A national sales tax discourages consumption, leading to a conservation of resources.
The removal of an income tax encourages saving and investing, which is the key to job growth.
Individuals would have an extra incentive to work hard and earn income, leading to a far more productive nation.
A sales tax would be a much simpler system, eliminating the need for individuals to comply with
complex tax reporting requirements and freeing up all the money & time lost on the income tax process.
Tax rates can be targeted to encourage or discourage the consumption of certain items.
Consumer prices of certain items would fall since labor and tax compliance costs would be cheaper to businesses.
It would allow a greater collection of tax money from those carrying out illegal transactions, since their income
is hid from the income tax system but will be taxed when they spend it in a sales tax.
It's a tax system consistent with a free society; i.e. Americans have a choice regarding their taxes,
unlike our current confiscation system.
Many of the most intelligent people in the country have devoted their worklife to understanding a ridiculous tax system; those
accountants & other professionals could be redirected to cutting costs and improving planning, productivity, and profitability.
Social Security, Medicare, Obamacare, and other government spending has put the federal budget on an unsustainable path, so
we have to try something new before America is totally bankrupt. If the U.S. can't pay its bills, the rest of the world will also be thrown into chaos.
A sales tax is easier to see and track, whereas income & payroll taxes are usually divided among 24+ time periods and partially absorbed by the
employer; most people don't really look at the tax as part of their actual pay, so they take it for granted.
Eliminating the income tax would lower employment costs for businesses, allowing them to hire more people or reduce prices. Thus,
the net effect of the lower costs + a sales tax would mean total prices are relatively the same as before the change.
A sales tax would be a regressive tax; i.e. low-income individuals would pay a much higher
share of their incomes than wealthy individuals.
A national sales tax is a risky system that may not raise near enough money to support all our needs in
defense, education, health care, etc.
Consumer spending, which drives a thriving economy, would likely drop as people save and invest
more rather than spend.
Many incentives built into our tax system (such as education, home ownership, charity, etc.) would be eliminated.
Tens of thousands of attorneys, accountants, and human resource workers would likely lose their jobs due
to the simpler tax system.
Real estate values would likely plummet since the tax advantages to ownership would vanish.
Mortgage and other consumer debt would likely explode since consumers would be forced to finance the taxes also.
We would have to come up with another way to raise or set aside funds for social security.
The transition costs of such a change would be extremely expensive.
Tax evasion and instances of black market purchasing would likely increase.
Consumer prices of many items would go up by a much greater rate than the sales tax rate since raw materials
would also be taxed.
Retirees and others who have earned the majority of their life income have already had their money hit with
income tax; thus, they will pay extra sales tax with money already subjected to income tax.
It is estimated that the cost to Americans of complying with our incredibly complex system is over $200 billion per year as well
as over 7 billion hours of time (Source: The Tax
Foundation). Many complain that our tax system punishes hard work, investment, and success while encouraging consumption.
With out-of-control government debt and deficits, one of the ideas currently being considered is
a national sales tax, or "Fair
Tax". A similar tax called the "value-added
tax" hits businesses at each stage of production, which ultimately hits
the consumer through increased prices of goods and services. In other words, you would be able to keep your employment earnings but would
have to pay an additional amount whenever you buy something (e.g. 15 or 20 percent tax). A compromise system would likely
tax consumer items at different rates with complete exemptions for necessities such as food. This
is a debate of the merits of a sales-tax system over an income tax system.