Thread: Economics The Fiscal Cliff Approacheth
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Old 11-24-2012, 11:08 AM   #221
patteeu patteeu is offline
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Quote:
Originally Posted by BigRedChief View Post
I haven't read anything lately about consumption vs. production tax revenue. But, what I have read about consumption taxes were that they were unbalanced and unfair compared to benefits.

Basically, it's easy to build a highway road and pay for it with a toll. It's not so simple for city and county roads, food, clothes, water etc.
We're going to "fair" ourselves into the global poor house if we aren't careful. As for unbalanced, I don't know what you mean.

We used to essentially be THE global market and our producers didn't really need to worry about exports. Every year, our share of the global market declines and exports become more and more important to our prosperity. Taxing consumption instead of production is a way of eliminating the tax overhead in the price of our exports so they are better able to compete in global markets while applying equal tax overhead to the price of both domestically produced products and imports for our own market so our products are more competitive here.

In theory, a consumption tax can be made progressive to alleviate your fairness concerns but that comes at a cost of (a) added complexity, (b) increased economic distortion, and (c) decreased revenue. I'm against progressivity, but practical reality, i.e. the greed of the lower/middle class, would probably require some degree of it.
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