James W. MacMeekin III

James W. MacMeekin III, of Winter Haven, Fla., is an author with five books to his credit, including “Lincoln Laughing.” (lincolnlaughing.com).
His latest book is “Destination Germany: The Combat Missions of Lt. Col. Charles A. Felts (USAF) (Ret.), His Crew, the 787th Bomb Squadron and Fellow Airmen.” A Korean War-era veteran of the U.S. Air Force, MacMeekin is a former investment manager and educator. He can be reached by e-mail at jameswmacmeekin @yahoo.com.

 

 

How about replacing the 40,000-page U.S. tax code with a national sales tax?

Tuesday, Feb. 7, 2012

By JAMES W. MacMEEKIN III

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Half of all Americans do not pay income taxes. Lawyers are exempt from certain taxes, as are other groups. Additionally, visitors from other countries pay very little toward governmental costs. A Canadian visitor can enter any emergency room and get free care. It’s the law. However, an American in Montreal, Canada, must have cash, or a credit card to receive medical attention.

Taxes must apply to all, with consideration for those actually in need. The income tax doesn’t meet the challenge, and must therefore be set aside. What to do?

Value-added tax

There have been periodic discussions promoting value-added taxes and/or substituting sales taxes in lieu of income taxes — maybe a combination of the latter two. A value-added tax requires a tax imposed upon a service or a product at each stage between its initiation and its delivery to the consumer. The problem with value-added taxation is the number of times required to apply the tax. Six steps from start to finish? Six taxes attached thereto. It’s six stages for something to go wrong, or worse. No, a value-added tax is attractive only to the bureaucrat.

Flat tax

A flat tax is an improvement over a progressive income tax, but there remains the problem of who will be exempt. No, a flat tax is another bureaucrat’s afternoon delight. Why? Individuals change economic hats from month to month, leading to the same problems incorporated within the income tax.

National sales tax

Why hasn’t a nationwide federal sales tax received a better reception? Well, as one example, the union members employed by the IRS will go absolutely berserk. Not all of them, because an IRS stable of much smaller size would remain in place. But, those headquartered in D.C. very likely will turn Washington into a midtown Detroit after a Pistons NBA championship. (If we can save the Lincoln and Washington memorials, along with the Smithsonian and Library of Congress, would this be a fair exchange?)

What are the pros for a national sales tax?

A national sales tax has many advantages. It will, by definition, encompass everything required for national inclusion. It impacts virtually everyone.

Second, the system is, in many respects, already in place. It needs only its adaptation by products and services not now subject to a sales or income tax.

Third, because products and services are the sources of taxation, rather than specific individuals, or their organizations, such products and services can be assigned different tax rates, or no tax at all to fit the circumstances of those in need. Little or no taxes on pharmaceuticals, medical and hospital services. Little or no taxes on basic food items. Variable sales taxes on products or services with price differentials. For example, a small car with great mileage, and few luxuries, logically would carry a much lower tax than Barack Obama’s limousines.

Fourth, it would encompass our tourists and, like automobiles, Motel 6 would carry a lower tax rate than the Waldorf Astoria.

The implementation of recommended changes in America’s tax structure — the move to a national sales tax — will lead to annual increases in federal revenues approximating 25 percent.

What are the cons to a national sales tax?

One seemingly reasonable objection introduced to squelch a national sales tax is the tax itself. It would require, objectors remind us, sales taxes as high as 25 percent. So? Think it through. First, we have death taxes, capital gains taxes and income tax rates of 35 percent. Those taxes will vanish. But, we are adding 150 million individuals to the taxpaying rolls. In addition, the United States leads all countries in tourism receipts. About 55 million international visitors arrive each year.

Second, if President Obama is successful in “… the fundamental transformation of the United States of America,” he and his handlers have, in print and voice, already said that income taxes of 100 percent are to be levied upon the wealthiest.

Third, as a patriot, as well as an optimist, I believe in America’s ability to overcome its greatest challenge. Nevertheless, Obama has many weapons available to bend our collective will. Nov. 6 might reform the House and Senate, but Obama would retain a veto power if re-elected. Given that a few Democrats still cherish our constitutional freedoms, an override of his veto is a distinct possibility. Unfortunately, in that event, it will become clear the $200 billion remaining in the economic “stimulus” bill is Obama’s to spend. And spend it he will.

Spend it on what? The further entrenchment of universal health care and every other program designed to “… fundamentally transform the United States of America.” Doubt me? If so, you are either in denial, or you haven’t been doing your homework.

 

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