[quote]Heuristic wrote:
They also have other taxes that go along the sales tax - especially a very high income tax[/quote]
That is a common misconception – but a misconception nevertheless. Personally, I paid LESS income tax in any country in Europe I lived in. The extremely wealthy are indeed taxed the heck out of them, but not the middle class – and the lower classes pay almost zero income tax.
[quote]Heuristic wrote:
This is true, there would have to be a tariff on imports which would be at least as high as the sales tax.[/quote]
That exists already. And you know what? Doesn’t work. First, people find creative ways to get around it – and they do. Second, those import taxes have an extremely negative effect on many other levels. Not only they are a big problem with goods that we simply cannot produce in the US, in some areas some external competition is good. It needs to be small, but it helps to be there.
[quote]Heuristic wrote:
Smuggling would be a problem. But tax evasion is a problem now. Yes the government would have to spend money to control illegal transaction, but think about how much it costs to have the IRS[/quote]
It’s all relative. First of all, most of the tax “evasion” is basically very wealthy people being able to explore legal loopholes. Legal loopholes can be closed. Second, as many people in, say, Brazil, can tell you, controlling smuggling is by far more expensive than controlling true income tax evasion (by true, I mean criminal tax evasion, i.e., not the exploration of tax loopholes).
[quote]Heuristic wrote:
I’m not sure about this, if anything savings would INCREASE because money would not be taxe until you spent it.[/quote]
Precisely. Don’t tell me you are under the impression savings are good for banks?! They put up with it because have to, not because they make money out of it. On the contrary. Banks make the real money with credit cards and personal (unsecured) loans. Why do you think both MBNA and Providian were just bought by banks (BofA and WaMu, respectively)?
[quote]Heuristic wrote:
I agree that income tax is the most efficient, but would question whether it is the easiest to collect.[/quote]
Ask your nearby CPA and he’ll confirm it.
[quote]Heuristic wrote:
As for having the least destructive psychological effect I would say that goes to hidden/corporate taxes. [/quote]
I meant specifically between Sales Tax and Income Tax.