Progressive Consumption Tax: Good or Bad?

Conservatives/Libertarians like Gary Johnson have advocated for a flat Consumption Tax. Sounds simple, but it would obviously be unfair to the middle class and the poor, since they spend more of their income. However, I came across the idea of a Progressive Consumption Tax, where the rate would increase steeply as one consumes more. It has been proposed that this would replace all federal taxes with the exception of the Estate Tax. I'm attracted to this because of the streamlined nature of the idea. Your thoughts?

Official response from submitted
Dear Dillon Fagan,
The important thing about your suggestion is that in introduces the concern with progressivity of taxation. This has traditionally been limited to income taxes with few exceptions and even there it has long been attacked with ideas and proposals such as Johnson's old one. It would need to be worked out how exactly we could measure total consumption outlet per individual so as to be able to progressively tax accordingly. Or perhaps another way to proceed would be to tax wealth progressively (far easier to implement and monitor since we already track stocks, bonds, real estate for other reasons and multiple jurisdictions) rather than the utterly gross fact that wealth in stocks and bonds (how the rich hold most of their property) is now not taxed as such by federal, state or local authorities. Local "property taxes" fall only on land, houses, business inventories and cars and boats, but very pointedly NOT on stocks and bonds or gold or cash). I would support movement towards a progressive consumption tax chiefly because it would reopen and stimulate public discussion about making all taxes progressive, not just the income taxes.

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  • responded with submitted 2016-09-19 12:37:48 -0400
  • published this page in Ask Prof. Wolff 2016-09-16 15:28:15 -0400


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