A Consumption Tax or an Income Tax?

LewRockwell.com ^ | 11/13/2002 | Llewellyn H. Rockwell, Jr.

[sheltonmac]

Some good points. A national sales tax is not the answer.

[Revolting cat!]

How mean spirited - tax those unfortunates who suffer from consumption? On the other hand, wait! That'll work for me!

[jdege]

Taxing income requires that the government know far more about my finances than it has any business knowing.

A sales tax simply requires that the government know a retailer's gross receipts.

It's far less intrusive.

[sheltonmac]

:-)

[billybudd]

He ignores the argument that a sales tax would be less politically sustainable because it is more visible to the general population.

[Free the USA]

http://www.freerepublic.com/perl/bump-list

[Gatún(CraigIsaMangoTreeLawyer)]

Just a question...An American living in another country would pay no U.S. taxes...hopefully? I admit this is becoming a tad confusing.

[ikka]

Just a question...An American living in another country would pay no U.S. taxes...hopefully? I admit this is becoming a tad confusing.

Current laws say that those overseas, earning $75K or more per year, must pay 10% income tax. Of course, you have to file for them to know what you are making. Under consumption tax, no, you would not pay any money.

[Gatún(CraigIsaMangoTreeLawyer)]

ikka, Thank you for your reply. I'll stay put in Panama. Since I pay U.S. taxes, I do not pay taxes to Panama (Panamanian law). Therefore, if this goes through, I take home every dime I earn.

[babygene]

"Some good points. A national sales tax is not the answer."

Ah, yes it is...

Here’s why:

Most of the products that we buy are foreign made. Just look around your house or shop. Most manufactures today make their products offshore, and then they import them back into the country duty free. This gives a huge tax advantage to move manufacturing out of the United States, and deprives our country of one of the few vehicles for generating wealth.

What a national sales tax (if it replaces the income tax) does is to level the playing field. Since goods would be taxed when purchased, it would effectively be a tariff on imported goods. If you wanted to go a little further without having a big negative impact on the revenue collected, you could exempt products made in the United States.

[sheltonmac]

Then why not just raise tariffs on imported goods? Either way, I only see the consumer suffering in the long run. The government will abuse a national sales tax just as they now abuse the national income tax. I think it would be best to leave taxation to the states, be it an income tax, a consumption tax, or whatever. The federal government would then tax the state governments directly. Nationalizing a consumption tax would ensure that no American could escape it, no matter how oppressive it became. The only way out would be to renounce U.S. citizenship and flee the country.

[Atlas Sneezed]

My favorite reason for the consumption tax is that citizens would not be forced to disclose their private life details (such as where they work, where they live, how they spend their money) and keep private records for government inspection for the the mere necessity of supporting themselves and their families.

The intrusive bookkeeping and loss of privacy would apply only to companies and those individuals who voluntarily decided to pursue retailing and such businesses.

[Always Right]

Taxing income requires that the government know far more about my finances than it has any business knowing.

A sales tax simply requires that the government know a retailer's gross receipts.

The government has to be able to see every transaction in any system to determine whether that transaction has some taxable consequence. I really see no difference. Most people get one pay check every two weeks, but they buy stuff every day.

[ThinkDifferent]

Some of the points are true, but irrelevant. I'm all for cutting government spending by a trillion or so, but it's just not going to happen anytime soon. As long as the government needs money, it has to collect it somehow, and a sales tax is far preferable to the complex, loophole-ridden, and invasive income tax we have now.

[Always Right]

As long as the government needs money, it has to collect it somehow, and a sales tax is far preferable to the complex, loophole-ridden, and invasive income tax we have now.

Since business to business transactions are not taxable, there are loopholes. What happens when every sets up businesses and try to claim everything as a tax-free purchase? There are loopholes in any system and as people get more creative, the tax becomes more complicated and more intrusive.

[kpp_kpp]

the goal should be reduce gov intrusion on personal finances. obviously, eliminating the gov would accomplish this but that is probably impractical. there should be a way for the gov to establish a tax/revenue system that accomplishes the non-intrusion goal w/o bancrupting itself or over burdoning individuals income or consumption.

* flat tax on all monies going from corporations (business entities) to individuals (employee, contractor, owner/dividends, etc.) in the 5-10% range. this accomplishes most of the non intrusion goal in that the corporation would just have to report the totals and keep track of its payments for auditing purposes.

* flat tax on all monies going from individuals to business entities (i.e. sales tax) in the 5% range. again this accomplishes the non intrusion goal.

* fair, progressive taxing of businesses - promote and encourage small businesses. the intrusion is of business entities not individuals.

* tariff/sin taxes where necessary (imports, fuel, alc, etc.)- unrealistic to think that the gov, esp the states, would give those up.

* constitutional amendment eliminating gov intrusion on personal finances to make the states play by the same rules.

[Gatún(CraigIsaMangoTreeLawyer)]

“Nationalizing a consumption tax would ensure that no American could escape it, no matter how oppressive it became. The only way out would be to renounce U.S. citizenship and flee the country.”

Renouncing your U.S. citizenship is an option but not necessary and not advisable at the moment until one researches everything. The more passports one has, one is better off in terms of survival in view of what the world is today. This has nothing to do with loyalty to one’s country. Although I am dual, Panama recognizes I pay U.S. Taxes. If I were to declare myself as strictly a Panamanian citizen, my taxes would be higher than those of the U.S.

[stubernx98]

You are right. that's the way Europe does it eith their VAT.

[babygene]

" Nationalizing a consumption tax would ensure that no American could escape it, no matter how oppressive it became."

Yes you could. You could stop buying new stuff and buy or barter used stuff. You control what you buy...