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tajshar2k
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10/19/2015 9:43:11 PM
Posted: 1 year ago
Help me understand this please.

What is a consumption tax?

And what is a progressive consumption tax?

Would it replace income tax?
"In Guns We Trust" Tajshar2k
16kadams
Posts: 10,497
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10/19/2015 9:56:10 PM
Posted: 1 year ago
At 10/19/2015 9:43:11 PM, tajshar2k wrote:
Help me understand this please.

What is a consumption tax?


A tax on what you consume. The most common form of sales tax are retail sales taxes or VAT taxes.

And what is a progressive consumption tax?

Depends on the proposal. The X tax, which is the best one, is kinda like a consumption tax... kinda... The Fair tax claims to be progressive, but it is regressive in reality.

So individuals report their wages to the government, and these wages are taxed progressively. Any money received through investment or savings is not taxed. Tax credits would still exist in the system.

On the business side, a business pays a flat tax rate (equivalent to the rate their highest paid employees paid, so if the CEO made enough money to pay 35% in taxes, the company would pay a 35% tax rate), but they deduct ALL of their investment costs.

Under the current income tax, as savings are taxed, you are taxed at a higher rate in the future if you save your money, so it makes sense to spend it all now. By deterring future consumption, well, that hurts the economy. The X tax is a sales tax in that your current consumption (wages) would be taxed, but if you put the remainder in a bank account and collected interest, the interest gained would NOT be taxed. On the business side, capital would essentially be untaxed, but a flat VAT rate would be applied to the cash flow (a cash flow is just the amount of money flowing into and out of the company).

This article explains it more: https://www.aei.org...

It is probably the best type of taxation that will never get passed until I become dictator.


Would it replace income tax?

Yes.
https://www.youtube.com...
https://rekonomics.wordpress.com...
"A trend is a trend, but the question is, will it bend? Will it alter its course through some unforeseen force and come to a premature end?" -- Alec Cairncross
tajshar2k
Posts: 2,382
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10/19/2015 10:34:37 PM
Posted: 1 year ago
At 10/19/2015 9:56:10 PM, 16kadams wrote:
At 10/19/2015 9:43:11 PM, tajshar2k wrote:
Help me understand this please.

What is a consumption tax?


A tax on what you consume. The most common form of sales tax are retail sales taxes or VAT taxes.

And what is a progressive consumption tax?

Depends on the proposal. The X tax, which is the best one, is kinda like a consumption tax... kinda... The Fair tax claims to be progressive, but it is regressive in reality.

So individuals report their wages to the government, and these wages are taxed progressively. Any money received through investment or savings is not taxed. Tax credits would still exist in the system.

On the business side, a business pays a flat tax rate (equivalent to the rate their highest paid employees paid, so if the CEO made enough money to pay 35% in taxes, the company would pay a 35% tax rate), but they deduct ALL of their investment costs.

Under the current income tax, as savings are taxed, you are taxed at a higher rate in the future if you save your money, so it makes sense to spend it all now. By deterring future consumption, well, that hurts the economy. The X tax is a sales tax in that your current consumption (wages) would be taxed, but if you put the remainder in a bank account and collected interest, the interest gained would NOT be taxed. On the business side, capital would essentially be untaxed, but a flat VAT rate would be applied to the cash flow (a cash flow is just the amount of money flowing into and out of the company).

This article explains it more: https://www.aei.org...

It is probably the best type of taxation that will never get passed until I become dictator.


Would it replace income tax?

Yes.

"So individuals report their wages to the government, and these wages are taxed progressively. Any money received through investment or savings is not taxed. Tax credits would still exist in the system."

Isn't that basically income tax? What is the difference then? I'm still confused on how this is different from the progressive tax system we have now.
"In Guns We Trust" Tajshar2k
16kadams
Posts: 10,497
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10/19/2015 11:16:13 PM
Posted: 1 year ago
At 10/19/2015 10:34:37 PM, tajshar2k wrote:
At 10/19/2015 9:56:10 PM, 16kadams wrote:
At 10/19/2015 9:43:11 PM, tajshar2k wrote:
Help me understand this please.

What is a consumption tax?


A tax on what you consume. The most common form of sales tax are retail sales taxes or VAT taxes.

And what is a progressive consumption tax?

Depends on the proposal. The X tax, which is the best one, is kinda like a consumption tax... kinda... The Fair tax claims to be progressive, but it is regressive in reality.

So individuals report their wages to the government, and these wages are taxed progressively. Any money received through investment or savings is not taxed. Tax credits would still exist in the system.

On the business side, a business pays a flat tax rate (equivalent to the rate their highest paid employees paid, so if the CEO made enough money to pay 35% in taxes, the company would pay a 35% tax rate), but they deduct ALL of their investment costs.

Under the current income tax, as savings are taxed, you are taxed at a higher rate in the future if you save your money, so it makes sense to spend it all now. By deterring future consumption, well, that hurts the economy. The X tax is a sales tax in that your current consumption (wages) would be taxed, but if you put the remainder in a bank account and collected interest, the interest gained would NOT be taxed. On the business side, capital would essentially be untaxed, but a flat VAT rate would be applied to the cash flow (a cash flow is just the amount of money flowing into and out of the company).

This article explains it more: https://www.aei.org...

It is probably the best type of taxation that will never get passed until I become dictator.


Would it replace income tax?

Yes.

"So individuals report their wages to the government, and these wages are taxed progressively. Any money received through investment or savings is not taxed. Tax credits would still exist in the system."

Isn't that basically income tax? What is the difference then? I'm still confused on how this is different from the progressive tax system we have now.

income taxes tax investment and saving. If I made $100,000 dollars but $40,000 of that was from interest, I would still have to pay taxes on that 40k. Under an X tax, only the 60k would be taxed.

As one good article says, "income taxes what people contribute to the economy, while taxing consumption taxes what they take out. ... he United States already taxes both income and consumption, of course. For nearly a century now, the principal federal tax on individuals has been the personal income tax, which falls on both labor income (wages and salaries) and capital income (interest, dividends, and capital gains)." http://www.econlib.org...

The X tax would eliminate taxes on capital. Nobel Laurate Robert Lucas estimated that "eliminating capital income taxation would increase the U.S. capital stock by about 35 percent." (http://www.econlib.org...) This study also discusses the harmful impact taxes on capital has on our economy (https://www.fraserinstitute.org...).
https://www.youtube.com...
https://rekonomics.wordpress.com...
"A trend is a trend, but the question is, will it bend? Will it alter its course through some unforeseen force and come to a premature end?" -- Alec Cairncross
tajshar2k
Posts: 2,382
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10/19/2015 11:29:20 PM
Posted: 1 year ago
At 10/19/2015 11:16:13 PM, 16kadams wrote:
At 10/19/2015 10:34:37 PM, tajshar2k wrote:
At 10/19/2015 9:56:10 PM, 16kadams wrote:
At 10/19/2015 9:43:11 PM, tajshar2k wrote:
Help me understand this please.

What is a consumption tax?


A tax on what you consume. The most common form of sales tax are retail sales taxes or VAT taxes.

And what is a progressive consumption tax?

Depends on the proposal. The X tax, which is the best one, is kinda like a consumption tax... kinda... The Fair tax claims to be progressive, but it is regressive in reality.

So individuals report their wages to the government, and these wages are taxed progressively. Any money received through investment or savings is not taxed. Tax credits would still exist in the system.

On the business side, a business pays a flat tax rate (equivalent to the rate their highest paid employees paid, so if the CEO made enough money to pay 35% in taxes, the company would pay a 35% tax rate), but they deduct ALL of their investment costs.

Under the current income tax, as savings are taxed, you are taxed at a higher rate in the future if you save your money, so it makes sense to spend it all now. By deterring future consumption, well, that hurts the economy. The X tax is a sales tax in that your current consumption (wages) would be taxed, but if you put the remainder in a bank account and collected interest, the interest gained would NOT be taxed. On the business side, capital would essentially be untaxed, but a flat VAT rate would be applied to the cash flow (a cash flow is just the amount of money flowing into and out of the company).

This article explains it more: https://www.aei.org...

It is probably the best type of taxation that will never get passed until I become dictator.


Would it replace income tax?

Yes.

"So individuals report their wages to the government, and these wages are taxed progressively. Any money received through investment or savings is not taxed. Tax credits would still exist in the system."

Isn't that basically income tax? What is the difference then? I'm still confused on how this is different from the progressive tax system we have now.

income taxes tax investment and saving. If I made $100,000 dollars but $40,000 of that was from interest, I would still have to pay taxes on that 40k. Under an X tax, only the 60k would be taxed.

As one good article says, "income taxes what people contribute to the economy, while taxing consumption taxes what they take out. ... he United States already taxes both income and consumption, of course. For nearly a century now, the principal federal tax on individuals has been the personal income tax, which falls on both labor income (wages and salaries) and capital income (interest, dividends, and capital gains)." http://www.econlib.org...

The X tax would eliminate taxes on capital. Nobel Laurate Robert Lucas estimated that "eliminating capital income taxation would increase the U.S. capital stock by about 35 percent." (http://www.econlib.org...) This study also discusses the harmful impact taxes on capital has on our economy (https://www.fraserinstitute.org...).

Would this X Tax simplify the tax code, and prevent companies from escaping their taxes?
"In Guns We Trust" Tajshar2k
16kadams
Posts: 10,497
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10/20/2015 1:06:30 AM
Posted: 1 year ago
At 10/19/2015 11:29:20 PM, tajshar2k wrote:
At 10/19/2015 11:16:13 PM, 16kadams wrote:
At 10/19/2015 10:34:37 PM, tajshar2k wrote:
At 10/19/2015 9:56:10 PM, 16kadams wrote:
At 10/19/2015 9:43:11 PM, tajshar2k wrote:
Help me understand this please.

What is a consumption tax?


A tax on what you consume. The most common form of sales tax are retail sales taxes or VAT taxes.

And what is a progressive consumption tax?

Depends on the proposal. The X tax, which is the best one, is kinda like a consumption tax... kinda... The Fair tax claims to be progressive, but it is regressive in reality.

So individuals report their wages to the government, and these wages are taxed progressively. Any money received through investment or savings is not taxed. Tax credits would still exist in the system.

On the business side, a business pays a flat tax rate (equivalent to the rate their highest paid employees paid, so if the CEO made enough money to pay 35% in taxes, the company would pay a 35% tax rate), but they deduct ALL of their investment costs.

Under the current income tax, as savings are taxed, you are taxed at a higher rate in the future if you save your money, so it makes sense to spend it all now. By deterring future consumption, well, that hurts the economy. The X tax is a sales tax in that your current consumption (wages) would be taxed, but if you put the remainder in a bank account and collected interest, the interest gained would NOT be taxed. On the business side, capital would essentially be untaxed, but a flat VAT rate would be applied to the cash flow (a cash flow is just the amount of money flowing into and out of the company).

This article explains it more: https://www.aei.org...

It is probably the best type of taxation that will never get passed until I become dictator.


Would it replace income tax?

Yes.

"So individuals report their wages to the government, and these wages are taxed progressively. Any money received through investment or savings is not taxed. Tax credits would still exist in the system."

Isn't that basically income tax? What is the difference then? I'm still confused on how this is different from the progressive tax system we have now.

income taxes tax investment and saving. If I made $100,000 dollars but $40,000 of that was from interest, I would still have to pay taxes on that 40k. Under an X tax, only the 60k would be taxed.

As one good article says, "income taxes what people contribute to the economy, while taxing consumption taxes what they take out. ... he United States already taxes both income and consumption, of course. For nearly a century now, the principal federal tax on individuals has been the personal income tax, which falls on both labor income (wages and salaries) and capital income (interest, dividends, and capital gains)." http://www.econlib.org...

The X tax would eliminate taxes on capital. Nobel Laurate Robert Lucas estimated that "eliminating capital income taxation would increase the U.S. capital stock by about 35 percent." (http://www.econlib.org...) This study also discusses the harmful impact taxes on capital has on our economy (https://www.fraserinstitute.org...).

Would this X Tax simplify the tax code, and prevent companies from escaping their taxes?

I think it probably would.
https://www.youtube.com...
https://rekonomics.wordpress.com...
"A trend is a trend, but the question is, will it bend? Will it alter its course through some unforeseen force and come to a premature end?" -- Alec Cairncross