Switching to a consumption tax is a progressive idea

[sweetheart]

This thread is to consider this idea of ending the income tax in
favour of a consumption based tax AS A POSITIVE idea that we can use
ourselves.

Bush did not invent this, hardly. It was economists who proposed this
years ago, as a way to end the burdensome overhead of tax collection
and compliance.

As democrats, simply knee-jerk rejection of different ideas does not
suit wise campaigning. Rather absorbing a good idea and running with
it makes for a smart opponent.

We should consider how we can take a consumption tax and make it suit
social democratic principles. How?

Well:

1. It promotes savings, to plug the time-bomb of the savings crisis
in America with people living longer and fewer working age people to
pay in social security. People will be more inclined NOT to spend
and keep some cash in their accounts. When this happens, the bank
takes that money and loans it out to businesses in the economy which
stimulates growth. It is a way of moving back from the brink of
massive indebtedness towards having enough in your savings to retire
on. This, as a nation, and as individuals.

2. Such a system should not tax life-staple goods that are needed for
basics, like food, medicine, books, charitable contributions and
such. This is already the case for similar tax regimens in Europe.
Food is not taxed. The fallacy that the poor will be put out for
eating is not true, and given proper exemptions, the tax can be set
up to better enable the poor as they will not have the Federals
borrowing money from them for a year without interest (withholding).

3. Policing such a tax is much easier, as it no longer involves
reading all your receipts for the past years and records, rather
simply keeping tabs on retail sales businesses as done today. The
cost cutting at the IRS could exceed 90% of its existing budget.

4. The anti-constitutional system of tax courts without jurys can be
totally ended, with savings in terms of a return to civilized
decency the nation over, as well as savings in not supporting
needless overhead. The brilliant minds that suck our economy dry
advising people on tax avoidance, and oblique tax code sections for
the very wealthy will have to go out and get real jobs as their
franchise will be ended.

5. You will be more in control of what taxes are collected from you
as your consumption habits will dictate this, not some obscure system
of laws defined by special interests in the corporate congress. It
is a small return of individual choice and responsibility to the
individual in our generally dis-empowering society.

6. George bush is an asshole, and if he repeats the idea of some
smart economists from his teleprompter, it does not make the idea
republican, or bad for democratic interests. Beware of the trap of
partisan ideology to the point of blindness.

How do we hijack this idea on the fly and make it ours?

[stevebreeze]

1. Should we drastically lower taxes paid by the wealthy ?

And raise taxes for the rest of us? This is the inevitable result of a consumption tax! Go to CTJ.org check out the state by state taxes. All states that rely heavily on sales taxes tax regressively.

[democratreformed]

6. Seriously, I don't understand.

Would lower taxes be percentage wise. Is it because they spend less percentage of their income? Is that why it is regressive? If so, then I guess I do understand. (I promise I started out not understanding but I guess I worked my way through it while writing this.)

[Protected]

11. Bill Gates makes millions a year in income and

how much of it do you think he spends on goods that would be taxed? One percent of his income? So under this plan, the other 99% of his income would go tax free and be saved somewhere or speculated in the stock or bond market. Compare this with a poorer person who, for example, pays 75% of their income on taxable goods. This person would spend a higher percentage of their income on taxes than Bill Gates under a national sales tax.

[democratreformed]

18. Right.

I think I arrived at that conclusion as I was asking the questions above. You're exactly right.

[AP]

61. Not only that, but Bill Gates buys antiques, paintings, rolexes, etc,

which appreciate. He could buy something, pay a 17.5% tax on it, then sell it five years later for 50% more than he paid for it. He could end up having a 0% effective tax burden.

[democratreformed]

95. That's an excellent point, too.

Thanks for pointing that out.

[HotPotato1]

97. Bill Gates spends much MORE money than he makes

keep in mind that "income" from a tax perspective means salary and wages and some other benefits.

Most of Bill's money comes from stock appreciation, and is not taxed as income. In fact, now it's not taxed at all because he gives his stock to his foundation and the foundation sells the share. Bill gets a tax deduction for this donation that he used to offset any income taxes he would have to pay.

But he still spends a lot of money, on which the capital gains taxes were probably paid years ago.

FYI, according to SEC filings, Bill Gates made $865 thousand dollars last year, and probably paid zero in income taxes (based on deductions from gifts of stock to his foundation). So, under the consumption tax plan, he would pay more in federal taxes if he bought a Snickers bar at the 7-11.

[stevebreeze]

23. the definition of being rich is have more money then you need to spend

the lower you income the higher a percentage of you income you are likely to spend, on consumer goods.

[unfrigginreal]

2. Why would we want to promote a regressive tax AS A POSITIVE idea?

That makes no sense.

[Gregorian]

3. I am totally for a pay for use system

If I gave it a complete analysis, I'd probably find something horribly wrong with it. But what's more important- running businesses, or having a planet for following generations?
Of course, it would mean that the poor couldn't consume, and the rich could do whatever they wanted.
So, I suppose there is no substitute for caring and consideration. But there seems to be little to none of that.

[uhhuh]

4. Encouraging savings and not taxing essentials...

What do we do when the government has no money left because people decide to save instead of spend?

There will be no reliable revenue stream to draw from for long term projects.

Would the American "consumer" be required to make a certain number of taxable purchases every year?

[CaTeacher]

5. This is a Libertarian idea--

and the Libertarians don't care if we have any central government at all.

There is very little chance that Democrats are going to hop on this bandwagon. Have you examined Kerry's record? Talk to some people from Massachussets--Kerry believes strongly in taxes (has he ever voted against ANY tax increase that has been proposed? check out his record). We can count on Kerry, he is running on a campaign of raising taxes.

Many people believe that once Kerry is elected that taxes will have to be raised much more than we think. (to get us out of the quagmire that * has gotten us in). Also, in order to pay for a good universal health care system--as well as some of the other goodies that we SHOULD support to have a decent society.

I personally hope that Kerry will put us back to where we were before Reagan started screwing the tax system up (tax rates will have to be MUCH higher across the board and I am eager for this to happen).

EVERYONE will benefit from President Kerry's increased taxes.

[HFishbine]

20. Er

You're freepin' me out, man.

on edit: I think Kerry is going to dissapoint you. He wants to lower taxes for 98% of Americans. Sorry.

[Sirveri]

39. that's not what I heard.

I heard he was going to leave the slight tax cuts to the middle and lower class in place and rescind the upper level bush tax cuts.

I do not have a problem with this, because a tax cut for the lower and middle class isn't a very bad thing, in that they drive the economy and thus more money for them is good for the economy. More money for the rich is just stupid, all they do is sit on it.

[HFishbine]

51. For your info

"Cut Middle-Class Taxes To Raise Middle-Class Incomes
When John Kerry is president, middle-class taxes will go down. Ninety-eight percent of all Americans and 99 percent of American businesses will get a tax cut under the Kerry-Edwards plan."

http://www.johnkerry.com/issues/economy/

[CaTeacher]

54. I'm telling you that yes--I

am very aware of what Kerry is saying as a campaigner--

But--this is a fact of life, if we want to have the goodies like Universal Health Care--we are going to end up having to pony up some money. Right now we are running big deficits--and we are not even trying to support the programs that we need-- it is going to cost $$$ to get big programs like Universal Health Care going. This is just being practical and using common sense. Don't rely on campaign slogans--since when has any president EVER held true to those once he is in office?

I support tax increases 100%--the benefits are going to be much greater than what people have to put in. And please examine Kerry's senate record. It will give you a truer picture of where he stands on taxes--he has many years of votes--and many, many votes where he has supported taxes--not Libertarian wet dreams.

[HFishbine]

63. I was replying

to the poster who said he heard that Kerry was going to keep the middle-class tax rates the same.

I'm glad you support tax increases 100$, that's a little freepy and I'm afraid you're going to be dissapointed.

[CaTeacher]

91. I said that I support them

to pay for things like Universal Health Care. And yes--I am in favor of paying my share when I get benefits and goodies like Health Care.

If we want to have some of these big expensive programs--and do them well, then everyone has to help out (who can) so that everyone can get benefits.

What is freepy about that?

[sangha]

7. Consumption taxes are a right-wing idea

and every point you made about it comes straight from the RNC talking point handbook.

Oh yeah! You should have removed the obviously cut and paste from the AEI (ie. "The anti-constitutional system of tax courts without jurys")

[sweetheart]

71. spare me

I don't even know what books you're reading to claim plagerism.

You can't make an argument so you use stereotyping to ad hominem..
how typical and tiresome. It seems so few progressives can actually
discuss without being ridiculous.

grow up. The tax court system is not in keeping with the trial
by jury. I guess you haven't read that part of the constitution.

[Fovea]

8. Uhhh

You are not really making sense to me.

Consumption taxing is inherently regressive, consuming a higher percentage of lower incomes. This is not a knee jerk reaction, it is simple fact.

Now, if you wanted to propose a bracketed consumption tax. A truely progressive tax that collects money a retiree pays for food and medicine at a different rate it charges a trophy wife for a new mink.
Then you maybe have an idea... a hideously complex idea, but hey.

This approach stops being simple and no muss, no fuss. I think that
income tax need not be complicated. And it is a lot easier to make progressive than consumption taxes.

Also in closing, the tax you propose will be a poison pill for the economy, a worse effect in all probability than decreased savings.

[ranosgol]

9. This Tax is fools gold for Middle Class

This form of taxation means a drastic tax cut for the very wealthy and a drastic increase of the middle class. It no more viable than Reagan's Voodoo economics. It is fools gold....do not be fooled by it.

[AP]

62. It would also discourage consumption of things the middle class buys....

...while encouraging the consumption of things the rich buy (ie, things that appreciate in value -- collectibles).

It would destroy an economy based on creating jobs by making and selling things the middle class wants and needs.

You can't build a strong nation on selling Rolls Royces, but you can build a strong economy on selling personal computers, calculators, books, lamps, sofas, beds, desks, microwaves, etc.

[PA Democrat]

10. Please do some research before repeating this RW propaganda BS

We have a sales tax in PA that excludes "necessities". It is still a regressive tax, that unfairly burdens the poor. People who have billions of $'s in assets do not need "encouragement" to save. They cannot possibly spend all their income.

Please check out these stats from PA. With a sales tax that excludes food, clothing and other "necessities", the poorest citizens in PA still get SCREWED. The poorest 20% pay 2.6 % of their income in sales tax, while the richest 1% pay a mere 0.5%.

http://www.ctj.org/whop/whop_pa.pdf

[sendero]

12. Sorry....

... I'll never get behind this idea. It is totally regressive, since porr people have NO CHOICE but to spend their entire incomes to survive.

It sounds like it would be really great for the rich though.

[Clovis Sangrail]

13. Not regressive?

I fail to see how a consumption tax is anything but regressive, or how it is any fairer or easier to police.

Would stock purchases be taxed?
Would a yaht be taxed at the same rate as a basketball?

If we had a consumption tax that was high enough to compensate for the loss of income tax, it seems everybody with the ability (read "rich folks")would simply buy what they can on their next jaunt over the border.
Meanwhile Joe Sixpack, making $30k/year, is paying 30% tax on everything he buys.

... I'm guessing we'd also be spending a lot more chasing down the inevitable black market/tax free market that would become viable.

I _do_ like the idea of a flat tax based on income...ALL INCOME... with a standard deduction high enough to basically exempt everyone below a certain income level.
As with any taxing scheme, the devil is in the details.

[robcon]

14. This is a regressive tax, with the highest burden on the poor.

Since the poor spend almost all their income, while the rich have much higher savings, a consumption tax is totally regressive. It is an awful idea.

[HotPotato1]

99. The poor would pay zero federal taxes under this plan...

there's a monthly rebate to ensure this.

[OneTwentyoNine]

15. How much "consuming" would Rush have to do to hit $8 million?

That would be the approximate amount of taxes Pillboy now pays on his $25 million a year radio job.

But lets see,he gets food,medicine and books tax free just like people who make $12K per year,so far he's paid $0.00 with the consumtion tax in effect.

Oh but Rush wants a big brand new SUV and seven new $1,000 suits, and for now he'll stay put in his $20 million $$$ Palm Beach mansion.

Well,between the suits and his new ride he blows $50,000. His consumption tax would be about $15,000. That only leaves about $7,985,000 to go before he pays what he used to.

Meanwhile the poor guy who makes 12K per year has to spend $5,000 on a used rattle trap and $200 or work clothes so he can get to work and not be fired. He just blew through almost $1600.00 in "consumption tax". Thats a load of taxes for someone who only makes 12K per year.

Wonder why the filthy rich are for this scheme?? Who's really doing the consuming,Rush or the poor guy??

David

[PA Democrat]

16. Do you think they could arrange collecting that "consumption" tax

in Denny's parking lot? Rush LOVES the idea of a consumption tax as long as it excludes illegal consumption of drugs.

[leftyandproud]

17. I agree!

People should be taxed based on their LIFESTYLE. The rich and famous who buy luxury items will get the shit taxed out of them, while the necessities of life (food, clothing, average cars, etc) will be exempt from all taxes. Taxes based on LIFESTYLE seems the most fair war to go.

[Sirveri]

40. that's not what a flat sales tax is though.

A flat sales tax taxes everything except food. PERIOD. What you just described was the luxury tax. That's not what sales tax is though, sales tax taxes everything. All at the same rate.

[Bandit]

57. That is not true

At least where I live. Any purchase over three thousand dollars pays a flat fee of $150. no more. So if you buy a hundred thousand dollar airplane you pay $150. in tax. No tax is collected on stock purchase or real estate at all. And at this time food is still being taxed along with medicine.

[AP]

72. So it's basically a car tax?

[AP]

64. Luxury items appreciate in value. If you taxed a rollex at 50% it would...

...still probably be a good investment over 10 years incurring a 0% tax burden.

[JanMichael]

19. Actually the Progressive Income Tax is a "Progressive Idea".

It's just that we all seem to have forgotton that lil' point.

[HFishbine]

21. People, People, People

I can't believe the knee-jerk reactions and the robotic responses to this idea. Look at Sweatheart's list of benefits -- good, yes?

Now, about the objections, I'm going to toss the notion that a national sales tax would mean a cut in government services -- there's no corrolation.

The objection that such a tax could be regressive is valid, but it isn't a given. Options ranging from exempting certain necessary items to a progressively higher tax based on annual consumption (possibly with no tax on the first $xxx amount of spending) would solve that.

Now, can someone please tell me what valid reason there is for defending the current, cumbersome, intrusive, labor-punishing system of income tax?

[Protected]

22. Labor-punishing?

You're sounding like Bill O'Lielly! ;)

I guess the main "benefit" that I don't like about this plan is that the rich get off easy as the poor and the middle class pay a much higher percentage of their income on taxes.

How do we implement a system that tracks the first $xxx of spending for 294 million people? Are we going to need to save receipts on every single purchase and file them away for tax rebates later on?

[Name removed]

25. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Protected]

35. Hmm

It's not about taxing expensive things more, it's about the fact that the middle class and the poor spend a higher percentage of their income on consumables than the rich do. Let's assume that there's a 20% sales tax on goods and that Bill Gates spends 1% of his income on taxed goods compared to me spending 75% of my income on taxed goods. Bill Gates pays 0.2% of his income for these taxes while I spend 15% of my income on these taxes. (Please correct my math or logic if I'm being a moron; it's late.) While it's true that Bill's 0.2% chunk will be a larger dollar amount than my 15%, it's clearly way out of whack in the fairness category.

By the way, the O'Lielly thing was a joke, hence the wink smiley. It is true, though, that he was bitching about the "labor-punishing" income tax on Tim Russert's CNBC show last weekend. He was selfishly whining that if his taxes went up any higher, he'd quit his radio show and that would mean 50 people would lose their jobs.

[Nadienne]

73. One way to make the system work

is with a heavier tax on things only the rich buy... like airplanes...

On the other hand, those who buy only what they need to survive pay less taxes. I'm not sure I like the idea of someone determining what is necessary and what is not, though...

[democratreformed]

27. Those are some interesting ideas and

I like them. I keep wanting to think - wealthy people will spend more on the same "sorts" of things. In other words, they have to have a house, but their house would cost quite a bit more than a poorer person's house (like mine :) ). Same with their cars, clothing, etc. I like your idea of taxing different levels of items at different rates.

[69KV]

30. Exempting necessary items

That would still make it regressive tax.

There are people barely scraping by and spending all their income on food and other necessities to survive, true, and the tax burden wouldn't fall as heavily on the poor. But it would still make it more difficult for the poor to enter the middle class, by making such things as cars and homes even more out of reach for them.

But, above the low income level it would become a regressive tax. The tax burden would wind up falling most heavily on the middle class. The wealthy would still wind up only paying 1-3% of their income as taxes. The middle class would pay 30-50% or more. It might discourage consumption, true, but only among the middle class, not the wealthy. It's a great way to further the divide between the rich and poor in this country.

Plus, how much do we exempt before the national sales tax becomes unable to produce enough revenue for the government to operate at current levels of spending? One reason I think the RW promotes a national sales tax is they know it will reduce government revenues and force big cuts in medicare and other programs.

[rman]

67. just do the math and see who benefits

-

[ElaineinIN]

24. I don't think this sticks to a wall

1. I think there is a general overestimation of the effect of taxation on behavior. The fact of the matter is for those in the lower/middle class, there isn't a lot of choice in what you buy--I mean, really, when was the last time you didn't buy something due to the sales tax. For those of us who are wealthier, they can afford the tax. In reality, I think tax sometimes effects the timing of transactions or the structure of the transactions but rarely stops people from doing them. For the poor/middle class, let's face it, they didn't have a lot to save anyway. For the wealthier, they'll spend what they want and pay the tax.

2. What is a basic? Is caviar? How much food--all, or just some? Who decides? It may not get the poorest of the poor... the income tax currently doesn't. I think this is just setting the stage for the same class distinctions and highlights regressivity. Marginal utility dictates that the next dollar is less useful than the previousl dollar. If you have $10.00, the 11th dollar is more useful to you than if you have $1,000,000 and you get dollar no. 1,000,001. If you were able to posit that each person has the same basic needs, then the tax is regressive because it assumes that dollar no. 11 and dollar no. 1,000,001 have the same value... when they don't. This is the fundamental problem with "flat type" taxes.

By the way, I'm sure all the people who would be unemployed at H&R block... and their secretaries, and file clerks, and janitors, will be happy to know that they don't actually have "real jobs" or at least jobs that matter to you.

An additional problem with any "flat type" tax is that, in this political system, there is no such thing. There would be so many exemptions, so many carve outs, that as a matter of reality I would expect that we would have a new mess, but not a better mess.

3. Policing the tax might be easier, but you certainly won't be able to abolish the IRS. Who makes the decisions in No. 2? Who determines what is food? Are viatmins medicine that are necessary? what is a basic? When does a transaction happen in an installment sale? Who polices the black market? Barter transactions? You'll see an incredible increase in lease transactions.

4. You have a choice to go to tax court. If you don't want to go to tax court, you can go to federal district court. And getting rid of tax courts won't necessarily be more efficient, as you'll clog the federal district court docket with more cases with jury trials, and you won't have the expertise that the tax court has to deal with these efficiently. Frankly, many tax court cases are straight out "what is the value of x" cases, not legal issues.

5. Again, I go back to the case that I'm not sure how much choice many of us have on our consumption, at least at the lower/middle class levels. And where I do have a choice, I don't think the tax makes a difference. Do I need a TV? no. Does the sales tax keep me from buying it? No. In addition, our economy is consumption based. To change the basis for taxation without changing the underlying economic realities is a recipe for disaster. How you change the nature of the economy... short of revolution.. I couldn't tell you.

6. Well, we agree on one thing. George Bush is an asshole.

[Cats Against Frist]

68. A great analysis

I don't like to dismiss flat taxes and sales taxes, right off the bat. Of course you ask the important questions: what are necessities? Do garbanzo beans get taxed at the same amount as Brie? But I believe if I go to my local co-op, they are taxed at the same rate. As for beluga caviar and Domaine de Thalabert -- everything is always arbitrary, anyway, so why not have an arbitrary system of goods classifications? What about taxing something proportionately to the gap between its production or "use value" and its retail price?

In addition, since everything is arbitrary -- like you said, most of the ultra poor wouldn't be affected. And why not keep capital gains and corporate taxes? Why not abolish the property tax (which I hate, since my dream is to have a little farm and be left alone), but tax the sale of property and equity? Why not simply abolish payroll taxes and up the consumption tax?

I am a minimalist, and I though I have a few weaknesses, overall, I feel that consumption IS bad, and that "necessity" means very few things. I also believe that though the ultra-wealty are exploitative bastards, that they wouldn't be so rich, without an army of dumb people willing to buy anything -- especially "name brand" goods, priced far beyond their use value -- and those who give their labor to spurious interests.

The rich never came to our doors and stole our money, and the middle class is enshrined as some kind of pariah -- but rampant consumerism places tons of strain on our resources, and irresponsible consumerism can be reasonably blamed for why things are so fucked up.

So, the question is valid, that the original poster is asking -- how can this be turned around in the favor of the middle class -- which, I think, is possible -- though I agree -- no less confusing.

And you are right -- any tax system that would alter consumption, without taking into account the systems that produce, would probably wreck the economy.

So, it's rife with problems and complex issues, but I don't see how it can't be turned around to benefit the middle class -- and provide people who want to be left alone, or not consume, or be responsible "savers," with a little less burden for their good, hard ascetic work.

[Lydia Leftcoast]

26. Japan has a consumption tax on goods and services

in addition to income taxes and poll taxes. Originally it was 3%, and it was just a minor annoyance.

However, when the government announced that it would go up to 5% in April of I-forget-which-year-in-the-1990s, there were two immediate effects:

1) There was a boom in buying high-priced goods before April. Everyone who was planning to buy a car or a computer or whatever rushed to buy it. Business was great.

2) After the tax went into effect, consumption fell off sharply and exacerbated the effects of the economic slowdown being caused by the collapse of real estate prices, the banking crisis, competition from China, and other factors. There was some odd psychological effect of raising the tax even 2%, and consumers who were spooked by everything else that was going on in the economy stayed out of the stores. The only tactic that seemed to bring them back was to declare "tax holidays" in which individual stores offered to "eat" the tax for a limited amount of time.

People seem to be accustomed to the higher tax now, but its imposition was far from painless.

[DemWitch]

28. the magic word was in paragraph 2... exemptions...

1st, consumer spending would go down drastically. Someone who makes 200K a year can afford to pay a 20% surcharge of 10K on his new Escalade. Someone who makes 20K a year cannot afford the 20% surharge of 3k on his new Neon. The middle class and below will not be buying TV's, BBQ grills, A/C units at Wal-Mart because of the added price of the units. Once the middle and lower classes fail to make purchases, that puts manufacturers in a crunch... no demand... workers get laid off... no work... no pay... no comsumer spending...

This is EXACTLY why trickle down/supply side doesn't work... it doesn't put the money in the hands of the people who spend it. What keep workers on the line more in Detroit? Building 1 Escalade or 100 Neons?

On to exemptions... this is axactly where the tax code is faulty. It allows someone who makes twice as much as I do to pay 2/3 the taxes becaase of write offs. How many people making under 40K have business expenses, can write off theier Hummer becasue of a Agricultral tax exemption, has capital gains losses, etc...

I do favor a flat tax. But the kind I like would never be put into law becasue there would be no exemtions for anyone. An accross the board 10% tax rate. You make 20K, you owe 2K. You make 200K, you owe 20K. Period. Everything else in life optional. Owning a home, having kids, etc. Why should someone who rents not get a break, but someone who owns does? Why should somone who deosn't ahve kids be taxed moe than someone who does? But as I said, it would never be enacted because lawmakers want to amke sure the middle class is snowed into thinking they are getting a break, while the uber-rich reap all the rewards.

[Selwynn]

37. Make it 15% and I'm sold :)

[left is right]

104. i keep reading that this consumption tax

would require at least 27% just to keep the government at the most basic level.

[Sirveri]

42. flat tax is also regressive.

I came up with something similar actually though. A tiered flat tax. It worked by taxing the ammount of money you made in seperate brackets.

0-20k, 0% tax.
That means the first 20k any person in the country earns, is not taxed, doesn't matter how wealthy you are. However, the next 20k you earn is taxed at 20%. Then the next 40k you earn (or fraction thereof) is taxed at 30-40%.

Basically the tiers would look like this:
0-20k 0%
20-40k 20%
40-80k 35%
80-150k 50%
150-500k 60-75%
500k-1M 80%
1M-2M 90%
2M-3M 91%
Keep increasing at 1% for 1M until you hit 99%.
All bracket levels increase at the rate of CPI based inflation.

This encourages people to not hoard income, but does not really penalise people from making obscene ammounts of money. Remember, the first 20k everyone gets is not taxed at all, for everyone, including Joe CEO making 25M a pop.

A example of how this tax structure would work is as follows.

Sue Pennysaver made 245k this year. Subtract 150k from that leaves 95k, which she pays 65%(we'll be nice) tax on or 61,750 dollars. she now has 150k left to pay taxes on, so subtract 80k, leaving us with 70k or which she then pays 50% or 35k on. She now has 80k with which to pay taxes on, subtract 40k of that and tax it at 35% for a total of 14k. She now has 40k left, subtract 20k from that and she can keep that outright and tax the other 20k at 20%, for 4k. Total taxes paid: 114.75k, or 46.8% which is not unreasonable for someone making 245k a year.

This tax structure would benefit the poor, strongly discourage wealth hoarding, AND it's fair. After all, everyone pays the same ammount on each tier level, if you make more money, you will still GET more money. The main issue is that there would likely need to be a exemption for mortgage payments, because if there wasn't a lot of people would be defaulting on their mortgages. Plus I would rather encourage home ownership and equity build up. I'm tempted to make other exemptions, but I should resist that siren lure. Must resist!

[RivetJoint]

48. Great idea

I support your graduated flat tax idea, but your taxation rates are too high. Max the Govt should take for ANY income level is about 40%.

[Sirveri]

80. the reason the upper levels get hit so hard is simple.

It redistributes the wealth to the rest of society and gives incentives for owners to pay their employees more rather than simply taking it all for themselves. It would get our wealth distribution levels in line with the rest of the world.

Besides, think about it, who NEEDS to make 1 Million dollars a year? What usefull purpose does it serve? How does them making 1M+ a year benefit society? The obvious answer is that it doesn't, but in reality that income is usually thrown back into the stock market to make even more money.

So the reason those tiers are so high is because we want to discourage obscene levels of wealth hoarding. Though of course the lower tax brackets certainly could be tweaked without signifigantly impacting the social engineering aspect of the upper tier taxes.

[Kellanved]

44. My problem with flat-tax

At least from an European standpoint:
About 50% of all taxes get paid by the top 10% of earners. Their tax-level is far beyond that, a normal worker would have to pay. In order to implement flat-rate tax, without drastically reducing public spending, the lower income-percentiles would have to pay more. So flat-rate is just a scheme to screw the workers.

I don't know how the tax distribution is in the US, but I believe it is somewhat similar.

[69KV]

29. Actually it's the second worst kind of tax

Only the lottery is worse. Based on the % of somebody's wealth paid as taxes, low-income people would wind up paying 30-40% of their income as taxes, while the wealthy would be paying 1-5% of their income. This will happen regardless of the fact that rich people consume more. It's a regressive tax. Everybody has to have clothing, housing, food, medications. On the other hand, excluding those necessities from the consumption tax might make it a more progressive tax but it would also ensure that the government would never have enough money to function.

A far better idea would be to replace all the current taxes with a graduated asset tax only on people with assets of $200,000 and up. That would mean poor people and those struggling to make it would pay no taxes, and the rich would have most of the tax burden. Setting the threshhold at $200,000 would also exempt normal homeowners and retirees, but not people with expensive trophy homes - thereby discouraging that sort of conspicuous consumption. (It would also have the effect of forcing real estate prices down in inflated markets like California.) Savings could continue to be encouraged by exempting 401Ks and individual retirement accounts from the taxable assets. People who play the "hide your assets and disappear" game would *not* be exempt and their Swiss bank accounts would be taxable. Corporate assets would be taxed at the same rate as individual assets. There would be no special exemptions for inheritances or money made through capital gains, etc. I've been sold on this idea for years but so far it doesn't seem to be on the national radar screen.

Taxes in order from most progressive to most regressive are:
Asset tax
Graduated income tax
Flat income tax
Luxury and excise taxes
National sales/consumption tax
Lottery tickets

[Sirveri]

43. 200k would not exempt home owners.

In the bay area where I live it is common to see homes listing for 500k and these are not anything I would call trophy homes. I have been in a trophy home to install a alarm system. Those homes cost easily in the 2M to 25M range. And I sincerly doubt the housing market will take that much of a down turn. And if it were to take such a downturn imagine the people who bought equity at the peak, they would be horribly screwed over. Suddenly their house can no longer increase in value, and they've just lost money. Unless of course this system keeps up with the rate of inflation (which it obviously should and would if properly implemented.)

[69KV]

52. You're right about the Bay Area

The vast differences in housing prices from city to city and state to state would be the one thing that might make an asset tax objectionable to some. Still, let's say the asset tax starts at 0.5% per year for net assets of $200,000 and goes up from there to the 10% or higher range for billionaires. That would still be a pretty low tax for most homeowners.

[Sirveri]

81. Well how would this tax be levied?

Because we already pay property tax? And then on top of that, state income tax, state sales tax, AND federal income tax, and social security tax. Then on top of all of that, a asset tax? Or would we be striking other taxes?

Oh, and I'd love your opinion on the graduated flat tax I put forth in post #42 on this thread.

[Bogus W Potus]

31. No, I don't want a consumption tax.

A graduated income tax is a much more progressive, and that's what we have.

I said this on another thread somewhere on here but I'll say it again. Even if we institute a consumption tax, there is no guarantee that the income tax system will be removed. So, theoretically, the lower and middle classes could be paying up to 70% of their income in taxes! You never know what Congress could do with that.

Also, tons of organizations would be lobbying for loopholes and exemptions in the tax. First, you'd have to have an exemption for food. Then for medicine. How about cars? American made cars? What about American grain and meat? When we get done with all of the exemptions, the consumption tax rate would end up being 30%+. Now, how many Americans do you think would be open to the idea of paying a 30% tax on everything they buy at the retail level? Very, very few.

[Cleita]

32. As usual it taxes the poor disproportionately to others.

Everyone has to consume. So it levels the field to consumption, necessity, maybe nice, and a lot of luxury. More supply side shit.

[HotPotato1]

98. The poor wouldn't be taxed at all

They'd get a monthly rebate check for ALL consumption taxes paid for items necessary to live at a pre-determined level.

They'd pay no federal taxes.

[Cleita]

102. Whose wish list is that under?

I really can't see any government office issuing all those rebate checks every month. If they did do this, the tax would be pointless because most consumerism is for basic necessities. I myself find very little that I purchase just because I wanted it. My purchases are 99% for necessities. So this would definitely put a large burden on the poor and working classes.

[BillZBubb]

33. This is satire/sarcasm right? It's typical right wing class warfare.

You cannot be serious. Now the wealthiest 10% pay about 70% of the taxes, but they account for much less than 70% of spending. Therefore, under a regressive sales tax (and almost all general sales taxes are regressive), that percentage would fall. That means more of the tax burden would fall on the less well off. The Repugs would love that.

Also, consumer spending drives US growth, not savings. Inhibiting consumer activity would begin a cascade of economic troubles. Lower spending means fewer jobs, fewer jobs means even less spending, etc. Increased saving is important, but only once growth and productivity increases are established.

[Mechatanketra]

34. Sigh.

It promotes savings, to plug the time-bomb of the savings crisis in America with people living longer and fewer working age people to pay in social security. People will be more inclined NOT to spend and keep some cash in their accounts. When this happens, the bank takes that money and loans it out to businesses in the economy which stimulates growth. It is a way of moving back from the brink of
massive indebtedness towards having enough in your savings to retire
on. This, as a nation, and as individuals.

Your arguments all miss the important point that a healthy economy is built on more spending, not less. When people are encouraged to stop spending money, the result is recession or a depression. Hence:

1) Savings are good for the savers, but bad for the economy. "Savings" is another word for "hoarding". When people are 'encouraged' to save money -- that is, discouraged from spending it -- the money cycle stagnates and recession or depression results.

On the flip side, not only is it not a good idea to discourage 'consumption', it's an attack on the basis of the whole economy. If I buy less product from Joe, Joe gets less money for himself and his employees, and is thus more likely to fire Dick or slash Harry's pay; Dick and Harry thus have less money to shop at my store and give to me, meaning I have even less money to buy from Joe ... see? Money is blood, and a consumption tax would aggravate "hoardening of the arteries" (read: RECESSION).

2) The economy's better off when you spend money than when you put it in the bank (or lend it out yourself), even though you, personally, may not be. To be blunt, loans are pseudo-investment: somebody sorta-kinda spending money, but not really. Hence, money is moved along in the cycle temporarily, but later 'snaps back' bringing more money with it (interest) to sit in the hoard.

Further, loans == inflation. Contrary to popular belief, the government doesn't "print money" in the economic sense (increasing the money supply, as opposed to merely manufacturing more dollar bills) -- banks do, by lending out from their reserves while still telling depositors the money is in their account. This is really just a reflection of the earlier point: inflation is the portion of the total money flow that doesn't actually produce anything, and interest charges are themselves ultimately a reward for possessing things rather than producing things.

The best tax system is the one that targets the most egregious hoarders: in practical terms, because you have to get money from those who have the money; in ethical terms, because it inflicts the 'punishment' weight of taxation on those most responsible for economic stagnation; and in moral terms, because it directs the potential suffering of taxation on those most insulated to it (the 'burden' of a tax is measured not by how much was taken from you, but how little you have left). A progressive income tax isn't this "best system", but it's a heck of a lot closer than any consumer-directed tax is going to be.

[ProfLefty]

36. Interesting

You make some very articulate and interesting points Sweetheart however, as one who has spent some degree of time studying our tax system and also working within it (when I was in law school and subsequently when I practiced law)and who also will readily concede that our current system is far from perfect or equitable, I still must respectfully assert that a national sales tax or even a VAT (Value Added Tax) would not be either effective or equitable if implemented in place of the current method of generating revenues by taxing earned income, windfall profits and transfers of wealth. In comparison to most other developed nations we are significantly undertaxed and need to find creative methods of increasing the amount of revenue collected from all our citizens in all of the areas of our society (corporate, small business, professional and private sectors). I understand that paying taxes is often burdensome and that burden is increased by the feeling of unfairness that permeates our tax system. As I see it though the problem is more one of how the money is spent or misspent would be a more accurate term. Most of us (I hope) are truly chagrined at the amount of money are country spends on building and maintaining a vastly oversized and overly equipped war machine. I have no problem with maintaining a military capable of defending our nation if attacked but we have built a vast and byzantine military machine organized and focused toward interfering in the affairs of other sovereign nations for the purpose of enforcing the will of a privileged few Americans, their allies and a handful of super powerful multi-national corporate concerns. Meanwhile our present leadership maintains that doing what is necessary to provide our citizens with access to univeral education and training as well as, univeral health care of high quality and rigorously maintained standards would just simply be far too "expensive". We fund a prohibitively expensive criminal justice system along with its penal component which has resulted in more of our citizens per capita being incarcerated than any other developed nation. In this area we find the one sector of our society where our minority citizens and poor are over-represented. Closely correlated is our "war on drugs" which constitutes the reason that between two-thirds and four-fifths of those who citizens who are incarcerated find themselves in that predicament. Now I have no problem with the government protecting citizens from violent crime, ensuring public safety and punishing severely those who commit acts of violence and even serious property crimes like grand theft, fraud and burglary but to wage a war against the significant sector of our society whom medical science tells us are the victims of a disease and incarcerate them for long periods of time while failing to provide them with the health care and treatment they so desperately require is in my opinion just another tragic and criminal example of the way current tax revenues are so grossly misappropriated and used to fund what have become and are essentially used as the tools and foot soldiers of the rw. Specifically I refer to organizations (police, military, etc.) created, funded and maintained by our tax dollars. Specifically in response to the proposal of a national sales tax or VAT, I think that is an idea worthy of consideration but only as an additional tax scheme implemented to supplement our current system of taxing income, economic windfalls and transfers of wealth. I think that your national sales tax idea might very well be a fine way for us to generate the extremely necessary increased revenues which are nation desperately needs and it may well be one of the least onerous and burdensome means of accomplishing that worthy objective. I have to apologize for going off on a bit of a tangent here...hope you will forgive me but this all ties in...at least for me and it is very close to my heart. Anyway, thanks for an interesting and thought stimulating topic for which the truth is that there really are no easy or simple solutions.

[Cats Against Frist]

70. Bravo

Again -- someone asking the important questions. The war on drugs, the military, the penal system and TONS of pork projects are part of the reason it costs so much to run the federal government -- and these, to me, seem to be pet projects of the right and center. And they say they're not for big government?

If some of this stuff were streamlined, we nationalize a couple things, like healthcare and telecom, and co-op others, like energy, still taking power away from big pharmeceuticals, big energy, big HMOs, big telecom -- AND making the tax system less for the middle class.

Am I dreaming? I just want to spin wool into string, grow a garden, shoot rabbits and be left alone. :) But I still want good healthcare and Internet access. Is there a tax system that's right for me? :)

[Sirveri]

38. Why the consumption tax and all other libertarian tax ideas are wrong.

This tax would be fair. It really would, it would fairly tax people for what they purchase. How incredibly fair that would be. It is a flat tax, and a flat tax is also incredibly fair. After all, why is it fair to pay more than someone else?

But taxes are NOT ABOUT FAIRNESS. Taxes are about insuring that the government has the funding to run properly. And further more, it is my heartfelt belief, that taxes should be used to redistribute the income of the rich to the poor in order to keep the economy flowing at a decent clip and so that we don't suffer a major class war.

If there are not enough people with adequate supplies of money who are willing to purchase goods, then our economy goes into a recession. The rich act to create these recessions by taking all the money out of the system, and sitting on it. Corporations aren't quite as bad, in that they reinvest the money taken out of the system to expand their business and hopefully take even more money out of the system in more areas. In addition to the obvious employment benefits they create. However the people often heading said corporations ARE rich, and they're generally the bad kind of rich which simply take their money and use it to make even more money for no appreciable purpose. I mean really, why do these people need 22 Million dollar a year salaries? What exactly do they buy with this? How does this appreciably add to the benefit of society, or even to themselves!

So that's why I support new deal economic policies. The government takes a lot more money from the rich and the REALLY rich, and then uses it for the benefit of everyone. Which in turn puts everyone to work and puts more money into the hands of the working and middle class.

[Francine Frensky]

46. And Bill Gates agrees with you...

The smart really-rich people would gladly pay more money to help things work better in this country, so then they can turn around and MAKE more money, the old-fashioned way, by earning it.

What could Europe be if they didn't have the flat tax, which serves only to preserve the assets of their aristocrats?? It was feudalism, the economy of the wealthy landowner and the many serfs, from which we escaped two hundred years ago! Let's not go back, people.

[loyalsister]

47. Good points- which brings me too

States Rights!!!!!
"But taxes are NOT ABOUT FAIRNESS. Taxes are about insuring that the government has the funding to run properly."

We have just witnessed a situation where the tax breaks have put almost every state in a major crunch. A national sales tax would limit the flexibility of states to levy their own taxes because of the extreme burdens they could harbor. Any state that adds a sales tax to a national sales tax would face an instant emmigration.
Something like this could empty Mississippi, Arkansas, North Dakota.... any other state that doesn't have some kind of job Industry so that people could earn some money to tax so that they could just run their damn government.
What happens next? Do we redraw the lines due to overcrowding?

[ProfessorGAC]

55. Want To Know Why I Support Those Same Policies?

It's easy. The data prove that they worked! And, the causative linkages between certain gov't programs and economic vibrancy are unmistakable and irrefutable.

So, i'm support them for the "softer" reasons you defined, but most of all, i've analyzed the data, in great deal, and the ideas work! Compare that to trickle down, which again from the data, is shown to be a failure and unsustainable.

One way works, the other doesn't. That's a good enough reason for me.
The Professor

[ProfLefty]

58. Absolutely right on!

You are so right Sirveri...also right on the fact that we do agree on most issues...I am glad of that. The national sales tax and its cousin the VAT are both just poorly disguised rw efforts at achieving its fondest wet dream of a flat tax rate. However, a national sales tax would be even more egregiously unfair than a straight flat tax in that the poorest members of our society would be possibly prevented from being able to purchase certain essential items because of the added expense of a burdensome tax being added to goods and services while the wealthiest members of society would be able to easily develop any number of schemes to either avoid or delay responsibly meeting their tax obligations under a national sales tax scheme. Also, as you point out any type of economic slowdown would trigger serious revenue shortfalls and it would be exceedingly difficult to predict such events and occurences making government funding of virtually all programs and services difficult to ensure and thereby ultimately creating much social unrest due to the sure to follow myriad social problems certain to arise.

[UdoKier]

41. No, it's a regressive economy killer.

NO. NO. NO.

If anything, the tax code should be more progressive.

When all people make close to the same amount of money, I'll consider supporting it.

With income disparity at its worst since the Gilded Age,

FUCK NO!!!!!!!!!!!!!!!!!!!!!!

:puke:x( :-( :( :mad: :eyes: :crazy: :wtf: :argh: :freak: :dunce: :hurts: :spank: :grr: :nuke: :thumbsdown:


Can you tell I hate the idea?

[MadHound]

45. Sorry friend, you can put all the lipstick in the world on this pig

But that still won't make it attractive.

National sales taxes, VATs, consumption taxes, they are all regressive taxes that penalize the poor. The tax burden falls disproportionately hard on the lower classes than the wealthy. Think about it, you've bought $200.00 in clothes for your children, and there is a ten percent consumption tax to pay, in addition to the seven percent combined sales tax for your state, county and city. This adds up to a total of thirty four dollars. Who is going to feel this more, a single mother making $25,000 or somebody who makes $200,000? For the former, that $34.00 is enough money for food for 3 days. For the latter, it is just a tip at a restraunt.

These kind of VATs, and flat tax rate schemes are the wet dreams of the wealthy. Don't be fooled by their bullshit.

[OneTwentyoNine]

49. Make no mistake,this tax wouldn't be 10% or even 15%...

Hell,why would the government only want 10% when some States are close to collecting that much in sales tax NOW??

This tax will be pimped at around 22-23%. Of course we all know how these things work. If it passed at that amount within two years it would have to go up to at least 25%. Sure,there will most likely be caps built in to keep it from going sky high so what happens?

Simple,the deficit keeps soaring as government takes in billions less than they spend. Within 10 years or so that tax would be at least 28-30% if not more.

Pillboy pays close to $8 mill per year now in federal taxes,I don't care how much "consumption" he would do in a years time he wouldn't COME CLOSE to $8,000,000.00 in consumption taxes. So...how do you think the difference between what rich cats used to pay and what they would pay in consumption tax gets made up? Yep,you guessed it...

David

[ASanders84]

50. Dumb idea

What's even scarier is that people may jump behind this idea without thinking about the consequences. I can see it now, people quit buying goods from department stores and ordering on the internet from Canada/Europe.

STUPID!

[69KV]

53. That's another point to consider

Would sales over the Internet still be exempt from the consumption tax? Sales over Ebay? I would assume not, but with the Repukes you never know. If so, it would put a lot of small businesses out of business pretty fast. I could imagine the effects of this on many downtown business districts - they would become ghost towns with empty store fronts.

Supposing Internet sales are not exempt, it would shift a lot of commerce over the Internet and elsewhere to the underground economy. I could see "entrepreneurs" setting up offshore e-commerce websites which are out of reach of the tax. The libertarians might love it but it would also hurt legitimate e-commerce too.

The national sales tax idea is bad, bad, bad.

[cmf]

56. It's just a way of lowering taxes for the super wealthy

while raising taxes on the middle class and poor. Even if things like food, staples, etc are not taxed, lower income people spend more of their income on purchases.

[AP]

59. People who go into debt would pay highest tax rates and people who spend

much less than they earn would pay the lowest tax rates.

Who spends more than the earn? The poor. People borrowing to go to college. People who borrow to buy a house. People who lose their jobs. People waiting to get good jobs.

Who spends much less than they earn? People who make millions. People who don't have to borrow to buy anything.

Also, people who buy things that depreciate to zero would pay a higher effective rate.

People who buy consumer goods which appreciate in value would earn money back to cover the sales tax they paid.

You buy a yugo or a casio, you not only pay the tax, but thing you buy is worth a tiny fraction of the sale price when you're finished with it.

Buy a Rolls Royce or a Rolex, not only to you sell the car for more than you paid for it, you can possibly end up making more than you paid in taxes.

Do you REALLY want to shift the tax burden off the super wealthy like that?

[ProfessorGAC]

60. Sorry, No Sale

The only way to do this is to have a progressive sales tax system. This would require a complicated system of tables in which various items in the market basket would be rated on a % above mean value. The higher above the mean value, the higher the tax rate.

This would make it a progressive tax, yes, but the scale would have to be profound. Like, for instance, the tax on a Kia would be 14%, but the tax on a Lamborghini would be 125%.

The resultant tax code, and the bureaucracy needed to maintain it would dwarf the current IRS. We'd have to build a second Pentagon to house the people needed to maintain the system and assure that EVERY retail store in the country wasn't skimming.

It would be a monumental task, be subject to massive fraud, and would require so many rules, regs, and oversight to assure it's progressivity that it would end up soaking up the excess revenue to support its own bureaucracy.
The Professor

[Cocoa]

65. nah

:eyes:

[rman]

66. doesn't fly, does it

-

[amazona]

69. it punishes savings

I have struggled to save my entire life and now I'm at the end of my working life -- my income is four figures a year. And now you are telling me that when I go into my savings to buy, say, a badly needed used automobile, I will be paying a federal sales tax on top of my local sales tax -- which is already almost 10 percent? It just isn't fair.

Please just stick a gun in my face while you're robbing me of my life's work. Don't pretend there is anything good or progressive about flat tax, VAT, or consumption taxes unless it is for expensive luxury items like yachts, cars over a certain price, etc..

I am becoming very discouraged. There is no hope for the future if we are going to give up all of our ideals so easily.

And don't tell me they won't tax food. They will -- did it here in Louisiana for years on end. I can't give up food, clothing, transportation. At my income level, only thieves and con artists will be able to survive. Then they will have an excuse to lock us all away.

Please. Back away from this idea. It is wrong and hurtful. This isn't Europe. The flat tax is not about liberating food, medicine, etc. from sales taxes, it is about sucking every tiny bit of pleasure and freedom from the life of the poorest. I'm the one who will have to live with the crime rate when liquor and cigarettes become too difficult to buy on a "real" income. I'm the one whose car will be stolen and parted out and I won't be able to replace it.

[sweetheart]

75. Reply to all

On reading the posts, the tax has some flaws,

It does not achieve the redistribution that liberal people want to
achieve (robin hood effect).

It may very well be implemented without exemptions for food and such,
thereby denying the poor of an exemption and turning in to a poor tax.

As well, it is not fair to the current elderly who will in effect
be double-taxed on savings they have accumulated and must now spend
in retirement.

I still think it is a good idea, but perhaps it would, as one poster
mentioned, be best implemented as part of an overall tax strategy
including the income tax.

NOBODY seems concerned about the deeply disturbing level of savings
that americans do not have for retirement, and nobody has proposed a
a serious solution, beyond cutting spending elsewhere to bail out
social security with federal funds.

NOBODY sees the IRS and a nationwide army of CPA's and tax consultants
as a burden on the economy. I seem them taking a major surcharge for
their own services out of the economy, and returning nothing for it.

NOBODY seems concerned that the tax courts violate the constitutional
right to trial by jury.

Several people expressed the deeply disturbing (for liberals) idea
that the population's primary purpose is to act as consumers for
businesses and that they are concern'ed over the impact that VAT
would have on our free spender buying habits. I hope those people
stay home any pay their credit card debits whilst considering the
reality of self funding their lifestyles from when they retire to
when they die, and where that money is going to come from.

I'm voting for mr kerry no matter what.

We need to reform the tax code that it is simpler. I hope some
democratic progressives can put foward something that "y'all" might
call fair that would be "our" proposal. As yet, i see little of that
and kerry's economic basis is wooly and unformed. This i see as a
weakness in our bid to retake the whitehouse. Bush by opening
this ground only exposes this weakness, and it appears a very
effective attack, as many liberal folks as evident on these threads
can only respond negatively without any serious alternate
ideas except that they accept the incredible innefficiency,
corporate favours and overheads of the system as it runs today. T
his seems, IMO, a weakness we need some polish on.

[sangh0]

76. And Bush* agrees with you

.

[K-W]

77. Non of your criticisms lead to your point.

Yes, the tax system has problems. that isnt the point. To make your point you need to show exactly how switching to a consumption level tax would be better. Of course an unused concept is simpler than a tax system that has been in practice for years.

If we implemented a sales tax it would have to be altered, changed, edited, reformed, and the end result would be a mess with plenty of downsides. Tax reform is one thing, arbitrarily switching to a new taxation location in the economy is not reform its sillyness.

"NOBODY seems concerned about the deeply disturbing level of savings
that americans do not have for retirement, and nobody has proposed a
a serious solution, beyond cutting spending elsewhere to bail out
social security with federal funds."

What on earth does that have to do with the taxation? Are you silly enough to think that if we changed taxes people would save more? People spend money, saving is counter human nature, and we have credit card companies and banks that are all too willing to lend people money. Immediate gratification over delayed gratification is a fundemental human problem. (heck its a fundemental phenomenom in many animals as well). Switching to a consumption tax would not fix the consumer debt problem or encourage saving. People consume and we live in a society that encourages consumption.

"NOBODY sees the IRS and a nationwide army of CPA's and tax consultants as a burden on the economy. I seem them taking a major surcharge for their own services out of the economy, and returning nothing for it."

There is no such thing as a tax system that wont require a hefty beurocracy. There are major major problems with the IRS none of them have anything to do with the fact that we tax income.

"NOBODY seems concerned that the tax courts violate the constitutional
right to trial by jury."

Once again, this issue has nothing whatsoever to do with taxing income.


So if these are your concerns why are you pushing a crackpot idea rather than calling for reforms of the system that would actually help solve your concerns?

[sweetheart]

78. Do they not? hmmm.

TO presume that the tax code does not reflect on the dangerously low
levels of savings is being naive. The tax code is critical in the
way people allocate their retirement money.

The system is well tried in europe with VAT, and has a track record
of supporting social democracy.

I think you miss the root basis my breaching this discussion however.

Bush has launched this as a new attack, and as a strategist on the
opposing team, i take "new attacks" very seriously. There are 3
strategies:

1. Oppose and make ink like an octapus, say NO No NO and defend the
status quo like a small "c" conservative. That seems the approach
here on DU given the posts.

2. Absorb and adapt - Take the good parts of the idea and come up
with a better one that takes the wind out of the perceived advantage
that rove think's he'll gain by having bush say this.

3. Accept - This is seeing the cost of accepting the idea at face
value and removing all campaign value for bush by making it our idea
as well.

I've just said that strategy 3 is a nonstarter. and i think we should
be looking at 2.

Most here are busy with 1. The tax issue wins elections. We
should be able to discuss it positively, rather than fist fighting
and being childish, which is clearly the preferred mechanism these
days.

Somebody in Mr. Kerry's campaign is working on a responding tax
strategy, and i was hoping that people here might be positive and
able to contribute. As it turns out, its not to be.

[K-W]

79. That isnt what Bush is doing at all.

Moving to a consumption attacks would be great for the wealthy and dick over the poor. That is why he is doing this.

Your theory makes no sense. He isnt going to trick anyone into thinking the status quo is good, that isnt his goal, nor would he ahve any hope of accomplishing it.

I guess your point of view has led you to two conclusions.

1. DU isnt positive or able to contribute to intelligent tax discussions.

2. Your tax idea isnt very good.

I suppose your ego forces you to go with #1, but excuse most of us if we choose option #2.

Changing the location of the taxation in the economy accomplishes absolutely nothing. People wont save money because they get more income and things cost more. The saved income money will go right into the higher prices. Youve accomplished nothing there while at the same time shifting the tax burden harcore to the poor.

I dont think you even know what progressive taxation is.

[sweetheart]

84. Psst.. we're within 80 days of an election

Everything bush is doing is to take the undecided vote, the
independents and the marginal fringe.

He is doing this to win an election. You've missed that.

It is doubtful whether, even if he won an election that he would be
able to implement such a radical policy that would dissolve and fire
a good portion of the IRS.

I've been on DU for years now and have met many people who are voting
democrat but have libertarian views on tax... enough people that i
view the current sample as must a small set amongst a greater whole,
and clearly the current set is not very positive, read the posts
yourself and decide. It does not take a big ego to read posts.

It is not "my" tax idea. YOUR ego has you thinking i've got a chip
to bear about this.. hardly. Rather, i'm always suspicious when
a whole lotta DU'ers who can only write 1 or 2 sentence posts make
negative spin views on something without making any substantial
poiint.

You seem to want this to be personal, so you can defeat "me" and be
right. That smacks of ego. I merely wanted to have a discussion
about something that sounds like good economics.

SO much depends on who implements a consumption tax. If a benevolent
force did so, poverty would be exempted from need purchases, and
people would save more for retirement.

Remember Rich people are democrats too, and your banging a class war
drum that is wholly inappropriate given the candiate the democrats
are taking to the presidency.

Remember, the ONLY significant statistical factor determining a bush
voter is "whether the person attends church on sunday", not income.

Progressive taxation is when people who make the rules care about
the whole of society and making sure poverty is ended. Taxes can be
implemented in many many ways.

I forgive your ad hominem blasts, and refer you to november 2 as
bush's primary reason to woo libertarian voters away from the dems.
Lets defeat this bush. You might find me disagreeable and difficult,
but without discussing things, we're on the "friends" set and not
on a political forum.

Lets defeat this bush whack. We're together on this.

[Sirveri]

82. we're not defending the status quo.

In fact two people here, me included, proposed alternate plans in this thread. What we're trying to say is that your idea is stupid, It will not work, and it is regressive. The only proper way to respond to the very idea of this type of tax is with vehement oppossition. The consumption tax does not work, it's also ten times worse than income tax. What needs to happen is to reform the tax code to close loop holes and to reform government to lower the huge levels of pork flying around.

[sweetheart]

85. agreed, tax reform must happen

I LOATHE the ridiculous complexity of a tax code designed primarily
to give corporations welfare whilst sticking it to the individiual.

I LOATHE seeing tax lawyers leech off this economy for no value add.

I LOATHE seeing CPA's leech off the economy for no value add.

It sickens me to see some cotton farmer getting free money from
the american tax payer because of bribes to the congress.

etc. etc. etc.

The tax laws are swiss cheeze today, and those who can afford the
advise and the loopholes walk through without a touch. It is
patently unfair and stupid.

On top of that, the taxes taken are used to mass murder people the
world over and this sickens me the most.

I would hope that y'all smarter than me about taxes, (and i apologize
if you've been posiitive and i sweepingly disregarded you), that you
all make for a tax reform that stops the waste and ends the stupidty
of draining the citizens dry for nothing except potholes, bad schools
and war assholes.

[Sirveri]

88. And most people here agree with that sentiment.

The problem is, that a consumption tax would not solve the problems you just mentioned. It might put CPA's out of work but other than that I suspect it would not tend to accomplish much. Aside from crushing consumer spending and screwing over the middle class and making the rich and ultra rich insanely happy.

I've got a post over at #43, that tax structure has no holes and is simple. You could do it if you can add. If you can't add you probably aren't going to even be paying any income tax because you probably have a pretty shitty job, if you can hold one at all.

[K-W]

74. This is a horrible idea.

What you tax in the economy is fairly arbitrary. Youve got to pull out money somewhere and Income is a far more progressive location than purchases at the base of it. Either way you need to manipulate it to get the desired results.

There is no logical reason to entertain this idea, it is pure fake new idea bullshit.

[lanparty]

83. BLACK MARKET

You would have one immediately and it would encourage people to break the law.

BTW, if you haven't noticed, our entire economy is based on the consumption of consumer goods. While I'm not 100% OK with this, I realize that our economy would collapse overnight if people started saving so much money instead of spending it.

[sweetheart]

86. yes, and yet sales tax works today pretty well

Methinks being a dodgey retailer would get you shut down pretty
quick.

On the consumer point, i think we have to find a happy medium between
shopping malls and 24 hour ebay and a balance with living, loving,
and having the silence to enjoy poetry.

As a culture we're HEAVILY in debt, and unlike the british empire
in a similar historical period, rather than being the world's largest
creditor, we're the world's largest debtor.

Either we fix this, or it will all end in a rain of tears no matter
what kind of tax we call it.

Namaste,
-s

[lanparty]

87. Because sales taxes are at reasonable levels ...

If sales taxes were 22% instead of 6%, you'd see a completely different situation on compliance.

[AP]

89. If it were higher, it might not work so well. If sales tax trippled or....

...quadrupled, it probably wouldn't work so well.

[Guaranteed]

90. This is absolute GARBAGE. This idea SHIFTS THE TAX BURDEN

to the middle and lower classes. Some people who are so poor that they don't even pay taxes now would end up paying taxes under this ridiculous idea.

Focus on keeping the tax burden on the RICH, not shifting it to poor people.

[niceperson]

92. one problem with your plan

is what are considered staple goods. I pay an excise task on my cell phone, but for me a cell phone is a staple because it's considerably cheaper than a land line in my area. Should I be taxed more when I am already paying more than someone in another area for a basic service? What about a car? is that a necessity or a luxury? For me it's a luxury. Should I expect someone else to pay excise taxes on their car even if they legitimately need it to get to work?

[BlackJack8324]

93. consumption taxes aren't progressive

Progressive taxation means the percentage of your income you owe in taxes is dependent on how much money you make. In a consumption tax everyone pays the same percentage of taxes regardless of income. Secondly if you exempt the basics like food, drink, and clothing I doubt you'd be able to get the tax revenue necessary to meet current federal spending. Thirdly with this system rich people will easily be available to avoid taxes if desired by simply buying more items out of the country.

[Strawman]

94. How about raising wages?

That will increase savings. Real wages have been flat for 4/5 of the population since 1970. I don't think people need a consumption tax to encourage them to save. They need higher wages so they can have something to save.

All this does is decrease the amount of rich people's wealth that is subject to tax. Sure rich people will pay more than than everyone else in absolute terms, but they'll pay alot less than they would under a truly fair progressive system. Close tax loopholes, raise texes on the mega rich and treat most capital gains (over a resonable threshold that exempts small middle class investors) as regular income. Restore estate taxes to pre-Bush levels or perhaps higher. Simplify the tax code by ripping out the pages written by the Jonathan Blattmachr's of the world for companies like Enron and people ten times richer than Ken Lay. Do something like the Progressive Tax Act that Kucninch proposed. I think that only raised the top rate to 39%. That should be doable. Taxes on the top bracket were something like 70% before Reagan and 90% before Kennedy.

I don't doubt that exemptions for necessities could minimize the regressive nature of this somewhat, but if so much is exempt (especially all of the money that the rich can never realistically spend) how is the government going to raise enough revenue to operate?

If we ever cave on the idea of progressive taxation, I'm afraid we're just putting the baby in the bathtub for Grover Norquist and turning on the water. I'll listen with an open mind, but to me progressive taxation makes the most sense.

[HotPotato1]

96. Important parts of the proposal are MISSING from this thread...

and I think they are very necessary if you are going to analyze the plan in an objective manner and make a decision that is not based on irrationally charged emotions. The missing points are:

1. The cost of goods will go down because the cost of tax compliance disappears. I own about 10% of a small agricultural supplier that distributes products along the East Coast. It is an LLC, which means I personally pay the taxes that the company incurs in exchange for corporate liability protection. Make no mistake, I am not rich and I'm not getting rich off of this company, but the tax burden is nightmarish. In many years (including last year), it costs me more to pay the lawyers and CPAs to prepare my return than the actual taxes incurred. These expenses are totally unproductive: no value is created anywhere by the expenditure of these dollars. They would disappear and market forces would cause a subsequent drop in prices.

I know many here like to be cynical about "market forces" when big companies are as powerful as they are, but all small businesses would be able to lower prices (and still get the same risk adjusted return on invested capital). I can promise you prices of all goods would go down if the cost of tax compliance was zero.

2. This is the most important one. Every American would receive a monthly rebate check for all consumption taxes paid on goods and services required to live at some pre-determined level (probably the poverty level). If, in your area, it costs $23,500 a year to sustain yourself at the poverty level, you would receive a monthly check for $450 (~$5400/year) to rebate ALL of the taxes that you have paid. This is adjustible based on local cost of living and number of dependents. In other words, poor folks wouldn't pay a penny in federal taxes (including SS taxes).

You wouldn't pay any taxes on anything you need (think survival). The only taxes anybody would pay would be on the excess purchases.

The studies I've read show this to be revenue neutral compared to the current tax scheme.

Of course, I'm not trying to sway anyone's opinion here, but these details are part of the plan and ARE NOT discussed in any of the posts in this thread. They are a very important part of an objective analysis. I believe, as the original poster, that this would make life easier for everybody (except for some CPAs and tax lawyers) while still ensuring that the people who live in luxury are the ones who pay most of the bills.

[Sirveri]

100. OK, well in any event

the subject you brang up still shift the tax burden off of the wealthy. Which is bad for both the economy and society in general.

[robcon]

101. I think that scheme should be called the tax adviser plan.

All it does is create a new bureaucratic, paperwork-driven level of proving that, based on MONTHLY figures, someone qualifies for tax rebates. Incredibly short-sighted. Worsens the current situation.

[left is right]

103. $1. 19 for 2-litre of Coke

That was the pre-tax price today at the local krogers. Prefer Coke over all other soft drinks but won't buy if more than $1.09. So at 30% plus local/state tax of 7% brings the price to $1.63. I will sure miss my evening glass of Coke