With a consumption tax, my net income goes up $18,000, would I not spend more?

Question

Also, visitors from overseas (Huckabee's point) and people taking money under the table will be paying into the tax revenue just by spending money.

Would I not buy a new car vs keeping the one that is paid for and so forth?

Who wouldn't love such a proposal? No writeoffs. No minimums nor maximiums.

avail_sk (below) whatever the percentage, isn't that concept the core of a free capitalist society?

Answer 1

I don't often agree with you, chi, but here I do.

Answer 2

The problem with the consumption tax is that the government has to get that $18,000 back or it it can't function.

If your net income goes up, the cost of goods you buy has to go up at an equal rate. (The alternative is for the government to spend less money, and that will never happen!)

Both systems can work, but unless we get smaller government, we the tax payers, don't get any benefit.

And think about this! If we go to a consumption base tax, how much of that "consumption" goes on credit cards. Now in essence we are paying our taxes on credit and paying interest on the taxes due. We would now have deficit spending on VISA. Scary!!!

Answer 3

It sounds like a good deal for the average taxpayer but I, as a retiree with an income of less than $25,000 per year, worry about what this tax would do to my cost of living expenses. Would my food, fuel and shelter consumption expenses be taxed? I bookmarked "southerly's" link and intend to read the information provided there that might satisfy my reservations about a plan such as this even though I doubt I'll live long enough to ever see it happen.

Answer 4

and every penny you spend, would be taxed at 23% under huckabee's point, so you would be paying more on every dollar you spend, if you make under 75k.

In states like Neveda who have no state income tax, their tax per dollar income just jumped 10%

I would love such a proposal just as soon as I can afford to import my goods right along with my business shipments, so I don't have to buy them here.

Sure chi, if the concept of free capitalist society means the lower and middle classes pay far more, so the rich can pay less.
I have a better Idea...how about the people in the upper tier tax brackets switch incomes with me, so they can pay less, and I can pay more, and that way we'll both be happy?

no matter how "fair" you make things, the people with 7 figure incomes will always look for a way to pay less and less, and will always be complaining about, and seeking ways to prevent from, having to pay anything.

Answer 5

There are a few things that you are leaving out of the consumption tax. First the income tax would be eliminated. There for you will get you gross of your pay check not the net like you do now. Check out your stub on your pay check. The with holdings and the medicare and social security would be gone. You will also get a prebate check every month from Uncle Sam.

Answer 6

This will not happen for a variety of reasons:

1. The government (including the IRS and Congress) will lose power over the American people.
2. People in the tax industry (accountants, lawyers, etc.) will lobby hard against this.
3. Shady deals (as you mentioned) will no longer be allowed.
4. It's fair.

When it comes to the government, if a policy makes too much sense, it's sure to die.

But, yes, you would definitely spend more money. And even if you didn't, you'd save it and people using the money would still spend it. Win-win for taxpayers - not gonna happen.

Answer 7

The only problem Chi is can we trust our politicians to keep only the consumption tax. Who is to say in 3 or 4 years after the consumption tax is established they don't re-institute the income tax. Then we'll have the income and consumption taxes to pay.

Answer 8

Yes, that's the general concensus. That is the tax that I've written so much about here. Here's a lot of information and there is also a great link for Q & A's.

Answer 9

I like the idea also but I fear it will never even come up for a vote.

Answer 10

Sounds pretty fair to me.