Taxation has traditionally been – and will continue to be – one ofthe most hotly contested American political issues. Perpetual debateis sparked daily over countless, complicated topics revolving aroundthe one issue that is a paramount to many Americans: money.
In recent times, some fiscally conservative proponents havepromoted the idea of a national sales tax in place of the currentprogressive income tax code. The Americans for Fair Taxation is agrassroots organization that supports such a system. According to thegroup’s Web site, www.fairtax.org,”… the Fair Tax replaces the way we’re currently taxed – basedon our annual income – with a tax on goods and services.”
The organization’s plan is to replace the tax code with a similartax proposed by notable people, such as Bill O’Reilly, yet they wouldexempt all income up to the poverty line – currently valued at$15,670 for a family of three. Claiming that current taxation”disproportionately injures the upwardly mobile” because of its biasagainst “those seeking to improve their families’ lot in life,” anational sales tax would reward one’s “decision to work, save andinvest.” Unfortunately, despite searching the Web site, I was unableto find an actual rate they wished to implement.
According to the Christian Science Monitor, President Bush islooking into the idea. When a supporter asked about implementing anational sales tax, Bush replied, “I’m not exactly sure how big thenational sales tax is going to have to be, but it’s the kind ofinteresting idea that we ought to explore seriously.”
Despite the argument proposed, the organization only provides oneside of the story while omitting some very important facts. The mainproblem with such a tax is its regressive nature.
For example, two businessmen buy automobiles. Salesman “A” earns$40,000 a year; Salesman “B” earns $200,000. Salesman “A” decides tobuy a $25,000 Honda Civic, while Salesman “B” decides to buy a$70,000 BMW. With a 10 percent sales tax, Salesman “A” would pay atax of $2,500, or 6.25 percent of his annual income. Salesman “B”would pay a tax of $7,000, or 3.5 percent of his income. Despitepurchasing a car worth almost two times the annual salary of Salesman”A,” Salesman “B” still pays a smaller percentage of his income tothe tax he would pay. A national sales tax would not be a flat tax,and it would not be fair. Cutting taxes is a great idea, butnegatively impacting those that can least afford it is the purestdefinition of backward logic.
Another flaw with the notion of a national sales tax is the logicthat the current system “disproportionately injures the upwardlymobile.” Though it has been an en vogue statement for years, it issimply not true. If the progressive tax code was so detrimental tothe financial situations of the wealthy, why do more of them not takepay cuts to avoid the tax penalties associated with higher income? Tomy knowledge, there has yet to be a single CEO of any public companywho has asked for a smaller salary to lessen his tax burden.
As I have stated before, I would love to decrease the tax burdenof everyone in America if possible. However, I think it is repulsivethe wealthy promote such a blatantly regressive system which onlybenefits those with more money. It is immoral and unethical tosuggest the implementation of such a system is for the greater goodof America.
To those people fortunate enough to be living a life of luxurywhile complaining about their tax burden, consider the words of late19th century Rep. Benton McMillin. Recently published in a WallStreet Journal article, McMillin said, “As you have been enabled toaccumulate this wealth by the blessings of free institutions,contribute something to perpetuate them.”
– Jonathan Sullivan is a finance senior.
– This column does not necessarily reflect the opinion of TheDaily Aztec. Send e-mail to letters@thedailyaztec.
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