Taxes – the Real Story

I have been a proponent of Sales Taxes rather then income taxes at the Federal level for many years now. It just makes sense to me. Tax on what is bought and sold rather then on what money people make just seems to be a little better way to go.

My feeling is if I invest some of my money wisely, and make more money back, why should I be taxed on that? I probably invested my money in some company, and they probably made something that got taxed, and they paid income taxes to their employees and capital gains taxes and pig-in-poke taxes – it’s just silly.

One of the arguments that I have heard is that the federal sales tax would have to be at 50 – 60%. That would be quite a burden to bear. I never though that made much sense – because that would mean that the federal government consumed 50 – 60% of the GDP in cash every year. Now, I know that we have a bloated government, but come on!

So, I did a little math. The Federal Budget listed tax income for 2004 as $1,879,783 million. The CIA fact book (a great site, by the way) listed the ’03 GDP as $10.99 trillion. So with some simple math – in order to come up with the same amount of federal revenue, we would need to have a sales tax (GDP tax) of $0.17 on the dollar. The $0.23 on the dollar that FairTax proposes would garner the Fed $2,525,400 million a year.

If we were to believe the nay-sayers, we would need to tax at a rate of $0.50 per dollar, giving the Fed $5,490,000 million a year. Wow. Sounds like they are for really big government to me.