KMA-628

O.K., this is going to be a long one as there is a lot to respond to:

How are 6.1 billion man-hours negliglble? Not only is this a huge economic loss for EVERYBODY, the future economic reprecussions are huge taking into account the opportunity cost of tax compliance. It is a huge waste of time that benefits nobody and costs all of us millions and millions of dollars. I would argue that tax compliance activities are hardly negliglible on any scale.

Closing the loopholes will leave over a trillion dollars untaxed--the underground economy. Closing the loopholes will not help a broken system that hinders savings, investment and growth--true variables when considering economic growth of today and the future.

Why are corporations moving their headquarters overseas? Reason: taxes. We are losing millions and millions of dollars because companies cannot afford to prosper in our economy. I guarantee you that with a consumption-based taxation system, you will see a sudden influx of capital from companies moving their headquarters back to the US and new companies seeking the tax shelter our system would provide. That represents real money in terms of new business, new jobs, more money, etc., etc.

The first $18,588 of spending is tax free, for everybody. How many poor people spend more than $18K a year? If they do, they aren't poor they just aren't reporting their income correctly.

How much more than $18K does an average middle-class family spend a year? On consumer items, not too much more than $18K (I have no facts for this, I am guessing based on total spending averages for the middle-class, minus spending that wouldn't be taxed). For arguments sake, let's say that the average middle-class family spends around $26-28K a year.

1 - The first $18,588 is tax free, so that drops the tax burden to $8-10K a year.
2 - With the implementation of this system, take home wages for middle-class people will instantly in crease around 20%. That is 20% more in their pocket, right away. On average, that will equate to an additional $5-9K of additional money in the middle-class' pocket.
3 - If spending stays the same, the poor will continue to pay in taxes what they are already paying - nothing. The middle-class will probably pay close to or less than they were.

Unless my math is wrong or my information is wrong, how do they get hurt? How is this shifting the tax burden? I just don't see it.


O.K. What did the government bring in? $1.95 trillion (this number includes all forms of taxes received by the government), gross, not net. In other words, we spent WAY more then we received from taxes. Especially since the $1.95 trillion number is gross--I haven't found a good source for net revenues yet, without doing a ton more research than I already have.

Granted, the first few year of this system, we would continue to run deficit spending. Given enough time, the benefits of the system would be seen and we would no longer take in less than we spend (as long as spending is capped--we have to control spending first, no tax system can maintain the kind of spending sprees we have seen over the last several decades).

Also, with the influx of money and jobs into our economy, the "poor" people that want to do better, can. Maybe some of these people will no longer be counted in the "poor" column.


Conservative estimates of the underground economy (which includes the people you reference) is over a trillion dollars, with some estimates considerable higher. I hardly think waitstaff and day laborers make up any sizable portion of this estimate. The unique thing is that people that are receiving money un-taxed (i.e. thieves, drug dealers, contractors that work "under the table") would be fairly taxed under a consumption system. Our current system has no way of doing that, other than by spending millions of dollars on prosecution and then settling for pennies on the dollar.

Anyway, what percentage of waitstaff and day-laborers earn more than $18K? They won't be taxed under this system, so they won't be hurt. In fact, they will bring home more than they are doing not.

A consumption tax (with the floor set at $18K) is ideal, because everybody spends and everybody spends according to their means. A millionaire spends much, much more than I do, so they would pay much, much more than I do on the consumption tax. A poor person spends a fraction of what I do and their burden would be 100% less than mine, i.e. zero.

The trick is to not hinder growth by being anti-savings and anti-investment. Savings and investment are key to our economy doing better as a whole. Without it, we will dwindle to nothing.



First, you must understand where I come from. I am not "redistributionist" in any way, shape or form, nor am I rich. Our country was founded on the idea that all people are equal. How is taxing one person more than the next equal? It isn't. If you are a redistributionist, then this tax plan will not appeal to you as it doesn't serve your purpose.

However, based on the evidence and the studies, a consumption-based taxation system could work and it could work very well. And, in a sense, it promotes your ideals because the burden of the "poor" is either zero or negligible. Granted, there is no "free money" for them under this plan (i.e. EIC).

Also, there is a very good possibilty that our economy could flourish under a system like this. This will help the poor, the middle-class and the rich. I don't want to give anybody hand-outs. I want a system where a person can make more money and be more properous, based on their motivation level.