Rethinking the Tax System

Posted by Myles Brandt on 29 June 2009 | 0 Comments

Tags: Tax, Value Added Tax

In Washington, the debate on how to pay for health care reform and the current and projected budget deficits has opened the floor to deliberation on the sales tax, commonly called the VAT (Value Added Tax). Although the tax could potentially balance the budget and pay for health care reform, many view it as regressive and therefore unacceptable. It is certainly an interesting time as far as opportunities for social engineering are concerned, but unfortunately, the economy may be too fragile to handle threats to consumer consumption.

The concept of a more efficient and cost effective tax system is nothing new of course. One example of a proposed tax system that tries to reconcile the regressive nature of a sales tax with the need for a more efficient system is the Fair Tax. The Fair Tax Book by Neal Boortz and John Linder spells out the particulars. The Fair Tax would tax all new items and would give a “prebate” to every taxpayer on poverty level spending whether they spent the money or not. The current fiscal and economic situation presents an excellent opportunity to rethink and improve the way we do things.

The Washington Post has an excellent article about proposed tax changes entitled “Once Considered Unthinkable, U.S. Sales Tax Gets Fresh Look.” (http://www.washingtonpost.com/wp-dyn/content/article/2009/05/26/AR2009052602909.html)