Friday, May 27, 2005

Flat Tax vs. National Sales Tax

I find the current income tax system to be an utter waste of time. I've heard of more than one drastic proposal that I think would be better than the current system. My favorite is replacing the entire income tax system with a national sales tax (it's called the "FairTax" by Americans for Fair Taxation). So I was sad to read Dick Armey being unfair to the idea of a national sales tax in his testimony to before the President’s Commission on Tax Reform:
Of the proposals for reform, the flat tax best meets these goals. While other proposals, such as the national sales tax, may be efficient tax collecting mechanisms, we should not introduce such a powerful tax collecting regime on the country until the 16th Amendment to the Constitution is repealed—otherwise, we will then have both a national sales tax and a federal income tax, a regime very similar to the dangerous combination of taxing powers that has enabled European governments to grow so large. Repealing constitutional amendments has been very difficult historically. In the mean time, those in favor of scrapping the current code should work toward enacting the flat tax.
Who's saying that we should have both a national sales tax and an income tax? If we couldn't get rid of the income tax, I wouldn't favor enacting a sales tax. Who has come out in favor of such a plan? That wouldn't make any sense to me. On the other hand, I don't see how the flat tax is any safer from the possibility that it rolls back into a labyrinth of special loopholes for political favors.

If you want to criticize the FairTax, please use economics rather than politics. Politics is the problem with the current system. The biggest hurdle to implementing either the flat tax or the national sales tax are all of the special interests that are paid off in the current tax code.

The best thing would be to scrap the income tax and use the FairTax instead. If we have to settle for a flat income tax, that'd still be a tremendous improvement over that current monstrosity known as the tax code. But I'd rather aim for the skies. There's no legal reason why Congress can't end the income tax right away. I see the need to wait 20 years until the 16th Amendment is repealed. It's not like Congress even waited for the 16th Amendment to tax the income of Americans in the first place.