Why is no one talking about this?
There is no denying the American economy has shifted over the past 30 years or so from a manufacturing economy to a service economy. Every day there are media reports of jobs being cut, plants closing, more off-shoring to China, India, and beyond. The big steel mills in Gary are about gone, Detroit no longer is the hub of auto manufacturing, there is not doubt the globalization of the past decade or so has eroded our manufacturing base. Usually, the news articles on this subject bemoan what is lost in jobs when a plant closes or scales back. What seems to go unreported is the shifting tax base.
The present sales tax structure in the US is antiquated. We collect sales tax on goods only, and often consumers can skirt that tax by buying over the Internet! Businesses that buy from out of state are required to pay a “use tax” if they are not charged sales tax, but enforcement is sketchy. Guess what is not taxed at all? Services. And we are now firmly entrenched as a service-based economy but services are not taxable. No wonder local, regional, and federal governments are scrambling to balance the books without cutting the services (there’s that word again) we all have come to rely on. Services are not taxed, and more and more of our domestic businesses are service based!
Certainly goods made elsewhere and sold in the US are taxed (except when bought over the Web in most cases) at the point of sale. But why isn’t there a sales tax on services? Wouldn’t that be an equitable concept to introduce? Even just a couple percent… wouldn’t that be fair?
Now, I am certainly not a tax advocate or an economist in any way. But is seems to me that the way purchases are taxed needs revision to more fairly reflect what is happening in our modern economy. Taxing bodies seem to keep upping the rate they collect already which seems unfairly biased. Someone make a case why services shouldn’t be taxable in this day and age.