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Originally Posted by Manx
Under your plan, A takes home all $50,000 and B takes home all $500,000. Meanwhile, A spends $35,000 on consumption-taxable goods, minus the $18k free-zone, that leaves $17,000 in taxable money - at the very conservative 20% you have suggested, that means $3400 in taxes. Or, a 7% tax rate.
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I question that "A" spends $35,000 on taxable goods under this plan. The plan that I am referring to uses retail spending as a base. I don't see "A" spending 70% of his/her income on retail spending. If that were the case, they wouldn't be able to afford a house, let alone a roof over their head.
Also, when I made $50,000/yr, my take home was less than $40,000.
I see where you are getting at, but I am not too sold on the numbers being used.