Those are pretty good arguments. Of course, moving from a straight retail tax to a VAT, or the proliferation of rates and exemptions, or adding an income tax to a sales tax, as is the practice in most states, would complicate matters further.
Most of us pay attention to gross and net statements on pay stubs, or on our W-2s, or have to file on our own, and thus are aware of the end of the year bite. On the other hand, I rarely pay attention to the tax statement at the end of a sales receipt, and, in any event, it is never added up for me into a gross amount at the end of the year, so I am not so confident that awareness would improve.
Bill suggests that monitoring the chain of supply would ensure against widespread fraud. As it stands, the IRS is capable of auditing about 5% of returns a year, and relies on fear of an audit to control cheating. I doubt that we could monitor inventory transfers enough to guard against cheating, and I doubt that such a system would be less onerous than auditing. If it be objected that only a small number of people would be subject to such monitoring, well, only a small number of people are subject to auditing. Supposing that compliance is not enforceable, there is a temptation to use the tax system as a means of offering price breaks through off the books sales.
But that is, of course, somewhat speculative. What is not speculative is that there is a whole economy built around certain expectations and calculations, and that radical revamping is dangerous. Even the flat tax is subject to doubt concerning its effect on pension and medical plans, since the pure form would eliminate the exemptions, and reduce the incentive to provide such plans, for example. Anything that is attempted must be as little disruptive as possible. Any scheme which is offered has to be scrutinized carefully, and may have to be phased in instead of adopted wholesale........ |
