Skip to main content

Davis Journal

Federal sales tax idea deserves a fresh debate

Feb 08, 2023 05:05PM ● By Bryan Gray

The opinions stated in this article are solely those of the author. 


Since the Grand Old Party gained a majority in the U.S. House, the Republicans have made several missteps, one of which could raise havoc with the U.S. economy. At the same time, however, some conservatives are rightly pushing for a potential replacement of the federal income tax.

On the negative side, the GOP (including all four of our congressmen) are playing with fire – torching the economy – by refusing to raise the national debt ceiling. Granted, spending is out of control, but the raise in the debt ceiling simply says the country will pay its bills, those already voted on and spent by Republicans and Democrats.

Look at it this way: If your spouse runs up a bill (with your knowledge) on your joint credit card for purchases at Nordstrom or Home Depot, you cannot just balk at paying. All you can do is work with your spouse at reducing future spending.

Not raising the debt limit makes America a deadbeat, catastrophic for interest rates and cost of goods. The impact of a slacker nation not paying its bills will mean delays or cutbacks in military/government paychecks and Social Security/Medicare/Medicaid payments, affecting a majority of American citizens.

Making it even worse, Republicans cut back the additional funds for the Internal Revenue Service. As much as you might despise and fear the IRS, it’s one of the few governmental agencies that brings in money rather than spending it. In halting funding, the Republicans are rewarding tax cheats, not average taxpayers. 

But the GOP deserves credit for House passage of the Fair Tax Act, which if rewritten could lead to a fairer system by substantially reducing the federal income tax and instituting a federal sales tax.

Our current income tax is a mess. If you want to avoid income tax, just avoid regular income – and the wealthy do just that. (Remember Donald Trump publicly saying he was “smart for not paying income taxes.”) Since the late 1970s, the average tax rate paid by the wealthiest sliver of Americans has fallen by more than half while the average rate for the bottom 90% has increased.

For the wealthy (one-half of one percent of taxpayers), upgrade your Gulf stream jet and deduct it as a business loss. A super-wealthy casino owner in Nevada set up 10 different grantor-retained annuity trusts which over three years knocked off nearly $3 billion in lawfully-owed taxes.  My father, a wage-earning printer in the early 1960s, paid $302 one year in federal income taxes; that same year, J. Paul Getty, one of the country’s wealthiest men, paid only $504.

The Fair Tax Act favored by Republicans would replace the income tax totally. That won’t happen, but reducing the income tax and replacing a portion of it with a federal sales tax makes sense.

A sales tax stops tax avoidance and tax dodges.  Everyone pays something – and everyone should since even the poor benefit from highways, military defense, and clean water, etc.  The rich pay more in actual dollars; the sales tax on a Ruth’s Chris dinner is more than a McDonald’s value meal. And a sales tax puts a stop to the non-taxed underground economy; even cash-based drug dealers have to make purchases.

Those opposed to the sales tax say the rich would pay a smaller portion of their income/assets. But under the current system, tax lawyers, loopholes, and special deductions already reward the wealthy.

The federal sales tax idea deserves a fresh debate and Republicans deserve some credit.