Senators Want National Sales Tax Instead of IRS Collections

WASHINGTON -- GOP Sens. Jim DeMint and Lindsey Graham, both of South Carolina, introduced a bill Wednesday that would abolish the federal income tax in favor of a national 8.5 percent sales tax, The Charlotte Observer reported.

In addition to eliminating all individual and corporate income taxes now collected by the Internal Revenue Service, their legislation would also end the estate tax -- Republicans call it the "death tax" -- as well as the alternative minimum tax and taxes on capital gains.

Instead, individuals would pay an 8.5 percent sales tax on new goods and services. Businesses, which would see their loopholes erased, would be taxed at a rate of 8.5 percent on the difference between its sales and its purchases from other businesses.

To relieve the burden on the poor, the S.C. senators' bill would provide a rebate to all Americans who make purchases with income below the poverty line. A family of four in this case would get a rebate of $1,641. The bill would also help low-income persons above the poverty line by providing a federal match to Individual Development Accounts that enable families to save and build assets.

-- NYSSCPA.org News Staff

Posted on 10/27/05