Sales tax, how much of it should we have?

[texdav]

yep at least here it depends on what service you want; they have to be paid for. Industrial and commercial can't pay for ecvryhting.

[NJBest]

Originally Posted by Phil P

And it seems like most people agree with the idea of a 5 to 9% sales tax with deductions for food + shelter.

I've generally believed that only raw foods should be untaxed.

[hoffdano]

Originally Posted by celcius

From a state's perspective, property tax and sales tax revenues are remarkably more stable than income tax.

A state relying on income tax alone would face very volatile revenue, and serious difficulties in budget planning and paying its municipal employees and bondholders. There is something to be said for the level of stability expected from governments.

There is a huge misconception here with regard to savings. Unless inflation is out of control, you do not want to encourage savings. As the poster above me noted, the economy relies on money velocity for national income. Savings in the bank are an enormous drag because they are uninvested and do not change hands.

Excellent point - and one of the clearest examples of this is the different financial condition of Texas and California during the recession. TX state revenue is largely dependent on sales and "franchise" taxes (business revenue). Local revenue is sales and property taxes. California taxes everything but relies strongly on personal and corporate income taxes. In a recession income of all kinds drops quickly. Businesses may have revenue, but no income (profit). So CA's tax revenues dropped sharply. An undisciplined legislature sets spending levels during good times, producing huge deficits during lean times.

Texas suffered, but not nearly as much because of restrained spending and more stable tax revenue.

[jtur88]

Personally, I'm all in favor of a larger part of our revenue coming from Sales Tax. If somebody buys a new $50K automobile, I see nothing unfair about his paying ten times as much tax as another person, who buys a $5K used car. It is more fair than taxing both people the same when they earn the money, regardless of what they do with it.

It also makes it possible to be an effective tax protester, just by refusing to spend your money on consumer goods and services.

[Phil P]

Ok, so after researching this and looking at this site, http://www.kansascityfed.org/Publica.../3q08Felix.pdf Sales tax pretty much follows the lead of income tax. It is neither more stable nor less stable.
Also, according to wikipedia, about $50 billion was lost in sales tax revenue do to online commerce. And as ecommerce grows, sales tax will be even less enforcable. This along with the fact that it's regressive makes me conclude that sales tax should be done away with entirely.