That's what the Democratic National Committee promised on the section of their website reserved for suggestions for additions to their platform. So I weighed in with an idea I've kicked around for a while, but I'm not sure if I've ever shared with you guys before. Tell me what you think!
So far as I know, this is a completely original idea. Thus, it may seem at first glance to be too far outside the usual debates over taxes. But in part for just that reason, I believe it's a revolutionary proposal that could help break things open for a Democratic majority.
We hear from time to time from right wingers and libertarian types who would like us to abolish the income tax and substitute a national sales tax. The appeal, of course, is that we would no longer have the intrusive "Big Brother" IRS looking over our shoulders; and we wouldn't have to stress about filling out a tax return every year. The disadvantage, of course, is that sales taxes tend to be regressive, hurting those at the lower end of the spectrum the most, while the income tax is progressive (even if less so after Bush's tax cut). My idea attempts to preserve the advantages of a national sales tax but also preserves progressivity.
Those with the requisite expertise and access to the appropriate data could vet and fine tune, but the broad outlines would work as follows:
(1) Set the sales tax rate higher than (double?) that needed to bring in the same amount of revenue as the income tax and payroll taxes combined (both of which would be abolished).
(2) Every American would still fill out a "tax return" each year, but it would be the proverbial "postcard" which would only assert the names and social security numbers of each member of the family.
(3) The extra revenue collected beyond that needed for the federal budget would be accumulated in a special trust fund, and divided up equally and sent to each citizen (as listed on their tax returns) as a "tax refund". (Another possibility would be to send the money, or part of it, back quarterly, monthly, even biweekly.)
This would also, in one fell swoop, replace the Earned Income Tax Credit--for those with the lowest incomes would get back more than they paid in. Meanwhile, billionaires would be getting the same refund as anyone else, only a tiny fraction of the amount they paid in taxes. Yet no intrusive data would have to be collected about people to ensure this progressivity. The only government oversight would be (1) to make sure, as they do now, that people weren't inventing dependents; and (2) to make sure businesses accurately report their sales and pay the appropriate amount of tax. Since almost all states currently have a sales tax, this would not be a significantly increased bureaucratic burden.
People would immediately get much bigger paychecks, more than enough to offset the uptick in prices (and to make it less of a "sticker shock" situation, the tax could be phased in over a few months even while the withholding is ended immediately). April 15 would be a date to look forward to rather than to dread, and no one would worry about being audited, or feel like they have to open up personal information about their lives to an intrusive bureaucracy. And Democrats would get the credit. The really beauty thing too is that Republicans would have no real way to give slanted tax breaks to the wealthy without taking the same amount immediately out of the hands of the middle class and poor, who wouldn't stand for that.