Taxing the black market by construction

Discussion in 'Politics' started by ananias, Jul 22, 2011.

  1. ananias

    ananias Rookie

    Jul 22, 2011
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    This is a very simple idea to fix our current economic woes and address some of our most intractable long term problems. I believe we can (and should) tax the underground economy (vice, money laundering, drug dealing, theft, illegal immigrants, etc.) rather easily and that it would raise approximately 500 billion dollars/year in new revenue for the states and federal government.

    The easiest way to do this is via a 100% national sales tax that only criminals would have to pay. Suppose that for every dollar of income earned (after taxes and witholding) that you also received a dollar of national sales tax credit. It would therefore be impossible for anyone who earns their money legally to end up with more money than NST (National Sales Tax) credits, and the new 100% NST would be a wash. Criminals and people working in the US illegally do not declare their income or file tax returns. They'd have no way to receive the NST credits and would thus have to pay the new 100% NST with their income which would be the same as taxing them at the rate of 50% (which is higher than any income tax bracket today.)

    I can think of even better ways to tax the black market, some with a lot of additional perks (like protecting our privacy and improving our health care system) but none of them are as easy to explain or implement. I feel this strategy is a good solution to our present economic crises because the infrastructure to calculate and collect sales tax is already in place and our black market, at roughly 8% of our 15 trillion dollar GDP, is large enough to be worthwhile to tax.

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