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Originally Posted by kutulu
KMA, you're talking out of both sides of your mouth. First you say that we are already paying a 50% tax rate because of all the "hidden" taxes. Then you say that a 30% consumption tax would be way higher than what the govt needs and in reality it would be under 20%? Right. Unless there is some drastic spending decrease it isn't going to work.
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Um, no I am not. I never said that the consumption tax would "be way higher", I said it would bring in more money. I am working my ass off to portray real information in a factual manner. I am also being very diligent to point out when I am asserting opinion or when I am referring to theory.
Note: see my previous post regarding spending, I completely agree with you there.
The 50% number is based on: income
Consumption tax is based on: consumer spending
Two different base number from which to draw percentages. It is not "talking out of both sides of my mouth" to say that the money brought in now (at the roughly (50% rate) would be less than the money brought in under a consumption tax.
Yes, the gov't will get more money by taxing spending than it does by taxing income.
The main reason: It is much harder to evade a consumption tax than an income tax (it is posiible, but harder).
Our current system does not and cannot collect revenue from tax evasion and the undergound economy (estimated to be over a trillion dollars). Consumer spending is roughly $7.7 trillion dollars.
Net revenue felt by our government right now would be less than the net result felt by the government by a consumption tax system. Plus, in theory, the amount of revenue felt by the gov't would gradually increease year after year as more companies expand, more companies move to the US, more jobs are created, "real" income goes up, spending is increased, etc., etc.