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That would be much, much worse. It would be the exact opposite of what the GP comment suggested.

thaumasiotes 7y ago
> It would be the exact opposite of what the GP comment suggested. Huh? That comment suggested > The problem is that under the current tax scheme in the US people are taxed on their total income and companies are taxed on their profits. and > I think if we could just get rid of the income tax somehow (like have a land tax instead) the country would be so much better off. Replacing the income tax with a consumption tax follows directly from both of those points. As to the first, it replaces the system where companies are taxed on profits and people are taxed on revenue with a system where companies are taxed on profits and people are taxed on profits. As to the second, obviously, it gets rid of the income tax. What were you thinking your GP comment said?
- cowsandmilk 7y ago
  > people are taxed on profits Setting aside the oddity of talking about profit of people, given constant income, you pay less consumption tax as your profit goes up. Consumption is expenses, profit = income - expenses. Rearranging. Consumption tax = y * expenses = y * (income - profit) where y is the consumption tax rate. So, as profits increase, expenses decrease and consumption tax goes down.
  - thaumasiotes 7y ago
    > Setting aside the oddity of talking about profit of people, given constant income, you pay less consumption tax as your profit goes up. > Consumption is expenses, profit = income - expenses. No, a person's profits are their consumption. Savings are not profits -- they don't benefit you at all. There's a chain going like this: Company spends money so that company receives (more) money so that person receives money so that person can spend money. The goal of the company is to accumulate money for someone else and that's how its profits are measured. Profit is money the company loses by paying it out to its owners. (Money the company loses by paying it out to non-owners is "expenses".) The goal of the person is to spend money on things it can actually use; for the person, money is an accounting tool, not an end goal. But we can identify profit the same way. Money that you lose by paying it out to yourself ("consumption") is your profit; savings is just money you might one day allocate to profit.

> It would be the exact opposite of what the GP comment suggested. Huh? That comment suggested > The problem is that under the current tax scheme in the US people are taxed on their total income and companies are taxed on their profits. and > I think if we could just get rid of the income tax somehow (like have a land tax instead) the country would be so much better off. Replacing the income tax with a consumption tax follows directly from both of those points. As to the first, it replaces the system where companies are taxed on profits and people are taxed on revenue with a system where companies are taxed on profits and people are taxed on profits. As to the second, obviously, it gets rid of the income tax. What were you thinking your GP comment said?

cowsandmilk 7y ago
> people are taxed on profits Setting aside the oddity of talking about profit of people, given constant income, you pay less consumption tax as your profit goes up. Consumption is expenses, profit = income - expenses. Rearranging. Consumption tax = y * expenses = y * (income - profit) where y is the consumption tax rate. So, as profits increase, expenses decrease and consumption tax goes down.
- thaumasiotes 7y ago
  > Setting aside the oddity of talking about profit of people, given constant income, you pay less consumption tax as your profit goes up. > Consumption is expenses, profit = income - expenses. No, a person's profits are their consumption. Savings are not profits -- they don't benefit you at all. There's a chain going like this: Company spends money so that company receives (more) money so that person receives money so that person can spend money. The goal of the company is to accumulate money for someone else and that's how its profits are measured. Profit is money the company loses by paying it out to its owners. (Money the company loses by paying it out to non-owners is "expenses".) The goal of the person is to spend money on things it can actually use; for the person, money is an accounting tool, not an end goal. But we can identify profit the same way. Money that you lose by paying it out to yourself ("consumption") is your profit; savings is just money you might one day allocate to profit.