Flat Tax or Consumption Tax

I am all for a consumption tax.

Less IRS employees- there are more IRS employees than the CIA and FBI combined, and that was before the new employees added to tax people who don’t pay into healthcare.
http://www.dailybrisk.com/2010/04/irs-has-more-employees-than-fbi-and-cia.html

People getting paid in cash under the table, illegal immigrants that use fake socials and claim 10 kids on their W2, and drug dealers would all be forced to pay the same amount in taxes as the rest of the population.

I like the idea of voting on where our tax dollars go, but am pesimistic on the level of knowledge of the majority of the American population. I don’t trust someone who would rather watch American Idol than read a book to make decisions regarding our federal budget.

This depression we are in now would not have been such a big deal if we weren’t already 10 trillion dollars in debt. Our debt is larger than most people think. We are 13 trillion in the whole right now, plus 7 trillion from Freddie and Fannie, plus 10 trillion dollars of projected debt over the next 10 years due to healthcare and other spending puts us at $30 trillion dollars in debt. I can’t see us maintaining a triple A rating from the IMF for much longer. A damaged credit rating will lead to higher interest payments on our existing debt and future loans, only increasing our debt further.

A consumption tax is the easiest to implement, most effective, and fairest way to tax a population. Some will argue that federal tax income would fluctuate too much between good and bad years, thus making it harder for govt to develop budgets, but that’s exactly what happens under the current system.

[quote]AdamDrew wrote:
I am all for a consumption tax.

Less IRS employees- there are more IRS employees than the CIA and FBI combined, and that was before the new employees added to tax people who don’t pay into healthcare.
http://www.dailybrisk.com/2010/04/irs-has-more-employees-than-fbi-and-cia.html

People getting paid in cash under the table, illegal immigrants that use fake socials and claim 10 kids on their W2, and drug dealers would all be forced to pay the same amount in taxes as the rest of the population.

I like the idea of voting on where our tax dollars go, but am pesimistic on the level of knowledge of the majority of the American population. I don’t trust someone who would rather watch American Idol than read a book to make decisions regarding our federal budget.

This depression we are in now would not have been such a big deal if we weren’t already 10 trillion dollars in debt. Our debt is larger than most people think. We are 13 trillion in the whole right now, plus 7 trillion from Freddie and Fannie, plus 10 trillion dollars of projected debt over the next 10 years due to healthcare and other spending puts us at $30 trillion dollars in debt. I can’t see us maintaining a triple A rating from the IMF for much longer. A damaged credit rating will lead to higher interest payments on our existing debt and future loans, only increasing our debt further.

A consumption tax is the easiest to implement, most effective, and fairest way to tax a population. Some will argue that federal tax income would fluctuate too much between good and bad years, thus making it harder for govt to develop budgets, but that’s exactly what happens under the current system. [/quote]

Why wouldn’t you want a bunch of ignoramuses deciding where their money is spent? The only thing worse than that is a bunch of ignoramuses deciding where OTHER people’s money is spent, which is essentially our current system.

[quote]pittbulll wrote:
I could go with consumption tax and heavy on the luxury and non necessity . with the exemption on food

Example a Hundai is taxed a a lower rate than a BMW[/quote]

Certainly, we must continue to punish people for enriching the economy by becoming financially successful. Great idea.

[quote]AdamDrew wrote:

A consumption tax is the easiest to implement, most effective, and fairest way to tax a population. [/quote]

Why do you want to punish those who can least afford to pay? Most products purchased are under $100. How does that help the low and middle class tax payer? Do you think the rich care if they pay $100, or $115 for a product? However, that $15 means a heck of a lot to a family of four who make under 50-k per year.

A consumption tax is probably the worst idea I’ve heard in a long time, oh, other than making Obama President, that was just crazy, as most can now see.

There has been some interesting ideas put forth on this page. One thing that I often worry about in this discussion, though, is that many people who say they want to reform that tax code REALLY just want to “starve the beast.” That’s fair enough, no one likes taxes. But I think it would be nice if we looked at implementation of these proposals as well.

If we are going to tax at “15%” then we should also be talking about how much of a deficit we will have at that rate. OR if you want to cut spending, we should talk about that at the same time. I know a lot of people on this thread have histories of saying where they don’t want their money going though, but it’d be nice to be up front about just how much would have to be cut, when you think it should be cut, and how that will realistically affect society.

DB, your idea sounds interesting. However, how general would you make the categories? How specific? How would bureaucracies be affected if they knew they only had a one year implementation period? What if a project would take several years (e.g. education reform)? Would you vote to put your money into specific categories (e.g. “education”)? or departments (e.g. DOE)? Do you think this might cause a “media frenzy” within the different organizations? Wouldn’t they all then, by necessity, have to get REALLY GOOD at marketing themselves to the public? These are just random questions. The core of your idea (a greater control of where “MY” tax dollars are spent) is a good one.

[quote]ZEB wrote:

[quote]AdamDrew wrote:

A consumption tax is the easiest to implement, most effective, and fairest way to tax a population. [/quote]

Why do you want to punish those who can least afford to pay? Most products purchased are under $100. How does that help the low and middle class tax payer? Do you think the rich care if they pay $100, or $115 for a product? However, that $15 means a heck of a lot to a family of four who make under 50-k per year.

A consumption tax is probably the worst idea I’ve heard in a long time, oh, other than making Obama President, that was just crazy, as most can now see.
[/quote]

See http://www.fairtax.org

Addresses some of these concerns.

[quote]ZEB wrote:
Why do you want to punish those who can least afford to pay?
[/quote]

Yes. You want to encourage them to save.

What is the alternative? Income taxes?

Income tax hurts those who work hard, consumption tax hurts those who consume.

Given two people Jack and Jill on the same wage they really should be paying the same in taxes. However, because Jill works far more hours she is taxed a much greater amount. Is her burden on the system any greater? No.

So she is basically being taxed upon lifestyle choices. Yet her lifestyle choices are beneficial to the country.

[quote]Gambit_Lost wrote:
There has been some interesting ideas put forth on this page. One thing that I often worry about in this discussion, though, is that many people who say they want to reform that tax code REALLY just want to “starve the beast.” That’s fair enough, no one likes taxes. But I think it would be nice if we looked at implementation of these proposals as well.

If we are going to tax at “15%” then we should also be talking about how much of a deficit we will have at that rate. OR if you want to cut spending, we should talk about that at the same time. I know a lot of people on this thread have histories of saying where they don’t want their money going though, but it’d be nice to be up front about just how much would have to be cut, when you think it should be cut, and how that will realistically affect society.

DB, your idea sounds interesting. However, how general would you make the categories? How specific? How would bureaucracies be affected if they knew they only had a one year implementation period? What if a project would take several years (e.g. education reform)? Would you vote to put your money into specific categories (e.g. “education”)? or departments (e.g. DOE)? Do you think this might cause a “media frenzy” within the different organizations? Wouldn’t they all then, by necessity, have to get REALLY GOOD at marketing themselves to the public? These are just random questions. The core of your idea (a greater control of where “MY” tax dollars are spent) is a good one.

[/quote]

I’d make the categories very general at first, as well as limiting the categories to just a few essential options at first, such as education, defense spending and paying off our debt. Right now I think the avg % of our income going to taxes is something like 35%, give or take. Most of that would initially be spent the way it is now and we’d only choose for ourselves where a very small % of that goes (perhaps 1-5% of our income to start).

The process would take years to implement, maybe ten or fifteen years. So all these various bureaucracies would know ahead of time that the day of reckoning is coming and that they’d better be on track by the time we can all vote where all of our tax dollars go. Any bureaucracy/program/etc wouldn’t have one year to implement their plans, they’d just be judged by us on a year-to-year basis as to how well they’re doing. Only in exreme cases would we just pull the rug out from under one of these entities entirely, which would happen due to outlandish ineffectiveness anyways.

But the two big roadblocks to this plan are significant, no doubt. The first roadblock is us. For the plan to work in the long run, we’d all have to become much more educated about everything the govt does. This is something we need anyways, and this plan might force it upon us, but there’s always going to be a bunch of assholes who don’t give a shit and put their taxes into the flavor-of-the-month. I think the way we avoid this is a slow implementation of the plan so as to prepare us for what would ultimately be a dramatic change, but we might also fall flat on our faces at first and learn the hard way to pay attention to shit.

The second roadblock is much harder to scale, and I admit I don’t have much of a solution for it. The media could definitely become a huge problem. As it is, sometimes I feel like I’m watching an infomercial for GOP policies when I watch FoxNews and I feel like the people on CNN are the same, just to a lesser extent. Sure there are other sources of media, but these are two of the big ones. It could get a lot worse with my plan. The leap of faith is to put our trust in the American people’s ability to see through the media bullshit. When a braindead dunce like Palin ends up on the GOP ticket and the left hails Obama as the Messiah, it kind of blows that theory up.

But the bottom line is that my plan would put the direction of this country much more squarely in the hands of the people. In the end, I don’t think this is a bad thing, as long as we’re ready for it.

[quote]phaethon wrote:
ZEB wrote:
Why do you want to punish those who can least afford to pay?

Yes. You want to encourage them to save.[/quote]

I think you are assuming too much. People learn the savings habit by being taught such in their early years. If someone suddenly is discouraged about paying a consumption tax may still not save it. They may find places for it where the nasty ole’s tax man can’t get it. Think about it.

Flat tax, everyone pays 20% there are no write off’s, no exceptions but one. If you make under 35-k per year you are exempt from all taxes.

I can’t think of a better way to bring an already weak economy to its knees.

Good logic, that’s why a fair flat tax is the answer. But, you will never see it as that would mean accounts and especially lawyers would be hurt.

As are the lifestyle choices of all of the people harmed by a consumption tax.

Single tax on land values.

since the question was flat vs consumption tax, I must choose one of them.

I choose a flat tax on income beetwen those too.

consumption taxes are regressive, that meens that if you are poor you pay a larger % of your
income. the richer you are the the lower the % of your income/fortune, its similar to the tax system in “robin hood” everybodyhad to pay the same tax regardless of their income. This is offcourse very unsocial
and very bad in an market economy, because if this make average people save more, it will mean less spending
and a recession is born. So I say no thank you to an consumption based tax system.

[quote]ZEB wrote:

[quote]AdamDrew wrote:

A consumption tax is the easiest to implement, most effective, and fairest way to tax a population. [/quote]

Why do you want to punish those who can least afford to pay? Most products purchased are under $100. How does that help the low and middle class tax payer? Do you think the rich care if they pay $100, or $115 for a product? However, that $15 means a heck of a lot to a family of four who make under 50-k per year.

A consumption tax is probably the worst idea I’ve heard in a long time, oh, other than making Obama President, that was just crazy, as most can now see.
[/quote]

Read up on the Fair tax. The fair tax is the best way to fund the government.

Good thing about the fair tax, Many liberals and conservatives view it as the best way to tax the population. Basically, the arguments against it are not down party lines, so it could gain mutual support from both sides of the isle, which really not any other plan could get anytime in the near future, or ever, making the fair tax not only the best Idea, but the only one that could actually ever be voted “yes” to.

V

For those that would like to either read the proposed bill and/or call up their representative it’s called H.R.25 - Fair Tax Act of 2009

[quote]DBCooper wrote:

[quote]Gambit_Lost wrote:
There has been some interesting ideas put forth on this page. One thing that I often worry about in this discussion, though, is that many people who say they want to reform that tax code REALLY just want to “starve the beast.” That’s fair enough, no one likes taxes. But I think it would be nice if we looked at implementation of these proposals as well.

If we are going to tax at “15%” then we should also be talking about how much of a deficit we will have at that rate. OR if you want to cut spending, we should talk about that at the same time. I know a lot of people on this thread have histories of saying where they don’t want their money going though, but it’d be nice to be up front about just how much would have to be cut, when you think it should be cut, and how that will realistically affect society.

DB, your idea sounds interesting. However, how general would you make the categories? How specific? How would bureaucracies be affected if they knew they only had a one year implementation period? What if a project would take several years (e.g. education reform)? Would you vote to put your money into specific categories (e.g. “education”)? or departments (e.g. DOE)? Do you think this might cause a “media frenzy” within the different organizations? Wouldn’t they all then, by necessity, have to get REALLY GOOD at marketing themselves to the public? These are just random questions. The core of your idea (a greater control of where “MY” tax dollars are spent) is a good one.

[/quote]

I’d make the categories very general at first, as well as limiting the categories to just a few essential options at first, such as education, defense spending and paying off our debt. Right now I think the avg % of our income going to taxes is something like 35%, give or take. Most of that would initially be spent the way it is now and we’d only choose for ourselves where a very small % of that goes (perhaps 1-5% of our income to start).

The process would take years to implement, maybe ten or fifteen years. So all these various bureaucracies would know ahead of time that the day of reckoning is coming and that they’d better be on track by the time we can all vote where all of our tax dollars go. Any bureaucracy/program/etc wouldn’t have one year to implement their plans, they’d just be judged by us on a year-to-year basis as to how well they’re doing. Only in exreme cases would we just pull the rug out from under one of these entities entirely, which would happen due to outlandish ineffectiveness anyways.

But the two big roadblocks to this plan are significant, no doubt. The first roadblock is us. For the plan to work in the long run, we’d all have to become much more educated about everything the govt does. This is something we need anyways, and this plan might force it upon us, but there’s always going to be a bunch of assholes who don’t give a shit and put their taxes into the flavor-of-the-month. I think the way we avoid this is a slow implementation of the plan so as to prepare us for what would ultimately be a dramatic change, but we might also fall flat on our faces at first and learn the hard way to pay attention to shit.

The second roadblock is much harder to scale, and I admit I don’t have much of a solution for it. The media could definitely become a huge problem. As it is, sometimes I feel like I’m watching an infomercial for GOP policies when I watch FoxNews and I feel like the people on CNN are the same, just to a lesser extent. Sure there are other sources of media, but these are two of the big ones. It could get a lot worse with my plan. The leap of faith is to put our trust in the American people’s ability to see through the media bullshit. When a braindead dunce like Palin ends up on the GOP ticket and the left hails Obama as the Messiah, it kind of blows that theory up.

But the bottom line is that my plan would put the direction of this country much more squarely in the hands of the people. In the end, I don’t think this is a bad thing, as long as we’re ready for it. [/quote]

It sounds like we have very similar opinions of where the country is right now and what the major roadblocks to this proposed legislation would be. I also think that your examples of Obama (as messiah) and Palin are appropriate. I think that the first phase of you plan might work. But, honestly, I doubt that the country could be ready for such a move (as are in the later stages of your plan) in the next 20 years. Of course, 20 years ago I said that America would “never” have a black or woman president…so things do change. I guess we’ll see what comes. This, in combination with other things, could be a step in the right direction.

[quote]IrishSteel wrote:

[quote]DBCooper wrote:

[quote]IrishSteel wrote:
It’s been a little while since we had a great knock-down drag-out tax debate . . . and possibly there’s nothing new to hit, but kicking dead horses is fun (and the socialists keep letting us kick them . . .) sooooo

How about it - to replace our current evil progressive tax system, which would you prefer Flat tax system or Consumption tax system, what limits/rules would you like to have and why that particular system.

I’ll lead off with Consumption tax: I would have it installed with a set percentage of 15%, with 5 for federal, 5 for state and 5 for county/city. There would be no mechanism for increasing or decreasing the percentage. It is fair to all and promotes the most economic activity - no taxes on profits, no taxes on inhertances, etc . . . earn all you want and only pay taxes on what you spend. The wealthy pay proportional to their wealth as do the poor, and it is completley equitable . . .[/quote]

Here’s an idea. We vote on what our tax dollars go toward. Not the backwards, far-removed way we do now, but a brand-new way.

It’ll take several years at least to implement but we start slowly. Let’s say we vote on some pre-determined percentage of our income (15% sounds like a nice number) or perhaps something like 12% for those who are “low-income” earners, 14% for the middle class and 16% for upper-class earners.

Now the first year, the week of April 15th (the whole week, not just one day) everyone must go to the ballot box and determine where, say 1% of our taxes go. If I want to dump 1% my income into defense spending, so be it. If I want to divide it between healthcare, defense and some other stuff, fine.

Each year we add a few %points to the total we vote on, along with giving us more options to choose from each year, until we’re acclimated to this process and are dividing our 12-16% between all sorts of different choices. Maybe we’ll take anywhere from 8-12% of our income for federal taxes and the rest for state taxes. The point is that we choose for ourselves where our tax dollars go. We get the govt we deserve, as the saying goes.

Obviously there would be some problems to this method, but a huge added benefit would be that we’d be forced to pay a little more attention to what the hell happens in our state, local and federal govt. You can bet your ass that if I wanted to put all of my taxes into education spending, I’m going to have a pretty good idea of what the education czar is all about. If most of the country feels that we should have a huge defense budget and no social services, that’s what we’ll get. And it’ll keep all these bureaucrats much more accountable because there budget will be determined on a year-to-year basis that is highly dependent on their success or failure each year. Fuck up this year, next year you might not get shit.[/quote]

You know what DBC? - we’ve disagreed on a few things - but this idea just might be freaking genius level intelligence! I like where you’re going here . . .[/quote]

The only thing I would change is it has to be flat across the board, that is the truly the only way taxes should work.

a percentage is a standardized or relative number already. What you are proposing from an analytical perspective is a wieghted system which indicates your model is not the best model to fit the data. In other words learn to spend less, people need to realize you can’t take outmore than you put in. The way our current tax system and budget is set up defies all natural laws.

only two major stipulations I have,

  1. no exemptions, credits or rebates for either plan.
  2. if you have a sales tax, there is no income tax at any level. If you have an income tax there is no sales tax at any level.

[quote]apbt55 wrote:

  1. if you have a sales tax, there is no income tax at any level. If you have an income tax there is no sales tax at any level.

[/quote]

I agree. On a personal note I can not beleive some of you live in states that have both Income taxes and Sales Taxes.