And true to their hypocritical nature, consumption taxes are also their favorite method of social engineering.
Just look at what they do with the excise (sales) tax on alcohol and tobacco.
Can you imagine what they'd do when Pandora's box is opened and a nationwide sales tax is placed on all retail sales?
I bet Chuckie Schumer would be the first to jump in with a proposal for a 500% NRST on handguns, hunting rifles and ammo.
The environuts will insist on higher NRST on SUVs and an exemption on bicyles and Yugos.
The Food Nazis will want a higher sales tax on Fast Food, red meat, etc. etc.
PETA will be demanding "protectionist" tax levels for all the abused little critters of the world.
Feminazis will be squawking that a sales tax on abortionist's "services" violates their privacy.
This national sales tax proposal is idiocy.
It just expands the number of items the congress critters will tax us on and we'll wind up keeping some kind of income tax anyway.
If there were no taxes at all on saving, we would per se have a consumption tax system, even if there were no direct taxes on sales.
Bruce Bartlett is a proponent of the Flat Tax, simply put a tax on wages combined with at VAT. His description of such is based in the economic equivalency:
Consumption (i.e. expenditure) = Income - savings.
A true consumption tax is laid on the left side of the equation (expenditure),
H.R.25
SPONSOR: Rep Linder, John (introduced 01/7/2003)
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
Refer: http://www.fairtax.org & http://www.salestax.org
while VATs & income taxes are laid on the right hand side of the equation (Income - savings).
None other than the father of the flat tax, Robert Hall of Stanford University (along with Alvin Rabushka), in his 1995 Ways and Means Committee testimony said, "The Hall-Rabushka flat tax is a value-added tax."
Which was pointed out again in additional hearings in April of 2000:
http://waysandmeans.house.gov/fullcomm/106cong/4-11-00/4-11kotl.htm
"Robert Hall, one of the originators of the proposal(Flat Tax), who describes his Flat Tax as, effectively, a Value Added Tax. A value added tax taxes output less investment (because firms get to deduct their investment.)"
"The Flat Tax differs from a VAT in only two respects. First, it asks workers, rather than firm managers, to mail in the check for the tax payment on that portion of output paid to them as wages. Second, it provides a subsidy to workers with low wages."
The Flat Tax; Chapter 3, by Robert Hall and Alvin Rabushka
| In our system, all income is classified as either business income or wages (including salaries and retirement benefits). The system is airtight. Taxes on both types of income are equal. The wage tax has features to make the overall system progressive. Both taxes have postcard forms. The low tax rate of 19 percent is enough to match the revenue of the federal tax system as it existed in 1993, the last full year of data available as we write. Here is the logic of our system, stripped to basics: We want to tax consumption. The public does one of two things with its income—spends it or invests it. We can measure consumption as income minus investment. A really simple tax would just have each firm pay tax on the total amount of income generated by the firm less that firm’s investment in plant and equipment. The value-added tax works just that way. But a value-added tax is unfair because it is not progressive. That’s why we break the tax in two. The firm pays tax on all the income generated at the firm except the income paid to its workers. The workers pay tax on what they earn, and the tax they pay is progressive. To measure the total amount of income generated at a business, the best approach is to take the total receipts of the firm over the year and subtract the payments the firm has made to its workers and suppliers. This approach guarantees a comprehensive tax base. The successful value-added taxes in Europe work this way. The base for the business tax is the following: Total revenue from sales of goods and services less purchases of inputs from other firms less wages, salaries, and pensions paid to workers less purchases of plant and equipment The other piece is the wage tax. Each family pays 19 percent of its wage, salary, and pension income over a family allowance (the allowance makes the system progressive). The base for the compensation tax is total wages, salaries, and retirement benefits less the total amount of family allowances. |
FLAT TAX, VAT TAX, ANYTHING BUT THAT TAX; Duke Law Magazine, Spring 96:
- "The flat tax is essentially a VAT, with a personalized element for wages. Thus, the business tax allows deduction of all purchases -- as does a VAT -- but also allows deduction of wages. The wage income that is taken out of the VAT base, however, is also taxed, but is assessed against the individual wage-earner, not against the business."
Concerning Proposals for a Flat-Rate Consumption Tax
Before the Joint Economic Committee, Statement of Robert S. McIntyre
Director, Citizens for Tax Justice May 17, 1995
- The Hall-Rabushka flat tax, and its Armey and Specter variants, would replace the current personal and corporate income taxes with a new tax that is conceptually identical to a "subtraction-method" value-added tax, a version of a national sales tax, with two major modifications: First, imports would be exempt from the flat tax, while exports would be subject to tax. Second, to mitigate the regressivity of the VAT, cash wages, pensions received and other cash earned income would be taken out of the VAT base (i.e., deducted by businesses) and taxed directly to individuals, with exemptions. Thus, structurally, the flat tax is exactly equal to a value-added tax with an import incentive, an export disincentive and a personal rebate based on a percentage of a capped amount of cash wages, pensions and other earned income.Businesses compute a typical "subtraction-method" value-added tax by adding up their taxable gross receipts and subtracting the cost of previously taxed items. Thus, in computing the VAT, businesses deduct their purchases from other businesses, whether for supplies, services, machines, land or whatever. (In another, more common form of a value-added tax, known as a "credit-invoice" VAT, businesses get a tax credit for taxes paid on purchased items. In general, this produces the same result as a "subtraction-method" VAT.) Ultimately, the total tax base for a VAT is equal to retail sales of taxable items, and a VAT is thus equivalent to a retail sales tax. As noted, however, the flat tax base differs from a usual VAT, however, in that wages are deducted by businesses, and taxed at the personal level
CONSUMPTION TAX PROPOSALS; 1996 Deloitte & Touche LLP
- One concern associated with the flat tax is whether the low advertised rates will produce the same amounts of revenue as the current income tax. A June 7, 1995, Treasury Department analysis of a flat-tax plan similar to the Armey proposal, concluded that a rate of at least 22.9 percent would be needed to make the plan revenue neutral, that is, it would allow the government to raise as much revenue as is currently raised. Although the proposal is designed to raise less revenue than present law, the extent of the shortfall will concern policymakers.
- The Armey bill, H.R. 2060, would replace the current corporate income tax with a tax on business activities equal to 20 percent (17 percent after 1997) of business taxable income. The tax would apply to every person engaged in a business activity, whether an individual, partnership, corporation, or otherwise. Taxable business income would be gross active income (that is, income other than investment income) reduced by an array of business deductions.
- This business activity tax resembles a VAT computed by subtracting the costs of inputs from gross receipts, except that H.R. 2060 allows a deduction for cash wage expenses. Note that, under the bill, cash wages are subject to tax at the individual level at the same flat rate applicable to business profits. Thus, the combination of the business activities tax and the individual tax is roughly equivalent to a VAT. In addition, taxing wages at the individual level allows a generous personal exemption that makes the personal tax more progressive. To ensure that compensation is taxed once, tax-exempt entities that pay compensation other than as cash or retirement plan contributions would be subject to an excise tax.
The choice is yours between real change to a National Retail Sales Tax, or a political fiction to perpetuate the mistakes of the the European Union's VAT plus income taxes and income/payroll tax systems.
That's an asinine remark, define "wealthy".
interest, dividends, rent and capital gains -- are fully taxed. Under a consumption tax, they would be exempt
Not entirely true. If you pay rent you'd pay tax on it. Some economists suggest homeowners should pay tax on imputed rent. Interest would be taxed on implicit and explicit "financial intermediation services" to include interest paid.
According to the Federation of Tax Administrators, 45 states currently have general sales taxes, varying between 2.9 percent in Colorado and 7 percent in Mississippi and Rhode Island. Local sales taxes can raise the total tax as high as 9.75 percent (in Oklahoma), with excise taxes on some specific goods on top. The Federal Government also has many excise taxes as well, especially on gasoline, alcohol and tobacco.
The so called "consumption taxes" are actually a tax "of the gross payment" ...all those state sales taxes, excise taxes, fees etc listed above would be taxed once again with the "gross payment" tax.
Paying taxes on taxes REDUCES your disposable income, you only think you'll have more money to spend/invest....government spending what it is, "how could it be otherwise"?
THAT'S the purpose of the Income Tax, pure and simple. It also, of course, has the side benefit of being able to be used to enslave the votes of the underclass, but that's not its root.
Michael
Since the typical mindset is corporations/businesses don't pay taxes they simply collect them, and as the article states, "consumption is roughly proportional to income, because over a lifetime we eventually consume all our income", I suggest we eliminate taxes on individuals and tax only corporations/businesses.