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This would only penalize the poor, as the rich could afford back yards full of solar panels and wind turbines, and drive Tesla cars... And since the rich are s

This would only penalize the poor, as the rich could afford back yards full of solar panels and wind turbines, and drive Tesla cars... And since the rich are such a small percent, this would have virtually no impact on the environment. I love the idea, but I do not believe this is a better solution to sales and employment tax.

Xcelerate 14y ago
I think a consumption tax is the best solution. Basic necessities like food, housing, etc.. are not taxed (or are minimally taxed). Luxury items like televisions, cell phones, etc. should be taxed though. This wouldn't penalize the poor, but the government would get the money they're looking for. Can anyone think of any downsides to this? EDIT: Yikes, I leave for half an hour and come back to a maelstrom of comments. So, to acknowledge one of your points, it could be difficult to categorize what is or isn't a luxury item. But, c'mon, is a $90,000 car really a necessity? I think it's easy to tell which items definitely aren't necessities.
- nahname 14y ago
  I imagine that would have severe economic implications.
- quanticle 14y ago
  Where do you draw the line? Is a home broadband connection a necessity or a luxury good? How about a computer? Or a car?
  - seiji 14y ago
    In New York, shoes under $120 aren't taxed. You can segment taxes easily by price range.
    - deleted 14y ago
      [deleted]
    - adventured 14y ago
      If you can ever get the bureaucrats to keep the inflationary adjustments current. See the alternative minimum tax for the greatest example of that in action.
  - jamesaguilar 14y ago
    The answer to this objection is, as always, "somewhere reasonable." What I'm trying to get across is that it is totally pointless to complain that an internet comment isn't exhaustive in its detail.
- rb2k_ 14y ago
  You'd have to figure out where "basic necessities" stop. No taxes on a 10 million dollar house but the poor family buying a TV will have to pay?
  - zanny 14y ago
    Someone else suggested it, and I think it works too - consumption tax on everything (one thing I would add is a scaling tax rate of the per goods cost against the median income, so that a car costing 200k might be taxed 10% higher than a 20k one, and I would call the taxation of large purchases at higher rates a benefit) but a tax credit for everyone equivalent to some metric to measure the amount of money it costs to feed / house / heat / clothe oneself.
- charliepark 14y ago
  One solution that a number of people have been working on is called the "Fair Tax." [1] The general idea (and I'm probably missing some of the significant points, but this is a rough outline) is that there would be no income tax at all — all taxes would be on consumption. Rather than trying to regulate what is taxed and what isn't, everything would be taxed at the same rate. To fight any regressiveness involved in that, everyone would get a set amount of money every year, which is equal to the consumption tax you'd be paying on the first, say, $30K of purchases a year. So if the consumption tax rate is 25%, you'd be given $7,500 a year. (The term they use is "prebate.") That way, everyone's first $30K of expenses is a wash. After that point, you're only taxed on the money you spend beyond it. The more you buy, the more tax you pay. A number of Republicans have been in favor of the Fair Tax, and it was one of the planks of Gary Johnson's presidential campaign last year. But it gets support from Democrats as well, and was one of the main components of Mike Gravel's campaign in 2008. I'm sure others will point out downsides to it, but one that I know of is that current retirees, who have already paid income tax on some of their savings, would have much less purchasing power under the new plan. That is, they'd be double-taxed on the money used to buy goods under a Fair Tax plan. I believe there's also been skepticism from opponents that the numbers actually work out well enough that a Fair Tax system would bring in enough money (as compared with current tax revenues). [Edit: the double-taxation wouldn't be limited to retirees; they're just the group that's often mentioned as being significantly affected.] (I'm not an apologist for a Fair Tax approach; just wanted to mention it as one theory for introducing a consumption-based tax in the US, in case you're interested / want to learn more.) 1. http://www.fairtax.org/ http://www.fairtax.org/
  - jader201 14y ago
    One seemingly obvious problem to this (at least the way you describe it, maybe not the way it's actually proposed - I didn't read it) is that this would disincentivize spending, and incentivize saving. So it would seem[1] that this would cause the economy to take a big hit. I just remember a few years back when the economy was at the worst we've seen in a while, the government seemed to really push spending and investing in stocks over saving. So if there was no penalty for earning money, only spending it, we'd be back in the same boat. [1] Disclaimer: I'm certainly not an expert in economics.
- gmac 14y ago
  Surprised nobody has mentioned a Land Value Tax. http://www.monbiot.com/2013/01/21/a-telling-silence/ http://www.monbiot.com/2013/01/21/a-telling-silence/ http://www.newstatesman.com/blogs/mehdi-hasan/2012/02/land-tax-income-brittan-case http://www.newstatesman.com/blogs/mehdi-hasan/2012/02/land-t...
  - adventured 14y ago
    I'm glad that nobody has mentioned it. Land value taxes are among the most evil possible. It's no coincidence land value taxes are so commonly related to extreme Socialism and Communism ideologically. Modern property taxes are a pretty horrendously vile tax on average people as well and are extremely regressive. The notion that you can work your whole life, pay off your average house, and still owe $2,000 per year in property taxes should be an outrage. $20,000+ over ten years? That destroys all the value return a typical home owner can ever expect to earn on their house. For most people, a house is the largest investment they'll ever make, and property taxes help destroy that. Not to mention the terrible idea that your paid for house can then be stolen because you don't pay the tax.
    - scotty79 14y ago
      The idea seems good though. By occupying land you are hoarding scarce resource. Tax should incentivise you to occupy less. I think the tax should be progressive so if you have small house and lot you don't owe state that much but if you have McMansion you should pay handsomely or sell it tho someone who can actually afford it or to someone who splits the lot between multiple buyers.
      - powatom 14y ago
        The idea seems good but the implementation could lead to cramped living and this in turn leads to sanitation and social issues. People need space - forcing them to live in small areas will not work out well.
        scotty79 14y ago
- revelation 14y ago
  Televisions and cell phones are not luxury items.
  - ldh 14y ago
    I suppose in an age where we're used to being able to contact anyone from nearly anywhere with a cellphone and it's increasingly hard to find payphones, those might not be a "luxury" per se. And cellphones can be had for relatively cheap. But televisions? Nobody needs a television. I'm not a luddite and I appreciate the things that technology enables for me, but I appreciate those things even more because I realize I don't need them.
    - afterburner 14y ago
      What about a computer screen?
      - philwelch 14y ago
        They come built in.
        icebraining 14y ago
        Not on desktops, they don't. Even if a "bundle" can be considered built-in, should I buy a whole new computer when my monitor breaks?
        philwelch 14y ago
        Who buys desktops anymore? They can pay sales tax. Plus, if you really wanted to tax TV's and not computer monitors, they're usually different SKU's and accept different inputs. If it has HDMI, coax, or component inputs, tax it as a TV. VGA, DVI, DisplayPort, Thunderbolt, tax it as a monitor.
        afterburner 14y ago
- ams6110 14y ago
  Exempting specific categories of purchases quickly becomes a quagmire of complexity. Better to just have an automatic tax credit of whatever amount is determined to offset tax on the typical "basic necessities" purchases of an individual or family.
- rolleiflex 14y ago
  We have this in form of VAT back in the other side of the pond. It's a massive, massive failure because it's impossible to actually keep the items list up to date. For example, a refrigerator and a TV are counted as luxury items because of the date the law was enacted, and it has since not been updated because of the gridlock not unlike D.C.'s.
- thomaspaine 14y ago
  Is a $50,000 car a necessity? $20,000? $10,000? Is a car a necessity at all? How about food? Is a $250 dinner at Saison a necessity? $5 dinner at McDonalds? $20 per pound imported beef at the grocery store? $200 jeans vs $80 vs $20? Are glasses a luxury item? How about Google Glasses? How do you define it? The devil is always in the details with laws and especially tax law, you can't just hand waive this kind of stuff away.
- bdcravens 14y ago
  You'd have to place caps on items. That said, you'd have to deal with complexity in pricing: $500,000 for a house in Houston is probably a luxury, but not so much in markets like San Francisco.

Xcelerate 14y ago

I think a consumption tax is the best solution. Basic necessities like food, housing, etc.. are not taxed (or are minimally taxed). Luxury items like televisions, cell phones, etc. should be taxed though. This wouldn't penalize the poor, but the government would get the money they're looking for. Can anyone think of any downsides to this? EDIT: Yikes, I leave for half an hour and come back to a maelstrom of comments. So, to acknowledge one of your points, it could be difficult to categorize what is or isn't a luxury item. But, c'mon, is a $90,000 car really a necessity? I think it's easy to tell which items definitely aren't necessities.

nahname 14y ago
I imagine that would have severe economic implications.
quanticle 14y ago
Where do you draw the line? Is a home broadband connection a necessity or a luxury good? How about a computer? Or a car?
- seiji 14y ago
  In New York, shoes under $120 aren't taxed. You can segment taxes easily by price range.
  - deleted 14y ago
    [deleted]
  - adventured 14y ago
    If you can ever get the bureaucrats to keep the inflationary adjustments current. See the alternative minimum tax for the greatest example of that in action.
- jamesaguilar 14y ago
  The answer to this objection is, as always, "somewhere reasonable." What I'm trying to get across is that it is totally pointless to complain that an internet comment isn't exhaustive in its detail.
rb2k_ 14y ago
You'd have to figure out where "basic necessities" stop. No taxes on a 10 million dollar house but the poor family buying a TV will have to pay?
- zanny 14y ago
  Someone else suggested it, and I think it works too - consumption tax on everything (one thing I would add is a scaling tax rate of the per goods cost against the median income, so that a car costing 200k might be taxed 10% higher than a 20k one, and I would call the taxation of large purchases at higher rates a benefit) but a tax credit for everyone equivalent to some metric to measure the amount of money it costs to feed / house / heat / clothe oneself.
charliepark 14y ago
One solution that a number of people have been working on is called the "Fair Tax." [1] The general idea (and I'm probably missing some of the significant points, but this is a rough outline) is that there would be no income tax at all — all taxes would be on consumption. Rather than trying to regulate what is taxed and what isn't, everything would be taxed at the same rate. To fight any regressiveness involved in that, everyone would get a set amount of money every year, which is equal to the consumption tax you'd be paying on the first, say, $30K of purchases a year. So if the consumption tax rate is 25%, you'd be given $7,500 a year. (The term they use is "prebate.") That way, everyone's first $30K of expenses is a wash. After that point, you're only taxed on the money you spend beyond it. The more you buy, the more tax you pay. A number of Republicans have been in favor of the Fair Tax, and it was one of the planks of Gary Johnson's presidential campaign last year. But it gets support from Democrats as well, and was one of the main components of Mike Gravel's campaign in 2008. I'm sure others will point out downsides to it, but one that I know of is that current retirees, who have already paid income tax on some of their savings, would have much less purchasing power under the new plan. That is, they'd be double-taxed on the money used to buy goods under a Fair Tax plan. I believe there's also been skepticism from opponents that the numbers actually work out well enough that a Fair Tax system would bring in enough money (as compared with current tax revenues). [Edit: the double-taxation wouldn't be limited to retirees; they're just the group that's often mentioned as being significantly affected.] (I'm not an apologist for a Fair Tax approach; just wanted to mention it as one theory for introducing a consumption-based tax in the US, in case you're interested / want to learn more.) 1. http://www.fairtax.org/ http://www.fairtax.org/
- jader201 14y ago
  One seemingly obvious problem to this (at least the way you describe it, maybe not the way it's actually proposed - I didn't read it) is that this would disincentivize spending, and incentivize saving. So it would seem[1] that this would cause the economy to take a big hit. I just remember a few years back when the economy was at the worst we've seen in a while, the government seemed to really push spending and investing in stocks over saving. So if there was no penalty for earning money, only spending it, we'd be back in the same boat. [1] Disclaimer: I'm certainly not an expert in economics.
gmac 14y ago
Surprised nobody has mentioned a Land Value Tax. http://www.monbiot.com/2013/01/21/a-telling-silence/ http://www.monbiot.com/2013/01/21/a-telling-silence/ http://www.newstatesman.com/blogs/mehdi-hasan/2012/02/land-tax-income-brittan-case http://www.newstatesman.com/blogs/mehdi-hasan/2012/02/land-t...
- adventured 14y ago
  I'm glad that nobody has mentioned it. Land value taxes are among the most evil possible. It's no coincidence land value taxes are so commonly related to extreme Socialism and Communism ideologically. Modern property taxes are a pretty horrendously vile tax on average people as well and are extremely regressive. The notion that you can work your whole life, pay off your average house, and still owe $2,000 per year in property taxes should be an outrage. $20,000+ over ten years? That destroys all the value return a typical home owner can ever expect to earn on their house. For most people, a house is the largest investment they'll ever make, and property taxes help destroy that. Not to mention the terrible idea that your paid for house can then be stolen because you don't pay the tax.
  - scotty79 14y ago
    The idea seems good though. By occupying land you are hoarding scarce resource. Tax should incentivise you to occupy less. I think the tax should be progressive so if you have small house and lot you don't owe state that much but if you have McMansion you should pay handsomely or sell it tho someone who can actually afford it or to someone who splits the lot between multiple buyers.
    - powatom 14y ago
      The idea seems good but the implementation could lead to cramped living and this in turn leads to sanitation and social issues. People need space - forcing them to live in small areas will not work out well.
      - scotty79 14y ago
revelation 14y ago
Televisions and cell phones are not luxury items.
- ldh 14y ago
  I suppose in an age where we're used to being able to contact anyone from nearly anywhere with a cellphone and it's increasingly hard to find payphones, those might not be a "luxury" per se. And cellphones can be had for relatively cheap. But televisions? Nobody needs a television. I'm not a luddite and I appreciate the things that technology enables for me, but I appreciate those things even more because I realize I don't need them.
  - afterburner 14y ago
    What about a computer screen?
    - philwelch 14y ago
      They come built in.
      - icebraining 14y ago
        Not on desktops, they don't. Even if a "bundle" can be considered built-in, should I buy a whole new computer when my monitor breaks?
        philwelch 14y ago
        Who buys desktops anymore? They can pay sales tax. Plus, if you really wanted to tax TV's and not computer monitors, they're usually different SKU's and accept different inputs. If it has HDMI, coax, or component inputs, tax it as a TV. VGA, DVI, DisplayPort, Thunderbolt, tax it as a monitor.
        afterburner 14y ago
ams6110 14y ago
Exempting specific categories of purchases quickly becomes a quagmire of complexity. Better to just have an automatic tax credit of whatever amount is determined to offset tax on the typical "basic necessities" purchases of an individual or family.
rolleiflex 14y ago
We have this in form of VAT back in the other side of the pond. It's a massive, massive failure because it's impossible to actually keep the items list up to date. For example, a refrigerator and a TV are counted as luxury items because of the date the law was enacted, and it has since not been updated because of the gridlock not unlike D.C.'s.
thomaspaine 14y ago
Is a $50,000 car a necessity? $20,000? $10,000? Is a car a necessity at all? How about food? Is a $250 dinner at Saison a necessity? $5 dinner at McDonalds? $20 per pound imported beef at the grocery store? $200 jeans vs $80 vs $20? Are glasses a luxury item? How about Google Glasses? How do you define it? The devil is always in the details with laws and especially tax law, you can't just hand waive this kind of stuff away.
bdcravens 14y ago
You'd have to place caps on items. That said, you'd have to deal with complexity in pricing: $500,000 for a house in Houston is probably a luxury, but not so much in markets like San Francisco.