Abolish income tax?

Dave!

Hey folks,

I was looking at some Ron Paul videos earlier, as ya do One of his main policies is that income tax should be abolished and that it is not necessary to run the country. I think he said it only makes up 38% of revenue in the US? And they've only had the tax since 1913.

Anywho, I don't have a clue about this sort of thing, so thought I'd ask ye lot! Is abolishing income tax feasible? It's probably different from country to country, ie. a country with a large import/export industry could probably make some more money from that, whereas that might not be possible in another.

It would also possibly cause the US to explode if it were to be introduced now!

But hypothetically, in a stable, economically sound country, would it work? Advantages? Disadvantages?

Time Magazine

Dave! wrote: »

Advantages? Disadvantages?

Removing income tax will necessarily mean raising sales taxes etc. if you want to make up the difference. Americans aren't stupid (honest!), so if their sales tax goes up they'll have less exports (tourists coming and buying stuff is an export) and way more imports as people cross the border to Canada to do their shopping. You can tax imports, but then you're stopping free trade (which costs consumers) and then you're just taxing imports instead of labour, which doesn't have any particularly strong rationale.

TBH I think the policy is just a political trick. You lower tax rates on one thing, find raising taxes on another isn't gonna work, so you cut spending. It's called "Starve the Beast" and the GOP have used it for a long time.

SoCal90046

Dave! wrote: »

Hey folks,

I was looking at some Ron Paul videos earlier, as ya do One of his main policies is that income tax should be abolished and that it is not necessary to run the country. I think he said it only makes up 38% of revenue in the US? And they've only had the tax since 1913.

Anywho, I don't have a clue about this sort of thing, so thought I'd ask ye lot! Is abolishing income tax feasible? It's probably different from country to country, ie. a country with a large import/export industry could probably make some more money from that, whereas that might not be possible in another.

It would also possibly cause the US to explode if it were to be introduced now!

But hypothetically, in a stable, economically sound country, would it work? Advantages? Disadvantages?

Income tax would have to be replaced by something else, likely a consumption tax with the introduction of a national sales tax. Much as I'd like to see it happen in the US, I don't think it will.

Économiste Monétaire

I think Ron Paul might be referring to the debate whether Federal income tax is lawful. I echo the two views above about income tax in general, the money would be raised in another fashion, not really saving people anything.

Run_to_da_hills

The Fianna Fail Government already lowered the Income tax rate, It was much higher in the 80ies and early 90ies. This was replaced by revenues taken in during the property boom from stamp duties etc.

Now that the bottom has fallen out of the property market as a good source of income for the government we can now expect a rise in income tax again. :mad:

Économiste Monétaire

The government lowered the income tax for two reasons: First, was the National wage agreement. Second, was an awakening to a laffer curve idea (they stopped raising taxes and started cutting expenditure, extensively). There had come a point where increasing income tax made no sense, when you lowered the tax rate you moved closer to an optimal tax level (a lower tax rate increased tax revenue, that may seem odd to some). What the optimal tax rate is in Ireland, is up for debate--but it does not lie at 80%.