Except for the fact that you don't have to tax necessities. Not even the FairTax does that.

Relativity doesn't matter in this issue, only the absolute. Income taxation hurts investment even if the rich still invest more than the poor.

Just like you don't have to buy from someone paying a consumption tax, you don't have to work for someone paying your income tax.

__________________
.

I find it extremely ironic that many of those who claimed that Bush was the worst president in history claim that Obama is possibly the greatest thing to ever happen. If it is policy you are concerned with, then Obama is simply more of the same. More spending, more deficit, more foreign involvement, more government intervention, and more government regulation. Only a true partisan would claim that Obama represented change as the only change is the party he's from.

If you do not tax necessities what do you tax! Taxes on luxury items will never be able to support the government. I realize now that this act is not a means to simpfly the government tax system, but means to limit and reduce the government. For all its faults, the income tax has proven reliable. Why fix something that is not broke? You will probably say that the income tax stifles investment, but a government that cannot properly regulate the economy stifles investment (do any recent events come to mind?). Also, there is no evidence proving that the fair tax will allievate any economic or beaucratic problems, so I do not think it is safe to risk our national integrity on a theory based on speculation and what-ifs.

__________________
"Anyone who trades liberty for security deserves neither liberty nor security."
- Benjamin Franklin
"The trouble with fighting for human freedom is that one spends most of one's time defending scoundrels.For it is against scoundrels that oppressive laws are first aimed, and oppression must be stopped at the beginning if it is to be stopped at all."
- H L Mencken
"Injustice anywhere is a threat to justice everywhere."
- Martin Luther King Jr.

By not taxing housing, utilities, medical care, and food, taxable consumption falls to 4,881B from 10,169B.

For that to be solvent at that tax rate and taxable income (assuming taxing government spending produces a wash), federal government would need at least a 2/3ds reduction in size to compensate, as well as a reduction in state sales tax and spending, or state non-sales tax raises. Texas would have to rethink its tax system entirely.

--------------------

If you just left off food and housing, the figure would remain at 7232B taxable, assuming 100% of that gets taxed. That translates to a 1663B tax revenue, or a 42.5% reduction in government spending, no prebates.

---------------------

By the way, government spending is 2.9 trillion. That document earlier underestimates by something like 600 billion. A small oversight that gives me a lot of confidence. Maybe they're assuming that we stop paying into SSA and SSI entirely, I'm not sure. Or interest, no more interest.

__________________

How much would would taxable consumption fall if the government could not tax income?

__________________
"Anyone who trades liberty for security deserves neither liberty nor security."
- Benjamin Franklin
"The trouble with fighting for human freedom is that one spends most of one's time defending scoundrels.For it is against scoundrels that oppressive laws are first aimed, and oppression must be stopped at the beginning if it is to be stopped at all."
- H L Mencken
"Injustice anywhere is a threat to justice everywhere."
- Martin Luther King Jr.

Income doesn't fall under the consumption numbers. But here's some relevant info if you meant something else

http://bea.gov/national/nipaweb/Tabl...&LastYear=2008

__________________

Both FairTax.org and the plan I proposed do tax necessities. There are no exclusions for new goods or services.

All new goods and services are taxed without exception so, if the "necessity" is a new good (e.g. food) or service (e.g. phone service) then it is taxed BUT the taxation for these necessities is offset by the Prebates. That is the very basis for the Prebates as they extablish the "cost" of necessities and then the Prebate covers the tax on those necessities.

Now if you are addressing something like clothing, which can be bought secondhand then it is not taxed because it is not new.


A consumption tax increase investments because income from those investments is not taxed. Instead of the wealthy moving money to offshore accounts, which is legal under our income tax system to avoid paying income tax on their investments, the money would stay inside the country and be invested. Additionally the wealthy from other countries would move their money into the US economy because they wouldn't be taxed on their investments. Basically the US would become an "offshore" account for people from other countries.

Additionally by removing the embedded taxation in products and services the cost of US goods and services in reduced making them more affordable on international markets driving up demand and the "market share" of the global markets. This market share increase drives up production, especially in the manufacturing sector, which increases labor demand by companies, employing more people. It becomes a job rich environment which also increases wages until a balance is reached between demand and production. True "capitalism" based upon supply and demand without government intervention which the current income taxes suppress.

__________________
Soldiers swear to protect and defend the Constitution with their lives.

Politicians swear to protect and defend the Constitution with someone else's life.

Pro of the consumption tax..... they can't force us to pay and that gives us a hammer.

New forum rule, all medications must be shared between posters LOL

The US Constitution is not flexible except in interpretation of it's application but it is amendable which makes it flexible. It is fundamentally a contract between the States and the Federal government where certain responsibilities (and specific prohibitions imposed) were transferred from the States to the Federal government in writing. If a responsibility has not been transferred then that responsibility remains with either the State or the People (10th Amendment).

We see abuses when this concept is applied in practice. For example, the federal government does currently provide money for interstate highways in the US (but not for city streets) so here, in Washington, they have an interstate highway that's about 400 ft long at the far end of a ferry run so that the ferry is considered a part of the interstate highway system. The more money you put in the federal coffers the more ways the politicians find to justify "earmarks" (you've heard about those). The famous "Bridge to nowhere" in Alaska was one such boondoggle project that only existed because the State of Alaska thought they could steal money from other States for a worthless project. They would never have considered a $200 million project for 40 people if the State had to pay for it.

We see the same thing for education here. The Federal government became involved in funding education although there is no enumerated authority for doing this. Educating our kids is important, isn't it? Well, the contribute about 7% of a States budget towards education. Sounds good so far. Unfortunately it has been calculated that unfunded mandates associated with these funds costs the States about 10% of their budget. So for every seven dollars of Federal aid to education it costs the State $10. This is a net loss of $3 and yet the People believe that they are getting "free money" from the Federal government when it actually reduces the net funding to education. There are school districts that refuse the Federal funding for this very reason. They avoid the addtional taxation and don't have to comply with the Federal mandates.

Federal funding always comes with strings attached and those "strings" are very expensive.

__________________
Soldiers swear to protect and defend the Constitution with their lives.

Politicians swear to protect and defend the Constitution with someone else's life.

It is true that the wealthy do not buy 70% of all new goods and services BUT you forget the prebate which offsets the consumption tax for the basic necessities for the poor and middle class. When this is accounted for the wealthy do buy the vast majority of new goods and services.

Let me use real estate as an example (no one can deny that the wealthy live in expensive and often new homes). If you buy a home that is "used" then you pay no tax at all. If, on the otherhand, you purchase a "new" construction home you pay a consumption tax on the building but not on the property (property is always used). I don't know about you but I have never purchased a new home and I would pay no taxes on the purchases I have made.

Let's look at buying a car. If you buy a new Mercedes made in Germany that car is taxed when you bring it into the United States or if you purchase it at a dealer in the United States. I've owned Mercedes (and even a Bentley) but they have always been used and I would be subject to no tax on the purchase.

People also forget that there is a major reduction in the cost of new goods and services with the elimination of embedded taxation estimated at over 20% for the average business so while a new Mercedes would cost the same plus the consumption tax a new Cadillac would cost about 20% less encouraging Americans to buy the less expensive Cadillac.

The black market that so many like to cite as a problem really isn't. If you buy something online from Mexico it still needs to be shipped into the United States. The tax would be applied when it comes into the country. Yes, there is an enforcement issue but it is not as hard as people suggest and, because the product from Mexico would cost about the same as the identical product made in the United States there isn't much of an incentive to risk such a transaction.

I can tell you who might oppose a consumption tax and that is Walmart. They depend on cheap Chinese goods because the cost of US goods is so high. If the Chinese goods are now taxed and American products do not have embedded taxation then American products can compete based upon retail price with the Chinese and Walmart loses it's competive advantage. Remember, there are no US income taxes collected on a the manufacture of a product produced in China but a consumption tax imposes the identical taxation regardless of counrty of manufacture.

__________________
Soldiers swear to protect and defend the Constitution with their lives.

Politicians swear to protect and defend the Constitution with someone else's life.

This is a false assumption based upon the belief that the government isn't already paying the taxes on the purchases it makes. When the government buys something like an F-35 fighter is pays the FICA and income taxes for all of the workers. While the consumption tax would not eliminate the money paid to the workers it would remove the embedded taxes, predominately FICA, which raise the cost of the product the government buys. As noted, not only does it not pay the FICA taxes but it doesn't have to pay for the accounting departments which would be greatly reduced by the elimination of federal taxation and even the profit the companies make on these overhead expenses. So the cost of that F-35 would be about 20% less and the government would pay about the same price, including the tax, as it does today.

Of course with a new more robust economy driven by increased production resulting from lower production costs the wealth of the country increases and the government actually nets more revenue. This is similar to the economic model that show that a reduction in the tax rates increases the government revenue by stimulating the economy.

__________________
Soldiers swear to protect and defend the Constitution with their lives.

Politicians swear to protect and defend the Constitution with someone else's life.