Reforming the Tax Code : Thoughts on the Sales Tax

I am not a fan of the Sales Tax.   Its certainly not as bad as the Income tax, or the Corporate tax.

The Fair Tax book, which I mostly agree with, builds an excellent case for using the sales tax exclusively (no other taxes at all).   And, while I think their plan would be better than what we have now, I don't think its the right way to skin the cat.  (please don't post about how much you don't like the Fair Tax unless you have actual read the book, or you will prove your own stupidity, almost all of the obvious objections are addressed in the book itself and if you haven't read it you wont know which of your objections are just ignorance.  If you have read it all and still object, then I'd love to have your comments.)

So, here is why I dont like sales tax (aside from the fact that it takes money out of my pocket).  The sales tax is a burden on businesses.  And, its kind of regressive.  Even after the "prebate" idea that the Fair Tax book publishes, it still hits the little guy harder (in my opinion).

But my real complaint is the cost of compliance.  How many hundreds of thousands of businesses are calculating sales tax and sending regular payments in to various governmental entities.  I mean, sure for retail stores, its part of doing business, you just accept the fact that its a necessary evil.

But, its a killer for small businesses.   Let me explain that by telling my own personal small business story:  While I was in collage,  I supported my family by being a free lance computer repair guy.  I could have ALSO sold computers (rather than just fix them) except I was scared to death to collect sales tax.   It meant I would be responsible to the state for getting them that tax money according to whatever schedule that they require, and fill out whatever forms were required, etc.   I didn't have time to care about that sort of thing.  I had a business to run, I had clients to take care of, I had a family to feed, I had classes to be at, and homework to do.   Sales tax was just one more piece of red tape I didn't want to deal with.  What I really didn't want to deal with was the possibility that I would handle it wrong and then have some unexpected fine or a court date to defend my ignorance that would further get in the way of me doing all of the other things that I needed to do from day to day.

Sure, collecting sales tax isn't the worst possible burden you can ask of a business.  But honestly, if there is an alternative that requires less administrative overhead I'm for the alternative.  Which is why I prefer the Property Tax.