Tax the people who LIVE the rich lifestyle, rather those who don't.

[Silverhair]

Consider a person who is highly productive and has become wealthly but continues to live moderately. That person is not using up excess resources on themselves, and their excess production is placed in the economy in general in the form of good investments. (If they make bad investment then they aren't rich anymore.) Those investments create jobs that in turn create more jobs, etc. This person should be free to create more jobs.

Now consider the person who LIVES rich. Mansions, expensive cars, etc. That person is using up much of the wealth of the country, even if they did produce it all themselves. Much of that wealth is used up as they consume it - it doesn't create multiple tiers of jobs. Tax the hell out of that person.

In other words - eliminate the income tax completely and substitute a national sales tax. Make food, medicines, housing (up to a certain price)tax exempt and then the poor would mostly escape the effects of the tax. But the person who wants to live the rich life would PAY.

Also, money gained that is currently hidden from the IRS, whether hidden legally or illegally, would become taxed as it is spent. Since most states have sales taxes already, then the mechanism for collecting the tax is already in place, so the army of income tax accountants could find something more productive to do.

The problem with both conservative and liberal economics is that they don't differentiate between those two types of wealthy people. Conservative tend to view all the rich as being the first kind. Liberals tend to view all the rich as being the second kind. Both sides are wrong.

The richer your LIFESTYLE, the more taxes you would pay.

[billbuckhead]

1. Sales taxes are wildly regresssive and don't reflect use of government

Microsoft would be broke in days if the Federal government didn't protect it's intellectual property.

[Silverhair]

4. How are they regressive? Please prove your statement.

Remember, in my proposal, I gave exemptions for those items that form a large part of the poor persons expenses.

[MallRat]

9. See reply #8.

n/t

[w4rma]

2. It's not about luxury. It's about power over others and the consolidation

of that power into fewer and fewer hands.

There *must* be a money-sink placed on the ultra-wealthy or they will keep on hording our country's resources at an exponential rate.

Bill Gates's income, of about 40B, *could* be used to pay 400,000 people a $100,000 salary.

[Egalitariat]

13. Bill Gates has wealth of $40B. Not income...

and wealth is not currently taxed.

[billbuckhead]

37. It should also be about who uses government

Big corporations and rich people use the government a lot, middle class people not very much.

[Bridget Burke]

3. Isn't this a Duplicate?

www.democraticunderground.com/discuss/duboard.php?az=view_all&address=104x2403525

Please check out the other thread which explains what's wrong with a Sales Tax replacing the Income Tax.

[Silverhair]

6. The other thread discuss a specific, and badly flawed, bill.

I am discussing the general concept. A bad bill can take a good idea and ruin it. I am not in favor of the current bill for this that is in congress.

[BlueEyedSon]

5. Buying cars, houses, etc creates jobs too.

[dumpster_baby]

7. F#CK THAT! TAX THE RICH! TAX THE YUPPIES! TAX WEALTH!

We need a steeply progressive taxations system and a top tax rate of 65% at least. Also, wealth itself should be taxed.

The income tax and the wealth tax should be the ONLY tax. No property or sales taxes. No fees of any kind. Just tax income and wealth. No payroll taxes.

Anyone making below 20K pays no income taxes at all.

THe only deduction should be for children, and it should be a hefty deduction.

I have no problems with capitalism, but it should be strictly controlled and heavily taxed.


Corporations should be restricted in their power and their access to commerce. Corporate growth in areas where their resources are not strictly needed should be restricted. For example, why on earth should corporations be allowed in the restaurant business? It just makes more competition for the solo proprietor. And what benefit is there for the general public? Very little.

[Egalitariat]

15. Taxing wealth sounds good, but I think it's fool's gold

Because most people's wealth is not cash, and currently all the government accepts as tax payment is cash.

Converting wealth to cash (in order to be able to write a check to the IRS) is quite expensive and would cause dreadful harm to the economy come tax time each year.

And, for some people (like large landowners), converting wealth to cash in a single year is nearly impossible.

[RivetJoint]

29. I have no problems with capitalism, but it should be strictly controlled..

...and heavily taxed

That would not be real capitalism, now would it?

Why should people with kids get any deductions?

[dumpster_baby]

38. we need kids for a sustaining welfare state

if we just hold down military expenses and corporate welfare, we could have a sustaining welfare state (see Scandanavia).

[MallRat]

8. National sales tax- highly regressive.

And, if you make all of the expenditures of living tax-free (food, medicine, clothing, housing, gasoline, heating fuel) in an effort to make the tax less regressive, then you won't have a tax base, period.

The other problem is that elimination of a national sales tax gives people incentive to hoard money. By putting the tax at the point of earning rather than on the spending end, our current system promotes commerce pretty well.

If you try to work around this problem by stimulating the economy by promoting investment through eliminating capital gains and dividend income taxes, you will create a new American aristocracy. The rich (who have the money to invest) will get richer, and the poor (who don't have the money in the first place) will get poorer.

-MR

[Silverhair]

10. Hoarding money? Like under the mattress?

If money if put under the mattress, then it is hoarded. If it is invested, then it helps the economy. If you punish investment, then there will be less of it.

Tax consumption. Tax the person who uses up a lot of resources. the person who is wealthy, but lives moderately is allowing his excess production to become part of the general economy.

[BlueEyedSon]

11. Sales tax is the most regressive tax possible

[Bridget Burke]

12. How is the rich old miser.....

"allowing his excess production to become part of the general economy"?

Please give some details.

[Silverhair]

22. Where else can you put money, except in the economy or in a box?

Those are the ONLY two places money can go. If you put it in a bank, or any type of fund, it goes into the economy. If you buy a factory with it, that's an investment.

[MallRat]

17. I don't mean hoarding in the "mattress" sense.

I'm saying that if you remove taxes on earned income and place the tax on the sales end, people will be less likely to buy that new TV, car, or computer until they really, really need it. Savings would increase (not entirely a bad thing, true), but you wouldn't have as much money going into the economy or into the federal coffers.

If you try to remedy this problem by discouraging saving by making investments tax-free too, then you would create an unprecedented chasm between the haves and have-nots. The have-nots don't have ready cash to take advantage of tax-free investment. The haves do.

If you tax consumption, but remove from the equation the necessities of life in an effort to make the tax less regressive, you would have to make the national sales tax rate on the remaining goods a ridiculous number to counteract the loss of revenue.

In short: bread and milk would be tax-free, but would you buy a new DVD player if they charged 85% tax?

-MR

[Silverhair]

24. You would have more money to buy it with.

Take the following tax rates for a middle class person.
IRS about 20% total - NOT at the margin
SS - 7.5%
SS Matching 7.5%
That's 35% of your income, before you ever see it. So your income would be increased by the corresponding amount. Now you have more money to buy the DVD with. However, you will think a little bit more before you buy something. Reducing gross consumption isn't a bad thing either.

[ProfessorGAC]

28. Hypersaving DOES NOT Help the Economy

If anything disincentivizes consumption, it takes that money from circulation for at least one cycle. This diminishes the velocity of money. The result of less consumption and slower dollars is far lower demand.

The result of that is fewer goods and services needed, and therefore fewer people making enough money to buy ANYTHING. This creates a downward spiral.

The investment money you describe so cavalierly would be invested in what, and for what purpose??? If companies are contracting due to diminished demand for goods and services, exactly what would those new investment dollars do for the economy. The answer is, without room for debate, NOTHING!

The macroeconomy is demand driven and consumption based. Discouraging consumption is bad economic policy. It will lead to the rich getting richer and the poor getting poorer.

Then, as demand falls, the prices will drop enough to offset the taxes. Rich people then end up with the same buying power as before. But, with fewer goods available, this will not filter down to all people with a few extra dollars.

Lastly, as the prices then decline due to lack of demand, the tax base is reduced since it's based upon a percentage of the consumed goods. Cheaper goods mean lower absolute tax value.

This is not an esoteric economic construct. This is simple algebra and common sense. My training lets me understand and develop the former. Everyone here should be able to develop the latter. One doesn't need to be able to teach grad level econometric modeling to see the consequences of a sales tax as the principle means to taxation and a disincentive to spending.
The Professor

[progressivejazz]

14. And just what percentage are you advocating?

You seem to be on top of this. What would your national sales tax percentage have to be to produce the revenue the income tax currently does?

Surely this is relevant.

[Silverhair]

18. I don't know.

I am talking about the general concept. Yes, it is a highly relevant question, but beyond my ability.

[progressivejazz]

19. Then maybe you should have held off ...

until you acquired the ability to address highly relevant questions.

[Silverhair]

21. A general concept can be discussed.

Specifics can be discussed at a later time.

[Inland]

16. 23% tax on baby food, drugs, water, and other luxury purchases

While a rich person pays less tax than he does under an income tax.

Its taxing the hell out of the rich? WTF?

Besides, all a truly rich person has to do is buy across the border. Unlike poor people, rich people can decide where to hold their million dollar party.

And nobody has ever learned how to put a sales tax on services. Nobody.

Its an idiotic idea and if it weren't a great deal for the rich and the government, it would have died a long time ago.

[Silverhair]

20. Services are subject to sales tax.

My services as a Private Investigator were taxed. It is really pretty easy for the gov't to do that.

Buy across the border? Ever heard of paying customs on imports?

I don't mind the rich person who lives moderately as that person is placing their excess production into the economy as investments instead of consuming it. Investments ARE good.

[Inland]

30. No problem with the 23% tax on diapers and drugs? Oh, well,

the rich still make out like bandits. After all, isn't that the essential character of the change? Why not talk about that?

SErvices aren't taxed in Illinois, and that's the way most states are. Why? Because enforcement is a bitch. But you don't figure in the incredibly difficult job of taxing a service economy.

Now you are also talking about taxing at customs. Like how? I buy raw diamonds for 70,000 South African Rand. I plan to have them cut in the US and create finished diamonds worth 100,000 dollars, that I will wear at my Republican fundraiser. What's my tax? When do I pay? And who isn't going to smuggle cigarettes from Canada now?

But I wasn't even talking about bringing the goods in. A truly rich person just takes shipment of and leaves his cars and planes and boats at his Carribean house. Make a billion, spend it on luxuries overseas, and the US doesn't see a cent.

And as for investment being good, what's problem with the economy now? Lack of demand. Not a lack of investment. What is so social harmful about buying baby food, that we would tax it to death?

[Silverhair]

34. Reread my original post please.

I specifically exempted those things that take up a large portion of the poors income.

No doubt that some would buy and keep their goodies outside of the country, but that wouldn't be a signifigant amount. It would be a pain in the rear to buy a goodie and not be able to use it regularly. And that other country would want their tax bite too. Their gov't has to pay it's bills too.

Smuggling has always been a problem, and no doubt would continue to be.

[Caution]

23. Here we go again. HORRIBLE IDEA

arghhh i dont know how many times I have had to explain this since the CHimp suggested it a month or two ago.

Real World Example:
A rich friend makes roughly $7 million a year. He now pays well over $1.75 million in federal taxes after all deductions from massive (and I do mean MASSIVE) charitable donations.

He spends on average about $35,000/month on goods which would be taxable under a national sales tax. Let's go nuts and say the tax rate is 50%

His total tax burden goes from $1.75 million to $210,000

or from 25% of his income to 3% of his income spent on taxes. How do you propose the federal governemt make up that other $1.5 million in tax revenue?

A national sales tax cannot work. There would simply not be enough revenue collected from it.

Just for the hell of it:

2003 service on national debt: 318.1 billions
http://www.publicdebt.treas.gov/opd/opdint.htm

2003 federal deficit (after using 2003 SS surplus as
offset): $ 375.3 billions
http://www.cbo.gov/showdoc.cfm?index=1821&sequence=0#ta ...

2003 federal outlays: $2,157.6 billions
http://www.cbo.gov/showdoc.cfm?index=1821&sequence=0#ta ...

2003 federal revenue from personal income tax: 793.7
billions
http://www.cbo.gov/showdoc.cfm?index=1821&sequence=0#ta ...

2003 federal revenue from corporate income tax: 131.8
billions
http://www.cbo.gov/showdoc.cfm?index=1821&sequence=0#ta ...

2003 retail and food sales: $3,756.7 billions
http://www.census.gov/mrts/www/data/html/nsal03.html

Federal sales tax rate needed to cover 2003 service on
national debt:
318.1/3,756.7 = 8.5%

Federal sales tax rate needed to cover 2003 federal
deficit:
375.3 /3,756.7 = 10.0%

Federal sales tax rate needed to cover 2003 federal
deficit and service on national debt:
(318.1 + 375.3)/3,756.7 = 18.5%

Federal sales tax rate needed to eliminate 2003
personal income tax:
793.7/3,756.7 = 21.1%

Federal sales tax rate needed to eliminate 2003
corporate income tax:
131.8/3,756.7 = 3.5%

Federal sales tax rate that would have been needed to
eliminate the 2003 federal budget deficit, if no
existing sources of revenue were abolished:
536,100/3,756,688 = 14%

Federal sales tax rate that would have been needed to
cover all 2003 federal budget outlays, assuming no
other sources of revenue: 2,157,600/3,756,688 = 57%

Now do you really think a national sales tax of 57% isn't regressive!?!?! Who pays the MASSIVELY higher percentage of their disposable income? The poor.

[JanMichael]

26. Stop with the math! This is the new Republican push, Sales Taxes.

Math can only hinder our descent in modern Corpo Fuedalism...

[Silverhair]

27. Now, what would happen to the 1.54M difference?

It wouldn't just disappear. It is going somewhere. If it goes into investments, then that helps the econonmy grow.

Besides, if you confiscated all the wealth of the top FORTUNE 500, it wouldn't be a pimple on national treasury. Under any taxation scheme, the middle class will may the mass of the tax.

The poor would largely escape paying much of the sales tax because you would have the things that they spend such a high proportion of their money on as exempt.

[Inland]

33. And the idea shows its cracks---

"The poor would largely escape paying much of the sales tax because you would have the things that they spend such a high proportion of their money on as exempt."

Well, that's suddenly sounding a little more complex. Exemptions? Of what? Rent? Food? Education? Drugs? Housing? Automobiles?

[MallRat]

35. Important question: would you eliminate capital gains/dividend taxes?

n/t

[Caution]

43. growing the economy is all fine and dandy

but what does it have to do with the lost tax revenue? Short-term and long-term income from stocks is just that...income...it isn't not an expenditure and there would now be ZERO taxes on this. The government operates on taxes. How much more blindingly obvious can it be that a national sales tax in place of income tax is appallingly regressive, it decreases the buying ability of the poor, decreases their lifestyle while also managing to decrease the overall tax collection of the federal government which would in turn decrease the funding for the social programs and education, the very things that may help provide opportunity for the poor.

By all means keep trying to convince yourself that this is a good idea but eventually it might get through to you that this is nothing more than a way to save money for the rich and to screw the poor.

[SemiCharmedQuark]

25. Sorry, if you're rich America's been good to you

It's time you be good right back to her. I like how all these "patriotic" Republicans would love to wriggle off the hook on taxes and see our country flushed down the toilet. Whatever happened to "ask not what your country can do..."? Oh yeah...a Democrat said it, so it must be bad :eyes:

[Silverhair]

31. So all the rich are the same type?

I am dividing the rich into two types. Low & high consumption. The low consumption person is helping the country and him/herself too. Win/Win. The high consumption person is hurting the country and ultimately themselves too. Lose/Lose.

You are treating all the rich as if they were all high consumption. The higher your consumption - the greater your tax. Live a moderate lifestyle and you would escape much of the tax.

[Bridget Burke]

39. How is sitting on an ever-growing pile of cash helping anyone?

At least the vulgar rich who buy things are putting money into the economy.

[Silverhair]

40. Because they don't sit on it.

Unless they put the cash under the sofa - they don't sit on it. The cash is put into the economy. There is no other place to put it. When you put money in the bank, it doesn't just sit there in a box waiting for you to want it. The bank loans your money out - puts the money to work.

You can only do three things with money

1. Under the sofa - sit on it - bad for the economy and the individual
2. Spend it - Consumption - moderately good for the economy and so/so for the individual.
3. Invest it - Really good for the economy and the individual.

There ARE no other options.

[lostnfound]

42. 4. Give it away.

Perhaps you'll call that a form of 'consumption' -- our consumer culture has taught us to view it as such..just another choice.

I recommend that you go see "The Corporation". You might start looking at 'Investment' a different way. Investment can be seen as 'rights without responsibilities'.

[SemiCharmedQuark]

41. What about moderate earners who save to buy a luxury item?

Say I earn 50,000 but I've saved and saved to buy a nice car? I'm going to be taxed to all hell for it. Meanwhile a rich person can afford to pay the higher taxes on the same car with ease and now I'm screwed, he's still rich as hell and we both have the same damn car.

[sangh0]

32. Another anti-tax thread on DU

Quelle surprise!

[MadHound]

36. Sorry, but this is a bad idea whose time should have gone a long time ago

It is a regressive tax friend, and even if you exempt food, housing and medicine, it is still going to be harder on the poor and working class and will benefit the rich and well off. A VAT would have to be pegged at somewhere around ten-twenty percent. This would also be in addition to state and local taxes, so with the addition of a national sales tax, one would add at least twenty percent to the cost of goods and services. An upper class income has to pay aprox thirty percent in income taxes. A VAT would drop that by ten percent, poof, more money for the wealthy. Sad to say, but most of that money would go right back into investments, and while investment and savings are good things, something the average American needs to do more of, if a large block of money is going into investments, as opposed to spending as it would with the lower classes currently, then our economy, a consumer driven economy, would go in the crapper.

It would also drive the consumer driven economy even further, since the poor and working class, faced with a twenty percent price hike, would be even more reluctant to spend. We would be lucky if we got off with a severe recession, more than likely another Great Depression. Not a good idea.

A little quick math for you. Say you have a single mother, two kids. She works a McJob, getting paid $18,0000/year. Currently, if we went to a VAT, she would be getting back aprox $600-$800/year if she didn't have to pay an income tax. However, even excluding housing, food and medicine, using the most conservative figure of a 10% VAT she would be paying out $900/year in VATs. How does that person gain? Meanwhile, a person who makes $1,000,000/yr would be getting back $330,000/yr from not having to pay income tax. Yet even if they spent all of that income on taxable items, ten percent of $1,000,000 is still only $100,000 paid in taxes. Gee, a net gain of $200,000 for the rich and well off. Sorry friend, but that is simply another give away to the rich at the expense of the rest of us, which is why the Republicans are pushing so hard for this bullshit. Don't fall for the smoke and mirrors friend.

[lostnfound]

44. Corporate power over public good is exacerbated by investment.

I have money invested also, and it's a personal struggle to understand what is the ethical action to take with it.

Money directs growth -- whether as consumers buying products or as investors choosing an investment, our money is tending towards increasing the growth of a company. Do you see a difference between money invested in a weapons manufacturer, a pesticide producer, a solar power producer, or an organic foods company?

"The Divine Right of Capital" is an interesting book that compares buying shares of stock to buying a piece of an aristocracy..Just as royalty were entitled to wealth produced by a certain area of land (like feudal estates) or a certain group of people, the ownership of shares of stock entitles you to wealth produced by a certain institution because you "own" it. Although a tiny percentage of stock purchased does provide funds for corporations to buy capital equipment and facilities, etc. (ie., through IPOs and special offerings), the majority can be seen as a form of speculation subsidized by wealth extraction from the corporation.

When you buy stock you buy the right to extract wealth.

I can see the other side to the story -- people earn money and want a place for it to grow; entrepeneurs can trade the promise of future wealth for assistance in acquiring the means of production or in bringing their ideas to market. Etc. Etc. But the dark side of corporations -- artificial "persons" whose reason for being is making a profit -- is apparent in the pillaging of the earth, the disregard for environmental and social damage, the aggressive usurpation of government power to achieve purely financial goals. Corporations strive to control government, to ensure preferential treatment, corporate welfare, freedom from regulation, etc. So doesn't investment simply add to corporate power, which supplants individual power within a democracy?

Especially now, when corporate and business power has become so intertwined that it is not far from the "f" word.

[HEIL PRESIDENT GOD]

45. This is absurd, Puritanical, atrocious.

Yeah, go after people who enjoy the finer things in life. We can start by doubling the price of organic groceries so everyone has to eat McDonald's.

The problem is not people wearing silk underwear. The problem is people who have more money than they could ever spend, no matter how luxurious their lifestyle, who treat it as a game and vie for power with each other.

I hate rich people who DON'T enjoy their wealth. They're the ones who make me sick. I used to work for a multimillionaire who had a radio shack stereo. The only food in his house was cup o' noodles, the only booze a handle of jim beam.

To me, that's not valiant in any way. That's mental illness. Take your attitude back to late-1600s New England, okay?

[SemiCharmedQuark]

46. uh...what?

[HEIL PRESIDENT GOD]

47. uh... the original message?

[SemiCharmedQuark]

48. What about rich people not living well sickens you?

I personally don't care if a rich person chooses to live in a box on the street as long as they pay their taxes and don't try and wriggle off the hook.

[HEIL PRESIDENT GOD]

49. It's a fucking waste

Think of all the people who are poor to make that person rich. What would they think if they saw him sitting down to his cup of noodles? The motherfucker should be patronizing goldsmiths, goddamit. Not just masturbating with the numbers in his portfolio.

It's a visceral thing, they just make me ill. I guess maybe I am ultimately biased against WASPs.

[SemiCharmedQuark]

50. Ahh, I understand

Thanks :)