progressive sales tax instead of income tax might not be so bad

Designing a **progressive sales tax** to replace the U.S. income tax is ambitious but possible. The key idea is to **scale tax rates based on purchase price tiers**, protecting low-income consumers while ensuring high-value luxury purchases fund government revenue. Here’s a conceptual design:

—

### **Progressive National Sales Tax (PNST)**

#### **Purpose:**

Replace federal income tax with a tiered consumption-based tax that is **fair**, **simple**, and **revenue-generating**, while minimizing the burden on the working class.

—

### **1. Tax Rate by Purchase Price Tier**

| Purchase Price (per item or per transaction) | Tax Rate |

|———————————————|———-|

| $0 – $25 | 0% |

| $25.01 – $100 | 2% |

| $100.01 – $500 | 5% |

| $500.01 – $1,000 | 8% |

| $1,000.01 – $10,000 | 12% |

| $10,000.01 – $100,000 | 18% |

| $100,000.01 – $1,000,000 | 24% |

| $1,000,000.01+ | 30% |

– Rates apply **only to the portion within each bracket** (like marginal income tax).

– **Basic needs** like food, rent, healthcare, and education could be **exempt or zero-rated**.

—

### **2. Optional Features for Fairness**

– **Prebate system**: Every citizen receives a monthly prebate (e.g., $300/month) to offset the tax on essentials—modeled after the FairTax concept.

– **Luxury surcharge**: Extra 5-10% on luxury items (e.g., yachts, private jets, supercars).

– **Exemption card for low-income individuals** (means-tested) for specific categories.

—

### **3. Revenue Goal**

– Target revenue: ~$4.5 trillion/year (current federal tax revenue).

– Sales tax base would cover **all new goods and services**, including digital products, financial services, etc.

– Assumes a large base and **robust enforcement** with digital tracking.

—

### **4. Advantages**

– Incentivizes saving over spending (good for capital formation).

– Simple compliance: tax is collected at point-of-sale.

– Reduces tax avoidance/evasion related to income hiding.

– Makes taxation **visible**, encouraging democratic accountability.

—

### **5. Challenges**

– Regressivity if poorly designed: mitigated through prebates and exemptions.

– Transition impact: must phase in while phasing out income tax.

– States would need coordination or integration.