Wednesday, August 23, 2006

Consumption Tax

I liked the discussion about consumption tax so much, I felt the need to post about it. I found this objective description of consumption tax on an economics site because I couldn't think of much If a downside. It turns out, there isn't much of one. Let's take a look:

Pros

  • Increased tax base. As SheaHeyKid points out we can collect from organized crime and illegal aliens.
  • Simplified tax code
  • Discourage those on public assistance from buying luxury items (See Fredo's comment)
  • Encourages savings, especially for those who should save
  • Taxes what you take out rather than what you put in
  • Good for the environment? Discourages disposable products?


Cons

  • (Help me out here)


Here's a decent criticism of it. The author mostly criticizes the VAT, which is obviously a bad idea since many Europeans do it. He also misses the key point of exclusions for necessities.

Hey, who knows? Maybe we could even reduce the size of the IRS!

2 comments:

SheaHeyKid said...

I remember reading somewhere that the IRS costs ~$2B / yr to run. Anything we can do to reduce that unnecessary waste is a win!

Fredo said...

Without the IRS, how would the once and (possibly) future Clinton White House intimidate their political opponents?

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Always sniffing for the truth

Always sniffing for the truth

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