Taxes Essays - Taxation, State Taxation In The United States

Taxes Only days after the last elections for Congress in November of 1994, Congressman Bill Archer declared his strong desire to "tear out the income tax by its roots." After that, Newt Gingrich and Bob Dole formed a commission to consider new alternatives to the income tax. That lead to more than a half dozen congressional panels holding hearings on that subject. So there is no longer a question of whether the income tax system will be replaced or not, the question now is, what should it be replaced with? Well, a national sales tax is an option that cannot be ignored, even though it may not be the best solution. The case for a national sales tax begins with one greatly appealing line. It will allow us to completely eliminate the income tax, possibly even repealing the 16th Amendment, an amendment that authorized the income tax and made it a part of the government in the first place. However, the change would come at a cost greater than seems fair: we would give up the income tax for a sales tax system that is more bothersome and pervasive. If the government sets out to collect a new tax at the register when something is bought, it will then have to extend that tax beyond the retailer to every single layer of production as well. The government would absolutely have to do this because a great amount of tax evasion would certainly take place. Soon enough, the national sales tax would become a very complex, multi-rate, value-added tax, or VAT. To generate enough revenue by taxing goods at the retail level only, a sales tax of at least 20 percent would have to be put into place. Suddenly, consumers will be seeing that everything they buy has been increased in price by that 20 percent. However, the people will not want to pay that high of a tax, so they will find ways to say that the products they buy are tax-exempt goods, they will buy the goods on the black market with cash, or they will evade it in other ways. So in essence, a national sales tax will be undermined by a tax revolt immediately and quietly, which will therefore mean that the government would respond with a value-added tax that no one wants. Whether or not the national sales tax evolved into a value-added tax, the government would become very closely involved in just about every transaction between consenting adults. Even very simple purchases, such as a farmer selling his produce on the side of the road or the corner grocer selling a loaf of bread, would be under the shadow of a government tax collector collecting his cut of the sale. Actually, if this is the case, every person that operates a business or sells anything outright, such as someone selling a car, would become a tax collector for the government. Some people that are lobbying for the national sales tax argue that by having this sales tax, we could eliminate the Internal Revenue Service completely. This could decrease the cost of running the government because the IRS agents would not have to be paid or given benefits. Instead, the states would collect the new federal sales tax through their own existing sales-tax systems. But again, there is a problem with taking out the IRS. While there are 50 states in the United States, only 45 of them currently have a state sales tax, which leaves five states without. These five states I'm sure would not particularly like to enforce something for someone else, the government, which they already oppose enforcing upon themselves. So while people argue that a national sales tax will help to remove the IRS from existance, the truth is that it will not eliminate any government agency, but rather increase the size of the government because politicians will be able to just raise the tax whenever they felt so inclined. Another argument that the sales-tax backers have, is that if there is not income tax there will be no need to file a federal tax form with the government because they pay their taxes when they make a purchase rather than when they are paid. But thats not really correct. Under any type of sales-tax system, people would still need to file paperwork with the government, only they would have to do it for totally different reasons than they do under the income tax system. With the sales tax in place, many Americans would be facing a great