Why would you want to "discourage consumption" by taxing it? Following the logic in your message.

I know you are just quoting this transcript/article... but you likely have an idea of how this would work since you classify this as the best solution.

Especially interested on how you would progressively tax consumption... How do you apply brackets to the day-to-day purchases? The general answer is to demand people to report their income/savings and the difference is taxed... and rich people will just game this as easily as the income taxes (if not more easily).

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fyredge 4 hours ago | parent | next [-]

I was initially skeptical of removal of income tax, but it's replacement with consumption tax makes sense.

Currently, income is "discouraged" through financial instruments such as Securities-Backed Line of Credit (SBLOC), which are very much only feasible in the realm of the very rich. Some part of this loophole can be offset by corporate tax, but corporate tax is based on profit, not income, incentivising all sorts of unproductive spending behaviour e.g. stock buybacks.

To me, the switch to consumption tax does a couple of things:

1. Instill discipline. Higher spending does not equate to higher productivity. By taxing spending, discipline will be instilled in both the consumer and corporation. With consumption tax, there will be no brackets, rather the amount of tax will be based on what the government policy is. Smoking bad? Higher tax. Soy milk more environmentally friendly? Lower tax.

2. Simplify tax situation with "capital gains". You pay tax upfront, now we don't need to evaluate what happens to the value of the stock, that will be the problem for the next buyer. No loophole for capital gains tax with inheritance.

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shinryuu 4 hours ago | parent [-]

The problem with consumption tax is that it's regressive. Poor(er) people are hit harder with such a tax.

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neonstatic 3 hours ago | parent [-]

Depends what is being taxed. Staples could be excluded, while luxury items taxed more heavily.

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snovv_crash 3 hours ago | parent [-]

Senate argument: "This poweryacht is necessary for my donor's livelihood of entertaining billionaires"

	▲	fyredge an hour ago \| parent [-]
		This argument kind of illustrates why consumption tax is better. It's easy to advocate "lower taxes for everyone!" giving rich people most of the benefit, but it's much harder to advocate for "lower yacht tax!" without pissing off a whole bunch of wage workers.

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rayiner 5 hours ago | parent | prev [-]

I’m not classifying it as the best solution. I’m quoting an NPR article describing the consensus view of economics experts.

But as I understand it, the reason is that consumption taxes have the least distortion in terms of deviating from the efficient behavior in the no-tax scenario: https://www.weforum.org/stories/2019/09/using-tax-to-tackle-...

	▲	dpark 4 hours ago \| parent [-]
		That article spends most of its time explaining why a progressive consumption tax is obviously the right choice, then basically decries liberals as too dumb to understand it and conservatives as too evil to want it, but spends zero words to explain how a progressive consumption tax might possibly be implemented.