Simple math. The GDP is $13.8 trillion. Even if you tax every single dollar of that at 18%, you get $2.48 trillion, which is about what we bring in now. But once you start giving people a $30k deduction (and recognize that we don't tax every dollar of GDP), then you end up with a huge shortage. I'd love to see an actual mathematically sound argument suggesting otherwise, since you're accusing me of making the assumptions..
My suggested 18% is by no means scientifically proven, just some random number I pulled. The main idea is to keep things simple, the simpler the system is, the less is the chance of corruption or loopholes. What if we decide the flat rate at 22%, and the low exemption base is set at 25,000? Will that generate enough revenue? With 22% of total tax rate, most of us are still paying a lot less than we currently are, while the government not only saves on IRS budget dramatically, but also saves on all levels of legislation for tax policy debating. Everyone pays less or equal tax.
Use point of sale cards like the ones they use now for food stamps and WIC. It is essentially a stored value card that exempts the appropriate amount of tax until the consumer has hit their exemption limit. The infrastructure is already in place.
It would certainly change our system some, but I would argue that our system needs some changing. The people who are already consuming will continue doing so as their income is going to increase drastically once the income tax goes away. The rich and even the well-to-do will continue spending much like they do now. The middle class and lower will change their habits some, to be sure. They will buy more used goods, which would be exempt from a consumption tax (they have already been "consumed"), they will look for products that will last rather than disposables when making new purchases, and they will look for ways to minimize their taxed spending. There will be plenty of new jobs in the untaxed market of used goods. People will need to find, refurbish, and market these products, which will create a drastic expansion in the "resale shop" business, most of which will be small businesses with very low barriers to entry. This will also create jobs in the big companies as they create buy back policies so that they can refurbish and sell older products tax-free. The benefits of a consumption tax would be far reaching and would affect even areas that aren't the primary reason for a consumption tax (like reducing landfill waste). The most significant change would be encouraging people to save more, which could eventually even reduce or eliminate the need for Social Security.
Actually, I didn't. That's the upper end - in other words, the best case scenario. If you bothered to read or quote the rest of what I wrote, I pointed out that real taxable income will be less than GDP: But once you start giving people a $30k deduction (and recognize that we don't tax every dollar of GDP), then you end up with a huge shortage. I also notice you still haven't provided any math or analytical backing for your position.
Two problems here: 1. None of that has anything to do with bondholder rights in a bankruptcy proceeding. 2. As it stands right now (pending whether the Supreme Court decides to hear the case), the case has been decided by a federal court of appeals that the gov't did nothing illegal. And let's be clear - that article you cited is a blog from a biased source, as indicated by the last sentence of his article: Justice Ginsurg's gatekeeper function would appear to indicate that the Indiana pension funds will see not see justice served.
I love the idea of a consumption tax. It would be so easy and I think would promote savings which our system does not currently do. Basically if you want to relax your tax burden, don't buy ****.
