Could the U.S. Ever
Adopt a National
Sales Tax?
3,951,104
The U.S. Tax code is a whopping
3,951,104
words long!
That adds up to 73,954 pages!
In total, individuals and businesses in the
U.S. spend approximately $170 billion and
6.1 billion hours per year on tax fil...
These numbers raise an important question:
Will the tax code every be simplified? If so,
how?
Several solutions for simplifying the
tax code have been introduced over
the years. One of the most dramatic
solutions is ...
The first Fair Tax proposal was
introduced by John Linder (R-GA) in
1999. Since then, a variation of the Fair
Tax Act has b...
Senator Ted Cruz, whose current presidential campaign
has been built on overhauling the tax code, co-sponsored
the Fair Ta...
What exactly does the
Fair Tax Act propose?
No gift tax No federal
income tax
No payroll tax
Elimination of
the IRS
No estate tax
An advance
refund to
households
A 23...
Let’s see what supporters and critics of the Fair Tax have
to say.
POSITIVES “Instead of imposing the highest amounts of taxes on taxpayers’ earnings, the
national sales tax would focus mor...
POSITIVES
National consumption of goods should go
down due to increased prices.
Encourages saving
POSITIVES
Elimination of the income and payroll taxes
would lower employment costs for businesses.
Creates jobs
POSITIVES
Paying taxes would become unavoidable in
this consumer based nation.
Mandatory taxation for all
POSITIVES
Time and money spent figuring out your taxes
can be spent elsewhere.
Frees up time and money
“[Income tax] punishes the productive by
taxing them the highest amounts, reduces
jobs by increasing the cost of employees...
 ”If there is an easy way to evade taxes, it is likely that a large number of people
will participate in it” –Mike Moffatt...
NEGATIVES
A national sales tax would not eliminate the
state sales tax, they would both be factored
into each purchase.
It...
NEGATIVES
Some will turn to buying their products
overseas to avoid higher prices.
Overseas spending would
increase
NEGATIVES
The tax compliance burden would shift onto
businesses making it easy for businesses to
report less revenue and p...
NEGATIVES
States and local governments would likely
lobby for laws to make themselves exempt
from paying the sales tax.
St...
NEGATIVES
Since every purchase would be subject to the
sales tax, the government could easily keep an
eye on your spending...
NEGATIVES
People may not spend enough money to
cover government expenses like hospitals,
schools, and law enforcement.
May...
Let’s see how this might affect
our country’s different families
JILL & GREG
Server & Hostess
THOMAS & JOYCE
Mechanic & Senior Business
Analyst
DONALD & CLAIRE
Lawyer & Mother
RACHEL
Smal...
Fair Tax
Age: 23 & 24
Income: $20,000
Assets: Parents, Flexible
Schedules
Liabilities: Bad Credit, Low
Education, Child
In...
Fair Tax
Age: 30 & 28
Income: $100,000
Assets: Parents, Homeowners,
Dual Income
Liabilities: Children, Property
Taxes
Inco...
Age: 50 & 44
Income: $2,000,000
Assets: Homeowners, Law
Degree, Investments
Liabilities: Children, Higher Tax
Bracket, Hig...
Age: 35
Income: $500,000-$800,000
Assets: Business Owner,
Variable Income
Liabilities: Non Employee, High
Tax Rate
Income ...
What’s the takeaway?What’s the takeaway?
The national sales tax has been debated for more
than a decade and still hasn’t been implemented.
The changes from a national sales tax would be
hard to transition into.
It’s hard to say if the national sales tax will ever be
passed, but with the coming election and the support
of some GOP c...
Questions l Thoughts l Comments
info@garzaharris.com
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Could the U.S. Ever Adopt a National Sales Tax?

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With the 2016 election around the corner, the U.S. has been debating what changes should be made to the U.S. tax code. This presentation questions if a national sales tax would be a viable solution.

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Could the U.S. Ever Adopt a National Sales Tax?

  1. 1. Could the U.S. Ever Adopt a National Sales Tax?
  2. 2. 3,951,104 The U.S. Tax code is a whopping 3,951,104 words long!
  3. 3. That adds up to 73,954 pages!
  4. 4. In total, individuals and businesses in the U.S. spend approximately $170 billion and 6.1 billion hours per year on tax filing.
  5. 5. These numbers raise an important question: Will the tax code every be simplified? If so, how?
  6. 6. Several solutions for simplifying the tax code have been introduced over the years. One of the most dramatic solutions is the Fair Tax Act which includes a national sales tax.
  7. 7. The first Fair Tax proposal was introduced by John Linder (R-GA) in 1999. Since then, a variation of the Fair Tax Act has been introduced in every session of Congress.
  8. 8. Senator Ted Cruz, whose current presidential campaign has been built on overhauling the tax code, co-sponsored the Fair Tax Act in 2013 and again in 2015.
  9. 9. What exactly does the Fair Tax Act propose?
  10. 10. No gift tax No federal income tax No payroll tax Elimination of the IRS No estate tax An advance refund to households A 23% national sales tax ATTRIBUTES OF THE FAIR TAX
  11. 11. Let’s see what supporters and critics of the Fair Tax have to say.
  12. 12. POSITIVES “Instead of imposing the highest amounts of taxes on taxpayers’ earnings, the national sales tax would focus more on what consumers spend” –Joe Garza Encourages saving Creates jobs Mandatory taxation for all Frees up time and money
  13. 13. POSITIVES National consumption of goods should go down due to increased prices. Encourages saving
  14. 14. POSITIVES Elimination of the income and payroll taxes would lower employment costs for businesses. Creates jobs
  15. 15. POSITIVES Paying taxes would become unavoidable in this consumer based nation. Mandatory taxation for all
  16. 16. POSITIVES Time and money spent figuring out your taxes can be spent elsewhere. Frees up time and money
  17. 17. “[Income tax] punishes the productive by taxing them the highest amounts, reduces jobs by increasing the cost of employees and reveals our personal finances and thus invades our privacy.” -David John Marotta Forbes Contributor
  18. 18.  ”If there is an easy way to evade taxes, it is likely that a large number of people will participate in it” –Mike Moffatt NEGATIVES It would add onto state taxes States would try to avoid it Tax evasion would rise Overseas spending would Increase May not cover all U.S Expenses Invades your Privacy
  19. 19. NEGATIVES A national sales tax would not eliminate the state sales tax, they would both be factored into each purchase. It would add onto state taxes
  20. 20. NEGATIVES Some will turn to buying their products overseas to avoid higher prices. Overseas spending would increase
  21. 21. NEGATIVES The tax compliance burden would shift onto businesses making it easy for businesses to report less revenue and pocket more of the money. Tax evasion would rise
  22. 22. NEGATIVES States and local governments would likely lobby for laws to make themselves exempt from paying the sales tax. States would try to avoid it
  23. 23. NEGATIVES Since every purchase would be subject to the sales tax, the government could easily keep an eye on your spending. Invades privacy
  24. 24. NEGATIVES People may not spend enough money to cover government expenses like hospitals, schools, and law enforcement. May not cover all U.S expenses
  25. 25. Let’s see how this might affect our country’s different families
  26. 26. JILL & GREG Server & Hostess THOMAS & JOYCE Mechanic & Senior Business Analyst DONALD & CLAIRE Lawyer & Mother RACHEL Small Business Owner
  27. 27. Fair Tax Age: 23 & 24 Income: $20,000 Assets: Parents, Flexible Schedules Liabilities: Bad Credit, Low Education, Child Income Tax o  The family has enough to get by with potentially a little left over every month for entertainment or savings o  Can get tax breaks based on income and family size o  Necessities would cost more, which would lead to the family only being able to spend money on necessities o  The family would be spending more on their son, due to the lack of tax breaks for children Back Story Melissa and Travis are two young parents from Farmersville, Texas. They currently live paycheck to paycheck. They own one vehicle, and carpool to work. Melissa’s mom is able to watch their son, Malcolm while they work long hours. MELISSA & TRAVIS Server & Hostess
  28. 28. Fair Tax Age: 30 & 28 Income: $100,000 Assets: Parents, Homeowners, Dual Income Liabilities: Children, Property Taxes Income Tax o  Thomas and Joyce receive tax breaks because of their son as well as owning their home o  Their actual net income is about $80,000 instead of the $100,000 they signed for o  Thomas and Joyce will receive no tax breaks for Thomas Jr. or their house o  Their cost of living will increase, especially because of increased spending required for Thomas Jr. o  The value of their home will decrease Back Story They have a wonderful son named Thomas Jr. The family just paid off their home. Thomas is a auto mechanic while his wife is a Senior Business Analyst for a large conglomerate. THOMAS & JOYCE Mechanic & Senior Business Analyst
  29. 29. Age: 50 & 44 Income: $2,000,000 Assets: Homeowners, Law Degree, Investments Liabilities: Children, Higher Tax Bracket, High Spending Income Tax o  Donald receives less than what he signed for o  They receive tax breaks for their children and home o  They pay a higher percentage of taxes because of their income o  Donald and his family will receive all $2,000,000 each year o  The value of Donald’s home will decrease o  The cost to maintain their lifestyle will increase o  The return on Donald’s investments will increase Back Story Donald and Claire have been married for 8 years. They have two children, Louise and Dennis. Donald works for a large and well-known law firm while his wife stays at home with the kids. The family currently has many investments and can afford a very luxurious lifestyle. Fair Tax DONALD & CLAIRE Lawyer & Mother
  30. 30. Age: 35 Income: $500,000-$800,000 Assets: Business Owner, Variable Income Liabilities: Non Employee, High Tax Rate Income Tax o  Rachel is not able to hire as many consultants to her firm due to higher business expenses o  Rachel pays a higher tax rate, but gets many tax breaks and write-offs as a business owner RACHEL Small Business Owner Back Story Rachel created a healthcare consulting firm. She has, thus far, been successful bringing in a large variety of clients. As the owner of the business, she is solely responsible for filing all taxes on her company’s annual revenue, which varies based on the company’s performance. o  Rachel can hire more consultants because of increased payroll o  Rachel loses her business tax breaks, but no longer pays payroll taxes or taxes on capital o  Rachel will have to keep up with the consumption tax people are paying for her services to pay it to the government Fair Tax
  31. 31. What’s the takeaway?What’s the takeaway?
  32. 32. The national sales tax has been debated for more than a decade and still hasn’t been implemented.
  33. 33. The changes from a national sales tax would be hard to transition into.
  34. 34. It’s hard to say if the national sales tax will ever be passed, but with the coming election and the support of some GOP candidates, its likelihood is increasing.
  35. 35. Questions l Thoughts l Comments info@garzaharris.com

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