In this edition of our ‘Ask The Experts’ series, we turn to experts in the fields of accounting and taxation to answer some popular questions from consumers about income taxes.
The issue of taxation is deeply engrained in the fabric of America, and while it continues to illicit stark emotions to this day, the anger it now inspires has less to do with pure ideology than simple confusion. Not only are many people understandably clueless about the maze of rules, loopholes, and forms that comprises the modern day tax system, there are also doubts about its fairness for various consumer segments as well as the role tax revenue will have to play in solving the current budget crisis.
How could a national sales tax replace income taxes?
Kenneth Milani – Professor of Accountancy in the University of Notre Dame’s Mendoza College of Business
“One question I field frequently has to do with a national sales tax replacing the income tax. When I mention that the national sales tax proposals are based on a rate that is in the 20% category, the conversation usually ends. People can ‘do the math’ and determine that the $400 television set will now cost about $500 when you tack on the national and local sales tax, the $25,000 car will create the need to finance over $30,000 given the sales tax rate in their locale plus an additional 20% to the federal government.”