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You misread what I said. A house + consumption tax is $625,000.00. If there was no consumption tax, the house would cost $500,000 + the income tax required to pay $500,00, which comes to $694,444.44. It is cheaper with the consumption tax. Now, of course, you could argue that the consumption tax rate should be set so that the tax is equivalent to the income tax required (otherwise, there would be a tax revenue drop).

The same logic applies to real estate lady, moving, furniture, drapes, painters, etc.

The argument that prices would drop by 25% and then add consumption tax so that you are at the same place is ludicrous. Essentially, the people that claim this are saying that all prices would be about the same after the tax, but there would be no income tax. This is dumb. The real benefit arises from the reduction in compliance costs. Also, it becomes increasingly difficult to make a consumption tax progressive. AND, individuals would no longer fear an audit. One other thing, it gets rid of hidden taxes (like employer paid taxes, property taxes applied to businesses, etc.)

What you are missing is during the initial construction, none of the construction items or work would have a consumption tax, because that is the manufacturing process. Only when it is sold as a new home would it be taxed. My guess is that when later sold, the difference in sales price would have to be taxed.

I do agree that the problem is that an income tax could be reintroduced.

What I personally would like to see is an amendment that allowed the only form of taxation to be a flat consumption tax. No income taxes, no property taxes, etc. It would consolidate all the taxing authorities, thereby significantly reducing compliance costs. Also, it would become extremely clear to the average joe how much he is paying in taxes.

Undeniable Logic

Wait just a darned minute ! If there IS a consumption tax, on everything, then there WOULD be a tax on what is bought to construct a house. Since I was talking about an already built one, though, one built prior to the introduction of a consumption tax, you've managed to strengthen MY side of the argument AND proven that a consumption tax would then make buying the house more expensive than buying one under today's ( which needs fixing and lowering ! ) income tax situation.

The article says absolutely nothing about property taxes, state taxes of any and all kinds, being done away with ; just a change in the FED GOV system of tax collecting.Neither does it claim that a consumption tax could never be increased. It could and it would be.

All in all, not that many people get audited. Have YOU ever been ? I have and we did nothing wrong. It's inconvenient, a pain in the neck, but not the end of the world.

The Fed Gov can't do away with local property taxes. That's a state's perogavtive and is not even a state doing this, but a local community.

The majority of states have state income taxes and N.Y.C. even has a city income tax. This article and the vast majority of posters totally ignore these saliant facts! Also being totally ignored, are the local sales taxes, which in Chicago and N.Y.C. are almost 9% of most purchases. Since a 25% consumption tax, on top of all of that, would be close to 40 % taxation and NO ONE, not even the highest tax rate level, is that high, this would be punishing. BTW, nowhere, in this article is a rate even mentioned. For all we know, it could be a 20 % or a 25 % or a higher rate. What if it's 30 % ? Where's the tax saving then, for most people ?