I've done some cursory reading on them, and like what I see on the surface. what are the pros and cons of this type of tax for those of you people who have done more research and thought on them? I'm more interested in the cons, but fire away at either of them.

for those of you against the FairTax or a flat sales tax, would you be more agreeable with only a VAT tax of some level (meaning no income taxes, property taxes, etc) and maybe some higher brackets for luxury goods?

3/1/2012 4:43:10 PM

i select option d.

3/1/2012 4:45:30 PM

I used to like the VAT tax. But I changed my mind. With a small enough federal government it becomes possible to restrict the income tax to only tax those with high incomes, so that is what I want to do. Make the government small enough that the rich can pay for it.

3/1/2012 5:50:41 PM

I'm against the VAT because if the government ever started using it here it would not replace the current tax structure but simply supplement it, thus increasing our taxes even more. For reference, see: most of Western Europe.

3/2/2012 8:19:06 AM

^this.

and we don't need no mo taxes!



no new taxes/tax increases until spending is under control, otherwise, it's a useless battle.

3/2/2012 8:46:44 AM

I'm not an expert on it at all but I would think it'd hurt smaller businesses more than larger, vertically integrated ones who can essentially be their own wholesaler, among other things. That is, I would think a smaller business would be nearer to the end of the chain of Value-Adding stages, and a large one might be able to integrate a lot of those stages into its own internal economy. Again, not an expert, correct me if this is way off (I know nobody will hesitate to correct me if they see an opportunity).

[Edited on March 2, 2012 at 10:21 AM. Reason : .]

3/2/2012 10:19:24 AM

I'd rather talk about ATM machines.

3/2/2012 11:21:28 AM

^^ it rewards efficiency in general. if you can keep costs down then you can keep prices down which means lower VAT. thats good for consumers.

likewise if you keep costs down, but charge a higher price then you pay more vat.

i dont know if it would hurt smaller businesses any more than the current system. they already compete on prices so its really no different.

i could probably get behind replacing the income tax with a progressive VAT. everyday items which are generally high frequency, low margin would end up with the same effective sales tax rate they have now, which would be a boon for a now income taxless middle-class. then you increase the tax rate as margins increase. high margin luxury items end up with the highest tax rates.

im not an expert either but i think it might could work.

3/2/2012 11:44:32 AM

Quote :

"and we don't need no mo taxes!"

What the F do you mean by this?

I'm tired of people making this statement unchecked. Do you want lower government spending as % of GDP? Do you want fewer ways of imposing taxes (constant % of GDP)? Do you want fewer levels of government imposing taxes? Do you want a more simple tax code?

None of this, absolutely none, is clear from your sound bite.

3/2/2012 12:06:09 PM

Quote :

"it rewards efficiency in general. if you can keep costs down then you can keep prices down which means lower VAT. thats good for consumers."

But is it good for consumers as far as their jobs go? If the tax system affects the relative viability of large and small businesses (it does) then we need to consider how changes to it would alter that dynamic.

3/2/2012 12:20:19 PM

Quote :

"I'm tired of people making this statement unchecked. Do you want lower government spending as % of GDP? Do you want fewer ways of imposing taxes (constant % of GDP)? Do you want fewer levels of government imposing taxes? Do you want a more simple tax code? None of this, absolutely none, is clear from your sound bite. "

maybe he wants all of those, along with about a hundred other things that would be addressed by no more taxes.

3/2/2012 1:00:44 PM

no more taxes = no more government

3/2/2012 1:44:45 PM

^this is what I'm getting at

3/2/2012 1:46:29 PM

So in other words, TSB libertarians are so divorced from reality that talking with them is pointless.

3/2/2012 1:54:09 PM

3/2/2012 2:00:06 PM

I'm no libertarian other letter.

I believe in small and limited government. I believe in having taxes as low as possible. The current system the (R)s and (D)s have been running is a scam and unsustainable. Anyone that suggests higher/new taxes on anyone with our current government must be on full throttle retard.

[Edited on March 2, 2012 at 2:09 PM. Reason : er]

3/2/2012 2:07:01 PM

Quote :

"Anyone that suggests higher/new taxes on anyone with our current government must be on full throttle retard."

The number of ways in which we tax things doesn't necessarily correlate to the complexity of the tax code, the size of government, or the efficiency of the government. Just look at income tax. There's plenty of complexity to screw things up with when we're only talking about a single kind of tax.

There's a good historical argument that rail transport was disadvantaged in the early days because of the tax structure. You paid taxes on rail transport depending on what it was you sent. It's not necessarily that the tax dollar amount made rail uncompetitive with roads, but companies didn't want to bother with that crap about declaring the items they were transporting. They just shoved it in a truck and turned the key for road transport. They still paid road tax when they filled up their tank, but paying a few cents on a gallon of gas meant not having to deal with the bull of filling out forms. You might say we have a similar disincentive with international container shipping today. Anything container that goes through U.S. port is not a secret from the federal government. You can be sure about that.

But we might as well set aside the issue of tax then. The story that I'm framing here is more about government control, not about tax collection. The more ways they have to tax, the more then necessarily have to know about what you're doing. That's actually why I think a VAT is hogwash.

Institute sales tax - a consumption tax. A VAT just requires that the government know more about what you're doing.

[Edited on March 2, 2012 at 2:31 PM. Reason : ]

3/2/2012 2:30:00 PM

^I agree with a sales tax.

But I would like that to be the ONLY tax. No income, VAT, property, etc. One tax. Simple.

3/2/2012 2:57:43 PM

Quote :

"For every complex problem there is an answer that is clear, simple, and wrong."

H. L. Mencken

3/2/2012 3:03:01 PM

^^ If government spending is 30% of GDP and you can uniformly tax all spending, you should be able to take care of it all with a 30% sales tax. No exceptions.

3/2/2012 3:33:27 PM

Quote :

"A VAT just requires that the government know more about what you're doing."

how do you figure? I'm talking about a VAT, by itself, mind you.

3/2/2012 6:04:37 PM

Quote :

"^^ If government spending is 30% of GDP and you can uniformly tax all spending, you should be able to take care of it all with a 30% sales tax. No exceptions."

No, it's not this simple, sorry.

3/5/2012 9:17:21 AM

Quote :

"H. L. Mencken"

for every simple problem there is an idiot who wants to over-complicate it.

[Edited on March 5, 2012 at 10:03 AM. Reason : who*]

3/5/2012 9:56:10 AM

No, Shaggy, more likely there are idiots like you who, rather than opening a book and learning something, just assume that every issue, system, and problem is as simple as his tiny, flat brain because that delusion is far more comforting and far less challenging.

[Edited on March 5, 2012 at 10:12 AM. Reason : .]

3/5/2012 10:12:04 AM

Quote :

""^^ If government spending is 30% of GDP and you can uniformly tax all spending, you should be able to take care of it all with a 30% sales tax. No exceptions." No, it's not this simple, sorry."

...it is.

I admit, it's silly in that you would have to collect tax on receipts of government spending too. But I'm curious where GDP comes from in your world.

3/5/2012 10:20:51 AM

Quote :

"I admit, it's silly in that you would have to collect tax on receipts of government spending too. But I'm curious where GDP comes from in your world."

1. When a company pays a salary, is that spending too?

2. Do you think that a 30% sales tax wont affect GDP? How will it affect spending habits? These systems have feedback both ways.

3. Not everybody spends the same proportion of their income. A consumption tax would affect nearly all of the poors' income, while affecting only a tiny percentage of that of the rich. What do you think the long-term effects of this disparity in taxation would be?



[Edited on March 5, 2012 at 10:25 AM. Reason : .]

3/5/2012 10:22:47 AM

no see we NEED a complex tax system, otherwise it would be too hard to hide income which would mean job losses for lawyers on both sides!!

3/5/2012 10:24:13 AM

income taxes are for suckers

3/5/2012 10:27:09 AM

Shaggy, if you're looking for a chat room check here: http://messenger.yahoo.com/features/chatrooms

There's also a handy list of tips for chatting safely that you should read.

3/5/2012 10:28:42 AM

Quote :

"1. When a company pays a salary, is that spending too?"

No it's not. It's not consumption.

But apparently I did leave out a factor. Investment is included in GDP. So I guess my statements could, at best, apply to ex-investment GDP.

Quote :

"2. Do you think that a 30% sales tax wont affect GDP? How will it affect spending habits? These systems have feedback both ways."

If you're talking about going from 30% govt spending to 30% govt spending, then the only difference is the type of activities that you encourage and discourage. If we "discourage" the 87% of GDP that is consumption (both public and private) then we will have more investment.

Or we could just maintain a $13 Trillion debt and use a federal reserve to hold interest rates and junk levels so that we starve real investment. There's always that option.

3/5/2012 10:36:20 AM

also im not for a flat tax, i was proposing a progressive vat as a replacement for the useless income tax based system we have now.

income is far too easy to hide. either tax wealth directly (ex: property taxes) or tax it when its used (consumption taxes). someone hiding wealth overseas? who cares, they're gonna get taxed when they spend it. got an entire group of lawyers dedicated to finding loopholes and deductions? doesnt matter anymore, their shit gets taxed when they spend it.

set a progressive rate based on value added and/or type of product/service and you've got an easy way to maintain low overall tax rates for lower incomes.

3/5/2012 10:40:22 AM

Quote :

"No it's not. It's not consumption."

Define consumption, and explain why me consuming a mechanic's services is different from a company consuming a CEO's services.

Quote :

"If you're talking about going from 30% govt spending to 30% govt spending, then the only difference is the type of activities that you encourage and discourage. If we "discourage" the 87% of GDP that is consumption (both public and private) then we will have more investment."

Really? There's not just consumption and investment, there's also simple savings, which many people do who don't have the kind of capital to warrant learning about investment. What happens to, say, job growth, when masses of people start saving more because consumption is suddenly disincentivized?

Quote :

"Or we could just maintain a $13 Trillion debt and use a federal reserve to hold interest rates and junk levels so that we starve real investment. There's always that option."

False dichotomy, try to stay focused.

Finally, you forgot to answer:

Quote :

" 3. Not everybody spends the same proportion of their income. A consumption tax would affect nearly all of the poors' income, while affecting only a tiny percentage of that of the rich. What do you think the long-term effects of this disparity in taxation would be?"

Shaggy: You could have just came out of the gate with this instead of a slew of half-thoughts presented as one-liners, you know. What happened to unnecessarily complicating things? Progressive taxation, all those brackets? Yer givin me a headache!

Seriously though, why go any more complex than a flat sales tax?

[Edited on March 5, 2012 at 10:46 AM. Reason : .]

3/5/2012 10:43:56 AM

Quote :

"Not everybody spends the same proportion of their income. A consumption tax would affect nearly all of the poors' income, while affecting only a tiny percentage of that of the rich. What do you think the long-term effects of this disparity in taxation would be?""

OMG, people having to pay into the system they've been leaching off of for years! Oh the horror! If you're really concerned for the poor, you'd vote for a flat consumption tax, vote for smaller government, and vote to keep that tax as low as possible to shelter the poor. It's the ultimate test - do you and your lefties really care about the poor? If so, shrink the government and taxes as much as possible... or will we find out that the left's care for the poor is really a charade? This type of tax finally holds political groups accountable for what they say. Start taxing the poor and if politicians really care about the poor, they'll stop spending so much money and keep taxes as low as possible. You say it's not right to tax the poor in such a manner; I say it's not fair that the poor who don't pay income tax get to have a say in my income taxes.

[Edited on March 5, 2012 at 10:55 AM. Reason : .]

3/5/2012 10:54:18 AM

How does a flat tax not dispoportionately affect the poor? Will a rich person who can't buy another helicopter be in as much of a struggle as a poor person that can't by food?

3/5/2012 11:13:32 AM

Quote :

"Define consumption, and explain why me consuming a mechanic's services is different from a company consuming a CEO's services."

A mechanic's service is consumed by the customer.

Going by accounting based around consumption, a mechanic creates value, and that value is consumed by the person who pays the labor bill. I know, I used to struggle with this same thing. There EXISTS and objective criteria for consumption in the economy. It's not always easy to track down, but it's there.

Now we're going to get more complicated. The customer's labor bill contains a premium, and this premium goes to the owner of the shop who did not provide labor for this expense - only capital. Both wages and investment income provide means to consume, however, investment starts with a principle that ultimately must have come from labor at some point.

Quote :

"Not everybody spends the same proportion of their income. "

As much as I'm going to be crucified for saying this, I'm still going to say it - this is wrong. Everybody spends 100% of their income eventually. Sure, you work and save money now. But why? You do that so you can spend it in retirement + a buffer that will ultimately go to your offspring as inheritance when you die. If you create generational wealth such that your offspring never need to work again, then (investment income) = (consumption) for those individuals.

Quote :

"3. Not everybody spends the same proportion of their income. A consumption tax would affect nearly all of the poors' income, while affecting only a tiny percentage of that of the rich. What do you think the long-term effects of this disparity in taxation would be?"

If inequality is the problem, why don't you address that directly. Inequality isn't exactly because of the tax structure, although the tax structure has contributed.

Inequality as per the 99% meme, or more specifically, the inequality problem is a result of two things:
- A cultural gap where too many people don't participate in capital markets
- Compensation structures that funnels money from the capital markets to crony capitalists

These things aside, inequality would have still grown in the last 3 decades, purely as a result of the baby boomer aging. That's inequality, but it's not a problem. The above two points are validly problems. The % of our population without even a bank account is frightening. Only half of Americans own stocks.

The 50% of people who are just scraping by obviously won't see any change until they build a capital account and benefit from the opportunity that comes with that. This gets to the reality that (capital+labor) is far more powerful than either of its parts.

The 2nd inequality problem is mostly separate from the above problem because it is a transfer from the top 50% to the top 1%. Compensation of managers and executives have skyrocketed (go look it up), and this compensation is tied to stock market performance. Obviously this top tier do better when the market goes up (like in the 90s) but the underlying problem is an overly-favorable compensation scheme for the services of their labor. This isn't stealing from the bottom 50% because wages are set by the labor market, and the bottom 50% get shafted because they don't have the leverage of capital working for them. The top 50% pay the top 1% with what would otherwise be returns on their capital. They could get better "prices" for executives, but under the justification of being competitive they've bid up the price of the services of these elite. But they're not really paying for services, they're paying for the connections. Shareholders are paying the CEO huge compensation packages because the CEO knows everyone on the board and plays golf with them.

3/5/2012 11:38:03 AM

Quote :

" A mechanic's service is consumed by the customer. Going by accounting based around consumption, a mechanic creates value, and that value is consumed by the person who pays the labor bill. I know, I used to struggle with this same thing. There EXISTS and objective criteria for consumption in the economy. It's not always easy to track down, but it's there. "

You didn't answer my question. How is a company not consuming a service provided by the CEO? If they aren't, then why are they paying him?

Quote :

"As much as I'm going to be crucified for saying this, I'm still going to say it - this is wrong. "

No, it is correct, and you'll be rightfully crucified for saying it because you are stating falsehood as fact.

Quote :

"Everybody spends 100% of their income eventually. Sure, you work and save money now. But why? You do that so you can spend it in retirement + a buffer that will ultimately go to your offspring as inheritance when you die. If you create generational wealth such that your offspring never need to work again, then (investment income) = (consumption) for those individuals."

Income that isn't taxed can go into investment, which by your system is not taxed. So, the poor will have a smaller proportion of their post-consumption income available for investment than the rich. Can you seriously not see how this will lead to inequality growing even faster?

Quote :

"These things aside, inequality would have still grown in the last 3 decades, purely as a result of the baby boomer aging."

Lol source please. There's dozens of other things that have happened in the past 3 decades, all working directly against the poor. You can't make a claim like this ("Nope, it is all due to this one thing") without a serious list of citations.

[Edited on March 5, 2012 at 11:58 AM. Reason : .]

3/5/2012 11:57:01 AM

Quote :

"How is a company not consuming a service provided by the CEO? If they aren't, then why are they paying him?"

None of my arguments require that I argue that the company is consuming a CEO's service. And anyway, I never referenced the CEO, did I? I referenced the ownership. The CEO can be treated the same as the mechanic. Of if you'd like, a bloodsucking money vacuum that doesn't nothing of use. I don't care. Doesn't affect my points.

Quote :

"No, it is correct, and you'll be rightfully crucified for saying it because you are stating falsehood as fact."

No, it's not correct. See, I can use refutation too.

Quote :

"Income that isn't taxed can go into investment, which by your system is not taxed. So, the poor will have a smaller proportion of their post-consumption income available for investment than the rich. Can you seriously not see how this will lead to inequality growing even faster? "

In my "system" income isn't taxed at all. It's back-loaded, not front-loaded.

So let's say it's front-loaded instead. Person A saves 50% of their income and Person B saves 0% of their income (spends it right away). In the front-loaded system Person A only has 50% times 1 minus the tax rate (we'll say 35%) to invest. The only thing forfeited compared to the back-loaded system are the returns on the 50% * 35% portion of income that goes to taxes.

So yes, you are correct, in a consumption based system the rich get the benefit of capital gains from a sum that would otherwise have its time-value absorbed by the government. My point, however, was that this is pretty much irrelevant of my "causes of inequality" list.

Quote :

"Lol source please"

[Edited on March 5, 2012 at 12:45 PM. Reason : go to 3:50-ish in the video, you don't have to agree with the rest]

3/5/2012 12:42:01 PM

Quote :

"None of my arguments require that I argue that the company is consuming a CEO's service. And anyway, I never referenced the CEO, did I? I referenced the ownership. The CEO can be treated the same as the mechanic. Of if you'd like, a bloodsucking money vacuum that doesn't nothing of use. I don't care. Doesn't affect my points."

If I perform a service, and you pay me money, then you have consumed my labor in exchange for money. Sounds awfully similar to both a CEO and a mechanic. So why is only the transaction with the mechanic taxed? Why does the company get off scott-free throwing cash at the CEO? I know this isn't in your argument, because it's a point of complexity, and you seem committed to maintaining a simplistic understanding for the sake of it. Now try to explain to me why this isn't a double standard.

Quote :

"In my "system" income isn't taxed at all. It's back-loaded, not front-loaded."

Yes, income is taxed. For the poor, it's taxed entirely and immediately. For the rich, it's taxed sometime in the distant future after you've used it 10x over in investments. Seriously, again, how will that not accelerate the rich-get-richer/poor-get-poorer effect if every year, the rich get to devote the vast majority of their income to investment, while the poor are taxed on the entirety of theirs as it goes to necessary consumption?

If you learned what you know from youtube videos, you don't know shit. Now please give me some real citations. I don't know how many of these you've watched, or what else you've watched, but it's pretty clear you've been tricked into advocating a system that appeals to you because it's simple and easy to understand. And yet, you seem surprised by the objections I'm raising, despite them being the obvious, first-order objections that would come up (That there are complex outcomes for this simple tax system that seem to be news to you). I prescribe a healthy dose of "exposing yourself to something aside from libertarian populist propaganda."


[Edited on March 5, 2012 at 12:56 PM. Reason : .]

3/5/2012 12:49:07 PM

It addressed the point.

Younger people make less money, and if the demographic pyramid shifts then the incomes of different quartiles will change as a result.

3/5/2012 12:56:53 PM

Okay, that's the hypothesis. Now show, with data, that this is the primary cause of inequality.

Quote :

"Younger people make less money, and if the demographic pyramid shifts then the incomes of different quartiles will change as a result."

So, you're saying that more young people = more inequality? Then shouldn't we be seeing LESS inequality since the 70's?




[Edited on March 5, 2012 at 1:02 PM. Reason : .]

3/5/2012 1:00:03 PM

^you must be retarded

are you off your medication again?

3/5/2012 1:13:59 PM