You Do Not Want a Consumption Tax

You buy your cars new. You take it to the dealer for your service. You paid more than an adoption fee for your dog. You not only have cable, you have internet, you have HBO, and you have a data plan on your cell phone. You eat out for lunch many times a week – and especially like going to fancy dinners. You have a laptop, an Ipad, and / or a Smartphone that are less than 2 years old.

Yet, you think that a consumption tax will be more fair – and make everybody pay their fair share.

Here’s the news – you are the peak of consumerism. You will effectively be in the top tax bracket.

You think upperclass earners will be paying more of their fair share – but there is no cable tier above HBO, the costs of owning a swimming pool are much more fixed than paying for a gym swimming membership (also more likely to earn a home exemption).  The tires for your Toyota SUV from a dealer are not that much cheaper than the tires for that Porsche.  Having that cook on staff certainly means that food can be bought at a low tax rate versus your eating out.

Beyond that, the lower class is likely to suffer more – even with an initial exemption – there is an effect where large discount chain stores operate less in lower class urban environments – even in New York and San Francisco, Delis and Fast food chains are much easier to find than grocers (this is also why the lower class are less healthy, more overweight, etc)

The consumption tax solves many loopholes (but most plans have many ways to get out). It helps ensure that the lower class pays for their enjoyments; But, it also makes sure that the middle class continues to take on the tax burden.

If you want to lower your taxes and increase your earnings – learn about the bush tax cuts (and the long term capital gains rates and dividend rates that existed and are guaranteed to exist for years to come.) [though the double taxation argument exists] – This is one way the middle class that I know are missing out – they think that their best and easiest to understand investments are in direct real estate investment.

[ I buy my cars used (private party) and am able to perform most of my own basic maintenance; – and there are various other reasons why I would be ahead of many other with a consumption tax.]