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Politics : A US National Health Care System? -- Ignore unavailable to you. Want to Upgrade?

To: Lane3 who wrote (3720)	1/10/2008 6:07:47 PM
From: TimF	Read Replies (1) \| Respond to of 42652

OT I can think of ways to try to handle it, but I'm not sure they are so reasonable. Any scheme of trying to compensate people based on age or previously paid income tax would likely be very messy on several levels. Difficult to administer, subject to fraud, and likely to encounter all sorts of political issues, from resistance to giving fairly wealthy people what might be seen as a handout, to different groups of people trying to shift the compensation scheme to benefit them. Also the compensation would simply be very expensive, it would increase the amount that a sales tax would have to bring in and/or cause a big increase in borrowing, just as we are heading towards the baby boomer's retirement. And if you wind up with high sales taxes, the retired people who previously paid a lot of income tax, might just cut their spending, or perhaps move to a different country and live off their retirement savings + compensation without paying a lot of US sales tax. If instead you try to compensate for sales tax paid rather than for previous income tax paid than your moving money around to no real effect other than to lose some of it in the process. What you really need to compensate is the extent of double taxation, but that's something that is just about impossible to calculate. Its not just a problem of collecting a correctly analyzing the data (although that would be a big issue). Its also an issue of a how you apply all the data to figure out compensation even if you had it all, it was all right, and you had it quickly. I don't really see any reasonable scheme. You could try to phase in the transition, and not provide any compensation. But then you would have to phase the transition in over a long time (decades not just years), or you still have the issue of people paying taxes twice. Our political system wouldn't be likely to leave the transition alone for decades, so you would all sorts of special interest inspired tinkering. Also people would get used to paying both income tax and a national sales tax, so you might want up with both being permanent, and a higher overall tax rate. If the revenue needed was really low, I might say go ahead and make people pay the tax twice, but with government taxes and spending at their current levels, it would be an unreasonable hit for many. We could greatly decrease the level of overall government spending and taxes, but in addition to all the political opposition to that idea, its a separate and larger issue than what form of tax we pay, so its really outside the scope of the debate on a national sales tax system.