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.