My Ideas for a Better Tax System

Can any tax system really be good? I'm not sure, but I know one could be made that is better than the current complex arrangement of sales, income, property, business, death, and just about every other imaginable form of tax.

What I would propose is an extremely simple set of two types of tax: sales tax and import tax (or tariffs). Everything else would be gone. This would, I'm sure, be insufficient to cover the needs of current US government spending - but alongside these I would put a requirement not that the government simply balance their budget, which leaves open the option to increase taxes, but that they actually must curb spending in order to fit within the projected income. Many government programs would have to be cut, I'm sure, but then I think that the government has its hands in too many pies already. That is another topic for another day, though, so I will try to limit myself to the subject at hand.

The reason I think a sales tax is 'fair' is that it hits everyone - not just the rich, nor just the poor. The rich would pay a substantial amount more over time, which I think makes sense, and as you will see would even pay at a 'higher rate' - not because it is forced upon them, but because of their natural choices.

There are two important things to point out about the sales tax I propose which are different from current implementations that I am aware of, or which at least take existing ideas a step further. One is to have different levels of taxation depending on the item being bought and its price. Essential items - raw foods, for example - would go untaxed (as they often do now); luxury items would be heavily taxed. I propose a range something like the following:

- Essential Items: 0% tax rate (basic foods, maybe a few other categories)
- Commonly Needed Items: 25% tax rate (simple clothes, rent of apartments or buildings under a certain value or value density [$/sq foot])
- Commonly Wanted Items: 50% tax rate (more expensive clothes, rent on more expensive things, computers, certain types of cars, basic entertainment services, gasoline, property purchases under a certain value)
- Luxury Items: 100% tax rate (more expensive property purchases, luxury entertainment services, airline travel, more expensive cars, junk foods)
- Completely Un-needed Items: 200% tax rate (alcohol, tobacco, porn, maybe soda - basically items that have no or little intrinsic value, and/or which are associated with problems in society that could be avoided by the lessened use of such products)

The kicker is that these would be nation-wide (I realize that violates current states-rights, but this is just a theoretical proposition for now), and so whenever a price for an item was displayed it would be required to include the appropriate tax. The tax percent could also be shown, but the main number would have to be the total that the customer would be paying.

Because this would be the major form of tax providing government funding, it would have to be split across the federal, state, and local governments. I propose the following breakdown:
25% of the taxes go to the federal government, 25% to the state, 25% to the county, and 25% to the city. If the item is purchased outside of a city/town, the numbers revert to 33.3% across the board. If the item is ordered from one place and shipped to another, the state/county/city amounts are split between the two locales. If the purchase is made in a retail location, the full amount is calculated based on that location.

The secondary tax form, which for convenience sake I'll call tariffs, would be in place less to generate revenue for the government and more to allow for US-based businesses to thrive and compete on an even footing with those from other countries. It would be variable, at the government's discretion, and would be intended to level the playing field between companies here in the US which might have higher overhead costs (because of paying reasonable wages, etc) than those from outside trying to import. The idea would not be to force the purchase of US products, or to price imports out of reach, but simply to make products compete on other merits like quality, features, etc. I know this runs against the current free-trade ideas out there, but in the long run they are not healthy for the US economy (in my opinion). I would expect other countries to adopt similar tariffs, and as long as they were used to make local competition better rather than to prevent importing I think that would be a good idea. Of course, we can't really trust the government to act in the 'right' way... but then what else is new?

This was a rather hurried overview of my ideas, but I'm curious to hear what others out there think.