Sensible Tax Reform--Simple, Just and Effective



Federal Consumption Tax

(1) Sensible Tax Reform
(2) The Impact of Sensible Tax Reform upon American Families
(3) The Impact of Sensible Tax Reform upon American Businesses
(4) The Impact of Sensible Tax Reform upon Social Security and Medicare
(5) The Impact of Sensible Tax Reform upon Very High Incomes
(6) The Impact of Sensible Tax Reform upon Estate Taxes
(7) A Federal Consumption Tax
(8) Table of Contents


(7) A Federal Consumption Tax

Sensible Tax Reform is a complete redesign of our federal tax system. It will eliminate most of the socially-engineered and politically-engineered distortions that make our existing tax system so incredibly complicated. It will end the susceptibility of the system to manipulation by lobbyists and the politicians whom they influence. It will attempt to be tax neutral. It will be tax reform pure and simple.

STR eliminates most of our current federal taxes: the Social Security and Medicare taxes, the business income tax, the estate tax and most personal income taxes. To replace those taxes, the principal federal tax system will be a federal consumption tax (FCT) that will be very simple, very just and also very beneficial to the U.S. economy:

  • There will be universal taxation of all consumers. Whatever the source of one’s income (whether earned or unearned, inherited or borrowed; whether legal or illegal), everyone will be subject to the same rules and the same tax rate when they make purchases for consumption in the United States.
  • There will be almost universal taxation of goods and services. Only a few very specific, very limited and very easy-to-understand special allowances will exist.
  • There will be only a single federal consumption tax--probably somewhere between 26-34%
  • A rebate of the federal consumption tax will be made on consumption up to the poverty level.

In summary, Sensible Tax Reform--Simple, Just and Effective:

Eliminates:

  • Social Security and Medicare taxes on both individuals and businesses,
  • Income taxes on businesses and most individuals,
  • Estate taxes on individuals, and
  • Alternative minimum taxes (AMT) on both individuals and businesses.

It replaces them with:

  • A federal consumption tax and
  • A simple-and-just federal tax on very high incomes.

STR will completely “un-tax”:

  • Businesses and
  • The poor.

STR will be:

  • Very just,
  • Extremely simple, and
  • Economically very effective.

We will be able to say goodbye to the massive federal tax code, with its more than 70,000 pages. Gone will be the annual tax-compliance obligation for most Americans and the fear of the Internal Revenue Service. In their place, Sensible Tax Reform--Simple, Just and Effective will introduce a federal tax system that is just, easy to understand and which will provide a very strong stimulus to the American economy.