Originally Posted by La literatura
Thanks for the post. I don't believe that the poor would pay less taxes, however. I actually think they would pay a lot more as a percentage of their income than they do now. Poor people generally spend all the money they get on consumer goods. Even middle class people often live paycheck to paycheck and put just a small amount towards savings, and rely on their employer matching their retirement funds and rely on that.
The people who would benefit from a consumption tax are entirely the rich. They already benefit from the "progressive" (now, it's almost regressive) income tax model right now, and it's created huge wealth inequality.
I think the better solution is to close loopholes and special interests for most of the rich and middle class, but rates at their moment are good.
That's certainly true. I don't think the poor would pay less taxes mostly because they don't really pay taxes, they just wouldn't be getting that big tax return at the end of the year. The consumption tax I had in mind would be dependent on the amount of the transaction. Similar to sales tax. Certain staples (milk, bread, rent up to a certain amount, etc.) could be exempt from consumption tax if it looks like it's going to end up screwing the poor over. Luxury items (large boats and other high dollar properties, nonessential high-end services, etc.) could entail a higher consumption tax if that proves necessary. Even a combination of a low flat income tax with a consumption tax might work.