Income Tax Vs Sales Tax

The federal government depends heavily on the revenue it obtains from income taxes but processing millions of income tax returns is a costly enterprise.

Income tax vs sales tax. This is an extremely helpful article but i keep seeing states that appear to override pl 86 272 by including in their form instruction that regardless of the shipping method or conditions of sale tangible personal property brought into the state is considered a sale in that state for income tax purposes. The list focuses on the main indicative types of taxes. Here is a look at the national sales tax pros and cons. Business owners pay significant amounts of money in income taxes as individuals and sometimes also as a corporation.

The overall effect is that sales taxes such as the gst is more regressive than other taxes such as income taxes. The pros of a national sales tax. Income tax can be avoided but it is hard to avoid the sales tax as it is wrapped in the price of product or service that is being purchased by the customer. Based on 1996 data a recent study found that enactment of a broad based flat rate consumption tax like the sales tax or flat tax would hurt families with incomes less than 200 000 because of.

Instead of having progressive taxes on the amount of money that is being earned a national sales tax would charge the same amount nationally to everyone for the goods and services that qualify. The learned commissioner of income tax appeals 57 hereinafter referred to as cit a erred in rejecting the appellant s alternative plea that there is a deemed payment of sales tax and therefore the amount of rs 266 72 89 043 is allowable as per the provisions of section 43b of the income tax act 1961. National sales tax vs. The core idea of the fair tax act of 2003 the idea to replace the income tax with a sales tax is not a new one.

It creates a truly equal system of taxation. The table is not exhaustive in. Some other taxes for instance property tax substantial in many countries such as the united states and payroll tax are not shown here. A customer will automatically pay the sales tax when he will purchase a specific product or service.

Thus a cut in the gst would help low and medium income earners more than a similar sized income tax cut. Federal sales taxes are widely used in other countries around the world and given the low tax burden compared to canada and europe it is at least plausible that the federal government could obtain enough revenue from a sales tax.