\r\nFirst of all, the real taxable income percentage greater than 30% only for those who are effectively single, or making a LOT of money.\r\n
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While this may be a small number of people, it's a large portion of the tax base. Which gets us to problem #1 with an expenditures-based revenue base: residents at the low end of the income ladder spend a larger portion of their income on taxable goods. The rich "spend" on trusts, inheritences, investments, business ventures, services, and other nontaxable transactions.
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Consequently, any sales tax based scheme would either be highly regressive, or would have to include significant adjustments to avoid taxing goods used by low-income households, and tax goods used by high-income households. This immediately loses the simplicity and implementation advantages of a sales tax: you are no longer levying a uniform tax across highly uniform products for which collection and enforcement are readily accomplished.
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\r\nSecond, a lot of people who buy things here don't pay income tax. Nowhere near 30%. Even 10% might be tolerable for a time.
\r\n\r\nNeed someone to come up with the total value of all goods "sold" in the country. Then total the income tax receipts and divide the total values of all goods sold by the tax receipts to come up with a figure.
\r\n\r\nIt's nowhere even close to 30%. I'm in a decent income job, two parent family (one primary income), and 3 kids and our income tax rate is only 20%, once you figure out mortgage interest, charitable giving, kid deductions, etc. I would expect the total income tax collected for all "taxable" income earned in the country to yield an average tax rate of 13-15 percent.
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The net aggregate tax rate in the US is generally estimated at about 50% of income, once federal and state income, SSI, unemployment, medicare, sales, property, and other tax assessments are combined. You're being nickeled and dimed for a lot of this so it doesn't register up front. Direct income tax is only about 16% of income. However, add to this an existing 7% sales tax (rates vary), 6% state income, and another 5.8% for SSI, and you're up to 34% total tax. This still excludes additional taxes such as gas -- at about $0.50/gallon in CA, 10,000 miles per year, and 22 MPG, that's another 0.5%. Ditto smokes, booze, recycling deposits, etc., etc., etc.
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For some statistics:
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\r\n- Total US BLS "consumer units" (households), 1999: 108.47 million
\r\n\r\n- HH income before taxes (1999): $4.767 trillion
\r\n\r\n- Taxes (implied, 1999): $754.482 billion (the IRS reports total personal income tax receipts in 1998 of $768 billion)
\r\n\r\n- Total US HH expenditures: $4.012 trillion. Note that this includes all sales and excise taxes for all items purchased, which we'll average at 7% (a SWAG), or $280 billion.
\r\n\r\n- Equivalent sales tax rate on untaxed income to result in equivalent tax returns: 15%
\r\n\r\n- Equivalent sales tax rate inclusive of SSI: 23.8%
\r\n\r\n- Equivalent sales tax rate inclusive of an average 7% local sales tax: 30.8%
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Note that we're still not done with taxes at the 30.8% value -- we're excluding state income and additional excise taxes. But you get the idea.
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\r\nSo, I would expect the total revenue collected from a tax of all goods sold in this country to be easily 2x to 3x the collected income tax.\r\n
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Nope. It's closer to 35% of income tax receipts.
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\r\nSo, I can't imagine that even a 10% national sales tax would not provide plenty of revenue to replace the current funds collected from income tax?\r\n
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Typical. Even understandable. But mistaken.
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Sources: US Bureau of Labor Statistics, [link|http://www.bls.gov/cex/home.htm|Consumer Expenditure Survey], [link|http://www.bls.gov/cex/csxann01.pdf|Consumer Expenditures in 2001] (see table, p. 3). [link|http://flattax.house.gov/taxfacts/irsfacts.asp|IRS Tax Return Statistics], [link|http://republican.sen.ca.gov/opeds/18/oped1728.asp|Gasoline Prices Can and Should Be Lower].
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