Wednesday, August 11, 2004

National Sales Tax

Check out this editorial on a national sales tax from the National Review Online. Referring to a current proposal by Rep. John Linder (R., Ga.), the article first questions Linder's numbers and refers to a Brookings Institute economist's estimate that tax-inclusive rates would be closer to 50% than Linder's proposed 23%. The editorial goes on to state :

The Linder bill (H.R. 25) is also deceptive in its basic assumption that all consumption of goods and services in the U.S. would be taxed. Implicitly, Americans would be taxed on, among other things, all medical care, purchases of new homes, and services provided by state and local governments if Linder’s bill became law.

This means that if you are sick and have large doctor bills, you are going to pay 30 percent on top to the federal government. (Alternatively, you would pay 30 percent more for health insurance.) If you buy a new house listed for $150,000, your actual purchase price is going to be $195,000, including the sales tax. (Alternatively, there could be a tax on the imputed rent homeowners pay themselves for living in their own homes.) And if your children receive $20,000 worth of education each year from the local public schools, somehow or other you are going to have to pay an additional $6,000 to the federal government.

It concludes with:

With all due respect to Speaker Hastert, trying to eliminate the IRS by adopting a national retail sales tax is a very dumb idea.

Might I echo that for Alan Keyes?