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There have been proposals in the U.S. Congress for over a decade to enact a national sales tax, with some versions labeled the “Fair Tax.” Taxing consumption through a sales tax, instead of taxing income, makes environmental sense. The signals from Mother Nature are now clear that she’s unhappy with the energy-intensive, materials-gobbling consumption habits many equate with the American Dream – big house, big cars, lots of personal and household goods. National sales tax receipts would be paid to the federal government by sellers of goods to final end users; one “fair tax” bill introduced in 1999 would have taken a $23 sales tax out of every $100 a consumer spends. A system which makes all physical goods more expensive would reduce the volume of goods consumed in our economy, thereby reducing the strains production and distribution of cars, clothes, houses and other manufactured products impose on natural resources.
There are many versions of such a tax, and I’ll give mine. The federal income tax code, with CCH Standard Federal Tax Reporter explanations, has 73,608 pages; it is the product of byzantine legislative and administrative processes with infinite opportunities for the well-placed and powerful to twist income tax law to their specifications – preferential deductions, tax credits, lower rates for preferred activities. Like some others, I would phase out the Internal Revenue Service along all income taxes, individual and corporate, and all payroll taxes, including social security and medicare. The new tax law would be implemented gradually to insure that the new tax regime is robust enough to reduce our current unsustainable federal deficits. Most proposals tax both goods and services, but I would exempt services from the sales tax. A lawyer negotiating a contract for her client has a much lighter carbon footprint, dollar for dollar, than a service station owner selling gasoline. I would design the tax with the intention of reducing consumption of all physical goods, including essentials such as groceries, and leave services untaxed.
Many argue that sales taxes are regressive and put unfair burdens on the poor. That objection could be solved by the government’s giving money to needy people under formulas which both encourage productive employment and act as appropriate shields against poverty. A Republican Congress and President Clinton successfully reformed the welfare system in the 1990s, and existing federal welfare commitments could be expanded to provide cash allowances to offset higher prices from a national sales tax.
Government, business, and individuals would save an ocean of time and resources if there were no more income tax returns, though Congress might decide to fund job-retraining programs to recycle thousands of accountants, lobbyists and tax attorneys burdened with obsolete income-tax-manipulating skills. Many countries, and most American states, have experience collecting sales taxes; the predictable administrative burdens of a national consumption tax would be smaller than the ongoing headaches caused by complex income tax codes. Taxing consumption rather than income is kinder to our planet and would reduce the unhappy, confused, income tax payer’s stress. Unfortunately our national government freezes when confronted with big issues – global warming, unsustainable fiscal deficits – and the possibilities of moving anytime soon to simpler methods of paying for government services appear to be small.
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