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Originally Posted by KMA-628
The "free" tax level is set at the poverty level, which is different for individuals and families and already set: I think for individuals it is around $9K.
Here is an example, based on the levels where I live:
Current Sales Tax: 7.1%
Proposed Consumption Tax: 16%
Total tax: 23%
Understand, however, that while this looks like an increase in spending on your part of 23%, it really isn't. First, costs will go down, followed by price. Second, real income will increase dramatically, instantly.
The "real" increase felt by most consumers will not be much more than is already being paid out--and nowhere near near the level we are being taxed at right now. This is actually a tax decrease, as roughly 50% of your income won't be spent on taxes as it is the case right now.
As the plan takes effect and begins to bring in more money, the rate would go down, probably to the 10-12% neighborhood.
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Sorry if i missed the answer in here somewhere, but how do you exempt a certain amount of income? If two people go and buy a couch, don't they pay the same tax? If one is low income and won't have to pay the tax, how do we figure that out? Say you don't know until the end of the year how much you will make? Is the exemption based on consumption or income? If income, then don't we all have to do some form of taxes anyway?