No. of Recommendations: 14
It is unlikely to be a US Federal sales tax, because of the nature of the US. United STATES of America. I don't think there is any other country that has such a structure.
Actually there are several.
Canada is one. (unless the second attempt at American conquest is more successful than the last time around) Individual provinces are *wholly* sovereign in a long list of specific areas, which includes health, transport, direct taxation, education, interprovincial trade and so forth. Considerably more independent and sovereign than US states in some ways. As in the US, national level laws have been promulgated effectively in those areas of solely local responsibility by offering conditional funding: if the smaller places voluntarily choose to follow certain rules, they get a boatload of money.
A national sales tax could certainly be done in the US, as there is always a workaround. As mentioned above, tariffs are in effect (if not in name) sales taxes. And the national government can always apply the funding pressure. Dear state: may we humbly request that you collect and remit the national value added tax...or we won't pay for your [insert federal funding program] any more.
We were on a long cruise and got to be friends with an Australian couple. They toured the US for a couple of weeks before boarding the cruise. They said they were floored when they bought something and the sticker price was less than the rung-up price. They, of course, were used to the tax (VAT) being buried in the price and not used to a separate sales tax.
Interestingly, in Canada when the GST was introduced, whether to include it in the sticker price was optional for each retailer. Each store was asked which sticker they wanted by the till. Some consumer associations heavily encouraged the "don't include it" approach, on the reasoning that it prevents the government from getting away with raising taxes, so that is the norm. Quite skipping the fact that sometimes raising taxes is the right thing to do. That's the way it went. Alas, having the tax not included causes a whole lot of minor human misery millions of times per day. Life is better when the transactions are simple and obvious and you know what you're paying.
But the Canadian example shows that no, the beauty of VAT (or GST and similar) isn't that it's invisible, the beauty is that it's extremely diffuse: it doesn't distort the economy, and rich people automatically pay more. It's astounding how much (or little) money can be raised without killing industries, or industriousness. Hungary is at 27%, which seems a bit startling even to an enthusiast like me, but the economy still continues. VAT is the main source of funding for the Monaco government, and it works well as an alternative to income tax.
Jim
