Sales tax vs Income tax

[GoodCallYouWin]

In the following interview, Mike Gravel claims that the income tax should be replaced by sales tax. I think this is a good idea but the sales tax should be removed from goods like food and used clothing. The less tax the better from my perspective but does it matter which tax we choose? Is the sales tax better than the income tax?


http://watchthis.zakyoung.com/index....0&Itemid=3

[The Truth]

We had a thread on the flat tax, but I can't find it.

The flat tax is good for some, not so good for others. It is a regressive tax. The people that save money benefit, those that spend all their income are hurt. It is a tax increase on the poor/middle class. It is a tax break for the rich.

[GoodCallYouWin]

Now Gravel claims the complete opposite (at least from what I could gather from the interview); why do you say he's wrong?

[The Truth]

[ QUOTE ]
Now Gravel claims the complete opposite (at least from what I could gather from the interview); why do you say he's wrong?

[/ QUOTE ]

I like Gravel alot. I respect what he is trying to do.
Making the tax system transparent is good. However, I think he has a fundamental misunderstanding of this tax system.

He claims that they will determine how much money they are currently yielding from all income tax. They will end the income tax. Then, they will place a tax rate on all goods to duplicate this amount.

So, the more money you spend, the more you are taxed. If you save or invest your money, then you will be taxed less. Who saves and invests their money? I think bill gates saves and invests alot. Maybe Warren Buffet? Mary down the road spends every dime she makes.

How are the vasts sums of money that the government earns from taxing the incomes of the richest 1% of our nation (at a higher tax rate than everone else) going to be made up?


This tax system doesn't create more money. It doesn't lower over all taxes. It is shifting the tax burden. It is not shifting the burden from the poor to the rich. It is shifting the tax burden more toward the middle class (it isn't helping the poor much). It is putting the tax burden on the non savers.




The idea of transparent taxation is an excellent one. I like trying to encourage the us population to save money. However, to say that the flat tax is one to help the poor/middle class is just incorrect.



Edit: I am not sure if he misunderstand this. He notes that poor people pay higher taxes in terms of % of income. He says we solve this by giving everybody a rebate at the start of every month. EVERYBODY gets this rebate. It is still taxing the lower classes at a higher % rate than the high classes.