Consumption Tax and Abolishment of the IRS
What do we think about this? Apparently a bill will be voted on to disband the IRS and abolish income taxes, as well as estate, death, and other taxes. A consumption tax would replace these.
I didn’t even know what a consumption tax was until this morning. Idk much, but it seems like a good idea to me. America wastes majority of tax money anyways - don’t see the problem with decreasing overall collections, which this switch would result in based on my reading
Consumption tax..you mean sales tax? You didn't know sales tax was a thing?
I'm all for a flat tax, but at this point and given your debt we just can't abolish all income tax.
Freedom Caucus: " Kevin, do you want to be the Speaker of the House?"
Kevin McCarthy: " Of course, I want this role more anything"
Freedom Caucus: "Bend over"
Kevin McCarthy: "How far?"
Freedom Caucus: Abolish the IRS, that is how far"
Matt's as trustworthy as any other politician and this is clearly just flexing because they know it'll never pass - I still love that they're making Kevin do this. You just know that it's going to be used as a beat stick in ads that "so and so voted to keep the IRS and income tax". Based af in my book.
Who is Matt? The only Matt who has been in the news lately is Schlapp, who has been accused of unwanted fondling and groping.
Don't think this is a new concept. Isn't this already thing at the state and muni level?
Do you have any evidence for this assertion, or just a personal fantasy?
Even if we assume that the United States does "waste" a "majority" of the tax money it collects, that just implies a pro rata reduction in all services without actually spending money more efficiently. I'm sure all those red state politicians who stuff every spending bill with pork for the completely unneeded military bases in their districts will be howling when half of them are shut down because the federal government can't afford to keep them open anymore. All those welfare states that rely on federal largesse to pave the roads and feed/house their citizens, ditto.
As always with the GOP, these inane proposals get put forth when there is no chance of them passing. No Congressional representatives or Senators think this is a good or workable idea, but they have no interest in productive policy discussions anyway. This is a chance for them to get a few good sound bytes in for their next campaign. If they gave half a shit, they would have done this in 2017-19 when they had control of the federal government.
Janet Yellen directed the IRS not to use any of the new funding to audit people or businesses earning less than 400k. So this, like pretty much everything the Republicans have done since Reagan, will be another attempt to get rich people to pay less in taxes. Same with taxes: working class people spend pretty much every penny they earn on consumption of goods and services, while rich people invest or save it. So switching from an income tax to a consumption tax will also be a shift in the tax burden from the rich to the poor.
Thankfully this bill is dead on arrival from the Democratic senate and presidency.
Yeah, I mean the timing of this shows just how serious the GOP is about it. In fact, it pretty strongly demonstrates exactly how serious the GOP is about governance in general. They had an opportunity to pass this, in addition to all sorts of other major policy initiatives, not five years ago when the controlled both houses of the legislature and the White House and had a SCOTUS majority. All they did was cut taxes for the wealthy. So you know exactly what their legislative priorities are - more money for themselves and their donors, and the rest of the country can fuck themselves.
This constant game where we pretend Republicans have an agenda or platform and give a shit about governing the country got old nearly a decade ago. We get it - a bunch of old and rural people are pissed that they don't get to lord it over minorities, don't actual give a shit about facts, and are mostly interested in venting their pent-up rage at the world at people who support the poor, support minorities, or who still think that part debate about where the future of this country lies should involve the truth and some level of shame about perverting it
I disagree with your assertion that the GOP is not serious about gutting the IRS, because they did it once before a decade ago. During the Tea Party years they were able to strongarm Obama into lowering its funding, and redirected the limited funds available to investigating poor people on welfare. That resulted in a steep dive in the number of wealthy people getting audited despite the explosion of wealth generated during the bull market. So Biden's expansion of the IRS was just a return to normality.
https://www.propublica.org/article/how-the-irs-was-gutted
I mean Janet Yellen can ask them to do whatever she wants, it's not in the bill so as far as they're concerned it's not in any way a binding order. The IRS rarely if ever uses additional funding to go after the uber-wealthy, they audit low-income earners at something like 5x the rate as other income groups. It's much easier to send a bunch of poor people a bill for a few hundred dollars which is enough to hurt but not enough to go to court vs go after a multi-millionaire who will drag it out with lawyers & accountants. Income tax was supposed to be temporary anyway, would be better for literally everyone BUT the government if this became a regular part of policy conversations going forward.
You're right though, DOA due to the Senate. Just shows once again how pathetic the Republican party is, rattling those sabers only when they're not in a position to do anything about it.
When the IRS had funding before the GOP gutted it, they did go after the wealthy much more than the poor. The reason for that is that most audits of the rich are done by professionals who the IRS couldn't afford to hire or retain, while audits of the middle class and poor are automated. In fact, the GOP specifically asked the IRS to audit poor people who claimed the earned income tax credit.
It's the typical right wing thought process. Deliberately ruin the government to benefit rich people, cry about the government not working, and then use that as an excuse to tear down the government even more and repeat the process.
This isn't entirely true. It's easier to go after wage earners because figuring out who isn't paying taxes on salary is easier than wading through complex investments. I feel like you see athletes and actors get hit for tax evasion all the time, because their primary income streams are pretty simple and seeing "Nicholas Cage made $20mm in fees on his movie and somehow only paid $20 in taxes" is a lot easier to investigate and prove than showing that some hedge fund manager is also avoiding paying taxes.
More generally, spending more money on the IRS has been proven to increase government tax receipts, to the tune of five to nine dollars for every one spent (I assume that's still relatively accurate). Hiring a couple dozen intelligent CPAs whose only job it is is to audit the ultra wealthy would be a great way of compelling honest returns, even if you aren't auditing a fraction of the applicable returns in any given year.
I mean... this both isn't true, and isn't relevant either. The country amended the Constitution for the specific purpose of enacting an income tax - it's hard to think of intending something more permanent than changing the literal foundational document of the country! And even if that's true, the fact that it managed to stay in existence isn't a great argument for abolishing it now, 100+ years later after its modern incarnation came into effect (we can ignore the Civil War income tax if you want).
Moreover, the assertion that getting rid of it would be better for "everyone" is genuinely insane. The income tax accounts for 51% of federal revenue! And really it's more like 85% of revenue, since medicaid and social security taxes are earmarked and can't be spent on other items. Get rid of it, and you're automatically hurting a lot of people. All the people who lose their food stamps will be hurt. The folks who rely on Section 8 subsidies to afford housing get hurt. 40% of the country doesn't pay income tax at all (which I disagree with, FYI, everyone should pay something, however small), so almost by definition you'd have to say that a significant minority of the country would be directly hurt from getting rid of the income tax, since they don't pay it in the first place and certainly benefit indirectly.
And as I said earlier... the day Mitch McConnell concedes that Fort Campbell is a useless expense and volunteers that to be the first item in the budget that gets cut is the day I or anyone else should be willing to listen to him, or anyone else, on the subject of cutting revenue. Ditto Fort Benning in Georgia/Alabama or For Bragg in Texas or Fort Bragg in North Carolina. And that's just the military! When you hear Republicans (mostly) talk about "cutting the budget" what they mean is they want maintained or increased spending for their pet projects, and to cut funding for everyone else. Which is why the budget never actually gets cut, because everyone wants their hand in the pie. At least most liberals have the intellectual and ethical honesty to admit it, and call for the additional taxation which would pay for it.
The "party of the working class" introduces a bill that would overwhelming favor billionaires (whose spending is a pittance of their earnings) and burden the working class (who spend nearly everything they make)
I am shocked!
The consumption tax could be low or zero for essential items and essential foods like bread, milk, eggs etc and there could be a high tax for luxury goods like Lambos, Yachts, Jets, etc.
It already is that way, that's what excise taxes are, but I see your point.
Maybe. I love the idea of simplifying the tax system so the ultra rich can manipulate it less frequently, but I don't see anyway a consumption tax only would generate anywhere near enough revenue to support our spending.
This is a bad idea. Someone making $500k+ a year should pay more tax than someone making like $50k. Consumption tax basically taxes the poor.
Using this logic, income tax inherently is unfair to high earners
Don't really have a dog in this fight (and the bill realistically has 0% chance of getting made into a law), but someone making $500k/year would naturally spend more than someone making $50k.
Yes, but that person would realistically spend a much smaller percentage of their income, which is why consumption taxes are branded as regressive.
What about property taxes? In some states sales taxes (consumption taxes) are already higher because they don't pay any state income tax, or even county tax (the north east is a disastrous mess in that regard).
Do you want a VAT? What about going back to the very original system before 1862 of only tariffs?
Abolish the IRS, income tax, and property tax. Property taxes just mean you do not own your home/property, simple as that. Income tax was supposed to be temporary, just like how Covid lockdowns would only be for 2 weeks. VAT taxes can stay, frankly they should go up. Tax people on consumption, not their investments to try and develop equity.
I will reprise my agree to disagree persona on this one. According to law, aka imminent domain, you don't actually "own own" your property. Hence the property taxes, which go into other things like roads, police, fire dpeartments, schools (even as much as they suck ATM). We don't have an actual VAT here in the USA, but you could pontificate it out that the sales taxes were equivalent. VAT is far worse though since it hits every step all up the chain until you wind up paying sales taxes on the end buyer's side. For investments / equity, I do agree that should be treated differently. Thankfully we have some rules in place. Hell, Thiel has a riduclously huge Roth IRA (look it up).
And don't get me started about transfer pricing...
All things that can and should be privatized anyway when you can recognize it's precisely because they are so heavily subsidized & regulated by government the quality has gone to utter shite... right. Glad we cleared up that we're all just government tax pigs renting land.
And yes, I am salty as a mother fucker about tax season approaching.
I did see the thing about Thiel's Roth, clearly an outlier considering he somehow finagled getting his IRA to get in on some of his early home run investments.
Theil's IRA is a terrible example to use. The Roth IRA was made to encourage ordinary Americans to save and invest more, not for institutional investors like Theil to store billions without paying taxes.
ahh you're one of those people that want to have their cake and eat it too.. gotta love libertarians living in a fairy tail world.
Shifting the tax burdens from the rich to the poor is not a fairy tale, it's something they've been successfully been doing since the Reagan Era.
The government could probably reduce their insatiable need for revenue if they passed something focused on cutting expenses.
I am 100% sure there is a massive list of bs both parties would be happy to cut.
But nobody likes doing cuts.
Democrats don't like cutting anything, but they want to tax to raise revenue to match their spending.
Republicans don't like to cut anything, but they also want to cut taxes, knowing they'll make liberals work to balance the budget (as usual) and then can point fingers about raising taxes. At some point, it's a question of first principles - the people committed to solving problems and even attempting to make hard choices deserve more respect then the ones sitting on the sidelines and jeering.
Given US is a purely consumption driven economy even the idea of it is stupid.
this is essentially a non-event. Unfortunately, it's just political grandstanding (republican reps earn "points" from their constituents, even though these reps know there's not a chance in hell it'll pass in the senate and get signed off by Biden). Just another circus act by congress.
The Republican constituency is excited to pay rich peoples' taxes? That's what a consumption tax essentially adds up to.
All they hear is "no income tax"
After 10 minutes of research, Arroz con Pollo has concluded that the US gov't wastes most of its tax money and that we should abolish the IRS. Absolutely brilliant. Can we please get this guy elected to congress already?!
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