Consumption Tax/Fair Tax

[dmcoco84 5]

Recently read up on it and I was curious to see what other think.

http://en.wikipedia.org/wiki/Consumption_tax
http://en.wikipedia.org/wiki/FairTax

Personally I like it. It would stop people from bitching about how much they have to pay in income taxes from their check each payday and you only pay taxes on what you buy. Good for poor and rich. Poor buy less so they pay less. Rich buy tons of shit so they pay more. Sounds good to me! There is a little more to it than that I know but in its most simple form it would appear to make sense. At least to me it does.

Coco

[Zeppo 0]

I honestly think it is the fairest method of taxation, in that it grants each person a choice to pay taxes. If they want to purchase that good...they need to pay the tax (as high as it is, but at least they can choose not to)

My only problem with this, is the overall tax collections by the government. You are right in that the weathly do consume more, but they also save more. The Super Rich save alot more than they consume.

Income Tax Method
Although I don't know the facts, lets say a senior executive makes, in one year, $130,000,000. (130 Million) Assuming a 50% tax rate (as in Canada, not sure with US) it'll mean a tax payable of $65,000,000. Let's also assume, that through various loop holes and tax strategies, he cuts this in half to $32,500,000. This is a significant amount for income tax, and I honestly remember reading somewhere (don't know where...likely college) that 20% of the people, pay 80% of the taxes.

Fair Tax
When you get to people like this, that may only actually spend $20 million in a year, at the same 50% tax, they only pay $10 million in taxes.

Although it would be a fair system for the middle and lower class, in order to offset the loss in taxes from the rich, one must increase tax rates, which will drastically reduce the purchasing power of the dollar.

Anyone have comments?

What goes up, must come DOWN!!!

[countzero 7]

i like it because i'd have $ for more jumps. i'd still be paying the consumption tax on: gas to get to the DZ, the food i bought for my sack lunch, and the beer i bought to drink with my friends. but being able to decide how i spend my $ instead of the gvt. just taking it sure would be nice.

diamonds are a dawgs best friend

[Nightingale 0]

I think the government would need to drastically reduce spending for a consumption tax to work. Otherwise, the tax would be high enough to encourage a black market on goods because things would appear much more expensive.

[SuFantasma 0]

Consumption tax has significant loopholes that the government can execute on to increase the net tax gain. For example, the goverment can pass laws requiring automobile manufacturers to install additional safety equipment, increase the transaction value and therefore the net tax gain to the goverment. Local goverments can change local ordinances to make house development more expensive and tag the cosumer with addtional taxes. etc.etc.etc.

Bottom line is : there are two things we can't avoid, death and taxes.


BREAKING NEWS: CNN is reporting that the goverment is funding an initiative to bring you back from the dead if you owe taxes. House has approved the bill and the Senate wants assurances that you will live long enough to pay the tax bill. Details after the following commercials....

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[Scoop 0]

Forgive my ignorance but is that like VAT?

[billvon 3,120]

It could work. I'd add a provision that the first $20,000 of essentials (food, clothing, housing) be tax-free, to avoid hammering the people who are barely getting by now. (Or you could give just those people a tax ID card that would let only them get the tax break.)

One potential negative economic impact is that it would encourage saving. Money in savings accounts is, of course, money that is not in the economy.

[Scoop 0]

You could have an inheritence tax so in the event of someones death the savings are taxed prior to being part of the estate.

Sounds good to me though if they did it in the UK. I'd save all my money up, then go to Spain every fortnight to jump out there. All my money would be going abroad I hate looking at my wageslip and seeing my deductions

[georgerussia 0]

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Personally I like it. It would stop people from bitching about how much they have to pay in income taxes from their check each payday and you only pay taxes on what you buy.

Unless the government cuts up spending, therefore needing less money in taxes (which we all doubt), people will not stop bitching, as they will have to pay the same amount in taxes. I see no benefits in this model.

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Good for poor and rich. Poor buy less so they pay less. Rich buy tons of shit so they pay more.

But rich have a lot of ways to avoid this tax as well. For example, they could buy a 10 million yacht for $500 shown on papers. Or "rent" it abroad for 100 years for $20/year (again, on papers).

Another concern is that very rich people do not spend a lot of money - i.e. if a person earns 100K/year, this person could spend 60-80% of their income. But if a person earns 100M/year, this person usually spends much less (in percentage) from their income. No matter how rich you are, you still could eat only limited amount of food, and could sleep in only one bed...

* Don't pray for me if you wanna help - just send me a check. *

[popsjumper 2]

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You could have an inheritence tax so in the event of someones death the savings are taxed prior to being part of the estate.

The savings are already taxed - income tax. And you want to tax it again when it gets passed on?

Oh wait....the USA already has Inheritance Taxes.

You can't even GIVE it away...Gift taxes.


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My reality and yours are quite different.
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