That's done though, through sales tax, property tax (which essential taxes you for consuming the land your property is located on), ect.So tax it more. I'm fine with that.
Also It could trigger a flight from cash. If people were taxed on what they consumed, how long before companies structured compensation not around cash, but benifits?They already do that. The ludicrous notion that employer-provided health care is pre-tax, has given us our silly HC system. It's something that will need to be dealt with.
Valuation and Liquidation would become a problem quite quickly too. Cash is easy to track and report. Consumption, not so much unless it's done at point of sale, which most states already impose a tax on.VAT handles this by taxing the entire supply chain.
It's also such a tough sell to people, Would people accept "hey, there's no income tax, but to make it up, 20% tax on all purchases in addition to your state income tax"I technically didn't say to get rid of income tax, but yes.
Conceptually I'm not opposed though. but as a practical matter i think Vertical and Horizantal fairness concerns, valuation problems, and implementing it in the first place mean we'll never see it.I have a feeling that circumstances of getting our finances in order as a country, may ultimately result in this. We could do something else -- I don't have a crystal ball -- but this is something that works elsewhere.
Sure, In much smaller economies. Scale matters, both for fairness and tracking concerns.
Also I'm still not sure how you sell this to the average voter, doubly so if your not going to replace the income tax.
How do you balance fairness across statelines, for example? A mere 3-5% diffrence is currently driving population curves to diffrent states, and now certain states (if we're assuming we need to replace the lowest tax bracket and expand the base) will have a 15% consumption tax added on and that just accounts for the lowest tax bracket, not FICA or SS taxes. To replicate them your talking 22% tax on consumption or so.
So lets say your a Massachussets representitive. You know, mathmaticaly, that 22%+6.25%, combined with the repeal of the federal income tax (lets say for sake of numbers) actually works out better for your state's tax base than seperate Tax rate bands.
Can you imagine selling that to the average voter?
"hey, just because you are now going to pay 26 dollars in sales tax Per 100 spent, I'm actually lowering your taxes!"
People would never buy it. And any high income tax payer who consumes at a higher rate will be revolt.
Nevermind, people would Flee to states with no sales tax, or states would be forced to give up thier own consumption revenue to keep resident's and buisnesses local.
Again, I'm not 100% opposed to the theortical IDEA of a consumption Tax, but i think the implementation problems would be huge.
Also: how would you track non-retail cash sales? wouldn't a high consumption tax increase black market activity?