Sales tax system fairer, reduces loopholes

HOUSTON (U-WIRE) — One of the fundamental debates that occurs every four years, signaling the upcoming presidential elections, is the debate over taxes. The Republicans want to give the American people their “hard-earned” money back in the form of tax cuts. The Democrats want to raise taxes in our time of prosperity, so that all people, regardless of their work ethic, can “participate in our booming economy.”
While I would obviously prefer the Republican approach to that of the Democrats, it seems to me that the very existence of this argument runs in conflict with the principles of liberty and self-determination that have made this country the exemplary democratic model that it is today.
America’s founders did not dream of a nation where the government has first claim on the earnings of its citizens. According to John Locke, one of the primary sources of inspiration for the founders, the government should exist to serve the people, not the contrary.
As the tax system exists today, the American people are mere serfs to a government that confiscates a percentage of their earnings, even before the people receive their payment for their work. In fact, when looked at from the perspective of the serf-master relationship of the Middle Ages, the American people are actually under worse conditions than the serfs were. At least serfs were allowed to purchase the essentials for survival before they were taxed. Americans are not even granted that luxury.
The only current tax proposal consistent with the founding principles of our nation is the national consumption tax, as advocated by presidential candidate Alan Keyes. A national sales tax would put the powers of taxation back in the hands of the American people, as it was originally intended. Each individual citizen would have the opportunity to choose their respective tax rates by virtue of the purchase choices they make.
Under Keyes’ proposal, certain items such as food, low-income housing and certain essentials for survival would be included in a “market basket” of goods that are not subject to taxation. Certainly, these items would not be heavily sought-after luxury items; however, the existence of this “market basket” would offer low-income families the opportunity for a tax-free existence.
Furthermore, those with higher income levels would be more likely to have higher tax rates simply by virtue of the fact that they are more likely to spend money on luxury items such as vacations, yachts and fine automobiles.
In addition, there are numerous economic benefits to a consumption tax system. Taxing purchases rather than earnings would encourage savings and investment, because money that is invested or put in savings would not be subject to taxation. The sales tax system would eliminate tax evasion and tax loopholes, eradicate the IRS and force those that profit from illegal businesses to take the role of taxpayer as well.
The sales tax system offers a win-win situation to all Americans. It places the power back in the hands of the people, allowing each person to choose his or her tax rate. It affords each citizen the opportunity to remove the hand of government from his or her pocketbooks. It allows those with limited finances to avoid taxation altogether and devote their funds to improving their situation. It does not discourage financial success by necessarily imposing heavier taxes on those individuals that reach higher echelons of economic status.
The consumption tax places the tax burden on those Americans with the will and the means to purchase luxury items while forcing those who currently do not pay taxes, such as illegal business owners and those who import U.S. goods, to accept some of the tax-paying burden. It encourages savings and investment, which will ensure continued prosperity, as well as an easy retirement for many people. And, most importantly, it is consistent with the principles of liberty, freedom and limitation of government that this nation was founded on.
Adam D. Elrod’s column originally appeared in Tuesday’s University of Houston paper, The Daily Cougar.