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“National sales tax: Too good to be true?”
When necessity forced me to give up filing short-form tax returns, I quickly learned that the nation's tax laws are complicated. Paying taxes became an annual frustrating, panicky struggle.
After a few years, I threw in the towel. I turned my tax preparation over to a professional, who recently told me I owe Uncle Sam a bunch of money because of my failure to understand the implications of a portion of the tax code that has never applied to me.
Well, stupid me. I not only need professionals to prepare my taxes every April, I also need tax advice during the other 11 months.
A nationally syndicated columnist I enjoy reading surprised me when he came out in support of a national sales tax to replace the entire tax code, which includes 55,000 pages of rules, exceptions and exemptions.
Scott Burns writes a personal finance column for The Dallas Morning News. Ten years ago, Burns said 5,000 of his readers agreed with his suggestion that the nation was suffering from TDB - tax debate burnout. The readers supported the simple flat tax proposal by Texas' then-Rep. Dick Armey.
I did not support Armey's proposal. The national income tax, after all, is a progressive tax. Tax rates increase as a taxpayer's income increases. Proportionally, the rich pay more and the poor pay less. That seems fair.
Armey's proposed flat tax attempted to compensate by exempting the first $13,100 of income for a single return and $26,200 for a joint return, with exemptions for each child.
The most recent proposal to replace the tax code with something simple is the Fair Tax Act of 2005, which would abolish all federal income taxes, death taxes, gift taxes, capital gains taxes and payroll taxes. They would be replaced by a 23 percent national retail sales tax on all goods and services. Exports and business-to-business sales would not be taxed.
Supporters say the benefits include workers keeping their entire paychecks, retirees keeping all their retirement benefits, elimination of the Internal Revenue Service, no more tax audits, no hidden federal taxes, no tax loopholes, increased sale of American-made products, more jobs, fairness to all taxpayers and raising tons of money.
The main criticism is that it is regressive, which means it places an unfair burden on poor people who must spend most of their income on necessities just to survive.
To compensate for this unfairness, most state sales taxes exempt food, medicine and other items considered necessary.
There's no question that our tax laws are too complicated. But it remains a huge question whether they should be replaced by a national sales tax. It sounds too good to be true.
Rowland Nethaway is editor of The Waco Tribune- Herald. E-mail, RNethaway@wacotrib.com