Federal Sales Tax
The purpose of the proposed Fair Tax Act of 2003 is "to promote freedom, fairness and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national sales tax to be administered primarily by the states." (Boortz, 2003). Unfortunately, there are a lot of beliefs about the proposed legislation that simply aren't true. Fears range from inflation, lower economic growth, unpredictable revenue shortfalls and unfairness to the poor. This paper explains that these concerns are not only false, but that the exact opposite is true in most instances.
One of the common misperceptions of the Fair Tax Act is that it will fuel inflation and dramatically impact the demand for goods with high price elasticities. However, it's likely that the sales tax will have minimal impact on prices. This is because there are already embedded taxes on all products and services that are purchased at the retail level that are estimated to be around twenty-two percent of their costs (Boortz, 2003). This twenty-two percent represents the payroll taxes and corporate business and income taxes paid by manufacturers, shippers, wholesalers, merchandisers and retailers. So, with regard to prices, all The Fair Tax Act really accomplishes is a replacement of embedded taxes with an equivalent direct sales tax, producing no significant change in the prices of goods and services for the consumer.
Any change in prices would indirectly come from the lower interest rates that The Fair Tax Act is expected to produce. Economic researchers predict that interest rates would drop in the direction of the current tax-free interest rate as the tax differential between the pre-tax and the after-tax rates of return was removed (Burton and Mastromarco, 1997). It is difficult to estimate exactly how much interest rates would fall because demand for credit would rise as well,...
Federal Government Tax The main source of government income is taxes. The government taxes various organizations in the economy differently to ensure that adequate revenue is collected. Corporate use loopholes in the tax system to reduce the tax paid to the federal government. The government should eliminate these loopholes to improve tax collection. Some taxes such as gift and estate tax as they are counter productive. Changes made to the federal
Sugary sodas contain corn syrup, but the American Agricultural Department subsidizes American farmers for growing corn, and this is one of the reasons that high-fructose corn syrup is so ubiquitous in the food supply. We are taxing corn syrup and subsidizing it at the same time, in other words. "The bigger issue, which the industry neither can nor particularly cares to rebut, is that the product [corn syrup] exists
consumption tax alternatives: retail sales tax, flat tax and personal consumption tax. Justifications for tax reform range from the need to simplify the current system to raising revenues to modifying social policy. In the face of growing demands by politicians and taxpayers alike, the topic of tax reform has produced alternate federal income tax proposals. This essay compares income tax to consumption tax, and also reviews the retail sales
sales tax reform in America. Specifically it will discuss the idea of an alternate tax system, the National Sales Tax and compare it to the current tax code. A new way of collecting taxes seems much more fair and equitable than the current income tax method, which seems antiquated and unfair. Some large corporations and America's wealthiest people pay very little or no taxes through tax loopholes, which makes
Internet Tax The issue of an Internet sales tax has been at the topic of much debate over the past few years. The issue is a complicated one and the budget crises' facing many states has made it a crucial one. The purpose of this discussion is to examine Internet tax legislation. We will begin by exploring the current status of Texas legislation regarding internet Taxation. We will also investigate the
The tax holiday was more likely to benefit families that had "the disposable income to buy an $80 sweater for their teen"(De La Torre 2008). To extend this argument, the effect upon equilibrium price and quantity demanded by such non-price sensitive consumers was negligible, resulting in no net benefit to the state's retailers or middle-class consumers. The sales tax holiday on clothing was as equally regressive as a sales
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