ATR believes that all consumed income should be taxed one time, at one low and flat rate. ATR is neutral as to where this taxation should occur. A flat tax is a consumption tax imposed when money is earned. Various sales taxes like the FAIR Tax are imposed when money is actually consumed. Each has the same consumption tax base. ATR maintains that tax reform should not be an excuse for a net tax increase. Rather, all deductions and credits repealed should be replaced by lower tax rates, new deductions and credits, and/or making existing deductions and credits bigger.
ATR believes that there should be no double taxation of savings. That’s why we advocate for a zero tax rate on capital gains and dividends. Another way of getting to that tax level is by expanding tax-free savings accounts like 401(k) plans, IRAs, 529 college savings plans, and health savings accounts (HSAs). We oppose a cascading of savings taxation, which is why we support permanently killing the death tax. Finally, we support ending the bias in favor of consumption over investment in business, which means moving from complex depreciation to full business expensing.
A value-added tax (VAT) is a type of sales tax which is embedded in the price of a good and passed along at all stages of production to the consumer. VATs are a bad idea for America. In Western Europe, VATs have grown from a small 5 percent tax in 1970 to an average 20 percent today. The tax burden has grown dollar-for-dollar with the growth of a VAT. ATR maintains an anti-VAT caucus in the United States Congress.
Tax Gap/Tax Prep
Many on the Left believe that the government isn’t collecting enough in tax revenue, and their term for this supposed underpayment is the “tax gap.” One preferred method of the Left to close this “tax gap” is to move toward government preparation of tax returns. This creates a conflict of interest for the IRS, since the revenue collector would also assert the amount of tax owed. This is a backdoor tax increase that counts on taxpayers not being able to fight City Hall.