Originally Posted by
natemd
Gotta play devils advocate. Personally I think it is an intreguing concept worth exploring but the first complaint you are going to hear from most people that it actually taxes people much worse. For example lets say you make 10 million dollars but only end up spending $500,000 of those dollars to live. The rest you save and put into stocks, CD's, IRA's and the such. You only pay 23 cents on each one of those dollars spent so essentially you pay $115,000 in taxes or 1.15% of your gross income.
Now say I make $20,000 a year and between my food and other daily living expenses it cost me $15,000 to survive. I would pay $3450 over the course of the year. Which comes out to be about 17.25% of my gross income.
So it has its downfalls. However, most supporters propose a tax refund for money spent up to the national "poverty level" which would offset this a little but the poor in turn will end up paying way more in taxes than the well off who can afford to invest there money.
*Disclaimer* Math is generalized and using 23 cent on every dollar rather than the percentage. But it will still essentially work out to be the same.*
Yeah, that is why it is politically impossible, it is progressive as a form of %. But it is titalating when it comes to not having the IRS. The value added tax is interesting too. It would level our playing field tax wise when it comes to trading with other countries. No matter what is done there will be loosers in a different tax system, just like there are loosers now.