Posted on 01/13/2009 6:17:44 AM PST by reaganaut1
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Why not pass a 5 percent consumption tax to take effect two years from now? There are many different ways to implement a consumption tax, but for simplicity think about a national sales tax.
In the short run, the anticipation of a consumption tax would encourage households to spend money now, rather than after the tax is in place. Along with the rest of the economic recovery package, this would help jump-start spending in the economy and thereby increase production and employment.
In the long run, a 5 percent consumption tax would raise approximately $500 billion a year, and fill a considerable hole in the budget outlook. In addition, a consumption tax would encourage more saving in the long run. Many economists consider a consumption tax an efficient way of raising tax revenue, especially in a global economy. The prospect of greater revenue flowing into federal coffers would probably help lower long-term interest rates because the government would need to borrow less down the road, and further bolster the economy.
The main downside of this proposal is that taxes reduce economic activity. But the government must make critical trade-offs, and a consumption tax could be the most efficient means to raise revenue to finance essential government functions. Over time, if the budget picture improved, income taxes or corporate taxes could be reduced and the revenue replaced by the consumption tax.
Another downside is that a consumption tax is a greater burden for the poor, who spend a relatively high share of their income. But this can be compensated by exempting essential items, like rent and nutritious, or by providing a rebate to low-income households.
(Excerpt) Read more at economix.blogs.nytimes.com ...
Exempting the poor from a consumption tax would amount to another income tax for the middle class.
Krueger says that income taxes could eventually be reduced if the budget deficit narrows, but under the current "progressive" income tax, any broad-based income tax cut will be denounced by Democrats as a "windfall for the rich".
Unlike some Freepers, I don't support the FairTax, because any national sales tax will be imposed ON TOP OF current income taxes, even though that is not the intention of FairTax advocates. It's better not to open the door on any new types of government taxes.
Tea Party Time!!!!!
I agree with you. After years of studying the “fair tax’ I am no longer in favor of it
The burden it would place, on top of the income tax, and how high it would need to be to have any real effect would be quite burdensom.
Now a flat tax plus an NST and you might have something that could work. However all Dems will want exemptions for the poor which would again add an extra burden to the middle class
I’m for a consumption tax to REPLACE ALL TAXES ON PRODUCTION.
It’s like watching the Monty Python “Spam” skit, only with the word “tax” substituted...
How about reducing all taxes by 5% right now?
No country ever taxed or spent its way to prosperity...
New taxes are new taxes no matter what we call them. The real problem is in the area of spending. God knows we’ve got an incredible ammount of useless taxpayer funded programs.
But, but, that's all the socialists know how to do. The economy's doing well, tax more to get their share. The economy's in the tank, tax more to get it moving again.
I swear, these people don't give a damn about the economy. All they care about is their fiefdom.
Welcome back from the dark side...
The proposed $500 billion in new revenue could be used to say reduce income taxes by a third across the board. It would bring the top rate down from 35% to around 23%.
However the Dems would balk at it as they want $500 billion to pay for new spending programs and hand outs and even if they agreed, they probably would just raise income taxes a few years later. But in a perfect world, as long as it was used to draw down the high income tax rates I would be okay with it.
A Fair Tax, IMO, would just mean the return of a bartering economy.
Any government worth having is worth everyone paying for.
Anything else is theft by proxy. The people receiving the money are stealing. The only difference is that they are using a politician instead of a gun.
Politicians are more dangerous.
Garde la Foi, mes amis! Nous nous sommes les sauveurs de la République! Maintenant et Toujours!
(Keep the Faith, my friends! We are the saviors of the Republic! Now and Forever!)
LonePalm, le Républicain du verre cassé (The Broken Glass Republican)
How about we reduce spending? How about we stop coming up with more clever taxing schemes? “Conservatives” are just as bad as the nitwit NYT. The best Republicans do is offer some clever scheme that they promise will either be revenue neutral or will bring in even more money. Doesn’t it make any of you sick to hear that some proposed tax cut will bring in even more money. Any tax cut that increases government revenue is not big enough. Anyone who touts a tax cut as increasing government revenue is no conservative.
There. . .fixed it.
OK
“any national sales tax will be imposed ON TOP OF current income taxes”
True dat. 16th amendment must be repealed in conjunction with a national sales tax.
We citizens will know when we are winning the war against ‘our’ politicians when we get a tax systen which takes power away from them and gives it to us. Currently the income tax system may be used by politicians for both benefit and punishment of citizens.
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