its factory in Shanghai, China.

Our two consumers are John and Chon. John lives in Los Angeles, California. Chon lives in Beijing, China.

For the purposes of our example, let's say it costs Alpha Company $100 to make a widget. To this $100, we must add the burden of income taxes. Again, solely for the purposes of our model, let's say that this upload increases the cost of the Alpha Company Widget by $20.

Alpha Company must pass these additional costs on to the consumer. Therefore, if John or Chon decide to buy Alpha Company brand widgets, they must pay more for them.

In effect, income tax makes Alpha Company widgets more expensive (and therefore less desirable) than Charlie Company widgets.


Now let's see the effects of a National Sales Tax on international trade.

Again, let's say that producing a widget costs Alpha Company $100. However, this time we will not charge Alpha Company with income tax.

In this model, there are no additional costs for the Alpha Company to pass on to the consumers, John and Chon. When John decides to buy a widget, he is charged the same national sales tax regardless of which widget he buys. This allows Alpha Company to compete on an equal level with Charlie Company.

Also, when Chon decides to buy a widget, he does not pay our National Sales Tax on the widget. This makes the price of Alpha Company brand widgets competitive in both China and the United States.

Let me reiterate this succinctly: the income tax destroys our national competitiveness and increases our trade deficit; The National Sales Tax restores our national competitiveness and allows us to compete on equal terms with the rest of the world.


Income Tax Discourages Work; The National Sales Tax Promotes Savings

Any good animal trainer knows that animals do what you reward them for doing and avoid doing what they are punished for.

The Income Tax effectively punishes people for working. For every extra dollar you earn, you are forced to pay more income taxes.

If you work for $10 an hour, income tax takes about $3.50 of that. Now he is working for $6.50/hr. Isn't that significantly less motivating than $10.00/hr?

By reducing our motivation to work, succeed, and produce, the income tax robs our national economy of much of its vigor. It hampers our ability to compete with other world economies.

The National Sales Tax, on the other hand, punishes Americans when they spend money. That $2 beer is now $2.50. The $100 Walkman is now a $125 Walkman.

This acts to discourage spending. Discouraging spending automatically encourages saving. Savings become investment. Investment becomes wealth.

What do American companies need to develop and grow? investment capital.

Where do American companies currently get that investment capital? From abroad.

Why do US companies get their investment capital from abroad? Because Americans don't save or invest.

Who benefits from American business? The investors.

Who ends up owning American companies? Foreign.

We must be careful here not to blame outsiders.ranchers who now own a large number of American companies. They took the risks and invested money when we didn't, and the markets rewarded them for it. What we must do, however, is build a tax system that allows and encourages Americans to save and invest in America.

Building wealth for foreigners is a good thing; Building wealth for Americans is something better.


Objections to the National Sales Tax


Objection:

The National Sales Tax is regressive. It taxes the poor more than the rich.


Resolution:

In many states that currently collect sales tax, basic items are exempt from sales tax. These items include food, clothing, and shelter.

The exemption of these basic elements of life from the National Sales Tax has the effect of moving the National Sales Tax from a regressive to a progressive tax.


Objection:

The National Sales Tax will be difficult and expensive to collect.


Resolution:

Forty-five states are now collecting state sales tax. The federal government may outsource the collection of the National Sales Tax to existing organizations within the states.

Organizations to collect the National Sales Tax will have to be built in just five states.


Objection:

The change to a national sales tax would require the repeal of the 16th Amendment.


Resolution:

Amendment 16 allows the federal government to impose an income tax, but does not [i]require[/i] it to do so.

We could switch to a National Sales Tax and repeal the 16th Amendment at some point far in the future.


Summary

Our nation is at a critical crossroads where we must choose to stay with our current broken tax system, try to fix it, or replace it entirely with something new.

The principles of economics clearly show us that the National Sales Tax is the right way forward to ensure America's economic prosperity for our children and their children.Sales tax versus income tax

The United States currently suffers under an unimaginably complex tax system. Maintaining this bureaucratic behemoth costs taxpayers billions of dollars each year. The direct costs borne by taxpayers are small compared to the costs borne by corporations and individual taxpayers in trying to comply with all these federal government regulations.

The people of the United States and their elected representatives are now considering two options to replace the current tax system: the flat income tax and the national sales tax.

The Single Income Tax represents a modification of the current tax system, where the National Sales Tax represents a complete re-architecture of the entire tax system.


A national sales tax would improve the trade deficit

This is a bold statement, so I'll explain it in layman's terms using a small model of the global economic system. In our model, we will have only two companies and two consumers.

Our two companies are Alpha Company and Charlie Company. Alpha Company manufactures widgets at its plant in Plano, TX. Charlie Company manufactures similar devices at its factory in Shanghai, China.

Our two consumers are John and Chon. John lives in Los Angeles, California. Chon lives in Beijing, China.

For the purposes of our example, let's say it costs Alpha Company $100 to make a widget. To this $100, we must add the burden of income taxes. Again, solely for the purposes of our model, let's say that this upload increases the cost of the Alpha Company Widget by $20.

Alpha Company must pass these additional costs on to the consumer. Therefore, if John or Chon decide to buy Alpha Company brand widgets, they must pay more for them.

In effect, income tax makes Alpha Company widgets more expensive (and therefore less desirable) than Charlie Company widgets.


Now let's see the effects of a National Sales Tax on international trade.

Again, let's say that producing a widget costs Alpha Company $100. However, this time we will not charge Alpha Company with income tax.

In this model, there are no additional costs for the Alpha Company to pass on to the consumers, John and Chon. When John decides to buy a widget, he is charged the same national sales tax regardless of which widget he buys. This allows Alpha Company to compete on an equal level with Charlie Company.

Also, when Chon decides to buy a widget, he does not pay our National Sales Tax on the widget. This makes the price of Alpha Company brand widgets competitive in both China and the United States.

Let me reiterate this succinctly: the income tax destroys our national competitiveness and increases our trade deficit; The National Sales Tax restores our national competitiveness and allows us to compete on equal terms with the rest of the world.


Income Tax Discourages Work; The National Sales Tax Promotes Savings

Any good animal trainer knows that animals do what you reward them for doing and avoid doing what they are punished for.

The Income Tax effectively punishes people for working. For every extra dollar you earn, you are forced to pay more income taxes.

If you work for $10 an hour, income tax takes about $3.50 of that. Now he is working for $6.50/hr. Isn't that significantly less motivating than $10.00/hr?

By reducing our motivation to work, succeed, and produce, the income tax robs our national economy of much of its vigor. It hampers our ability to compete with other world economies.

The National Sales Tax, on the other hand, punishes Americans when they spend money. That $2 beer is now $2.50. The $100 Walkman is now a $125 Walkman.


This acts to discourage spending. Discouraging spending automatically encourages saving. Savings become investment. Investment becomes wealth.

What do American companies need to develop and grow? investment capital.

Where do American companies currently get that investment capital? From abroad.

Why do US companies get their investment capital from abroad? Because Americans don't save or invest.

Who benefits from American business? The investors.

Who ends up owning American companies? Foreign.


We must be careful here not to blame outsiders.ranchers who now own a large number of American companies. They took the risks and invested money when we didn't, and the markets rewarded them for it. What we must do, however, is build a tax system that allows and encourages Americans to save and invest in America.

Building wealth for foreigners is a good thing; Building wealth for Americans is something better.


Objections to the National Sales Tax


Objection:

The National Sales Tax is regressive. It taxes the poor more than the rich.


Resolution:

In many states that currently collect sales tax, basic items are exempt from sales tax. These items include food, clothing, and shelter.

The exemption of these basic elements of life from the National Sales Tax has the effect of moving the National Sales Tax from a regressive to a progressive tax.


Objection:

The National Sales Tax will be difficult and expensive to collect.


Resolution:

Forty-five states are now collecting state sales tax. The federal government may outsource the collection of the National Sales Tax to existing organizations within the states.

Organizations to collect the National Sales Tax will have to be built in just five states.


Objection:

The change to a national sales tax would require the repeal of the 16th Amendment.


Resolution:

Amendment 16 allows the federal government to impose an income tax, but does not [i]require[/i] it to do so.

We could switch to a National Sales Tax and repeal the 16th Amendment at some point far in the future.


Summary

--------------

Our nation is at a critical crossroads where we must choose to stay with our current broken tax system, try to fix it, or replace it entirely with something new.

The principles of economics clearly show us that the National Sales Tax is the right way forward to ensure America's economic prosperity for our children and their children.