Monday, December 28, 2009

Simple Fix For Economy That Won't Cost a Dime

Here's a simple fix for our economic woes that won't cost a dime:
  • eliminate all sales taxes.
  • tax only individuals on their income, not businesses.
Sales tax is not fair. Why? Because sales taxes put more burden on poor people than on rich people. Imagine two people, one makes $25 per day and the other makes $100 per day. On a particular day, they both buy a movie DVD for $20 and pay 8% sales tax which is $1.60. Both people paid $1.60 in sales tax but that represents 6.4% of the lower income person's daily salary while it's a mere 1.6% of the other person's daily salary. The reality is - poor people are shouldering a ridiculously unreasonable share of the sales tax burden.

Sales taxes are a terrible idea that should be stopped. Right now, many companies are complaining that Amazon doesn't have to charge sales tax giving Amazon an unfair advantage over their brick and mortar competitors. Eliminating all sales taxes for everyone will fix this.

How about taxing people on income and not taxing businesses? There's no such thing as a business without people. A business is just a concept - there has to be someone receiving the profit. Why not just tax the income when a person actually receives it? Eliminating income tax on busines will free business to focus on good ideas rather than tax impact.

Where can states and cities get their income if there is no sales tax? From income taxes alone.

What would happen in our economy if there were no sales taxes and no tax on businesses? The economy would become highly productive because no one and no business would be wasting time and money trying to control their tax exposure - we would enter a whole new era of productivity and wealth. This would be a positive change in our society on a scale to rival the industrial revolution and at the same time, it would be more fair.

See http://fairsimpletax.blogspot.com/ for more detail.