Federal Sales Tax

[○∙◄☻¥tπ[╪AV┼cVê└]

The idea was to have this tax be very regressive - taxing stuff you need to survive, but not taxing investments. The tax rate would have to be huge. This is a terrible idea.

[○∙◄☻¥tπ[╪AV┼cVê└]

The idea was to have this tax be very regressive - taxing stuff you need to survive, but not taxing investments. The tax rate would have to be huge. This is a terrible idea.

A 15% sales tax is not huge.

It would have to be more than that.

In any case, sales taxes are quite regressive.

[○∙◄☻¥tπ[╪AV┼cVê└]

The idea was to have this tax be very regressive - taxing stuff you need to survive, but not taxing investments. The tax rate would have to be huge. This is a terrible idea.

A 15% sales tax is not huge.

It would have to be more than that

No, and it could actually be less, if we didn't repeal corporate taxes.

I already went over the two ways we could make it progressive.

Making it more progressive requires the rate to go up.
So which taxes exactly would it replace?

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With a 15% rate? Individual and corporate income tax, the capital gains tax, the estate and gift taxes, and non-trust-fund excise taxes.

I don't know how much money the government collects from the corporate income tax, so I don't know what the effect would be.

From the 2004 budget as percentage of GDP
Individual income tax 7.0%
Corporate income tax 1.6%
Excise taxes 0.6%
Estate taxes 0.2%
Deficit 4.9%

http://www.cbo.gov/showdoc.cfm?index=1821&sequence=0


That means that to keep the current deficit, 63% of the GDP has to be taxed at 15%. That's probably too high, since they exclude investments from the tax.

To close the deficit, too 95% of the GDP has to be taxed at 15%.


It's going to have to be a lot higher than 15%.

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Any number substantially higher than 15% is a plan to repeal payroll taxes, which we wouldn't do.

What fraction of the GDP will be taxed?
1. The Republicans have already said that they're regressively exempt investments
2. The government's own spending isn't taxed
3. You claimed this would somehow be progressive, which would require tons of more exemptions

That leaves only a fraction of the GDP.

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No, it only requires a rebate.

What does CATO claim that the money represented in that graph will replace?