National Sales Tax: "massive redistribution of burden to the middle class"

[Bush_Eats_Beef]

http://www.washingtonpost.com/wp-dyn/articles/A32739-2005Apr6.html

Thursday, April 7, 2005; Page A30

George F. Will blithely commented that the national sales tax proposed by Rep. John Linder (R-Ga.) would "not only sensitize consumers to the cost of government with every purchase, (but) would destroy K Street" (op-ed, March 31). But a 23 percent sales tax would constitute a massive redistribution of the tax burden to the middle class and the poor -- exactly the people into whose hands more money should flow if an economy is to grow from the ground up. A 23 percent tax on food? Want to exempt food? What constitutes "food"? Or "medicine"? Figuring those things out will cost the government plenty. Want to simplify the tax code and kill K Street? Get rid of tax breaks for corporations and rich people, and fix the tax brackets so that fewer people are taxed out of the economy.

George F. Will overstated the simplicity and ease of enforcing a national sales tax. Only "personal" purchases would be subject to the tax; thus, the incentive would be to classify purchases as "business" to avoid the tax. Likewise, not all services would be taxable. Education, for example, would be classified as an "investment" and thus exempt. No doubt those K Street lobbyists would attempt to add other exemptions. Who'd want to pay a sales tax on medical expenditures or a house? And would churches, charities and the government pay this high sales tax on their purchases?

In addition, Mr. Will repeated the misleading assertion that the tax rate is 23 percent. Under this plan, though, the tax on a $100 purchase would be $30. Proponents are using the "tax-inclusive" method to calculate the tax rate, dividing the tax of $30 by the price-plus-tax of $130 to produce a rate of 23 percent. This is not the way sales tax rates are usually calculated. Anyone on the street would tell you that a 23 percent tax on a $100 purchase would be $23. No nation or state has had success in collecting a sales tax at such a high rate; evasion no doubt would be rife.