Picture this: You are seated at your computer in your house, trading stocks on line on the Singapore exchange, while I sit in my identical house across the street, in the same town, playing chess on line against a server in Germany.
Were both getting the same protection from the armed forces and the local fire department. It makes no difference if you make a hefty profit. If you get defrauded, you deal with Singapores government bureaucracy. If I make nothing playing chess while you have a good day trading stocks, I might heat up a can of ravioli while you might call out for pizza, and pay tax on that.
Governments are far too intrusive, invading our personal privacy to learn how much money we make, when it really is none of their business. The cost of defending the country needs to be paid by taxing what goes through ports of entry and cash registers in the United States of America, and not on what happens elsewhere. If you commute across the border and work in Canada, any problems involving unpaid wages or workplace hazards would be handled by government bureaucrats in Canada.
Particularly troubling is the Foreign Account Tax Compliance Act, which burdens those banks abroad that serve anybody deemed under U.S.A. law to be a U.S.A. citizen, and coerces the banks to provide information on those deposits. The U.S.A. has no right to tax people in other countries and cannot acquire such a right by manufacturing documents declaring such persons to be citizens of the United States of America. Many of these persons are no more American than U.S. Senator Ted Cruz was a Canadian when he learned in 2013 that under Canadian law he was a citizen of Canada.
President Obamas father was born in Kenya. Should the Kenyan bureaucrats claim President Obama as one of their citizens, and then impose income taxes and bank account reporting requirements on him? Of course not.
Taxing domestic sales and not income would help make U.S.-made goods more competitive. An imported car would be subject to the same sales tax as a domestic car. The cost of making cars in the U.S.A. currently is increased by the taxes on the labor involved in the manufacture.
In States with sales taxes, one obstacle to opening a new store is the requirement that you spend time and money, which you could spend buying merchandise and advertising, to get a bond that guarantees you wont flee with the governments tax money. You must also register as a business that collects the tax. Small businesses need the option of buying revenue stamps. If you operate a table at a flea market, you could apply sales tax stamps to the receipts, cancel them with a pen, and pay the sales tax that way. You would not be required to spend time and money keeping records and getting audited. The government does not need to know how much you sell or how much money you make. The soldiers protecting your business still have to get paid.
The cost of the armed forces needs to be reduced by eliminating waste and eliminating U.S. military bases in other countries. Those countries dont have bases in the United States, do they? But the defense of the United States is still a necessity and an expensive one, requiring taxes.