National Sales Tax: Not Gonna Happen

Kevin Drum points out that on Tuesday, Bush said this about a national sales tax:

“It’s an interesting idea. You know, I’m not exactly sure how big the national sales tax is going to have to be, but it’s the kind of interesting idea that we ought to explore seriously.”(*)

Kevin addresses the politics of the issue, and the difficulty of being a Bush advisor (“like sweeping up after the elephants at the circus”), but he also basically endorses my point, posted last week, that if nothing else would stop this from happening, seniors would:

Seniors would sure be pissed off about this. And who can blame them? All their lives their income was reduced by the amount of income tax they paid, and now that they’re retired this reduced amount of money is suddenly subject to a brand new sales tax. Talk about your double taxation!

(Don’t get it? Think of it this way. Suppose you make $100 today and it gets taxed at 20%. You have $80 left over and you put it in the bank. Tomorrow the income tax is abolished and a 30% sales tax is implemented, so you can only buy $60 worth of stuff with your $80. Your original $100 has essentially been taxed down to $60. For senior citizens, this applies to everything they’ve socked away over their entire lives.)

Matt Y. also wrote last week that, “Switching from income taxes to consumption taxes would be a very bad deal for retirees and retirees always get what they want from politicians, so there’s about no chance this will happen.”

In other words, the idea is only being floated by Hastert so he can take a few shots at the IRS. I doubt that even he considers it a serious proposal.


(*) PGL also noticed this Bush statement, quipping, “I guess taking seriously and not knowing what the tax rate would be is par for the course with George W. Bush.”