I am not as worried that the rich will get an undue benefit from the national sales tax program, mainly since they are so good at not paying income tax as it is. The very wealthy have a lot of devices for keeping their income untaxed legally and illegally. For excellent reading on the subject, I suggest Perfectly Legal: The Covert Campaign to Benefit the Super Rich-- And Cheat Everyone Else by David Cay Johnston. If everyone read this book, we'd be living in a different America.

I do really like that changing the tax scheme would suddenly make "hiding" or understating income to avoid income tax pointless. This benefit can't be overstated.

The major question, to me, is whether it's easier to police the "sales tax" system than it is to police our current system. We don't want to replace a bad system with a worse one from a cheating perspective.

A thought on making the tax "progressive": the progressiveness could be built into the cost of the good. The first $5000 of a car is tax free. The next $5000 is taxed at X rate, etc.

This is a lot more sensible than raiding people's credit card data.

I agree absolutely that Huckabee's idea might be just replacing one faulty system with a worse one. When I first heard about this it sounded as smart as fixing a broken toaster with a baseball bat. It might keep the rich from hiding their assets since allegedly we would no longer need to know how much someone was earning. But I'm certain they would find some new way of mangling the system i.e. spending more of their earned dollars abroad, since they can afford to travel more than say middle and lower classes.

Does anyone know how this might affect companies doing business in America or the tourist trade? When would we be charged these extra sales taxes? At the register? If so then everything would suddenly become extremely expensive overnight. Try selling that to people who have become used to bargain shopping at places like Wal-Mart. Does anyone really want to pay $75 for a $20 t-shirt just to get rid of the IRS.

I got stuck paying the VAT tax in Norway once. No fun. They actually do refund the VAT spent by foreigners at the airport, but the shop screwed up my paperwork, and it was too late to do anything about it.

So there is precedent out there to treat foreigners differently on VAT tax, which I think is pretty similar in application to sales tax.

I've heard arguments that it is actually much easier to cheat a sales tax. Consider that a sales tax needs to have an exemption for businesses, otherwise it will be paid over and over as goods move through the supply chain. Smugglers can therefore buy goods in bulk using this exemption and then resell them directly to consumers, bypassing the tax entirely. A VAT, while similar to a sales tax, is much harder to cheat since each business in the supply chain pays a small part of it instead of it being paid all at once in the last mile.

To counter the steadily decreasing tax revenue as smugglers improve their methods, the government has two options. They can create a vast, expensive, invasive enforcement structure, a sort of giant expansion of the War on Drugs to cover every segment of the economy. They can also increase the tax rate, creating more smuggling, and so on in a vicious circle.

I can't believe the article author just assumed that there would be no cheating problems with a huge sales tax. It's one of the biggest problems with the proposal.

I wondered about the business exemption. I can't see how it would work in the overall tax structure. A business wouldn't pay taxes on its profits and wouldn't pay taxes on its expenses. That means every business out there is tax free. That can't be possible.

Even if there is such an exemption, it would have to be radically reworked from the current system, or the door to the really obvious cheating you've described. The business deduction could be done as a refund that has to be applied for, thus, you're not going to be able to claim 47 plasma screen TVs for your pet store without the government knowing what you're doing.

All that being said, I am not certain that it's harder to catch these sales tax cheats than it is to catch income tax cheats. I think it's a lot easier, because you've only got to show one thing-- they aren't collecting sales tax.

Walk into your local convenience store. I've got no idea whether or not they are taking undue deductions, shaving income, etc., but I know pretty easily whether or not they are collecting sales tax.

The rejoinder, I suppose, is that I don't know whether they are turning that money into the state, and I am not sure how to work that part out.

This would be very easy to cheat, since the system would still rely on self-reporting of sales by all retail sales AND service providers. That means all those plumbers, accountants, doctors, lawyers, and etc. that provide service will now have to charge the 30% national sales tax. That's a 30% incentive right there for them to collect, but not report or remit the sales tax.

I think you're onto something, here. I think food should be exempted (everybody's gotta eat), and perhaps housing and transportation expenses up to . . . oh, I dunno; maybe 75% of the median rent/mortgage for housing, go with your ideas on the car, maybe exempt ALL public transit expenses. If states then wish to levy income, property, or sin taxes, they can.

. . . I don't see any reason to "exempt" business expenses. Being occasionally self-employed (when I get paid for my acting work), and being married to a self-employed massage therapist, I'd say that the current tax burden on businesses of all sizes necessitates exemption to offset loss.

I think half the point of a sales tax system is that it is already in place and enforced. If more enforcement is needed it still makes more sense than the current system. Instead of having to police 500 million people they only have to patrol 5 million, if that, businesses. It is much harder to cheat the system at that point, and it is more fair.

Also, allot of folks seem to be throwing huge numbers to get their point across like a 75$ t-shirt at Walmart (for one example,) while most of the numbers that I have seen in reports and listening to the speeches is more alone the lines of just a 7% federal tax to come out ahead of the tax we currently collect for income.

Yes I made the numbers up, but the idea still rings true. Overpriced goods would ultimately cause sticker shock at a time when we cannot afford to hurt consumer confidence. Even if the shirt only goes from $20 to $25 it would still cause people to want to buy less. Look at every time gas goes up a penny. Would you suggest retailers hang signs saying 'Don't worry about the prices, it's actually cheaper than last year's income taxes.' Ever wonder why a cheeseburger costs 99 cents rather than a dollar. Because that penny makes it seem like a bargain even if the difference is negligible. Immediate perception matters to the consumer.

Who is this 5 million that would be policed rather than the 500 million? Are these businesses and retailers? That would shift the burden of taxes entirely onto businesses so that the corporate giants can buy their way into better deals and leave the smaller companies floating in a sea of bureaucracy.