Focus Point - Bad Numbers on the Sales TaxCommentary by Pete du Pont
January 25, 2000
I'm Pete du Pont with the National Center for Policy Analysis. I've always said I'd be equally happy with a flat tax or a sales tax if it meant ditching the current IRS income tax. But some numbers have made me rethink my sales tax comfort level.
Bill Gale of the Brookings Institution estimates a 50 percent tax rate would be needed to replace all federal taxes, not the 23 percent sales tax supporters claim.
That's because they assume the federal government would pay the tax as well as consumers -- "taxing" themselves and calling it income.
Dallas fed economist Evan Koenig notes a sales tax, unlike the flat tax, raises the prices of all goods and services, thus requiring higher tax rates to maintain the real level of social security benefits and other programs. Koenig estimates it would require a 60 percent sales tax rate to keep even.
Finally, the internet's increasing opportunities to buy goods and services without paying sales taxes, destroying the viability of a national retail sales tax.
Flat's looking better and better.
Those are my ideas, and at the NCPA we know ideas can change the world. I'm Pete du Pont. Next time, a liberal shoots down gunmaker lawsuits.