It seems pretty obvious that everyone is ready for some changes. The only people I know who are happy with the IRS and current tax laws are those who make very little and end up getting a several thousand refund (usually EIC). JPL over at AllThingsFinancial has been talking about Forbes flat tax plan. Much of Forbes ideas are good, but I still like the federal sales tax idea.
Some are saying that the sales tax rate would have to be around 40% to 50%, but I think it would work at 25% to 30% myself. Of course I have no data to back this up. Some also argue that this would be unfair to the low income because they spend nearly all their income, verses the upper class who save more and spend less. I fail to see why this is unfair. If you don’t want to pay taxes, don’t buy anything. Seems quite simple to me.
However, I would have certain exceptions. I don’t think sales tax should be charged on a primary residence, but it should be charged on second home, investment property, and commercial property.
Vehicle’s should be taxed, but I feel there should be a tax break on hybrids and alternative fuel vehicles. The existing taxes for gasoline and diesel fuel should be left alone, but I think taxes on the alternative fuels used in some places (hydrogen, ethanol, etc.) should be tax free. That should help to stimulate (somewhat, anyway) the move from gasoline engines to something better.
All utilities should be taxed, however groceries and perscription drugs should not be taxed. This is my one give-in for the lower class and elderly.
This is an area of interest that I’m going to try to do a bit of research. If anyone has any comments or suggestions, have at.
